<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 17, 1997
VIMRX PHARMACEUTICALS INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-19153 06-1192468
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation.)
2751 Centerville Road, Suite 210, Wilmington, DE 19808
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (302) 998-1734
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
On December 17, 1997, VIMRx Pharmaceuticals Inc. (the "Registrant")
completed its previously announced acquisition of the intellectual property and
intangible assets, other than trademarks, of the Immunology Division (the
"Division") of the Biotech Business Group of Baxter Healthcare Corporation
("Baxter"), for 11,000,000 shares of the Registrant's Common Stock and 66,304
shares of the Registrant's Class A Preferred Stock; and the transfer of such
intangible assets to a newly organized subsidiary, BIT Acquisition Corp. (the
"Subsidiary"), in exchange for 80.5% of the Subsidiary's common stock.
Concurrently, the Subsidiary acquired the tangible assets, business, trademarks
and certain obligations of the Division in exchange for the payment to Baxter of
19.5% of the Subsidiary's common stock and a warrant entitling Baxter to
purchase an additional 6% of the Subsidiary's common stock for $6,000,000. In
addition, the Registrant purchased $10,000,000 principal amount of the
Subsidiary's 6.5% convertible subordinated debentures for $10,000,000, paid out
of available cash on hand, and Baxter purchased $30,000,000 principal amount of
such debentures for $30,000,000.
In addition, the Subsidiary entered into several agreements with
Baxter pursuant to one of which, the Subsidiary may pay up to $21,000,000 to
Baxter as and when certain product development and regulatory milestones are
achieved. Baxter will also provide manufacturing services to the Subsidiary on
an ongoing basis with respect to the Division's products at cost, and Baxter
will provide marketing services at cost plus a gross margin.
The Registrant intends to utilize the acquired assets to continue
developing the current business of the Division.
The Division, which commenced operations on January 1, 1993, is
engaged in the development, manufacture, marketing and distribution of
specialized instruments used in ex vivo cell research and therapies. The
Division's cell processing instruments are used in combination with biological
reagents and other instruments to provide integrated systems for manipulation of
cells extracted from patients. These cell processing instruments are used in the
treatment of various diseases, including various forms of cancer.
The Division was global in nature with headquarters in Irvine,
California, a research facility in Round Lake, Illinois, and customer training,
service and limited manufacturing and research capabilities in Munich, Germany.
The Subsidiary did not acquire the Division's facilities in Round Lake, Illinois
and Munich, Germany and, following the closing, operations are being
consolidated at the Irvine, California facility.
2
<PAGE>
The Division currently markets the Isolex(R) Cell Separator, an
automated, sterile path instrument for the positive clinical separation of
specific cell populations from blood and bone marrow (positive cell selection).
In positive cell selection, a targeted cell population is captured and retained
for reinfusion or for further biological manipulation. The Division offers three
versions of the Isolex(R) Cell Separator instrument: the smaller scale Isolex(R)
50 Cell Separator for research use; the clinical scale semi-automated 300SA Cell
Separator; and the fully automated 300i Cell Separator. All three versions are
currently marketed for therapeutic and/or research purposes in Europe. As the
Division has not yet received regulatory approval of the instruments for
therapeutic purposes, sales in the United States and Japan are limited to
research laboratories and institutions on a cost recovery basis.
In addition to the positive selection Isolex Cell Separator, the
Division markets the MaxSep(R) System. The semi-automated MaxSep(R) System is a
negative selection system in which undesired cells are removed from a diverse
population of cells. The MaxSep(R) System is currently marketed for therapeutic
purposes in Europe.
The Division also markets various ancillary products which are utilized
in the cell manufacturing cycle. These products include the following:
Cryocyte/TM/ containers used in the freezing of blood components; Lifecell(R)
tissue culture flasks which provide a closed system environment for culturing
cells; CFU stem cell kit used to measure stem cell colony formation in samples
of bone marrow, peripheral blood, cord blood, or selected CD3 cells; and
Harvester,/TM/ a cell collection device used primarily to reduce large cell
volumes.
Item 5. Other Events
------------
A special meeting of stockholders of the Registrant was held on
December 16, 1997 to consider and vote on the acquisition of the Division (see
Item 2.) and to consider and vote on an amendment to the Registrant's
Certificate of Incorporation to authorize the Registrant to issue up to 150,000
shares of Class A Preferred Stock, of which 66,304 shares were issued to Baxter
at the closing.
Proxies representing 28,906,567 shares (52% of the outstanding shares
of record entitled to vote) were present at the meeting.
On the proposal to authorize the purchase of the Division, 28,057,027
shares voted in favor, 496,365 shares voted against, and 353,175 shares
abstained.
3
<PAGE>
On the proposal to authorize the amendment to the Certificate of
Incorporation, 27,888,069 shares voted in favor, 617,969 shares voted against,
and 400,529 shares abstained.
Accordingly, both agenda items were approved.
Item 7. Financial Statements and Exhibits.
---------------------------------
a. Financial Statements of Division.
PAGE
----
Independent Auditor's Report........................................... F-2
Balance Sheets as of December 31, 1995 and 1996........................ F-3
Statements of Operations for the years ended December 31,
1994, 1995 and 1996............................................... F-4
Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996............................................... F-5
Notes to Financial Statements.......................................... F-6
Balance Sheets as of December 31, 1996 (Audited) and June 30,
1997 (Unaudited).................................................. F-13
Statements of Operations for the six months ended June 30,
1996 and 1997 (Unaudited)......................................... F-14
Statements of Cash Flows for the six months ended June 30,
1996 and 1997 (Unaudited)......................................... F-15
Notes to Condensed Financial Statements (Unaudited).................... F-16
b. Pro Forma Financial Statements of Registrant.
Unaudited Pro Forma Condensed Combined Balance Sheet at June
30, 1997.......................................................... F-20
Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 1996.............................. F-21
Unaudited Pro Forma Condensed Combined Statement of Operations
for the six months ended June 30, 1997............................ F-22
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements........................................................ F-23
c. Exhibits.
2.1 Asset Purchase Agreement dated as of October 10, 1997 among Registrant,
Subsidiary and Baxter.
3.1 Certificate of Amendment of Certificate of Incorporation of Registrant.
10.1 Hardware and Disposables Manufacturing Agreement between Subsidiary and
Baxter, dated as of December 17, 1997.
4
<PAGE>
10.2 Antibody Manufacturing and Storage Agreement between Subsidiary and Baxter,
dated as of December 17, 1997.
10.3 Hardware and Disposables Supply Agreement between Subsidiary and Baxter,
dated as of December 17, 1997.
10.4 Marketing, Sale and Distribution Agreement between Subsidiary and Baxter,
dated as of December 17, 1997.
10.5 Non-Competition and Confidentiality Agreement between Registrant and
Baxter, dated as of December 17, 1997
10.6 Sublicense (Chiron) between Subsidiary and Baxter, dated as of December 17,
1997.
10.7 Sublicense (Dorken) between Subsidiary and Baxter, dated as of December 17,
1997.
10.8 Sublicense (First Becton-Dickinson) between Subsidiary and Baxter, dated as
of December 17, 1997.
10.9 Sublicense (Second Becton-Dickinson) between Subsidiary and Baxter, dated
as of December 17, 1997.
5
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
A DIVISION OF BAXTER HEALTHCARE CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS:
Independent Auditor's Report............................................. F-2
Balance Sheets as of December 31, 1995 and 1996.......................... F-3
Statements of Operations for the years ended December 31, 1994, 1995 and
1996.................................................................... F-4
Statements of Cash Flows for the years ended December 31, 1994, 1995 and
1996.................................................................... F-5
Notes to Financial Statements............................................ F-6
CONDENSED FINANCIAL STATEMENTS:
Balance Sheets as of December 31, 1996 (Audited) and June 30, 1997
(Unaudited)............................................................. F-13
Statements of Operations for the six months ended June 30, 1996 and 1997
(Unaudited)............................................................. F-14
Statements of Cash Flows for the six months ended June 30, 1996 and 1997
(Unaudited)............................................................. F-15
Notes to Condensed Financial Statements (Unaudited)...................... F-16
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders Baxter Healthcare Corporation:
We have audited the accompanying balance sheets of the Immunotherapy
Division of Baxter Biotech, a division of Baxter Healthcare Corporation, as of
December 31, 1995 and 1996 and the related statements of operations and cash
flows for each of the years in the three-year period ended December 31, 1996.
These financial statements are the responsibility of the Business' management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Immunotherapy Division
of Baxter Biotech as of December 31, 1995 and 1996 and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Los Angeles, California
July 28, 1997
F-2
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash................................................. $ 13,000 $ 35,000
Accounts receivable, less allowance for doubtful
accounts of $48,000 in 1995 and $71,000 in 1996..... 6,268,000 6,019,000
Due from related parties............................. 353,000 529,000
Other receivables.................................... 647,000 1,788,000
Inventories.......................................... 6,767,000 8,523,000
Prepaid expenses and other current assets............ 209,000 131,000
----------- -----------
Total current assets............................... 14,257,000 17,025,000
Property and equipment, net............................ 10,338,000 11,808,000
Other assets........................................... 3,110,000 3,605,000
----------- -----------
Total assets....................................... $27,705,000 $32,438,000
=========== ===========
LIABILITIES AND BUSINESS EQUITY
Current liabilities:
Accounts payable..................................... $ 2,190,000 $ 2,428,000
Due to related parties............................... 28,000 658,000
Accrued expenses and other current liabilities....... 3,571,000 4,023,000
----------- -----------
Total current liabilities.......................... 5,789,000 7,109,000
Commitments and contingencies (note 10)
Business equity (note 11).............................. 21,916,000 25,329,000
----------- -----------
Total liabilities and business equity.............. $27,705,000 $32,438,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenue............................... $ 19,702,000 $ 22,564,000 $ 23,947,000
Cost of goods sold.................... 9,943,000 11,608,000 11,638,000
------------ ------------ ------------
Gross profit........................ 9,759,000 10,956,000 12,309,000
------------ ------------ ------------
Operating expenses:
Research and development............ 35,308,000 35,711,000 34,699,000
Sales, general and administrative... 12,324,000 13,356,000 13,254,000
------------ ------------ ------------
Total operating expenses............ 47,632,000 49,067,000 47,953,000
------------ ------------ ------------
Operating loss...................... (37,873,000) (38,111,000) (35,644,000)
------------ ------------ ------------
Other income (expense):
Loss on sale of investment.......... -- (1,388,000) --
Gain on sale of Therasorb assets.... -- -- 651,000
Other............................... 6,000 (39,000) 1,753,000
------------ ------------ ------------
Total other income (expense)........ 6,000 (1,427,000) 2,404,000
------------ ------------ ------------
Net loss............................ $(37,867,000) $(39,538,000) $(33,240,000)
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................... $(37,867,000) $(39,538,000) $(33,240,000)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization..... 2,296,000 3,693,000 4,383,000
Gain on sale of Therasorb assets.. -- -- (651,000)
Loss on sale of investment........ -- 1,388,000 --
Changes in assets and liabilities:
Accounts receivable.............. (1,480,000) (1,982,000) (689,000)
Due from related parties......... (88,000) (265,000) (176,000)
Other receivables................ (601,000) (46,000) (1,141,000)
Inventories...................... (3,307,000) (2,257,000) (3,435,000)
Prepaid expenses and other
assets.......................... 2,072,000 (133,000) 60,000
Accounts payable................. (200,000) (160,000) 925,000
Due to related parties........... (4,000) 28,000 630,000
Accrued expenses and other
current liabilities............. 2,353,000 (138,000) 846,000
------------ ------------ ------------
Net cash used in operating
activities...................... (36,826,000) (39,410,000) (32,488,000)
------------ ------------ ------------
Cash flows from investing activities:
Purchases of property and
equipment......................... (4,226,000) (4,667,000) (6,468,000)
Purchases of other assets.......... (298,000) (2,100,000) (961,000)
Proceeds from sale of Therasorb
assets............................ -- -- 3,286,000
Proceeds from sale of investments.. -- 1,385,000 --
------------ ------------ ------------
Net cash used in investing
activities...................... (4,524,000) (5,382,000) (4,143,000)
------------ ------------ ------------
Cash flows from financing
activities--
financing from parent............... $ 41,355,000 $ 44,800,000 $ 36,653,000
------------ ------------ ------------
Net cash provided by financing
activities...................... 41,355,000 44,800,000 36,653,000
------------ ------------ ------------
Net increase in cash............. 5,000 8,000 22,000
Cash at beginning of year............ -- 5,000 13,000
------------ ------------ ------------
Cash at end of year.................. $ 5,000 $ 13,000 $ 35,000
============ ============ ============
Supplemental cash flow disclosures:
Cash paid during the year for:
Interest......................... -- -- --
Income taxes..................... $ -- $ -- $ --
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995 AND 1996
(1) BASIS OF PRESENTATION
General
The Immunotherapy Division of Baxter Biotech (the Business) is a division of
Baxter Healthcare Corporation (Baxter), which is a subsidiary of Baxter
International, Inc. The Business is engaged in the development, manufacture,
marketing and distribution of specialized instruments used in ex-vivo cell
research and therapies.
Historically, the Business had no separate legal status. The accompanying
financial statements have been prepared from the historical accounting records
as if the Business had operated as a separate entity during all periods
presented.
The financial statements include all of the direct operating expenses of the
Business and allocations of certain shared administrative services costs from
Baxter. Expenses are allocated on the basis of actual usage or other methods,
which approximate actual usage. Management believes that the allocation
methods are reasonable. However, these allocations are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity.
Operations outside the United States are included in the accompanying
financial statements on the basis of fiscal years ending November 30.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value).
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives which range from 3 to
11 years. Leasehold improvements are amortized using the straight-line method
over the estimated useful life or the lease term, whichever is shorter.
License Agreements
License agreements are recorded at cost and are amortized using the
straight-line method over the shorter of the estimated useful lives of the
license or the license term. These costs are included with other assets in the
accompanying balance sheets. Accumulated amortization at December 31, 1995 and
1996 was $1,174,000 and $1,640,000, respectively.
Financial Instruments
The carrying value of financial instruments such as cash, accounts
receivable, other current assets, accounts payable and other current
liabilities approximates their fair value due to the short-term nature of
these instruments.
Revenue Recognition
Revenue and related cost of goods sold are recognized upon shipment of
products.
F-6
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
Research and Development Costs
Research and development costs are charged to expense as incurred.
Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Business adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," on January 1, 1996. SFAS No. 121
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount
of an asset to future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amounts of the assets exceed
their fair values. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of this statement
did not have a material impact on the Business' financial position or results
of operations.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which defines a fair-value
method of accounting for stock-based awards. As permitted by SFAS No. 123, the
Business elected to continue to follow existing accounting requirements for
stock options and other stock-based awards contained in Accounting Principles
Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees."
Management of the Business has determined that the required pro forma
disclosures pursuant to SFAS No. 123 are not material to the accompanying
financial statements (see note 7).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
(3) SALE OF INVESTMENT AND DISCONTINUED OPERATIONS
At December 31, 1994, the Business owned 117,748 shares of Applied Immune
Science, Inc. (AIS) common stock. Through its investment, the Business
obtained certain distribution and marketing rights to products developed
either exclusively by AIS or jointly by AIS and the Business. In November
1995, the Business sold its entire holding of AIS common stock for cash
proceeds of $1,385,000 which resulted in a loss of $1,388,000.
F-7
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
In February 1996, the Business sold the assets of its "Therasorb" product
line for $3,286,000 which resulted in a gain of $651,000. In addition, the
Business recorded income of approximately $1,764,000 during 1996 related to
the "earn-out" provisions related to the sale of the Therasorb assets. This
amount is included in "Other" income in the accompanying financial statements.
On January 1, 1997, the Business transferred the assets of its "Collections"
product line to another Baxter division. The operating results of the
"Therasorb" and "Collections" product lines included in the statements of
operations were revenues of $12,900,000, $16,400,000 and $13,700,000 in 1994,
1995 and 1996, respectively, and operating losses of $2,500,000 and $100,000
in 1994 and 1995 and operating profit of $1,200,000 in 1996.
(4) INVENTORIES
Inventories at December 31, 1995 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Raw materials.......................................... $ 558,000 $1,424,000
Work in process........................................ 1,003,000 668,000
Finished goods......................................... 5,206,000 6,431,000
---------- ----------
$6,767,000 $8,523,000
========== ==========
</TABLE>
(5) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1995 and 1996 are summarized as
follows:
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Land................................................ $ -- $ 25,000
Buildings and improvements.......................... 60,000 275,000
Equipment........................................... 18,258,000 23,470,000
Construction in progress............................ 475,000 410,000
----------- -----------
18,793,000 24,180,000
Less accumulated depreciation and amortization...... 8,455,000 12,372,000
----------- -----------
$10,338,000 $11,808,000
=========== ===========
</TABLE>
(6) INCOME TAXES
The Business has not recorded income tax expense or benefit for 1994, 1995
or 1996. On a separate return basis, the losses incurred during those years
would give rise to net operating loss carryforwards and related deferred tax
assets. The deferred tax assets before related valuation allowances at
December 31, 1995 and 1996 would amount to $27,013,000 and $37,168,000,
respectively. Due to the uncertainty of ultimate utilization of those
carryforwards on a separate-return basis, the Business has recorded valuation
allowances for the full amounts of those deferred tax assets. The tax effect
of other temporary differences that give rise to deferred tax liabilities at
December 31, 1995 and 1996 was not material.
The Business, on a stand-alone basis, would have a net operating loss
carryforward for Federal income tax purposes of approximately $104,405,000 at
December 31, 1996. However, since the Business has been included in the
consolidated tax filings of Baxter, its prior losses have been utilized in the
Baxter consolidated tax returns.
F-8
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
As such, should the Business actually file separate tax returns in the future,
no net operating losses would be available.
(7) STOCK-BASED COMPENSATION PLANS
Employees of the Business participate in certain Baxter stock-based
compensation plans, which are described below. The Business applies APB No. 25
and related interpretations in accounting for its employees' participation in
these plans. Accordingly, no compensation expense has been recognized by the
Business under the plans in which employees participate other than for
performance-based stock granted to employees.
Fixed Stock Option Plans
The two Baxter International, Inc. fixed stock option plans provide for the
grant of incentive stock options. Options are primarily granted at the fair
market value of the Baxter International, Inc. common stock at the date of
grant with an initial term of ten years. Vesting terms vary, with some options
vesting ratably over three years and others vesting 100% after five years,
with accelerated vesting upon the achievement of specific stock market value
levels.
The following summarizes the stock option transactions under the plans
during the periods presented:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE EXERCISE
SHARES PRICE
------- ----------------
<S> <C> <C>
Options outstanding at December 31, 1993........... 81,852 $24.39
Options granted.................................... 20,289 24.79
Options exercised.................................. (4,563) 13.29
Options canceled................................... -- --
------- ------
Options outstanding at December 31, 1994........... 97,578 24.99
Options granted.................................... 56,130 34.68
Options exercised.................................. (6,870) 16.39
Options canceled................................... (3,933) 30.39
------- ------
Options outstanding at December 31, 1995........... 142,905 29.06
Options granted.................................... 37,700 51.00
Options exercised.................................. (12,341) 19.55
Options canceled................................... (4,034) 34.56
------- ------
Options outstanding at December 31, 1996........... 164,230 $34.68
======= ======
</TABLE>
At December 31, 1996, the range of exercise prices and the weighted average
remaining contractual life of outstanding options was $20.51-$51.00 and 7
years, respectively.
At December 31, 1994, 1995 and 1996, the number of options exercisable was
58,842, 60,967 and 64,609, respectively, and the weighted average exercise
price of those options was $24.51, $25.86 and $26.68, respectively.
Employee Stock Purchase Plans
Business employees may participate in the Baxter International, Inc. stock
purchase plans through payroll deductions. The common stock purchase price is
the lower of 85% of the closing market price on the date of
F-9
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
subscription or 85% of the closing market price as defined by the plans. The
total subscription amount for each participant cannot exceed 25% of current
annual pay. Purchases by Business employees under the Baxter International,
Inc. stock purchase plans aggregated 13,175, 12,230, and 9,220 shares in 1994,
1995 and 1996, respectively.
Management of the Business has determined that the pro forma compensation
cost determined under the fair-value method prescribed under SFAS No. 123
would not be material to the accompanying financial statements.
Restricted Stock
Certain key employees of the Business have received grants of restricted
stock under the Baxter International, Inc. restricted stock plan. Under the
plan, annual grants are earned based on the achievement of net income and
average "operational cash flow" targets, adjusted up or down by Baxter
International, Inc.'s stock performance against the change in the Standard &
Poor's Medical Products and Supplies Index. These restricted shares vest one
year after they are earned.
At December 31, 1996, 9,218 shares were subject to restrictions which lapse
in 1997 and 17,182 shares were subject to restrictions that lapse upon
achievement of future performance objectives and related vesting periods.
During 1994, 1995 and 1996, 6,050, 6,776 and 9,218 shares, respectively, of
restricted stock were earned. The Business has recorded compensation expense
for the restricted stock of $85,000, $227,000 and $331,000 during 1994, 1995
and 1996, respectively.
(8) RETIREMENT AND OTHER POSTEMPLOYMENT BENEFIT PLANS
Retirement Plans
Substantially all U.S. employees of the Business are eligible to participate
in Baxter International, Inc.'s qualified 401(k) plan and Baxter
International, Inc.'s qualified and nonqualified non-contributory, defined
benefit pension plans. Under the defined benefit pension plans, benefits are
based on years of service and the employee's compensation during five of the
last ten years of employment as defined by the plans. Baxter International,
Inc.'s funding policy is to make contributions to the trusts of the qualified
plans which meet or exceed the minimum funding requirements. Assets held by
the trusts of the plans consist primarily of equity and fixed income
securities.
Baxter International, Inc. recorded pension costs of $43,000,000,
$35,000,000 and $47,000,000 during the years ended December 31, 1994, 1995 and
1996, respectively, and a net pension asset of $13,000,000 as of December 31,
1995 and 1996. The value of the projected benefit obligation at December 31,
1995 and 1996 assumed a 7.25% and an 8.0% discount rate, respectively, and a
4.5% rate of increase in future compensation levels. The expected long-term
rate of return on assets was 9.5% for 1995 and 1996. The Business' allocated
portion of pension costs was $371,000, $343,000 and $412,000 in 1994, 1995 and
1996, respectively. The Business has not recorded a pension related asset or
liability in the accompanying financial statements.
Under the 401(k) plan, participating Business employees may contribute up to
12% of their annual compensation to the plan and the Business matches
participants' contributions up to 3% of compensation. The Business' matching
contributions were $180,000, $182,000 and $196,000 in 1994, 1995 and 1996,
respectively.
F-10
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
Other Postemployment Benefit Plans
Baxter International, Inc. sponsors certain unfunded contributory health
care and life insurance benefits for substantially all domestic-retired
employees. Baxter International, Inc. recorded net postretirement benefits
costs of $16,000,000, $16,000,000 and $18,000,000 during the years ended
December 31, 1994, 1995 and 1996, respectively, and an accrued postretirement
benefit liability of $273,000,000 and $268,000,000 as of December 31, 1995 and
1996, respectively. The value of the accumulated postretirement benefit
obligation at December 31, 1995 and 1996 assumed a 7.25% and an 8.0% discount
rate, respectively. The assumed health care cost trend rate used in measuring
the accumulated postretirement benefit obligation was 10.0% in 1997, gradually
declining to 5.0% after five years. The effect of increasing the health care
cost trend rate by one percentage point in each year would increase the
accumulated postretirement benefit obligation by $28,000,000 at December 31,
1996 and the net periodic cost by $3,000,000 for the year. The Business'
allocated portion of net postretirement benefit costs was $149,000, $148,000
and $217,000 in 1994, 1995 and 1996, respectively. The Business has not
recorded a postretirement benefit liability in the accompanying financial
statements.
(9) DOMESTIC AND FOREIGN OPERATIONS
The Business is engaged in a single industry, the development, manufacture,
marketing and distribution of specialized instruments used in ex-vivo cell
research and therapies. The Business' customers are concentrated in the United
States and Europe and no single customer accounts for a significant amount of
the Business' sales.
Information related to domestic and foreign operations is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Sales:
United States.................. $ 6,513,000 $ 5,800,000 $ 5,254,000
Europe......................... 9,541,000 12,762,000 13,114,000
Other.......................... 3,648,000 4,002,000 5,579,000
------------ ------------ ------------
Total.......................... $ 19,702,000 $ 22,564,000 $ 23,947,000
============ ============ ============
Operating income (loss):
United States.................. $(30,265,000) $(31,661,000) $(31,249,000)
Europe......................... (8,023,000) (6,654,000) (4,822,000)
Other.......................... 415,000 204,000 427,000
------------ ------------ ------------
Total.......................... $(37,873,000) $(38,111,000) $(35,644,000)
============ ============ ============
Identifiable assets at end of
year:
United States.................. $ 11,636,000 $ 12,335,000 $ 16,729,000
Europe......................... 10,353,000 14,004,000 11,380,000
Other.......................... 724,000 1,366,000 4,329,000
------------ ------------ ------------
Total.......................... $ 22,713,000 $ 27,705,000 $ 32,438,000
============ ============ ============
</TABLE>
F-11
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994, 1995 AND 1996
(10) COMMITMENTS AND CONTINGENCIES
Litigation
The Company is involved in certain litigation arising in the ordinary course
of business. The potential outcome of the litigation cannot be predicted with
certainty. However, management believes that the loss, if any, resulting from
the litigation, would not be material to the financial statements of the
Business.
Operating Leases
The Business leases certain of its facilities and equipment under various
noncancelable operating leases expiring through November 2004.
Total rental expense for all operating leases, excluding allocations from
Baxter, was approximately $1,200,000, $1,008,000 and $1,021,000 for the years
ended December 31, 1994, 1995 and 1996, respectively.
At December 31, 1996, the future minimum payments under noncancelable leases
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1997......................................................... $ 859,000
1998......................................................... 828,000
1999......................................................... 736,000
2000......................................................... 674,000
2001......................................................... 670,000
Thereafter................................................... 1,955,000
----------
$5,722,000
==========
</TABLE>
(11) BUSINESS EQUITY
Business equity represents Baxter's ownership interest in the recorded net
assets of the Business. All cash transactions and intercompany transactions
with Baxter are reflected in this amount. A summary of the activity is as
follows:
<TABLE>
<S> <C>
Balance at December 31, 1993................................ $ 13,166,000
Net loss.................................................... (37,867,000)
Net intercompany activity................................... 41,355,000
------------
Balance at December 31, 1994................................ 16,654,000
Net loss.................................................... (39,538,000)
Net intercompany activity................................... 44,800,000
------------
Balance at December 31, 1995................................ 21,916,000
Net loss.................................................... (33,240,000)
Net intercompany activity................................... 36,653,000
------------
Balance at December 31, 1996................................ $ 25,329,000
============
</TABLE>
F-12
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND JUNE 30, 1997
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, 1996 1997
----------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash........................................... $ 35,000 $ 17,000
Accounts receivable, less allowance for
doubtful accounts of $71,000 at December 31,
1996 and $59,000 at June 30, 1997............. 6,019,000 4,354,000
Due from related parties....................... 529,000 400,000
Other receivables.............................. 1,788,000 1,122,000
Inventories.................................... 8,523,000 7,717,000
Prepaid expenses and other current assets...... 131,000 501,000
----------- -----------
Total current assets......................... 17,025,000 14,111,000
Property and equipment, net...................... 11,808,000 15,272,000
Other assets..................................... 3,605,000 4,374,000
----------- -----------
Total assets................................. $32,438,000 $33,757,000
=========== ===========
LIABILITIES AND BUSINESS EQUITY
Current liabilities:
Accounts payable............................... $ 2,428,000 $ 1,810,000
Due to related parties......................... 658,000 368,000
Accrued expenses and other current
liabilities................................... 4,023,000 2,408,000
----------- -----------
Total current liabilities.................... 7,109,000 4,586,000
Commitments and contingencies
Business equity.................................. 25,329,000 29,171,000
----------- -----------
Total liabilities and business equity........ $32,438,000 $33,757,000
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
F-13
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996, AND 1997
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Revenue............................................ $ 11,915,000 $ 7,816,000
Cost of goods sold................................. 5,456,000 5,506,000
------------ ------------
Gross profit..................................... 6,459,000 2,310,000
------------ ------------
Operating expenses:
Research and development......................... 17,409,000 12,069,000
Sales, general and administrative................ 6,597,000 5,429,000
------------ ------------
Total operating expenses......................... 24,006,000 17,498,000
------------ ------------
Operating loss................................... (17,547,000) (15,188,000)
------------ ------------
Other Income:
Gain on sale of Therasorb assets................. 651,000 --
Other, net....................................... 19,000 287,000
------------ ------------
Total other income............................... 670,000 287,000
------------ ------------
Net loss......................................... $(16,877,000) $(14,901,000)
============ ============
</TABLE>
See accompanying notes to unaudited financial statements.
F-14
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.......................................... $(16,877,000) $(14,901,000)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization.................... 1,608,000 1,723,000
Gain on sale of Therasorb assets................. (651,000) --
Changes in assets and liabilities:
Accounts receivable.............................. 2,697,000 1,665,000
Due from related parties......................... (176,000) (129,000)
Other receivables................................ (3,171,000) 666,000
Inventories...................................... 1,949,000 806,000
Prepaid expenses and other assets................ (179,000) (370,000)
Accounts payable................................. (998,000) (618,000)
Due to related parties........................... 630,000 (290,000)
Accrued expenses and other current liabilities... 40,000 (1,615,000)
------------ ------------
Net cash used in operating activities............ (15,128,000) (12,805,000)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment............... (882,000) (1,521,000)
Purchases of other assets......................... (368,000) (861,000)
------------ ------------
Net cash used in investing activities............ (1,250,000) (5,956,000)
------------ ------------
Cash flows from financing activities--financing
from parent....................................... 16,399,000 15,169,000
------------ ------------
Net cash provided by financing activities........ 16,399,000 15,169,000
------------ ------------
Net increase in cash............................. 21,000 (18,000)
Cash at beginning of period........................ 13,000 35,000
------------ ------------
Cash at end of period.............................. $ 34,000 $ 17,000
============ ============
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest......................................... -- --
Income taxes..................................... $ -- $ --
============ ============
</TABLE>
Supplemental disclosure of noncash financing and investing activities:
In the second quarter of 1997, Baxter transferred leasehold improvements
and equipment with a net book value of $3,574,000 to the Business.
See accompanying notes to unaudited financial statements.
F-15
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1996 AND 1997
The unaudited financial statements as of June 30, 1997 and for the six month
periods ended June 30, 1996 and 1997 included herein have been prepared by the
Business, and in the opinion of management, reflect all adjustments that are
necessary to fairly state the financial position of the Business and its cash
flows and the results of its operations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, the Business believes that the disclosures are adequate to prevent
the information presented from being misleading. These financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Business' annual report for the year ended December
31, 1996.
(1) BASIS OF PRESENTATION
General
The Immunotherapy Division of Baxter Biotech (the Business) is a division of
Baxter Healthcare Corporation (Baxter), which is a subsidiary of Baxter
International, Inc. The Business is engaged in the development, manufacture,
marketing and distribution of specialized instruments used in ex-vivo cell
research and therapies.
Historically, the Business had no separate legal status. The accompanying
financial statements have been prepared from the historical accounting records
as if the Business had operated as a separate entity during all periods
presented.
The financial statements include all of the direct operating expenses of the
Business and allocations of certain shared administrative services costs from
Baxter. Expenses are allocated on the basis of actual usage or other methods,
which approximate actual usage. Management believes that the allocation
methods are reasonable. However, these allocations are not necessarily
indicative of the costs and expenses that would have resulted if the Business
had been operated as a separate entity.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
(net realizable value).
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives which range from 3 to
11 years. Leasehold improvements are amortized using the straight-line method
over the estimated useful life or the lease term, whichever is shorter.
License Agreements
License agreements are recorded at cost and are amortized using the
straight-line method over the shorter of the estimated useful lives of the
license or the license term. These costs are included with other assets in the
accompanying balance sheets.
F-16
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
JUNE 30, 1996 AND 1997
Financial Instruments
The carrying value of financial instruments such as cash, accounts
receivable, other current assets, accounts payable and other current
liabilities approximates their fair value due to the short-term nature of
these instruments.
Revenue Recognition
Revenue and related cost of goods sold are recognized upon shipment of
products.
Research and Development Costs
Research and development costs are charged to expense as incurred.
Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Business adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," on January 1, 1996. SFAS No. 121
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount
of an asset to future net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amounts of the assets exceed
their fair values. Assets to be disposed of are reported at the lower of the
carrying amount or fair value less costs to sell. Adoption of this statement
did not have a material impact on the Business' financial position or results
of operations.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which defines a fair-value
method of accounting for stock-based awards. As permitted by SFAS No. 123, the
Business elected to continue to follow existing accounting requirements for
stock options and other stock-based awards contained in Accounting Principles
Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees."
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
F-17
<PAGE>
IMMUNOTHERAPY DIVISION OF BAXTER BIOTECH
(A DIVISION OF BAXTER HEALTHCARE CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
JUNE 30, 1996 AND 1997
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
(3) DISCONTINUED OPERATIONS
In February 1996, the Business sold the assets of its "Therasorb" product
line and on January 1, 1997, the Business transferred the assets of its
"Collections" product line to another Baxter division.
(4) INCOME TAXES
The Business has not recorded income tax expense or benefit for the six
months ended June 30, 1996 and 1997. On a separate return basis, the losses
incurred during those periods would give rise to net operating loss
carryforwards and related deferred tax assets. Due to the uncertainty of
ultimate utilization of those carryforwards on a separate-return basis, the
Business has recorded valuation allowances for the full amounts of those
deferred tax assets. The tax effect of other temporary differences that give
rise to deferred tax liabilities are not material.
The Business, on a stand-alone basis, would have a net operating loss
carryforward for Federal income tax purposes. However, since the Business has
been included in the consolidated tax filings of Baxter, its prior losses have
been utilized in the Baxter consolidated tax returns. As such, should the
Business actually file separate tax returns in the future, no net operating
losses would be available.
(5) CONTINGENCIES
The Business is involved in certain litigation arising in the ordinary
course of business. The potential outcome of the litigation cannot be
predicted with certainty. However, management believes that the loss, if any,
resulting from the litigation, would not be material to the financial
statements of the Business.
(6) BUSINESS EQUITY
Business equity represents Baxter's ownership interest in the recorded net
assets of the Business. All cash transactions and intercompany transactions
with Baxter are reflected in this amount.
(7) ASSET PURCHASE AGREEMENT
On June 12, 1997, the Business signed a letter of intent with VIMRX
Pharmaceuticals Inc. (VIMRX) to form a new company.
Pursuant to the definitive asset purchase agreement dated October 10, 1997,
certain of the assets of the Business will be transferred to a new company,
yet to be named, in which VIMRX will hold a majority ownership (80.5%) and
Baxter will hold a minority ownership (19.5%). VIMRX will issue to Baxter 11
million shares of common stock and convertible preferred shares with a nominal
value of $40 million. To the extent the 11 million shares of common stock are
worth less than $50 million at the time of closing (based upon the average of
the per share closing prices for the 15 trading days ending five days prior to
the closing date), Baxter will receive additional convertible preferred
shares. The conversion price for the preferred shares will be determined
according to the closing prices of VIMRX's common stock within the 18 month
period following the closing of the transaction, subject to a floor of $5.50
per share and a ceiling of $7.50 per share. Baxter will purchase $30 million
and VIMRX will purchase $10 million of the new company's 6 1/2% subordinated
debentures to provide initial operating funds. The new company will pay Baxter
milestone payments, related to regulatory approvals, of up to $21 million over
several years. Baxter will retain its exclusive license to the CD34 antibody
used in selection technology and sublicense it to the new company. Baxter will
have one representative on the new company's board of directors and one
representative on VIMRX's board of directors. The closing is subject, among
other conditions, to regulatory approval and the approval by the stockholders
of VIMRX, which is anticipated to occur in the fourth quarter of 1997.
F-18
<PAGE>
VIMRX PHARMACEUTICALS INC.
UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1996 and the six month period ended June 30, 1997 set
forth in this report gives effect to the Acquisition as if it had occurred on
January 1, 1996. The unaudited pro forma condensed combined balance sheet at
June 30, 1997 gives effect to the Acquisition as if it had occurred on June 30,
1997. The pro forma condensed combined statement of operations excludes material
non-recurring charges related to purchased in-process research and development
which totaled approximately $40.1 million.
For accounting purposes, the Acquisition was treated as a purchase.
Accordingly, for purpose of these unaudited pro forma condensed combined
statements of operations, the excess of the purchase price over the fair market
value of the acquired assets is amortized over 12 years.
The unaudited pro forma condensed combined financial statements have been
prepared by the Company's management based upon the financial statements of the
Division and the Company included elsewhere herein. Unaudited pro forma
financial data do not purport to be indicative of either the future results of
operations or the results of operations that would have occurred if the
Acquisition had been consummated on the indicated dates. The pro forma
adjustments are based on available information and certain assumptions that the
Company believes to be reasonable. The unaudited pro forma condensed combined
financial statements should be read in conjunction with the audited financial
statements contained elsewhere herein.
F-19
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1997
<TABLE>
<CAPTION>
HISTORICAL BAXTER
HISTORICAL IMMUNOTHERAPY PRO FORMA PRO FORMA
VIMRX DIVISION ADJUSTMENTS COMBINED
------------ ----------------- ------------ ------------
ASSETS
<S> <C> <C> <C> <C>
Cash and cash
equivalents............ $ 2,445,000 $ 17,000 $ (17,000)(1) $ 32,445,000
30,000,000 (5)
Securities held for
sale................... 34,372,000 -- -- 34,372,000
Receivables............. -- 5,876,000 (5,876,000)(1) --
Inventory............... -- 7,717,000 (3,224,000)(1) 7,093,000
2,600,000 (4)
Prepaid expenses and
other.................. 246,000 501,000 (95,000)(1) 652,000
------------ ----------- ------------ ------------
Total current assets.. 37,063,000 14,111,000 23,388,000 74,562,000
Equipment, net.......... 3,096,000 15,272,000 (6,310,000)(1) 16,919,000
4,861,000 (4)
Marketable equity secu-
rities................. 286,000 -- -- 286,000
Intangible assets....... -- 4,273,000 (3,415,000)(1) 2,985,000
2,127,000 (4)
Goodwill................ 1,030,000 -- 25,597,000 (4) 26,627,000
Patents................. -- -- 2,737,000 (4) 2,737,000
Workforce............... -- -- 3,140,000 (4) 3,140,000
Other assets............ 292,000 101,000 (101,000)(1) 292,000
------------ ----------- ------------ ------------
Total assets......... 41,767,000 33,757,000 52,024,000 127,548,000
============ =========== ============ ============
<CAPTION>
LIABILITIES
<S> <C> <C> <C> <C>
Accounts payable and ac-
crued expenses......... $ 1,845,000 4,218,000 $ (4,218,000)(1) $ 3,545,000
1,700,000 (3)
Related party payables.. -- 368,000 (368,000)(1) --
Term note payable-
warrantholder.......... 36,000 -- -- 36,000
Capital leases-current
portion................ 472,000 -- -- 472,000
------------ ----------- ------------ ------------
Total current
liabilities.......... 2,353,000 4,586,000 (2,886,000) 4,053,000
Term note payable-
warrantholders......... 227,000 -- -- 227,000
Capital leases.......... 292,000 -- -- 292,000
Convertible debt........ -- -- 30,000,000 (5) 30,000,000
------------ ----------- ------------ ------------
Total liabilities.... 2,872,000 4,586,000 27,114,000 34,572,000
------------ ----------- ------------ ------------
Minority interest....... 1,035,000 -- 2,870,000 (4) 3,905,000
------------ ----------- ------------ ------------
<CAPTION>
SHAREHOLDERS EQUITY
<S> <C> <C> <C> <C>
Class A Convertible Pre-
ferred Stock........... -- -- 54,580,000 (3) 54,580,000
Common Stock............ 55,000 -- 11,000 (3) 66,000
Additional paid-in capi-
tal.................... 90,649,000 -- 36,709,000 (3) 127,358,000
Business equity......... -- 29,171,000 (14,452,000)(1) --
(14,719,000)(4)
Unearned compensation... (534,000) -- -- (534,000)
Unrealized gain on in-
vestment............... (167,000) -- -- (167,000)
Cumulative translation
adjustment............. (65,000) -- -- (65,000)
Deficit accumulated dur-
ing development stage.. (52,078,000) -- (40,089,000)(4) (92,167,000)
------------ ----------- ------------ ------------
Total shareholder's
equity............... 37,860,000 29,171,000 22,040,000 89,071,000
------------ ----------- ------------ ------------
$ 41,767,000 $33,757,000 $ 52,024,000 $127,548,000
============ =========== ============ ============
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
F-20
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL
BAXTER
HISTORICAL IMMUNOTHERAPY PRO FORMA PRO FORMA
VIMRX DIVISION ADJUSTMENTS COMBINED
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenue................. $ -- $ 23,947,000 $(17,527,000)(1)(2) $ 6,420,000
Cost of goods sold...... -- 11,638,000 (5,290,000)(1)(2) 8,948,000
2,600,000 (4)
------------ ------------ ------------ ------------
Gross profit (loss).. -- 12,309,000 (14,837,000) (2,528,000)
------------ ------------ ------------ ------------
Operating expenses:
Research and develop-
ment................... 2,950,000 34,699,000 (3,332,000)(1)(2) 34,803,000
486,000 (4)
Purchased research and
development............ 14,484,000 -- -- 14,484,000
Royalty expense......... 100,000 -- -- 100,000
Goodwill amortization... -- -- 2,622,000 (4) 2,622,000
General and administra-
tive................... 4,300,000 13,254,000 (10,643,000)(1)(2) 6,911,000
------------ ------------ ------------ ------------
Total operating ex-
penses.............. 21,834,000 47,953,000 (10,867,000) 58,920,000
------------ ------------ ------------ ------------
Operating (loss)........ (21,834,000) (35,644,000) (3,970,000) (61,448,000)
------------ ------------ ------------ ------------
Other (income) expenses:
Minority interest in net
loss of consolidated
subsidiary............. (116,000) -- (6,999,000)(4) (7,115,000)
Interest income......... (1,792,000) -- -- (1,792,000)
Interest expense........ 329,000 -- 1,950,000 (5) 2,279,000
Gain on sale of
Therasorb assets....... -- (651,000) 651,000 (1) --
Other, net.............. (395,000) (1,753,000) 1,788,000 (1) (360,000)
------------ ------------ ------------ ------------
Total other (income) ex-
penses................. (1,974,000) (2,404,000) (2,610,000) (6,988,000)
------------ ------------ ------------ ------------
Net (loss).............. (19,860,000) (33,240,000) (1,360,000) (54,460,000)
Preferred Stock divi-
dends.................. -- -- (4,657,000)(6) (4,657,000)
------------ ------------ ------------ ------------
Net loss applicable to
Common Stock........... $(19,860,000) $(33,240,000) $ (6,017,000) $(59,117,000)
============ ============ ============ ============
Pro forma weighted aver-
age number of shares
outstanding............ 39,398,644 11,400,000 (3) 50,798,644
============ ============ ============
Net loss per share...... $ (0.50) $ (1.16)
============ ============
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
F-21
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
HISTORICAL BAXTER
HISTORICAL IMMUNOTHERAPY PRO FORMA PRO FORMA
VIMRX DIVISION ADJUSTMENTS COMBINED
----------- ----------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue................. $ -- $ 7,816,000 $(2,759,000)(1)(2) $ 5,057,000
Cost of goods sold...... -- 5,506,000 349,000 (1)(2) 5,855,000
----------- ------------ ----------- ------------
Gross profit (loss)... -- 2,310,000 (3,108,000) (798,000)
----------- ------------ ----------- ------------
Operating expenses:
Research and develop-
ment................... 6,714,000 12,069,000 (225,000)(1)(2) 18,801,000
243,000 (4)
Purchased research and
development............ 1,800,000 -- -- 1,800,000
Royalty expense......... 100,000 -- -- 100,000
Goodwill amortization... -- -- 1,312,000 (4) 1,312,000
General and administra-
tive................... 4,128,000 5,429,000 (4,324,000)(1)(2) 5,233,000
----------- ------------ ----------- ------------
Total operating ex-
penses............... 12,742,000 17,498,000 (2,994,000) 27,246,000
----------- ------------ ----------- ------------
Operating (loss)........ (12,742,000) (15,188,000) (114,000) (28,044,000)
----------- ------------ ----------- ------------
Other (income) expenses:
Minority interest in net
loss of consolidated
subsidiary............. (1,876,000) -- (2,815,000)(4) (4,691,000)
Interest income......... (1,282,000) -- -- (1,282,000)
Interest expense 83,000 -- 975,000 (5) 1,058,000
Other, net.............. 40,000 (287,000) -- (247,000)
----------- ------------ ----------- ------------
Total other (income) ex-
penses................. (3,035,000) (287,000) (1,840,000) (5,162,000)
----------- ------------ ----------- ------------
Net (loss).............. (9,707,000) (14,901,000) 1,726,000 (22,882,000)
Preferred Stock divi-
dends.................. -- -- (2,329,000)(6) (2,329,000)
----------- ------------ ----------- ------------
Net loss applicable to
Common Stock........... $(9,707,000) $(14,901,000) $ (603,000) $(25,211,000)
=========== ============ =========== ============
Pro forma weighted aver-
age number of shares
outstanding............ 54,626,741 11,400,000 (3) 66,026,741
=========== =========== ============
Net loss per share...... $ (0.18) $ (0.38)
=========== ============
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
F-22
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Certain assets, the existing liabilities and the operations of the
"Collections" and Therasorb product lines of the Division were not acquired
by the Subsidiary and have been eliminated.
2. Concurrent to the Proposed Acquisition, the Subsidiary will enter into
various agreements with Baxter under which Baxter will provide certain
manufacturing, supply, marketing and administrative services. The charges
from Baxter related to these agreements have been reflected as a reduction
in revenues, an increase in cost of sales and a reduction in general and
administrative expenses.
3. Pursuant to the asset purchase agreement, the Company will issue 11,000,000
shares of Common Stock, 40,000 shares of Class A Preferred Stock and
additional shares of Class A Preferred Stock valued at $1,000 per share to
total, together with the Common Stock, $50,000,000. Based on the June 30,
1997 closing sale price of $3.22 as reported on the Nasdaq National Market,
an additional 14,580 shares of Class A Preferred Stock would be issued. The
Company will also issue approximately 400,000 shares of Common Stock to
Lazard Freres as part of the consideration for their services.
4. The purchase price was allocated to inventory, the net tangible assets,
goodwill and purchased in-process research and development which has been
charged to operations. The purchased in-process research and development of
$40.1 million has been deemed to be non-recurring and directly attributable
to the acquisition and accordingly has been excluded from the pro forma
results of operations. The purchased in-process research and development
will be expensed in the period the transaction is consummated. The
Subsidiary's Common Stock is eliminated and minority interest is
established. Goodwill is being amortized on a straight line basis over a
period of expected benefit of approximately 12 years.
5. Baxter will purchase $30,000,000 of convertible debentures of the
Subsidiary's 6 1/2% subordinated debentures. The $10,000,000 convertible
debenture purchased by the Company will eliminate in consolidation and,
therefore, is not recorded.
6. To reflect preferred stock dividends which accumulate at a rate of 6%.
7. The Subsidiary also will issue a warrant to Baxter to purchase an
additional 6% of the Subsidiary's common stock for $6,000,000.
F-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
VIMRx Pharmaceuticals Inc.
By:/s/ Francis M. O'Connell
------------------------
Francis M. O'Connell
Chief Accounting Officer
6
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
VIMRX PHARMACEUTICALS INC.
BAXTER HEALTHCARE CORPORATION
AND
BIT ACQUISITION CORP.
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made this 10th day of October, 1997, by and among
BAXTER HEALTHCARE CORPORATION, a Delaware corporation with offices at 1627
Lake Cook Road, Deerfield, Illinois 60015 (the "Seller"), VIMRx
PHARMACEUTICALS INC., a Delaware corporation with offices at 2751 Centerville
Road, Suite 210, Wilmington, Delaware 19808 ("VIMRx") and BIT ACQUISITION
CORP., a Delaware corporation with offices at 2751 Centerville Road, Suite
210, Wilmington, Delaware 19808 (the "Buyer").
WHEREAS, the Seller currently operates a business segment known as the
Immunotherapy Division of its Biotech Business Group (the "Division");
WHEREAS, the business in which the Division is engaged is the ex vivo cell
therapy business described in Exhibit A attached hereto (such business being
hereinafter referred to as the "Business");
WHEREAS, the Seller and VIMRx desire to enter into a strategic alliance by
engaging in the Business through the Buyer, which is currently a wholly-owned
subsidiary of VIMRx;
WHEREAS, the strategic alliance will be created pursuant to the sale and
transfer or license of certain technology relating to the use of cells for the
treatment, mitigation or prophylaxis of diseases, including research into such
activities, together with certain other property related to the manufacture,
use and sale of the products of the Business;
WHEREAS, as a condition to the obligations of the parties under this
Agreement, the parties will enter into, among other things, manufacturing and
supply agreements for the manufacture and supply of the Isolex(R) and
Maxsep(R) Products (as hereinafter defined), certain antibodies and other
components of the Isolex(R) and Maxsep(R) Products and certain other products
of the Business; certain license agreements to grant the right to use certain
technology relating to the Business; the Distribution Agreement (as
hereinafter defined) providing for the marketing, sales and distribution of
the Isolex(R) and Maxsep(R) Products and certain other products of the
Business; and the Services Agreement (as hereinafter defined) relating to the
provision, by the Seller to the Buyer, of certain Business-related services
previously supplied by other divisions of the Seller to the Division;
WHEREAS, to that end, the Seller desires, among other things, to have the
Buyer acquire, and the Buyer desires to acquire, the Assets (as hereinafter
defined); and
WHEREAS, the parties wish to set forth their agreement with respect to the
purchase and the sale of such Assets and a mutual investment in the Buyer;
NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained, the parties agree as follows:
1.Definitions and Interpretation.
1.1 Definitions. Capitalized terms used herein shall have the following
meanings:
"Acquired Securities" shall mean the VIMRx Common Stock, VIMRx Preferred
Stock, Buyer Common Stock and the Warrant acquired by the Seller pursuant to
Section 2.2, together with the Buyer Convertible Debentures acquired by the
Seller pursuant to Section 8.3(B).
"Actions" shall mean claims, actions, suits, audits, proceedings or
investigations, whether at law, in equity or admiralty, and whether or not
before any Tribunal or any Authority.
"Affiliate" shall mean, with respect to any party, any entity (i) which
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, the party or (ii) fifty
percent
1
<PAGE>
(50%) or more of the voting capital stock (or in the case of an entity which
is not a corporation, fifty percent (50%) or more of the equity interest) of
which is beneficially owned or held by a party or any of such party's
Subsidiaries.
"Affiliated Transaction" shall mean, in respect of any Person, any
transaction, or series of similar transactions, or any currently proposed
transaction, to which such Person is a party, in which the amount involved
exceeds $60,000 and in which any Affiliate of such Person had, or will have, a
direct or indirect material interest (but excluding, in any event,
transactions, between divisions of the same Person and transactions between a
Person and any consolidated subsidiary of such Person).
"Aggregate Agreed Value" shall have the meaning assigned thereto in Section
2.2(C).
"Agreed Value" shall mean the average of the closing sale prices of VIMRx
Common Stock on the 15 trading days preceding, but not including, the date
falling five days prior to the Closing Date, as reported by Nasdaq.
"Antibody Manufacturing and Storage Agreement" shall mean the Antibody
Manufacturing and Storage Agreement substantially in the form annexed hereto
as Exhibit B.
"Assets" shall mean the assets set forth or described in Schedule 2.1.
"Assigned Contracts" shall have the meaning assigned thereto in Exhibit C.
"Assignment of Parker Lease" shall mean an assignment document assigning to
the Buyer the lease relating to the Parker Facility, the form and content of
which shall be reasonably satisfactory to the Buyer.
"Assumed Liabilities" shall have the meaning assigned thereto in Exhibit C.
"Authority" shall mean any Federal, state, municipal, foreign or other
government or governmental department, commission, board, bureau, agency or
instrumentality.
"BDG" shall mean Baxter Deutschland GmbH, an indirect subsidiary of an
Affiliate of the Seller.
"Business" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Business Day" shall mean any day other than (a) a Saturday or Sunday or (b)
a day on which commercial banks in Illinois, New York or Delaware are
authorized or required by law to close.
"Buyer" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Buyer Common Stock" shall mean the common stock of the Buyer, $.001 par
value per share.
"Buyer Convertible Debentures" shall mean each or all, as the context may
require, of (i) the convertible debenture issued by the Buyer to the Seller,
in the forms annexed hereto as Exhibits D and E, and/or (ii) the convertible
debenture issued by the Buyer to VIMRx, in the form annexed hereto as Exhibit
F.
"Buyer Liabilities" shall have the meaning assigned thereto in Section
2.5(C).
"Cambes" shall mean Cambes, Ltd., a Delaware corporation.
"Cash Position" shall mean, in respect of the Buyer and as of the date of
determination, (1) the total amount of cash, cash equivalents and short-term
investments owned by the Buyer minus (2) the then total outstanding principal
amount of the Buyer's indebtedness to the Seller for borrowed sums.
"CellPro" shall mean CellPro, Inc., a Delaware corporation.
2
<PAGE>
"CellPro Litigation" shall have the meaning assigned thereto in Section
16.1.
"Chiron Collaboration Agreement" shall mean that certain Collaboration
Agreement, dated as of December 27, 1996, between Chiron Corporation and the
Seller.
"Chiron Sublicense" shall mean that certain sublicense from the Seller to
the Buyer relating to breast cancer antibodies licensed from Cetus Oncology
Corporation, d/b/a/ Chiron Therapeutics, to the Seller, in substantially the
form annexed hereto as Exhibit G.
"Class A Assets" shall have the meaning assigned thereto in Schedule 2.1.
"Class B Assets" shall have the meaning assigned thereto in Schedule 2.1.
"Closing Date" shall have the meaning assigned thereto in Section 2.6.
"Closing" shall have the meaning assigned thereto in Section 2.6.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Non-Competition and Confidentiality Agreement" shall mean the Non-
Competition and Confidentiality Agreement between the Seller and the Buyer
substantially in the form annexed hereto as Exhibit H.
"Contaminants" shall mean any material, pollutant, substance or waste which
is defined in, regulated by, or subject to any Environmental Law, including
asbestos and asbestos containing materials.
"Control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of an entity
(other than a natural person), whether through the ownership of voting capital
stock, by contract or otherwise.
"Controlled Subsidiary" shall mean, with respect to any Person, any other
Person in which such first Person owns, directly or indirectly, 50% or more of
the outstanding equity interest.
"Conversion Securities" shall mean any VIMRx Common Stock or Buyer Common
Stock issuable upon conversion or exercise of certain Acquired Securities.
"Copyrights" shall mean United States and foreign copyrights, whether
registered or unregistered.
"Customized Software" shall mean all Software owned by, licensed to or used
by the Seller in connection with the Division, other than Shrinkwrap Software.
"Data Room" shall mean Room 313 at the Parker Facility.
"Disclosure Period" shall mean the period commencing on the date hereof and
ending at 5:00 p.m. (Eastern time) on the date falling 14 days after (but not
including) the date hereof; provided, however, that in the event that such
14th day shall not be a Business Day, the Disclosure Period shall instead end
at 5:00 p.m. (Eastern time) on the next succeeding Business Day.
"Distribution Agreement" shall mean the Marketing, Sales and Distribution
Agreement substantially in the form annexed hereto as Exhibit I.
"Division" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Dorken Sublicense" shall mean that certain sublicense from BDG to the Buyer
relating to "B" cells licensed from Prof. Bernd Dorken to BDG in substantially
the form annexed hereto as Exhibit J.
3
<PAGE>
"Encumbrance" shall mean any lien, charge, security interest, encumbrance or
claim, whether legal or equitable.
"Environmental Laws" shall mean any and all laws, statutes, codes, rules,
regulations, ordinances, orders, writs, decrees and injunctions of any
Authority relating to the protection or pollution of the environment, or
community health and safety, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act and the
Hazardous and Solid Waste Amendments, the Clean Air Act, the Clean Water Act,
the Toxic Substances Control Act, the Safe Drinking Water Act and any similar
or analogous statutes, regulations and decisional law of any Authority.
"Epstein Opinion" shall mean the opinion of Epstein Becker & Green, P.C.
with respect to this Agreement and the transactions contemplated hereby, the
form and content of which shall be negotiated after the execution and delivery
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Benefit Plans" shall mean any (i) "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), (ii) "multiemployer plan" (as
such term is defined in Section 3(37) of ERISA), or (iii) "welfare benefit
plan" (as such term is defined in Section 3(1) of ERISA).
"Excepted Obligations" shall mean the obligations set forth or described in
subsection 2 of Exhibit C.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Execution Schedule" shall mean that certain disclosure schedule (composed
of various sections) which is being delivered by the Seller to the Buyer in
connection herewith, but which is not an attachment to the Agreement. In all
other respects, references in this Agreement to "Schedules" shall be deemed
also to refer to the Execution Schedule.
"FDA" shall mean the U.S. Food and Drug Administration.
"First BD License" shall have the meaning assigned thereto in Section 16.1.
"First BD Sublicense" shall mean that certain sublicense, from the Seller to
the Buyer relating to CD34+ cell population and related antibody and method
patents licensed from Becton, Dickinson and Company to the Seller, in
substantially the form annexed hereto as Exhibit K.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, applied on a consistent basis.
"Hardware and Disposables Manufacturing Agreement" shall mean that certain
Hardware and Disposables Manufacturing Agreement between the Buyer and the
Seller substantially in the form annexed hereto as Exhibit L.
"Hardware and Disposables Supply Agreement" shall mean that certain Hardware
and Disposables Supply Agreement between the Buyer and the Seller
substantially in the form annexed hereto as Exhibit M.
"Hart-Scott" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"HHS" shall mean the United States Department of Health and Human Services.
4
<PAGE>
"Improvements" shall mean all buildings, structures and improvements located
on the Real Estate.
"Included Agreements" shall have the meaning assigned thereto in Schedule
2.1.
"Indemnified Party" shall have the meaning assigned thereto in Section 9.2.
"Indemnifying Party" shall have the meaning assigned thereto in Section 9.2.
"Information" shall mean confidential ideas, trade secrets, technology,
know-how, inventions (whether or not patentable) and improvements thereto,
concepts, methods, processes, formulae, reports, data, customer lists, mailing
lists, business plans, or other proprietary information.
"Innovir" shall mean Innovir Laboratories, Inc., a Delaware corporation.
"Innovir Common Stock" shall mean the common stock of Innovir, $.013 par
value per share.
"VIMRx Holdings" shall mean Innovir Holdings, Ltd., a Delaware corporation.
"VIMRx Holdings Common Stock" shall mean the common stock of Innovir
Holdings, $.01 par value per share.
"Innovir UK" shall mean Innovir Limited, an English private limited company.
"Innovir UK Ordinary Shares" shall mean the common shares of Innovir UK, one
pound par value per share.
"Innovir Germany" shall mean Innovir Gesellschaft fur die Entwicklung und
Synthese von Oligomeren mbH, a Gesellschaft mit beschrankter Halftung
organized under the laws of the Federal Republic of Germany.
"Innovir Preferred Stock" shall mean the Preferred Stock of Innovir, par
value $.06 per share, including Class B Preferred Stock and Preferred Stock
undesignated as to class or series.
"Intellectual Property" shall mean Copyrights, Patents, Trademarks,
Information and Software.
"Intellectual Property Right" shall mean any right possessed by any person
or entity which arises as a result of his or its ownership, license or use of,
or of any application for, or application for registration of, any
Intellectual Property.
"Inventory Entity" shall have the meaning set forth in Section 3.21 hereto.
"Isolex(R) and Maxsep(R) Technology" shall have the meaning assigned thereto
in the Hardware and Disposables Manufacturing Agreement.
"Isolex(R) and Maxsep(R) Products" shall have the meaning assigned thereto
in the Hardware and Disposables Manufacturing Agreement.
"KPMG" shall mean KPMG Peat Marwick LLP.
"Licenses" shall mean licenses, authorizations, authorities, approvals,
permits and certificates.
"Losses" shall mean liabilities, claims, losses, costs, damages, and
expenses (including without limitation, reasonable attorneys' fees and
expenses), whether incurred in connection with a claim, controversy or dispute
between the parties hereto or between a party hereto and one or more third
parties.
"Manufactured Products" shall mean (i) all Isolex(R) and Maxsep(R) Products
listed on Schedule I attached to the Hardware and Disposables Manufacturing
Agreement and all components thereof, in each case as currently
5
<PAGE>
produced by the Seller utilizing the Isolex(R) and Maxsep(R) Technology;
provided, however, that Manufactured Products shall not include those products
or components to be manufactured or supplied by the Seller under the Hardware
and Disposables Supply Agreement; (ii) all "Antibodies" (as that term is
defined in the Antibody Manufacturing and Storage Agreement) specified in
Schedule I attached to the Antibody Manufacturing and Storage Agreement, in
each case as currently produced by the Seller; and (iii) the products
currently used in the research and development program of the Business.
"Material Adverse Effect", with respect to the Seller, the Buyer or VIMRx,
means a material adverse effect, or the occurrence or existence of facts or
circumstances that would reasonably be expected to result in a material
adverse effect, on the business, assets, liabilities, results of operations,
properties, financial or operating condition of (i) the Division, in the case
of the Seller, (ii) VIMRx and its subsidiaries (other than the Buyer) taken as
a whole, in the case of VIMRx, and (iii) the Buyer and its subsidiaries, if
any, taken as a whole, in the case of the Buyer, or on the ability of any such
Person (and to the extent applicable, its subsidiaries) to consummate the
transactions contemplated hereunder.
"Milestone" shall mean each of the regulatory approval milestones set forth
on Exhibit N to this Agreement.
"Milestone Payment" shall mean each and any of the payments to be made to
the Seller pursuant to Section 6.2(A) to this Agreement.
"Munich Facility" shall mean the facility, located at Edisonstrasse 3-4 D-
85716 Unterschlessein, Germany, in which BDG currently conducts certain
operations on behalf of the Division.
"Nasdaq" shall mean the Nasdaq Stock Market.
"Net Projected Expenses" shall mean, in respect of the Buyer as of any given
Occurrence Date, the excess, if any, of (i) the total cash operating expenses
(excluding depreciation, amortization and similar non-cash items) projected by
the Buyer to be incurred by the Buyer during the 12-month period immediately
succeeding such Occurrence Date minus (ii) the total amount of revenue and
income, from whatsoever source, projected by the Buyer to be earned by the
Buyer during such 12-month period.
"NIH" shall mean the National Institutes of Health.
"Non-Assumed Liabilities" shall have the meaning assigned thereto in Section
2.5(A).
"Non-ERISA Plans" shall mean, in respect of any Person, each and every (i)
employee collective bargaining agreement, employment agreement (other than
employment agreements terminable by such Person without premium or penalty on
notice of 30 days or less under which the only monetary obligation of such
person is to make current wage or salary payments and provide current fringe
benefits), consulting, advisory or service agreement (as to the latter three,
where such person is the recipient of the services); deferred compensation
agreement, confidentiality agreement or covenant not to compete (other than
confidentiality agreements and covenants not to compete contained in
agreements which are required to be disclosed by such Person hereunder), (ii)
contract or agreement with any officer, director or employee (other than
employment agreements disclosed in response to clause (i) or excluded from the
scope of clause (i)), agent, or attorney-in-fact of such Person; or (iii)
stock option, stock purchase, bonus or other incentive plan or agreement.
"Occurrence Date" shall mean, with respect to any given Milestone, the date
on which such Milestone shall occur, if at all.
"Orders" shall mean any order, writ, injunction or decree of any Tribunal or
Authority.
"Owned Software" shall mean all Software owned by the Seller and used in the
Business of the Division.
6
<PAGE>
"Parker Facility" shall mean the facility, located at 9 Parker, Irvine,
California, in which the Division currently conducts certain of its
operations.
"Patents" shall mean United States and foreign patents, continuations,
continuations-in-part, divisions, reissues, reexaminations, extensions and
disclosures.
"Patent Rights" shall have the meaning assigned thereto in Section 16.1.
"Plan A Projections" shall mean the financial projections, relating to the
Buyer, which are included as Section 1 of the Execution Schedule.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business
for sums not yet due and payable, (c) liens on deposits or pledges to secure
obligations under workmen's compensation, social security or similar laws and
(d) other liens, encumbrance(s) or imperfections on property which are not
material in amount or do not materially detract from the value of or
materially impair the existing use of the property affected by such lien,
encumbrance(s) or imperfection.
"Person" shall mean any individual, corporation, partnership, limited
partnership, limited liability partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization,
Authority or other entity.
"Primary Licenses" shall mean the following agreements: (i) the License
Agreement between the Seller and Becton, Dickenson and Company, dated August
24, 1990 as amended on November 10, 1993 and March 30, 1995 (relating to CD34+
cell population and related antibody and method patents); (ii) the License
Agreement between the Seller and Becton, Dickenson and Company, dated June 1,
1993 (relating to "B" cell antibodies); (iii) the Non-Exclusive License
Agreement between the Seller and Cetus Oncology Corporation d/b/a Chiron
Therapeutics, dated March 28, 1996 (relating to breast cancer antibodies); and
(iv) the Agreement between BDG and Professor Bernd Dorken, dated October 20,
1994 (relating to "B" cells).
"Proxy Statement" shall have the meaning assigned thereto in Section 5.16.
"PTO" shall mean the United States Patent and Trademark Office.
"Purchase Consideration" shall have the meaning assigned thereto in Section
2.2.
"Real Property" shall have the meaning assigned thereto in Section 3.7(B).
"Registration Rights Agreement" shall mean the registration rights agreement
substantially in the form annexed hereto as Exhibit O.
"Representatives" shall mean, with respect to any Person, such Person's
officer's, directors, employees, independent contractors, agents and
representatives.
"Ribonetics" shall mean Ribonetics Gesellschaft fur molekulare therapie
GmbH, a Gesellschaft mit beschrankter Halftung organized under the laws of the
Federal Republic of Germany.
"Round Lake Facility" shall mean the facility, located at WG 2-3S Route 120
& Wilson Road, Round Lake, Illinois, in which the Division currently conducts
certain of its operations.
"Royalty Assignment and Agreement" shall mean the royalty assignment and
agreement substantially in the form annexed hereto as Exhibit P.
7
<PAGE>
"Saxholm Litigation" shall mean the certain litigation identified as Saxholm
AS v. Baxter Healthcare Corp., Civil Action No. 94 C 5408, which is pending in
the Northern District of Illinois, Eastern Division.
"SEC" shall mean the United States Securities and Exchange Commission.
"Second BD Sublicense" shall mean that certain sublicense, from the Seller
to the Buyer relating to "B" cell antibodies licensed from Becton, Dickenson
and Company to the Seller, in substantially the form annexed hereto as Exhibit
Q.
"SEC Reports" shall mean all forms, reports and documents required to be
filed with the SEC pursuant to the Securities Act or the Exchange Act.
"Section 14.2 Date" shall mean that date falling 21 days after (but not
including) the date hereof; provided, however, that in the event that such
21st day shall not be a Business Day, the Section 14.2 Date shall instead be
the next succeeding Business Day.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Services Agreement" shall mean an agreement between the Buyer and the
Seller, to be negotiated after the execution and delivery hereof, relating to
manufacturing, regulatory and other support services (other than those covered
by (i) the Hardware and Disposables Manufacturing Agreement, (ii) the
Distribution Agreement and (iii) the other Transaction Documents) which shall
provide, among other terms to be mutually agreed by the parties, for the
Seller to provide to the Buyer, at its fully-loaded cost, certain services (of
the type which are now rendered by the Seller in respect of the Division).
"Seyfarth Opinion" shall mean the opinion of Seyfarth, Shaw, Fairweather &
Geraldson with respect to this Agreement and the transactions contemplated
hereby, the form and content of which shall be negotiated after the execution
and delivery hereof.
"Shrinkwrap Software" shall mean all Software that is available in consumer
retail stores and subject to form shrinkwrap license agreements.
"Software" shall mean computer software programs and software systems,
including, without limitation, all database applications, compilations, tool
sets, compilers, higher level or "proprietary" languages, related
documentation and materials, whether in source code, object code or human
readable form as well as all Copyrights, if any, appurtenant thereto.
"Stockholders' Agreement" shall mean the stockholders' agreement between
VIMRx and the Seller substantially in the form annexed hereto as Exhibit R.
"Sublicenses" shall mean, collectively, the Chiron Sublicense, the Dorken
Sublicense and the First and Second BD Sublicenses.
"Subsidiary" shall mean, as to any party, any corporation of which more than
50% of the outstanding capital 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 party,
by one or more of its subsidiaries, or by the party and one or more of its
subsidiaries.
"Tax Return" shall mean, in respect of any Person, any report, statement,
return, declaration of estimated Tax or other information required to be
supplied by or on behalf of such Person to a Tax Authority in connection
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with Taxes, or with respect to grants of Tax exemption, including any
consolidated, combined, unitary, joint or other return filed by any person
that properly includes the income, deductions or other Tax information
concerning such Person.
"Taxes" shall mean all taxes, including all Federal, state, local, foreign
and other income, franchise, sales, use, property, payroll, stamp,
withholding, environmental, alternative or add-on minimum and other taxes,
assessments, charges, duties, fees, levies or other governmental charges of
any kind whatsoever, and all estimated taxes, deficiency assessments,
additions to tax, penalties and interest, and any contractual or other
obligation to indemnity or reimburse any person with respect to any such
assessment.
"Third Party Claim" shall mean, in respect of any party hereto, any claim,
or the commencement, or possible commencement, of any Action with respect to
which indemnification is or is reasonably likely to be claimed by such party
pursuant to Section 9.
"Trademarks" shall mean United States, state and foreign trademarks, service
marks, logos, trade dress and trade names, whether registered or unregistered.
"Transaction Documents" shall mean the following:
(i) the Distribution Agreement,
(ii) the Non-Competition and Confidentiality Agreement,
(iii) the Assignment of Parker Lease,
(iv) the Registration Rights Agreement,
(v) the First BD Sublicense,
(vi) the Second BD Sublicense,
(vii) the Dorken Sublicense,
(viii) the Chiron Sublicense,
(ix) the Stockholders' Agreement,
(x) the Services Agreement,
(xi) the Antibody Manufacturing and Storage Agreement,
(xii) the Royalty Assignment and Agreement,
(xiii) the Hardware and Disposables Manufacturing Agreement,
(xiv) the Hardware and Disposables Supply Agreement,
(xv) the Voting Agreement,
(xvi) and each of the other agreements, documents and instruments being, or
to be, executed in connection with the transactions contemplated
hereunder.
"Transactional Taxes" shall mean all sales, use, transfer, conveyance, bulk
transfer, business and occupation, value added or other such Taxes, duties,
excises or governmental charges imposed by any taxing jurisdiction.
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"Tribunal" shall mean any domestic or foreign court, arbitration board or
other tribunal.
"VGI" shall mean VIMRx Genomics, Inc., a Delaware corporation.
"VGI Common Stock" shall mean the common stock of VGI, $.01 par value per
share.
"VIMRx Common Stock" shall mean the common stock of VIMRx, $.001 par value
per share.
"VIMRx Preferred Stock" shall mean Series A Convertible Preferred Stock of
VIMRx, par value $.001, having rights, preferences and designations (including
a per share liquidation value of $1,000) as set forth on Exhibit S to this
Agreement.
"VIMRx" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Voting Agreement" shall mean that certain Voting Agreement, between the
Seller, VIMRx, Richard L. Dunning, Donald G. Drapkin, Laurence D. Fink,
Lindsay A. Rosenwald, M.D., Eric A. Rose, M.D. and Paramount Capital Asset
Management Inc. substantially in the form annexed hereto as Exhibit T.
"Warrant" shall mean a stock purchase warrant, substantially in the form
annexed hereto as Exhibit U, for the purchase of 6.383 additional shares of
the Buyer Common Stock (which number of shares, if issued at Closing, would
represent, immediately after issuance thereof, 6% of all issued and
outstanding Buyer Common Stock) at an aggregate exercise price of $6,000,000.
1.2 Interpretation.
(A)In respect of any of the Seller, the Buyer or VIMRx, the terms "to the
knowledge of" such Person and "awareness of" such party, and variations
thereof, shall be deemed to refer to the actual knowledge and/or awareness
(without any requirement of inquiry) of the Relevant Persons of such Party.
In respect of the Seller, the term "Relevant Persons" shall be deemed to
refer to (i) Victor W. Schmitt, John A. Osth, Michael J. Griffith, Dennis
E. Van Epps, Reiner Spaethe, Kristin Houser, Charles Nawrot, Kathy Carroll,
Donna Waldo, Michael Schiffer, Tim Anderson, Bruce Davis, Janice Guthrie,
Bradford Price, William C. Lake, Alan R. Hardwick, Debra Condino, Sarah
Bates, and (ii) any other person who, prior to the Closing Date, shall
succeed to the position or office now held by any of the foregoing persons
in (i). In respect of the Buyer, the term "Relevant Persons" shall be
deemed to refer to (i) Richard L. Dunning, L. William McIntosh, Francis M.
O'Connell, Lowell S. Lifschultz, Don M. Kerr and David A. Jackson, Ph.D.,
and (ii) any other person who, prior to the Closing Date, shall succeed to
the position or office now held by any of the foregoing persons in (i). In
respect of VIMRx, the term "Relevant Persons" shall be deemed to refer to
(i) Richard L. Dunning, L. William McIntosh, Francis M. O'Connell, Lowell
S. Lifschultz, Don M. Kerr, Richard E. Kouri, Ph.D., Thomas Sharpe, Ph.D.,
David Stern, M.D. and David A. Jackson, Ph.D., and (ii) any other person
who, prior to the Closing Date, shall succeed to the position or office now
held by any of the foregoing persons in (i).
(B)Whenever in this Agreement the phrase "in the ordinary course of
business" is used, it shall be construed as meaning "in the ordinary course
of business and substantially consistent with prior practice."
(C)Whenever in this Agreement the term "including" is used, it shall be
construed as meaning "including but not limited to."
(D)All accounting terms not specifically defined herein shall be
construed in accordance with GAAP in effect at the Closing.
(E)Whenever in this Agreement the term "agreement" is used, it shall be
deemed to refer to commitments, leases, licenses, contracts and agreements.
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(F)Whenever in this Agreement the term "party to" is used in regard to an
agreement, it shall be construed as meaning "party to or bound by".
(G)Notwithstanding anything to the contrary in this Agreement, in
connection with any representations or warranties relating to (i)
Manufactured Products to be acquired by the Buyer from third parties, and
(ii) products currently used in the research and development program of the
Business, and which form a part of the Manufactured Products, neither the
Seller nor any of its officers, directors, employees or representatives,
including without limitation those individuals set forth in Section 1.2(A)
hereof, shall have any obligation or requirement of any kind whatsoever to
conduct any inquiry to support such representations and warranties.
2.Purchase and Sale of the Assets; Closing.
2.1 Purchase and Sale.
(A)In reliance on the representations and warranties contained herein and
subject to all of the terms and conditions hereof, the Seller hereby agrees
to sell, assign, transfer and deliver (or cause to be sold, assigned,
transferred and delivered) to the Buyer and the Buyer agrees to purchase
from the Seller, on the Closing Date, all of the Seller's right, title and
interest in and to the Class A Assets, as set forth or described on
Schedule 2.1 hereto.
(B)In reliance on the representations and warranties contained herein and
subject to all of the terms and conditions hereof, the Seller hereby agrees
to sell, assign, transfer and deliver (or cause to be sold, assigned,
transferred and delivered) to VIMRx and VIMRx agrees to purchase from the
Seller, on the Closing Date, all of the Seller's right, title and interest
in and to the Class B Assets, as set forth or described on Schedule 2.1
hereto; provided, however, that notwithstanding the foregoing, VIMRx
hereby, effective as of the Closing Date (and for the consideration
described in Section 2.4 below), assigns to the Buyer all of VIMRx's rights
to receive all of the Seller's right, title and interest in and to the
Class B Assets, with the result that the Class B Assets shall be conveyed
directly to the Buyer.
2.2 Purchase Consideration. In consideration of the sale, assignment and
transfer of the Class A Assets and Class B Assets pursuant to Section 2.1
hereof, VIMRx or the Buyer, as the case may be, agrees to pay or issue to the
Seller the following consideration (the "Purchase Consideration"):
(A)eleven million (11,000,000) shares of VIMRx Common Stock;
(B)forty thousand (40,000) shares of VIMRx Preferred Stock;
(C)in the event that the aggregate Agreed Value of the eleven million
shares of VIMRx Common Stock issued pursuant to Section 2.2(A) hereof
(hereinafter, the "Aggregate Agreed Value") shall be less than $50,000,000,
such additional number of shares of VIMRx Preferred Stock as shall equal
the result obtained by dividing, by 1,000, the difference of $50,000,000
minus the Aggregate Agreed Value; provided, however, that in lieu of any
fractional share which might otherwise be due pursuant to such formula,
VIMRx shall pay to the Seller an equivalent amount in cash (based on a
liquidation value of $1,000);
(D)Nineteen and one-half (19.5) shares of Buyer Common Stock, which will
represent, immediately after the issuance thereof, 19.5% of all issued and
outstanding Buyer Common Stock; and
(E)the Warrant.
2.3 Payment. At the Closing provided for in Section 2.6 hereof, the Buyer
and VIMRx, as the case may be, shall deliver to the Seller certificates
representing the VIMRx Common Stock, VIMRx Preferred Stock and Buyer Common
Stock provided for in Section 2.2, together with the Warrant, against delivery
of the items designated to be delivered by the Seller at Closing pursuant to
Section 8.1.
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2.4 Issuance to VIMRx. In consideration for the agreement of VIMRx to assign
to the Buyer its rights to acquire the Class B Assets, as provided in Section
2.1(B), the Buyer shall, on the Closing Date, issue to VIMRx 80.5 shares of
Buyer Common Stock, which will represent, immediately after the issuance
thereof, 80.5% of all issued and outstanding Buyer Common Stock.
2.5 Liabilities.
(A)Liabilities Not Assumed. Except as specifically provided in Section
2.5(B), the Buyer and VIMRx neither assume nor shall be obligated to pay,
perform or discharge, and the Seller hereby agrees to pay, perform,
discharge or otherwise satisfy in due course and to hold the Buyer and
VIMRx harmless from, any and all debts, liabilities and obligations of the
Seller, whether known or unknown, fixed, contingent or otherwise, including
all Taxes arising from any Seller operations up to and including the
Closing Date (all such non-assumed liabilities being hereinafter
collectively referred to as the "Non-Assumed Liabilities").
(B)Assumed Liabilities. In addition to the consideration payable pursuant
to Section 2.2 hereof, and subject to the terms and conditions set forth in
this Agreement, effective as of the Closing Date, the Buyer hereby assumes
only those liabilities of the Seller specifically set forth on Exhibit C
(the "Assumed Liabilities").
(C)Buyer Liabilities. The Seller shall have no liability for any
obligations of the Buyer that are incurred or arise after the Closing Date
("Buyer Liabilities") except to the extent (i) otherwise provided in this
Agreement or any Transaction Document or (ii) that any such liability
arises from a wrongful act or omission on the part of the Seller, any
Affiliate of Seller or any Representative of any of the foregoing.
(D)No Assumption by VIMRx. In connection with the assignment, by VIMRx to
the Buyer, of the rights described in Section 2.1(B), VIMRx neither
assumes, nor shall be obligated to pay, perform or discharge, any debts,
obligations or liabilities of the Seller, whether known or unknown, fixed,
contingent or otherwise.
2.6 Closing. The closing of the purchase and sale of the Assets hereunder
(the "Closing") shall be held at the offices of the Seller located at the
Parker Facility, as promptly as reasonably practicable following the date on
which the last of the conditions set forth in Section 7 has been satisfied or
waived in accordance with the terms of this Agreement, or on such other date,
and at such other time and place, as the Seller and the Buyer shall mutually
agree in writing (the day of occurrence of the Closing being referred to
hereinafter as the "Closing Date").
3.Representations and Warranties of the Seller
The Seller represents and warrants to the Buyer and VIMRx as of the end of
the Disclosure Period, and as of the Closing Date, as follows:
3.1 Good Standing.
The Seller is a corporation organized, validly existing and in good standing
under the laws of the State of Delaware, and with respect to the Business of
the Division, has all necessary corporate power and authority to own, lease
and operate its properties and to carry on the Business as the same is now
being conducted. True, accurate and complete copies of the Certificate of
Incorporation and By-Laws of the Seller have been provided to the Buyer.
3.2 Authority.
The Seller possesses full right, corporate power and legal authority to
execute and deliver this Agreement and the Transaction Documents to which the
Seller is a party and to perform each of the agreements and make
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each of the representations and warranties on its part to be performed and
made hereunder and thereunder. The execution and delivery of this Agreement
and the Transaction Documents to which the Seller is a party and the
consummation by it of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of the Seller. This Agreement has been duly and validly executed by the Seller
and constitutes, and the Transaction Documents (upon and subject to their
execution and delivery by all parties thereto) shall constitute, the legal,
valid and binding obligation of the Seller enforceable against it in
accordance with their terms subject to the qualification that the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect, affecting creditors' rights and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding for the enforcement
thereof may be brought. Except as set forth on Schedule 3.2, the execution and
delivery of this Agreement and the Transaction Documents to which the Seller
is a party and the performance by it of all of the transactions contemplated
herein and therein do not and shall not (with or without the giving of notice
or the passage of time or both) (A) violate or conflict with the Certificate
of Incorporation or By-laws of the Seller, or (B) (1) violate or conflict with
any law, rule, ruling, determination, ordinance or regulation of any Authority
or any condition or provision of, (2) result in the creation or imposition of
any Encumbrance upon any of the Assets of the Seller pursuant to, (3)
accelerate or create, or permit the acceleration or creation of, any liability
or obligation of the Seller under, or (4) cause a termination under or give
rise to a right of termination under, the terms of, any contract, mortgage,
lien, lease, agreement, indenture, trust, instrument, order, judgment or
decree to which the Seller is a party or which is binding upon the Seller (it
being agreed that this subsection (B) shall be deemed to refer only to the
Assets, liabilities, obligations, contracts, mortgages, liens, leases,
agreements, indentures, trusts, instruments, orders, judgments and decrees
which relate to or affect the Division and which are being transferred to,
assumed by or sublicensed to the Buyer, as the case may be); provided,
however, that the existence of any such violations, conflicts, encumbrances,
accelerations, creations, terminations or rights of termination shall not be
deemed to be a breach of this Section 3.2 unless, individually or in the
aggregate, they would have a Material Adverse Effect on the Division or
(subsequent to the Closing) on the Buyer.
3.3 Consents and Approvals.
Except at set forth on Schedule 3.3, no other action or consent, whether
corporate or otherwise, including action or consent by any Authority, is
necessary in connection with the execution, delivery, validity or
enforceability of this Agreement or the Transaction Documents with respect to
the Seller or the consummation by it of the transactions contemplated hereby
and thereby.
3.4 Financial Statements.
To the knowledge of the Seller, the representations contained in paragraph
numbers 1 through 14 of that certain Management Representation Letter, dated
July 28, 1997, to KPMG from the Seller (executed by Messrs. Osth and Schmitt
and Mrs. Waldo) are true and correct.
3.5 FDA and Related Regulatory Matters.
(A)Except as otherwise disclosed in Schedule 3.5(A), all current products
of the Business which shall constitute Manufactured Products, Supplied
Products, Antibodies, Reagents and Reagent Kits under the Hardware and
Disposables Manufacturing Agreement, the Hardware and Disposables Supply
Agreement, and/or the Antibody Manufacturing and Storage Agreement, and all
components thereof (all such products and components being collectively
referred to as the "Current Baxter Products") and which are manufactured by
the Seller or any Affiliate of the Seller, are in compliance, in all
material respects, with all applicable requirements of the FDA and any
analogous Authority in any country or other jurisdiction in which such
Current Baxter Products are manufactured, processed, packaged, labeled,
held or sold.
(B)Except as otherwise disclosed in Schedule 3.5(B), to the Seller's
knowledge, all Current Baxter Products which are manufactured, processed,
packaged, labeled or held by Persons other than the Seller or
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any Affiliate of the Seller are in compliance, in all material respects,
with all applicable requirements of the FDA and any analogous Authority in
any country or other jurisdiction in which such Current Baxter Products are
manufactured, processed, packaged, labeled, held or sold.
(C)Except as otherwise disclosed in Schedule 3.5(C), all facilities,
owned or operated by Seller or any Affiliate of Seller, at which any
Current Baxter Products are manufactured, processed, packaged, labeled or
held are in compliance, in all material respects, with all applicable
requirements of the FDA and any analogous Authority in any country or other
jurisdiction in which such Current Baxter Products are manufactured,
processed, packaged, labeled, held or sold.
(D)Except as otherwise disclosed in Schedule 3.5(D), to the Seller's
knowledge, all facilities, owned or operated by Persons other than Seller
or any Affiliate of Seller, in which any Current Baxter Products are
manufactured, processed, packaged, labeled, held or sold are in compliance,
in all material respects, with all applicable requirements of the FDA and
any analogous Authority in any country or other jurisdiction in which such
Current Baxter Products are manufactured, processed, packaged, labeled,
held or sold.
(E)The Seller and each relevant Affiliate of Seller has obtained all
required marketing and clinical authorizations, clearances or approvals in
each foreign country in which it distributes any Current Baxter Products
(including all approvals necessary for the Seller or such Affiliate to be
paid or reimbursed therefor). Schedule 3.5(E) sets forth a true and correct
list of such foreign marketing and clinical authorizations, clearances and
approvals.
(F)Schedule 3.5(F) sets forth a true and correct list of all PMA's,
510(k)'s, IDE's, IND's, MAF's, DMF's, ELA's, PLA's and other FDA related
submissions ("FDA Submissions") which (i) relate to Current Baxter Products
and (ii) are either (a) submitted and pending, or (b) cleared and/or
approved.
(G)Except as set forth in Schedule 3.5(G), non-clinical data supporting
the quality and integrity of the safety data in all FDA Submissions listed
on Schedule 3.5(F) were generated in compliance, in all material respects,
with all applicable requirements under Federal, state, local or foreign
law.
(H)Except as set forth in Schedule 3.5(H), the Seller and each Affiliate
of the Seller is in compliance, in all material respects, with all MDR
requirements as set forth in 21 C.F.R. Parts 803 and 804, as well as with
all analogous state, local and foreign laws, in connection with each
facility referred to in Section 3.5(C); provided, however, that this
representation shall apply only to the extent that such MDR (or analogous)
requirements relate to Current Baxter Products.
(I)Except as set forth in Schedule 3.5(I), to the Seller's knowledge, the
relevant responsible party is in compliance, in all material respects, with
all MDR requirements as set forth in 21 C.F.R. Parts 803 and 804, as well
as with all analogous state, local and foreign laws, in connection with
each facility referred to in Section 3.5(D); provided, however, that this
representation shall apply only to the extent that such MDR (or analogous)
requirements relate to Current Baxter Products.
(J)Except as set forth in Schedule 3.5(J), in regard to the Current
Baxter Products, the Seller and each Affiliate has complied in all material
respects with the applicable import and export provisions of federal, state
and local law as well as the applicable import and export laws of relevant
foreign countries. When exporting Current Baxter Products pursuant to 21
U.S.C. (S)382(b), the Seller and each relevant Affiliate has provided the
FDA with written notice as required by 21 U.S.C. (S)382(g). When required
for purposes of import of Current Baxter Products into foreign countries,
the Seller and/or any relevant Affiliate has obtained all required FDA
certifications for provision to the relevant foreign Authorities.
(K)All FDA Submissions listed on Schedule 3.5(F) were prepared in
compliance, in all material respects, with applicable FDA laws and relevant
agency guidance documents and contain all necessary data and information
required to be contained therein under applicable law and policy.
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(L)In connection with the Current Baxter Products and the facilities
referred to in Section 3.5(C) (including the operations conducted therein)
neither Seller, nor any Affiliate of Seller nor any Representative of any
of the foregoing, has made an untrue statement of a material fact or a
fraudulent statement to the FDA or any other Authority, failed to disclose
a material fact required to be disclosed to the FDA or any such other
Authority, or committed any act that would reasonably be expected to
provide a basis for the FDA to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities," as set
forth in 56 Fed. Reg. 46191 (September 10, 1991) or for any such other
Authority to invoke any analogous policy.
(M)None of the clinical data which was used in connection with any of the
FDA Submissions listed on Schedule 3.5(F), or any required marketing or
clinical authorizations, clearances and approvals described in Section
3.5(E) above, was collected or obtained from a clinical investigator who
was at the time disqualified by the FDA or any other Authority.
3.6 Taxes.
Except as set forth in Schedule 3.6:
(A)As a division of the Seller, the Division does not file Tax Returns;
(B)The Seller has, in respect of the Division and the Assets, withheld
proper and accurate amounts (including from persons now or previously
employed by the Division for income Taxes and Social Security and other
payroll Taxes) for all periods in compliance with all relevant Tax laws and
other withholding provisions of all applicable laws; and either paid such
amounts to the relevant Tax Authorities or set them aside in accounts for
such purpose; provided, however, that no failure to so withhold, pay or set
aside such Taxes shall constitute a breach of this Section 3.6(B) unless
such failure would have a Material Adverse Effect on the Division;
(C)the Seller has, since its incorporation, been a "C" corporation, as
defined in Section 1361(a) of the Code; and
(D)no transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code.
3.7 Title; Tangible Personal Property and Real Property.
(A)The net book value of the furniture, fixtures and equipment included
in the Assets shall, as of the Closing Date, be not less than $7.2 million.
Except as set forth in Schedule 3.7(A), each material item of tangible
personal property included in the Assets, as well as each material item of
personal property covered by a lease included in the Included Agreements,
is in reasonable working order. Each such item of owned or leased property
is located in the Parker Facility.
(B)The Seller leases the Parker Facility pursuant to a lease disclosed on
Schedule 3.0(A) (such facility, together with the land upon which it is
situated, shall collectively be referred to herein as the "Real
Property.").
(C)With respect only to the Real Property, to the knowledge of the Seller
(except for the representation relating to receipt of written notice in the
second clause of subsection (iii), which is not qualified by knowledge):
(i)the use being made thereof by the Seller is in conformity with
valid and subsisting certificates of occupancy issued therefor;
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(ii)neither the whole nor any portion of the Real Property is in the
process of being condemned, requisitioned or otherwise taken by any
Authority, and no such condemnation, requisition or taking is
threatened;
(iii)the Real Property complies in all material respects with all
building, fire, zoning and other ordinances and regulations of all
Authorities applicable thereto; and the Seller has not received any
written notice (and is unaware of having received any verbal notice) of
any alleged violation of any of the foregoing;
(iv)the use, occupancy and operation of the Real Property as
currently used, occupied and operated by the Seller in connection with
the Business of the Division does not constitute a materially
nonconforming use under any applicable law, regulation or ordinance;
(v)the Seller has a valid leasehold interest in the Parker Facility
lease free and clear of Encumbrances, other than Permitted
Encumbrances; and
(vi)the Parker Facility, including the roof and structural elements
thereof and the systems and facilities included therein, are in
reasonable operating condition and repair.
(D)The Seller is the sole and exclusive owner of and has good and valid
title to all of the Assets free and clear of all Encumbrances, except for
Permitted Encumbrances and except as set forth in Schedule 3.7(D) hereto.
(E)The Assets, together with the performance by the Seller of its
obligations under the Transaction Documents, are sufficient to enable the
Buyer (i) to conduct the Business, in all material respects, as it was
conducted by the Division prior to the Closing (the parties recognizing
that changes in the conduct of the Business may result from differences in
personnel arising from, for example, the fact that certain employees of the
Seller may not become employees of the Buyer), subject to the Seller's
rights and obligations under the Chiron Collaboration Agreement, and (ii)
to achieve the levels of financial performance contemplated by the Plan A
Projections; provided, however, that nothing herein shall be construed to
constitute a guarantee of performance by the Seller of the financial
performance by the Buyer of the Plan A Projections. There are no rights or
assets retained by the Seller and/or its Affiliates that would prevent the
Buyer from conducting the Business, in all material respects, as it was
conducted prior to the Closing, subject to (i) any rights retained with
respect to the Seller's performance of its obligations under the Chiron
Collaboration Agreement, (ii) rights relating to the products or components
to be manufactured or supplied by the Seller under the Hardware and
Disposables Supply Agreement and (iii) the rights under the Primary
Licenses.
3.8 Intellectual Property.
(A)Schedule 3.8(A) contains a list and description of all Patents and
Trademarks currently owned by or licensed to the Seller in connection with
the Division (separately identifying those which are owned and those which
are licensed and, if not owned by the Seller, identifying the owner
thereof, if any).
(B)Schedule 3.8(B) contains a list and description of all material
Copyrights (registered or unregistered) licensed to the Seller in
connection with the Division (identifying the owner thereof and the related
work).
(C)Schedule 3.8(C) contains a list of (i) all applications for
registration of any Intellectual Property (other than Patents) owned by or
licensed to the Seller in connection with the Division (other than
applications relating to Supplied Products or products acquired by the
Buyer from third parties) as well as a list of all existing registrations
of any such Intellectual Property (in either case, identifying the
Intellectual Property, the application or registration number and the
jurisdiction thereof) and (ii) pending applications for any Patents
relating to Intellectual Property used in connection with the Division
(other than applications
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relating to Supplied Products or products acquired by the Buyer from third
parties) where the Seller is listed as the owner or is the licensee of any
of the underlying technology (identifying the subject matter of the
application, the relevant application number, the jurisdiction thereof and
the owner thereof). True and correct copies of all such applications and
registrations have been provided to the Buyer.
(D)Except as set forth on Schedule 3.8(D), such Schedule contains a list
of all material documents relating to product clearances for Patent
infringement performed by or on behalf of the Seller with respect to (i)
all Isolex(R) and Maxsep(R) Products and (ii) all other Manufactured
Products. The Seller has delivered to the Buyer true and correct copies of
all such documents.
(E)Schedule 3.8(E) contains a list and description (showing in each case
the parties thereto and, in the event the same has not been reduced to
writing, the material terms thereof) of all material agreements and
licenses to which the Seller is a party or by which it is bound which
entitle the Seller or a third party to use, or restrict the Seller's or a
third-party's use of, (i) any Copyrights, Patents, Trademarks or
Information owned by, licensed to, or used by, the Seller in connection
with the Division or (ii) any Customized Software.
(F)Schedule 3.8(F) contains a list and description, showing in each case
the owner or licensor, of all Customized Software.
(G)Except as disclosed in Schedule 3.8(G): (i) to the knowledge of the
Seller, all Patents, and all Copyright and Trademark registrations, owned
by the Seller in connection with Manufactured Products are valid and in
full force and effect, and (ii) the Seller has not received written notice
(and is unaware of having received any verbal notice) of any outstanding
challenges, by any third party, either to any such Patents or registrations
or to any of the applications described in Section 3.8(C).
(H)Except as disclosed in Schedule 3.8(H), the Seller is not aware that
there now exists any use, by a third party, of any Intellectual Property
which violates any material Intellectual Property Right of the Seller (in
connection with Manufactured Products).
(I)Except as set forth in Schedule 3.8(I), (i) to the Seller's knowledge,
no infringement of any material Intellectual Property Right of any other
person or entity has occurred or results in any way from the current
operations of the Division or the Business, and (ii) no claim of any
infringement by the Seller (in connection with the Division or the
Business) of any material Intellectual Property Right of any other person
or entity has been made, asserted or threatened in writing (and the Seller
is unaware of any verbal such claims) against and to the Seller.
(J)Except as set forth on Schedule 3.8(J), there is no existing material
breach, by the Seller, of any material agreement by which the Seller has
granted or received a license or sublicense of an Intellectual Property
Right, including, but not limited to, the Primary Licenses ("Material
Intellectual Property Agreements") by the Seller. To the Seller's
knowledge, and subject to the foregoing, each of the Material Intellectual
Property Agreements is valid, enforceable and in full force and effect,
except to the extent the enforceability thereof may be affected by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws or general principles of equity. To the Sellers' knowledge,
except as set forth in Schedule 3.8(J), no material default, by any party
other than the Seller, exists under any of the Material Intellectual
Property Agreements and no event has occurred which, with the lapse of time
or the giving of notice or both is reasonably likely to constitute a
material breach of any such agreement by the Seller or give rise to a right
on the part of any of the other parties thereto to terminate such agreement
or to deprive the Seller of any material right, or accelerate any of its
material obligations, thereunder.
(K)Except as disclosed in Schedule 3.8(K): (i) the Owned Software is not
subject to any transfer, assignment, site, equipment, or other operational
limitations; (ii) the Owned Software is eligible for protection and
registration under applicable copyright law and, to the knowledge of the
Seller, has not been
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forfeited to the public domain; (iii) the Seller has copies of all releases
or separate versions of the Owned Software so that the same may be subject
to registration in the United States Copyright Office; (iv) the Seller has
all right, title and interest in and to the Owned Software; (v) the Seller
has developed the Owned Software through its own efforts and for its own
account without the aid or use of any consultants, agents, independent
contractors or persons or entities other than persons who are (or were at
the time) employees of the Seller; and (vi) any Owned Software includes the
source code, object code and system documentation, used for the
development, maintenance, implementation and use thereof.
(L)Except as disclosed in Schedule 3.8(L), all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of the Seller or any predecessor in interest thereto
either: (x) is a party to a valid written agreement under which the Seller
is deemed to be the original owner/author of all property rights therein;
or (y) has executed, or is obligated pursuant to an existing agreement to
execute, a valid agreement assigning to the Seller (or such predecessor in
interest, as applicable) all right, title and interest in such material;
provided, however, that this Section 3.8(L) shall not apply to any
copyrightable, patentable or trade secret material which, whether
considered individually or in the aggregate, is not material to the
operation of the Business.
(M)Subject to Section 1.2(G) hereof, with respect to all representations
in this Section 3.8 which are made to the Seller's "knowledge" or which
involve the Seller's "awareness" of any facts or circumstances, the Seller
represents and warrants that it has performed a reasonable due diligence
review with respect to the subject matter thereof.
3.9 Environmental Matters.
(A)Schedule 3.9 lists all written notices (and all verbal notices of
which the Seller is aware) received by the Seller of violations of
Environmental Laws or environmental claims from environmental Authorities
since January 1, 1992 (in each case, only to the extent that they relate(d)
to the Parker Facility). The Seller has delivered to the Buyer true and
correct copies of all such notices, claims and reports, as well as all
reports of the Seller filed with such Authorities since such date which
relate to the Division.
(B)Except as set forth in Schedule 3.9, with respect only to the Parker
Facility, to the knowledge of the Seller, (i) there has been no release or
discharge by the Seller (or any other Person) of any Contaminant in or on
the Parker Facility (or the land upon which it is situated) and (ii) there
otherwise exist no Contaminants on or in any such real property, in any
material quantity, which, in either case, would (a) constitute or have
constituted a material violation of any Environmental Law, or (b) give rise
to an obligation on the part of the Seller, its assigns or successors in
interest to effect any environmental cleanup or remediation.
3.10 Contracts and Commitments.
(A)Except as set forth on Schedule 3.10(A), the Seller is not, solely in
connection with the Division, a party to any written or oral:
(i)cooperative research and development agreement, supply agreement,
research agreement, research funding agreement, clinical trial
agreement, cell processing laboratory agreement, investigator
agreement, development agreement, consulting agreement, incoming
material transfer agreement, or outgoing material transfer agreement;
(ii)lease of real property, or commitment, contract or agreement for
the purchase or sale of real property;
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(iii)royalty, distribution, agency or license agreement (license
agreements shall include, but not be limited to, any agreement pursuant
to which the Seller or any third party is licensed, or otherwise
afforded the right, to use, sell, reproduce or exploit any Intellectual
Property);
(iv)agreement of employment with any officer, employee, director,
professional person, or independent contractor (including consultants)
which is not terminable, at the discretion of the Seller, without
payment or other penalty, on 30 (or fewer) days' notice from the
Seller;
(v)agreement (including a collective bargaining agreement) with any
labor union or other representative of employees;
(vi)agreement guaranteeing the payment or performance of the
obligations of others;
(vii)lease of any personal property under which aggregate payments
exceed $15,000 per year;
(viii) agreement not made in the ordinary course of business
involving a sum in excess of $15,000;
(ix)agreement (except leases of personal property) for the purchase
or sale of products or other personal property, or the provision or
purchase of services, involving a sum in excess of $15,000;
(x)partnership or joint venture agreement;
(xi)security, pledge or escrow agreement or any other agreement
creating or providing for the creation of any Encumbrance;
(xii) agreement restricting in any way the ability of the Seller to
engage in any enterprise;
(xiii) agreement (other than agreements of employment with an
officer, employee, director, professional person or independent
contractor) restricting in any way the ability of a third party to
engage in any enterprise;
(xiv) agreement obligating the Seller to pay any commission, finder's
fee or other such contingent remuneration;
(xv)agreement under which the Seller is obligated to provide or
expend services, property or cash with a fair market value in excess of
$15,000; or
(xvi) agreement, not otherwise required to be disclosed on Schedule
3.10(A) pursuant to the above provisions of this Section 3.10(A), which
constitutes an Included Agreement.
(B)True and correct copies of those agreements which are required to be
disclosed on Schedule 3.10(A) and which have been reduced to writing have
been delivered to the Buyer, and Schedule 3.10(B) contains a true and
correct description of all material terms of those of such agreements which
have not been reduced to writing.
(C)Except as set forth on Schedule 3.10(C), there is no existing material
breach of any Included Agreement, or any Primary License, by the Seller. To
the Seller's knowledge, and subject to the foregoing, each of the Included
Agreements, and each Primary License, is valid, enforceable and in full
force and effect, except to the extent the enforceability thereof may be
affected by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws or general principles of equity, and no event has
occurred which, with the lapse of time or the giving of notice or both is
reasonably likely to constitute a material breach of any such agreement by
the Seller or give rise to a right on the part of any of the other parties
thereto to terminate such agreement or to deprive the Seller of any
material right, or accelerate any of its material obligations, thereunder.
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(D)Except as set forth on Schedule 3.10(D), to the knowledge of the
Seller, there is no existing material breach of any Included Agreement, or
any Primary License, by any party (other than the Seller) thereto, and no
event has occurred which, with the lapse of time or the giving of notice or
both, is reasonably likely to constitute a material breach thereof by such
other party or give rise to a right on the part of the Seller to terminate
such agreement or to deprive the other party of any right, or accelerate
any obligation of such party, thereunder.
(E)Except as set forth on Schedule 3.10(E), to the knowledge of the
Seller, there are no circumstances which, if true, create a reasonable
probability that the Seller will not, or will be unable to, fulfill any of
its material obligations, under any material Included Agreement or any
Primary License.
(F)The Seller (or the relevant Affiliate, in the case of insurance held
by an Affiliate) has not, during the current term of any insurance policy
which provides coverage with respect to persons, properties or operations
of the Division, received any notice canceling or threatening to cancel or
refusing to renew, based (to the knowledge of the Seller) on reasons
relating directly to the Business or the Division, any such policy, and no
policy insuring any such persons, properties or operations has, based (to
the knowledge of the Seller) on reasons relating directly to the Business
or the Division, been canceled by the insurer within the last twelve
months.
3.11 Labor Relations.
The Seller employs 88 employees in the Division in the United States,
none of whom is subject to union or collective bargaining agreements by
which the Seller is bound or subject. The name of each such employee is
listed on Schedule 3.11. The Seller has not at any time during the last
five years, had, nor is there now to the knowledge of the Seller
threatened, a strike, picket, work stoppage, work slowdown, union
organizing activity or other labor trouble that has had or would be
reasonably likely to have a Material Adverse Effect on the Division. The
Seller is not aware of any pending or threatened union activity, strike,
picketing, work stoppage, work slowdown or other labor trouble with respect
to the employees of any of the providers of goods and services listed on
Schedule 3.15 which would be reasonably likely to have a Material Adverse
Effect on the Division.
3.12 Legal Proceedings.
(A)Except as set forth on Schedule 3.12(A) attached hereto, there are no
Actions pending, or to the knowledge of the Seller, threatened against or
affecting the Seller, which relate to the Division or to any Assets used in
connection with the Division; and the Seller is not in default with respect
to any Order which has been issued against the Seller in connection with
the operations of the Division. Except as set forth on Schedule 3.12(A),
there are no Orders issued against the Seller which relate to the
operations of the Division. True and correct copies of the pleadings (or,
if there are no pleadings, then all material documents (including
correspondence) setting forth the nature of the Action) relating to all
Actions required to be disclosed on Schedule 3.12(A) (other than workers
compensation claims and the CellPro and Saxholm Litigations) have been
delivered to the Buyer.
(B)Except as set forth on Schedule 3.12(B), there are no Actions in which
the Seller, in connection with the operations of the Division, is either a
plaintiff or, if not a formal proceeding, an aggrieved party or claimant.
True and correct copies of the pleadings (or, if there are no pleadings,
then all material documents (including correspondence) setting forth the
nature of the Action) relating to all such Actions have been delivered to
the Buyer.
3.13 Compliance with Law.
(A)Except as set forth in Schedule 3.13(A), in connection with the
operations of the Division, (i) the Seller has complied in all material
respects with, and (ii) the Seller, and all of its properties, are in
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compliance in all material respects with, all material laws, orders, rules,
and regulations of each Authority having jurisdiction over the Division or
its operations or properties.
(B)Schedule 3.13(B) attached hereto sets forth a true and complete list
and description of every License required of the Seller for the operations
of the Division conducted at the Parker Facility.
(C)Schedule 3.13(C) sets forth a true and correct list, with respect only
to the Parker Facility, for the period since January 1, 1992, of (i) all
investigations and inspections, performed by the Seller or by any third
party (including any Authority and any third party commissioned by or on
behalf of the Seller), designed to evaluate the conformity of any physical
plant occupied by the Seller in connection with the operations of the
Parker Facility or any personal property contained, or any process or
activities taking place, therein with any Federal, state or local law,
regulation or ordinance relating to the environment or human health or
safety (including OSHA), (ii) any written reports created, commissioned or
received by or on behalf of the Seller arising out of any such
investigation or inspection ("Health and Safety Reports"), and (iii) any
notices received by the Seller (but only in relation to property, plant or
equipment occupied or used by, or activities engaged in, by the Seller at
the Parker Facility) relating to alleged violations of any such laws,
regulations or ordinances (other than Environmental Laws) ("Violation
Notices"). The Seller has delivered to the Buyer true and correct copies of
all such Health and Safety Reports and Violation Notices.
3.14 Absence of Certain Changes since Balance Sheet Date.
Except as set forth on Schedule 3.14 hereto, since June 30, 1997, the
Seller has not suffered, done or agreed to do (orally or in writing) any of
the following in respect of or relating to the Division or the Business:
(A)mortgage, pledge or subject any of the Assets to any Encumbrance,
other than Permitted Encumbrances;
(B)sell, transfer or otherwise dispose of any assets or property included
in the Assets, except in connection with (i) the sale of inventory in the
ordinary course of business or (ii) the sale or other disposal of assets no
longer needed for the operation of the Division in the ordinary course of
business;
(C)waive, release or compromise any material claims or rights of the
Seller relating to the operation of the Division (other than claims or
rights relating to the CellPro and Saxholm Litigations);
(D)except in the ordinary course of business, increase the compensation
(including severance and termination pay) payable to any employees of the
Division; or enter into any agreement with any employee of the Division
providing for a salary in excess of $50,000 per year;
(E)enter into any material transaction or agreement other than in the
ordinary course of business;
(F)enter into or amend any contract or other agreement, which constitutes
or shall constitute part of the Included Agreements, pursuant to which it
agrees to indemnify any party or to refrain from competing with any party;
(G)suffer or incur any damage, construction delay or halt, breach of
contract, destruction or loss materially adversely affecting the assets,
properties, business, operations or financial condition of the Division;
(H)(i) materially change any of its business policies or practices
relating solely to the Division, including, without limitation, those
relating to advertising, marketing, pricing, purchasing, personnel, budget,
job acquisition or bidding, the collection of accounts receivable or the
payment of accounts payable, or (ii) make any material change in the types,
nature, composition or quality of the products of the Division.
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(I)(i) terminate or fail to renew or (ii) receive any statement
indicating that the other party was considering, was desirous of or
threatened to, terminate or fail to renew, any Included Agreement that is
or was material to the assets, properties, business operations or financial
condition of the Division; or
(J)suffer or have any adverse change in the business, results of
operations, assets or financial condition of the Division, other than those
changes that are in the ordinary course of business, none of which
(individually or in the aggregate) would have, or constitute, a Material
Adverse Effect on the Division.
3.15 Suppliers.
Schedule 3.15 attached hereto sets forth, as to the Division, the ten
largest suppliers (including other divisions of the Seller) of goods and/or
services to it, in each case with respect to each of the fiscal year ended
December 31, 1996 and the six months ended June 30, 1997. Except as set
forth on Schedule 3.15, no such supplier (excluding for these purposes
other divisions of the Seller) listed on Schedule 3.15 (i) has canceled or
otherwise terminated or provided written (or, to the knowledge of the
Seller, verbal) notice to the Seller indicating that it was considering,
was desirous of or was threatening to cancel or otherwise terminate, or to
decrease or limit, its relationship with, the Division, (ii) has, during
the last 12 months, decreased materially the sale of its services, supplies
or materials to the Division or, (iii) has provided written (or, to the
knowledge of the Seller, verbal) notice to the Seller that (a) he or it
will not, or is likely to not, do business with the Buyer, subsequent to
the Closing Date, on substantially the same terms as he or it has
traditionally done business with the Division or (b) he or it is
considering altering, in any material respect, or has decided to alter, in
any material respect, the terms under which he or it has traditionally done
business with the Division.
3.16 Compensation.
Section 2 of the Execution Schedule sets forth a true and correct list of
the (a) names, (b) positions and (c) compensation arrangements (including
annualized salary, bonus and commission arrangements), monetary or
otherwise, of all current employees of the Division who, during the year
ended December 31, 1996 or during the period from January 1, 1997 through
June 30, 1997, earned annual (or, in the case of the June 30 period,
annualized) compensation of at least $50,000. Except as set forth on
Schedule 3.16, no such employee has provided written (or, to the Seller's
knowledge, verbal) notice to the Seller with regard to either cancellation
or other termination of his or her relationship with the Seller.
3.17 Affiliated Transactions.
Schedule 3.17 sets forth a list of all Affiliated Transactions between or
among the Seller and any one or more of its Affiliates since January 1,
1996.
3.18 Books and Records.
The books and records of the Seller included in the Assets accurately
reflect all material Assets, and all material liabilities and transactions
of the Seller relating to the Division.
3.19 Brokers.
Other than The Craves Group and Lehman Brothers, no broker, finder or
other such Person or entity is entitled to receive a finder's or broker's
fee or commission with respect to the transactions contemplated hereby
based on arrangements made by or on behalf of the Seller.
3.20 Benefits Received.
The Seller has not:
(A)received any payment or other consideration for any products or
services that the Buyer will be obligated hereunder to deliver; or
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(B)received any payment or other benefit for or with respect to any other
obligation that the Buyer will be obligated hereunder to perform.
3.21 Inventory.
(A)All finished goods inventory relating to the Division is owned either
by the Seller or by one of the following entities: Allegiance Healthcare,
Inc., a Delaware corporation, Baxter Export corporation, a Nevada
corporation, Baxter, S.A., a Belgian corporation, BDG, Baxter Medical AB, a
Swedish corporation, Baxter Healthcare, S.A., a Panamanian corporation,
Baxter A/S, a Danish corporation, Baxter A.G., a Swiss corporation, Baxter
Oy, a Finnish corporation, Baxter GES, m.b.H., a German corporation, Baxter
S.p.A., an Italian corporation, Baxter Travenol N.V., a Belgian
corporation, Baxter Healthcare Ltd., a United Kingdom corporation, Baxter
B.V., a Netherlands corporation, Baxter S.A., a French corporation, Baxter
Limited, a Japanese corporation, Baxter Healthcare Pty, Ltd., an Australian
corporation and Baxter Healthcare Ltd., a Taiwanese corporation (each of
the foregoing entities being referred to as an "Inventory Entity").
(B)The finished goods inventory included in the Assets ("Included
Inventory") was acquired in the ordinary course of business, in customary
quantities.
(C)All items of Included Inventory have been manufactured in accordance
with the specifications, procedures, product drawings/blueprints and
regulatory requirements applicable thereto and are free from defects in
workmanship.
(D)Attached hereto as Schedule 3.21(D) is a true and correct list
showing, for each physical location where Included Inventory was held by
the Seller or any Inventory Entity as of August 31, 1997, (i) the street
address of such location and (ii) the aggregate book value of all Included
Inventory held at such location as of such date.
3.22 Experience.
The Seller is experienced in evaluating companies such as the Buyer and
VIMRx, is able to fend for itself in transactions such as the one
contemplated by this Agreement, has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits
and risks of its prospective investment in the Buyer and VIMRx, and has the
ability to bear the economic risks of the investment.
3.23 Investment.
The Seller is acquiring the Acquired Securities and will acquire any
Conversion Securities for investment for the Seller's own account and not
with the view to, or for resale in connection with, and distribution
thereof. The Seller understands that the Acquired Securities (and any
Conversion Securities) have not been and will not be registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things,
the bona fide nature of the investment intent as expressed herein. The
Seller further represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any third person with respect to any of the Acquired
Securities (or any Conversion Securities). The Seller understands and
acknowledges that the offering and issuance of the Acquired Securities
pursuant to this Agreement, and any issuance of Conversion Securities will
not be registered under the Securities Act on the ground that the sale
provided for in this Agreement and the issuance of securities hereunder is
exempt from the registration requirements of the Securities Act based on,
among other things, the bona fide nature of the investment intent as
expressed herein.
3.24 Rule 144.
The Seller acknowledges that the Acquired Securities (and any Conversion
Securities) must be held indefinitely unless subsequently registered under
the Securities Act or an exemption from such registration
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is available. The Seller is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of certain securities
purchased in a private placement subject to the satisfaction of certain
conditions. In connection therewith, the Seller acknowledges that the Buyer
and VIMRx will make a notation on their stock books regarding the
restrictions on transfers set forth in this Section 3.24 and will transfer
securities on their books only to the extent not inconsistent therewith and
with the Stockholders' Agreement. The Seller acknowledges that all shares
representing Acquired Securities (and any Conversion Securities) will bear
appropriate restrictive legends reflecting the transfer restrictions
reflected in this Section 3.24 as well as in the Stockholders' Agreement.
3.25 No Public Market.
The Seller understands that no public market now exists for the
securities of the Buyer or for the VIMRx Preferred Stock; that it is not
expected that a public market will ever exist for the VIMRx Preferred
Stock, and that it is uncertain whether a public market will ever exist for
the Buyer Common Stock.
3.26 Access to Data.
For purposes of satisfying the applicable requirements for the exemptions
from registration relating to the issuance of the Acquired Securities, the
Seller acknowledges that it has received and reviewed information about
VIMRx and the Buyer and has had an opportunity to discuss VIMRx's and the
Buyer's business, management and financial affairs with its management and
to review their facilities.
3.27 Full Disclosure.
Without limiting any of the foregoing, no representation or warranty by
the Seller herein and no other statement or certificate furnished by or on
behalf of the Seller to the Buyer or its Representatives pursuant to this
Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Seller that has not
been disclosed in this Agreement which (i) has had, or would reasonably be
expected to have, a Material Adverse Effect on the Division or the Business
or (ii) which would reasonably be expected to materially and adversely
affect the ability of the Seller to perform its obligations under this
Agreement.
3.28 Proxy-Related Information.
None of the information provided in writing by the Seller or its
Representatives to VIMRx for inclusion in the Proxy Statement, pursuant to
Section 6.1(A)(x), shall contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained in
the Proxy Statement, in light of the circumstances under which they are
made, not misleading.
4.Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller, as of the end of the
Disclosure Period and as of the Closing Date, as follows:
4.1 Good Standing.
The Buyer is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware, with all necessary
corporate power and authority to own, lease and operate its properties and
to carry on its business as the same is now being conducted. True, accurate
and complete copies of the Certificate of Incorporation and By-Laws of the
Buyer have been provided to the Seller.
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4.2 Authority.
The Buyer possesses full right, corporate power and legal authority to
execute and deliver this Agreement and the Transaction Documents to which
the Buyer is a party and to perform each of the agreements and make each of
the representations and warranties on its part to be performed and made
hereunder and thereunder. The execution and delivery of this Agreement and
the Transaction Documents to which the Buyer is a party and the
consummation by it of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the
part of the Buyer. This Agreement has been duly and validly executed by the
Buyer and constitutes, and the Transaction Documents (upon and subject to
their execution and delivery by all parties thereto) shall constitute, the
legal, valid and binding obligation of the Buyer enforceable against it in
accordance with their terms subject to the qualification that the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter
in effect, affecting creditors' rights and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding for the enforcement
thereof may be brought. Except as set forth on Schedule 4.2, the execution
and delivery of this Agreement and the Transaction Documents to which the
Buyer is a party and the performance by it of all of the transactions
contemplated herein and therein do not and shall not (with or without the
giving of notice or the passage of time or both) (A) violate or conflict
with the Certificate of Incorporation or By-laws of the Buyer, or (B) (1)
violate or conflict with any law, rule, ruling, determination, ordinance or
regulation of any Authority or any condition or provision of, (2) result in
the creation or imposition of any Encumbrance upon any of the property or
assets of the Buyer pursuant to, (3) accelerate or create, or permit the
acceleration or creation of, any liability or obligation of the Buyer
under, or (4) cause a termination under or give rise to a right of
termination under, the terms of any contract, mortgage, lien, lease,
agreement, indenture, trust, instrument, order, judgment or decree to which
the Buyer is a party or which is binding upon the Buyer; provided, however,
that the existence of any such violations, conflicts, encumbrances,
accelerations, creations, terminations or rights of termination shall not
be deemed to be a breach of this Section 4.2 unless, individually or in the
aggregate, they would have a Material Adverse Effect on the Buyer.
4.3 Consents and Approvals.
Except at set forth on Schedule 4.3, no other action or consent, whether
corporate or otherwise, including action or consent by any Authority, is
necessary in connection with the execution, delivery, validity or
enforceability of this Agreement or the Transaction Documents with respect
to the Buyer or the consummation by it of the transactions contemplated
hereby and thereby.
4.4 Capitalization.
The authorized capital stock of the Buyer consists, or will consist prior
to the Closing, of ten thousand (10,000) shares of Buyer Common Stock, of
which no shares are issued and outstanding on the date of this Agreement.
Upon issuance, all shares of Buyer Common Stock issued pursuant to this
Agreement will be duly authorized, validly issued, fully paid and
nonassessable. As of the Closing Date, (i) the Warrant shall be
outstanding, which shall permit the Seller to purchase an aggregate of
6.383 shares of Buyer Common Stock and (ii) the Buyer Convertible
Debentures shall be outstanding, under the terms of which the Seller and
VIMRx shall be permitted to convert such debt into shares of Buyer Common
Stock. Except as set forth in this Agreement or as a result of the exercise
of options to purchase shares reserved for issuance under the Buyer's
employee stock option plan described in Section 7.2(D) hereof, there are no
outstanding securities of the Buyer. As of the Closing Date, and excluding
any shares of Buyer Common Stock reserved for issuance under the Buyer's
employee stock option plan, or pursuant to the terms of the Warrant and the
Buyer Convertible Debentures, VIMRx will own 80.5% and the Seller will own
19.5% of the issued and outstanding shares of Buyer Common Stock. There are
no outstanding obligations of the Buyer to repurchase, redeem or otherwise
acquire any securities of the Buyer, other than the Buyer's obligation to
convert the Buyer Convertible Debentures into shares of Buyer Common Stock.
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4.5 Valid Issuance of Common Stock.
The Shares of Buyer Common Stock that are being acquired by the Seller
hereunder, when authorized, issued and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, will be
duly and validly authorized and issued, fully paid, and nonassessable, and
will be free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Stockholders' Agreement and the other
Transaction Documents and under applicable state and Federal securities
laws. The Buyer Common Stock issuable upon exercise of the Warrant has been
duly authorized and validly reserved for issuance and, upon issuance upon
such exercise in accordance with the terms of the Warrant, will be duly and
validly authorized and issued, fully paid, and nonassessable and will be
free of restrictions on transfer other than restrictions on transfer under
this Agreement, the Stockholders' Agreement and the other Transaction
Documents and under applicable state and Federal securities laws.
4.6 Brokers.
Other than Lazard Freres & Co., L.L.C., no broker, finder or other such
Person or entity is entitled to receive a finder's or broker's fee or
commission with respect to, the transactions contemplated hereby based on
arrangements made by or on behalf of the Buyer.
4.7 No Prior Activities.
Since the date of its incorporation, the Buyer has not engaged in any
activities other than in connection with or as contemplated by this
Agreement.
4.8 Full Disclosure.
Without limiting any of the foregoing, no representation or warranty by
the Buyer herein and no other statement or certificate furnished by or on
behalf of the Buyer to the Seller or its Representatives pursuant to this
Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Buyer that has not
been disclosed in this Agreement which (i) has had, or would reasonably be
expected to have, a Material Adverse Effect on the Buyer or (ii) which
would reasonably be expected to materially and adversely affect the ability
of the Buyer to perform its obligations under this Agreement.
5.Representations and Warranties of VIMRx.
VIMRx represents and warrants to the Seller, as of the end of the Disclosure
Period and as of the Closing Date, as follows:
5.1 Good Standing.
(A)VIMRx is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware, with all necessary
corporate power and authority to own, lease and operate its properties and
to carry on its business as the same is now being conducted. True, accurate
and complete copies of the Certificate of Incorporation and By-Laws of
VIMRx have been provided to the Seller.
(B)Innovir is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware, with all necessary
corporate power and authority to own, lease and operate its properties and
to carry on its business as the same is now being conducted. True, accurate
and complete copies of the Certificate of Incorporation and By-Laws of
Innovir have been provided to the Seller.
(C)VIMRx Holdings is a corporation organized, validly existing and in
good standing under the laws of the State of Delaware, with all necessary
corporate power and authority to own, lease and operate its
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properties and to carry on its business as the same is now being conducted.
True, accurate and complete copies of the Certificate of Incorporation and
By-Laws of VIMRx Holdings have been provided to the Seller.
(D)Innovir UK is a private limited company organized, validly existing
and in good standing under the laws of England, with all necessary
corporate power and authority to own, lease and operate its properties and
to carry on its business as the same is now being conducted. True, accurate
and complete copies of the Memorandum and Articles of Association of
Innovir UK have been provided to the Seller.
(E)VPI Germany is a Gesellschaft mit beschrankter Halftung organized,
validly existing and in good standing under the laws of the Federal
Republic of Germany, with all necessary corporate power and authority to
own, lease and operate its properties and to carry on its business as the
same is now being conducted. True, accurate and complete copies of the
initial Gesellschaftsvertrag, of VPI Germany have been provided to the
Seller.
(F)VGI is a corporation organized, validly existing and in good standing
under the laws of the State of Delaware, with all necessary corporate power
and authority to own, lease and operate its properties and to carry on its
business as the same is now being conducted. True, accurate and complete
copies of the Certificate of Incorporation and By-Laws of VGI have been
provided to the Seller.
(G)Ribonetics is a Gesellschaft mit beschrankter Halftung organized,
validly existing and in good standing under the laws of the Federal
Republic of Germany, with all necessary corporate power and authority to
own, lease and operate its properties and to carry on its business as the
same is now being conducted. True, accurate and complete copies of the
initial Gesellschaftsvertrag of Ribonetics have been provided to the
Seller.
5.2 Authority.
VIMRx possesses full right, corporate power and legal authority to
execute and deliver this Agreement and the Transaction Documents to which
VIMRx is a party and to perform each of the agreements and make each of the
representations and warranties on its part to be performed and made
hereunder and thereunder. The execution and delivery of this Agreement and
the Transaction Documents to which VIMRx is a party and the consummation by
it of the transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Directors of VIMRx. Upon and subject to
the approval and adoption of this Agreement and the transactions
contemplated hereby by the requisite vote of VIMRx's stockholders in
accordance with applicable Delaware General Corporation Laws, the execution
and delivery of this Agreement and the Transaction Documents and the
consummation by VIMRx of the transactions contemplated by this Agreement
and the Transaction Documents (including the issuance of VIMRx Common Stock
to the Seller as part of the consideration paid to the Seller pursuant to
this Agreement) shall have been approved by all necessary corporate action
on the part of VIMRx. This Agreement has been duly and validly executed by
VIMRx and constitutes, and the Transaction Documents (upon and subject to
their execution and delivery by all parties thereto) shall constitute, the
legal, valid and binding obligation of VIMRx enforceable against it in
accordance with their terms subject to the qualification that the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter
in effect, affecting creditors' rights and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding for the enforcement
thereof may be brought. Except as set forth on Schedule 5.2, the execution
and delivery of this Agreement and the Transaction Documents to which VIMRx
is a party and the performance by it of all of the transactions
contemplated herein and therein do not and shall not (with or without the
giving of notice or the passage of time or both) (A) violate or conflict
with the Certificate of Incorporation or By-laws of VIMRx or any Controlled
Subsidiary, or (B) (1) violate or conflict with any law, rule, ruling,
determination, ordinance or regulation of any Authority or any condition or
provision of, (2) result in the creation or imposition of any Encumbrance
upon any of the property or assets
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of VIMRx or any Controlled Subsidiary pursuant to, (3) accelerate or
create, or permit the acceleration or creation of, any liability or
obligation of VIMRx or any Controlled Subsidiary under, or (4) cause a
termination under or give rise to a right of termination under, the terms
of any contract, mortgage, lien, lease, agreement, indenture, trust,
instrument, order, judgment or decree to which VIMRx or any Controlled
Subsidiary is a party or which is binding upon VIMRx or any Controlled
Subsidiary; provided, however, that the existence of any such violations,
conflicts, encumbrances, accelerations, creations, terminations or rights
of termination shall not be deemed to be a breach of this Section 5.2
unless, individually or in the aggregate, they would have a Material
Adverse Effect on VIMRx.
5.3 Consents and Approvals.
Except at set forth on Schedule 5.3, no other action, consent, filing or
approval, whether corporate or otherwise, including action or consent by
any Authority, is necessary in connection with the execution, delivery,
validity or enforceability of this Agreement or the other Transaction
Documents with respect to VIMRx or the consummation by it of the
transactions contemplated hereby and thereby.
5.4 Capitalization.
(A)The authorized capital stock of VIMRx consists, or will consist on or
prior to the Closing, of:
(i)Common Stock. 120,000,000 shares of VIMRx Common Stock, of which
55,358,676 shares are issued and outstanding on the date of this
Agreement.
(ii)Preferred Stock. One Million (1,000,000) shares of blank check
preferred stock, $.001 par value (none of which are issued or
outstanding on the date hereof) of which 100,000 shares shall be VIMRx
Preferred Stock.
All issued and outstanding shares of VIMRx Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. As of
the date hereof, options, calls and other rights to purchase an aggregate
10,396,506 shares of VIMRx Common Stock are outstanding and the weighted
average exercise price of such options, calls and commitments is $1.48 per
share of VIMRx Common Stock. Except as set forth in this Agreement or in
Schedule 5.4(A), and except as a result of the exercise of the options,
calls and commitments outstanding on this date, there are no outstanding
securities of VIMRx. There are no outstanding obligations of VIMRx or any
of its subsidiaries to repurchase, redeem or otherwise acquire any
securities of VIMRx, other than VIMRx's obligation to repurchase options
under, and in accordance with the express terms of, the employment
agreements set forth on Schedule 5.4(A) (accurate and complete copies of
which have previously been delivered to the Seller).
(B)The authorized capital stock of Innovir consists of:
(i)Common Stock. 70,000,000 shares of Innovir Common Stock, of which
29,750,529 shares are issued and outstanding on the date of this
Agreement.
(ii)Preferred Stock. 15,000,000 shares of Innovir Preferred Stock, of
which 280,000 shares of Class B Preferred Shares are issued and
outstanding on the date of this Agreement.
All issued and outstanding shares of Innovir Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. As of
the date hereof, options, calls and other rights to purchase an aggregate
10,008,487 shares of Innovir Common Stock are outstanding and the weighted
average exercise price of such options, calls and commitments is $3.87 per
share of Innovir Common Stock. Except as set forth in this Agreement or in
Schedule 5.4(B), and except as a result of the exercise of the options,
calls and commitments outstanding on this date, there are no outstanding
securities of Innovir. Except as set forth on Schedule 5.4(B), there are no
outstanding obligations of Innovir to repurchase, redeem or otherwise
acquire any securities of Innovir.
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(C)The authorized capital stock of VIMRx Holdings consists of:
(i)Common Stock. 120,000 shares of VIMRx Holdings Common Stock, of
which 12,000 shares are issued and outstanding on the date of this
Agreement.
All issued and outstanding shares of VIMRx Holdings Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable. As of the date hereof, there are no options, calls or other
rights to purchase any shares of VIMRx Holdings Common Stock. Except as set
forth in this Agreement or in Schedule 5.4(C), there are no outstanding
securities of VIMRx Holdings. Except as set forth on Schedule 5.4(C), there
are no outstanding obligations of VIMRx Holdings to repurchase, redeem or
otherwise acquire any securities of VIMRx Holdings.
(D)The authorized capital stock of Innovir UK consists of:
(i)Common Stock. 1,000 Ordinary Shares of which 1,000 shares are
issued and outstanding on the date of this Agreement.
All issued and outstanding Innovir UK Ordinary Shares have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as set forth in this Agreement or in Schedule 5.4(D), there are no
outstanding securities of Innovir UK. Except as set forth on Schedule
5.4(D), there are no outstanding obligations of Innovir UK to repurchase,
redeem or otherwise acquire any securities of Innovir UK.
(E)Innovir Germany is authorized to issue an unlimited amount of share
capital. The issued share capital of Innovir Germany is DM 50,000 all of
which is issued to VIMRx Holdings. There are no other equity interests
authorized, issued or outstanding in Innovir Germany.
(F)The authorized capital stock of VGI consists of:
(i)Common Stock. 5,000 shares of VGI Common Stock, of which 1,000
shares are issued and outstanding on the date of this Agreement.
All issued and outstanding shares of VGI Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as set forth in this Agreement or in Schedule 5.4(F), there are no
outstanding securities of VGI. Except as set forth on Schedule 5.4(F),
there are no outstanding obligations of VGI to repurchase, redeem or
otherwise acquire any securities of VGI.
(G)Ribonetics is authorized to issue an unlimited amount of share
capital. The issued share capital of Ribonetics is DM 50,000 all of which
is issued to VIMRx Holdings. There are no other equity interests
authorized, issued or outstanding in Ribonetics.
5.5 Valid Issuance of Preferred and Common Stock.
The shares of VIMRx Preferred Stock and VIMRx Common Stock that are being
acquired by the Seller hereunder, when authorized, issued and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly authorized and issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the other Transaction
Documents and under applicable state and federal securities laws. The VIMRx
Common Stock issuable upon conversion of the VIMRx Preferred Stock acquired
under this Agreement has been duly authorized and validly reserved for
issuance and, upon issuance upon such conversion in accordance with the
terms of the Certificate of Incorporation of VIMRx, will be duly and
validly authorized and issued, fully paid, and nonassessable and will be
free of restrictions on transfer other than restrictions on transfer under
this Agreement and the other Transaction Documents and under applicable
state and Federal securities laws.
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5.6 Brokers.
Other than Lazard Freres & Co., L.L.C., no broker, finder or other such
Person or entity is entitled to receive a finder's or broker's fee or
commission with respect to, the transactions contemplated hereby based on
arrangements made by or on behalf of VIMRx.
5.7 Financial Statements.
(A)Except as set forth on Schedule 5.7(A), VIMRx and Innovir have filed
all SEC Reports, if any, required to be filed by them with the SEC since
January 1, 1995 and December 23, 1996, respectively, each of which has
complied as to form in all material respects with applicable requirements
of the Securities Act and the Exchange Act. As of their respective dates,
none of such SEC Reports contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order the make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim
financial statements of VIMRx included in its SEC Reports have been
prepared in conformity with GAAP applied on a consistent basis (except as
may be indicated in the notes thereto), and present fairly, in all material
respects, the consolidated financial position of VIMRx as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements).
(B)Except (i) as disclosed or recorded in the unaudited consolidated
balance sheet of VIMRx at June 30, 1997 (including any notes or schedules
thereto), (ii) as set forth on the Schedules to this Agreement and (iii)
for liabilities incurred in the ordinary course of business, since June 30,
1997, which would not have a Material Adverse Effect on VIMRx or any
Controlled Subsidiary, VIMRx and the Controlled Subsidiaries have no
material liabilities of any nature (whether arising out of contract, tort,
statute or otherwise and whether direct or indirect, accrued, matured,
asserted or unasserted, absolute contingent or otherwise).
5.8 Absence of Certain Changes.
Since June 30, 1997, except as specifically disclosed in the SEC Reports
filed by VIMRx on or prior to the date of this Agreement or as set forth on
Schedule 5.8, and except for this Agreement and the Transaction Documents,
neither VIMRx nor Innovir has entered into any material transaction, or, in
any material respect, conducted its business or operations other than in
the ordinary course of business consistent with past practice. Since June
30, 1997, neither VIMRx nor Innovir has suffered or had any adverse change
in its business, results of operations, assets or financial condition,
other than those changes that are in the ordinary course of business, none
of which (individually or in the aggregate) would have, or constitute, a
Material Adverse Effect on VIMRx or Innovir.
5.9 Legal Proceedings.
(A)Except as set forth on Schedule 5.9 attached hereto, there are no
Actions pending, or to the knowledge of VIMRx, threatened against or
affecting VIMRx or any Controlled Subsidiary; and neither VIMRx nor any
Controlled Subsidiary is in default with respect to any Order which has
been issued against it. Except as set forth on Schedule 5.9, there are no
Orders issued against VIMRx or any Controlled Subsidiary. True and correct
copies of the pleadings (or, if there are no pleadings, then all material
documents (including correspondence) setting forth the nature of the
Action) relating to all Actions required to be disclosed on Schedule 5.9
(other than worker compensation claims) have been delivered to the Seller.
(B)Except as set forth on Schedule 5.9, there are no Actions in which
VIMRx or a Controlled Subsidiary is either a plaintiff or, if not a formal
proceeding, an aggrieved party or claimant. True and correct copies of the
pleadings (or, if there are no pleadings, then all material documents
(including correspondence) setting forth the nature of the Action) relating
to all such Actions have been delivered to the Seller.
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5.10 Compliance with Law.
Except as set forth on Schedule 5.10, VIMRx and each Controlled
Subsidiary has complied in all material respects with, and each such entity
and all of its properties are in compliance in all material respects with,
all material laws, orders, rules, and regulations of each Authority having
jurisdiction over such entity or its operations or properties.
5.11 Contracts and Commitments.
(A)Except as set forth on Schedule 5.11(A), there is no existing material
breach of any contract or agreement to which VIMRx or any Controlled
Subsidiary is a party by VIMRx or the relevant Controlled Subsidiary; to
the knowledge of VIMRx, and subject to the foregoing, no event has occurred
which, with the lapse of time or the giving of notice or both, is
reasonably likely to constitute a material breach of any such agreement by
VIMRx or the relevant Controlled Subsidiary or give rise to a right on the
part of any of the other parties thereto to terminate such agreement or to
deprive VIMRx or the relevant Controlled Subsidiary of any material right,
or accelerate any of its material obligations, thereunder.
(B)Except as set forth on Schedule 5.11(B), to the knowledge of VIMRx,
there is no existing material breach of any contract or agreement to which
VIMRx or any Controlled Subsidiary is a party by any party (other than
VIMRx and the relevant Controlled Subsidiary) thereto and no event has
occurred which, with the lapse of time or the giving of notice or both, is
reasonably likely to constitute a material breach thereof by such other
party or give rise to a right on the part of VIMRx or the relevant
Controlled Subsidiary to terminate such agreement or to deprive the other
party of any right, or accelerate any obligation of such party, thereunder.
(C)Except as set forth on Schedule 5.11(C), to the knowledge of VIMRx,
there are no circumstances which, if true, create a reasonable probability
that VIMRx or any Controlled Subsidiary will not, or will be unable to,
fulfill any of its material obligations, under any material agreement to
which it is a party.
(D)VIMRx (or the relevant Controlled Subsidiary, in the case of insurance
held by a Controlled Subsidiary) has not, during the current term of any
insurance policy which provides coverage with respect to persons,
properties or operations of VIMRx or any Controlled Subsidiary, received
any notice canceling or threatening to cancel or refusing to renew, based
(to the knowledge of VIMRx) on reasons relating directly to the business if
VIMRx or any Controlled Subsidiary, any such policy, and no policy insuring
any such persons, properties or operations has, based (to the knowledge of
VIMRx) on reasons relating directly to the business if VIMRx or any
Controlled Subsidiary, been canceled by the insurer within the last twelve
months.
5.12 Intellectual Property.
(A)Schedule 5.12(A) contains a list and description of all Patents and
Trademarks currently owned by or licensed to VIMRx or any Controlled
Subsidiary (separately identifying those which are owned and those which
are licensed and, if not owned by such entity, identifying the owner
thereof, if any).
(B)Schedule 5.12(B) contains a list and description of all material
Copyrights (registered or unregistered) licensed to VIMRx or any Controlled
Subsidiary (identifying the owner thereof and the related work).
(C)Schedule 5.12(C) contains a list of (i) all applications for
registration of any Intellectual Property owned by or licensed to VIMRx or
any Controlled Subsidiary as well as a list of all existing registrations
of any such Intellectual Property (in either case, identifying the
Intellectual Property, the application or registration number and the
jurisdiction thereof) and (ii) pending applications for any Patents where
VIMRx or any Controlled Subsidiary is listed as the owner or is the
licensee of any of the underlying technology
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(identifying the subject matter of the application, the relevant
application number, the jurisdiction thereof and the owner thereof). True
and correct copies of all such applications and registrations have been
provided to the Seller.
(D)Schedule 5.12(D) contains a list of all material documents relating to
product clearances relating to Patent infringement performed by or on
behalf of VIMRx or any Controlled Subsidiary. VIMRx has delivered to the
Seller true and correct copies of all such documents, if any.
(E)Schedule 5.12(E) contains a list and description (showing in each case
the parties thereto and, in the event the same has not been reduced to
writing, the material terms thereof) of all material agreements and
licenses to which VIMRx or any Controlled Subsidiary is a party or by which
it is bound which entitle VIMRx or any Controlled Subsidiary or a third
party to use, or restrict VIMRx's or any Controlled Subsidiary's or a
third-party's use of, (i) any Copyrights, Patents, Trademarks or
Information owned by, licensed to, or used by, VIMRx or any Controlled
Subsidiary.
(F)Except as disclosed in Schedule 5.12(F): (i) to the knowledge of
VIMRx, all Patents, and all Copyright and Trademark registrations, owned by
VIMRx or any Controlled Subsidiary are valid and in full force and effect,
and (ii) VIMRx has not received written notice (and is unaware of having
received any verbal notice) of any outstanding challenges, by any third
party, either to any such Patents or registrations or to any of the
applications described in Section 5.12(C).
(G)Except as disclosed in Schedule 5.12(G), VIMRx is not aware that there
now exists any use, by a third party, of any Intellectual Property which
violates any material Intellectual Property Right of VIMRx or any
Controlled Subsidiary.
(H)Except as set forth in Schedule 5.12(H), (i) to VIMRx's knowledge, no
infringement of any material Intellectual Property Right of any other
person or entity has occurred or results in any way from the current
operations of VIMRx or any Controlled Subsidiary, and (ii) no claim of any
infringement by VIMRx or any Controlled Subsidiary of any material
Intellectual Property Right of any other person or entity has been made,
asserted or threatened in writing (and VIMRx is unaware of any verbal such
claims) against and to VIMRx.
(I)With respect to all representations in this Section 5.12 which are
made to VIMRx's "knowledge" or which involve VIMRx's "awareness" of any
facts or circumstances, VIMRx represents and warrants that it has performed
a reasonable due diligence review with respect to the subject matter
thereof.
5.13 Environmental Matters.
(A)Schedule 5.13(A) lists all written notices (and all verbal notices of
which VIMRx is aware) received by VIMRx or any Controlled Subsidiary of
violations of Environmental Laws or environmental claims from environmental
Authorities since January 1, 1992 (in each case, only to the extent that
they relate(d) to a facility currently being occupied by VIMRx or such
Controlled Subsidiary). VIMRx has delivered to the Seller true and correct
copies of all such notices, claims and reports, as well as all reports of
VIMRx or any Controlled Subsidiary filed with such Authorities since such
date.
(B)Except as set forth in Schedule 5.13(B), with respect only to any
facility currently occupied by VIMRx or any Controlled Subsidiary, to the
knowledge of VIMRx, (i) there has been no release or discharge by VIMRx (or
any other Person) of any Contaminant in or on any such facility (or the
land upon which it is situated) and (ii) there otherwise exist no
Contaminants on or in any such real property, in any material quantity,
which, in either case, would (a) constitute or have constituted a material
violation of any Environmental Law, or (b) give rise to an obligation on
the part of VIMRx or any Controlled Subsidiary, its assigns or successors
in interest to effect an environmental cleanup or remediation.
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5.14 Labor Relations.
VIMRx, Innovir, Innovir Holdings, Innovir UK, Innovir Germany, VGI and
Ribonetics employ 12, 31, 0, 10, 12, 2 and 0 employees, respectively, none
of whom is subject to union or collective bargaining agreements by which
such entity is bound or subject. None of such entities has, at any time
during the last five years, had, nor is there now to the knowledge of VIMRx
threatened, a strike, picket, work stoppage, work slowdown, union
organizing activity or other labor trouble that has had or would be
reasonably likely to have a Material Adverse Effect on VIMRx.
5.15 Employee Benefit Plans.
(A)Except as set forth in Schedule 5.15(A), neither VIMRx nor any
Controlled Subsidiary is a party to or bound by any oral or written Non-
ERISA Plans.
(B)Except as set forth in Schedule 5.15(B), VIMRx and each Controlled
Subsidiary does not maintain, has never maintained, is not required to
contribute to, and has never been required to contribute to or pay any
amount with respect to, and has no liability with respect to any ERISA
Benefit Plans. Except as set forth in Schedule 5.15(B), and, to the best of
VIMRx's knowledge, each of the plans described in Schedule 5.15(B) that is
an ERISA Benefit Plan ("VIMRx Group ERISA Benefit Plan") complies in form
and is operated in all material respects in accordance with the
requirements of ERISA and, where applicable, the Code. VIMRx and, to the
knowledge of VIMRx, each Controlled Subsidiary, as applicable, has complied
with the health care continuation requirements of Section 601, et. seq., of
ERISA with respect to its employees and their spouses, former spouses and
dependents.
(C)Except as set forth on Schedule 5.15(C), VIMRx has delivered to the
Seller, with respect to each VIMRx Group ERISA Benefit Plan, correct and
complete copies of (i) all plan documents and amendments, trust agreements
and insurance contracts and policies, (ii) the current and, to the extent
available, the prior summary plan description, (iii) the most recent
financial statements, if any, and (iv) where applicable, a determination
letter of the Internal Revenue Service evidencing the plan's qualification
under the Code.
(D)Neither VIMRx nor any Controlled Subsidiary has any obligations under
any VIMRx Group ERISA Benefit Plan or otherwise to provide health benefits
to former employees of VIMRx or any Controlled Subsidiary, except as
specifically required by law. Neither VIMRx nor any Controlled Subsidiary
has any liability, potential or otherwise, under Section 4069 or Section
4212(c) of ERISA. Neither VIMRx nor any Controlled Subsidiary has ever made
a contribution to a voluntary employees' beneficiary association described
in Section 501(c)(9) of the Code.
(E)Neither VIMRx nor, to the knowledge of VIMRx, any Controlled
Subsidiary or any other "disqualified person" (within the meaning of
Section 4975 of the Code) or "party in interest" (within the meaning of
Section 3(14) of ERISA) has engaged in any "prohibited transaction" (within
the meaning of Section 4975 of the Code or Section 406 of ERISA) with
respect to any VIMRx Group ERISA Benefit Plan which could subject any such
Plan (or its related trust) or VIMRx or any Controlled Subsidiary or any
officer, director or employee of VIMRx or any Controlled Subsidiary to the
penalty or tax under Section 402(i) or Section 402(1) of ERISA or Section
4975 of the Code.
(F)There is no pending or, to the knowledge of VIMRx, threatened claim
which alleges any violation of ERISA or any other law (i) by or on behalf
of any VIMRx Group ERISA Benefit Plan or (ii) by any employee of VIMRx or
any Controlled Subsidiary or any plan participant or beneficiary against
any such plan.
(G)There does not now exist (and has not in the past existed) an
"employee pension benefit plan," as defined in Section 3(2) of ERISA,
maintained by VIMRx or any Controlled Subsidiary or to which VIMRx or any
Controlled Subsidiary contributes or is required to contribute (or
contributed or was required
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to contribute in the past), including any multiemployer employee pension
benefit plan, other than an individual account plan within the meaning of
Section 3(34) or ERISA.
(H)Except as set forth on Schedule 5.15(H), there has been no complete or
partial termination of any VIMRx Group ERISA Benefit Plan and no action
taken by VIMRx or its Affiliates at any time during the three years
preceding the Closing date which has or will result in termination of any
employee benefit plan in effect during such period; nor has there been any
"reportable event," as such term is defined in Section 4043(c) of ERISA and
the regulations promulgated thereunder, with respect to any VIMRx Group
ERISA Benefit Plan; and except by reason of discontinuance of any VIMRx
Group ERISA Benefit Plan as a result of or following the transactions
contemplated by this Agreement, no VIMRx Group ERISA Benefit Plan or other
employee plan, arrangement or agreement of VIMRx or any Controlled
Subsidiary provides for additional or accelerated payments or other
consideration to be made on account of the transactions contemplated by
this Agreement.
5.16 Proxy Statement.
The Proxy Statement on Schedule 14A to be prepared by VIMRx and delivered
to its stockholders in connection with the stockholders' meeting referenced
to in Section 6.1(B)(v) (the "Proxy Statement") shall not, at the time it
is delivered to stockholders, contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided, that
this representation shall be deemed not to apply to any written information
provided by the Seller or its Representatives to VIMRx for inclusion in the
Proxy Statement. The Proxy Statement will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules
and regulations thereunder.
5.17 Books and Records.
Except as set forth in Schedule 5.17, all of the books and records of
VIMRx and each Controlled Subsidiary (including all minute books and stock
records) are accurate and complete in all material respects, are kept in
the ordinary course of business and are maintained at the principal offices
of VIMRx or the relevant Controlled Subsidiary.
5.18 Financial Ability.
VIMRx has the financial ability and resources to purchase $10,000,000 in
principal amount of the Buyer Convertible Debentures to be issued to it by
the Buyer on the Closing Date.
5.19 Experience.
VIMRx is experienced in evaluating companies and businesses such as the
Business of the Division and is able to fend for itself in transactions
such as the one contemplated by this Agreement, has such knowledge,
sophistication, and experience in financial and business matters that it is
capable of evaluating the merits and risks of (i) the acquisition of the
Assets of the Division pursuant to the terms and conditions of this
Agreement and (ii) its prospective investment in the Buyer and the Seller,
and has the ability to bear the economic risks of the investment.
5.20 Controlled Subsidiaries.
Innovir, VIMRx Holdings, Innovir UK, Innovir Germany, Cambes, VGI and
Ribonetics are the only Controlled Subsidiaries of VIMRx; provided,
however, that references elsewhere in this Agreement to "Controlled
Subsidiary" shall be deemed not to refer to Cambes.
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5.21 Full Disclosure.
Without limiting any of the foregoing, no representation or warranty by
VIMRx herein and no other statement or certificate furnished by or on
behalf of VIMRx to the Seller or its Representatives pursuant to this
Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to VIMRx that has not been
disclosed in this Agreement which (i) has had, or would reasonably be
expected to have, a Material Adverse Effect on VIMRx or (ii) which would
reasonably be expected to materially and adversely affect the ability of
VIMRx to perform its obligations under this Agreement.
6.Certain Covenants and Agreements.
6.1 Pre-Closing Covenants.
(A)Covenants of the Seller. From the date hereof (except as set forth in
Section 6.1(A) (viii) below) until the Closing Date, the Seller covenants
that it shall do the following (it being agreed by Buyer that it shall not
unreasonably withhold its consent, which shall not be valid unless in
writing, to any proposed departures, by the Seller, from the provisions of
Sections 6.1(A)(xi)-(xviii) below):
(i) preserve and maintain its corporate existence and good standing
in the jurisdiction of its incorporation;
(ii) continue to operate the Division, in all material respects, in
the ordinary course of business;
(iii) maintain, keep and preserve, in all material respects, all of
the material properties and assets used in the operation of the
Division;
(iv) keep reasonably adequate books and records with respect to the
Division;
(v) maintain the insurance policies in effect as of the date of this
Agreement which relate to the Assets, or operations, of the Division;
(vi) comply (with respect to the persons, assets and operations of
the Division), in all material respects, with all applicable laws,
rules, regulations and orders;
(vii) at any reasonable time and from time to time, (a) permit the
Buyer and VIMRx, or any agent or representative of either, to examine
and make copies and abstracts from any and all of the Seller's records
and books relating to the Division and visit and inspect any and all of
its assets and properties relating to the Division and (b) make
available its officers, employees and independent accountants to
discuss with the Buyer, VIMRx and their representatives the Division's
affairs, finances and accounts;
(viii) in the event and to the extent, that events or circumstances
occur or arise, or the Seller becomes aware of events or circumstances,
which render any of the representations and warranties set forth in
Section 3 hereof inaccurate, and without limiting in any way the
Buyer's rights under Section 7.1, promptly notify the Buyer and VIMRx
thereof by delivering to Buyer and VIMRx new, updated or amended (and
red-lined) Schedules relating to such events or circumstances (it being
agreed by the parties that, notwithstanding any other provision hereof,
this Section 6.1(A)(viii) shall apply (a) only during the period
beginning on the day following the end of the Disclosure Period and
ending on the Closing Date and (b) only in the event that this
Agreement shall not have been terminated in accordance with Section
14.2);
(ix)exercise commercially reasonable efforts to: (a) preserve intact,
in all material respects, the Division's business organization, (b)
keep available the services of its employees and (c) maintain
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satisfactory relationships with suppliers, contractors, customers,
creditors and others having business relationships with the Seller or
the Division;
(x) promptly provide to VIMRx, at its request and in writing, all
information, with respect to the Seller and its business, properties,
personnel and operations, required for inclusion in the Proxy Statement
and, to the extent that any information previously provided to VIMRx is
discovered to be false or misleading, provide to VIMRx, in writing,
such additional or different information as may be required to correct
such deficiency;
(xi) not mortgage, pledge or subject any of the Assets to any
Encumbrance, other than Permitted Encumbrances;
(xii) not sell, transfer or otherwise dispose of any assets or
property included in the Assets, except in connection with (i) the sale
of inventory in the ordinary course of business or (ii) the sale or
other disposal of assets no longer needed for the operation of the
Division in the ordinary course of business;
(xiii) not waive, release or compromise any material claims or rights
of the Seller relating to the operation of the Division (other than in
connection with the CellPro and Saxholm Litigations);
(xiv) not, except in the ordinary course of business, increase the
compensation (including severance and termination pay) payable to any
employees of the Division; or enter into any agreement with any
employee of the Division providing for a salary in excess of $50,000
per year;
(xv) not (a) enter into any material transaction or agreement with
respect to the Division or (b) amend or terminate any Included
Agreement or Primary License, other than in the ordinary course of
business;
(xvi) not enter into or amend any contract or other agreement, which
constitutes or shall constitute part of the Assumed Liabilities, in
connection with the Division pursuant to which it agrees to indemnify
any party or to refrain from competing with any party;
(xvii) not (i) materially change any of its business policies or
practices relating solely to the Division, including, without
limitation, those relating to advertising, marketing, pricing,
purchasing, personnel, budget, job acquisition or bidding, (ii) make
any material change in the types, nature, composition or quality of the
products of the Division; and
(xviii) not abandon or forfeit any Intellectual Property, or any
application for protection or registration (including patenting) of any
Intellectual Property included in the Assets.
(B)Covenants of VIMRx. From the date hereof (except as set forth in
Section 6.1(B)(vii) below) until the Closing Date, VIMRx covenants that it
shall, and shall (except with respect to items (iv), (v) and (vii) below)
cause the Buyer and each Controlled Subsidiary to:
(i)continue to operate, in all material respects, in the ordinary
course of business;
(ii) provide to the Seller copies of all management letters, audit
letters and reports, including, without limitation, all drafts or
preliminary versions of such letters and reports, in each case,
prepared by its outside auditors in connection with any audit of its
internal controls and procedures;
(iii)not issue, deliver or sell, or authorize or propose to issue,
deliver or sell (whether through the granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), any
shares of its capital stock of any class or series, or any other
securities other than options, warrants, commitments, subscriptions or
rights to purchase under arrangements existing as of the Closing Date
in amounts previously disclosed in writing to the Seller;
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(iv)promptly (but in any event on or prior to October 15, 1997)
prepare and file the Proxy Statement, and prior to filing the Proxy
Statement with the SEC, submit such material to the Seller and its
counsel and provide the Seller and its counsel a reasonable opportunity
to review and comment upon such materials;
(v)duly and promptly call, give notice of, convene and hold a
stockholders' meeting for the purpose of considering and taking action
upon this Agreement and the Transaction Documents and the transactions
contemplated hereunder, and, subject to the fiduciary duties of the
Board of Directors of VIMRx under applicable law, include in the Proxy
Statement the recommendation of the Board of Directors of VIMRx that
stockholders of VIMRx vote in favor of the approval and adoption of
this Agreement and the transactions contemplated hereby;
(vi)at any reasonable time and from time to time, (a) permit the
Seller, or any representative or agent of the Seller, to examine and
make copies and abstracts from any and all of its records and books and
visit and inspect any and all of its assets and properties and (b) make
available its officers, employees and independent accountants to
discuss with the Seller and its representatives its affairs, finances
and accounts; and
(vii)in the event and to the extent, that events or circumstances
occur or arise, or VIMRx becomes aware of events or circumstances,
which render any of the representations and warranties set forth in
Section 5 hereof inaccurate, and without limiting in any way the
Seller's rights under Section 7.2, promptly notify the Seller thereof
by delivering to the Seller new, updated or amended (and red-lined)
Schedules relating to such events or circumstances (it being agreed by
the parties that, notwithstanding any other provision hereof, this
Section 6.1(B)(vii) shall apply (a) only during the period beginning on
the day following the end of the Disclosure Period and ending on the
Closing Date and (b) only in the event that this Agreement shall not
have been terminated in accordance with Section 14.2);
(C)Filings. The Buyer and/or VIMRx, as appropriate, shall, and the Seller
shall (and shall cause its Affiliated entities, as appropriate, to) (i)
promptly file, and use their best efforts to respond as promptly as
practicable to all inquiries received from the Federal Trade Commission or
the Antitrust Division of the Department of Justice for additional
information or documentation with respect to, the Notification and Report
Forms required to be filed under Hart-Scott in connection with the
transactions contemplated hereby, (ii) promptly take all such action as may
be necessary under any laws applicable to or necessary for, and will file
and, if appropriate, use their reasonable best efforts to have declared
effective or approved all documents and notifications with all Authorities
which they deem necessary or appropriate for, the consummation of the
transactions contemplated hereby and, (iii) promptly give any other party
hereto information requested by such other party pertaining to it and its
subsidiaries and Affiliates which is reasonably necessary to enable such
other party to take such actions and file in a timely manner all reports
and documents required to be so filed by or under applicable laws.
(D)Negotiations with Others. From the date hereof until the Closing Date,
neither the Seller nor any of its Affiliates or Representatives, directly
or indirectly, will (i) solicit or initiate discussions or engage in
negotiations or discussions with any other person or entity (other than the
Buyer or any of its Affiliates or Representatives) involving (x) the
possible acquisition of a substantial portion of the Assets, or (y) any
form of extraordinary transaction that involves the Division or the
Business (a "Competing Transaction"); (ii) provide information to any
person or entity (other than the Buyer or its Affiliates or
Representatives) with respect to a possible Competing Transaction (except
that the Buyer acknowledges that the Seller provided such information to
third parties, subject to confidentiality agreements, prior to June 11,
1997) or (iii) enter into any Competing Transaction with any person or
entity other than the Buyer or any of its Affiliates. If the Seller
receives any offer or proposal to enter into any Competing Transaction or
to enter into any negotiation relating thereto, the Seller immediately will
notify the Buyer of the existence of such offer or proposal, which notice
shall include information as to the identity of the offeror or the party
making any such proposal and the specific terms of such offer or proposal.
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6.2 Post-Closing Covenants.
(A)Milestone Payments. The parties agree that subsequent to the Closing,
the Seller shall have the additional rights set forth below:
(i)Upon the occurrence of each Milestone, the Seller shall have the
right to receive from the Buyer, within 45 days after the applicable
Occurrence Date, the amount set forth opposite such Milestone on
Exhibit N.
(ii)The Buyer agrees that, in the event that, as of the Occurrence
Date relating to any Milestone, the Cash Position of the Buyer shall be
less than Net Projected Expenses, VIMRx shall, within 45 days of such
Occurrence Date, lend to the Buyer (for the purpose of enabling the
Buyer to pay the applicable Milestone Payment) a sum equal to such
Milestone Payment. In consideration of any such loan, the Buyer shall
execute and deliver to VIMRx a subordinated promissory note,
substantially in the form annexed hereto as Exhibit V.
(B)Assignability. To the extent that any lease, contract, license,
agreement, sales or purchase order, commitment, property interest or other
asset included in the Assets, or any claim, right or benefit arising
thereunder or resulting therefrom (each an "Interest") is not capable of
being sold, assigned, transferred or conveyed without the approval,
consent, novation or waiver of the issuer thereof or the other party or
parties thereto, or any other third person (including an Authority) (or
would be breached in the event of a sale, assignment, transfer, or
conveyance without such approval, consent or waiver), this Agreement shall
not, in the event any such issuer or third party shall object to such
assignment, constitute a sale, assignment, transfer or conveyance thereof,
or an attempted sale, assignment, transfer or conveyance thereof absent
such approval, consent or waiver. At the request of the Buyer, the Seller
shall use its commercially reasonable best efforts, both prior and
subsequent to the Closing Date, to obtain all necessary approvals, consents
or waivers necessary to convey to the Buyer each such Interest as soon as
reasonably practicable; provided, however, that the Seller shall not be
required to pay any additional consideration in order to obtain such
approvals, consents or waivers. To the extent any of the approvals,
consents or waivers referred to in this Section 6.2(B) have not been
obtained as of the Closing, the Seller shall, during the remaining term of
such Interest (and without limiting the Buyer's right to have the Seller
persist, post-Closing, in attempting to obtain any such approval, consent
or waiver), exercise commercially reasonable best efforts to cooperate with
the Buyer in any reasonable and lawful arrangements designed to provide the
benefits of such Interest to the Buyer.
(C)Facilitation of Possession. Subsequent to the Closing, the Seller, at
the request of the Buyer, shall write letters to, and otherwise communicate
with third parties, and do such other reasonable acts and things as may be
necessary or appropriate, to facilitate the gaining of possession, by the
Buyer of the Assets.
(D)Management Slate. The Seller agrees (so long as (i) it shall own 3% or
more of the issued and outstanding capital stock of VIMRx and (ii) its
representative (if it shall have chosen to designate one) shall retain a
seat on the VIMRx Board of Directors, per Section 6.2(E) below) to vote all
of its shares of stock in VIMRx (whether at meetings, pursuant to written
consents or otherwise) for the election to the Board of Directors of VIMRx
of all candidates who are recommended to be elected thereto by the then-
current Board of Directors.
(E)Board Seat. VIMRx agrees that until the date on which the Seller shall
cease to own at least 3% of the issued and outstanding capital stock of
VIMRx, VIMRx shall nominate and recommend to its stockholders, and to vote
all shares for which management receives a proxy (other than proxies to the
contrary) for the election of one Person selected by the Seller as its
representative to the Board of Directors of VIMRx.
(F)Internal Control Procedures. VIMRx agrees that it shall (i) cause its
outside auditors to perform an audit of the internal controls and
procedures of VIMRx, and (ii) adopt all recommendations regarding such
internal controls and procedures as its Board of Directors shall deem to be
appropriate for adoption.
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(G)Round Lake and Munich Employees. The Seller shall bear the expenses
and costs incurred in connection with the closing of the Round Lake
Facility and the expenses and costs of relocating employees of the Seller
employed at the Round Lake Facility to the Parker Facility; provided,
however, that such relocation shall be in accordance with standard
relocation policies of the Seller in effect as of the date of this
Agreement and the expenses and costs of relocating such employees (which
shall be borne by the Seller hereunder) shall not exceed those which would
be borne by the Seller under such standard relocation policies of the
Seller. The Seller shall bear the expenses and costs incurred in connection
with the closing of the Munich Facility; provided, however, that the Seller
shall not bear any expenses or costs incurred in connection with the
relocation of any employees of the Munich Facility to the Parker Facility
or any other facility operated by or on behalf of the Buyer.
(H)Intellectual Property. The Seller shall cooperate, and shall cause its
Representatives to cooperate, with the Buyer in (i) obtaining, maintaining,
enforcing, defending and confirming the Buyer's ownership of the
Intellectual Property included in the Assets (and the Buyer shall reimburse
the Seller's reasonable out of pocket costs, including, without limitation,
reasonable attorneys fees, incurred in connection therewith) and (ii)
enforcing and defending the Intellectual Property Rights arising from the
Primary Licenses.
(I)Chiron Obligations. (i) The Buyer hereby acknowledges that the Seller
has performance obligations under the Chiron Collaboration Agreement and
agrees, at the Seller's request, to allow the Seller to satisfy the
Seller's performance obligations under the Chiron Collaboration Agreement
including, without limitation (a) allowing the Seller to achieve a
Qualifying Acceptance by the Seller (as that term is defined in the Chiron
Collaboration Agreement), (b) after a Qualifying Acceptance has been
achieved, to permit the Seller to develop and/or manufacture to the
Seller's specifications, a Semi-Automated Baxter System (as that term is
defined in the Chiron Collaboration Agreement), and (c) allowing the Seller
to perform all other obligations of the Seller; provided, that the Semi-
Automated Baxter System will not involve Ex Vivo Cell Processing (as that
term is defined in the Hardware and Disposables Manufacturing Agreement).
Without limitation of the foregoing, and notwithstanding any terms of
this Agreement or the other Transaction Documents to the contrary, the
Buyer agrees, (i) at the request of Seller, to provide to Seller such
assistance and information (at Seller's cost) as may be reasonably required
for Seller to comply with its obligations under Sections 3.8 and 3.9 of the
Chiron Collaboration Agreement and (ii) to abide by the exclusivity
provisions of Section 3.1 of the Chiron Collaboration Agreement pursuant to
clause b(ii) of the third sentence of Section 3.5(a) of the Chiron
Collaboration Agreement in the same manner as such provisions apply to
Baxter. The Buyer further agrees that the Buyer will not, directly or
indirectly (in the event Buyer otherwise has the right to do so), and/or
shall not require Seller to, violate the terms of Section 8.4 of the Chiron
Collaboration Agreement.
(ii)The Semi-Automated Baxter System shall be distributed by the
Seller in compliance with the Non-Competition and Confidentiality
Agreement.
(iii)In return for the Buyer's agreeing to the above, the Seller will
use commercially reasonable efforts to obtain from Chiron Corporation,
a Delaware corporation, the right to grant a sublicense to the Buyer
and its Affiliates under (and on the same terms as) the license granted
to the Seller in Section 2.1(b) of the Chiron Collaboration Agreement.
In the event that the Seller shall obtain such right, the Seller will
grant such sublicense to the Buyer and its Affiliates.
(iv)The Seller shall indemnify and hold harmless the Buyer from and
against any claims of patent or other Intellectual Property
infringement, and any product liability claims, incurred by the Buyer
in connection with the Seller's performance of its obligations under
the Chiron Collaboration Agreement; provided, however, that this
indemnity shall not apply to any claims arising out of actions or
omissions of the Buyer or the performance of Buyer's obligations under
any sublicense, referred to in Section 6.2(I)(iii) above, which it may
enter into with Seller, with the consent of Chiron.
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(J)Potential Post-Closing Adjustment.
(i)Within 120 days after the Closing Date, the Buyer shall prepare
and deliver to the Seller, or cause to be prepared and delivered to the
Seller, a statement (the "FFE Statement") showing the Buyer's good
faith determination, based on a physical inventory, as to the aggregate
net book value of all furniture, fixtures and equipment included in the
Assets (hereinafter, the "Net Book Value"). The Seller shall reimburse
the Buyer for the out-of-pocket costs incurred by the Buyer in so
preparing, or causing to be prepared, the FFE Statement, but in no
event shall the Seller be obligated to reimburse the Buyer for an
aggregate amount of more than $20,000.
(ii)Within 45 days after the date on which the Buyer shall have
delivered the FFE Statement to the Seller (such 45th day being the
"Lapse Date"), the Seller shall notify the Buyer as to whether the
Seller disputes the FFE Statement (such notice being the "FFE Notice").
In the event that the Seller shall, prior to the Lapse Date, notify the
Buyer that it agrees with the FFE Statement, the FFE Statement shall be
deemed, on the date of giving of such notice, to have been finally
determined for purposes of Section 6.2(J)(iv). In the event that the
Seller fails to deliver an FFE Notice to the Buyer on or before such
45th day, the Seller shall be deemed to have agreed to the FFE
Statement and the FFE Statement shall be deemed likewise to have been
finally determined for purposes of Section 6.2(J)(iv).
(iii)In the event that the Seller timely delivers an FFE Notice which
indicates that it disputes the FFE Statement, the Seller and the Buyer
shall, during the 30-day period after the date on which the FFE Notice
shall have been given to the Buyer, negotiate in good faith to resolve
any disagreements with respect to the FFE Statement. If at the end of
such 30-day period, no such resolution is reached, such disagreements
shall, under the principles set forth in this Section 6.2(J), be
resolved by a "Big Six" firm of independent accountants (other than
KPMG and Price Waterhouse) upon which the Seller and the Buyer shall
agree (the "Jointly Selected Firm"), and such firm shall review the FFE
Statement and determine whether any revisions thereto are appropriate.
If the parties are unable, within five days after the expiration of
such 30 day period, to agree upon the Jointly Selected Firm, the Seller
and the Buyer shall cause an independent mutually acceptable third
party to write the names of each of such other four "Big Six" firms on
four pieces of paper and then draw one of such names blindly, and
randomly, from a container (the firm so chosen being referred to as the
"Appointed Firm"). The parties shall retain the Appointed Firm to
review and, if appropriate, revise the FFE Statement. The Jointly
Selected Firm or the Appointed Firm, as the case may be, shall be
instructed promptly to discharge its task and to deliver written notice
of its decision (and, if appropriate, a revised FFE Statement)
simultaneously to the Buyer and the Seller. The date as of which the
Buyer and the Seller shall have received such notice shall be the date
on which the FFE Statement shall be deemed to have been finally
determined for purposes of Section 6.2(J)(iv). The determination made
by the Jointly Selected Firm or the Appointed Firm shall be conclusive
and binding on the parties hereto, absent manifest error. The fees and
disbursements of the Jointly Selected Firm or the Appointed Firm, as
the case may be, shall be divided equally between the Seller, on the
one hand, and the Buyer, on the other hand.
(iv)Within 10 days after the date on which the FFE Statement shall
have been finally determined pursuant to the above provisions, the
parties shall comply with either subsection (a) or (b) below, as
applicable:
(a)if the Net Book Value shown on the final FFE Statement shall
equal or exceed $7,200,000, no adjustment shall be in order and no
additional sum shall be payable by Seller to Buyer;
(b)if the Net Book Value shall be less than $7,200,000, the Seller
shall pay to the Buyer the excess of (1) $7,200,000 over (2) the Net
Book Value.
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(K)Preferred Stock. VIMRx shall not issue or sell any shares of VIMRx
Preferred Stock to any person other than the Seller or an Affiliate of the
Seller, so long as the Seller or any Affiliate of the Seller remains the
beneficial owner of any shares of VIMRx Preferred Stock.
7.Conditions to Obligations of the Buyer, VIMRx and the Seller
7.1 The Buyer's and VIMRx's Conditions.
The obligations of the Buyer and VIMRx to consummate the transactions
contemplated hereunder are conditioned upon the following, any or all of
which may be waived by the Buyer and VIMRx in their sole and absolute
discretion:
(A)All representations and warranties of the Seller contained in this
Agreement that are qualified as to materiality shall be true and correct on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date,
and all representations and warranties of the Seller contained in this
Agreement which are not so qualified shall, in all material respects, be
true and correct on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and
as of the Closing Date.
(B)The Seller shall, in all material respects, have performed and
complied with all of the covenants and agreements (including the agreement
to make the deliveries set forth in Section 8.1) required by or pursuant to
this Agreement, or any Exhibit or instrument delivered pursuant to this
Agreement, to be performed or complied with by it on or prior to the
Closing Date.
(C)The Buyer shall have received an executed consent from The Irvine
Company, in form reasonably satisfactory to the Buyer, consenting to the
assignment and delegation to the Seller of the lease relating to the Parker
Facility.
(D)The Buyer shall have received an executed estoppel certificate, in
form and substance reasonably satisfactory to the Buyer, from The Irvine
Company relating to the aforesaid lease.
(E)The Seller shall have obtained and delivered to the Buyer consents, in
form reasonably satisfactory to the Buyer, executed by (i) every party
(other than the Seller) to each agreement set forth on Exhibit W,
consenting to the assignment and delegation to the Buyer of such agreement
and (ii) every party (other than the Seller) to every material Included
Agreement to which the Seller becomes a party after the date hereof whose
consent to the assignment and delegation of such agreement to the Buyer is
required in order to avoid a violation of such agreement.
(F)The Seller and the Buyer shall, simultaneously with the Closing, have
executed and delivered the Services Agreement.
(G)At least 75% of all of the Division's United States employees to whom
the Buyer shall have sent an offer letter (to be drafted by the Buyer and
containing a statement requesting the recipient to countersign it if such
recipient is interested in becoming an employee of the Buyer) shall have
countersigned such letter and delivered it to the Buyer; provided, however,
that this condition shall be waived and shall be deemed to have been
satisfied unless (i) the Buyer shall have mailed such offer letter to said
employees on or prior to November 12, 1997 and (ii) such offer letter shall
contain a statement from the Buyer requesting a response from each employee
recipient on or prior to November 26, 1997.
(H)The Seller shall have obtained and delivered to the Buyer consents, in
form reasonably satisfactory to the Buyer, from Becton, Dickenson and
Company, Cetus Oncology Corporation and Bernd Dorken relating to the
permission of such parties to execute and deliver the First BD Sublicense,
the Second BD Sublicense, the Dorken Sublicense and the Chiron Sublicense,
as the case may be.
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(I)The Seyfarth Opinion shall, simultaneously with the Closing, have been
delivered to the Buyer and VIMRx.
7.2 The Seller's Conditions.
The obligations of the Seller to consummate the transactions contemplated
hereunder are conditioned upon the following, any or all of which may be
waived by the Seller in its sole and absolute discretion:
(A)All warranties and representations of the Buyer and VIMRx contained in
this Agreement that are qualified as to materiality shall be true and
correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date, and all representations and warranties of the Buyer and VIMRx
which are not so qualified shall, in all material respects, be true and
correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date.
(B)The Buyer and VIMRx shall, in all material respects, have performed
and complied with all of the covenants and agreements (including the
agreements to make the deliveries set forth in Sections 8.2 and 8.3)
required by or pursuant to this Agreement, or any Exhibit, Section or
instrument delivered pursuant to this Agreement, to be performed or
complied with by them on or prior to the Closing Date.
(C)The Epstein Opinion shall, simultaneously with the Closing, have been
delivered to the Seller.
(D)The Buyer shall have adopted an employee stock option plan.
7.3 Mutual Conditions.
The respective obligations of each party hereto to consummate the
transactions contemplated hereunder are conditioned upon the following:
(A)This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of VIMRx's stockholders in
accordance with applicable Delaware General Corporation Laws and the rules
and regulations of Nasdaq.
(B)No order of any court or Authority shall be in effect which restrains
or prohibits the transactions contemplated hereby or which would materially
limit or materially and adversely affect the ability of the Buyer to
conduct the Business of the Division as now conducted by it, and no suit,
action or proceeding by any Authority or other person shall be pending or
threatened which seeks to restrain the consummation, or challenges the
validity or legality, of the transactions contemplated by this Agreement or
which would, if successful, materially limit or materially and adversely
affect the ability of the Buyer to conduct the business of the Division.
(C)Any waiting period applicable under Hart-Scott and relating to the
transactions contemplated hereby shall have terminated or expired.
(D)All other consents, approvals or orders of any Authority, the granting
of which is required for the lawful consummation of the transactions
contemplated hereby, shall have been obtained; and all other waiting and
notification periods specified under applicable law the termination or
expiration of which is necessary for such consummation shall have been
terminated or shall have expired.
(E)VIMRx shall have mailed the Proxy Statement to the VIMRx stockholders
and such Proxy Statement shall have included the recommendation of the
VIMRx Board of Directors that the stockholders of VIMRx vote in favor of
the approval and adoption of the actions to authorize and issue the VIMRx
Preferred Stock and issue the VIMRx Common Stock to the Seller pursuant to
this Agreement.
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8.Deliveries of the Parties.
8.1 The Seller's Deliveries.
(A)To the Buyer. At the Closing, the Seller shall deliver, or cause to be
delivered, to the Buyer the following:
(i)a Bill of Sale from the Seller, and a Bill of Sale from each
Inventory Entity (and from each other entity, if any, which shall then
own any Included Inventory or other assets constituting Assets), each
to be in a form reasonably satisfactory to the Buyer;
(ii)a good standing certificate, dated as of a date not more than
five days prior to the Closing Date, as to the corporate existence and
good standing of the Seller, certified by the Secretary of State of
Delaware;
(iii)[intentionally omitted];
(iv)such individual or general contract assignments as Buyer shall
reasonably request;
(v)all governmental or other approvals, consents, grants, and
licenses, if any, required to be procured by the Seller in connection
with the transactions contemplated hereby;
(vi)[INTENTIONALLY OMITTED];
(vii)a certificate of the Secretary of the Seller certifying and
including the resolutions of the Board of Directors authorizing the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby and attesting to the incumbency and
signatures of all officers executing any documents in connection with
the transactions contemplated by this Agreement;
(viii) an executed copy of each of the Transaction Documents to which
the Seller is a party;
(ix)the sum of $10 million, representing the purchase price for the
Buyer Convertible Debenture described in Section 8.3(B)(i), such sum to
be paid by wire transfer of immediately available Federal funds to an
account of the Buyer designated by the Buyer;
(x)the additional sum of $20 million, representing the price for the
purchase of the additional Buyer Convertible Debenture described in
Section 8.3(B)(ii), such sum to be paid in the same manner provided for
in clause (ix) above;
(xi)such other executed assignments, bills of sale, endorsements,
notices, consents, novations, assurances and such other instruments of
conveyance and transfer as counsel for the Buyer shall reasonably
request and as shall be effective to vest in the Buyer the Seller's
rights, title and interest in the Assets;
(xii)a separate letter to the FDA (on the Seller's letterhead),
executed by an authorized officer of the Seller and complying with
relevant FDA laws and policy, in respect of each of the categories of
FDA Submissions listed in Schedule 3.5(F) assigning to the Buyer all of
the Seller's right, title and interest in and to each FDA Submission
listed on Schedule 3.5.
(xiii) an executed and notarized assignment of the United States
registration for each trademark included in the Assets which is
registered with the PTO, the form of which assignment shall be
reasonably satisfactory to the Buyer;
(xiv) an executed and notarized assignment of the United States
trademark application for each trademark included in the Assets which
is the subject of an application for registration filed with the PTO,
the form of which assignment shall be reasonably satisfactory to the
Buyer;
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(xv)an executed and notarized assignment of United States
patents/patent applications for each United States patent or patent
application included in the Assets, the form of which assignment shall
be reasonably satisfactory to the Buyer.
(xvi) a true and correct certificate (the precise form of which shall
be reasonably satisfactory to KPMG) showing, for each physical location
where Included Inventory was held by the Seller or any Inventory Entity
as of last day of the month immediately preceding the month in which
the Closing shall occur, (i) the street address of each location, (ii)
the number of units of each kind of Included Inventory at such location
as of such date and (iii) for each such kind of Included Inventory
thereat, the aggregate book value of all units of such kind of Included
Inventory at such location.
(B)To VIMRx. At the Closing, the Seller shall deliver to VIMRx the
following:
(i)an executed copy of each of the Transaction Documents to which the
Seller is a party; and
(ii)[intentionally omitted].
8.2 Deliveries of VIMRx.
(A)To the Seller. At the Closing, VIMRx shall deliver to the Seller the
following:
(i)the Purchase Consideration due at Closing to the Seller pursuant
to Sections 2.2 (A), (B) and (C) hereof;
(ii)an executed copy of each of the Transaction Documents to which
each of VIMRx and the Seller is a party; and
(iii)[intentionally omitted].
(B)To the Buyer. At the Closing, VIMRx shall deliver to the Buyer the
following:
(i)the sum of $10 million, representing the purchase price for the
Buyer Convertible Debenture described in Section 8.3(A)(i), such sum to
be paid by wire transfer of immediately available federal funds to an
account of the Buyer designated by the Buyer; and
(ii)an executed copy of each of the Transaction Documents to which
each of the Buyer and VIMRx is a party.
8.3 Deliveries of the Buyer.
(A)To VIMRx. At the Closing, the Buyer shall deliver to VIMRx the
following:
(i)an executed Buyer Convertible Debenture, substantially in the form
annexed hereto as Exhibit F in respect, and in the principal amount, of
the $10 million paid by VIMRx pursuant to Section 8.2(B)(i); and
(ii)an executed copy of each of the Transaction Documents to which
each of VIMRx and the Buyer is a party; and
(iii)80.5 shares of Buyer Common Stock.
(B)To the Seller. At the Closing, the Buyer shall deliver to the Seller
the following:
(i)an executed Buyer Convertible Debenture, substantially in the form
annexed hereto as Exhibit D in respect, and in the principal amount, of
the $10 million paid by the Seller pursuant to Section 8.1(A)(ix);
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(ii)an executed Buyer Convertible Debenture, substantially in the
form annexed hereto as Exhibit E in respect, and in the principal
amount, of the $20 million paid by the Seller pursuant to Section
8.1(A)(x);
(iii)an executed Warrant; and
(iv)an executed copy of each of the Transaction Documents to which
the Buyer is a party.
9.Survival of Representations: Indemnities.
9.1 Survival.
All representations and warranties contained in, or in any certificate
delivered pursuant to or in connection with, this Agreement (the Agreement,
together with such other certificates, being collectively referred to as
"Documents") shall survive the Closing of the transactions contemplated
under this Agreement until March 31, 1999; provided, however, that the
representations and warranties set forth in Sections 3.7(D), 3.8, 3.12,
4.4, 5.4, 5.9 and 5.12 shall survive the Closing for a period of five
years. All covenants and agreements contained in any Document shall survive
in accordance with their terms; provided, however, that for the removal of
doubt, none of the covenants set forth in Section 6.1 or 6.2 shall survive
the termination of this Agreement in accordance with Section 14.
9.2 Indemnity.
(A)The Seller agrees to indemnify, and hold the Buyer and VIMRx harmless
from and against (i) any and all Losses which the Buyer or VIMRx shall
sustain by reason of or in connection with the breach or inaccuracy of, or
failure to comply with, any of the representations, warranties, covenants
or undertakings, contained in any Document, made by the Seller, (ii) the
Non-Assumed Liabilities, (iii) any broker's or finder's fee or commission
due to Lehman Brothers or The Craves Group with respect to the transactions
contemplated hereby, (iv) any and all Losses which the Buyer or VIMRx shall
sustain in connection with (a) claims by third parties arising in
connection with the Non-Assumed Liabilities, or (b) claims by third parties
(including but not limited to Lehman Brothers and The Craves Group) that
they are due a broker's or finder's fee or similar compensation with
respect to the transactions contemplated hereby, which claims arise out of
actions of the Seller or any Representative of the Seller and (v) any and
all Losses which the Buyer or VIMRx shall sustain by reason of or in
connection with (a) any violation of Environmental Law, committed by the
Seller or any of its Representatives, in respect of the Parker Facility or
the land upon which it is situated, during the Seller's occupancy thereof,
(b) subject to Section 10 hereof, any Taxes arising out of the operations
of the Seller up to and including the Closing Date, (c) any violation of
ERISA committed by the Seller or any of its Representatives, (d) the
Saxholm Litigation and any litigation which may be brought against Buyer
and/or VIMRx alleging infringement of one or more of Saxholm U.S. patents
4,324,859, 4,657,868 and 4,992,377 and foreign equivalents due to
manufacture, use, importation or sale of Isolex(R) and/or Maxsep(R)
Products (except to the extent that any such Losses arise out of
infringement resulting from changes made by the Buyer in design or
operation of the accused device) and (e) the antitrust-related counterclaim
against the Seller in the CellPro Litigation. Notwithstanding the
foregoing, the Buyer and VIMRx shall not be entitled to any indemnification
under this Section 9.2 (A) with respect to any Losses incurred by the Buyer
or VIMRx as a result of the breach of any representation or warranty
contained in Section 3 hereof, other than Losses pursuant to breaches of
Sections 3.7(D), 3.12 or 3.19, unless and until the aggregate amount of all
Losses arising from breaches of representations and warranties contained in
Section 3 shall exceed $400,000 and then only to the extent that such
aggregate amount shall exceed $400,000; provided, further, that the
immediately preceding proviso shall not apply in the case of any fraudulent
breach.
(B)VIMRx agrees to indemnify and hold the Seller harmless from and
against (i) any and all Losses which the Seller shall sustain by reason of
or in connection with the breach or inaccuracy of any of the
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representations or warranties, contained in any Document, made by the Buyer
and/or VIMRx, (ii) any broker's or finder's fee or commission due to
Lazard, Freres with respect to the transactions contemplated hereby, and
(iii) any and all Losses which the Seller shall sustain in connection with
claims by third parties that they are due a finder's or broker's fee or
similar compensation with respect to the transactions contemplated hereby,
which claims arise out of actions of the Buyer or VIMRx or any
Representatives of either; provided, however, that the Seller shall not be
entitled to any indemnification under this Section 9.2(B) with respect to
any Losses incurred by the Seller as a result of the breach of any
representation or warranty contained in Section 4 or 5 hereof, other than
Losses pursuant to breaches of Sections 4.5, 4.6, 5.5, 5.6 or 5.9, unless
and until the aggregate amount of all Losses arising from breaches of
representations and warranties contained in Section 4 or 5 shall exceed, in
the aggregate, $400,000 and then only to the extent that such aggregate
amount shall exceed $400,000; provided, further, however, that the
immediately preceding proviso shall not apply in the case of any fraudulent
breach.
(C)The Buyer agrees to indemnify and hold the Seller harmless from and
against (i) any and all Losses which the Seller shall sustain by reason of
or in connection with the breach of, or failure to comply with, any of the
covenants or undertakings, contained in any Document, made by the Buyer,
(ii) the Buyer's Liabilities (except to the extent that such liabilities
are to be borne by the Seller pursuant to this Agreement or any Transaction
Document and except to the extent that the same arise from a wrongful act
or omission on the part of the Seller, any Affiliate of Seller or any
Representative of any of the foregoing), and (iii) any and all Losses which
the Seller shall sustain in connection with claims by third parties arising
in connection with the Buyer's Liabilities (except as stated in the above
parenthetical); provided, however, that subsection (i) of this Section
9.2(C) shall be deemed to refer to breaches and failures of the Buyer only
to the extent that the same exist and/or persist subsequent to the Closing
Date.
(D) VIMRx agrees to indemnify and hold the Seller harmless from and
against (i) any and all Losses which the Seller shall sustain by reason of
or in connection with the breach of, or failure to comply with, any of the
covenants or undertakings, contained in any Document, made by VIMRx and
(ii) any and all Losses which the Seller shall sustain by reason of or in
connection with the breach of, or failure to comply with, any of the
covenants or undertakings, contained in any Document, made by the Buyer;
provided, however, that subsection (ii) of this Section 9.2(D) shall be
deemed to refer to breaches and failures of the Buyer only to the extent
that the same exist and/or persist during the period beginning on the date
hereof and ending on the Closing Date.
(E)(i) Notwithstanding anything to the contrary contained herein, but
subject in any event to the rest of this Section 9.2(E), the maximum
indemnity which the Seller could become obligated to provide to the Buyer
and/or VIMRx, in the aggregate, under Section 9.2(A) for breaches of
representations, warranties, covenants and/or undertakings is $18,000,000
(in cash or securities, as more specifically provided below); provided,
however, that notwithstanding the foregoing, any indemnity or payment to
which the Buyer or VIMRx may be or become entitled under Sections 2.5(A),
6.2(G), 6.2(I)(iv), 6.2(J)(i) (last sentence only), 6.2(J)(iii) (last
sentence only), 6.2(J)(iv), 9.2(A)(ii)-(v) (other than Section 9.2(A)(v)(a)
thereof), 10, 13, 16.1(C), 16.1(G) (proviso only), 16.1(H) (second sentence
only) and 16.4(A) shall be paid by the Seller notwithstanding such
$18,000,000 cap.
(ii)In the event that the Seller becomes liable to indemnify VIMRx
for Losses under Section 9.2(A) for breaches of representations,
warranties, covenants and/or undertakings, the first $5,000,000 of such
indemnified Losses shall be payable only in cash. Any indemnified
Losses in excess of $5,000,000 shall be payable, at the option of the
Seller, either in cash or by way of the Seller's surrender (i.e.,
transfer of ownership) to VIMRx of shares of VIMRx Preferred Stock. For
the purposes of this Section 9.2, each share of VIMRx Preferred Stock
shall be valued at its $1,000 liquidation value. Therefore, for
example, in the event that the Seller became obligated to VIMRx for
$1,000,000 (over and above the first $5,000,000, which would be payable
in cash), the Seller would have the right to satisfy such liability by
the surrender of 1,000 shares of VIMRx Preferred Stock. Notwithstanding
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anything herein to the contrary, VIMRx acknowledges and agrees that,
although it may become entitled to indemnification from Seller under
Section 9.2 based upon Losses directly incurred by Buyer (and not
directly by VIMRx), to the extent that Buyer has been made whole for
any such Loss which has been directly incurred by it, VIMRx shall (to
avoid "double recovery" for the same Loss) lose its right to be
indemnified with respect to such Loss.
(iii)In the event that the Seller becomes liable to indemnify the
Buyer for Losses under Section 9.2(A) for breaches of representations,
warranties, covenants and/or undertakings, the first $5,000,000 of such
indemnified Losses shall be payable to the Buyer only in cash. Any
indemnified Losses in excess of $5,000,000 shall be payable, at the
option of the Seller, either in cash or by the surrender (i.e.,
cancellation) of indebtedness otherwise owed to the Seller under the
Buyer Convertible Debentures, such surrender/cancellation to be made on
a dollar-for-dollar basis in accordance with the amount of Losses to be
indemnified.
(F)Notwithstanding anything to the contrary contained herein, the maximum
aggregate indemnity which the Buyer and/or VIMRx could, in the aggregate,
become obligated to provide to the Seller under Section 9.2(B) for breaches
of representations, warranties, covenants and/or undertakings is
$18,000,000; provided, however, that notwithstanding the foregoing, any
indemnity or payment to which the Seller may be or become entitled under
Sections 2.5(B), 6.2(A)(i), 6.2(H) (parenthetical contained in subsection
(i) only), 6.2(J)(iii) (last sentence only), 9.2(B)(ii) and (iii),
9.2(C)(ii) and (iii), 10, 13 and 16.4(C) shall be paid by the Buyer or
VIMRx, as the case may be, notwithstanding such $18,000,000 cap.
(G)Within a reasonable period of time after receipt by any party hereto
of notification of the assertion by a third party, of any Third Party Claim
(such recipient being referred to hereinafter as an "Indemnified Party"),
such Indemnified Party shall give written notice of such Third Party Claim
to each party which has, or would reasonably be expected to have, an
obligation to indemnify such Indemnified Party under this Section 9 (an
"Indemnifying Party"); provided, however, that the failure to so notify the
Indemnifying Party shall not relieve him or it of any indemnity obligations
hereunder unless, and to the extent, the Indemnifying Party's rights have
been adversely affected by any such failure or delay. The Indemnifying
Party shall (upon its delivery to the Indemnified Party of a written
acknowledgment and agreement that, if such Third Party Claim shall be
adversely determined, the Indemnifying Party shall be fully responsible
hereunder to indemnify the Indemnified Party with respect to such Third
Party Claim) have the option, upon notice to the Indemnified Party, to
assume control of the defense of the Third Party Claim and the Indemnified
Party may participate at its own expense in (but not control) the Third
Party Claim (with counsel selected by it in its discretion) if it notifies
the Indemnified Party in writing of its intention so to participate;
provided, however, that the Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement, except with the written
consent of the Indemnified Party, which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Party and its Affiliates and Representatives of a release from
all liability in respect of such Action or which imposes any injunctive
relief upon the Indemnified Party or any of its Affiliates or
Representatives. In the event of such assumption, the Indemnified Party
shall cooperate fully in the defense of the Third Party Claim as and to the
extent reasonably requested by the Indemnifying Party (such cooperation
shall include the retention and, upon the request of the Indemnifying
Party, the provision to such party of records and information which are
reasonably relevant to such claim or demand and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder). In the absence of any such
assumption of the defense, the Indemnifying Party shall be obligated to
cooperate in accordance with the preceding sentence.
(H)The provisions of this Section 9 are the exclusive remedy of any party
to this Agreement against any other party to this Agreement for any claim
for breach of any covenant, agreement, representation, warranty or other
provision of this Agreement (other than a claim for specific performance or
injunctive relief or a claim based upon fraud) with the intent that all
such claims shall be subject to the limitations and other provisions
contained in this Section 9.
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(I)In no event shall any party hereto be entitled to or recover exemplary
or punitive damages in any action under this Agreement or relating to the
subject matter hereof.
10.Transactional and Other Taxes.
(A)Transactional Taxes. The Buyer and the Seller shall each bear one-half
of any applicable Transactional Taxes with respect to the sale, transfer,
or assignment of the Assets or otherwise on account of this Agreement or
the transactions contemplated herein.
(B)Personal Property Taxes. All personal property taxes relating to any
and all personal property conveyed pursuant to this Agreement shall be pro-
rated between the Buyer and the Seller in accordance with the relationship
of the Closing Date to the entire relevant tax year. Any payment owed in
respect of such pro-ration shall be made at Closing.
(C)Utilities. All utility accounts relating to the Parker Facility will
be read as of the commencement of business on the Closing Date. The Seller
shall be responsible for all utility charges accruing up to said time and
the Buyer shall be responsible for all utility charges accruing thereafter.
11.Further Assurances and Cooperation.
Following the date hereof, and subject to the terms and conditions hereof,
each of the Seller, VIMRx and the Buyer severally agrees to execute and
deliver such documents and take such other action as shall be reasonably
requested by the other party to carry out and effectuate the transactions
contemplated by this Agreement. On and subsequent to the Closing Date, each
party severally covenants and warrants that it shall, whenever and as often as
it shall be reasonably requested to do so by another party to this Agreement,
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered, any and all such further documents and instruments as may be
reasonably necessary, expedient or proper in order to complete any and all of
the conveyances, transfers, sales and assignments herein provided for. Without
limiting the foregoing, this Section 11 shall apply in particular to any items
of the type described in Section 8.1(A)(xi) which are not delivered on the
Closing Date (e.g., foreign registrations of the trademark ISOLEX(R)).
12.Notices.
All notices, requests, demands, and other communications permitted or
required under this Agreement shall be in writing and shall be either
personally delivered (including couriers such as FedEx) or sent by pre-paid
certified mail, return receipt requested or facsimile transmission, with a
confirmation copy personally delivered or sent by pre-paid certified mail,
addressed or transmitted to the address or number stated below of the party to
which notice is given, or to such other address or number as such party may
have fixed by notice given in accordance with the terms hereof:
To the Buyer:
BIT Acquisition Corp.
c/o VIMRx Pharmaceuticals Inc.
2751 Centerville Road
Suite 210
Wilmington, Delaware 19808
Attention:Chief Executive Officer
Facsimile:(302) 998-3794
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With a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention:Lowell S. Lifschultz, Esq.
or David C. Denowitz, Esq.
Facsimile:(212) 661-0989
To VIMRx:
VIMRx Pharmaceuticals Inc.
2751 Centerville Road
Suite 210
Wilmington, Delaware 19808
Attention:Chief Executive Officer
Facsimile:(302) 998-3794
With a copy to:
Epstein Becker Green, P.C.
250 Park Avenue
New York, New York 10177
Attention:Lowell S. Lifschultz, Esq.
or David C. Denowitz, Esq.
Facsimile:(212) 661-0989
To the Seller:
Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Attention:President--Biotech Business Group
President--Venture Management
General Counsel--Biotech Business Group
Facsimile:
With a copy to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Chicago, Illinois 60603-5803
Attention:Christopher A. Lause, Esq.
Facsimile:(312) 269-8869
Any notice, sent as provided above, shall be deemed given, if sent by
certified mail, upon delivery at the address provided for above (or, in the
event delivery is refused, the first date on which delivery was tendered) or,
if sent by facsimile transmission, upon receipt by the sender of confirmation
of delivery.
13.Expenses.
Subject to the terms of Section 9 hereof, each party hereto shall bear its
own expenses (including all attorneys' and accountants' fees) incurred in
connection with the negotiation, preparation, consummation and
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performance of this Agreement and the other Documents and the transactions
contemplated hereby and thereby. The Buyer and the Seller shall each bear one-
half of any filing fees or similar payments to any Authority incurred in
connection with any filings or other actions required to be taken hereunder in
respect of Hart-Scott. Notwithstanding anything to the contrary contained in
this Section 13, the parties agree that the Seller shall bear the first
$100,000 of expenses and costs relating to the audit services referred to in
that certain KPMG Engagement Letter, dated July 24, 1997, relating to the
Division, with all expenses and costs relating thereto which are in excess of
$100,000 to be borne solely by the Buyer.
14.Termination.
14.1 Conditions.
This Agreement may be terminated at any time on or prior to the Closing
Date:
(A)by mutual consent of the Seller, the Buyer and VIMRx;
(B)by the Buyer and VIMRx, if (i) there has been a material
misrepresentation or breach on the part of the Seller with respect to any
representation or warranty of the Seller set forth herein, or (ii) there
has been any material failure on the part of the Seller to comply with any
of its obligations or to perform any of its covenants hereunder, which
failure, if capable of remedy, has not been remedied within 15 days of
receipt by the Seller of notice thereof, or (iii) any of the conditions set
forth in Section 7.1 or 7.3 shall not have been fulfilled by December 31,
1997 (other than by virtue of a breach of this Agreement by the Buyer or
VIMRx) and the fulfillment thereof shall not have been waived by the Buyer
and VIMRx; or
(C)by the Seller, if (i) there has been a material misrepresentation or
breach on the part of the Buyer or VIMRx in any of its representations or
warranties set forth herein, or (ii) there has been any material failure on
the part of the Buyer or VIMRx to comply with any of its obligations or to
perform any of its covenants hereunder, which failure, if capable of
remedy, has not been remedied within 15 days of receipt by the Buyer or
VIMRx, as appropriate, of notice thereof, or (iii) any of the conditions
set forth in Section 7.2 or 7.3 shall not have been fulfilled by December
31, 1997 (other than by virtue of a breach of the Agreement by the Seller)
and the fulfillment thereof shall not have been waived by the Seller.
14.2 Special Termination Right.
(A)In addition to the rights of termination provided for in Section 14.1,
and in recognition of the fact that (i) notwithstanding the execution and
delivery hereof, each of the Buyer, the Seller and VIMRx is continuing to
perform its own ongoing due diligence in connection with the transactions
contemplated hereby, (ii) each of the parties hereto may not have fully
completed either the Schedules relating to its representations and
warranties or its own analysis of the Schedules heretofore submitted by the
other parties hereto and (iii) the parties have not fully completed or
agreed upon Schedule 2.1, the Seller, on the one hand, and the Buyer and
VIMRx jointly, on the other hand, shall have the right, which may be
exercised in their sole and absolute discretion, to terminate this
Agreement at any time on, or prior to, the Section 14.2 Date.
(B)During the Disclosure Period, the Seller, the Buyer and VIMRx shall
have the right (but not the obligation) both to supply Schedules (relating
to Sections 3, 4 and 5, respectively) to the party or parties to whom the
related representation and warranty is being made (the "Receiving Party")
and to modify, in any respect, any such Schedule which shall theretofore
have been provided by it to the Receiving Party. In the event that neither
the Buyer and VIMRx, on the one hand, nor the Seller, on the other hand,
shall have validly terminated this Agreement pursuant to Section 14.2(A) on
or prior to the Section 14.2 Date, references in this Agreement to any
Schedule delivered or attached pursuant to Section 3, 4 or 5, as the case
may be, shall be deemed to refer to the last version of such Schedule which
was provided to the Receiving Party prior to the end of the Disclosure
Period, regardless whether such version purported to be
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"final"or "draft" (it being the intent of the parties to give to each such
"last version" the same status as a Schedule attached to a purchase
agreement at the time of execution and delivery). In that connection, in
the event that Section 3, 4 or 5 provides for a Schedule but no Schedule
(whether "draft", "final" or other) shall have been provided, prior to the
end of the Disclosure Period, by the party making the related
representation and warranty, such party shall be deemed, for all purposes
of this Agreement, to have provided such Schedule immediately prior to the
end of the Disclosure Period in completely blank form (i.e., with no
information or writing on it). Any information which is first provided on a
version of a Schedule which version is not received by the Receiving Party
until after the Disclosure Period shall not be deemed to have been received
by the Receiving Party until after the Section 14.2 Date. No information
shall be deemed to have been included on a Schedule unless such information
shall have been delivered to the Receiving Party in a writing at the top of
each page of which writing appears the words "Baxter/VIMRx" and the number
of the related Schedule (e.g., "Schedule 3.5").
(C)During the Disclosure Period, the Seller shall have the right (but not
the obligation) to supply Schedule 2.1 to the Buyer and VIMRx and to
modify, in any respect, any version of such Schedule which shall
theretofore have been provided by it to the Buyer and VIMRx. In the event
that neither the Buyer and VIMRx, on the one hand, nor the Seller, on the
other hand, shall have validly terminated this Agreement pursuant to
Section 14.2(A) on or prior to the Section 14.2 Date, references in this
Agreement to Schedule 2.1 shall be deemed to refer to the last version of
such Schedule which was provided to the Buyer and VIMRx prior to the end of
the Disclosure Period, regardless whether such version purported to be
"final"or "draft" (it being the intent of the parties to give to such "last
version" the same status as a Schedule attached to a purchase agreement at
the time of execution and delivery). No modification to Schedule 2.1 shall
be deemed to have been made by the Seller prior to the end of the
Disclosure Period unless such modification shall have been delivered to the
Buyer and VIMRx in a writing at the top of each page of which writing
appears the words "Baxter/VIMRx" and "Schedule 2.1." After the end of the
Disclosure Period, no modification to Schedule 2.1 shall be effective
unless agreed to in writing by each party hereto.
(D)Each party hereto acknowledges that, for purposes of determining
whether the conditions stated in Sections 7.1(A) and 7.2(A) have been
satisfied, the representations and warranties in Sections 3, 4 and 5, as
provided in such Sections, are being deemed to have been made immediately
prior to the end of the Disclosure Period rather than on the date of
execution and delivery hereof.
(E)Notwithstanding anything to the contrary herein, the valid termination
of this Agreement in accordance with Section 14.2 shall not give rise to
any liability of any party hereto.
14.3 Effective Date.
A termination pursuant to Section 14.1(B) or (C) or Section 14.2(A) shall
be effective immediately upon delivery of a notice of termination by the
party or parties having the right to terminate to the other party or
parties.
14.4 No Liability.
In the event of a termination of this Agreement, as provided above, this
Agreement shall forthwith terminate and there shall be no liability on the
part of VIMRx, the Buyer or the Seller, except for liability arising from a
breach of this Agreement.
15.Employment.
The Buyer shall make offers of employment to at least 75% of the persons who
are employed by the Division, in the United States, immediately prior to the
Closing.
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16.Certain Additional Covenants and Acknowledgments.
16.1 CellPro Litigation.
The parties understand and agree that matters pertaining to the potential
infringement by CellPro of the patents and technology licensed to the
Seller pursuant to that certain License Agreement between Becton, Dickenson
and Company and the Seller, dated August 24, 1990, as amended on November
10, 1993 and further amended on March 30, 1995 (the "First BD License"),
including the conduct of the CellPro Litigation, will remain the
responsibility of the Seller, as set forth below:
(A)The Seller will vigorously pursue in good faith and for the benefit of
the Buyer in the pending litigation entitled Johns Hopkins University v.
CellPro, No. 94-105-RRM (D. Del.) (the "CellPro Litigation") its legal
remedies against CellPro for infringement of certain of the patent rights
embodied in the First BD License, which patent rights are to be sublicensed
to the Buyer (the "Patent Rights");
(B)The Seller will vigorously defend the Patent Rights in any actions or
proceedings with respect to CellPro that have been or may in the future be
brought in any court of law or before the HHS or NIH, including proceedings
seeking a compulsory license to CellPro of technology included in the
Patent Rights;
(C)The Seller will bear the full cost and expense of the CellPro
Litigation and any other such litigation or other protective defense action
or proceeding, including without limitation, attorneys' fees and expenses,
and fees and expenses of public relations advisors, accountants, experts,
and other advisors or consultants, that are incurred in connection
therewith;
(D)The Seller will retain any award of damages or other recovery
attributable to the infringing use of such Patent Rights by CellPro;
(E)The Seller will consult with the Buyer concerning the conduct of any
litigation or action described above;
(F)The Seller will obtain the Buyer's consent to all material decisions,
including settlement and other strategic decisions, relating to the CellPro
Litigation and any other litigation or action described above or related
thereto, which consent shall not be unreasonably withheld or delayed;
provided, however, that in the event that the Seller shall seek to grant a
license to CellPro, then the Buyer shall have the right to withhold its
approval thereto in its sole and absolute discretion without being subject
to the aforementioned "unreasonably withheld" standard.
(G)The Buyer will abide by and comply with any settlement or commitment
with or to HHS or NIH, made by the Seller with regard to CellPro, after
approval thereof by the Buyer (which approval shall not be unreasonably
withheld or delayed unless, in the Buyer's good faith opinion, such
decision will materially adversely affect the Buyer's ability to achieve
the Plan A Projections) including but not limited to the commitments made
by the Seller to HHS, as set forth below, provided that the Seller will
bear the full cost and expense of such compliance to the extent such cost
and expense exceeds the projected cost and expense thereof included in the
Plan A Projections. Notwithstanding anything to the contrary contained
herein, the commitments made by the Seller to HHS, with which the Buyer
will consent, and agree to cooperate with the Seller in assuring complete
satisfaction of, include the following:
(i)The Seller will use its best efforts to ensure in the CellPro
Litigation that any injunctive relief against CellPro entered by the
federal court will permit CellPro's continued sale of its Ceprate(R) SC
products and its continued provision of those products to clinicians
involved in clinical trials, pending FDA approval of a medically
equivalent or superior alternative;
(ii)If CellPro reduces support of any clinical site that does not
already have the Seller's Isolex(R) 300 System available as an
alternative, the Seller will install its device at the CellPro site
free of charge
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and will make its best efforts to provide that site with support
comparable to that which CellPro was providing on comparable contract
terms. The Seller will also provide all necessary clinical, regulatory
and technical support to put the Isolex(R) 300 system into operation as
quickly as possible;
(iii)If CellPro reduces support for any clinical site, the Seller
will take steps to assure that there will be no gap in patient access
to the technology; and
(iv)The Seller will retain the responsibility and the ability to
support the clinical and research needs for stem cells for transplant
through retaining a non-exclusive license to the Patent Rights,
continuing to manufacture the Isolex(R) devices under the
Manufacturing, Supply and Distribution Agreements, and continuing as
the exclusive worldwide distributor for the Isolex(R) 300 System in
support of stem cell selection for the treatment of cancer.
(H)The Buyer shall take all actions the Seller reasonably deems necessary
or appropriate to assist the Seller in pursuing the CellPro Litigation,
and/or other matters related to CellPro. The Seller will reimburse the
Buyer for all reasonable out-of-pocket expenses associated with providing
such cooperation or otherwise incurred by the Buyer in connection with the
CellPro Litigation, including but not limited to attorneys' and other
professionals' fees and expenses, that may be incurred in the event the
Buyer is made a party to the CellPro Litigation.
16.2 Employee Covenants.
The parties agree that the following shall apply in respect of the
employees of the Division:
(A)The Buyer shall have the right to designate to the Seller those
employees of the Division (other than Safa Karandish, Heather Kinder,
Virginia Mansour, Marta Schilling and Trish Swinney) whose services (as
newly-hired employees) the Buyer is interested in retaining subsequent to
the Closing (such people as may be so designated by the Buyer from time to
time prior to Closing being referred to as the "Designated Employees"). The
Seller shall encourage each Designated Employee to accept employment with
the Buyer.
(B)The Buyer shall also have the right to designate one or more, at its
discretion, of the Designated Employees as "key" employees (such people as
may be so designated by the Buyer from time to time prior to Closing being
referred to as "Key Employees"). In the event that any Key Employee
declines to accept employment with the Buyer, the Seller shall exercise
commercially reasonable best efforts to continue to employ each and every
such person, for a period of at least one year following the Closing, in
such capacity as will enable such person to devote substantially all his or
her business time to working on those aspects of the post-Closing
Buyer/Seller relationship with which such person has familiarity; provided,
however, that (i) except to the extent provided in the Services Agreement,
in no event shall the Seller be required to increase the direct or indirect
compensation payable to such Key Employee in order to retain such
employee's services and (ii) to the extent and under the circumstances
provided in the Services Agreement, the Buyer shall reimburse the Seller
for the fully-loaded costs of such Key Employee. If the Buyer should
request from time to time that any particular such Key Employee be focused
on any particular project or area of competence, the Seller shall not
unreasonably withhold its consent to such request.
16.3 Disclaimer.
The Seller shall not be deemed to have made to the Buyer any
representation or warranty other than as expressly made by the Seller in
Article 3 hereof. Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and warranties made
by the Seller in Article 3 hereof, the Seller makes no representation or
warranty to the Buyer with respect to:
(A)any projections, estimates or budgets heretofore delivered to or made
available to the Buyer of future revenues, expenses or expenditures or
future results of operations; or
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(B)except as covered by a representation and warranty contained in
Article 3 hereof, any other information or documents (financial or
otherwise) made available to the Buyer or its counsel, accountants or
advisers with respect to the Seller.
16.4 Delayed FDA Approval.
(A)In the event (i) the Buyer has not received notification before
January 1, 1998, that an application for premarket approval for commercial
marketing of an Isolex 300SA or 300i System in the United States is
approved by the FDA ("FDA Approval"), or (ii) such FDA Approval is received
but the Seller is unable to manufacture Isolex 300SA or 300i Systems, as
the case may be, in compliance with the Federal Food, Drug and Cosmetic
Act, the Public Health Service Act and FDA implementing regulations, the
Seller shall remit to the Buyer all CellPro Profit Margin Payments (as
hereinafter defined) received by the Seller in respect of the period
commencing January 1, 1998 and ending on the first date the Seller has
received FDA Approval and is able to deliver to the Buyer Isolex 300SA or
300i Systems, as the case may be, which comply with said Acts and
regulations conforming to such FDA Approval.
(B)"CellPro Profit Margin Payments" shall mean any and all payments (i)
made pursuant to any court order affecting CellPro, or any agreement
between CellPro and the Seller, regarding CellPro's infringement of
Intellectual Property Rights of the Seller embodied in the Isolex Products,
and (ii) which are received by the Seller as compensation for, or damages
in respect of, sales by or on behalf of CellPro on or after the Closing
Date, of any product infringing any Intellectual Property Rights of the
Seller embodied in the Isolex Products. The term "CellPro Profit Margin
Payments" specifically excludes (a) damages or compensation payable to
Johns Hopkins University and/or Becton, Dickenson and Company in respect of
such infringement, (b) royalty payments made to Johns Hopkins University
and/or Becton, Dickenson and Company in respect of any such damages or
other compensation paid to the Seller, and (c) any reimbursement for
attorney's fees received by Seller from Johns Hopkins University.
(C)In the event the Seller becomes obligated to repay or refund any
CellPro Profit Margin Payment received by the Buyer, to CellPro, its
bankruptcy estate, its trustee in bankruptcy or its creditors, by reason of
such payment being held to constitute a preference under any bankruptcy or
insolvency law, the Buyer shall pay to the Seller the amount of such
payment promptly after receipt of notice from the Seller of such
obligation.
16.5 Allocation of Consideration.
The parties shall exercise their good faith efforts to agree upon how the
consideration paid or given for the Class A Assets and Class B Assets
(including but not limited to the Purchase Consideration and the Milestone
Payments) shall be allocated. In the event that any such agreement is
executed and delivered by the parties, such consideration shall be deemed,
for all purposes (including those relating to Taxes of any kind
whatsoever), to be allocated to the Class A Assets and Class B Assets in
accordance therewith and, without limiting the foregoing, any IRS Forms
8594 shall be prepared consistent therewith.
17.Miscellaneous.
17.1 Entire Agreement: No Modification.
This Agreement, including the Exhibits, Schedules and instruments
delivered pursuant hereto, sets forth the entire agreement and
understanding between the parties hereto as to the specific subject matter
hereof and thereof, and merges and supersedes all prior discussions,
agreements and understandings of every kind and nature between them with
respect to the specific subject matter hereof and thereof, and no party
hereto shall be bound by any condition, definition, warranty or
representation other than as expressly provided for in this Agreement,
provided, however, that the parties hereto acknowledge and agree that the
Primary Licenses are not being made a part of this Agreement and shall not
be integrated into this Agreement. This
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Agreement shall not be changed or amended except by a writing signed by the
Buyer, VIMRx and the Seller.
17.2 Waiver of Breach.
The waiver by a party of a breach or violation by any other party of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach or violation by any party of the same or any other
provision of this Agreement. No such waiver shall be effective unless in
writing signed by the party claimed to have made the waiver.
17.3 Benefit of Parties; Assignment.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, legal
representatives, successors and permitted assigns. No party shall have the
right to assign or delegate any of its rights or obligations arising
hereunder, except with the prior written consent of each other party
hereto; provided, however, that any party may assign any or all of its
rights, and delegate any or all of its obligations, hereunder to any person
or entity who shall, by merger, consolidation, transfer of assets or
otherwise, have acquired all or substantially all of the assets (not
counting cash and cash equivalents) of such party; provided, further, that
no such delegation shall relieve the delegating party of the obligation to
satisfy and discharge the obligation(s) so delegated. Notwithstanding the
foregoing, the Seller shall have the right to assign this Agreement, and
any rights and obligations arising hereunder, to an Affiliate of the Seller
without the prior written consent of any other party hereto; provided, that
no such assignment shall relieve the Seller of any of its obligations
hereunder. Any purported assignment or delegation in violation of this
Section 17.3 shall be null and void ab initio.
17.4 Headings.
The headings of the sections and paragraphs of this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
17.5 Governing Law; Jurisdiction
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to principles of
conflict of laws. Each party to this Agreement expressly and irrevocably
(A) consents that any legal action or proceeding against it under, arising
out of or in any manner relating to, this Agreement, or any other Document
delivered in connection herewith, may be brought in any court of the State
of Delaware located within the District of Delaware or in the United States
District Court for the District of Delaware, (B) consents and submits to
the personal jurisdiction of any of such courts in any such action or
proceeding, (C) consents to the service of any complaint, summons, notice
or other process relating to any such action or proceeding by delivery
thereof to him, her or it by hand or by any other manner provided for in
Section 12, (D) waives any claim or defense in any such action or
proceeding based on any alleged lack of personal jurisdiction, improper
venue or forum non conveniens or any similar basis, and (E) waives all
rights, if any, to trial by jury with respect to any such action or
proceeding. Nothing in this Section shall affect or impair in any manner or
to any extent the right of any party to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction or to serve
process in any manner permitted by law.
17.6 Multiple Counterparts; Execution by Fax.
This Agreement may be signed in any number of counterparts which taken
together shall constitute one and the same instrument. This Agreement may
be executed and delivered by exchange of facsimile copies showing the
signatures of the parties hereto, and those signatures need not be affixed
to the same copy. The facsimile copies showing the signatures of the
parties will constitute originally signed copies of the same agreement
requiring no further execution.
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17.7 Exhibits, Schedules.
All Exhibits and Schedules referred to in this Agreement are attached
hereto and are incorporated herein by reference as if fully set forth
herein.
17.8 Construction.
The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning, strictly neither for
nor against any party hereto, and without implying a presumption that the
terms 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 person who himself or through his agent prepared the
same, it being agreed that representatives of both parties have
participated in the preparation hereof.
17.9 Publicity.
No party to this Agreement shall issue or cause the publication of any
press release or other public announcement with respect to this Agreement
or the transactions contemplated hereby without first providing a draft of
such press release or announcement to the other parties and obtaining the
consent of the other parties hereto; provided, however, that nothing herein
shall prevent any party from making any disclosure required by law.
17.10 Number and Gender.
Whenever in this Agreement the singular is used, it shall include the
plural if the context so requires, and whenever the masculine gender is
used in this Agreement, it shall be construed as if the masculine, feminine
or neuter gender, respectively, has been used where the context so
dictates, with the rest of the sentence being construed as if the
grammatical and terminological changes thereby rendered necessary have been
made.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the
date first above written.
VIMRx:
VIMRx PHARMACEUTICALS INC.
By: /s/ Richard L. Dunning
-----------------------------------------
Title: Chief Executive Officer
--------------------------------------
SELLER:
BAXTER HEALTH CARE CORPORATION
By: /s/ Victor W. Schmitt
-----------------------------------------
Title: President-Venture Management (Biotech)
--------------------------------------
BUYER:
BIT ACQUISITION CORP.
By: /s/ Richard L. Dunning
-----------------------------------------
Title: President
--------------------------------------
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VIMRX PHARMACEUTICALS INC.
----------------
PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
----------------
VIMRx Pharmaceuticals Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is VIMRx Pharmaceuticals Inc. and the name
under which the Corporation originally was incorporated was "Cellular
Immunology Corporation."
2. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of Delaware on December 13, 1986.
3. The Amended and Restated Certificate of Incorporation of the Corporation,
as heretofore amended or supplemented (the "Certificate of Incorporation"), is
hereby further amended by striking out "Article IV" and substituting in lieu
thereof a new "Article IV" changing the authorized capital stock of the
Corporation to read as follows:
"FOURTH:
A. The authorized capital stock of the Corporation shall consist of one
hundred twenty million one hundred fifty thousand (120,150,000) shares,
consisting of one hundred twenty million (120,000,000) shares of Common
Stock, each having a par value of $.001 (the "Common Stock"), and one
hundred fifty thousand (150,000) shares of Preferred Stock, each having a
par value of $.001 (the "Preferred Stock").
B. The Board of Directors hereby creates and establishes and authorizes
the issuance of a first series of preferred stock, such series to consist
of 150,000 shares of this Corporation's authorized and unissued Preferred
Stock, each share having a par value of $.001, and the Board of Directors
hereby fixes the designation of such series as "Series A Cumulative
Convertible Preferred Stock" (hereinafter referred to as the "Preferred
Stock") and fixes the number of shares constituting such series at 150,000,
and hereby determines the powers, preferences, rights, qualifications,
limitations and restrictions of such series as follows:
SECTION 1.
DIVIDENDS.
(a)The holders of the Preferred Stock shall be entitled to receive dividends
thereon at the rate of 6% of the Liquidation Preference (as defined in Section
2) per share per annum, (as adjusted for any combinations, consolidations,
stock distributions or stock dividends with respect to such shares) as and
when declared by the Board of Directors, before any dividend or distribution
shall be declared, set apart for, or paid upon the Common Stock of the
Corporation, which dividend shall be payable in additional shares of Preferred
Stock, each valued at
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their Liquidation Preference. The dividends on the Preferred Stock shall be
cumulative, so that if the Corporation fails in any fiscal year to pay such
dividends on all of the issued and outstanding Preferred Stock, such
deficiency in the dividends shall be fully paid before any dividends or
distributions shall be paid on or set apart for the Common Stock. All
dividends and distributions on the Preferred Stock shall be made pro rata per
share to all holders of Preferred Stock; provided, however, that,
notwithstanding the foregoing, until all cumulative dividends on the Preferred
Stock shall have been fully paid, all dividends and distributions on the
Preferred Stock shall be made ratably to the holders thereof in proportion to
the respective amounts that would be payable on such shares if such dividend
arrearages were paid in full. Such dividends shall accrue annually on the
anniversary of the Original Issuance Date (as defined in Section 3(d)).
(b)For purposes of this Section 1, unless the context requires otherwise,
"distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, or the purchase or
redemption of shares of the Corporation (other than repurchases of Common
Stock held by employees or directors of, or consultants to, the Corporation
upon termination of their employment or services pursuant to agreements
providing for such repurchase and other than redemptions in liquidation or
dissolution of the Corporation) for cash or property, including any such
transfer, purchase or redemption by a subsidiary of the Corporation.
SECTION 2.
LIQUIDATION RIGHTS.
(a) Treatment at Liquidation, Dissolution or Winding Up.
(i)Except as otherwise provided in Section 2(b) below, in the event of
any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the holders of Preferred
Stock shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of the Corporation's
capital stock of all classes, before payment or distribution of any of such
assets to the holders of any other class of the corporation's capital
stock, an amount equal to $1,000 per share of Preferred Stock (the
"Liquidation Preference,") which amount shall be subject to equitable
adjustment whenever there shall occur a stock dividend, stock split,
combination of shares, reclassification or other similar event affecting
such shares), and shall include any accrued but unpaid dividends.
(ii) After payment shall have been made in full to the holders of
Preferred Stock pursuant to Section 2(a)(i) hereof or funds necessary for
such payment shall have been set aside by the Corporation in trust for the
account of the holders of Preferred Stock to be available for such payment,
the remaining assets of the Corporation shall be distributed ratably to the
holders of Common Stock to the exclusion of the Preferred Stock.
(iii)If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of Preferred Stock of all amounts
distributable to them under Section 2(a)(i) hereof, then the entire assets
of the Corporation available for such distribution shall be distributed
ratably among the holders of Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
(b)Treatment of Reorganizations, Consolidations, Mergers and Sales of
Assets. A consolidation or merger of the Corporation with or into another
unaffiliated corporation or a sale of all or substantially all of the assets
of the Corporation, shall not be regarded as a liquidation, dissolution or
winding up of the affairs of the Corporation for purposes of this Section 2,
but shall result in conversion of the Preferred Stock into Common Stock as set
forth in Section 3(c).
(c)Distributions Other Than Cash. The value of any distribution provided for
in this Section 2, or portion thereof, payable in property other than cash
shall be the fair value (as determined by the Board of Directors in good
faith) of such property at the time of such distribution.
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SECTION 3.
CONVERSION.
The holders of Preferred Stock shall have conversion rights (the "Conversion
Rights") and the Preferred Stock shall be subject to conversion, as follows:
(a)Right to Convert; Conversion Price. Each share of Preferred Stock shall
be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after
eighteen (18) months after the Original Issuance Date (as defined in Section
3(d) below), at the office of the Corporation or any transfer agent for the
Preferred Stock, into such whole number of fully paid and nonassessable shares
of Common Stock as is determined by dividing $1,000 by the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion. The
Conversion Price at which shares of Common Stock shall be deliverable upon
conversion without the payment of any additional consideration by the holder
of Preferred Stock (the "Conversion Price") shall initially be the highest
average of closing bid prices per share of Common Stock on the principal
market on which such Common Stock trades for any sixty (60) consecutive
trading day period commencing with the Original Issuance Date and ending on
the date which is eighteen (18) months from such date, but in no event shall
such Conversion Price be less than $5.50 or greater than $7.50. Such initial
Conversion Price shall be subject to adjustment, in order to adjust the number
of shares of Common Stock into which Preferred Stock is convertible, as
hereinafter provided. The right of conversion with respect to any shares of
Preferred Stock which the Corporation redeems pursuant to Section 5(a) hereof
shall terminate at the close of business on the Redemption Date (as defined in
Section 5 of this Certificate of Designations), unless the Corporation shall
default in the payment of the redemption price for such shares of Preferred
Stock, in which case such termination shall occur upon payment of the
redemption price of such shares.
(b)Mechanics of Conversion; Dividends; Fractional Shares. Before any holder
of Preferred Stock shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for
the Preferred Stock, and shall give written notice to the Corporation at such
office that such holder elects to convert the same. At the time of each
conversion of shares of Preferred Stock, the Corporation shall also issue
shares of Common Stock in an amount equal to all dividends declared and unpaid
on the shares of Preferred Stock surrendered for conversion to the date upon
which such conversion is deemed to occur, valued at the Conversion Price. In
lieu of any fractional shares of Common Stock to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Conversion Price. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such
holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
(c)Automatic Conversion.
(i)Each share of Preferred Stock shall automatically be converted into
shares of Common Stock at the then effective Conversion Price:
(1)on the date which is seven (7) years after the Original Issuance
Date; or
(2)immediately prior to the effective time of any merger, sale of
assets, reorganization or like event in which the Corporation is not
the surviving entity (if such event occurs prior to eighteen months
from the Original Issuance Date, then the Conversion Price shall be
equal to the fair value of the consideration to be received by the
holder of a share of Common Stock, as determined in good faith by the
Corporation's Board of Directors, but in no event greater than $7.50),
or
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(3)upon the written election of the holders of not less than a
majority in voting power of the then outstanding shares of Preferred
Stock to require such mandatory conversion.
(ii)Upon the occurrence of an event specified in Section 3(c)(i) hereof,
all shares of Preferred Stock shall be converted automatically without any
further action by any holder of such shares and whether or not the
certificate(s) representing such shares are surrendered to the Corporation
or the transfer agent for the Preferred Stock; provided, however, that the
Corporation shall not be obligated to issue a certificate or certificates
evidencing the shares of Common Stock issuable upon such conversion unless
the certificate(s) evidencing such shares of Preferred Stock being
converted are either delivered to the Corporation or the transfer agent for
the Preferred Stock, or the holder notifies the Corporation or such
transfer agent that such certificate or certificates have been lost,
stolen, or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection therewith ("Indemnity Agreement"), except that such holder shall
not be required to provide any indemnity bond. Upon the automatic
conversion of Preferred Stock, each holder of Preferred Stock shall
surrender the certificate(s) representing such holder's shares of Preferred
Stock or the aforesaid Indemnity Agreement at the office of the Corporation
or of the transfer agent for the Preferred Stock. Thereupon, there shall be
issued and delivered to such holder, promptly at such office and in such
holder's name as shown on such surrendered certificate(s), a certificate or
certificates for the number of shares of Common Stock into which the shares
of Preferred Stock surrendered were convertible on the date on which such
automatic conversion occurred. No fractional shares of Common Stock shall
be issued upon the automatic conversion of Preferred Stock. In lieu of any
fractional shares of Common Stock to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied
by the then effective Conversion Price.
(d)Adjustment for Stock Splits and Combinations. If the Corporation shall at
any time or from time to time after the date on which shares of the Preferred
Stock are first issued (the "Original Issuance Date") effect a subdivision of
the outstanding Common Stock, the Conversion Price in effect immediately
before that subdivision shall be proportionately decreased. If the Corporation
shall at any time or from time to time after the Original Issuance Date
combine the outstanding shares of Common Stock, the Conversion Price in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(e)Adjustment for Certain Dividends and Distributions.
(1)In the event the Corporation at any time or from time to time after
the Original Issuance Date shall make or issue, or fix a record date for
the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock, then
and in each such event the Conversion Price then in effect shall be
decreased as of the time of such issuance or, in the event such a record
date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price then in effect by a fraction:
(A)the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(B)the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend
or distribution;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or such distribution is not fully made on the
date fixed therefor, the Conversion Price shall be recomputed accordingly
as of the close of business on such record date and thereafter the
Conversion Price shall be adjusted pursuant to this paragraph as of the
time of actual payment of such dividends or distributions.
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(2)For the purposes of Section 3(e)(1) hereof, the total number of shares
of Common Stock deemed to be issued and outstanding shall include (i) all
shares of Common Stock issuable on conversion of all shares of Preferred
Stock outstanding and (ii) all shares of Common Stock issued and
outstanding and entitled to receive such dividend.
(f)Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issuance Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, including a
cash dividend, then and in each such event provision shall be made so that the
holders of Preferred Stock shall receive upon conversion thereof in addition
to the number of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation and/or cash that they would have received had
their Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event
to and including the conversion date, retained such securities receivable by
them as aforesaid during such period, giving application to all adjustments
called for herein during such period.
(g)Adjustment for Reclassification, Exchange or Substitution. If the Common
Stock issuable upon the conversion of the Preferred Stock shall be changed
into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation, or sale of assets
provided for in Section 3(c), then and in each such event the holder of each
such share of Preferred Stock shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock into which such
shares of Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(h)[INTENTIONALLY OMITTED]
(i)Adjustment of Conversion Price Upon Issuance of Additional Shares of
Common Stock.
(1)Subject always to Section 3(i)(5), in the event that at any time or
from time to time after the Original Issuance Date, through and including
the date which ends eighteen (18) months after the Original Issuance Date,
but not thereafter, the corporation shall issue any shares of Common Stock
or securities convertible into or exercisable to purchase shares of Common
Stock ("Additional Shares of Common Stock") excluding shares issued upon a
stock split or combination as provided in Section 3(d) or as a dividend or
distribution as provided in Sections 3(e) or (f)), without consideration or
for a consideration per share less than the Conversion Price in effect on
the date of, and immediately prior to, the issuance or deemed issuance of
such Additional Shares of Common Stock, (which shall include the assumed
conversion of all convertible securities and the assumed exercise of all
convertible securities or rights to purchase shares of Common Stock in
accordance with the terms of such convertible securities or rights to
purchase Common Stock), then and in such event, the applicable Conversion
Price then in effect shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying such
Conversion Price by a fraction:
(A)the numerator of which shall be (x) the number of shares of Common
Stock outstanding immediately prior to such issue plus (y) the number
of shares of Common Stock which the aggregate consideration received or
deemed to have been received by the corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the
Conversion Price in effect on the date of, and immediately prior to,
the issuance or deemed issuance of such Additional Shares of Common
Stock, and
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(B)the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of
such Additional Shares of Common Stock so issued or deemed to be
issued.
(2)For the purposes of Section 3(i) (1) hereof, all shares of Common
Stock issuable upon conversion of shares of Preferred Stock outstanding
immediately prior to any issue of Additional Shares of Common Stock, or any
event with respect to which Additional Shares of Common Stock shall be
deemed to be issued, shall be deemed to be outstanding; and immediately
after any Additional Shares of Common Stock are deemed issued pursuant to
Section 3(i)(l) such Additional Shares of Common Stock shall be deemed to
be outstanding.
(3)Notwithstanding anything to the contrary contained herein, the
applicable Conversion Price in effect at the time Additional Shares of
Common Stock are issued or deemed to be issued shall not be reduced
pursuant to Section 3(i)(1) hereof at such time if the amount of such
reduction would be an amount less than $. 01, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount and
any other amount or amounts so carried forward, shall aggregate $.01 or
more.
(4)Determination of Consideration. For purposes of this Section 3(i) ,
the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(i)Cash and Property: Such consideration shall:
(A)insofar as it consists of cash, be computed at the aggregate
amounts of cash received by the Corporation, excluding amounts paid
or payable for accrued interest or accrued dividends;
(B)insofar as it consists of property other than cash, be computed
at the fair value thereof at the time of such issue, as determined
in good faith by the Board of Directors; and
(C)in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion
of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of
Directors.
(ii)Options and Convertible Securities. The consideration per share
received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 3(i)(1) , relating to
options, warrants or rights to purchase Common Stock, and convertible
securities, shall be determined by dividing (W) the total amount, if
any, received or receivable by the Corporation as consideration for the
issue of such options or convertible securities, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such options or the conversion or
exchange of such convertible securities, or in the case of options for
convertible securities, the exercise of such options for convertible
securities and the conversion or exchange of such convertible
securities, by (X) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such options or the conversion or
exchange of such convertible securities.
(5)Notwithstanding any other provision of this Section 3(i), there shall
be no deemed issuance of Additional Shares of Common Stock upon (A)
issuance of any shares of Preferred Stock as a dividend on the Preferred
Stock, (B) conversion of any Preferred Stock, (C) exercise of any options
or warrants issued and outstanding on the Original Issuance Date, (D) grant
or exercise of any options to purchase Common Stock pursuant to the
Corporation's Stock Option Plan as in effect on the Original Issuance Date
or any
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subsequent amendment thereof which is approved by the Corporation's
stockholders pursuant to Securities and Exchange Commission regulations, or
(E) the sale for cash of no more than 3,333,334 shares of Common Stock for
aggregate gross proceeds of no more than $10,000,000, at a gross per-share
price of no less than $3.00. In the event that the gross per-share sale
price of a share of Common Stock under Section 3(i)(5)(E) shall be less
than $3.00, then the difference between $3.00 and the actual gross per-
share sale price shall be subtracted from the Conversion Price utilized in
the calculation set forth in Section 3(i)(1)(A)(y).
(j)Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price pursuant to this Section 3, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each affected
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any affected holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of each share of
Preferred Stock.
(k)Notices of Record Date. In the event of any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend
(other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Preferred Stock at least ten (10) days prior to such record date a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
(l)Common Stock Reserved. The Corporation shall reserve and keep available
out of its authorized but unissued Common Stock such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all Preferred Stock.
(m)Certain Taxes. The Corporation shall pay any issue or transfer taxes
payable in connection with the conversion of any shares of Preferred Stock;
provided, however, that the Corporation shall not be required to pay any tax
that may be payable in respect of any transfer to a name other than that of
the holder of such Preferred Stock.
SECTION 4.
VOTING RIGHTS.
Except as otherwise required by law or by Section 7, the holders of
Preferred Stock shall not have the right to vote on any matter submitted to a
vote of the stockholders of the Corporation. With respect to all questions as
to which, under law, stockholders are entitled to vote by classes, the holders
of Preferred Stock shall vote together as a single class separately from the
holders of Common Stock.
SECTION 5.
NO REISSUANCE PREFERRED STOCK.
No share or shares of Preferred Stock acquired by the Corporation by reason
of redemption, purchase, conversion or otherwise shall be reissued, and all
such shares shall be canceled, retired and eliminated from the shares which
the Corporation shall be authorized to issue.
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SECTION 6.
PROTECTIVE COVENANT.
The Corporation shall not, without the affirmative vote or written consent
of the holders of a majority of the then issued and outstanding shares of
Preferred Stock, amend its Certificate of Incorporation to provide for the
creation or issuance of any class or series of capital stock which shall rank
pari passu or senior to the Preferred Stock in priority to receive the
liquidation preference on the Preferred Stock."
4. The amendment to the Certificate of Incorporation herein certified has
been duly adopted in the manner and by the vote presecribed by Section 242 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed
by Richard L. Dunning, its President, and attested by Lowell S. Lifschultz,
its Secretary, as of this day of December, 1997.
VIMRx PHARMACEUTICALS INC.
By:
-----------------------------------
Name: Richard L. Dunning
Title:President and Chief Executive
Officer
ATTEST:
- -------------------------------------
Name: Lowell S. Lifschultz
Title:Secretary
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EXHIBIT 10.1
HARDWARE AND DISPOSABLES
MANUFACTURING AGREEMENT
This HARDWARE AND DISPOSABLES MANUFACTURING AGREEMENT ("Agreement"), dated
as of December 17, 1997, is entered into by and between Baxter Healthcare
Corporation, a Delaware corporation having a place of business at 1627 Lake Cook
Road, Deerfield, Illinois 60015 ("Baxter"), and BIT ACQUISITION CORP., a
Delaware corporation having a place of business at Nine Parker, Irvine,
California 92718 ("Newco").
RECITALS
A. Baxter and VIMRx Pharmaceuticals Inc., a Delaware corporation
("VIMRx"), have agreed to enter into a strategic alliance in the ex vivo cell
therapies business and have formed Newco for that purpose, pursuant to that
certain Asset Purchase Agreement dated as of October 10, 1997, by and among
Baxter, Newco and VIMRx (the "Acquisition Agreement").
B. Pursuant to the Acquisition Agreement, Baxter has transferred to Newco
certain Isolex(R) and Maxsep(R) Technology (as that capitalized term is defined
below) as well as other IT Assets relating to Isolex(R) and Maxsep(R) Products
(as those capitalized terms are defined below).
C. Pursuant to the Acquisition Agreement, Baxter and Newco have entered
into that certain sublicense of even date herewith relating to CD34+ cell
population and related antibody and method patents licensed from Becton,
Dickenson and Company to Baxter (the "First BD Sublicense"); that certain
sublicense of even date herewith relating to B cell antibodies licensed from
Becton, Dickenson and Company to Baxter (the "Second BD Sublicense"); that
certain sublicense of even date herewith relating to breast cancer antibodies
licensed from Cetus Oncology Corporation, d/b/a Chiron Therapeutics, to Baxter
(the "Chiron Sublicense"); and that certain sublicense of even date herewith
relating to B cells licensed from Prof. Bernd Dorken to Baxter Deutschland GmbH
(the "Dorken Sublicense") (the First BD Sublicense, the Second BD Subicense, the
Chiron Sublicense and the Dorken Sublicense are collectively referred to herein
as the "Sublicense Agreements") pursuant to which Baxter has granted to Newco
licenses to the Licensed Technology (as that capitalized term is defined in each
of the Sublicense Agreements) as described therein.
D. Baxter has agreed to manufacture for Newco certain antibodies, reagents
and reagent kits which are components of or used in connection with certain of
the Isolex(R) and Maxsep(R) Products (as such capitalized term is defined below)
pursuant to the terms of that certain Antibody Manufacturing and Storage
Agreement of even date herewith (the "Antibody Manufacturing and Storage
Agreement") and certain prototype products for the research market pursuant to
the terms of that certain Services Agreement of even date herewith (the
"Services Agreement").
<PAGE>
E. Baxter also has agreed to supply to Newco certain other products and
components which are utilized in connection with the Isolex(R) and Maxsep(R)
Products, pursuant to the terms of that certain Hardware and Disposables Supply
Agreement of even date herewith (the "Hardware and Disposables Supply
Agreement").
F. Newco desires that Baxter manufacture for Newco the Isolex(R) and
Maxsep(R) Products as described herein and subject to the terms hereof and
Baxter is willing to manufacture for Newco certain Isolex(R) and Maxsep(R)
Products as described herein and subject to the terms hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and Newco hereby agree as follows:
1. DEFINITIONS.
1.1 Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth therein.
1.2 Other Terms: As used herein, the following capitalized terms shall
have the following meanings:
A. "Affiliate" of a party shall mean any entity (i) which
directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with the party or (ii) fifty
percent (50%) or more of the voting capital stock (or in the case of an
entity which is not a corporation, fifty percent (50%) or more of the
equity interest) of which is beneficially owned or held by a party or any
of such party's Subsidiaries. The term "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of an entity (other than a natural person),
whether through the ownership of voting capital stock, by contract or
otherwise.
B. "Device History Record" shall have the meaning ascribed to it
by the regulations of the FDA, as may be amended or changed from time to
time.
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C. "Ex Vivo Cell Processing" shall mean the active selection, and
any subsequent modification, genetic alteration, activation and/or
expansion, of nucleated cells outside the body for therapeutic purposes
such as cellular therapy or gene therapy. For the purpose of this
definition, "active selection" shall mean processing involving the action
of a biological component, such as an antibody or modified antibody, a
lectin, or a ligand, to selectively and specifically bind to a particular
molecule on the surface of the cells to be selected so as to confer
specificity or selectivity for such cells in the cell selection process.
D. "FDA" means the United States Food and Drug Administration.
E. "FDA-Regulated Non-Baxter Component" shall mean any component
of a Manufactured Product which is manufactured by a third party for or on
behalf of Baxter and which is either (a) deemed, under applicable law and
FDA regulations, to be "intended for use" in an FDA-regulated product or
(b) manufactured at any FDA-registered establishment.
F. "Fenwal" means the Fenwal Division of Baxter.
G. "Field of Distribution" shall bear the meaning ascribed to
such capitalized term in the Marketing, Sales & Distribution Agreement.
H. "Form FDA-483" shall have the meaning ascribed to it by FDA
policy, as may be amended or changed from time to time.
I. "Fully Loaded Cost" means, for either party, such party's cost
of manufacturing, performing or acquiring any items or services, in
accordance with generally accepted accounting principles, consistently
applied ("GAAP"), and, with respect to each party, in accordance with such
party's normal accounting policies, all consistently applied, including any
royalties payable by such party in connection with manufacturing,
performing or acquiring any items or services, but excluding, in the case
of Baxter's Fully Loaded Cost, any royalty obligations of Baxter that are
paid or reimbursed by Newco pursuant to the Sublicense
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<PAGE>
Agreements. Fully Loaded Cost shall not include general corporate
allocations or other allocations which are not directly related to the
manufacture, performance or acquisition of the item or service, however
designated. A charge for the cost of funding the party's working capital
needs for such manufacture, performance or acquisition of items or
services, including capital expenditures for facilities and/or equipment
and capitalized manufacturing costs, will be included in Fully Loaded Cost,
which charge will be made at the interest rate paid by Baxter on its then
most recent issuance of commercial paper; provided, however, that no charge
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shall be made for any cost of, or the cost of funding any, changes in the
site of manufacturing any Manufactured Products. In the event any item is
acquired or any service is provided for a party from or by an Affiliate of
such party, the cost of acquiring such items or services shall be deemed to
mean such Affiliate's actual cost of manufacturing, performing or acquiring
such items or services in accordance with the principles set forth in this
definition of "Fully Loaded Cost." Current costs of developing any items
or services shall be included in Fully Loaded Cost, but in no event shall
any historic development costs be included in Fully Loaded Cost.
J. "Isolex(R) and Maxsep(R) Products" means, individually and
collectively, the products listed on Schedule 1 attached hereto, which
----------
Schedule 1 includes Isolex(R) and Maxsep(R) instruments and Isolex(R) and
----------
Maxsep(R) disposable sets (other than those products or components to be
acquired by Newco from third parties or manufactured or supplied by Baxter
under the Hardware and Disposables Supply Agreement or the Antibody
Manufacturing and Storage Agreement), in each case as currently produced by
Baxter utilizing the Isolex(R) and Maxsep(R) Technology, and such new
products as are currently under development, are in research, or have been
identified as proposed new products as indicated in Schedule 1, or as
----------
Baxter may otherwise agree to develop pursuant to the Services Agreement,
in each case as consistent with the nature of the Isolex(R) and Maxsep(R)
Products existing at the date of this Agreement and with Baxter's legal
obligations and technological capabilities (including, without limitation,
regulatory requirements applicable to Baxter) during the Term of this
Agreement.
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<PAGE>
K. "Isolex(R) and Maxsep(R) Technology" means automated systems
for positive and negative immunomagnetic cell selection.
L. "IT Assets" means those Assets set forth in Schedule 2.1(A) of
the Acquisition Agreement that consist of personal property currently
utilized by Baxter solely in connection with manufacturing the Isolex and
Maxsep(R) Products, including equipment, molds and tools.
M. "Manufactured Products" means all Isolex(R) and Maxsep(R)
Products and/or any components thereof, other than those products or
components to be acquired by Newco from third parties or manufactured or
supplied by Baxter under the Hardware and Disposables Supply Agreement, the
Antibody Manufacturing and Storage Agreement, or the Services Agreement.
N. "Manufacturing Facility" means any production site selected by
Baxter or a third party subcontractor of Baxter for manufacture of the
Manufactured Products.
O. "Marketing, Sales & Distribution Agreement" means the
Marketing, Sales & Distribution Agreement by and between Baxter and Newco
of even date herewith.
P. "Master Scheduling System" shall mean the computerized master
scheduling system currently used by Baxter in connection with the
production of the Isolex(R) and Maxsep(R) Products, as such system may be
changed by Baxter from time to time.
Q. "MDR" shall mean Medical Device Reports, as such term is
defined by the rules and regulations of the FDA, as may be amended or
changed from time to time.
R. "Non-Compete Agreement" means the Non-Competition and
Confidentiality Agreement by and among Baxter, VIMRx and Newco of even date
herewith.
S. "Post-Market Approval ("PMA") Post-Approval Requirements"
shall have the meaning ascribed to it by the regulations and policy of the
FDA, as may be amended or changed from time to time.
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T. "Product Field" means use of the Isolex(R) and Maxsep(R)
Technology in the treatment, mitigation or prophylaxis of diseases,
including research into such activities, through Ex Vivo Cell Processing.
U. "Quality Manual" shall mean the quality manual currently used
in connection with the production of the Isolex(R) and Maxsep(R) Products
or components thereof, as such manual may be changed from time to time.
V. "Quality System Regulation" ("QSR") shall have the meaning
ascribed to it by the rules and regulations of the FDA, as may be amended
or changed from time to time.
W. "Regulatory Approval" means (1) in the United States, approval
from the FDA and any other United States governmental authority (or agency
or other political subdivision thereof) necessary for Newco to have the
right to market, sell or distribute the Isolex and Maxsep(R) Products in
the United States to the public at large for use in the Product Field
(including the Field of Distribution) and (2) outside the United States, an
analogous order by a non-U.S. governmental authority (or agency or other
political subdivision thereof) necessary for Newco to have the right to
market, sell or distribute, and the right to be paid or reimbursed for, the
Isolex(R) and Maxsep(R) Products in a country (other than the United
States) to the public at large for use in the Product Field (including the
Field of Distribution).
X. "Section 305 Hearing" shall have the meaning ascribed to it by
the Federal Food, Drug and Cosmetic Act (the "Act") and implementing
regulations of the FDA, as may be amended or changed from time to time.
Y. "Standard Operating Procedure System" shall mean the standard
operating procedures used in connection with the production of the
Isolex(R) and Maxsep(R) Products, as such procedures may be changed from
time to time.
Z. "Subcontractor" means a third party who produces and/or
supplies any of the Isolex(R) and Maxsep(R) Products or any FDA-Regulated
Non-Baxter Component of a Manufactured Product to or on behalf of Baxter
under contract.
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AA. "Subsidiary" means, as to any party, any corporation of
which more than fifty percent (50%) of the outstanding capital 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 party, by one or more of its subsidiaries, or by
the party and one or more of its subsidiaries.
BB. "Supplied Products" means those products supplied by
Baxter to Newco under the terms of the Hardware and Disposables Supply
Agreement.
CC. "Term" shall mean, individually and collectively, the
term of this Agreement as provided in Section 2.
DD. "Value Improvement Process" shall mean the Value
Improvement Management System currently used in connection with the
production of the Isolex(R) and Maxsep(R) Products, as such system may be
changed from time to time.
EE. "Warning Letter" shall have the meaning ascribed to it
by FDA policy, as may be amended or changed from time to time.
2. TERM. The term of this Agreement shall be five (5) years from
the date hereof. After the expiration of twelve (12) months following the date
of this Agreement, Baxter and Newco shall commence to negotiate in good faith a
renewal as well as the prices to be paid during such renewal for the
Manufactured Products produced hereunder.
3. MANUFACTURING. During the Term, Baxter shall manufacture for
Newco the Manufactured Products, and shall complete the manufacturing and
assembly of the Isolex(R) and Maxsep(R) instruments and disposable sets using
components to be acquired by Newco from third parties or supplied by Baxter
under the Hardware and Disposables Supply Agreement and the Antibody
Manufacturing and Storage Agreement, for use and sale in the Product Field,
subject to the terms and conditions contained in this Agreement. In
manufacturing such Manufactured Products, Baxter will produce finished goods.
Nothing contained in this Agreement shall prevent Newco from having products
with the same specifications as the Manufactured Products manufactured by Newco
or third parties on behalf of Newco. Nothing herein contained shall oblige
Baxter to continue producing or Newco to continue purchasing any Manufactured
Product if such production is reasonably believed by Baxter or by Newco, as the
case may be, to violate any applicable law, regulation, rule or license or if
the Manufactured Products produced infringe
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a third party's patent or other intellectual property rights, provided that
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Baxter will cooperate with Newco, to the extent commercially feasible, to
develop and implement such changes as may be necessary to bring a Manufactured
Product into compliance or to prevent such infringement, and Baxter will
continue to produce after a finding of infringement if Newco reaches an
agreement with the third party which permits future production without
infringement. Proposed new products identified on Schedule 1 as Isolex(R) and
Maxsep(R) Products and manufactured by Baxter pursuant to the Services Agreement
shall become Manufactured Products and shall be manufactured by Baxter hereunder
in the event that, and at such time as, their specifications become sufficiently
fixed to permit standardized production at commercial levels. In the event that
Baxter, in its sole discretion, agrees to manufacture for Newco any other
instruments, disposable sets or other products (other than proposed new products
identified on Schedule 1 as Isolex(R) and Maxsep(R) Products agreed to be
manufactured as Manufactured Products hereunder), and Baxter and Newco enter
into a separate written agreement on mutually agreeable terms (including price)
with respect to such manufacturing, then Baxter will manufacture such additional
products as the two parties may so agree, and such additional products will be
treated for all purposes of this Agreement as Manufactured Products.
4. MANUFACTURING LICENSE AND USE OF IT ASSETS.
4.1 Manufacturing License: Newco hereby grants to Baxter and
Baxter accepts, a non-exclusive, royalty-free worldwide license, under the
Isolex(R) and Maxsep(R) Technology, to make, have made, use and sell the
Manufactured Products to or on behalf of Newco during the Term pursuant to the
terms of this Agreement.
4.2 Use of IT Assets: During the Term, Newco shall provide to
Baxter the use and possession of (at Baxter's Manufacturing Facilities described
in Section 7.1 below), but not title to, those IT Assets (including equipment,
molds or tools) which are required by, or may be useful for, Baxter in
manufacturing the Manufactured Products pursuant to this Agreement, as set forth
on Schedule 2 attached hereto.
5. TRADEMARK LICENSE AND LABEL COPY.
5.1 Trademark License: Newco hereby grants to Baxter and Baxter
accepts a non-exclusive royalty-free worldwide license to use Newco's
trademarks, trade names, service marks, corporate logos and copyrighted
materials solely in connection with the manufacture, use and sale of the
Manufactured Products to or on behalf of Newco during the Term pursuant to the
terms of this Agreement, provided that Newco has reviewed and approved in
writing each use or display of such Newco trademarks, trade names, service
marks, logos and materials. If any such Newco trademark, trade name, service
mark, logo or material is to be used in connection with the Manufactured
Products, Baxter shall obtain prior written authorization from Newco (which
authorization may be withheld by Newco in its sole discretion) for such use and
for all subsequent changes to any art work, labels, inserts, advertising,
packaging or marketing materials that incorporate such Newco trademark, trade
name, service mark, logo or materials. No other use of Newco's trademarks, trade
names, service marks, logos and copyrighted materials
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is permitted during or after the Term of this Agreement. Except as provided in
this Agreement, Baxter shall not use any trademark, trade name, service mark or
logo claimed by Newco or any confusingly similar trademark, trade name, service
mark or logo, during or after the Term of this Agreement.
5.2 Label Copy: Newco shall provide all labeling, product
inserts and packaging for the Manufactured Products, provided that Baxter has
reviewed and approved in writing each use or display on such labels, inserts or
packaging of any trademark, trade name, service mark or logo used or owned by
Baxter, other than any trademark, trade name, service mark or logo licensed to
Baxter pursuant to Section 5.1 of this Agreement. If a trademark, trade name,
service mark or logo owned or used by Baxter or its parent corporation, other
than any trademark, trade name, service mark or logo licensed to Baxter pursuant
Section 5.1 of this Agreement, is to be used in connection with the Manufactured
Products (except to the extent such use is mandatory in connection with the
labeling requirements of applicable law) Newco shall obtain prior written
authorization from Baxter (which authorization may be withheld by Baxter in its
sole discretion) for such use and for all subsequent changes to the art work,
labels, inserts or packaging for the Manufactured Products that incorporate such
a Baxter trademark, trade name, service mark or logo. Each use of such a Baxter
trademark, trade name, service mark or logo shall inure to the benefit of Baxter
and its parent company. Should any such use vest in Newco any rights in a
trademark, trade name, service mark or logo used by Baxter, other than any
trademark, trade name, service mark or logo licensed to Baxter pursuant to
Section 5.1 of this Agreement, Newco shall transfer such rights to Baxter or its
designee upon the request of Baxter. Except as provided in this Agreement, Newco
shall not use any trademark, trade name, service mark or logo claimed by Baxter
or any confusingly similar trademark, trade name, service mark or logo during or
after the Term of this Agreement.
6. ADMINISTRATION
6.1 Production Operating Teams: Administration of this
Agreement will be accomplished by the establishment of three "Production
Operating Teams," to include the Hyland Production Operating Team, the Tampa
Production Operating Team and the Mountain Home Production Operating Team. The
Production Operating Teams will consist of representatives from each of Newco
and Baxter, who typically would include the individuals identified in Schedule
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3, or other persons of an appropriate level of authority and responsibility.
Each party will select representatives and shall notify the other party of such
selections and any changes thereto. The Production Operating Teams will meet in
person or by teleconference at least once in each calendar quarter to review the
progress of Newco and Baxter in the execution of this Agreement and to develop,
review and agree on specific plans and programs designed to assure that Baxter
can fulfill orders placed by Newco. Each Production Operating Team will develop
a process to agree upon short-term and long-term forecasts, orders and
production planning schedules and to conduct any other business to discharge its
responsibilities pursuant to the provisions of this Agreement. Regardless of
the number of representatives selected by each of Newco and Baxter for service
on any of the Production Operating Teams, the representatives of each party
shall have, in the aggregate, a single vote in all matters to be decided by any
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Production Operating Team. If, in the course of conducting the activities
contemplated in these Agreements, any Production Operating Team cannot resolve a
matter of difference between Baxter and Newco representatives, or cannot reach
agreement on a matter within its area of responsibility under the terms of this
Agreement, the Production Operating Team shall promptly refer the matter to the
Manufacturing Oversight Committee for resolution in accordance with this
Agreement.
6.2 Manufacturing Oversight Committee: The "Manufacturing
Oversight Committee" will consist of representatives from each of Newco and
Baxter, and typically would consist of Newco's Director/Vice President,
Manufacturing and Logistics; Newco's Vice President, Global Marketing; Newco's
Vice President, Business Development; Baxter's Vice President, Monoclonal and
Plasma Operations from Hyland; Baxter's Renal Division Plant Manager, Tampa; and
Baxter's Renal Division Plant Manager, Mountain Home, or such other personnel as
may be designated by Newco and Baxter, respectively. The Manufacturing
Oversight Committee will meet once a year or more often as necessary to carry
out its responsibilities hereunder, and shall review and approve the plans,
programs and recommendations prepared by the Production Operating Teams. The
Manufacturing Oversight Committee will review and decide any matter in dispute
referred to it by a Production Operating Team. Regardless of the number of
representatives selected by each of Newco and Baxter for service on the
Manufacturing Oversight Committee, the representatives of each party shall have,
in the aggregate, a single vote in all matters to be decided by the
Manufacturing Oversight Committee. When the Manufacturing Oversight Committee
cannot agree on the resolution of any matter within its area of responsibility
hereunder, it shall promptly refer the matter to the Corporate Committee for
resolution in accordance with this Agreement.
6.3 Corporate Committee: The "Corporate Committee" will consist
of one representative each from VIMRx and Baxter, who ordinarily will be the
President and CEO of VIMRx and the President of Fenwal, respectively. The
Corporate Committee will meet only as needed to resolve any dispute or otherwise
undecided matter referred to it by the Manufacturing Oversight Committee. If
the Corporate Committee cannot come to agreement with respect to any matter, the
matter will be referred to arbitration as provided in this Agreement.
6.4 Responsibilities: Newco and Baxter will cooperate to
identify their separate responsibilities hereunder, and will diligently execute
those responsibilities to assure a continuous, uninterrupted supply to the
market for all Manufactured Products. For guidance and illustrative purposes, a
list of the various functional responsibilities to be performed by Newco and
Baxter for purposes of this Agreement are attached as Schedule 4. Whenever the
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need for functions and responsibilities not previously identified or assumed by
either Newco or Baxter becomes evident, the relevant Manufacturing Oversight
Committee will assign such functions or responsibilities.
7. PRODUCTION AND PRODUCTION SITES.
7.1 Production Sites: Baxter's and its Subcontractors'
manufacture of the Manufactured Products (and components thereof) may be carried
out at any Manufacturing
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Facility, with the original Manufacturing Facilities selected by Baxter and its
Subcontractors set forth on Schedule 5 attached hereto, provided that the cost
---------- --------
of effecting any change of the Manufacturing Facilities from the original sites
selected, or of effecting any subsequent change, shall not be included in the
Fully Loaded Cost, the new facilities meet any applicable QSR and other
regulatory requirements (or, in the case of a Baxter Subcontractor, to Baxter's
knowledge the new facilities meet any applicable QSR and other regulatory
requirements), and any change in facilities does not require submission and
approval of a PMA supplement or foreign marketing application by Newco. If
Newco determines a PMA supplement approval or foreign marketing authorization or
approval is necessary, Baxter (and/or its Subcontractor) and Newco shall agree
to the allocation of costs related to preparation and submission of the PMA
supplement or other application and Baxter or the relevant Subcontractor shall
continue to use and supply Newco from existing facilities, pending PMA
supplement or foreign approval.
7.2 Production of Manufactured Products: In manufacturing the
Manufactured Products, Baxter and its Subcontractors shall comply with all
applicable QSR or applicable state or foreign regulatory requirements except to
the extent a relevant requirement has been allocated to Newco under the
Agreements between Newco and Baxter. More specifically, as applicable, Baxter's
or a Subcontractor's QSR responsibilities, include but are not limited to:
A. Complying with all relevant materials, manufacturing and in-
process controls, label control and quality control specifications, product
drawings/blueprints and operating procedures which are applicable at the
time of production to the manufacture of the Manufactured Products or as
they are changed by Newco with the prior written consent of Baxter or a
Subcontractor with respect to material changes (which consent shall not be
unreasonably withheld).
B. Performing the release function for each lot of Manufactured
Product.
C. Preparing and maintaining the Device Master Record and Device
History Record or state, local or foreign equivalent for each Manufactured
Product, including records of any product retentions which may have been
issued against a lot during the manufacturing process, the action taken,
and the disposition of the retention.
D. Maintaining and complying with the quality system as described
in its current Quality Manual applicable to the Manufactured Products, or
as subsequently changed generally for all products of that type
manufactured by such manufacturer.
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E. Maintaining and complying with its Standard Operating
Procedure System which is currently applicable to the Manufactured Products
(relating to product manufacturing, testing and critical engineering,
system monitoring and control, cleaning/sanitization, calibration of
equipment, preventative maintenance, employee training, pest control,
environmental control/monitoring, equipment and process validation,
labeling/packaging control, failure investigations, internal quality
audits, handling of customer calls and complaint forwarding, computer
systems validation and maintenance, product release, product/process change
control and delegation of authority), or as subsequently changed generally
for all products of that type manufactured by such manufacturer.
Baxter or a Baxter Subcontractor may change the product specifications for any
Manufactured Product only with the prior written consent of Newco, which consent
shall not be unreasonably withheld. If Baxter or its Subcontractor proposes to
make a material change in product specifications (including in design,
materials, or suppliers), it shall give Newco not less than six months' prior
notice of any such change (including, without limitation, any change which may
affect the PMA or state, local or foreign regulatory approval of any
Manufactured Product or that requires any regulatory review). If any such
change is unacceptable to Newco (in its reasonable discretion), Newco shall give
Baxter and, if applicable, the Subcontractor notice of its objection within
thirty (30) days after receipt of the notice given hereunder by Baxter or its
Subcontractor, as the case may be. In the event that Newco objects to a
proposed change because it would require a PMA supplemental approval or state,
local or foreign marketing authorization or approval or for any other reason,
Baxter or its Subcontractor will continue to provide the Manufactured Products
without any change in product specifications, provided that if Newco objects to
-------------
the change because it determines a PMA supplemental approval or state, local or
foreign marketing application or approval would be necessary, Baxter or its
Subcontractor may prepare and bear the cost of the PMA supplement or other
foreign application which Newco will file with the FDA or other appropriate
authority. In such a case, modified Manufactured Products may be provided upon
PMA supplement or state, local or foreign approval or when otherwise consistent
with the FDA or other applicable regulations.
7.3 Materials and Services: Baxter and its Subcontractors shall
purchase all materials and services required to manufacture the Manufactured
Products (the cost of which will be reimbursed by Newco as part of Fully Loaded
Cost). Baxter and its Subcontractors may change suppliers of materials or
services without the prior consent of Newco, provided that (i) there is no
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material increase in the price of the Manufactured Products to Newco, (ii) a PMA
supplemental approval or state, local or foreign marketing authorization or
approval for any of the Manufactured Products is not necessary, and (iii) the
production of the Manufactured Products otherwise conforms to the terms of this
Agreement (including Sections 7.2 and 12.1).
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7.4 Title to Specifications: The specifications, product
drawings/blueprints and procedures that relate solely to the Manufactured
Products (and components thereof) referred to in Section 7.2A, other than any
such specifications, drawings/blueprints or procedures that relate solely to
those products or components to be supplied by Baxter under the Hardware and
Disposables Supply Agreement, are and shall remain the property of Newco. Newco
shall provide copies of such documents to Baxter or a relevant Subcontractor in
quantities sufficient to permit Baxter or the Subcontractor to carry out its
obligations hereunder. Specifications, product drawings/blueprints and
procedures that were not transferred to Newco as part of the IT Assets and that
relate both to the Manufactured Products (and components thereof) and to other
Baxter products are and shall remain the property of Baxter or any relevant
subcontractor. Baxter and its Subcontractors shall provide copies of such
documents to Newco in quantities sufficient to permit Newco to manufacture, or
have manufactured on its behalf, products with the same specifications as the
Manufactured Products.
8. CHANGE OF PRODUCTION SITES/OUTSOURCING MANUFACTURE. After
consultation with the Manufacturing Oversight Committee and after written notice
to Newco (but without the requirement of prior consent), Baxter or a Baxter
Subcontractor may change the current production site of any Manufactured Product
and Baxter may outsource the production of any Manufactured Product, provided
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that (i) there is no material increase in the price of the Manufactured Products
to Newco, (ii) a PMA supplemental approval or state, local or foreign marketing
authorization or approval is not required, (iii) Newco's rights to any IT Assets
are not materially adversely affected thereby, and (iv) the manufacturing of the
Manufactured Products otherwise conforms to the terms of this Agreement with
respect to Manufactured Products (including Sections 7.2 and 12), or Baxter
causes a relevant third party to comply with the terms of this Agreement in
connection with outsourced manufacturing of a Manufactured Product, as the case
may be. Newco and Baxter agree that nothing contained in this Agreement shall
require Baxter or a Subcontractor to change, or to open any new or additional
Manufacturing Facilities, apart from any upgrades in its Manufacturing
Facilities that Baxter or a Subcontractor may make in order to meet the
specifications for production of the Manufactured Products applicable at any
time and any changes as may be necessary to enable Baxter or a Subcontractor to
satisfy its obligations hereunder to deliver Manufactured Products to Newco.
Both Newco and Baxter acknowledge and agree that the production of certain
components of the Manufactured Products is currently outsourced by Baxter to
manufacturers other than Baxter. With respect to production site changes, new
outsourcing, and facility upgrades, Baxter or a Subcontractor shall provide
Newco with sufficient advance notice to allow Newco to comply with any
applicable regulatory requirements. If Newco determines a PMA supplement
approval or foreign marketing authorization or approval is necessary, Baxter
(and/or its Subcontractor) and Newco shall agree to the allocation of costs
related to preparation and submission of the PMA supplement or other
application. New production sites, outsourcing and facility upgrades shall not
be utilized relative to Manufactured Products, pending PMA supplement or foreign
approval, unless consistent with FDA and other applicable regulations.
9. FACILITY ACCESS AND AUDITS.
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9.1 Facility Access: During the Term, Baxter and its Subcontractors
shall permit Newco access to all areas of the Manufacturing Facilities in which
the Manufactured Products are manufactured, upon reasonable prior notice and
scheduling by Newco during normal business hours, for the examination of
production or quality records or to perform QSR audits. Newco's access to such
Manufacturing Facilities shall be coordinated through the Production Operating
Teams.
9.2 Audit: Newco may audit Baxter's and Baxter Subcontractors'
books and records for the purpose of determining compliance with the terms of
this Agreement. Newco may use independent outside auditors (who may participate
fully in such audit). In the event that an audit is proposed with respect to
information which Baxter or a Baxter Subcontractor wishes not to disclose to
Newco ("Restricted Information"), then on the written
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demand of Baxter or such Subcontractor the individuals conducting the audit with
respect to the Restricted Information will be limited to Newco's independent
auditors. In such event, Baxter or such Subcontractor shall pay the costs of the
independent auditors conducting such audit, but only with respect to that
portion of the audit relating to the Restricted Information. Such independent
auditors shall enter into an agreement with the relevant parties, on terms that
are agreeable to the parties, under which such independent auditors shall agree
to maintain the confidentiality of the information obtained during the course of
such audit and establishing what information such auditors will be permitted to
disclose in reporting the results of any audit of Restricted Information. Any
such audit shall be conducted during regular business hours in a manner that
does not interfere unreasonably with the operations of Baxter or such
subcontractor. The aggregate number of audits of Baxter's books and records
conducted under this Agreement and the Sublicense Agreements, the Antibody
Manufacturing and Storage Agreement, the Services Agreement, the Marketing,
Sales and Distribution Agreement and the Hardware and Disposables Supply
Agreement shall not exceed one (1) per facility in any twelve (12) month period
unless the next preceding audit disclosed a failure to conform to the terms of
any such Agreement or unless a Manufacturing Facility receives a Form FDA-483
during the twelve (12) months following any audit. Subject to the foregoing
limitations, any such audit shall be conducted when requested by notice given
not less than thirty (30) days prior to the commencement of the audit.
9.3 Baxter Subcontractors: Newco's rights to facility access
and to audit books and records pursuant to this Section 9, process validation
pursuant to Section 10 below, and certain regulatory compliance matters pursuant
to Sections 12.1(D), (E), (F), (G), (H), (I) and (J) below are, in the case of
Baxter's Subcontractors, subject to the limits on Baxter's rights under its
agreements with such Subcontractors. Baxter will use its best efforts, without
the requirement of payment of money, to cause all of its Subcontractors to
permit facility access, the right to audit books and records, process
validation, and certain regulatory compliance matters as set forth herein with
respect to the Manufactured Products as provided in this Section 9, Section 10
below and Sections 12.1(D), (E), (F), (G) (H), (I) and (J) below.
10. PROCESS VALIDATION. During the Term, at Newco's request, Baxter
and its Subcontractors shall permit Newco to review production validation
protocols and results with respect to the Manufactured Products. Such review
shall be arranged by the Production Operating Teams.
11. REGULATORY RESPONSIBILITY. Except as allocated to Baxter or its
Subcontractors as a QSR obligation or otherwise under the agreements between
Baxter and Newco, Newco will obtain Regulatory Approval for, and shall maintain
all regulatory files on, every Manufactured Product (except Supplied Products)
manufactured by Baxter or a Subcontractor exclusively for Newco.
12. COMPLIANCE WITH REGULATORY REQUIREMENTS.
12.1 Baxter Responsibilities: Notwithstanding any provision of
Section 11 hereof to the contrary, Baxter shall and, as applicable, shall
require any Subcontractor to:
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A. Appropriately register its manufacturing establishments with
the FDA and other regulatory agencies when required.
B. Maintain its required IS0 and EN certification for each
Manufacturing Facility and comply with all European Union and other foreign
regulatory requirements, as applicable.
C. Comply with the QSR requirements and other relevant
regulations issued by the FDA, state, local or other regulatory agencies
and in effect from time to time except to the extent that a QSR or other
regulatory obligation has been allocated to Newco under the agreements
between Baxter and Newco.
D. When practicable, permit Newco to send a representative to
attend, or when such attendance is not permitted or practicable, provide
Newco with periodic progress reports on, every visit to a relevant
Manufacturing Facility by the FDA or other regulatory agency which affects
or concerns the manufacture of the Manufactured Products (such reports to
be given as frequently as reasonably possible, but not more often than once
in each 24-hour period, during that portion of the visit which directly
affects or concerns any Manufactured Products). Newco shall be provided
with a copy of any Form FDA-483, Establishment Inspection Report and/or
Warning or "untitled" Letter generated as a result of an FDA visit, or any
equivalent foreign, state or local document generated as a result of an
inspection visit, and responses thereto (which copies may be redacted to
the extent necessary to protect confidential information unrelated to the
Manufactured Products, provided that such redaction does not prevent Newco
from discerning any information that is related to the Manufactured
Products). Newco shall also be apprised as soon as possible of the time and
place of any FDA "close out" meeting at the end of an FDA or other agency
visit and allowed to attend the meeting when the meeting directly affects
or concerns any Manufactured Product, provided that, in the discretion of
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Baxter's or its Subcontractor's regulatory professionals, the presence of a
Newco representative would not prejudice Baxter's or its Subcontractor's
interests.
E. Respond, in a timely manner, after consultation with Newco, to
any Form FDA-483, Warning or "untitled"
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Letter or Section 305 Notice received, and any other notices or letters
received from the FDA, a state or local regulatory authority, or an
analogous regulatory authority outside the United States, which relate to
the Manufactured Products.
F. Communicate to Newco product complaints received relating to
the Manufactured Products and cooperate, as mutually agreed by the parties,
with Newco in the resolution of such product complaints.
G. Maintain and store production records relating to the
Manufactured Products as required by its record retention policy, as
amended from time to time.
H. Cooperate with Newco, as mutually agreed by the parties, in
connection with mandatory notifications, repairs, replacements, and
refunds, safety alerts, "cease distribution and notification" and mandatory
recall actions, voluntary recalls, market withdrawals and stock recoveries,
and device removals and corrections, as defined or understood under law or
FDA policy, related to the Manufactured Products produced for Newco. Such
cooperation shall be at Newco's expense, subject to the provisions of
Section 12.3 below.
I. Cooperate with Newco in Newco's preparation and filing of MDRs
and compliance with PMA Post-Approval Requirements related to the
Manufactured Products. Such cooperation shall be at Newco's expense,
subject to the provisions of Section 12.3, below.
J. Provide Newco with reasonable access to and a copy of such
portions of its regulatory files relating to the Manufactured Products as
Newco shall reasonably request.
12.2 Newco Responsibilities: Newco shall:
A. Prepare, obtain approval of, and hold all applications,
notifications, submissions and regulatory files required by the FDA and the
Act relating to the Manufactured Products, except such files as are agreed
to be maintained by Baxter or a Baxter third party sub-contractor pursuant
to the other Agreements between Newco and Baxter.
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B. Provide Baxter with copy for all labeling related to the
Manufactured Products, which labeling shall comply with the Act and with
FDA and any relevant state or local regulatory requirements, as well as
with all applicable foreign regulatory requirements.
C. Be responsible for handling product complaints and maintenance
of complaint files and records related to Manufactured Products, and shall
notify Baxter of complaints regarding Manufactured Products.
D. File with FDA medical device reports under 21 C.F.R. Part 803
regarding the Manufactured Products.
E. Administer all mandatory notifications, repairs, replacements
and refunds, safety alerts, "cease distribution and notification" and
mandatory recall actions, voluntary recalls, market withdrawals and stock
recoveries, and device removals and corrections, as defined or understood
under law or FDA policy, and related and analogous actions involving
Manufactured Products.
F. Register with the FDA as a specifications developer and
register with other authorities, as applicable.
G. List the Manufactured Products with the FDA or other
authorities, as necessary.
H. Comply with any PMA Post-Approval Requirements applicable to
the Manufactured Products.
I. Respond in a timely manner, after consultation with Baxter or
a relevant Baxter third party sub-contractor, to any Form FDA-483, Warning
Letter or Section 305 Notice received, and any other notices or letters
received from the FDA, a state or local regulatory authority, or an
analogous regulatory authority outside the United States, which relate to
the Manufactured Products.
J. Provide Baxter with reasonable access to and a copy of such
portions of Newco's regulatory files relating to the Manufactured Products
as Baxter shall reasonably request.
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K. Comply with all European Union and other foreign regulatory
requirements, as applicable to the Manufactured Products.
12.3 Regulatory Actions: In the event that Newco takes a
regulatory action relative to any Manufactured Product (or component thereof)
and such action is due solely to Baxter's or its Subcontractor's failure to
produce the Manufactured Product (or component) in accordance with its
responsibilities under Sections 7.2, 8 or 12 of this Agreement, then Baxter
shall pay or reimburse Newco for all out-of-pocket costs and expenses incurred
by Newco in connection with such action, including expenses or obligations to
third parties, the cost of notifying customers, costs associated with the return
of Manufactured Products (or components thereof) by customers, and costs related
to otherwise addressing, handling or correcting the Manufactured Products (or
components thereof). In the event that such action is due in part to Baxter's
or its Subcontractor's failure to manufacture the Manufactured Product (or
component) in accordance with its responsibilities under this Agreement, Baxter
shall pay or reimburse Newco for such part of Newco's out-of-pocket costs and
expenses as shall be agreed by the parties or by the Corporate Committee, or as
shall be determined in binding arbitration pursuant to Section 32 of this
Agreement to be attributable to Baxter's failure. For purposes of this
paragraph, "regulatory action" means mandatory notifications, repairs,
replacements and refunds, safety alerts, "cease distribution and notification"
and mandatory recall actions, voluntary recalls, market withdrawals, and stock
recoveries, and device removals and corrections, as defined or understood under
law or FDA policy, and related and analogous actions.
13. ACTIVITY PLANNING/FORECASTS AND ORDERS.
13.1 Forecasts: Prior to the beginning of each calendar month
during the Term, Newco shall give Baxter a forecast of the orders Newco expects
to place with Baxter for Manufactured Products during each of the next eighteen
(18) months, using data supplied to Newco by Baxter from the Master Scheduling
System currently employed by Baxter and reviewed by the appropriate Production
Operating Teams. The forecast for the first two (2) months contained in such
eighteen month forecast shall constitute firm orders. The forecast for the first
of the eighteen (18) months in such eighteen month forecast must be the same as
the forecast for the second month in the previous eighteen month forecast; and
the forecast for the second of the eighteen (18) months in such eighteen month
forecast may not vary from the forecast for such month in the previous eighteen
month forecast by more than [Confidential Information Omitted], without the
prior consent of Baxter after consultation with each of the Production Operating
Teams. The eighteen month forecast for the eighteen month period beginning on
the date hereof was delivered to Baxter on the date hereof.
13.2 Production Schedule: Based on the forecasts and orders
received by Baxter from Newco, Baxter shall develop and maintain detailed
production schedules for the Manufactured Products which shall be presented for
review by the Production Operating Teams at least quarterly.
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13.3 Production in Excess of Orders: If Baxter's actual production of
Manufactured Products exceeds Newco's firm orders, Newco shall purchase such
excess, up to [Confidential Information Omitted] above Newco's firm orders,
provided that Newco's firm orders
- --------
for the next month shall be reduced by such excess unless Newco requests that
such reduction not be made.
13.4 Production Below Amount of Orders: If, due to the fault or
error of Baxter or a third-party supplier or subcontractor of Baxter, and
subject to the provisions of Section 29 of this Agreement, Baxter fails to
deliver Manufactured Products in the quantities specified in Newco's firm
orders, Baxter shall take action as may be necessary to cure such failure as
rapidly as is commercially reasonable, including without limitation, the actions
specified with respect to various fill rates as follows:
A. If production for any month is [Confidential
Information Omitted] of Newco's firm orders or lower,
Baxter shall (i) increase its production in the next
following month as reasonably necessary to satisfy both
the unfilled orders and the firm orders for such next
following month and (ii) pay air freight and other
extraordinary shipping costs reasonably necessary to
deliver delayed Manufactured Products to Newco's
customers until Baxter has brought production into
compliance with firm orders. Increased production
required under this Section 13.4(A) shall not be
subject to the limits on variance of orders set forth
in Section 13.1. The [Confidential Information
Omitted]fill rate commitment established pursuant to
this Section 13.4(A) may be adjusted by the parties
during the Term hereof as may be appropriate to reflect
actual manufacturing experience.
B. If production for any month is [Confidential
Information Omitted] of Newco's firm orders, (as
increased by the number of unfilled orders, if any,
carried over from the previous month) or lower, or if
production for any three consecutive months is
[Confidential Information Omitted] of Newco's firm
orders (as increased by the number of unfilled orders,
if any, carried over from the previous month) or lower,
Baxter shall (i) take the remedial measures set forth
in Section 13.4(A), (ii) promptly prepare and present
to the Production Operating Teams a plan for restoring
compliance firm orders, and (iii) promptly implement
such measures to restore compliance with firm orders as
are directed by the Production Operating Teams,
including without limitation changing, or allocating
additional manufacturing resources.
C. If, after the first twelve (12) months of the Term
hereof, production for any three consecutive months is
[Confidential Information Omitted] of Newco's firm
orders (as increased by the number of unfilled
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orders, if any, carried over from the previous month)
or lower, or if production for any six consecutive
months is [Confidential Information Omitted] of Newco's
firm orders (as increased by the number of unfilled
orders, if any, carried over from the previous month)
or lower, Baxter shall, at Newco's option, either (i)
take the remedial measures set forth in Section 13.4(B)
or (ii) assist Newco to transfer, at Baxter's sole
expense, all manufacturing of Manufactured Products to
a third party alternative manufacturer selected by
Newco, with such assistance to include without
limitation the transfer of such inventory, raw
materials, work in process, IT Assets, specifications,
drawings/blueprints, copy of the Device History Record,
and such other property owned by Newco or owned by
Baxter and previously charged to Newco as part of
Fully-Loaded Cost; transfer all information and
technical know-how concerning Baxter manufacturing
processes required for production of the Manufactured
Products; provide the services of technical personnel
as needed to effect such transfers of information and
technical know-how; and continue to manufacture the
Manufactured Products during the transition to an
alternative manufacturer until such alternative
manufacturer is able to meet market demand for the
Manufactured Products, provided that Newco and such
--------
alternative manufacturer are making good faith efforts
to effectuate the transition and to enable such
alternative manufacturer to meet market demand for the
Manufactured Products. Any third party alternative
manufacturer selected by Newco must (a) agree to be
bound, to the same extent that Newco is bound, by the
provisions of that certain Non-Competition and
Confidentiality Agreement among Baxter, VIMRx and Newco
of even date herewith; and (b) be approved by the
Corporate Committee.
The provisions of this Section 13.4 shall not apply to Manufactured Products
manufactured for use in clinical trials. Except with respect to Manufactured
Products manufactured for use in clinical trials (as to which Section 13.4 does
not apply), the provisions of Section 13.4 shall be the sole remedy available to
Newco in the event that Baxter fails to satisfy Newco's firm orders made
pursuant to this Section 13, provided that Baxter is endeavoring in good faith
--------
to satisfy its obligations to Newco in accordance with the terms of this
Agreement, including, without limitation, this Section 13.4.
13.5 Long Range Forecasts: The parties shall cooperate in good
faith in providing other, longer range, forecasts, which shall be useful in
budget planning for the parties.
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13.6 Transition Period: Baxter and Newco acknowledge that during the
first twelve (12) months of the Term of this Agreement, it may not be
commercially feasible for Baxter (a) to immediately strictly comply with the
labeling, product inserts and packaging requirements of Section 5 of this
Agreement by changing the label copy, product inserts and packaging for Supplied
Products to include Newco's label copy, product inserts, packaging, trademarks,
trade names, service marks, logos or materials or (b) to fulfill the production
rate requirements of Section 13.4A through 13.4C, inclusive, of this Agreement.
Accordingly, Baxter and Newco agree that during the first twelve (12) months of
the Term of this Agreement, Baxter will use its commercially reasonable best
efforts to achieve full compliance with (a) the labeling, product inserts and
packaging requirements of Section 5 of this Agreement and (b) the production
rate requirements of Section 13.4A of this Agreement but shall not be deemed to
be in breach of Sections 5 or 13.4 of this Agreement during such twelve (12)
month period unless Baxter fails to comply with this Section 13.6. Any dispute
between Baxter and Newco relating to Baxter's non-compliance with this Section
13.6 shall be referred to the Production Operating Teams for resolution pursuant
to Section 6.1 of this Agreement.
14. INVENTORY. Baxter shall retain title to all raw materials and
work in process relating to the Manufactured Products, except that any of such
items relating solely to the Manufactured Products which become obsolete due to
action of Newco or regulatory requirements shall, at Baxter's option, be
purchased by Newco pursuant to Section 15 below to the extent they do not exceed
ninety (90) days' normal usage, based on annual budgeted volume.
15. PRICING, BILLING AND PAYMENT.
15.1 Fully Loaded Cost: During the first three (3) full years of
the Term, the prices to Newco for Manufactured Products shall be Baxter's Fully
Loaded Cost for such Manufactured Products.
15.2 Fully Loaded Cost Plus: After the expiration of the first
three (3) full years of the Term, the prices for Manufactured Products shall be
Baxter's Fully Loaded Cost for such Manufactured Products plus [Confidential
Information Omitted] of such Fully Loaded Cost (unless Baxter and Newco
otherwise agree in writing to a different price).
15.3 Price Adjustments: The prices for Manufactured Products
shall be adjusted as of January 1 of each year of the Term, through Baxter's
annual internal budgeting process, based on forecast changes in volume pursuant
to the forecasting process set forth in Section 13, anticipated changes in
materials prices and anticipated cost reductions resulting from Baxter's Value
Improvement Process. The overall intent of the parties is that the Manufactured
Products shall be transferred at the prices described in Sections 15.1 and 15.2,
as adjusted for future changes in Baxter's costs of production (taking into
account Section 15.4 hereof).
15.4 Unanticipated Volume, Materials Price or Overhead Changes:
Cost variances shall be paid by or credited to the parties during the course of
a calendar year based on unanticipated volume, materials price or overhead
changes, as follows:
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A. Cost variances based on volume changes shall be made only when
firm orders exceed or are less than forecast activity by [Confidential
Information Omitted] or more (excluding any increases attributable to
earlier failures to supply firm orders) and shall cover only the difference
between [Confidential Information Omitted] of the budgeted activity and the
variance from budgeted activity. The adjustment will be based on
[Confidential Information Omitted] of Baxter's standard overhead
attributable to the difference from the planned volume.
B. Cost variances based on materials price changes shall be made
only when actual prices for total materials costs differ from those
anticipated in the budgeting process by more than [Confidential Information
Omitted]. The adjustment shall cover only the difference between
[Confidential Information Omitted] of total budgeted materials cost and the
variance from budgeted activity.
C. Cost variances based on overhead cost changes caused by
conditions, other than those described in Section 15.4(A) or 15.4(B) above,
beyond Baxter's control, shall be shared pro rata (based on changes in
total plant overhead) by the parties or as they shall otherwise agree.
D. Adjustments pursuant to this Section 15.4 will be determined
as of the end of each calendar quarter (on a year to date basis) and
reflected as an amount due and payable (or a credit receivable) spread
ratably over the following three months.
E. All pricing adjustments will be reviewed, but not for
approval, by the Production Operating Teams and any dispute concerning such
adjustments will be referred to the Manufacturing Oversight Committee and,
if necessary, to the Corporate Committee.
15.5 Spare Parts: Baxter shall manufacture and make available
for purchase by Newco spare parts for the repair of the Manufactured Products.
Newco's purchases of such spare parts shall be subject to the pricing, billing
and payment provisions of this Section 15. Notwithstanding the foregoing,
Baxter shall maintain a stock of spare parts to satisfy its obligations under
service contracts entered into by Baxter with purchasers of the Isolex(R) and
Maxsep(R) Products, there shall be no charge to Newco for such spare parts
manufactured by or at the direction of Baxter for the purpose of satisfying such
Baxter obligations, and Baxter shall be entitled to retain all revenues from
such service contracts and from the sale of such spare parts pursuant to such
service contracts.
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15.6 Billing and Payment: Baxter shall bill Newco as of the end of
each calendar month for Manufactured Products shipped during the month. Newco
shall pay such invoices within sixty (60) days of Newco's receipt thereof.
16. FOREIGN CURRENCY CONVERSION. Where calculations of Baxter's
Fully Loaded Cost relate to a currency other than United States dollars, all
such calculations shall be calculated pursuant to Baxter's then current
accounting policies and practices.
17. WITHHOLDING TAXES. Where required to do so by applicable law,
Newco shall withhold taxes required to be paid to a taxing authority on account
of any payments to Baxter hereunder, and Newco shall furnish Baxter with
satisfactory evidence of such withholding and payment in order to permit Baxter
to obtain a tax credit or other relief as may be available under the applicable
law. Newco shall cooperate with Baxter in obtaining exemption from withholding
taxes where available under applicable law.
18. INTEREST ON OVERDUE PAYMENTS. Interest shall accrue and be
payable on all overdue payments owing by a party under this Agreement from the
date due at the rate of [Confidential Information Omitted] percent [Confidential
Information Omitted] per month (or the highest rate allowed by law, if lower),
compounded annually, until fully paid (including full payment of such interest).
19. DELIVERY. All shipments of Manufactured Products shall be FOB
the manufacturing facilities where such Manufactured Products are manufactured
by or on behalf of Baxter. Except as specified in Section 13.4 above, all
freight, insurance, and other delivery costs (and any customs duties) shall be
paid by Newco.
20. TITLE. Title to all Manufactured Products shall pass to Newco
(or Newco's designated distributor) when the Manufactured Products are placed on
Newco's truck or Newco's designated carrier (or Newco's designated distributor's
truck or designated carrier) at Baxter's Manufacturing Facility or when
Manufactured Products distributed by Baxter pursuant to the Marketing, Sales and
Distribution Agreement, of even date herewith, by and between Baxter and Newco,
are placed in Baxter's designated finished goods inventory.
21. CHANGES IN LABELING. Changes in Manufactured Product labeling
requested by Newco and the cost of labeling made obsolete by such changes will
be paid for by Newco at Baxter's Fully Loaded Cost.
22. WARRANTIES.
22.1 Warranty: Baxter warrants to Newco that the Manufactured
Products delivered to or at the direction of Newco hereunder (i) will have been
manufactured in accordance with the applicable specifications, procedures and
product drawings/blueprints and all applicable laws (including the Act), (ii)
will not be adulterated or misbranded within the meaning of the Act as a result
of acts or omissions by Baxter, and (iii) are free from defects in workmanship.
Notwithstanding the foregoing, Baxter shall not be liable to Newco under subpart
(ii) above as a
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result of any labels supplied by or affixed to such Manufactured Products by
Newco. This warranty shall be continuing and shall be binding on Baxter and its
permitted successors and assigns and shall inure to the benefit of Newco and its
permitted successors and assigns.
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE NOT GIVEN
BY BAXTER AND ANY SUCH IMPLIED WARRANTIES ARE SPECIFICALLY DISCLAIMED.
22.2 Baxter Indemnity: Subject to Section 28 below, Baxter
agrees to indemnify Newco and hold it harmless from any liability, loss,
expense, cost, claim or judgment arising out of any claim for property damage,
personal injury or death which is caused by Baxter's (or its Subcontractor's)
failure to manufacture the Manufactured Products in accordance with the designs,
specifications, procedures and product drawings/blueprints, with the laws,
regulations, rules, orders and notices, or with the quality system and Standard
Operating Procedure System described in Section 7.2 and Section 12 above and
which are applicable to Baxter or such Subcontractor thereunder, as the case may
be. At Baxter's expense, Newco shall cooperate fully with Baxter in defending
or otherwise resolving any such claim. Baxter shall have full control of any
litigation brought against Newco with respect to any claim that is indemnifiable
by Baxter hereunder; but Newco may, at its expense, also be represented by its
own counsel in any such litigation.
22.3 Newco Indemnity: Subject to Section 28 below, Newco agrees
to indemnify Baxter and hold it harmless from any liability, loss, expense,
cost, claim or judgment arising out of any claim for property damage, personal
injury or death which is caused by defects in the products, design,
specifications, procedures, product drawings/blueprints, label copy or resulting
from the use of the Manufactured Products; provided, however, that Newco will
-------- -------
have no liability to Baxter whatsoever with respect to any liability, loss,
expense, cost, claim or judgment arising out of any claim for property damage,
personal injury or death which is caused by defects in the designs,
specifications, procedures or product drawings/blueprints acquired by Newco from
Baxter pursuant to the Acquisition Agreement, except defects in modifications to
such designs, specifications, procedures or product drawings/blueprints made by
Newco subsequent to its acquisition thereof. At Newco's expense, Baxter shall
cooperate fully with Newco in defendng or otherwise resolving any such claim.
Newco shall have full control of any litigation brought against Baxter with
respect to any claim that is indemnifiable by Newco hereunder; but Baxter may,
at its expense, also be represented by its own counsel in any such litigation.
22.4 Indemnification for Infringement: Newco shall defend,
indemnify and hold Baxter harmless with respect to any liability incurred by
Baxter as a result of activities under this Agreement with respect to any claim
of patent, trade name, trademark or copyright infringement or misuse (i) with
respect to any Isolex(R) and Maxsep(R) Products, reagent kits, or other
products which are not being manufactured or supplied by Baxter (or its
Subcontractor) for or to Newco under this Agreement or an agreement having the
same date as this Agreement (or an extension or renewal thereof); or (ii)
arising from any modification to product designs, specifications, procedures or
product drawings/blueprints made by Newco subsequent to its acquisition thereof
from Baxter. At Newco's expense, Baxter shall cooperate fully with Newco
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in defending or otherwise resolving any such charges of infringement or misuse.
Newco shall have full control of any litigation brought against Baxter alleging
such infringement or misuse; but Baxter may at its expense, also be represented
by its own counsel in any such litigation.
23. INSURANCE.
23.1 Baxter Insurance: During the Term, Baxter shall procure and
maintain, through self-insurance or a combination of self-insurance and
commercially placed insurance, comprehensive general liability insurance
covering each occurrence of bodily injury and property damage in the amount of
not less than [Confidential Information Omitted] Dollars [Confidential
Information Omitted] combined single limit, including coverage for product and
completed operations, blanket contractual liability and vendor's liability.
Baxter shall, within sixty (60) days of the date of this Agreement, furnish a
certificate of insurance to Newco evidencing the foregoing coverages and limits,
and thereafter shall give at least thirty (30) days' prior notice to Newco of
any termination, expiration without renewal, or material change to such
insurance, coverage or limits.
23.2 Newco Insurance: During the Term, Newco shall procure
andmaintain, through self-insurance or a combination of self-insurance and
commercially placed insurance, comprehensive general liability insurance
covering each occurrence of bodily injury and property damage in the amount of
not less than [Confidential Information Omitted] Dollars [Confidential
Information Omitted] combined single limit including coverage for product and
completed operations, blanket contractual liability and vendor's liability.
Newco shall, within sixty (60) days of the date of this Agreement, furnish a
certificate of insurance to Baxter evidencing the foregoing coverages and limits
and thereafter shall give at least thirty (30) days' prior notice to Baxter of
any termination, expiration without renewal, or material change to such
insurance, coverage or limits.
24. DISCONTINUANCE OF PRODUCT LINE. Subject to Section 25 below, if
Newco wishes to discontinue a product or product line which includes any
Manufactured Product (subject to Newco's obligations under the Marketing, Sales
& Distribution Agreement), Newco shall give Baxter six (6) months' prior written
notice thereof and the parties will negotiate appropriate closure conditions
which provide for recovery by Baxter of the related overhead costs, any related
investment (including any dedicated or additional equipment purchased by Baxter
exclusively to support the discontinued product line) and related direct out-of-
pocket expenses.
25. RIGHT OF FIRST OFFER. In the event Newco elects to abandon
and/or discontinues substantially all efforts to develop or market (or to have
developed or marketed) the Manufactured Products, or any of them (the
"Discontinued Products"), within the Product Field or any sub-field thereof, and
---
Newco elects to sell Newco's right to make, have made, use and sell the
Discontinued Products in the Product Field or any sub-field thereof to a third
party, Baxter shall have a right of first offer to obtain an exclusive worldwide
license to make, have made, use and sell in such Product Field or sub-field,
those Discontinued Products. After Newco notifies Baxter of Newco's intention
to sell such right, Baxter will have sixty (60) days to respond to Newco and to
negotiate the material terms and conditions of such a license. The terms and
conditions of such a license shall be negotiated by Newco and Baxter, bargaining
in good faith,
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and documented in a written agreement, signed by authorized representatives of
both parties. If, after notice to Baxter and expiration of sixty (60) days
without completed negotiation of the material terms of a license agreement,
Newco desires to enter into an agreement with a third party on terms and
conditions that are less favorable to Newco than the terms and conditions
offered by or to Baxter (a "New Offer"), then Newco must give Baxter notice and
an additional thirty (30) days to respond to Newco's offer on substantially the
same terms and conditions as those of the New Offer. The culmination of any
transaction pursuant to this Section 25 is subject to the parties entering into
a definitive agreement on terms which are agreeable to each of the parties, in
their sole discretion.
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26. TERMINATION.
26.1 Expiration: This Agreement, and any licenses granted
hereunder, shall terminate upon the earlier to occur of the expiration of the
Term or a termination pursuant to Section 26.2 below.
26.2 Early Termination: A non-breaching party may terminate this
Agreement, and may terminate any licenses granted by such party hereunder, if
any of the following events (each is herein referred to as a "Material Breach")
occur:
A. A party fails to pay any amount owing under this Agreement on
the date(s) specified for such payment and such failure shall continue for
sixty (60) days after written notice of such failure by the other party to
this Agreement;
B. A party shall default in the performance of or compliance with
any material covenant contained in this Agreement or the Non-Compete
Agreement (other than a failure to make a payment described in Section
26.2A above) which shall continue uncured beyond the applicable grace
period therefor; a party shall default in the performance of or compliance
with any covenant contained in the Marketing, Sales and Distribution
Agreement and such default results in termination of such Marketing, Sales
and Distribution Agreement; or the Marketing, Sales and Distribution
Agreement is rejected in the course of the bankruptcy of the non-
terminating party;
C. A receiver, conservator, custodian, liquidator or trustee of a
party or of all or any of the property of a party, is appointed by court
order and such order remains in effect for more than ninety (90) days; or
an order for relief is entered under the federal bankruptcy laws with
respect to a party; or any of the material property of a party is
sequestered by court order and such order remains in effect for more than
ninety (90) days; or a petition is filed against a party under the
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within ninety (90) days after
such filing;
D. A party files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy,
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reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction, whether now or hereafter in effect,
or consents to the filing of any petition against it under any such law; or
E. A party makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, conservator,
custodian, liquidator or trustee of the party, or of all or any part of its
property.
26.3 Return of IT Assets: In addition to any other rights or
remedies the parties may have upon termination of this Agreement at law or in
equity, Baxter agrees that Baxter shall, upon termination and payment in full to
Baxter of any unpaid amounts due under this Agreement by Newco, deliver, at
Newco's direction, and at Newco's sole risk of loss and expense, any and all IT
Assets, any and all other specifications, drawings/blueprints and other
documents relating solely to the Manufactured Products then held by, or under
the control of, Baxter pursuant to this Agreement and copies of any and all
other specifications, product drawings/blueprints and procedures required for
the manufacture of the Manufactured Products.
27. FORCE MAJEURE. Neither party to this Agreement shall be liable
for delay or failure in the performance of any of its obligations hereunder if
such delay or failure is due to causes beyond its reasonable control, including
acts of God, fires, earthquakes, strikes and labor disputes, acts of war, civil
unrest or intervention of any governmental authority, but any such delay or
failure shall be remedied by such party as soon as is reasonably possible.
28. LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF
BREACH OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY
OR LIQUIDATED DAMAGES.
29. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement
or any associated transaction is required by the law of any nation to be either
approved or registered with any governmental authority, or any agency or
political subdivision thereof, Baxter shall assume all legal obligations to do
so.
30. EXPORT CONTROL. Baxter shall observe all applicable United
States and foreign laws with respect to the transfer of all Manufactured
Products to or on behalf of Newco between nations, countries or other sovereign
states.
31. NOTICES. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
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facsimile transmission (provided that, in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter, such notices shall be delivered to: President
Baxter Biotech Group
with a copy to: General Counsel
Baxter Healthcare Corporation
If to Baxter, other written communications shall be delivered to:
President
Venture Management
Baxter Biotech Group
with a copy to: Associate General Counsel
Baxter Healthcare Corporation
If to Newco, such notices shall be delivered to: President
BIT Acquisition Corp.
with a copy to: Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention: Lowell S. Lifschultz, Esq.
If to Newco, other written communications shall be delivered to:
President
BIT Acquisition Corp.
with a copy to: Vice President
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 31. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered: by hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery
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thereof to the United States Postal Service; or by facsimile transmission, at
the time of transmission.
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32. DISPUTE RESOLUTION.
32.1 Provisional Remedies: The procedures specified in this
Section 32 shall be the sole and exclusive procedures for the resolution of
disputes between the parties arising out of or relating to this Agreement;
provided, however, that a party, without prejudice to these procedures, may seek
- -------- -------
a preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in
good faith in the procedures specified in this Section 32.
32.2 Negotiations Between Executives: The parties will attempt
in good faith to resolve promptly any claim or controversy arising out of or
relating to the execution, interpretation or performance of this Agreement
(including the validity, scope and enforceability of the provisions contained in
this Section 32), by negotiations under the procedures set forth in Section 6
concerning referral of disputes to the Corporate Committee.
32.3 Arbitration: In the event that any dispute arising out of
or relating to this Agreement or its breach, termination or validity has not
been resolved after good faith negotiation pursuant to the procedures of Section
32.2, such dispute shall, upon written notice by either party to the other, be
finally settled by arbitration administered by the Center for Public Resources
in accordance with the provisions of its Commercial Arbitration Rules and the
United Stated Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators all of whom shall be selected from a
list of neutral arbitrators supplied by the Center for Public Resources.
From such list, each of Baxter and Newco shall select one (1) arbitrator,
and the arbitrators so selected shall select a third. The panel shall
designate one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration
Act as necessary to protect the rights or property of the party pending the
decision of the arbitrators.
D. The parties shall allow and participate in limited discovery
for the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the Center
for Public Resources. All discovery shall be completed within sixty
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(60) days following the filing of the answer or other responsive pleading.
Unresolved discovery disputes shall be brought to the attention of the
chair of the arbitration panel and may be disposed of by the chair.
E. Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators,
provided that the chair of the panel of arbitrators may establish such
longer times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the
arbitrators within fifteen (15) business days after
conclusion of the hearing of the matter, shall be in
writing and shall specify the factual and legal basis
for the award. Judgment thereon may be entered in any
court having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the
-------- -------
arbitrators will have no authority to award special, punitive or exemplary
damages, or other money damages that are not measured by the prevailing
party's actual damages.
32.4 Performance During Dispute: Each party is required to
continue to perform its obligations under this Agreement pending final
resolution of any dispute arising out of or relating to this Agreement, unless
to do so would be commercially impossible or impractical under the
circumstances.
33. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the internal laws of the state of Delaware,
without application of conflicts of law principles, and, subject to Section 32
above, each party hereby submits to the jurisdiction and venue of any state or
federal court in the State of Delaware. To the extent permissible by law, each
of the parties hereby waives, releases and agrees not to assert, and agrees to
cause its Affiliates to waive, release and not assert, any rights such party or
its Affiliates may have under any foreign law or regulation that would be
inconsistent with the terms of this Agreement as governed by Delaware law.
34. PROVISIONS CONTRARY TO LAW/SEVERABILITY. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
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an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted herefrom, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
35. ENTIRE AGREEMENT. This Agreement, together with any exhibits or
schedules attached hereto, 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 this Agreement.
36. WAIVERS AND MODIFICATIONS. The failure of any party to insist on
the performance of any obligation hereunder shall not be deemed to be a waiver
of such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing signed by the party to be bound by such waiver, modification, release or
amendment.
37. NO OTHER LICENSES. Except as permitted by Section 4 or Section 5
of this Agreement, or as may otherwise be agreed to by the parties in writing,
neither party shall use the name of the other party in any promotional materials
or advertising without the prior written consent of the other party. Except as
necessary for the manufacture of the Manufactured Products as set forth in
Sections 4 and 5 of this Agreement, and subject to Section 25 above, nothing in
this Agreement shall grant to either party any right to the other party's
intellectual property, including patents, patent applications, technology, know-
how, inventions, copyrights, trademarks, service marks, logos or trade names
("Intellectual Property"). Neither party shall at any time assert any claim to
any goodwill, reputation or ownership of the other party's Intellectual Property
and all uses of a party's Intellectual Property shall inure to the benefit of
that party.
38. ASSIGNMENT. Newco may assign its rights and obligations under
this Agreement to any Affiliate of Newco without the prior written consent of
Baxter, provided that such Affiliate is owned, directly or indirectly, by Baxter
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and VIMRx in substantially the same proportions as Newco is owned. Baxter may
assign its rights and obligations hereunder to any Affiliate of Baxter without
prior notice to or consent of Newco. No assignment by Baxter or by Newco, or by
any permitted assignee, shall be effective unless and until the assignee shall
have agreed to become bound by the provisions of the Non-Compete Agreement to
the same extent and in the same manner as Baxter (in the case of a Baxter
assignee) or Newco (in the case of a Newco assignee) is bound. No party hereto
may assign any of its rights or obligations under this Agreement, unless and to
the extent expressly permitted by this Section 38. Subject to the foregoing,
this Agreement shall inure to the benefit of and be binding on the parties'
permitted successors and assigns.
39. INDEPENDENT PARTIES. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint
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venturer, or legal representative, and neither party has express or implied
authority to bind the other in any manner whatsoever.
40. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together, and shall constitute one and the same instrument.
41. RULES OF CONSTRUCTION. In this Agreement, unless a clear
contrary intention appears:
A. The singular number includes the plural number and vice versa;
B. Reference to any party includes such party's permitted
successors and assigns;
C. Reference to any gender includes the other gender;
D. Reference to any Section, Exhibit or Schedule means such
section of this Agreement, exhibit to this Agreement or schedule to this
Agreement, as the case may be, and references in any section or definition
to any clause means such clause of such section or definition;
E. "Herein," "hereunder," "hereof," "hereto," and words of
similar import shall be deemed references to this Agreement as a whole and
not to any particular section or other provision of this Agreement;
F. "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
G. Relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding" and "through"
means "through and including";
H. Reference to any law (including statutes and ordinances) means
such law as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder;
I. Accounting terms used herein shall have the meanings
historically attributed to them by Baxter International Inc., a Delaware
corporation, and its subsidiaries prior to the date hereof;
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J. In the event of any conflict between any of the provisions of
the body of this Agreement and any exhibit or schedule hereto, the
provisions of the body of this Agreement shall control;
K. The headings contained in this Agreement have been inserted
for convenience of reference only, and are not to be used in construing
this Agreement; and
L. Any rule of construction or interpretation which might
otherwise require this Agreement to be construed or interpreted against
either party shall not apply to any construction or interpretation hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first set forth above.
BAXTER HEALTHCARE CORPORATION
By:______________________________
Name:
Title:
BIT ACQUISITION CORP.
By:______________________________
Name:
Title:
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EXHIBIT 10.2
ANTIBODY MANUFACTURING AND STORAGE AGREEMENT
This ANTIBODY MANUFACTURING AND STORAGE AGREEMENT (the "Agreement"), dated
as of December 17, 1997 by and between Baxter Healthcare Corporation, a Delaware
corporation having a place of business at 1627 Lake Cook Road, Deerfield
Illinois 60015 ("Baxter") and BIT ACQUISITION CORP., a Delaware corporation
having a place of business at Nine Parker, Irvine, California 92618 ("Newco").
RECITALS
A. Baxter and VIMRx Pharmaceuticals Inc., a Delaware corporation (VIMRx"),
have agreed to enter into a strategic alliance in the ex vivo cell therapies
business and have formed Newco for that purpose pursuant to an Asset Purchase
Agreement dated as of October 10, 1997 by and among Baxter, VIMRx and Newco (the
"Acquisition Agreement");
B. Baxter has agreed to manufacture for Newco certain Isolex(R) and
Maxsep(R) Products pursuant to the terms of that certain Hardware and
Disposables Manufacturing Agreement (the "Hardware and Disposables Manufacturing
Agreement"), to supply to Newco certain other products and components pursuant
to that certain Hardware and Disposables Supply Agreement (the "Hardware and
Disposables Supply Agreement") each between Baxter and Newco and each of even
date herewith (collectively, the "Hardware and Disposables Agreements") and to
manufacture certain prototype products for the research market pursuant to the
terms of that certain Services Agreement of even date herewith (the "Services
Agreement");
C. Pursuant to the Acquisition Agreement, Baxter has transferred to Newco
certain Isolex(R) and Maxsep(R) Technology (as that capitalized term is defined
below) as well as other IT Assets relating to Isolex(R) and Maxsep(R) Products
(as those capitalized terms are defined below).
D. Pursuant to the Acquisition Agreement, Baxter and Newco have entered
into that certain sublicense of even date herewith relating to CD34+ cell
population and related antibody and method patents licensed from Becton,
Dickenson and Company to Baxter (the "First BD Sublicense"); that certain
sublicense of even date herewith relating to B cell antibodies licensed from
Becton, Dickenson and Company to Baxter (the "Second BD Sublicense"); that
certain sublicense of even date herewith relating to breast cancer antibodies
licensed from Cetus Oncology Corporation, d/b/a Chiron Therapeutics, to Baxter
(the "Chiron Sublicense"); and that certain sublicense of even date herewith
relating to B cells licensed from Prof. Bernd Dorken to Baxter Deutschland GmbH
(the Dorken Sublicense") (the First BD Sublicense, the Second BD Sublicense, the
Chiron Sublicense and the Dorken Sublicense are collectively referred to herein
as the "Sublicense Agreements") pursuant to which Baxter has granted to Newco
licenses to the Licensed
<PAGE>
Technology (as that capitalized term is defined in each of the Sublicense
Agreements) as described therein.
E. Baxter currently manufactures certain Antibodies (as such capitalized
terms is defined below) which are components of the Isolex(R) and Maxsep(R)
Products, and certain Reagents and Reagent Kits (as those capitalized terms are
defined below) used in connection with the Isolex(R) and Maxsep(R) Products, and
is willing to continue to manufacture such Antibodies, Reagents and Reagent Kits
for Newco; and
F. Newco desires that Baxter manufacture for Newco such Antibodies,
Reagents and Reagent Kits as described herein and subject to the terms hereof
and Baxter is willing to manufacture such Antibodies, Reagents and Reagent Kits.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and Newco hereby agree as follows:
1. DEFINITIONS
1.1 Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth herein.
1.2 Terms Not Herein Defined. As used herein, all terms not defined
herein shall have the meanings ascribed to them in the Hardware and Disposables
Agreements.
1.3 Other Terms. As used herein, the following capitalized terms shall
have the following meanings:
A. "Affiliate" of a party shall mean any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by,
or is under common Control with the party or (ii) fifty percent (50%) or
more of the voting capital stock (or in the case of an entity which is not
a corporation, fifty percent (50%) or more of the equity interest) of which
is beneficially owned or held by the party or any of such party's
Subsidiaries. The term "Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of an entity (other than a natural person), whether through
the ownership of voting capital stock, by contract or otherwise.
B. "Antibodies" shall mean the antibodies specified in Schedule I
attached hereto and such other antibodies as Baxter may
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agree to produce, pursuant to Section 4 hereof, from time to time in
connection with the Isolex(R) and Maxsep(R) Products.
C. "Cell Lines" shall mean the cell lines specified in Schedule 2
attached hereto.
D. "Ex Vivo Cell Processing" shall mean the active selection, and
any subsequent modification, genetic alteration, activation and/or
expansion, of nucleated cells outside the body for therapeutic purposes
such as cellular therapy or gene therapy. For the purpose of this
definition, "active selection" shall mean processing involving the action
of a biological component, such as an antibody or modified antibody, a
lectin, or a ligand, to selectively and specifically bind to a particular
molecule on the surface of the cells to be selected so as to confer
specificity or selectivity for such cells in the cell selection process.
E. "FDA" shall mean the United States Food and Drug
Administration.
F. "FDA-Regulated Non-Baxter Component" shall mean any component
of a Reagent Kit which is manufactured by a third party for or on behalf of
Baxter and which is either (a) deemed, under applicable law and FDA
regulations, to be "intended for use" in an FDA-regulated product or (b)
manufactured at any FDA-registered establishment.
G. "Field of Distribution" shall have the meaning ascribed to
such capitalized term in the Marketing, Sales & Distribution Agreement.
H. "Form FDA-483" shall have the meaning ascribed to it by FDA
policy, as the same may be amended or changed from time to time.
I. "Fully Loaded Cost" means, for either party, such party's cost
of manufacturing, performing or acquiring any items or services, in
accordance with generally accepted accounting principles, consistently
applied ("GAAP"), and, with respect to each party, in accordance with such
party's normal accounting policies, all consistently applied, including any
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royalties payable by such party in connection with manufacturing,
performing or acquiring any items or services, but excluding in the case of
Baxter's Fully Loaded Cost, any royalty obligations of Baxter that are paid
or reimbursed by Newco pursuant to the Sublicense Agreements. Fully Loaded
Cost shall not include general corporate allocations or other allocations
which are not directly related to the manufacture, performance or
acquisition of the item or service, however designated. A charge for the
cost of funding the party's working capital needs for such manufacture,
performance or acquisition of items or services, including capital
expenditures for facilities and/or equipment and capitalized manufacturing
costs, will be included in Fully Loaded Cost, which charge will be made at
the interest rate paid by Baxter on its then most recent issuance of
commercial paper; provided, however, that no charge shall be made for any
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cost of, or the cost of funding any, changes in the site of manufacturing
any of the Antibodies, Reagents or Reagent Kits, except as expressly
provided in this Agreement. In the event any item is acquired or any
service is provided for a party from or by an Affiliate of such party, the
cost of acquiring such items or services shall be deemed to mean such
Affiliate's actual cost of manufacturing, performing or acquiring such
items or services in accordance with the principles set forth in this
definition of "Fully Loaded Cost". Development costs will be included in
Fully Loaded Cost only to the extent such development costs consist of
costs for evaluating candidate cell lines and for producing pilot or
clinical scale lots of antibodies.
J. "Hyland" shall mean the Hyland Division of Baxter.
K. "Isolex(R) and Maxsep(R) Products" shall have the meaning
ascribed to such term in the Hardware and Disposables Manufacturing
Agreement.
L. "Isolex(R) and Maxsep(R) Technology" means automated systems
for positive and negative immunomagnetic cell selection.
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M. "IT Assets" means those Assets set forth in Schedule 2.1(A) of
the Acquisition Agreement that consist of personal property currently
utilized by Baxter solely in connection with manufacturing the Isolex(R)
and Maxsep(R) Products, including equipment, molds and tools.
N. "Manufacturing Facility" means any production site selected by
Baxter or a Subcontractor of Baxter for manufacture of the Antibodies,
Reagents or Reagent Kits.
O. "Marketing, Sales & Distribution Agreement" means the
Marketing, Sales & Distribution Agreement by and between Baxter and Newco
of even date herewith.
P. "Master Scheduling System" shall mean the computerized master
scheduling system currently used by Baxter in connection with the
production of Antibodies, as such system may be changed by Baxter from time
to time.
Q. "Non-Compete Agreement" means the Non-Competition and
Confidentiality Agreement, by and among Baxter, VIMRx and Newco of even
date herewith.
R. "Product Field" means use of the Isolex(R) and Maxsep(R)
Technology in the treatment, mitigation or prophylaxis of diseases,
including research into such activities, through Ex Vivo Cell Processing.
S. "Quality Manual" shall mean the quality manual currently used
in connection with the production of the Antibodies, Reagents or Reagent
Kits, as such manual may be changed from time to time.
T. "Quality System Regulation" ("QSR") shall have the meaning
ascribed to it by the rules and regulations of the FDA, as may be amended
or changed from time to time.
U. "Reagents" means the reagents specified in Schedule 1 attached
hereto and such other reagents as Baxter may agree to produce, pursuant to
Section 4 hereof, from time to time in connection with the Isolex(R) and
Maxsep(R) Products.
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V. "Reagent Kits" means the reagent kits specified in Schedule 1
attached hereto and/or any components thereof and such other reagent kits
as Baxter may agree to produce, pursuant to Section 4 hereof, from time to
time in connection with the Isolex(R) and Maxsep(R) Products.
W. "Regulatory Approval" means (1) in the United States, approval
from the FDA and any other United States governmental authority (or agency
or other political subdivision thereof) necessary for Newco to have the
right to market, sell or distribute the Isolex and Maxsep(R) Products in
the United States to the public at large for use in the Product Field
(including the Field of Distribution) and (2) outside the United States, an
analogous order by a non-U.S. governmental authority (or agency or other
political subdivision thereof) necessary for Newco to have the right to
market, sell or distribute, and the right to be paid or reimbursed for, the
Isolex(R) and Maxsep(R) Products in a country (other than the United
States) to the public at large for use in the Product Field (including the
Field of Distribution).
X. "Section 305 Hearing" shall have the meaning ascribed to it by
the Federal Food, Drug, and Cosmetic Act (the "Act") and implementing
regulations of the FDA, as may be amended or changed from time to time.
Y. "Standard Operating Procedure System" shall mean the standard
operating procedures used in connection with the production of Antibodies,
as such procedures may be changed from time to time.
Z. "Subcontractor" means a third party who produces and/or
supplies an Antibody, Reagent or reagent kit (but not the separate
components thereof), or any FDA-Regulated Non-Baxter Component thereof, to
or on behalf of Baxter under contract.
AA. "Subsidiary" means, as to any party, any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the Board of directors of such
corporation
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(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 party, by one or more of its subsidiaries, or by the party and
one or more of its subsidiaries.
BB. "Supplied Products" means those products supplied by
Baxter to Newco under the terms of the Hardware and Disposables Supply
Agreement.
CC. "Value Improvement Process" shall mean the Value
Improvement Management System currently used in connection with the
production of Antibodies, as such system may be changed from time to time.
DD. "Warning Letter" shall have the meaning ascribed to it by FDA policy, as
the same may be amended or changed from time to time.
EE. "Term" shall mean, individually and collectively, the
term of this Agreement as provided in Section 2.
2. TERM. The term of this Agreement shall be five (5) years from
the date hereof.
3. CELL LINES.
3.1 Grant: Newco hereby grants Baxter the non-exclusive right
to use the Cell Lines during the Term to produce Antibodies pursuant to the
terms of this Agreement for Newco's use and sale.
3.2 Cell Pro Litigation: In the event that Baxter requires use
of the Cell Lines to meet Baxter's performance of certain obligations relating
to the CellPro Litigation as set forth in Section 8 of that certain License
Agreement of even date herewith with respect to the First BD License Agreement
(as defined therein), Newco agrees to make such Cell Lines available to Baxter
for such use.
3.3 Care of Cell Lines: Baxter shall have no right to retain
possession of master cell banks or otherwise use the Cell Lines except as set
forth in Section 3.1 and 3.2 hereof. Baxter shall at all times endeavor to keep
the Cell Lines secure and safe from loss and damage in such manner as Baxter
shall determine in accordance with the Standard Operating
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Procedures System. Upon transferring any portion of a master or working cell
bank to Newco, or to Newco's designee, at Newco's request, Baxter shall conduct
viability testing prior to shipment of such master or working cell bank and
shall retain reports of such testing for Newco's inspection. Newco shall assume
full responsibility for shipping such master or working cell banks and all such
shipments shall be FOB the facilities where such master or working cell banks
are kept by Baxter.
4. MANUFACTURING. During the Term, Baxter shall manufacture for
Newco those Antibodies, Reagents and Reagent Kits specified in Schedule 1
----------
hereto. In the event Baxter elects to discontinue producing any specific
Antibody altogether and provides Newco with twenty-four (24) months' written
notice of such discontinuation, Baxter shall then supply to Newco the master
cell bank for the Cell Line relating to such discontinued Antibody. Baxter may
make such an election to discontinue producing any Antibody pursuant to this
Section 4 effective only after the date that is three (3) years after the date
of this Agreement; and Baxter hereby agrees that in the event that it makes such
an election, it will, at Newco's expense, for a period of twenty-four (24)
months make all reasonable efforts to provide Newco or Newco's third party
manufacturer with such support, assistance and manufacturing know-how as shall
be required by Newco to effect an orderly transition. Notwithstanding the
foregoing, nothing contained in this Agreement shall prevent Newco from having
antibodies, reagents or reagent kits with the same specifications as the
Antibodies, Reagents, and Reagent Kits produced by Newco or third parties on
behalf of Newco. Nothing herein contained shall oblige Baxter to continue
producing or Newco to continue purchasing Antibodies, Reagents or Reagent Kits
if such production is reasonably believed by Newco or by Baxter, as the case may
be, to violate any applicable law or license or if the Antibodies, Reagents, or
Reagent Kits produced infringe a third party's patent or other intellectual
property rights, provided that Baxter will cooperate with Newco, to the extent
--------
commercially feasible, to develop and implement such changes as may be necessary
to bring such Antibody, Reagent or Reagent Kit, as the case may be, into
compliance or to prevent such infringement, and Baxter will continue to produce
after a finding of infringement if Newco or Baxter reaches an agreement with the
third party which permits future production without infringement. In the event
that Baxter, in its sole discretion, agrees to manufacture for Newco any
additional antibodies, reagents or reagent kits and Baxter and Newco enter into
a separate written agreement on mutually agreeable terms (including price) with
respect to the terms of such production, then Baxter will produce such
additional antibodies, reagents or reagent kits as the two parties may so agree,
and such additional antibodies, reagents or reagent kits will be treated for all
purposes of this Agreement as Antibodies, Reagents or Reagent Kits, as the case
may be.
5. USE OF IT ASSETS. During the Term, Newco shall provide to Baxter
the use and possession of (at Baxter's Manufacturing Facilities described in
Section 8.1 below), but not title to, those IT Assets (including the master cell
banks containing the Cell Lines) which are required by, or may be useful for,
Baxter in producing the Antibodies pursuant to this Agreement, as set forth on
Schedule 3 attached hereto.
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6. TRADEMARK LICENSE AND LABEL COPY.
6.1 Trademark License: Newco hereby grants to Baxter and Baxter
accepts a non-exclusive royalty-free worldwide license to use Newco's
trademarks, trade names, service marks, corporate logos and copyrighted
materials solely in connection with the manufacture, use and sale of the
Antibodies to or on behalf of Newco during the Term pursuant to the terms of
this Agreement, provided that Newco has reviewed and approved in writing each
use or display of such Newco trademarks, trade names, service marks, logos and
materials. If any such Newco trademark, trade name, service mark, logo or
material is to be used in connection with the Antibodies, Baxter shall obtain
prior written authorization from Newco (which authorization may be withheld by
Newco in its sole discretion) for such use and for all subsequent changes to any
art work, labels, inserts, advertising, packaging or marketing materials that
incorporate such Newco trademark, trade name, service mark, logo or materials.
No other use of Newco's trademarks, trade names, service marks, logos and
copyrighted materials is permitted during or after the Term of this Agreement.
6.2 Label Copy: Newco shall provide all labeling, product
inserts and packaging for the Antibodies provided that Baxter has reviewed and
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approved in writing each use or display on such labels, inserts or packaging of
any trademark, trade name, service mark or logo used or owned by Baxter, other
than any trademark, trade name, service mark or logo licensed to Baxter pursuant
to Section 6.1 of this Agreement. If a trademark, trade name, service mark or
logo owned or used by Baxter or its parent corporation, other than any
trademark, trade name, service mark or logo licensed to Baxter pursuant to
Section 6.1 of this Agreement, is to be used in connection with the Antibodies
(except to the extent such use is mandatory in connection with the labeling
requirements of applicable law) Newco shall obtain prior written authorization
from Baxter (which authorization may be withheld by Baxter in its sole
discretion) for such use and for all subsequent changes to the art work, labels,
inserts or packaging for the Antibodies that incorporate such a Baxter
trademark, trade name, service mark or logo. Each use of such a Baxter
trademark, trade name, service mark or logo shall inure to the benefit of Baxter
and its parent company. Should any such use vest in Newco any rights in a
trademark, trade name, service mark or logo used by Baxter, other than any
trademark, trade name, service mark or logo licensed to Baxter pursuant to
Section 6.1 of this Agreement, Newco shall transfer such rights to Baxter or its
designee upon the request of Baxter. Except as provided in this Agreement,
Newco shall not use any trademark, trade name, service mark or logo claimed by
Baxter or any confusingly similar trademark, trade name, service mark or logo
during or after the Term of this Agreement.
7. CONTACTS/PLANNING COMMITTEE.
7.1 Administration: Administration of this Agreement will be
accomplished by the establishment of a "Production Operating Team." The
Production Operating Team will consist of representatives from each of Newco and
Baxter, who typically would include the individuals identified in Schedule 4, or
other persons of an appropriate level of authority and
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responsibility. Each party will select representatives and shall notify the
other party of such selections and any changes thereto. The Production
Operating Team will meet (in person or by teleconference) at least once in each
calendar quarter to review the progress of Newco and Baxter in the execution of
this Agreement and to develop, review and agree on specific plans and programs
designed to assure that Baxter can fulfill orders placed by Newco. The
Production Operating Team will develop a process to agree upon short-term and
long-term forecasts, orders and production planning schedules and to conduct any
other business to discharge its responsibilities pursuant to the provisions of
this Agreement. Regardless of the number of representatives selected by each of
Baxter and Newco for service on the Production Operating Team, the
representatives of each party shall have, in the aggregate, a single vote in all
matters to be decided by the Production Operating Team. If, in the course of
conducting the activities contemplated in these Agreements, the Production
Operating Team cannot resolve a matter of difference between Baxter and Newco
representatives, or cannot reach agreement on a matter within its area of
responsibility under the terms of this Agreement, the Production Operating Team
shall promptly refer the matter to the Manufacturing Oversight Committee.
7.2 Manufacturing Oversight Committees: The "Manufacturing
Oversight Committee" will consist of representatives from each of Newco and
Baxter and typically would consist of Newco's Director/Vice President,
Manufacturing and Logistics; Newco's Vice President, Global Marketing; and
Newco's Vice President, Business Development; Baxter's Vice President,
Monoclonal and Plasma Operations from Hyland; and/or such other representatives
as may be designated by Baxter and Newco. The Manufacturing Oversight Committee
will meet once a year or more often as necessary to carry out its
responsibilities hereunder, and shall review and approve the plans, programs and
recommendations prepared by the Production Operating Team. Regardless of the
number of representatives selected by each of Baxter and Newco for service on
the Manufacturing Oversight Committee, the representatives of each party shall
have, in the aggregate, a single vote in all matters to be decided by the
Manufacturing Oversight Committee. The Manufacturing Oversight Committee will
review and decide any matter in dispute referred to it by the Production
Operating Team. When the Manufacturing Oversight Committee cannot agree on the
resolution of any matter within its area of responsibility hereunder, it shall
promptly refer the matter to the Corporate Committee for resolution in
accordance with this Agreement.
7.3 Corporate Committee: The "Corporate Committee" will consist
of one representative each from VIMRx and Baxter, who ordinarily will be the
President and CEO of VIMRx and the President of Hyland, respectively. The
Corporate Committee will meet only as needed to resolve any dispute or otherwise
undecided matter referred to it by the Manufacturing Oversight Committee. If
the Corporate Committee cannot come to an agreement with respect to any matter,
the matter will be referred to arbitration as provided in this Agreement.
7.4 Responsibilities: Newco and Baxter will cooperate to
identify their separate responsibilities hereunder, and will diligently execute
those responsibilities to assure a
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continuous, uninterrupted supply to the market for all Antibodies, Reagents and
Reagent Kits. For guidance and illustrative purposes, a list of the various
responsibilities to be assumed by Newco and Baxter for purposes of this
Agreement are attached on Schedule 5. Whenever the need for functions and
----------
responsibilities not previously identified or assumed by either Newco or Baxter
becomes evident, the relevant Manufacturing Oversight Committee will assign such
functions or responsibilities.
8. PRODUCTION AND PRODUCTION SITES.
8.1 Production Sites: Baxter's and its Subcontractors'
production of the Antibodies, Reagents and Reagent Kits (including components
thereof) may be carried out at any of Baxter's or its Subcontractors'
Manufacturing Facilities, with the original Manufacturing Facilities selected by
Baxter and its Subcontractors as set forth on Schedule 6 attached hereto;
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provided that the cost of effecting any change of the Manufacturing Facilities
- --------
from the original sites selected by Baxter, or of effecting any subsequent
change, shall not be included in Fully Loaded Cost, the new facilities meet any
applicable QSR and other regulatory requirements (or, in the case of a Baxter
Subcontractor, to Baxter's knowledge the new facilities meet any applicably QSR
and other regulatory requirements), and any change in facilities does not
require submission and approval of a Post-Marketing Approval ("PMA") supplement
or foreign marketing application by Newco. If Newco determines a PMA supplement
approval or foreign marketing authorization or approval is necessary, Baxter
(and/or its Subcontractor) and Newco shall agree to the allocation of costs
related to preparation and submission of the PMA supplement or foreign
application and Baxter or the relevant Subcontractor shall continue to supply
Newco from existing facilities, pending PMA supplement or foreign approval.
8.2 Closing of Munich Facility. Baxter and Newco acknowledge
that prior to the date of this Agreement, Baxter was manufacturing certain of
the Antibodies at a manufacturing facility in Munich, Germany (the "Munich
Facility"), and that Baxter intends to close such Munich Facility. Baxter will
bear all of the costs and expenses associated with closure of the Munich
Facility, and all of the costs and expenses of establishing and preparing
alternative facilities for the manufacture of the Antibodies previously
manufactured at the Munich Facility, provided, however, that such costs and
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expenses shall not include any costs and expenses of transferring any employee
previously employed at the Munich Facility to employment within the United
States. A charge for Baxter's costs and expenses of establishing and preparing
alternative facilities for the manufacture of the Antibodies previously
manufactured at the Munich Facility will be included in Baxter's Fully Loaded
Cost hereunder. During the term, Baxter will provide, at its Fully Loaded Cost
thereof, storage within Europe of the master cell bank of the T Cell antibody,
and will provide support, assistance and manufacturing know-how to effect an
orderly transition to manufacture of such antibody by a third-party manufacturer
in the same manner as set forth in Section 4 hereof with respect to
discontinuance of manufacturing of an Antibody.
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8.3 Production of Antibodies, Reagents and Reagent Kits: In
producing the Antibodies, Reagents and Reagent Kits Baxter and its
Subcontractors shall comply with all applicable QSR or applicable state or
foreign regulatory requirements except to the extent a relevant requirement has
been allocated to Newco under the Agreements between Newco and Baxter. More
specifically, as applicable, Baxter or its Subcontractor, as the case may be,
shall:
A. Expand and continuously passage the appropriate Cell Lines to
produce such Antibodies as requested by Newco;
B. Comply with all relevant materials, manufacturing and in-
process controls, label control and quality control specifications, product
drawings/blueprints and operating procedures which are applicable at the
time of manufacture
to the manufacture of the Antibodies, Reagents, and
Reagent Kits or as they shall be changed by Newco with
the prior written consent of Baxter or a Subcontractor
with respect to material changes (which consent shall
not be unreasonably withheld);
C. Perform the release function for each lot of Antibodies,
Reagents and Reagent Kits;
D. Prepare and maintain all appropriate records, and all
manufacturing records required for regulatory purposes, for each lot,
including records of any product retentions which may have been issued
against the lot during the manufacturing process, the action taken, and the
disposition of the retention;
E. Maintain and comply with the quality system as described in
its current Quality Manual applicable to the Antibodies, Reagents or
Reagent Kits or as subsequently changed generally for all products of that
type manufactured by such manufacturer; and
F. Maintain and comply with its Standard Operating Procedure
System which is currently applicable to manufacturing Antibodies, Reagents
or Reagent Kits (relating to product manufacturing, testing and critical
engineering system monitoring and control, cleaning/sanitation, calibration
of equipment, preventative maintenance, employee training, pest control,
environmental control/monitoring,
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equipment/process validation, labeling/packaging control, failure
investigation, internal quality audits, handling of customer calls and
complaint forwarding, computer systems validation and maintenance, product
release, product/process change control and delegation of authority), as
such Standard Operating Procedure System may be amended by such
manufacturer from time to time.
8.4 Materials and Services: Baxter and its Subcontractors shall
purchase all materials and services required to produce the Antibodies, Reagents
and Reagent Kits (the cost of which will be reimbursed by Newco as part of Fully
Loaded Cost). Baxter and its Subcontractors may change suppliers of materials
or services without the prior consent of Newco, provided that (i) there is no
--------
material increase in the price of the Antibodies, Reagents and Reagent Kits to
Newco, (ii) a PMA supplemental approval or foreign marketing authorization or
approval for any Antibody, Reagent or Reagent Kit or for any product
incorporating any of the Antibodies, Reagents or Reagent Kits as a component
thereof is not necessary, and (iii) the production of the Antibodies, Reagents
and Reagent Kits otherwise conforms to the terms of this Agreement (including
Sections 8.3 and 12.2)
8.5 Title to Cell Lines and Records: Baxter acknowledges that
the Cell Lines, and all documents and records relating to the history and
Regulatory Approval of the Cell Lines, including without limitation regulatory
files maintained by Baxter pursuant to its obligations under Sections 8.3 and
12.2 hereof, are and shall remain the property of Newco or of the relevant
third-party licensor of certain of the Cell Lines, as the case may be. Baxter
will provide Newco with copies of all relevant documents, records and regulatory
files promptly upon Newco's request.
9. CHANGE OF PRODUCTION SITES/OUT SOURCING MANUFACTURE. After
consultation with the Manufacturing Oversight Committee and after written notice
to Newco (but without the requirement of prior consent), Baxter or a
Subcontractor of Baxter may change the current production site of any of the
Antibodies, Reagents or Reagent Kits or outsource the production of any of the
Antibodies, Reagents or Reagent Kits; provided that (i) there is no material
--------
increase in the price of the Antibodies, Reagents and Reagent Kits to Newco,
(ii) a PMA supplemental approval or foreign marketing authorization or approval
for any Antibody, Reagent or Reagent Kit or for any product incorporating any of
the Antibodies, Reagents or Reagent Kits as a component thereof is not
necessary, (iii) Newco's rights to any IT Assets (including but not limited to
the Cell Lines) are not materially adversely affected thereby, and (iv) the
production of the Antibodies, Reagents and Reagent Kits otherwise conforms to
the terms of this Agreement (including Sections 8.3 and 12.2) or Baxter causes a
relevant third party to comply with the terms of this Agreement in connection
with outsourced production of the Antibodies, Reagents or Reagent Kits, as the
case may be. Newco and Baxter agree that nothing contained in this Agreement
shall require Baxter or a Subcontractor to change, or open any new or
additional,
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Manufacturing Facilities, apart from any upgrades in its Manufacturing
Facilities that Baxter or a Subcontractor may, in its sole discretion, make in
order to meet the specifications for production of the Antibodies, Reagents or
Reagent Kits applicable at any time and any changes as may be necessary to
enable Baxter or a Subcontractor to satisfy its obligations hereunder to deliver
Antibodies, Reagents or Reagent Kits to Newco. With respect to production site
changes, new outsourcing and facilities upgrades, Baxter or its Subcontractor
will provide Newco with sufficient advance notice to allow Newco to comply with
any applicable regulatory requirements. If Newco determines a PMA supplemental
approval or state, local or foreign marketing authorization or approval is
necessary, Baxter (and/or its Subcontractor) and Newco shall agree to the
allocation of costs related to preparation and submission of the PMA supplement
or other application. New production sites, outsourcing and facility upgrades
shall not be utilized relative to Antibodies, Reagents or Reagent Kits pending
PMA supplemental or other approval, unless consistent with FDA and other
applicable regulations.
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10. FACILITY ACCESS AND AUDITS.
10.1 Facility Access: During the Term, Baxter and any Baxter
Subcontractor shall permit Newco access to all areas of the Manufacturing
Facilities, upon reasonable prior notice and scheduling by Newco during normal
business hours, for the examination of production or quality records or to
perform QSR audits. Newco's access to such Manufacturing Facilities shall be
arranged by and coordinated through the Production Operating Team.
10.2 Audits: Newco may audit Baxter's and Baxter Subcontractors'
books and records for the purpose of determining compliance with the terms of
this Agreement. Newco may use independent outside auditors (who may participate
fully in such audit). In the event that an audit is proposed with respect to
information which Baxter or its Subcontractor does not wish to disclose to Newco
(the "Restricted Information"), then on the written demand of Baxter or such
Subcontractor, the individuals conducting the audit with respect to the
Restricted Information will be limited to Newco's independent auditors. In such
event, Baxter or such Subcontractor shall pay the costs of the independent
auditors conducting such audit, but only with respect to that portion of the
audit relating to the Restricted Information. Such independent auditors shall
enter into an agreement with the relevant parties, on terms that are agreeable
to such parties, under which such independent auditors shall agree to maintain
the confidentiality of the information obtained during the course of such audit
and establishing what information such auditors will be permitted to disclose in
reporting the results of any audit of Restricted Information. Any such audit
shall be conducted during regular business hours in a manner that does not
interfere unreasonably with the operations of Baxter or its Subcontractor. The
aggregate number of audits of Baxter's or its Subcontractor's books and records
conducted under the provisions of this Agreement; the Sublicense Agreements; the
Hardware and Disposables Manufacturing Agreement; the Hardware and Disposables
Supply Agreement; the Marketing, Sales and Distribution Agreement, and the
Services Agreement shall not exceed one (1) per facility in any twelve (12)
month period unless the next preceding audit disclosed a failure to conform to
the terms of any such Agreement or unless Manufacturing Facility receives a Form
FDA-483 in the twelve (12) months following any audit. Subject to the foregoing
limitations, any such audit shall be conducted when requested by notice given
not less than thirty (30) days prior to the commencement of the audit.
10.3 Baxter Subcontractors: Newco's rights to facility access
and to audit books and records pursuant to this Section 10, process validation
pursuant to Section 11 below, and Newco's rights to participation and co-
operation in certain regulatory compliance matters pursuant to Sections 12.2(D),
(E), (F), (G), (H), (I) and (J) below are, in the case of Baxter's
Subcontractors, subject to the limits on Baxter's rights under its agreements
with such Subcontractors. Baxter will use its best efforts, without the
requirement of payment of money, to cause all of its Subcontractors to permit
facility access, the right to audit books and records, process validation, and
Newco's rights to participation and cooperation in regulatory compliance
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matters as set forth herein with respect to the Antibodies, Reagents and Reagent
Kits as provided in this Section 10, Section 11 below and Sections 12.2(D), (E),
(F), (G), (H), (I) and (J) below.
11. PROCESS VALIDATION. During the Term, at Newco's request, Baxter
and its Subcontractors shall permit Newco to review production validation
protocols and results with respect the Antibodies, Reagents and Reagent Kits.
Such review shall be arranged by the Production Operating Team.
12. COMPLIANCE WITH REGULATORY REQUIREMENTS.
12.1 Newco Responsibilities: Newco shall:
A. Prepare, obtain approval of, and hold all applications, notifications,
submissions and regulatory files required by the FDA and the Act or state,
local or foreign authorities and laws relating to all products which
incorporate the Antibodies, Reagents or Reagent Kits as a component
thereof, except such files and records as are agreed to be maintained by
Baxter or a Baxter third party sub-contractor pursuant to other Agreements
between Newco and Baxter.
B. Provide Baxter with copy for all labeling relating to all
products which incorporate the Antibodies, Reagents and Reagent Kits as a
component thereof, which labeling shall comply with FDA and any relevant
state or local requirements, as well as with all applicable foreign
regulatory requirements.
C. Be responsible for handling product complaints and
maintenance of complaint files and records related to products which
incorporate the Antibodies, Reagents or Reagent Kits as a component
thereof, and notify Baxter of complaints regarding Antibodies,
Reagents and Reagent Kits.
D. File with FDA medical device reports (MDRs) under 21 C.F.R.
part 803 regarding products which incorporate the Antibodies, Reagents or
Reagent Kits as a component thereof.
E. Administer all mandatory notifications, repairs, replacements
and refunds, safety alerts, "cease distribution and notification" and
mandatory recall actions, voluntary
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recalls, market withdrawals and stock recoveries, and device removals and
corrections, as defined or understood under law or FDA policy, or related
or analogous actions by any applicable state, local or foreign regulatory
authorities involving products which incorporate the Antibodies, any
applicable state, local or foreign regulatory authorities Reagents or
Reagent Kits as a component thereof.
F. Register with the FDA as a specifications developer and
register with any applicable state, local or foreign regulatory
authorities.
G. List with the FDA and state, local or foreign authorities, as
necessary, those products which incorporate the Antibodies, Reagents or
Reagent Kits as a component thereof.
H. Comply with any PMA Post-Approval Requirements or any other
post-approval requirements applicable to products which incorporate the
Antibodies, Reagents, or Reagent Kits as a component thereof.
I. Respond in a timely manner, after consultation with Baxter or
a relevant Baxter third party sub-contractor, to any Form FDA-483, Warning
Letter or Section 305 Notice received, and any other notices or letters
received from the FDA, a state or local regulatory authority, or an
analogous regulatory authority outside the United States, which relate to
products which incorporate the Antibodies, Reagents or Reagent Kits as a
component thereof.
J. Comply with all European Union and other foreign regulatory
requirements, as applicable to products which incorporate the Antibodies,
Reagents or Reagent Kits as a component thereof.
K. Provide Baxter with reasonable access to and a copy of such
portions of Newco's regulatory files relating to the Antibodies, Reagents
and Reagent Kits as Baxter shall reasonably request.
12.2 Baxter Responsibilities: Baxter shall; and, as applicable,
shall require any Subcontractor to;
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A. Appropriately register its manufacturing establishments with the FDA and
other regulatory agencies as required;
B. Maintain required ISO and EN certification for each
Manufacturing Facility, and comply with all EU and other applicable foreign
regulatory requirements.
C. Comply with the QSR requirements and other relevant
regulations issued by the FDA, state, local or other regulatory agencies
and in effect from time to time, except to the extent that a QSR or other
regulatory obligation has been allocated to Newco under the Agreements
between Newco and Baxter.
D. When practicable, permit Newco to send a representative to
attend, or when such attendance is not permitted or practicable, provide
Newco with periodic progress reports on every visit to a relevant
Manufacturing Facility by the FDA or other regulatory agency which affects
or concerns the manufacture of the Antibodies Reagents or Reagent Kits
(such reports to be given as frequently as reasonably possible, but not
more often than once in each 24-hour period, during that portion of the
visit which directly affects or concerns any Antibody, Reagent or Reagent
Kit). Newco shall be provided with a copy of any Form FDA-483,
Establishment Inspection Report (EIR and/or Warning or "untitled" Letter
generated as a result of an FDA visit, or any equivalent foreign, state or
local document generated as a result of an inspectional visit, and
responses thereto (which copies may be redacted to the extent necessary to
protect confidential information unrelated to the Antibodies, Reagents or
Reagent Kits, provided that such redaction does not prevent Newco from
--------
discerning any information that is related to the Antibodies, Reagents or
Reagent Kits. Newco shall also be apprised as soon as possible of the time
and place of any "close out" meeting at the end of an FDA or other agency
visit and be allowed to attend the meeting when the meeting directly
affects or concerns any Antibody, Reagent or Reagent Kit, provided that, in
--------
the discretion of Baxter's or its Subcontractor's regulatory professionals,
the
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presence of a Newco representative would not prejudice Baxter's or its
Subcontractor's interests.
E. Respond, in a timely manner, after consultation with Newco, to
any Form FDA-483, Warning or "untitled" Letter or Section 305 Notice
received, and any other notices or letters received from the FDA, a state
or local regulatory authority, or an analogous regulatory authority outside
the United States, which relate to the Antibodies, Reagents or Reagent Kit.
F. Communicate and forward to Newco product complaints received
relating to the Antibodies, Reagents or Reagent Kits and cooperate, as
mutually agreed by the parties, with Newco in the resolution of such
product complaints.
G. Maintain and store production records relating to the
manufacture of Antibodies, Reagents and Reagent Kits as required by its
record retention policy, as amended from time to time.
H. Cooperate with Newco, as mutually agreed by the parties, in
connection with mandatory notifications, repairs, replacements, and
refunds, safety alerts, "cease distribution and notification" and mandatory
recall actions, voluntary recalls, market withdrawals and stock recoveries,
and device removals and corrections, as defined or understood under law and
FDA policy, or related and analogous actions related to the Antibodies,
Reagents or Reagent Kits produced for Newco. Such cooperation shall be at
Newco's expense, subject to the provisions of Section 12.3 below.
I. Cooperate with Newco in Newco's preparation and filing of MDRs
and compliance with PMA and other post-approval requirements regarding
products which incorporate the Antibodies, Reagents or Reagent Kits as a
component thereof. Such cooperation shall be at Newco's expense, subject
to the provisions of Section 12.3 below.
J. Provide Newco with reasonable access to and a copy of such
portions of its regulatory files relating to the Antibodies,
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Reagents and Reagent Kits as Newco shall reasonably request.
12.3 Regulatory Actions: In the event that Newco takes a
regulatory action relative to any of its products which contain or use
Antibodies, Reagents or Reagent Kits produced by Baxter or a Baxter
Subcontractor pursuant to this Agreement (the "Newco Products") or relative to a
Newco Product component, and such action is due solely to Baxter's failure or
its sub-contractor's failure to produce the Newco Products in accordance with
its responsibilities under Sections 8.3, 9 or 12.2 of this Agreement, then
Baxter shall pay or reimburse Newco for all out-of-pocket costs and expenses
incurred by Newco due to such action, including expenses or obligations to third
parties, the cost of notifying customers, costs associated with the return of
Newco Products by customers, and costs related to otherwise addressing, handling
or correcting Newco Products. In the event that such action is due in part to
Baxter's or its sub-contractor's failure to manufacture any Newco Product in
accordance with its responsibilities under this Agreement, Baxter shall pay or
reimburse Newco for such part of Newco's out-of-pocket costs and expenses as
shall be agreed by the parties or by the Corporate Committee, or as shall be
determined in binding arbitration pursuant to Section 32 of this Agreement. For
purposes of this paragraph, "regulatory action" means mandatory notification,
repairs, replacements and refunds, safety alerts, "cease distribution and
notification" and mandatory recall actions, voluntary recalls, market
withdrawals, and stock recoveries, and device removals and corrections, as
defined or understood under law or FDA policy, or related or analogous actions.
13. FORECASTS AND ORDERS
13.1 Forecasts: Newco shall supply to Baxter a rolling two year
forecast of its estimated requirements for all Antibodies, Reagents and Reagent
Kits on a quarterly basis. Such forecast shall state monthly estimated
requirements for each Antibody and for Reagents and Reagents Kits included in
the forecast, using data supplied by Baxter from Baxter's Master Planning
Schedule and reviewed by the appropriate Production Operating Teams. The two
year forecast for the two year period beginning on the date hereof was delivered
to Baxter on the date hereof.
13.2 Purchase Orders: Newco shall supply the following
information on a purchase order submitted to Baxter at least eight (8) months
before the requested delivery date:
A Number of units ordered of each Antibody, Reagent or
Reagent Kit; and
B. Requested delivery date of the Antibodies, Reagents and
Reagent Kits ordered in the purchase order.
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13.3 Production in Excess of Orders: If Baxter's actual production of
Antibodies exceeds Newco's orders, Newco shall purchase such excess, up to
[Confidential Information Omitted] above Newco's orders; provided that Newco's
--------
orders for the next month shall be reduced by such excess unless Newco requests
that such reduction not be made.
13.4 Production Below Amount of Orders: If, due to the fault or
error of Baxter or a third-party supplier or sub-contractor of Baxter, and
subject to the provisions of Section 28 of this Agreement, Baxter fails to
deliver Antibodies in the quantities specified in Newco's orders, Baxter shall
take such action as may be necessary to cure such failure as rapidly as is
commercially reasonable, including without limitation, the actions specified
with respect to various fill rates as follows:
A. If production for any month is [Confidential Information Omitted] of
Newco's firm orders or lower, Baxter shall (i) increase its production in
the next following month as reasonably necessary to satisfy both the
unfilled orders and the firm orders for such next following month, and (ii)
pay air freight and other extraordinary shipping costs reasonably necessary
to deliver delayed Antibodies to Newco or Newco's product manufacturer
until Baxter has brought production into compliance with firm orders. The
[Confidential Information Omitted] fill rate commitment established
pursuant to this Section 13.4A may be adjusted by the parties during the
Term hereof as may be appropriate to reflect actual manufacturing
experience.
B. If production for any month is [Confidential Information
Omitted] of Newco's firm orders (as increased by the number of unfilled
orders, if any, carried over from the previous month) or lower, or if
production for any three consecutive months is [Confidential Information
Omitted] of Newco's firm orders (as increased by the number of unfilled
orders, if any, carried over from the previous month) or lower, Baxter
shall (i) take the remedial measures set forth in Section 13.4(A), (ii)
promptly prepare and present to the Production Operating Teams a plan for
restoring compliance with firm orders, and (iii) promptly implement such
measures to restore compliance with firm orders as are directed by the
Production Operating Teams, including without limitation, changing or
allocating additional manufacturing resources.
C. If, after the first twelve (12) months of the Term of this
Agreement, production for any three consecutive months is [Confidential
Information Omitted] of Newco's firm orders (as increased by the number of
unfilled orders, if any, carried over from the previous month) or lower, or
if production for any six
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(6) consecutive months is [Confidential Information Omitted] of Newco's
firm orders (as increased by the number of unfilled orders, if any, carried
over from the previous month) or lower, Baxter shall, at Newco's option,
either (i) take the remedial measures set forth in Section 13.4(B) or (ii)
assist Newco to transfer all manufacturing of Antibodies, Reagents and
Reagent Kits to a third party alternative manufacturer selected by Newco,
with such assistance to include without limitation the transfer of such
Cell Lines, master cell banks, inventory, raw materials, work in process,
IT Assets, specifications, drawings/blueprints, copy of regulatory files,
and such other property used in manufacturing the Antibodies, Reagents and
Reagent Kits hereunder and owned by Newco or by third-party licensors, or
owned by Baxter and previously charged to Newco as part of Fully Loaded
Cost; transfer all information and technical know-how concerning Baxter
manufacturing processes required for production of the Antibodies, Reagents
and Reagent Kits; provide the services of technical personnel as needed to
effect such transfers of information and technical know-how; and continue
to manufacture the Antibodies, Reagents and Reagent Kits during the
transition to an alternative manufacturer until such alternative
manufacturer is able to meet market demand for the Antibodies, Reagents and
Reagent Kits, provided that Newco and such alternative manufacturer are
making good faith efforts to effectuate the transition and to enable such
alternative manufacturer to meet market demand for the Antibodies, Reagents
and Reagent Kits. Any third party alternative manufacturer selected by
Newco must (a) agree to be bound, to the same extent that Newco is bound,
by the provisions of that certain Non-Competition and Confidentiality
Agreement among Baxter, VIMRx and Newco of even date herewith, and (b) be
approved by the Corporate Committee.
The provisions of this Section 13.4 shall not apply to Antibodies, Reagents and
Reagent Kits manufactured for use in clinical trials. Except with respect to
Antibodies, Reagents and Reagent Kits manufactured for use in clinical trials
(as to which Section 13.4 does not apply), the provisions of this Section 13.4
shall be the sole remedy available to Newco in the event that Baxter fails to
satisfy Newco's firm orders made pursuant to this Section 13, provided that
Baxter is endeavoring in good faith to satisfy its obligations to Newco in
accordance with the terms of this Agreement, including without limitation, this
Section 13.4.
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13.5 Transition Period: Baxter and Newco acknowledge that during the
first twelve (12) months of the Term of this Agreement, it may not be
commercially feasible for Baxter (a) to immediately strictly comply with the
labeling, product inserts and packaging requirements of Section 6 of this
Agreement by changing the label copy, product inserts and packaging for Supplied
Products to include Newco's label copy, product inserts, packaging, trademarks,
trade names, service marks, logos or materials or (b) to fulfill the production
rate requirements of Section 13.4A through 13.4C, inclusive, of this Agreement.
Accordingly, Baxter and Newco agree that during the first twelve (12) months of
the Term of this Agreement, Baxter will use its commercially reasonable best
efforts to achieve full compliance with (a) the labeling, product inserts and
packaging requirements of Section 6 of this Agreement and (b) the production
rate requirements of Section 13.4A of this Agreement but shall not be deemed to
be in breach of Sections 6 or 13.4 of this Agreement during such twelve (12)
month period unless Baxter fails to comply with this Section 13.5. Any dispute
between Baxter and Newco relating to Baxter's non-compliance with this Section
13.5 shall be referred to the Production Operating Team for resolution pursuant
to Section 7.1 of this Agreement.
14. INVENTORY. Baxter shall retain title to all raw materials and
work in process relating to the Antibodies, Reagents and Reagent Kits, except
that any of such items relating solely to the Antibodies, Reagents and Reagent
Kits which become obsolete due to action of Newco or regulatory requirements
shall, at Baxter's option, be purchased by Newco pursuant to Section 15 below to
the extent they do not exceed ninety (90) days' normal usage, based on annual
budgeted volume.
15. PRICING, BILLING AND PAYMENT.
15.1 Fully Loaded Cost: During the first three (3) full years of
the Term, the prices to Newco for the Antibodies, Reagents and Reagent Kits
shall be Baxter's Fully Loaded Cost for such products.
15.2 Fully Loaded Cost Plus: After the expiration of the first
three (3) full years of the Term, the prices for Antibodies, Reagents and
Reagent Kits shall be Baxter's Fully Loaded Cost for such products plus
[Confidential Information Omitted] of such Fully Loaded Cost (unless Baxter and
Newco otherwise agree in writing to a different price).
15.3 Price Adjustments: The prices for Antibodies shall be
adjusted as of every January 1 of each year of any Term, through Baxter's annual
internal budgeting process, based on forecast changes in volume pursuant to the
forecasting process set forth in Section 13, anticipated changes in materials
prices and anticipated cost reductions resulting from Baxter's Value Improvement
Process. The overall intent of the parties is the Antibodies shall be
transferred at the prices described in Sections 15.1 and 15.2, as adjusted for
future changes in Baxter's costs of production (taking into account Section 15.4
hereof).
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15.4 Unanticipated Volume, Materials Price or Overhead Changes: Cost
variances shall be paid by or credited to the parties during the course of a
calendar year based on unanticipated volume, materials price or overhead
changes, as follows:
A. Cost variances based on volume changes shall be made only when orders
exceed or are less than forecast activity by [Confidential Information
Omitted] or more (excluding any increases attributable to earlier failures
to supply firm orders) and shall cover only the difference between
[Confidential Information Omitted] of the budgeted activity and the
variance from budgeted activity. The adjustment will be based on
[Confidential Information Omitted] of Baxter's standard overhead
attributable to the difference from the planned volume.
B. Cost variances based on materials price changes shall be made
only when actual prices for total materials costs differ from those
anticipated in the budgeting process by more than [Confidential Information
Omitted]. The adjustment shall cover only the difference between
[Confidential Information Omitted] of total budgeted materials cost and the
variance from budgeted activity.
C. Cost variances based on overhead cost changes caused by
conditions, other than those described in 15.4(A) or 15.4(B) above, beyond
Baxter's control shall be shared pro rata (based on changes in total plant
overhead) by the parties or as they shall otherwise agree.
D. Adjustments pursuant to this Section 15.4 will be determined
as of the end of each calendar quarter (on a year to date basis) and
reflected as an amount due and payable (or a credit receivable) spread
ratably over the following three months.
E. All pricing adjustments will be reviewed, but not for
approval, by the Production Operating Teams and any dispute concerning such
adjustments will be referred to the Manufacturing Oversight Committee and,
if necessary, the Corporate Committee.
15.5 Billing and Payment: Baxter shall bill Newco as of the end
of each calendar month for the Antibodies, Reagents and Reagent Kits shipped
during such month. Newco shall pay such invoices within sixty (60) days of
Newco's receipt thereof.
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16. FOREIGN CURRENCY CONVERSION. Where calculations of Baxter's
Fully Loaded Cost relate to a currency other than United States dollars, all
such calculations shall be calculated pursuant to Baxter's then current
accounting policies and practices.
17. WITHHOLDING TAXES. Where required to do so by applicable law,
Newco shall withhold taxes required to be paid to a taxing authority on account
of any payments to Baxter hereunder, and Newco shall furnish Baxter with
satisfactory evidence of such withholding and payment in order to permit Baxter
to obtain a tax credit or other relief as may be available under the applicable
law. Newco shall cooperate with Baxter in obtaining exemption from withholding
taxes where available under applicable law.
18. INTEREST ON OVERDUE PAYMENTS. Interest shall accrue and be
payable on all overdue payments owing by a party under this Agreement from the
date due at the rate of [Confidential Information Omitted] per month (or the
highest rate allowed by law, if lower), compounded annually, until fully paid
(including full payment of such interest).
19. DELIVERY. All shipments of Antibodies, Reagents and Reagent Kits
shall be FOB the manufacturing facilities where such products are manufactured
by or on behalf of Baxter. Except as specified in Section 13.4 above, all
freight, insurance, and other delivery costs (and any customs duties) shall be
paid by Newco. At the time of shipping the Antibodies, Baxter shall make
appropriate viability tests to demonstrate the specified activity of the
Antibodies prior to shipment. Newco shall bear the risk of loss for the
Antibodies or any loss of activity of the Antibodies during shipment.
20. TITLE. Title to all Antibodies shall pass to Newco (or Newco's
designated distributor) when the Antibodies are placed on Newco's truck or
Newco's designated carrier (or Newco's designated distributor's truck or
designated carrier) at Baxter's Manufacturing Facility or when products
distributed by Baxter pursuant to the Marketing, Sales and Distribution
Agreement, of even date herewith, by and between Baxter and Newco, are placed in
Baxter's designated finished goods inventory.
21. CHANGES IN LABELING. Changes in Antibodies, Reagents or Reagents
Kits labeling requested by Newco and the cost of labeling made obsolete by such
changes will be paid for by Newco at Baxter's Fully Loaded Cost.
22. WARRANTIES.
22.1 Warranty: Baxter warrants to Newco that the Antibodies,
Reagents and Reagent Kits delivered to or at the direction of Newco hereunder
(i) will have been manufactured in accordance with the applicable specifications
and procedures for the production of such Antibodies, Reagents and Reagent Kits,
and in accordance with all applicable laws (including the Act); (ii) will not be
adulterated or misbranded within the meaning of the Act as a
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result of acts or omissions by Baxter; and (iii) are free from defects in
workmanship. Notwithstanding the foregoing, Baxter shall not be liable to Newco
under subpart (ii) above as a result of any labels supplied by or affixed to
such Antibodies, Reagents or Reagent Kits by Newco. This warranty shall be
continuing and shall be binding on Baxter and its permitted successors and
assigns and shall inure to the benefit of Newco and its permitted successors and
assigns. WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
NOT GIVEN BY BAXTER AND ANY SUCH IMPLIED WARRANTIES ARE SPECIFICALLY DISCLAIMED.
22.2 Baxter Indemnity: Subject to Section 28 below, Baxter
agrees to indemnify Newco and hold it harmless from any liability, loss,
expense, cost, claim or judgement arising out of any claim for property damage,
personal injury or death which is caused by Baxter's (or its Subcontractor's)
failure to manufacture the Antibodies, Reagents or Reagent Kits in accordance
with the specifications and procedures, and with the laws, regulations, rules,
orders and notices, and with the quality system and Standard Operating Procedure
System described in Sections 8.3 and 12.2 above and which are applicable to
Baxter or such Subcontractor thereunder, as the case may be. At Baxter's
expense, Newco shall cooperate fully with Baxter in defending or otherwise
resolving any such claim. Baxter shall have full control of any litigation
brought against Newco with respect to any claim that is indemnifiable by Baxter
hereunder; but Newco may, at its expense, also be represented by its own counsel
in any such litigation.
22.3 Newco Indemnity: Subject to Section 28 below, Newco agrees
to indemnify Baxter and hold it harmless from any liability, loss, expense,
cost, claim or judgement arising out of any claim for property damage, personal
injury or death which is caused by defects in the products, design,
specifications, procedures, product drawings/blueprints, label copy or resulting
from the use of the Antibodies, Reagents or Reagent Kits; provided, however,
-------- -------
that Newco will have no liability to Baxter whatsoever with respect to any
liability, loss, expense, cost, claim or judgment arising out of any claim for
property damage, personal injury or death which is caused by defects in the
designs, specifications, procedures, or product drawings/blueprints acquired by
Newco from Baxter pursuant to the Acquisition Agreement, except defects in
modifications to such designs, specifications, procedures, or product
drawings/blueprints made by Newco subsequent to its acquisition thereof. At
Newco's expense, Baxter shall cooperate fully with Newco in defending or
otherwise resolving any such claim. Newco shall have full control of any
litigation brought against Baxter with respect to any claim that is
indemnifiable by Newco hereunder; but Baxter may, at its expense, also be
represented by its own counsel in such litigation.
22.4 Indemnification for Infringement: Newco shall defend,
indemnify and hold Baxter harmless with respect to any liability incurred by
Baxter as a result of activities under this Agreement with respect to any claim
of patent, trade name, trademark or copyright infringement or misuse (i) with
respect to any Antibodies, Reagents or Reagent Kits, any Isolex(R) or Maxsep(R)
Products, or other products which are not being manufactured or supplied by
Baxter
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(or its third party subcontractor) for or to Newco under this Agreement or an
agreement having the same date as this Agreement (or an extension of renewal
thereof); or (ii) arising from any modification to product designs,
specifications, procedures or product drawings/blueprints made by Newco
subsequent to its acquisition thereof from Baxter. At Newco's expense, Baxter
shall cooperate fully with Newco in defending or otherwise resolving any such
charges of infringement or misuse. Newco shall have full control of any
litigation brought against Baxter alleging such infringement or misuse, but
Baxter, may at its expense, also be represented by its own counsel in any such
litigation.
23. INSURANCE.
23.1 Baxter Insurance: During the Term, Baxter shall procure and
maintain, through self-insurance or a combination of self-insurance and
commercially placed insurance, comprehensive general liability insurance
covering each occurrence of bodily injury and property damage in the amount of
not less than [Confidential Information Omitted] combined single limit including
coverage for product and completed operations, blanket contractual liability and
vendor's liability. Baxter shall, within sixty (60) days of the date of this
Agreement, furnish a certificate of insurance to Newco evidencing the foregoing
coverages and limits and thereafter shall give at least thirty (30) days prior
notice to Newco of any termination, expiration without renewal, or material
change to such insurance, coverage or limits.
23.2 Newco Insurance: During the Term, Newco shall procure and
maintain, through self-insurance or a combination of self-insurance and
commercially placed insurance, comprehensive general liability insurance
covering each occurrence of bodily injury and property damage in the amount of
not less than [Confidential Information Omitted] combined single limit including
coverage for product and completed operations, blanket contractual liability and
vendor's liability. Newco shall, within sixty (60) days of the date of this
Agreement, furnish a certificate of insurance to Baxter evidencing the foregoing
coverages and limits and thereafter shall give at least thirty (30) days prior
notice to Baxter of any termination, expiration without renewal, or material
change to such insurance, coverage or limits.
24. DISCONTINUANCE OF PRODUCT LINE. Subject to Section 25 below, if
Newco wishes to discontinue a product or product line which includes any
Antibodies, Reagents or Reagent Kits (subject to Newco's obligations under the
Marketing, Sales & Distribution Agreement), Newco shall give Baxter six (6)
months' prior written notice thereof and the parties will negotiate appropriate
closure conditions which provide for recovery by Baxter of the related overhead
costs, any related investment (including any dedicated or additional equipment
purchased by Baxter exclusively to support the discontinued product line) and
related direct out-of-pocket expenses.
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25. RIGHT OF FIRST OFFER. In the event Newco elects to abandon
and/or discontinues substantially all efforts to develop or market (or to have
developed or marketed) the Antibodies, Reagents or Reagent Kits, or any of them
(the "Discontinued Products"), within the Product Field or any sub-field thereof
and Newco elects to sell Newco's right to make, have made, use and sell the
- ---
Discontinued Products in the Product Field, or any sub-field thereof, to a third
party, Baxter shall have a right of first offer to obtain an exclusive worldwide
license to make, have made, use and sell, in such Product Field or sub-field,
those Discontinued Products. After Newco notifies Baxter of Newco's intention
to sell such right, Baxter will have sixty (60) days to respond to Newco and to
negotiate the material terms and conditions of such a license. The terms and
conditions of such a license shall be negotiated by Newco and Baxter, bargaining
in good faith, and documented in a written agreement, signed by authorized
representatives of both parties. If, after notice to Baxter and expiration of
sixty (60) days without completed negotiation of the material terms of a license
agreement, Newco desires to enter into an agreement with a third party on terms
and conditions that are less favorable to Newco than the terms and conditions
offered by or to Baxter (a "New Offer"), then Newco must give Baxter notice and
an additional thirty (30) days to respond to Newco's offer on substantially the
same terms and conditions as those of the New Offer. The culmination of any
transaction pursuant to this Section 25 is subject to the parties entering into
a definitive agreement on terms which are agreeable to each of the parties, in
their sole discretion.
26. TERMINATION.
26.1 Expiration: This Agreement, and any licenses granted
hereunder, shall terminate upon the earlier to occur of the expiration of the
Term or a termination pursuant to Section 26.2 below.
26.2 Early Termination: A non-breaching party may terminate this
Agreement, and may terminate any licenses granted by such party hereunder, if
any of the following events (each is herein referred to as a "Material Breach")
occur:
A. A party fails to pay any amount owing under this Agreement on the date(s)
specified for such payment and such failure shall continue for sixty (60)
days after written notice of such failure by the other party to this
Agreement;
B. A party shall default in the performance of or compliance with
any material covenant contained in this Agreement or the Non-Compete
Agreement (other than a failure to make a payment described in Section
26.2A above) which shall continue uncured beyond the applicable grace
period therefor, or if a party shall default in the performance of or
compliance with any covenant contained in the Marketing,
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Sales and Distribution Agreement and such default results in termination of
the Marketing, Sales and Distribution Agreement; or the Marketing, Sales
and Distribution Agreement is rejected in the course of the bankruptcy of
the non-terminating party;
C. A receiver, conservator, custodian, liquidator or trustee of a
party or of all or any of the property of a party, is appointed by court
order and such order remains in effect for more than ninety (90) days; or
an order for relief is entered under the federal bankruptcy laws with
respect to a party; or any of the material property of a party is
sequestered by court order and such order remains in effect for more than
ninety (90) days; or a petition is filed against a party under the
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within ninety (90) days after
such filing;
D. A party files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing
of any petition against it under any such law; or
E. A party makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, conservator,
custodian, liquidator or trustee of the party, or of all or any part of its
property.
26.3 Return of IT Assets: In addition to any other rights or
remedies the parties may have upon termination of this Agreement at law or in
equity, Baxter agrees that Baxter shall, upon termination and payment in full to
Baxter of any unpaid amounts due under this Agreement by Newco, deliver at
Newco's direction, and at Newco's sole risk of loss and expense, any and all IT
Assets, any and all other specifications, drawings/blueprints and other
documents relating solely to the Antibodies, Reagents or Reagent Kits then held
by, or under the control of, Baxter pursuant to this Agreement and copies of any
and all other specifications, product drawings/blueprints and procedures
required for the manufacture of the Antibodies, Reagents and Reagent Kits.
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27. FORCE MAJEURE. Neither party to this Agreement shall be liable
for delay or failure in the performance of any of its obligations hereunder if
such delay or failure is due to causes beyond its reasonable control, including
acts of God, fires, earthquakes, strikes and labor disputes, acts of war, civil
unrest, intervention of any governmental authority or cell death due to neither
party's actions, but any such delay or failure shall be remedied by such party
as soon as is reasonably possible.
28. LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF
BREACH OF CONTRACT TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY
OR LIQUIDATED DAMAGES.
29. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement
or any associated transaction is required by the law of any nation to be either
approved or registered with any governmental authority, or any agency or
political subdivision thereof, Baxter shall assume all legal obligations to do
so.
30. EXPORT CONTROL. Baxter shall observe all applicable United
States and foreign laws with respect to the transfer of all Antibodies, Reagents
and Reagent Kits to or on behalf of Newco between nations, countries or other
sovereign states.
31. NOTICES. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
facsimile transmission (provided that in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter, such notices shall be delivered to:
President
Baxter Biotech Group
with a copy to:
General Counsel
Baxter Healthcare Corporation
If to Baxter, other written communications shall be delivered to:
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President
Venture Management
Baxter Biotech Group
with a copy to:
Associate General Counsel
Baxter Healthcare Corporation
If to Newco, such notices shall be delivered to:
President
BIT Acquisition Corp.
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with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attn: Lowell S. Lifschultz, Esq.
If to Newco, other written communications shall be delivered to:
President
BIT Acquisition corp.
with a copy to:
Vice President
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 31. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered by: hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
32. DISPUTE RESOLUTION.
32.1 Provisional Remedies: The procedures specified in this
Section 32 shall be the sole and exclusive procedures for the resolution of
disputes between the parties arising out of or relating to this Agreement;
provided, however, that a party, without prejudice to these procedures, may seek
- -------- -------
a preliminary injunction or other provisional relief if, in its sole judgement,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in
good faith in the procedures specified in this Section 32.
32.2 Negotiations Between Executives: The parties will attempt
in good faith to resolve any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
32) promptly by negotiations under the procedures set forth in Section 7
concerning referral of disputes to the Corporate Committee.
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32.3 Arbitration: In the event that any dispute arising out of or
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith negotiation pursuant to the procedures of Section
32.2, such dispute shall upon written notice by either party to the other, be
finally settled by arbitration administered by the Center for Public Resources
in accordance with the provisions of its Commercial Arbitration Rules and the
United Stated Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3) independent and
impartial arbitrators all of whom shall be selected from a list of neutral
arbitrators supplied by the Center for Public Resources. From such list,
each of Baxter and Newco shall select one (1) arbitrator, and the
arbitrators so selected shall select a third. The panel shall designate
one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration
Act as necessary to protect the rights or property of the party pending the
decision of the arbitrators.
D. The parties shall allow and participate in limited discovery
for the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the Center
for Public Resources. All discovery shall be completed within sixty (60)
days following the filing of the answer or other responsive pleading.
Unresolved discovery disputes shall be brought to the attention of the
chair of the arbitration panel and may be disposed of by the chair.
E. Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators,
provided that the chair of the panel of arbitrators may establish such
longer times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify
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the factual and legal basis for the award. Judgment thereon may be entered
in any court having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the
-------- -------
arbitrators will have no authority to award special, punitive or exemplary
damages, or other money damages that are not measured by the prevailing
party's actual damages.
32.4 Performance During Dispute: Each party is required to
continue to perform its obligations under this Agreement pending final
resolution of any dispute arising out of or relating to this Agreement, unless
to do so would be commercially impossible or impractical under the
circumstances.
33. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the internal laws of the state of Delaware,
without application of conflicts of law principles, and, subject to Section 32
above, each party hereby submits to the jurisdiction and venue of any state or
federal court in the State of Delaware. To the extent permissible by law, each
of the parties hereby waives, releases and agrees not to assert, and agrees to
cause its Affiliates to waive, release and not assert, any rights such party or
its Affiliates may have under any foreign law or regulation that would be
inconsistent with the terms of this Agreement as governed by Delaware law.
34. PROVISIONS CONTRARY TO LAW/SEVERABILITY. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted herefrom, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
35. ENTIRE AGREEMENT. This Agreement, together with any exhibits or
schedules attached hereto, 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 this Agreement.
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36. WAIVERS AND MODIFICATIONS. The failure of any party to insist on
the performance of any obligation hereunder shall not be deemed to be a waiver
of such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing signed by the party to be bound by such waiver, modification, release or
amendment.
37. NO OTHER LICENSES. Except as permitted by Section 5 or Section 6
of this Agreement, or as may otherwise be agreed to by the parties in writing,
neither party shall use the name of the other party in any promotional materials
or advertising without the prior written consent of the other party. Except as
necessary for the production of the Antibodies, Reagents and Reagent Kits as set
forth in Section 5 and Section 6 of this Agreement, and subject to Section 26
above, nothing in this Agreement shall grant to either party any right to the
other party's intellectual property, including patents, patent applications,
technology, know how, inventions, copyrights, trademarks, service marks, logos
or trade names ("Intellectual Property"). Neither party shall at any time
assert any claim to any goodwill, reputation or ownership of the other party's
Intellectual Property and all uses of a Party's Intellectual Property shall
inure to the benefit of that party.
38. ASSIGNMENT. Newco may assign its rights and obligations under
this Agreement to any Affiliate of Newco without the prior written consent of
Baxter, provided that such Affiliate is owned, directly or indirectly, by Baxter
and VIMRx in substantially the same properties as Newco is owned. Baxter may
assign its rights and obligations hereunder to any Affiliate of Baxter without
prior notice to or consent of Newco. No assignment by Baxter or by Newco, or by
any permitted assignee, shall be effective unless and until the assignee shall
have agreed to become bound by the provisions of the Non-Compete Agreement to
the same extent and in the same manner as Baxter (in the case of a Baxter
assignee) or Newco (in the case of a Newco assignee) is bound. No party hereto
may assign any of its rights or obligations under this Agreement, unless and to
the extent expressly permitted in this Section 38. Subject to the foregoing,
this Agreement shall inure to the benefit of and be binding on the parties'
permitted successors and assigns.
39. INDEPENDENT PARTIES. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venture, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
40. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together, and shall constitute one and the same instrument.
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41. RULES OF CONSTRUCTION. In this Agreement, unless a clear
contrary intention appears:
A. The singular number includes the plural number and vice versa;
B. Reference to any party includes such party's permitted
successors and assigns;
C. Reference to any gender includes the other gender;
D. Reference to any Section, Exhibit or Schedule means such
section of this Agreement, exhibit to this Agreement or schedule to this
Agreement, as the case may be, and references in any section or definition
to any clause means such clause of such section or definition;
E. "Herein," "hereunder," "hereof," "hereto," and words of
similar import shall be deemed references to this Agreement as a whole and
not to any particular section or other provision of this Agreement;
F. "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
G. Relative to the determination of any period of time, "from"
means "from and including", "to" means "to but excluding" and "through'
means "through and including";
H. Reference to any law (including statutes and ordinances) means
such law as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder;
I. Accounting terms used herein shall have the meanings
historically attributed to them by Baxter International Inc., a Delaware
corporation, and its subsidiaries prior to the date hereof;
J. In the event of any conflict between any of the provisions of
the body of this Agreement and any exhibit or schedule hereto, the
provisions of the body of this Agreement shall control;
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K. The headings contained in this Agreement have been inserted
for convenience of reference only, and are not to be used in construing
this Agreement; and
L. Any rule of construction or interpretation which might
otherwise require this Agreement to be construed or interpreted against
either party shall not apply to any construction or interpretation hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first set forth above.
BAXTER HEALTHCARE CORPORATION
By:_________________________________
Name:
Title:
BIT ACQUISITION CORP.
By:_________________________________
Name:
Title:
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EXHIBIT 10.3
HARDWARE AND DISPOSABLES
SUPPLY AGREEMENT
This HARDWARE AND DISPOSABLES SUPPLY AGREEMENT ("Agreement"), dated as of
December 17, 1997, is entered into by and between Baxter Healthcare Corporation,
a Delaware corporation having a place of business at 1627 Lake Cook Road,
Deerfield, Illinois 60015 ("Baxter"), and BIT ACQUISITION CORP., a Delaware
corporation having a place of business at Nine Parker, Irvine, California 92718
("Newco").
RECITALS
A. Baxter and VIMRx Pharmaceuticals Inc., a Delaware corporation
("VIMRx"), have agreed to enter into a strategic alliance in the ex vivo cell
therapies business and have formed Newco for that purpose, pursuant to that
certain Asset Purchase Agreement dated as of October 10, 1997, by and among
Baxter, Newco and VIMRx (the "Acquisition Agreement").
B. Pursuant to the Acquisition Agreement, Baxter has transferred to Newco
certain Isolex(R) and Maxsep(R) Technology (as that capitalized term is defined
below) as well as other IT Assets relating to Isolex(R) and Maxsep(R) Products
(as those capitalized terms are defined below).
C. Pursuant to the Acquisition Agreement, Baxter and Newco have entered
into that certain sublicense of even date herewith relating to CD34+ cell
population and related antibody and method patents licensed from Becton,
Dickenson and Company to Baxter (the "First BD Sublicense"); that certain
sublicense of even date herewith relating to B cell antibodies licensed from
Becton, Dickenson and Company to Baxter (the "Second BD Sublicense"); that
certain sublicense of even date herewith relating to breast cancer antibodies
licensed from Cetus Oncology Corporation, d/b/a Chiron Therapeutics, to Baxter
(the "Chiron Sublicense"); and that certain sublicense of even date herewith
relating to B cells licensed from Prof. Bernd Dorken to Baxter Deutschland GmbH
(the "Dorken Sublicense") (the First BD Sublicense, the Second BD Sublicense,
the Chiron Sublicense and the Dorken Sublicense are collectively referred to
herein as the "Sublicense Agreements") pursuant to which Baxter has granted to
Newco licenses to the Licensed Technology (as that capitalized term is defined
in each of the Sublicense Agreements) as described therein.
D. Baxter has agreed pursuant to the terms of that certain Hardware and
Disposables Manufacturing Agreement of even date herewith (the "Hardware and
Disposables Manufacturing Agreement"), to manufacture for Newco certain
Isolex(R) and Maxsep(R) Products (as that capitalized term is defined in the
Hardware and Disposables Manufacturing Agreement); and Baxter has
<PAGE>
agreed to manufacture certain prototype products for the research market
pursuant to the terms of that certain Services Agreement of even date herewith
(the "Services Agreement").
E. Baxter has agreed, pursuant to the terms of that certain Antibody
Manufacturing and Storage Agreement of even date herewith (the "Antibody
Manufacturing and Storage Agreement") to manufacture for Newco certain
Antibodies, Reagents and Reagent Kits (as those capitalized terms are defined in
the Antibody Manufacturing and Storage Agreement) which are utilized in
connection with the Isolex(R) and Maxsep(R) Products.
F. Newco desires that Baxter supply to Newco certain products utilized in
connection with, and other components of, the Isolex(R) and Maxsep(R) Products
as described herein and subject to the terms hereof and Baxter is willing to
supply to Newco certain products utilized in connection with, and other
components of, the Isolex(R) and Maxsep(R) Products as described herein and
subject to the terms hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and Newco hereby agree as follows:
1. DEFINITIONS.
1.1 Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth therein.
1.2 Other Terms: As used herein, the following capitalized terms shall
have the following meanings:
A. "Affiliate" of a party shall mean any entity (i) which
directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with, the party or (ii) fifty
percent (50%) or more of the voting capital stock (or in the case of an
entity which is not a corporation, fifty percent (50%) or more of the
equity interest) of which is beneficially owned or held by a party or any
of such party's Subsidiaries. The term "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of an entity (other than a natural person),
whether through the ownership of voting capital stock, by contract or
otherwise.
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B. "Baxter Products" means the products of Baxter identified on
Schedule 1 attached hereto (but not including the Spinning Membrane), as
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currently produced by Baxter, including improvements, revisions or
refinements of such products and such new products as are currently under
development, are in research, or have been identified as proposed new
products as indicated on Schedule 1, or as Baxter may otherwise agree to
----------
develop pursuant to this Agreement or the Services Agreement, in each case
as consistent with the nature of the Baxter Products existing at the date
of this Agreement for use in connection with the Isolex(R) and Maxsep(R)
Products and with Baxter's legal obligations and technological capabilities
(including, without limitation, regulatory requirements applicable to
Baxter) during the Term of this Agreement.
C. "Baxter Products Components" means components of Baxter
Products which may be assembled into Baxter Products and/or extruded sheet
stock which may be manufactured into Baxter Products, all as identified on
Schedule 2 attached hereto.
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D. "Device History Record" shall have the meaning ascribed to it
by the regulations of the FDA, as may be amended or changed from time to
time.
E. "Ex Vivo Cell Processing" shall mean the active selection, and
any subsequent modification, genetic alteration, activation and/or
expansion, of nucleated cells outside the body for therapeutic purposes
such as cellular therapy or gene therapy. For the purpose of this
definition, "active selection" shall mean processing involving the action
of a biological component, such as an antibody or modified antibody, a
lectin, or a ligand, to selectively and specifically bind to a particular
molecule on the surface of the cells to be selected so as to confer
specificity or selectivity for such cells in the cell selection process.
F. "FDA" means the United States Food and Drug Administration.
<PAGE>
G. "FDA-Regulated Non-Baxter Component" shall mean any component
of a Supplied Product which is manufactured by a third party for or on
behalf of Baxter and which is either (a) deemed, under applicable law and
FDA regulations, to be "intended for use" in an FDA-regulated product or
(b) manufactured at any FDA-registered establishment.
H. "Fenwal" means the Fenwal Division of Baxter.
I. "Field of Distribution" shall have the meaning ascribed to
such capitalized term in the Marketing, Sales & Distribution Agreement.
J. "Forms FDA-483" shall have the meaning ascribed to that term
by FDA policy, as may be amended or changed from time to time.
K. "Fully Loaded Cost" means, for either party, such party's cost
of manufacturing, performing or acquiring any items or services, in
accordance with generally accepted accounting principles, consistently
applied ("GAAP"), and, with respect to each party, in accordance with such
party's normal accounting policies, all consistently applied, including any
royalties payable by such party in connection with manufacturing,
performing or acquiring any items or services (and in the case of Baxter,
including the royalties payable under the McLaughlin License), but
excluding, in the case of Baxter's Fully Loaded Cost, any royalty
obligations of Baxter that are paid or reimbursed by Newco pursuant to the
Sublicense Agreements. Fully Loaded Cost shall not include general
corporate allocations or other allocations which are not directly related
to the manufacture, performance or acquisition of the item or service,
however designated. A charge for the cost of funding the party's working
capital needs for such manufacture, performance or acquisition of items or
services, including capital expenditures for facilities and/or equipment
and capitalized manufacturing costs, will be included in Fully Loaded Cost,
which charge will be made at the interest rate paid by Baxter on its then
most recent issuance of commercial paper; provided, however, that no charge
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shall be made for any cost of, or the cost of funding, any changes in the
site of
<PAGE>
manufacturing of the Baxter Products or Baxter Products Components. In the
event any item is acquired or any service is provided for a party from or
by an Affiliate of such party, the cost of acquiring such items or services
shall be deemed to mean such Affiliate's actual cost of manufacturing,
performing or acquiring such items or services in accordance with the
principles set forth in this definition of "Fully Loaded Cost". Current
costs of developing any items or services shall be included in Fully Loaded
Cost, but in no event shall any historic development costs be included in
Fully Loaded Cost.
L. "Isolex(R) and Maxsep(R) Products" shall have the meaning
ascribed to that term in the Hardware and Disposables Manufacturing
Agreement.
M. "Isolex(R) and Maxsep(R) Technology" means automated systems
for positive and negative immunomagnetic cell selection.
N. "Isolex(R) Products" means all Isolex(R) and Maxsep(R)
Products except Maxsep(R) instruments, Maxsep(R) disposables and Isolex(R)
disposables.
O. "IT Assets" means those Assets set forth in Schedule 2.1(A) of
the Acquisition Agreement that consist of personal property currently
utilized by Baxter solely in connection with manufacturing the Isolex(R)
and Maxsep(R) Products, including equipment, molds and tools.
P. "Manufacturing Facility" means any production site selected by
Baxter or a third party subcontractor of Baxter for manufacture of the
Supplied Products.
Q. "Marketing, Sales and Distribution Agreement " means the
Marketing, Sales and Distribution Agreement by and between Baxter and Newco
of even date herewith.
R. "Master Scheduling System" shall mean the computerized master
scheduling system currently used by Baxter in connection with the
production of the Supplied Products, as such system may be changed by
Baxter from time to time.
<PAGE>
S. "McLaughlin License" means that certain Patent License and
Assignment Agreement, dated June 6, 1986, by and among Travenol
Laboratories, Inc., Hemascience Laboratories, Inc., and William F.
McLaughlin, as amended from time to time.
T. "MDR" shall mean Medical Device Reports, as such term is
defined by the regulations of the FDA, as may be amended or changed from
time to time.
U. "Non-Compete Agreement" means the Non-Competition and
Confidentiality Agreement, by and among Baxter VIMRx, and Newco of even
date herewith.
V. "PMA Post-Approval Requirements" shall have the meaning
ascribed to them by the regulations and policy of the FDA, as the same may
be amended or changed from time to time.
W. "Product Field" means the treatment, mitigation or prophylaxis
of diseases, including research into such activities, through Ex Vivo Cell
Processing.
X. "Quality Manual" shall mean the quality manual currently used
in connection with the production of the Supplied Products, as such manual
may be changed from time to time.
Y. "Quality System Regulation" ("QSR") shall have the meaning
ascribed to it by the regulations of the FDA, as the same may be amended or
changed from time to time.
Z. "Regulatory Approval" means (1) in the United States, approval
from the FDA and any other United States governmental authority (or agency
or other political subdivision thereof) necessary for Newco to have the
right to market, sell or distribute the Isolex(R) and Maxsep(R) Products in
the United States to the public at large for use in the Product Field
(including the Field of Distribution), and (2) outside the United States,
an analogous order by a non-U.S. governmental authority (or agency or other
political subdivision thereof) necessary for Newco to have the right to
market, sell or distribute, and the right to be paid or
<PAGE>
reimbursed for, the Isolex(R) and Maxsep(R) Products in a country (other
than the United States) to the public at large for use in the Product Field
(including the Field of Distribution).
AA. "Section 305 Hearing" shall have the meaning ascribed
to it by the Federal Food, Drug, and Cosmetic Act (the "Act") and
implementing regulations of the FDA, as may be amended or changed from time
to time.
BB. "Spinning Membrane" means the products of Baxter
described on Schedule 3 attached hereto, utilized in connection with one or
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more of the Isolex(R) and Maxsep(R) Products, and manufactured, used and
sold by Baxter subject to the McLaughlin License.
CC. "Standard Operating Procedure System" shall mean the
standard operating procedures used in connection with the production of the
Supplied Products, as such procedures may be changed from time to time.
DD. "Subcontractor" shall mean a third party who produces
and/or supplies Baxter Products or Spinning Membrane, or any FDA-Regulated
Non-Baxter Component of a Baxter Product or Spinning Membrane to or on
behalf of Baxter under contract.
EE. "Subsidiary" means, as to any party, any corporation of
which more than fifty percent (50%) of the outstanding capital 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 party, by one or more of its subsidiaries, or by
the party and one or more of its subsidiaries.
FF. "Supplied Products" means the Baxter Products, the
Baxter Products Components and the Spinning Membrane and/or any components
of the Baxter Products and the Spinning Membrane.
<PAGE>
GG. "Value Improvement Process" shall mean the Value
Improvement Management System currently used in connection with the
production of the Supplied Products, as such system may be changed from
time to time.
HH. "Warning Letter" shall have the meaning ascribed to it
by FDA policy, as the same may be amended or changed from time to time.
2. TERM.
2.1 Term: With respect to each of the Supplied Products except
the Harvester System, the Solution Transfer Pump and the Cell Wash Sets, the
term of this Agreement (the "Term"), unless earlier terminated pursuant to
Section 25 below, shall be eleven (11) years from the date hereof. If Newco and
Baxter are unable to agree upon the terms for extension or renewal of this
Agreement after good faith negotiation, then at the expiration of the Term
hereof, at Baxter's option, with respect to each Supplied Product either (A)
Baxter will continue to supply such Supplied Product under the then current
terms and conditions of this Agreement; or (B)(i) Baxter will transfer to Newco
or provide Newco with an exclusive, worldwide, royalty-free, perpetual license
or sublicense (subject in the case of a sublicense, to any applicable license
terms) to make, have made, use and sell such Supplied Product in connection with
Ex Vivo Cell Processing under all of the intellectual property (including
without limitation, patents, patent applications, copyrights, know-how and
confidential and proprietary information) owned or used by Baxter as required
for the manufacture of such Supplied Product, which license will be subject to
any then existing licenses or sublicenses of such technology, and (ii) Baxter
will transfer to Newco, or otherwise provide access to and the rights to
reference, any applicable FDA device master file.
2.2 Certain Products: With respect to each of the Harvester
System, the Solution Transfer Pump and the Cell Wash Sets, the Term, unless
earlier terminated pursuant to Section 24 below, shall be five (5) years from
the date hereof. At the end of such five (5) year term, (i) Baxter will grant
to Newco an exclusive, worldwide, royalty-free, perpetual license to make, have
made, use and sell the Harvester System, the Solution Transfer Pump and the Cell
Wash Sets in connection with Ex Vivo Cell Processing under all of the
intellectual property (including without limitation, patents, patent
applications, copyrights, know-how and confidential and proprietary information)
owned or used by Baxter as required for the manufacture of the Harvester System,
the Solution Transfer Pump and the Cell Wash Sets, which license will be subject
to any then existing licenses or sublicenses of such technology, (ii) Baxter
will transfer to Newco, or otherwise provide access to and the rights to
reference, any applicable FDA device master file, and (iii) Baxter will assist
in the transfer of the manufacture of the Harvester System, the Solution
Transfer Pump and the Cell Wash Sets to a third party manufacturer selected by
<PAGE>
Newco in the manner described in clauses (i) through (iii) of Section 3.2B and
Section 3.2C, below.
2.3 Licenses: Licenses granted by Baxter to Newco pursuant to
this Section 2 shall not be assignable and sublicenses may not be granted
thereunder, except (i) any such license may be assigned in the event of an
acquisition or transfer of substantially all of the Ex Vivo Cell Processing
business of Newco to a third party; (ii) Newco may grant a sublicense under any
such license to an Affiliate of Newco that is owned by Baxter and VIMRx in
substantially the same proportions as Newco is owned; and (iii) Newco may grant
a sublicense under any such license to a third party manufacturer in connection
with the manufacturing for Newco of any Supplied Product, provided that such
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assignee, licensee or third party manufacturer has agreed to be bound by the
terms of that certain Non-Competition and Confidentiality Agreement of even date
herewith, by and among Baxter, VIMRx and Newco, in the same manner as Newco is
bound.
3. SUPPLY.
3.1 Baxter to Supply: During the Term, Baxter shall supply to
Newco the Supplied Products solely in conjunction with the manufacture, use and
sale of the Isolex(R) and Maxsep(R) Products, any substituted versions of such
products and any new products developed by Newco in connection with Ex Vivo Cell
Processing, subject to the terms and conditions contained in this Agreement.
Newco shall have the exclusive worldwide royalty-free right during the Term to
distribute the Supplied Products in connection with Ex Vivo Cell Processing,
provided that (a) the Spinning Membrane may only be sold by or on behalf of
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Newco as part of an Isolex(R) disposable kit for use in Ex Vivo Cell Processing;
(b) the Spinning Membrane subassembly may only be sold by or on behalf of Newco
as a spare part for replacement of such subassembly in one or more of the
Isolex(R) Products sold by Newco (or, prior to the date hereof, sold by Baxter)
for use in Ex Vivo Cell Processing; and (c) Newco's distribution rights
hereunder are subject to Baxter's right to distribute the Supplied Products
pursuant to the Marketing, Sales and Distribution Agreement.
3.2 Alternate Products or Manufacturers: All Supplied Products
shall be finished goods; provided, however, that:
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A. In the event Baxter elects to discontinue manufacturing any
specific Baxter Product or Products altogether and provides Newco with six
months' written notice of such discontinuation, Baxter shall instead
provide to Newco the Baxter Products Components which may be assembled or
manufactured by Newco or a third party manufacturer chosen by Newco, into
products having the same specifications as such Baxter Product(s)
("Alternate
<PAGE>
Products") under an exclusive, worldwide, royalty-free license to make,
have made, use and sell such Alternate Products solely in connection with
Ex Vivo Cell Processing, on terms mutually agreeable to the parties (but
not including a license to any of Baxter's trademarks, trade names, logos
or service marks or to any of Baxter's copyrights). Baxter may only make
such an election to discontinue manufacturing any Baxter Products pursuant
to this Section 3.2A effective after three (3) years from the date hereof
and Baxter hereby agrees that in the event it makes such an election, (i)
it will provide Newco or Newco's third party manufacturer, at Baxter's sole
expense, with such support, assistance and manufacturing know-how as shall
be required by Newco to effect an orderly transition and (ii) it will
continue to manufacture and supply such Baxter Products until Newco or
Newco's third party manufacturer is ready, willing and able to satisfy the
demand for such Baxter products.
B. Baxter agrees to supply to Newco the Supplied Products listed
on Schedule 4 hereto, or, in Baxter's sole discretion, Baxter may license
----------
to Newco and Newco's third party manufacturer the right to produce any or
all of the Supplied Products listed on Schedule 4 under an exclusive,
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worldwide, royalty-free license to make, have made, use and sell such
Supplied Products solely in connection with Ex Vivo Cell Processing on
terms mutually agreeable to the parties; provided that such license shall
--------
not grant to Newco or Newco's third party manufacturer the right to make,
have made, use or sell such Supplied Products except to the extent
permitted in Section 3.1 above. Baxter may not elect to discontinue
manufacturing for Newco any of the Supplied Products listed on Schedule 4
----------
during the Term of this Agreement unless it has licensed to Newco the right
to produce such Supplied Product; provided, however, that Baxter may adjust
-----------------
the price for any of the Supplied Products listed on Schedule 4 at any time
----------
in accordance with the terms of Section 13.3 hereto. In the event that
Baxter elects to license to Newco and Newco's third party manufacturer the
right to produce any such Supplied Product, (i) Baxter will provide Newco
or Newco's third party manufacturer, at Baxter's sole expense, with such
support, assistance and
<PAGE>
manufacturing know-how as shall be required by Newco to effect an orderly
transition, (ii) Baxter will transfer to Newco or Newco's third party
manufacturer, or otherwise provide access to and the rights to reference,
Baxter's FDA device master file, and (iii) Baxter will continue to
manufacture and supply Newco with Supplied Product until Newco or Newco's
third party manufacturer is ready, willing and able to satisfy the demand
for such Supplied Product.
C. In any case where Baxter is obligated to provide support,
assistance and manufacturing know-how and Baxter is obligated to continue
manufacturing until Newco or Newco's manufacturer is ready, willing and
able to satisfy the demand for such product, such Baxter obligations shall
continue only as long as Newco or any Newco third-party manufacturer
receiving such Baxter assistance is endeavoring in good faith to assume
manufacturing responsibilities and become ready, willing and able to
satisfy the demand for such product.
3.3 Acknowledgement: Newco acknowledges and understands that
Baxter's manufacturing and sale of the Spinning Membrane and any disposable sets
containing the Spinning Membrane is subject to the terms and conditions of, and
the limitations, if any, contained in, the McLaughlin License.
3.4 Violations: Nothing herein contained shall oblige Baxter to
continue supplying or Newco to continue purchasing any Supplied Product if such
supply or purchase is reasonably believed by Baxter or Newco, as the case may
be, to violate any applicable law, regulation, rule or license or if the
Supplied Products supplied infringe a third party's patent or other intellectual
property rights, provided that Baxter will cooperate with Newco, to the extent
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commercially feasible, to develop and implement such changes as may be necessary
to bring such Supplied Product into compliance or to prevent such infringement
and Baxter will continue to supply after a finding of infringement if Newco or
Baxter reaches an agreement with the third party which permits future production
without infringement.
4. CONTACTS/PLANNING COMMITTEE.
4.1 Administration: Administration of this Agreement will be
accomplished by the establishment of two "Production Operating Teams," to
include the Tampa Production Operating Team and Mountain Home Operating Team.
The Production Operating Teams will consist of representatives from each of
Newco and Baxter who typically would include
<PAGE>
the individuals identified in Schedule 5, or other persons of an appropriate
----------
level of authority and responsibility. Each party will select representatives
and shall notify the other party of such selections and any changes thereto.
The Production Operating Teams will meet (in person or by teleconference) at
least once in each calendar quarter to review the progress of Newco and Baxter
in the execution of this Agreement and to develop, review and agree on specific
plans and programs designed to assure that Baxter can fulfill orders placed by
Newco. Each Production Operating Team will develop a process to agree upon
short-term and long-term forecasts, orders and production planning schedules and
to conduct any other business to discharge its responsibilities pursuant to the
provisions of this Agreement. Regardless of the number of representatives
selected by each of Newco and Baxter for service on either of the Production
Operating Teams, the representatives of each party shall have, in the aggregate,
a single vote in all matters to be decided by any Production Operating Team.
If, in the course of conducting the activities contemplated in these Agreements,
either Production Operating Team cannot resolve a matter of difference between
Baxter and Newco representatives, or cannot reach agreement on a matter within
its area of responsibility under the terms of this Agreement, the Production
Operating Team shall promptly refer the matter to the Corporate Committee.
4.2 Corporate Committee: The "Corporate Committee" will consist
of one representative each from VIMRx and Baxter, who ordinarily will be the
President and CEO of VIMRx and the President of Fenwal, respectively. The
Corporate Committee will meet only as needed to resolve any dispute or otherwise
undecided matter referred to it by the Production Operating Teams. If the
Corporate Committee cannot come to an agreement with respect to any matter, the
matter will be referred to arbitration as provided in this Agreement.
4.3 Responsibilities: Newco and Baxter will cooperate to
identify their separate responsibilities hereunder, and will diligently execute
those responsibilities to assure a continuous, uninterrupted supply to the
market for all Supplied Products. For guidance and illustrative purposes, a
list of the various responsibilities to be assumed by Newco and Baxter for
purposes of this Agreement are attached on Schedule 6. Whenever the need for
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functions and responsibilities not previously identified or assumed by either
Newco or Baxter becomes evident, the Production Operating Teams will assign such
functions or responsibilities.
5. TRADEMARK LICENSE AND LABEL COPY.
5.1 Trademark License: Newco hereby grants to Baxter and Baxter
accepts a non-exclusive royalty-free worldwide license to use Newco's
trademarks, trade names, service marks, corporate logos and copyrighted
materials solely in connection with the manufacture, use and sale of the
Supplied Products to or on behalf of Newco during the Term pursuant to the terms
of this Agreement, provided that Newco has reviewed and approved in writing each
use or display of such Newco trademarks, trade names, service marks, logos and
materials. If any such Newco trademark, trade name, service mark, logo or
material is to be used
<PAGE>
in connection with the Supplied Products, Baxter shall obtain prior written
authorization from Newco (which authorization may be withheld by Newco in its
sole discretion) for such use and for all subsequent changes to any art work,
labels, inserts, advertising, packaging or marketing materials that incorporate
such Newco trademark, trade name, service mark, logo or materials. No other use
of Newco's trademarks, trade names, service marks, logos and copyrighted
materials is permitted during or after the Term of this Agreement. Except as
provided in this Agreement, Baxter shall not use any trademark, trade name,
service mark or logo claimed by Newco or any confusingly similar trademark,
trade name, service mark or logo, during or after the Term of this Agreement.
5.2 Label Copy: Newco shall provide all labeling, product
inserts and packaging for the Supplied Products, provided that Baxter has
reviewed and approved in writing each use or display on such labels, inserts or
packaging of any trademark, trade name, service mark or logo used or owned by
Baxter, other than any trademark, trade name, service mark or logo licensed to
Baxter pursuant to Section 5.1 of this Agreement. Changes in Supplied Product
labeling requested by Newco and the cost of labeling made obsolete by such
changes will be paid for by Newco at Baxter's Fully Loaded Cost. If a
trademark, trade name, service mark or logo owned or used by Baxter or its
parent corporation, other than any trademark, trade name, service mark or logo
licensed to Baxter pursuant to Section 5.1 of this Agreement, is to be used in
connection with the Supplied Products (except to the extent such use is
mandatory in connection with the labeling requirements of applicable law) Newco
shall obtain prior written authorization from Baxter (which authorization may be
withheld by Baxter in its sole discretion) for such use and for all subsequent
changes to the art work, labels, inserts or packaging for the Supplied Products
that incorporate such a Baxter trademark, trade name, service mark or logo.
Each use of such a Baxter trademark, trade name, service mark or logo shall
inure to the benefit of Baxter and its parent company. Should any such use vest
in Newco any rights in a trademark, trade name, service mark or logo used by
Baxter, other than any trademark, trade name, service mark or logo licensed to
Baxter pursuant to Section 5.1 of this Agreement, Newco shall transfer such
rights to Baxter or its designee upon the request of Baxter. Except as provided
in this Agreement, Newco shall not use any trademark, trade name, service mark
or logo claimed by Baxter or any confusing similar trademark, trade name,
service mark or logo during or after the Term of this Agreement.
6. PRODUCTION.
6.1 Production of Supplied Products: In manufacturing the
Supplied Products, Baxter and its Subcontractors shall comply with all
applicable QSR or applicable state or foreign regulatory requirements except to
the extent a relevant regulatory requirement has been allocated to Newco under
the Agreements between Baxter and Newco. More specifically, as applicable,
Baxter or its Subcontractor, as the case may be, shall:
<PAGE>
A. Comply with all relevant materials, manufacturing and in-
process controls, label control and quality control specifications, product
drawings/blueprints and operating procedures which are applicable at the
time of manufacture to the manufacture of the Supplied Products thereof or
(except with respect to product specifications) as they shall be changed by
Baxter or a Subcontractor with the prior written consent of Newco with
respect to material changes (which consent shall not be unreasonably
withheld);
B. Perform the release function for each lot of Supplied Product;
C. Prepare and maintain the Device History Record and any state,
local, or foreign equivalent thereof for each lot, including records of any
product retentions which may have been issued against the lot during the
manufacturing process, the action taken, and the disposition of the
retention;
D. Maintain and comply with the quality system as described in
its current Quality Manual applicable to the Supplied Products, or as
subsequently changed generally for all products of that type manufactured
by such manufacturer; and
E. Maintain and comply with its Standard Operating Procedure
System which is currently applicable to the Supplied Products (relating to
product manufacturing, testing and critical engineering system monitoring
and control, cleaning/sanitization, calibration of equipment, preventative
maintenance, employee training, pest control, environmental
control/monitoring, equipment/process validation, labeling/packaging
control, failure investigations, internal quality audits, handling of
customer calls and complaint forwarding, computer systems validation and
maintenance, product release, product/process change control and delegation
of authority), or as subsequently changed generally for all products of
that type manufactured by such manufacturer.
Baxter or a Baxter Subcontractor may change the product specifications for any
Supplied Product only with the prior written consent of Newco, which consent
shall not be unreasonably withheld.
<PAGE>
If Baxter or its Subcontractor proposes to make a material change in product
specifications (including in design, materials or suppliers), it shall give
Newco not less than six months' prior notice of any such change (including,
without limitation, any change that may affect the Post-Marketing Approval
("PMA") or state, local or foreign regulatory approval of any Supplied Product
or of any Isolex(R) and Maxsep(R) Products which utilize such Supplied Product,
or that requires regulatory review). If any such change is unacceptable to
Newco (in its reasonable discretion), Newco shall give Baxter and, if
applicable, the Subcontractor notice of its objection within thirty (30) days
after receipt of the notice provided hereunder by Baxter or its Subcontractor as
the case may be. In the event that Newco objects to a proposed change, Baxter
will continue to provide the Supplied Products without any change in product
specifications. If Newco objects to such a change because it determines a
Regulatory Approval is required for the Supplied Product or for any product of
Newco that incorporates a Supplied Product as a component thereof, Baxter or its
Subcontractor, as the case may be, may prepare and pay the cost of application
for such Regulatory Approval with the appropriate regulatory authority, and
Baxter or its Subcontractor may supply the changed Supplied Product upon
obtaining Regulatory Approval and satisfying any other applicable regulatory
requirements.
6.2 Materials and Services: Newco shall not have any right of
prior approval with respect to changes of suppliers or materials relating to
Supplied Products, except to the extent that such changes affect any Supplied
Product's specifications, whereupon Newco shall have the right to review and
approve or object to such changes pursuant to Section 6.1 above (and the rights
of the parties in connection therewith shall be governed by Section 6.1 above).
7. CHANGE OF PRODUCTION SITES / OUTSOURCING MANUFACTURE. After
consultation with the Production Operating Teams and written notice to Newco
(but without the requirement of prior consent) Baxter or a Baxter Subcontractor
may change the current production site of any Supplied Products (or any
component thereof) and Baxter may outsource the production of any Supplied
Products provided that (i) there is no material increase in the price of the
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Supplied Products to Newco, (ii) A PMA supplemental approval or foreign
marketing authorization or approval for any Supplied Product or any of the
Isolex(R) and Maxsep(R) Products which utilize such Supplied Product is not
required, and (iii) the manufacturing of the Supplied Products otherwise
conforms to the terms of this Agreement or Baxter causes a relevant third party
to comply with the terms of this Agreement in connection with outsourced
manufacturing of the Supplied Products, as the case may be. Newco and Baxter
agree that nothing contained in this Agreement shall require Baxter or a
Subcontractor to change, or open any new or additional, Manufacturing
Facilities, apart from any upgrades in its Manufacturing Facilities that Baxter
or a Subcontractor may, in its sole discretion, make in order to meet the
specifications for production of the Supplied Products applicable at any time
and any change as may be necessary to enable Baxter or a Subcontractor to
satisfy its obligations hereunder to deliver Supplied Products to Newco. With
respect to production site changes, new outsourcing, and facility upgrades,
Baxter or a Subcontractor shall provide Newco with sufficient advance notice to
allow Newco to comply with any applicable regulatory requirements. If Newco
determines a PMA supplemental approval or
<PAGE>
state, local or foreign marketing authorization or approval is necessary, Baxter
(and/or its Subcontractor) and Newco shall agree to the allocation of costs
related to preparation and submission of the PMA supplemental or other
application. New production sites, outsourcing and facility upgrades shall not
be utilized for supply to Newco, pending PMA supplement or foreign approval,
unless consistent with FDA and other applicable regulations.
8. FACILITY ACCESS AND AUDITS.
8.1 Facility Access: During the Term, Baxter and its
Subcontractors shall permit Newco access solely to those areas of the
Manufacturing Facilities in which the Supplied Products are manufactured, upon
reasonable prior notice and scheduling by Newco during normal business hours,
for the examination of production or quality records or to perform QSR audits.
Newco's access to such Manufacturing Facilities shall be coordinated through the
Production Operating Teams.
8.2 Audit: Newco may audit Baxter's and Baxter Subcontractors'
books and records for the purpose of determining compliance with the terms of
this Agreement. Newco may use independent outside auditors (who may participate
fully in such audit). In the event that an audit is proposed with respect to
information which Baxter or such Subcontractor wishes not to disclose to Newco
("Restricted Information"), then on the written demand of Baxter or such
Subcontractor, the individuals conducting the audit with respect to the
Restricted Information will be limited to the independent auditors of Newco. In
such event, Baxter or such Subcontractor shall pay the costs of the independent
auditors conducting such audit, but only with respect to that portion of the
audit relating to the Restricted Information. Such independent auditors shall
enter into an agreement with the relevant parties on terms that are agreeable to
such parties, under which such independent auditors shall agree to maintain the
confidentiality of the information obtained during the course of such audit and
establishing what information such auditors will be permitted to disclose in
reporting the results of any audit of Restricted Information to Newco. Any such
audit shall be conducted during regular business hours in a manner that does not
interfere unreasonably with the operations of Baxter or a Subcontractor. The
aggregate number of audits of Baxter's or its Subcontractor's books and records
conducted under this Agreement and the Sublicense Agreements, the Hardware and
Disposables Manufacturing Agreement, the Antibody Manufacturing and Storage
Agreement, the Services Agreement and the Marketing, Sales and Distribution
Agreement shall not exceed one (1) per facility in any twelve (12) month period
unless the next preceding audit disclosed a failure to conform to the terms of
any such Agreement or unless the facility received a Form FDA-483 in the twelve
(12) months following any audit. Subject to the foregoing limitations, any such
audit shall be conducted when requested by notice given not less than thirty
(30) days prior to the commencement of the audit.
8.3 Baxter Subcontractors: Newco's rights to facility access
and to audit books and records pursuant to this Section 8, process validation
pursuant to Section 9 below, and certain regulatory compliance matters pursuant
to Sections 11.1(D), (E), (G), (H), (I) and (J)
<PAGE>
below, are, in the case of Baxter Subcontractors, subject to the limits on
Baxter's rights under its agreements with such Subcontractors. Baxter will use
its best efforts, without the requirement of the payment of money, to cause all
of its Subcontractors to permit facility access, the right to audit books and
records, process validation, and certain regulatory compliance matters as set
forth herein with respect to the Supplied Products as provided in this Section
8, Section 9 below and Sections 11.1(D), (E), (G), (H), (I) and (J) below.
9. PROCESS VALIDATION. During the Term, at Newco's request, Baxter
and its Subcontractors shall permit Newco to review production validation
protocols and results with respect to the Supplied Products. Such reviews shall
be arranged by the Production Operating Teams.
10. REGULATORY RESPONSIBILITY.
10.1 Regulatory files: Except with respect to regulatory files and
records needed only or additionally by Newco to meet its PMA holder obligations,
Baxter and its third party subcontractors will maintain all regulatory files on
all Supplied Products and every component thereof.
10.2 Newco Responsibility: Notwithstanding the provisions of Section
10.1 or Section 11.1L hereof, Newco shall prepare, obtain approval of and hold
all applications, notifications, submissions and regulatory files required by
the FDA and the Act, or by state or foreign authorities and laws, relating to
any Supplied Product manufactured by Baxter solely for or on behalf of Newco,
provided that Baxter and any Baxter Subcontractor manufacturing such Supplied
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Product shall provide Newco with access to and the right to reference any
relevant device master file held by Baxter or any such Subcontractor.
11. COMPLIANCE WITH REGULATORY REQUIREMENTS.
11.1 Baxter Responsibilities: Notwithstanding any provision of
Section 10 hereof to the contrary, Baxter shall, and, as applicable, shall
require any Subcontractor to:
A. Appropriately register its manufacturing establishments with
the FDA and other regulatory agencies when required and list Supplied
Products as necessary with the FDA and other regulatory agencies.
B. Maintain existing IS0 and EN certification for each
Manufacturing Facility, and comply with all European Union and other
foreign regulatory requirements as applicable.
<PAGE>
C. As applicable, comply with the QSR requirements and other
relevant regulations issued by the FDA, state, local or other regulatory
authorities and in effect from time to time.
D. When practicable, permit Newco to send a representative to
attend, or when such attendance is not permitted or practicable, provide
Newco with periodic progress reports on every visit to a relevant
Manufacturing Facility by the FDA or other regulatory agency which affects
or concerns a Supplied Product (such reports to be given as frequently as
reasonably possible, but not more often than once in each 24-hour period,
during that portion of the visit which directly affects or concerns a
Supplied Product. Newco shall be provided with a copy of any Form FDA-483,
Establishment Inspection Report and/or Warning or "untitled" Letter
generated as a result of an FDA visit, or any equivalent foreign, state or
local document generated as a result of an inspectional visit, and
responses thereto (which copies may be redacted to the extent necessary to
protect confidential information unrelated to the Supplied Products,
provided that such redaction does not prevent Newco from discerning any
information that is related to the Supplied Products. Newco shall also be
apprised as soon as possible of the time and place of any "close out"
meeting at the end of an FDA or other agency visit and allowed to attend
the meeting when the meeting directly affects or concerns any Supplied
Product provided that in the discretion of Baxter's or its Subcontractor's
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regulatory professionals, the presence of a Newco representative would not
prejudice Baxter's or its Subcontractor's interests.
E. Respond in a timely manner, after consultation with Newco, to
any Form FDA-483, Warning Letter or Section 305 Notice, and any other
notices or letters received from the FDA, a state or local regulatory
authority, or an analogous regulatory authority outside the United States,
which relate to the Supplied Products.
F. Be responsible for handling product complaints and maintenance
of complaint files and records related to its Supplied Products.
<PAGE>
G. Provide to Newco copies of product complaints received
relating to Supplied Products which were used in conjunction with the
Isolex(R) and Maxsep products or other Newco-owned products.
H. Maintain and store production records relating to the Supplied
Products as required by its record retention policy and its Standard
Operating Procedure System, as amended from time to time.
I. With cooperation from Newco, as mutually agreed by the
parties, administer mandatory notifications, repairs, replacements, and
refunds, safety alerts, "cease distribution and notification" and mandatory
recall actions, voluntary recalls, market withdrawals and stock recoveries,
and device removals and corrections, as defined or understood under law or
FDA policy, and related and analogous actions involving the Supplied
Products. Newco's cooperation shall be at Baxter's or its Subcontractor's
expense, subject to the provisions of Section 11.3 below.
J. Cooperate with Newco, as mutually agreed by the parties, in
connection with Newco's compliance with PMA and other post-approval
requirements, such cooperation to be at Newco's expense, subject to the
provisions of Section 10.3 below.
K. Prepare and file with FDA, under 21 C.F.R. Part 803, MDRs
related to Supplied Products it manufactures.
L. Prepare, obtain approval of, and hold all applications,
notifications, submissions and regulatory files required by FDA and the
Act, or by state or foreign authorities and laws, relating to its Supplied
Products, except as described in Section 10 above.
M. Comply with any PMA Post-Approval Requirements or other post-
approval regulatory requirements or special controls applicable to its
Supplied Products.
11.2 Newco Responsibilities: Newco shall:
<PAGE>
A. Forward product complaints received on Supplied Products to
Baxter or the relevant Baxter Subcontractor.
B. Cooperate, as mutually agreed by the parties, in Baxter's or a
Baxter Subcontractor's administration of mandatory notifications, repairs,
replacements and refunds, safety alerts, "cease distribution and
notification" and mandatory recall actions, voluntary recalls, market
withdrawals and stock recoveries, and device removals and corrections, as
defined or understood under law or FDA policy, or related or analogous
actions involving the Supplied Products.
C. Comply with distributor medical device reporting (MDR)
responsibilities as set forth in 21 C.F.R. Part 804 relating to Supplied
Products, to the extent required by law.
D. Comply with European Union and any other foreign regulatory
requirements, as applicable.
11.3 Regulatory Actions: In the event that Newco takes a
regulatory action relative to any Supplied Product or any Newco product
containing any Supplied Product manufactured for or supplied to it by Baxter or
a Baxter Subcontractor and such action is due solely to Baxter's or its
Subcontractor's failure to manufacture the Supplied Product in accordance with
its responsibilities under Sections 6.1, 7 or 11.1 of this Agreement, then
Baxter shall pay or reimburse Newco for all out-of-pocket costs and expenses
incurred by Newco due to such action, including expenses or obligations to third
parties, the cost of notifying customers, costs associated with the return by
customers of Supplied Products or Newco products containing any Supplied
Products, and costs related to otherwise addressing, handling or correcting the
Supplied Products. In the event that such action is due in part to Baxter's or
its Subcontractor's failure to manufacture the Supplied Product in accordance
with its responsibilities under this Agreement, Baxter shall pay or reimburse
Newco for such part of Newco's out-of-pocket costs and expenses as shall be
agreed by the parties or by the Corporate Committee, or as determined in binding
arbitration pursuant to Section 30 of this Agreement. For purposes of this
paragraph, "regulatory actions" mean mandatory notifications, repairs,
replacements and refunds, safety alerts, "cease distribution and notification"
and mandatory recall actions, voluntary recalls, market withdrawals and stock
recoveries, and device removals and corrections, as defined or understood under
law or FDA policy, and related or analogous actions.
12. ACTIVITY PLANNING / FORECASTS AND ORDERS.
<PAGE>
12.1 Forecasts: Prior to the beginning of each calendar month during
the Term, Newco shall give Baxter a forecast of the orders Newco expects to
place with Baxter for Supplied Products during each of the next eighteen (18)
months, using the data supplied to Newco by Baxter from the Master Scheduling
System currently employed by Baxter and reviewed by the appropriate Production
Operating Teams. The forecast for the first two months contained in such
eighteen month forecast shall constitute firm orders. The forecast for the
first of the eighteen (18) months in such eighteen month forecast must be the
same as the forecast for the second month in the previous eighteen month
forecast; and the forecast for the second of the eighteen months in such
eighteen month forecast may not increase the number of orders shown in the
forecast for such month in the previous eighteen month forecast by more than
[Confidential Information Omitted], without the prior consent of Baxter after
consultation with each of the Production Operating Teams. The eighteen month
forecast for the eighteen month period beginning on the date hereof, was
delivered to Baxter on the date hereof.
12.2 Production Schedule: Based on the forecasts and orders
received by Baxter from Newco, Baxter shall develop and maintain detailed
production schedules for the Supplied Products, which shall be presented for
review by the Production Operating Teams at least quarterly.
12.3 Production in Excess of Orders: If Baxter's actual
production of Supplied Products which are manufactured specifically for Newco
exceeds Newco's firm orders, Newco shall purchase such excess, up to
[Confidential Information Omitted] above Newco's firm orders, provided that
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Newco's firm orders for the next month shall be reduced by such excess unless
Newco requests that such reduction not be made.
12.4 Production Below Amount of Orders: If, due to the fault or
error of Baxter or a third-party supplier or subcontractor of Baxter, subject to
the provisions of Section 25 of this Agreement, Baxter fails to deliver Supplied
Products in the quantities specified in Newco's firm orders, Baxter shall take
action as may be necessary to cure such failure as rapidly as is commercially
reasonable, including without limitation, the actions specified with respect to
various fill rates as follows:
A. If production for any month is [Confidential Information
Omitted] of Newco's firm orders or lower, Baxter shall (i) increase its
production in the next following month as reasonably necessary to satisfy
both the unfilled orders and the firm orders for such next following month,
and (ii) pay air freight and other extraordinary shipping costs reasonably
necessary to deliver the delayed Supplied Products to Newco or Newco's
product manufacturer until Baxter has brought production into compliance
with firm orders. Increased production under this Section 11.4(A) shall not
be subject to
<PAGE>
the limits on variance of orders set forth in Section 12.1. The
[Confidential Information Omitted] fill rate commitment established
pursuant to this Section may be adjusted by the parties during the Term
hereof as may be appropriate to reflect actual manufacturing experience.
B. If production for any month is [Confidential Information
Omitted] of Newco's firm orders (as increased by the number of unfilled
orders, if any, carried over from the previous month) or lower, or if
production for any three consecutive months is [Confidential Information
Omitted] of Newco's firm orders (as increased by the number of unfilled
orders, if any, carried over from the previous month) or lower, Baxter
shall (i) take the remedial measures set forth in Section 12.4(A), (ii)
promptly prepare and present to the Production Operating Teams a plan for
restoring compliance with firm orders, and (iii) promptly implement such
measures to restore compliance with firm orders as are directed by the
Production Operating Teams, including without limitation, changing or
allocating additional manufacturing resources.
C. If, after the first twelve (12) months of the Term, production
for any three consecutive months is [Confidential Information Omitted] of
Newco's firm orders (as increased by the number of unfilled orders, if any,
carried over from the previous month) or lower, or if production for any
six consecutive months is [Confidential Information Omitted] of Newco's
firm orders (as increased by the number of unfilled orders, if any, carried
over from the previous month) or lower, Baxter shall, at Newco's option,
(i) take the remedial measures set forth in Section 12.4(B) or (ii) (x) in
the case of the Supplied Products other than those listed on Schedule 7,
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assist Newco to transfer all manufacturing of the Supplied Products to a
third party alternative manufacturer selected by Newco, with such
assistance to include without limitation licensing or sub-licensing Newco
and Newco's third-party manufacturer to make use and sell the Supplied
Products in connection with Ex Vivo Cell Processing under any patent or
other rights necessary to the manufacture and sale of the Supplied
Products; transfer such inventory, raw materials, work in process, IT
Assets, specifications, drawings/blueprints, copy of regulatory files, and
such other property owned by
<PAGE>
Newco or owned by Baxter and previously charged to Newco as part of Fully
Loaded Cost; transfer all information and technical know-how concerning
Baxter manufacturing processes required for the production of the Supplied
Products; transfer or provide all necessary access to and rights to
reference any device master file concerning manufacture of the Supplied
Products; provide the services of technical personnel as needed to effect
such transfers of information and technical know-how; and continue to
manufacture the Supplied Products during the transition to an alternative
manufacturer until such alternative manufacturer is ready, willing and able
to meet market demand for the Supplied Products; provided that Newco and
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such alternative manufacturer are making good faith efforts to effectuate
the transition and to enable such alternative manufacturer to meet market
demand for the Supplied Products; or (y) in the case of any of the Supplied
Products listed on Schedule 7, allocate for sale to Newco hereunder such
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portion of Baxter's total aggregate production of such Supplied Product
(whether or not produced pursuant to this Agreement) as is equal to the
aggregate number of unfilled Newco orders for such Supplied Product divided
by the aggregate number of all unfilled orders for such Supplied Product
held by Baxter. Any third party alternative manufacturer selected by Newco
must (a) agree to be bound, to the same extent that Newco is bound, by the
provisions of the Non-Competition Agreement, and (b) be approved by the
Corporate Committee.
The provisions of this Section 12.4 shall not apply to Supplied
Products manufactured for use in clinical trials. Except with respect to
Supplied Products manufactured for use in clinical trials (as to which Section
12.4 does not apply), the provisions of Section 12.4 shall be the sole remedy
available to Newco in the event that Baxter fails to satisfy Newco's firm orders
made pursuant to this Section 12, provided that Baxter is endeavoring in good
--------
faith to satisfy its obligations to Newco in accordance with the terms of this
Agreement, including without limitation, this Section 12.4.
12.5 Transition Period: Baxter and Newco acknowledge that during
the first twelve (12) months of the Term of this Agreement, it may not be
commercially feasible for Baxter (a) to immediately strictly comply with the
labeling, product inserts and packaging requirements of Section 5 of this
Agreement by changing the label copy, product inserts and packaging for Supplied
Products to include Newco's label copy, product inserts, packaging,
<PAGE>
trademarks, trade names, service marks, logos or materials or (b) to fulfill the
production rate requirements of Sections 12.4A through 12.4C, inclusive, of this
Agreement. Accordingly, Baxter and Newco agree that during the first twelve
(12) months of the Term of this Agreement, Baxter will use its commercially
reasonable best efforts to achieve full compliance with (a) the labeling,
product inserts and packaging requirement of Section 5 of this Agreement and (b)
the production rate requirements of Section 12.4A of this Agreement but shall
not be deemed to be in breach of Sections 5 or 12.4 of this Agreement during
such twelve (12) month period unless Baxter fails to comply with this Section
12.5. Any dispute between Baxter and Newco relating to Baxter's non-compliance
with this Section 12.5 shall be referred to the Production Operating Teams for
resolution pursuant to Section 4.1 of this Agreement. The fill rate commitment
percentages established pursuant to this Section may be adjusted by the parties
during the Term hereof as may be appropriate to reflect actual manufacturing
experience; and shall be so adjusted to reflect actual manufacturing experience
in the case of the Harvester System, Solution Transfer Pump and Cell Wash Sets,
provided that Baxter is endeavoring in good faith to satisfy Newco's orders and
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the production schedules established pursuant to Section 12.1 and 12.2 hereof.
12.6 Long Range Forecasts: The parties shall cooperate in good
faith in providing other, longer range, forecasts, which shall be useful in
budget planning for the parties.
13. INVENTORY. Baxter shall retain title to all raw materials and
work in process relating to the Supplied Products.
14. PRICING, BILLING AND PAYMENT.
14.1 Fully Loaded Cost: During the first three (3) full years of
the Term, the prices to Newco for Supplied Products shall be Baxter's Fully
Loaded Cost for such Supplied Products.
14.2 Fully Loaded Cost Plus: After the expiration of the first three
(3) full years of the Term, the prices for Supplied Products during the next two
(2) full years of the Term shall be Baxter's Fully Loaded Cost for such Supplied
Products plus [Confidential Information Omitted] of such Fully Loaded Cost
(unless Baxter and Newco otherwise agree in writing to a different price). After
the expiration of the first five (5) full years of the Term, the prices for
Supplied Products during the remainder of the Term shall be Baxter's fully
Loaded Cost for such Supplied Products plus [Confidential Information Omitted]
of such Fully Loaded Cost (unless Baxter and Newco agree in writing to a
different price).
14.3 [Confidential Information Omitted]
<PAGE>
14.4 Price Adjustments: The prices for Supplied Products
shall be adjusted as of January 1 of each year of the Term, through Baxter's
annual internal budgeting process, based on forecast changes in volume pursuant
to the forecasting process set forth in Section 12, anticipated changes in
materials prices and anticipated cost reductions resulting from Baxter's Value
Improvement Process. The overall intent of the parties is that the Supplied
Products shall be transferred at the prices described in Sections 14.1 as
adjusted for future changes in Baxter's costs of production (taking into account
Section 14.4 hereof).
14.5 Unanticipated Volume, Materials Price or Overhead Changes:
Cost variances shall be paid by or credited to the parties during the course of
a calendar year based on unanticipated volume, materials price or overhead
changes, as follows:
A. Cost variances based on volume changes shall be made only when
firm orders exceed or are less than forecast activity by [Confidential
Information Omitted] or more (excluding any increases attributable to
earlier failures to supply firm orders) and shall cover only the difference
between [Confidential Information Omitted] of the budgeted activity and the
variance from budgeted activity. The adjustment will be based on
[Confidential Information Omitted] of Baxter's standard overhead
attributable to the difference from the planned volume.
B. Cost variances based on materials price changes shall be made
only when actual prices for total materials costs differ from those
anticipated in the budgeting process by more than [Confidential Information
Omitted]. The adjustment shall cover only the difference between
[Confidential Information Omitted] of total budgeted materials cost and the
variance from budgeted activity.
C. Cost variances based on overhead cost changes caused by
conditions, other than those described in 14.4(A) or 14.4(B) above, beyond
Baxter's control, shall be shared pro rata (based on changes in total plant
overhead) by the parties or as they shall otherwise agree.
<PAGE>
D. Adjustments pursuant to this Section 14.4 will be determined
as of the end of each calendar quarter (on a year to date basis) and
reflected as an amount due and payable (or a credit receivable) spread
ratably over the following three months.
E. All pricing adjustments will be reviewed, but not for
approval, by the Production Operating Teams and any dispute concerning such
adjustments will be referred to the Corporate Committee.
14.6 Spare Parts: During the Term hereof, Baxter shall
manufacture and make available for purchase by Newco spare parts for the repair
of the Supplied Products and Newco products incorporating the Supplied Products.
Newco's purchases of such spare parts shall be subject to the pricing, billing
and payment provisions of this Section 14. Notwithstanding the foregoing,
Baxter shall maintain a stock of spare parts to satisfy its obligations under
service contracts entered into by Baxter with purchasers of the Isolex(R) and
Maxsep(R) Products, there shall be no charge to Newco for such spare parts
manufactured by or at the direction of Baxter for the purpose of satisfying such
Baxter obligations, and Baxter shall be entitled to retain all revenues from
such service contracts and from the sale of such spare parts pursuant to such
service contracts.
14.7 Billing and Payment: Baxter shall bill Newco as of the end
of each calendar month for Supplied Products shipped during the month and
current development costs under Section 14.3. Newco shall pay such invoices
within sixty (60) days of Newco's receipt thereof.
15. FOREIGN CURRENCY CONVERSION. Where calculations of Baxter's
Fully Loaded Cost relate to a currency other than United States dollars, all
such calculations shall be calculated pursuant to Baxter's then current
accounting policies and practices.
16. WITHHOLDING TAXES. Where required to do so by applicable law,
Newco shall withhold taxes required to be paid to a taxing authority on account
of any payments to Baxter hereunder, and Newco shall furnish Baxter with
satisfactory evidence of such withholding and payment in order to permit Baxter
to obtain a tax credit or other relief as may be available under the applicable
law. Newco shall cooperate with Baxter in obtaining exemption from withholding
taxes where available under applicable law.
17. INTEREST ON OVERDUE PAYMENTS. Interest shall accrue and be
payable on all overdue payments owing by a party under this Agreement from the
date due at the rate of [Confidential Information Omitted] per month (or the
highest rate allowed by law, if lower), compounded annually, until fully paid
(including full payment of such interest).
<PAGE>
18. DELIVERY. All shipments of Supplied Products shall be FOB the
manufacturing facilities where such Supplied Products are manufactured by or on
behalf of Baxter. Except as specified in Section 12.4 above, all freight,
insurance, and other delivery costs (and any customs duties) shall be paid by
Newco.
19. TITLE. Title to all Supplied Products shall pass to Newco (or
Newco's designated distributor) when the products are placed on Newco's truck or
Newco's designated carrier (or Newco's designated distributor's truck or
designated carrier) at Baxter's Manufacturing Facility or when Supplied Products
distributed by Baxter pursuant to the Marketing, Sales and Distribution
Agreement are placed in Baxter's designated finished goods inventory.
<PAGE>
20. WARRANTIES.
20.1 Warranty: Baxter warrants to Newco that the Supplied
Products delivered to or at the direction of Newco hereunder (i) will have been
manufactured in accordance with the applicable specifications, procedures and
product drawings/blueprints and all applicable laws (including the Act) and (ii)
will not be adulterated or misbranded within the meaning of the Act as a result
of acts of or omissions by Baxter, and (iii) are free from defects in
workmanship. Notwithstanding the foregoing, Baxter shall not be liable to Newco
under subpart (ii) above as a result of any labels supplied by or affixed to
such Supplied Products by Newco. This warranty shall be continuing and shall be
binding on Baxter and its permitted successors and assigns and shall inure to
the benefit of Newco and its permitted successors and assigns. WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE NOT GIVEN BY BAXTER AND
ANY SUCH IMPLIED WARRANTIES ARE SPECIFICALLY DISCLAIMED.
20.2 Baxter Indemnity: Subject to Section 26 below, Baxter agrees
to indemnify Newco and hold it harmless from any liability, loss, expense, cost,
claim or judgement arising out of any claim for property damage, personal injury
or death which is caused by Baxter's (or its Subcontractor's) failure to
manufacture the Supplied Products in accordance with the designs,
specifications, procedures and product drawings/blueprints, with the law,
regulations, rules, orders and notices, and with the quality system and Standard
Operating Procedure System described in Section 6.1 and Section 11.1 above, and
which are applicable to Baxter or such Subcontractor thereunder, as the case may
be. At Baxter's expense, Newco shall cooperate fully with Baxter in defending
or otherwise resolving any such claim. Baxter shall have full control of any
litigation brought against Newco with respect to any claim that is indemnifiable
by Baxter hereunder, but Newco may, at its expense, also be represented by its
own counsel in any such litigation.
21. INSURANCE.
21.1 Baxter Insurance: During the Term, Baxter shall procure and
maintain, through self-insurance or a combination of self-insurance and
commercially placed insurance, comprehensive general liability insurance
covering each occurrence of bodily injury and property damage in the amount of
not less than [Confidential Information Omitted] combined single limit including
coverage for product and completed operations, blanket contractual liability and
vendor's liability. Baxter shall, within sixty (60) days of the date of this
Agreement, furnish a certificate of insurance to Newco evidencing the foregoing
coverages and limits and thereafter shall give at least thirty (30) days prior
notice to Newco of any termination, expiration without renewal, or material
change to such insurance, coverage or limits.
21.2 Newco Insurance: During the Term, Newco shall procure and
maintain, through self-insurance or a combination of self-insurance and
commercially placed
<PAGE>
insurance, comprehensive general liability insurance covering each occurrence of
bodily injury and property damage in the amount of not less than [Confidential
Information Omitted] combined single limit including coverage for product and
completed operations, blanket contractual liability and vendor's liability.
Newco shall, within sixty (60) days of the date of this Agreement, furnish a
certificate of insurance to Baxter evidencing the foregoing coverages and limits
and thereafter shall give at least thirty (30) days prior notice to Baxter of
any termination, expiration without renewal, or material change to such
insurance, coverage or limits.
22. DISCONTINUANCE OF PRODUCT LINE. If Newco wishes to discontinue a
product or product line which includes any Supplied Product (subject to Newco's
obligations under the Marketing, Sales & Distribution Agreement), Newco shall
give Baxter six (6) months' prior written notice thereof and the parties will
negotiate appropriate closure conditions which provide for recovery by Baxter of
the related overhead costs, any related investment (including any dedicated or
additional equipment purchased by Baxter exclusively to support the discontinued
product line) and related out-of-pocket expenses.
23. INDEMNIFICATION FOR PATENT INFRINGEMENT.
23.1 Baxter Indemnification: Baxter shall defend, indemnify and
hold Newco harmless with respect to any liability, loss or damage incurred by
Newco with respect to any claim of patent, trade name, trademark or copyright
infringement or misuse with respect to any current commercial Supplied Product.
At Baxter's expense, Newco shall cooperate fully with Baxter in defending or
otherwise resolving any such charges of infringement or misuse. Baxter shall
have full control of any litigation brought against Newco alleging such
infringement or misuse, but Newco may, at its expense, also be represented by
its own counsel in any such litigation.
23.2 Newco Indemnification: Newco shall defend, indemnify and
hold Baxter harmless with respect to any liability incurred by Baxter as a
result of activities under this Agreement with respect to any claim of patent,
trade name, trademark or copyright infringement or misuse (i) with respect to
any Isolex(R) and Maxsep(R) Products, reagent kits or other products which are
not being manufactured or supplied by Baxter (or its Subcontractor) for or to
Newco under this Agreement or an agreement having the same date as this
Agreement (or an extension or renewal thereof); or (ii) arising from any
modification to product designs, specifications, procedures or product
drawings/blueprints made by Newco subsequent to its acquisition thereof from
Baxter. At Newco's expense, Baxter shall cooperate fully with Newco in
defending or otherwise resolving any such charges of infringement or misuse.
Newco shall have full control of any litigation brought against Baxter alleging
such infringement or misuse, but Baxter may at its own expense also be
represented by its own counsel in any such litigation.
<PAGE>
24. TERMINATION.
24.1 Expiration: This Agreement, and any licenses granted
hereunder, shall terminate upon the earlier to occur of the expiration of the
Term or a termination pursuant to Section 24.2 below.
24.2 Early Termination: A non-breaching party may terminate this
Agreement, and may terminate any licenses granted by such party hereunder, if
any of the following events (each is herein referred to as a "Material Breach")
occur:
A. A party fails to pay any amount owing under this Agreement, on
the date(s) specified for such payment and such failure shall continue for
sixty (60) days after written notice of such failure by the other party to
this Agreement;
B. A party shall default in the performance of or compliance with
any covenant contained in this Agreement or the Non-Compete Agreement
(other than a failure to make a payment described in Section 24.2(A) above)
which shall continue uncured beyond the applicable grace period therefor,
or if a party shall default in the performance of or compliance with any
covenant in the Marketing, Sales and Distribution Agreement and such
default results in termination of such Marketing, Sales and Distribution
Agreement; or the Marketing, Sales and Distribution Agreement is rejected
in the course of the bankruptcy of the non-terminating party;
C. A receiver, conservator, custodian, liquidator or trustee of a
party or of all or any of the property of a party, is appointed by court
order and such order remains in effect for more than ninety (90) days; or
an order for relief is entered under the federal bankruptcy laws with
respect to a party; or any of the material property of a party is
sequestered by court order and such order remains in effect for more than
ninety (90) days; or a petition is filed against a party under the
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within ninety (90) days after
such filing;
<PAGE>
D. A party files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing
of any petition against it under any such law; or
E. A party makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, conservator,
custodian, liquidator or trustee of the party, or of all or any part of its
property.
25. FORCE MAJEURE. Neither party to this Agreement shall be liable
for delay or failure in the performance of any of its obligations hereunder if
such delay or failure is due to causes beyond its reasonable control, including
acts of God, fires, earthquakes, strikes and labor disputes, acts of war, civil
unrest or intervention of any governmental authority, but any such delay or
failure shall be remedied by such party as soon as is reasonably possible.
26. LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF
BREACH OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY
OR LIQUIDATED DAMAGES.
27. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement
or any associated transaction is required by the law of any nation to be either
approved or registered with any governmental authority, or any agency or
political subdivision thereof, Baxter shall assume all legal obligations to do
so.
28. EXPORT CONTROL. Baxter shall observe all applicable United
States and foreign laws with respect to the transfer of all Supplied Products to
or on behalf of Newco between nations, countries or other sovereign states.
29. NOTICES. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
facsimile transmission (provided that in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail
<PAGE>
(postage prepaid) within two (2) days of facsimile transmission), addressed to
each party as follows:
If to Baxter, such notices shall be delivered to:
President
Baxter Biotech Group
with a copy to:
General Counsel
Baxter Healthcare Corporation
If to Baxter, other written communications shall be delivered to:
President
Venture Management
Baxter Biotech Group
with a copy to:
Associate General Counsel
Baxter Healthcare Corporation
If to Newco, such notices shall be delivered to:
President
BIT Acquisition Corp.
with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attn: Lowell S. Lifschultz, Esq.
If to Newco, other written communications shall be delivered to:
President
BIT Acquisition Corp.
<PAGE>
with a copy to:
Vice President
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 29. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered by: hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
30. DISPUTE RESOLUTION.
30.1 Provisional Remedies: The procedures specified in this
Section 30 shall be the sole and exclusive procedures for the resolution of
disputes between the parties arising out of or relating to this Agreement;
provided, however, that a party, without prejudice to these procedures, may seek
- -------- -------
a preliminary injunction or other provisional relief if, in its sole judgement,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in
good faith in the procedures specified in this Section 30.
30.2 Negotiations Between Executives: The parties will attempt in
good faith to resolve any claim or controversy arising out of or relating to the
execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
30) promptly by negotiations under the procedures set forth in Section 4
concerning referral of disputes to the Corporate Committee.
30.3 Arbitration: In the event that any dispute arising out of
or relating to this Agreement or its breach, termination or validity has not
been resolved after good faith negotiation pursuant to the procedures of Section
30.2, such dispute shall upon written notice by either party to the other, be
finally settled by arbitration administered by the Center for Public Resources
in accordance with the provisions of its Commercial Arbitration Rules and the
United Stated Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators all of whom shall be selected from a
list of neutral arbitrators supplied by the Center for Public Resources.
From such list, each of Baxter and Newco shall select one (1) arbitrator,
and the arbitrators
<PAGE>
so selected shall select a third. The panel shall designate one (1) among
them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration
Act as necessary to protect the rights or property of the party pending the
decision of the arbitrators.
D. The parties shall allow and participate in limited discovery
for the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the Center
for Public Resources. All discovery shall be completed within sixty (60)
days following the filing of the answer or other responsive pleading.
Unresolved discovery disputes shall be brought to the attention of the
chair of the arbitration panel and may be disposed of by the chair.
E. Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators,
provided that the chair of the panel of arbitrators may establish such
longer times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify the factual and legal basis
for the award. Judgment thereon may be entered in any court having
jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the
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arbitrators will have no authority to award special, punitive or exemplary
damages, or other money damages that are not measured by the prevailing
party's actual damages.
<PAGE>
30.4 Performance During Dispute: Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
31. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the internal laws of the state of Delaware,
without application of conflicts of law principles, and, subject to Section 30
above, each party hereby submits to the jurisdiction and venue of any state or
federal court in the State of Delaware. To the extent permissible by law, each
of the parties hereby waives, releases and agrees not to assert, and agrees to
cause its Affiliates to waive, release and not assert, any rights such party or
its Affiliates may have under any foreign law or regulation that would be
inconsistent with the terms of this Agreement as governed by Delaware law.
32. PROVISIONS CONTRARY TO LAW / SEVERABILITY. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted herefrom, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
33. ENTIRE AGREEMENT. This Agreement, together with any exhibits or
schedules attached hereto, 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 this Agreement.
34. WAIVERS AND MODIFICATIONS. The failure of any party to insist on
the performance of any obligation hereunder shall not be deemed to be a waiver
of such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing signed by the party to be bound by such waiver, modification, release or
amendment.
35. NO OTHER LICENSES. Except as permitted by Section 19 of this
Agreement, or as may otherwise be agreed to by the parties in writing, neither
party shall use the name of the other party in any promotional materials or
advertising without the prior written consent of the other party. Except as
provided in Section 3.2(B) and Section 12.4(C) hereof, nothing in this Agreement
shall grant to either party any right to the other party's intellectual
property, including
<PAGE>
patents, patent applications, technology, know-how, inventions, copyrights,
trademarks, service marks, logos or trade names ("Intellectual Property").
Neither party shall at any time assert any claim to any goodwill, reputation or
ownership of the other party's Intellectual Property and all uses of a Party's
Intellectual Property shall inure to the benefit of that party.
36. ASSIGNMENT. Newco may assign its rights and obligations under
this Agreement to any Affiliate without the prior written consent of Baxter,
provided that such Affiliate is owned, directly or indirectly, by Baxter and
- --------
VIMRx in substantially the same proportions as Newco is owned. Baxter may
assign its rights and obligations hereunder to any Affiliate of Baxter without
prior notice to or consent of Newco. No assignment by Baxter or by Newco, or by
any permitted assignee, shall be effective unless and until the assignee shall
have agreed to become bound by the provisions of the Non-Compete Agreement to
the same extent and in the same manner as Baxter (in the case of a Baxter
assignee) or Newco (in the case of a Newco assignee) is bound. No party may
assign any of its rights or obligations under this Agreement unless and to the
extent expressly permitted by this Section 36. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding on the parties' permitted
successors and assigns.
37. INDEPENDENT PARTIES. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may other-wise be expressly
provided herein), partner, joint venture, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
38. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together, and shall constitute one and the same instrument.
39. RULES OF CONSTRUCTION. In this Agreement, unless a clear
contrary intention appears:
A. The singular number includes the plural number and vice versa;
B. Reference to any party includes such party's permitted
successors and assigns;
C. Reference to any gender includes the other gender;
D. Reference to any Section, Exhibit or Schedule means such
section of this Agreement, exhibit to this Agreement or schedule to this
Agreement, as the case may be, and
<PAGE>
references in any section or definition to any clause means such clause of
such section or definition;
E. "Herein," "hereunder," "hereof," "hereto," and words of
Similar import shall be deemed references to this Agreement as a whole and
not to any particular section or other provision of this Agreement;
F. "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
G. Relative to the determination of any period of time, "from"
means "from and including", "to" means "to but excluding" and "through"
means "through and including "
H. Reference to any law (including statutes and ordinances) means
such law as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder-,
I. Accounting terms used herein shall have the meanings
historically attributed to them by Baxter International Inc., a Delaware
corporation, and its subsidiaries prior to the date hereof,
J. In the event of any conflict between any of the provisions of
the body of this Agreement and any exhibit or schedule hereto, the
provisions of the body of this Agreement shall control;
K. The headings contained in this Agreement have been inserted
for convenience of reference only, and are not to be used in construing
this Agreement; and
L. Any rule of construction or interpretation which might
otherwise require this Agreement to be construed or interpreted against
either party shall not apply to any construction or interpretation hereof
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date set forth above.
BAXTER HEALTHCARE CORPORATION
By:____________________________
Name:
Title:
BIT ACQUISITION CORP.
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT 10.4
MARKETING, SALES AND DISTRIBUTION AGREEMENT
This MARKETING, SALES AND DISTRIBUTION AGREEMENT ("Agreement"), dated as of
December 17, 1997 is entered into by and between Baxter Healthcare Corporation,
a Delaware corporation having its principal place of business at 1627 Lake Cook
Road, Deerfield, Illinois 60015 ("Baxter") and BIT ACQUISITION CORP., a Delaware
corporation having its principal place of business at Nine Parker, Irvine,
California 92618 ("Newco").
RECITALS
A. Baxter and VIMRx Pharmaceuticals Inc., a Delaware corporation
("VIMRx"), have agreed to enter into a strategic alliance in the ex vivo cell
therapies business and have formed Newco for that purpose, pursuant to that
certain Asset Purchase Agreement dated as of October 10, 1997, by and among
Baxter, Newco and VIMRx (the "Acquisition Agreement").
B. Pursuant to the Acquisition Agreement, Baxter has transferred to Newco
certain Isolex(R) and Maxsep(R) Technology (as that capitalized terms is defined
in the Hardware and Disposables Manufacturing Agreement) as well as other IT
Assets (as that capitalized term is defined in the Hardware and Disposables
Manufacturing Agreement) relating to Isolex(R) and Maxsep(R) Products (as that
capitalized term is defined below).
C. Pursuant to the Acquisition Agreement, Baxter and Newco have entered
into that certain sublicense of even date herewith relating to CD34+ cell
population and related antibody and method patents licensed from Becton,
Dickenson and Company to Baxter (the "First BD Sublicense"); that certain
sublicense of even date herewith relating to B cell antibodies licensed from
Becton, Dickenson and Company to Baxter (the "Second BD Sublicense"); that
certain sublicense of even date herewith relating to breast cancer antibodies
licensed from Cetus Oncology corporation, d/b/a Chiron Therapeutics, to Baxter
(the "Chiron Sublicense"); and that certain sublicense of even date herewith
relating to B cells licensed from Prof. Bernd Dorken to Baxter Deutschland GmbH
(the "Dorken Sublicense") (the First BD Sublicense, the Second BD Sublicense,
the Chiron Sublicense and the Dorken Sublicense) are collectively referred to
herein as the "Sublicense Agreements") pursuant to which Baxter has granted to
Newco licenses to the Licensed Technology (as that capitalized term is defined
in each of the Sublicense Agreements) as described therein.
D. Baxter has agreed to manufacture for Newco certain antibodies pursuant
to the terms of that certain Antibody Manufacturing and Storage Agreement of
even date herewith (the
<PAGE>
"Antibody Manufacturing and Storage Agreement"), which are components of certain
of the Reagent Kits (as that capitalized term is defined below).
E. Baxter has agreed to supply to Newco certain other products and
components which are utilized in connection with the Isolex(R) and Maxsep(R)
Products pursuant to the terms of that certain Hardware and Disposables Supply
Agreement of even date herewith (the "Hardware and Disposables Supply
Agreement").
F. Baxter has also agreed to manufacture for Newco the Isolex(R) and
Maxsep(R) Products pursuant to the terms of that certain Hardware and
Disposables Manufacturing Agreement of even date herewith (the "Hardware and
Disposables Manufacturing Agreement") and certain prototype products for the
research market pursuant to the terms of that certain Services Agreement of even
date herewith (the "Services Agreement").
G. Newco desires that Baxter market, sell and distribute Isolex(R) and
Maxsep(R) Products and Reagent Kits as described herein and subject to the terms
hereof and Baxter is willing to market, sell and distribute Isolex(R) and
Maxsep(R) Products and Reagent Kits as described herein and subject to the terms
hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and Newco hereby agree as follows:
1. DEFINITIONS.
1.1 Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth therein.
1.2 Terms Defined in License Agreements: Unless otherwise defined herein,
as used herein all capitalized terms defined in the License Agreements shall
bear the meanings ascribed to such terms as set forth therein.
1.3 Other Terms: As used herein, the following capitalized terms shall
have the following meanings:
A. "Affiliate" of a party shall mean any entity (i) which
directly or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with, the party or (ii) fifty
percent (50%) or more of the voting capital stock (or in the case of an
entity which is not a corporation, fifty percent (50%) or more of the
equity interest) of which
2
<PAGE>
is beneficially owned or held by a party or any of such party's
Subsidiaries. The term "Control" means the posses sion, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of an entity (other than a natural person), whether through
the ownership of voting capital stock, by contract or otherwise.
B. "Agreement Year" shall mean each calendar year, and the
partial calendar years that begin on the date hereof and end on the date of
termination, during the term of this Agreement.
C. "Baxter Region" means, individually and collectively, the
geographical regions of (1) Western and Eastern Europe; (2) North America
(United States and Canada); (3) Japan; and, (4) the rest of the world.
D. "Ex Vivo Cell Processing" shall mean the active selection, and
any subsequent modification, genetic alteration, activation and/or
expansion, of nucleated cells outside the body for therapeutic purposes
such as cellular therapy or gene therapy. For the purpose of this
definition, "active selection" shall mean processing involving the action
of a biological component, such as an antibody or modified antibody, a
lectin, or a ligand, to selectively and specifically bind to a particular
molecule on the surface of the cells to be selected so as to confer
specificity or selectivity for such cells in the cell selection process.
E. "FDA" means the United States Food and Drug Administration.
F. "Field of Distribution" means the market in connection with
the Maxsep(R) and/or Isolex(R) Products used for the selection of cells
with one or more of the CD34, B Cell, T Cell or breast cancer antibodies
for the treatment, mitigation, prophylaxis or selection of/for cancer,
including the research market; and any product used for the treatment,
mitigation, prophylaxis or selection of/for cancer based upon the selection
or use of CD34+ cells, including the research market; but excluding the
genetic manipulation of such cells.
3
<PAGE>
G. "Fully Loaded Cost" means, for either party, such party's cost
of manufacturing, performing or acquiring any items or services, in
accordance with generally accepted accounting principles, consistently
applied ("GAAP"), and, with respect to each party, in accordance with such
party's normal accounting policies, all consistently applied, including any
royalties payable by such party in connection with manufacturing,
performing or acquiring any items or services, but excluding, in the case
of Baxter's Fully Loaded Cost, any royalty obligations of Baxter that are
paid or reimbursed by Newco pursuant to the Sublicense Agreements. Fully
Loaded Cost shall not include general corporate allocations or other
allocations which are not directly related to the manufacture, performance
or acquisition of the item or service, however designated. A charge for
the cost of funding the party's working capital needs for such manufacture,
performance or acquisition of items or services, including capital
expenditures for facilities and/or equipment and capitalized manufacturing
costs, will be included in Fully Loaded Cost, which charge will be made at
the interest rate paid by Baxter on its then most recent issuance of
commercial paper; provided, however, that no charge shall be made for any
-------- -------
cost of, or the cost of funding any, changes in the site of manufacturing
any Manufactured Products. In the event any item is acquired or any
service is provided for a party from or by an Affiliate of such party, the
cost of acquiring such items or services shall be deemed to mean such
Affiliate's actual cost of manufacturing, performing or acquiring such
items or services in accordance with the principles set forth in this
definition of "Fully Loaded Cost." Current costs of developing any items
or services shall be included in Fully Loaded Cost, but in no event shall
any historic development costs be included in Fully Loaded Cost. An
example of the calculation of Fully Loaded Cost is attached hereto, for
illustrative purposes, as Schedule 1.
----------
H. "Isolex(R) and Maxsep(R) Products" means, individually and
collectively, the products listed on Schedule 2 attached hereto, which
----------
includes Isolex(R) and Maxsep(R) instruments and Isolex(R) and Maxsep(R)
disposable sets, in each case as currently produced by Baxter utilizing the
Isolex(R) and Maxsep(R) Technology. From time to time, the products
4
<PAGE>
listed on Schedule 2 will be changed by the parties to add new products,
----------
line extensions and improvements as are currently under development, are in
research, or have been identified as proposed new products in Schedule 1 of
----------
the Hardware and Disposables Manufacturing Agreement, or that Baxter may
agree to develop pursuant to the Services Agreement, in each case as
consistent with the nature of the Isolex(R) and Maxsep(R) Products existing
at the date of this Agreement and with Baxter's legal obligations and
technological capabilities (including, without limitation, regulatory
requirements applicable to Baxter) during the term of this Agreement, and
such new products, line extensions and improvements added to Schedule 2
shall thereafter be treated as Isolex(R) and Maxsep(R) Products for all
purposes of this Agreement.
I. "Isolex(R) and Maxsep(R) Technology" means automated systems
for positive and negative immunomagnetic cell selection.
J. "Products" means, collectively, the finished goods of the
Isolex(R) and Maxsep(R) Products and Reagent Kits and other goods used in
conjunction with Isolex(R) and Maxsep(R) Products. as indicated in Schedule
--------
2 attached hereto.
-
K. "Product Code" means number and/or letter designations
individually assigned to Products and Reagent Kits, as indicated in
Schedule 2 attached hereto.
----------
L. "Product Field" means the treatment, mitigation or prophylaxis
of diseases including research into such activities, through Ex Vivo Cell
Processing.
M. "Reagent Kits" means the reagent kits specified in Schedule 1
attached to the Antibody Manufacturing and Storage Agreement and such other
reagent kits as may be used from time to time in connection with the
Isolex(R) and Maxsep(R) Products. A current direction insert of a sample
Reagent Kit is included as Schedule 3 attached hereto.
----------
N. "Regulatory Approval" means (1) in the United States, approval
from the FDA and any other United States governmental authority (or agency
or other political
5
<PAGE>
subdivision thereof) necessary for the right to market, sell or distribute
the Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products in
the United States to the public at large, for use in the Field of
Distribution, and (2) outside the United States, an analogous order by a
non-U.S. governmental authority (or agency or other political subdivision
thereof) necessary for the right to market, sell or distribute, and the
right to be paid or reimbursed for, the Isolex(R) and Maxsep(R) Products,
Reagent Kits and other Products in a country (other than the United States)
to the public at large, for use in the Field of Distribution.
O. "Total Net Sales" means the Total Net Sales projection shown
in the "Plan A" Projections attached hereto as Schedule 6.
----------
2. TERM OF AGREEMENT.
2.1 Duration: The term of this Agreement (the "Term"), unless
earlier terminated as provided below, shall be eleven (11) years, commencing on
the date hereof. The Term may be extended upon the mutual written agreement of
the parties.
2.2 Early Termination: A non-breaching party may terminate this
Agreement if any of the following events (each is herein referred to as a
"Material Breach") occur:
A. A party fails to pay any amount owing under this Agreement, on
the date(s) specified for such payment and such failure shall continue for
sixty (60) days after written notice of such failure by the other party to
this Agreement;
B. A party shall default in the performance of or compliance with
any covenant contained in this Agreement (other than a failure to make a
payment described in Section 2.2A above or a default the liability for
which is excused under Section 5.4 or Section 13 hereof) which shall
continue uncured beyond the applicable grace period therefor;
C. A receiver, conservator, custodian, liquidator or trustee of a
party or of all or any of the property of a party, is appointed by court
order and such order remains in effect for more than ninety (90) days; or
an order for relief is entered under the federal bankruptcy laws with
respect to a
6
<PAGE>
party; or any of the material property of a party is sequestered by court
order and such order remains in effect for more than ninety (90) days; or a
petition is filed against a party under the bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction, whether now or hereafter in effect, and is not
dismissed within ninety (90) days after such filing;
D. A party files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing
of any petition against it under any such law;
E. A party makes an assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, conservator,
custodian, liquidator or trustee of the party, or of all or any part of its
property; or
F. Prior to a Qualified Public Offering (as that capitalized term
is defined in that certain Stockholders Agreement by and among VIMRx,
Baxter and Newco, among others, of even date herewith), Baxter and VIMRx do
not, collectively, have the power to control Newco.
2.3 Continued Purchase and Supply: Despite early termination of
this Agreement under Section 2.2 above, Baxter will continue to purchase from
Newco and Newco will continue to supply and fill Baxter's orders of any Product
until the entire supply of any Product specifically inventoried or being
prepared for Baxter shall be depleted; however, Baxter shall not be required to
purchase, after the termination of this Agreement, any Product inventory in
excess of its average two (2) months' requirement based on prior purchases
during the last full Agreement Year.
3. APPOINTMENT.
3.1 Exclusive Appointment: Subject to the terms and conditions
contained in this Agreement, and subject to Newco's right to market and co-
promote as described in Section 8, Newco appoints Baxter as its exclusive
worldwide marketing, sales and distribution entity for the Isolex(R) and
Maxsep(R) Products, Reagent Kits and other Products in the Field of
Distribution. Baxter accepts such an appointment.
7
<PAGE>
3.2 Right of First Offer: Baxter shall have a right of first
offer with respect to acquiring marketing, sales and distribution rights for
other products developed or acquired by Newco using the Isolex(R) and Maxsep(R)
Technology in the Product Field ("Future Opportunity"). After Newco notifies
Baxter of a Future Opportunity, Baxter will have sixty (60) days to respond to
Newco and to negotiate the material terms and conditions of an appointment to
market, sell and distribute such Future Opportunity prior to Newco discussing
the Future Opportunity with any and all third entities. The terms and
conditions of Baxter's appointment to distribute any such Future Opportunity
shall be negotiated by Newco and Baxter, bargaining in good faith, and
documented in a written agreement, signed by authorized representatives of both
parties. If, after notice to Baxter and expiration of sixty (60) days without
completed negotiation of the material terms of an agreement for marketing, sale
and distribution of such Future Opportunity, Newco desires to enter into an
agreement on a Future Opportunity with a third entity on terms or conditions
that are less favorable to Newco than the terms and conditions offered by or to
Baxter in connection with Baxter's right of first offer (a "New Offer"), then
Newco must give Baxter notice and an additional thirty (30) days to respond to
the offer on substantially the same terms and conditions as those of the New
Offer.
4. ADMINISTRATION, OVERSIGHT AND GOVERNANCE
4.1 Marketing Committee:
A. Administration of this Agreement will be accomplished by the
establishment of a "Marketing Committee." The Marketing Committee will
consist of representatives selected by each of Newco and Baxter, who
typically would include such representatives as Newco's Vice President for
Global Marketing, Baxter's Region Marketing Vice Presidents, and one or
more of Newco's Vice President of Product Development, Vice President of
Medical Affairs and Vice President of Finance and Product Managers. Each
party shall notify the other party of such selections and any changes
thereto. The Marketing Committee will meet in person or by teleconference
at least once in each calendar quarter to review the progress of Newco and
Baxter in the execution of their responsibilities under this Agreement and
to develop, review and agree on specific marketing plans and programs. At
least once annually prior to each Agreement Year the Marketing Committee
will prepare, review, agree upon and present to the Oversight Committee the
following: (a) a global, annual marketing plan, (b) a 12-month, global
sales forecast by month and product code (c) a 12-month marketing resources
commitment schedule ("Marketing Resource Plan"), and (d) a five-year global
8
<PAGE>
strategic plan, including a five-year global sales forecast by year and
product group. Regardless of the number of representatives selected by
each of Newco and Baxter for service on the Marketing Committee, the
representatives of each party shall have, in the aggregate, a single vote
in all matters to be decided by the Marketing Committee. If, in the course
of administering the activities contemplated in this Agreement, the
Marketing Committee cannot resolve a matter of difference between Baxter
and Newco representatives, or cannot reach agreement on a matter within its
area of responsibility under the terms of this Agreement, the Marketing
Committee shall promptly refer the matter to the Oversight Committee for
resolution in accordance with this Agreement.
B. During the first twelve (12) months of the Term hereof, the
Marketing Committee will (i) develop a transition plan for the satisfaction
of long-term customer agreements in place on the date hereof and
determination of appropriate pricing adjustments, if any, for products
purchased from Newco to satisfy such agreements; and (ii) develop a plan
for the transition to sales and marketing by Newco with respect to existing
Baxter customers for Newco products that will not be marketed, sold or
distributed by Baxter hereunder.
4.2 Oversight Committee: The "Oversight Committee" will consist
of one representative each from Newco and Baxter, the President of Newco and the
designee of the President of Baxter Biotech Group. The Oversight Committee will
meet once a year prior to each Agreement Year, or more often as necessary to
carry out its responsibilities hereunder, to review and approve the plans,
programs and recommendations prepared by the Marketing Committee. When the
Marketing Committee cannot agree on decisions and responsibilities under its
authority, the Oversight Committee will review and evaluate the issue under
dispute and come to an agreement or decision. When the Oversight Committee
cannot agree on the resolution of any matter within its area of responsibility
hereunder, it shall promptly refer the matter to the Corporate Committee for
resolution in accordance with this Agreement.
4.3 Corporate Committee: The "Corporate Committee" will consist
of one representative each from VIMRx and Baxter, who ordinarily will be the
President and CEO of VIMRx and the President of the Fenwal Division of Baxter,
respectively. The Corporate Committee will meet only as needed to resolve any
dispute under this Agreement or to decide any otherwise undecided matter
referred to it by the Oversight Committee. If the Marketing Committee cannot
agree upon the Marketing Resource Plan for any Agreement Year, and the Oversight
Committee and the Corporate Committee cannot resolve the dispute, then Baxter
will
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determine the Marketing Resource Plan for such Agreement Year, subject to the
provisions of Section 8 of this Agreement.
4.4 Responsibilities: Newco and Baxter will diligently execute
their separate responsibilities to assure successful marketing of products
contemplated under this Agreement. For guidance and illustrative purposes, a
list of the various functional responsibilities to be performed by Newco and
Baxter for purposes of this Agreement are attached as Schedule 4. If and when
----------
individual functions and responsibilities not previously identified or assumed
by either Newco or Baxter become evident, the Oversight Committee shall assign
such functions or responsibilities.
5. MANUFACTURE AND SUPPLY.
5.1 Obligation to Supply: Newco shall exercise its reasonable
efforts to manufacture and supply the Isolex(R) and Maxsep(R) Products, Reagent
Kits, other Products and spare parts or make satisfactory arrangements for the
manufacture and supply of the Isolex(R) and Maxsep(R) Products, Reagent Kits,
other Products and spare parts for Baxter, provided that Newco shall have no
--------
obligation to supply the T Cell antibody, or any Reagent Kits containing the T
Cell antibody, unless and until Baxter or a third party undertakes the
manufacturing of such T Cell antibody after the date of this Agreement. Newco
shall make the investment required to enable it to manufacture and supply or
make satisfactory arrangements for the same, as required. Newco, or its
contract manufacturer, shall comply with the regulations of the country of
manufacture and the country of sale as related to the production of the
Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products (for example,
Quality System Regulation ("QSR") of the FDA).
5.2 Changes to Suppliers, Manufacturers or Specifications:
Newco may change suppliers, contract manufacturers or the specifications of
Isolex(R) and Maxsep(R) Products, Reagent Kits, other Products and spare parts
without notice to or approval of Baxter, provided that any such change has been
--------
presented for review and approval by the Marketing Committee at least ninety
(90) days before it becomes effective, and has been approved by the Marketing
Committee, and provided, further, that Newco will be responsible for obtaining
-------- -------
any required Regulatory Approval with respect to such changes and, subject to
the provisions of the Hardware and Disposables Manufacturing Agreement, the
Antibody Manufacturing and Storage Agreement and the Hardware and Disposables
Supply Agreement, will be responsible for all costs associated with such change,
including without limitation the cost of field upgrades.
5.3 Forecasting: Prior to the beginning of each calendar month
during the term of this Agreement, Baxter shall provide Newco with a rolling
eighteen month forecast of the orders it expects to place for the Isolex(R) and
Maxsep(R) Products, Reagent Kits, and other Products during the next eighteen
(18) months. Forecasting activities under this Agreement will be coordinated
with the forecasting activity occurring under the provisions of the Hardware and
Disposables Manufacturing, Antibody Manufacturing and Storage, and Hardware and
Disposables Supply Agreements, and will be reviewed with the Marketing
Committee. The forecast for the
10
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first two months of each eighteen month forecast will constitute binding orders.
The forecast for the first of the eighteen months in such eighteen month
forecast must be the same as the forecast for the second month in the previous
eighteen month forecast; and the forecast for the second of the eighteen months
in such eighteen month forecast may not increase the number of orders shown in
the forecast for such month in the previous eighteen month forecast by more than
[Confidential Information Omitted]. The parties shall cooperate in good faith in
creating and providing other, longer range forecasts which shall be used in
budget planning for the parties. The initial forecast for the eighteen month
period beginning on the date hereof was delivered to Newco on the date hereof.
5.4 Fill Rate Commitment: After the first twelve (12) months of
the Term hereof, Newco agrees to achieve and maintain an overall first delivery
"fill rate" on Baxter's orders for Products of at least [Confidential
Information Omitted]. For the purpose of this Agreement, "fill rate" shall be
defined as lines of product shipped on the date specified in Baxter's purchase
order, divided by lines of product ordered, times 100. Fill rate will be
monitored by Newco and Baxter and reviewed by the Marketing Committee. If, after
the first twelve (12) months of the Term hereof, Newco's fill rate over the
course of two (2) consecutive calendar quarters should fall below [Confidential
Information Omitted], then the Marketing Committee shall create a remedial plan
to handle backorders of the Products and to assist Newco in reestablishing the
[Confidential Information Omitted] fill rate. Subject to Section 15
and Section 16, Newco will be responsible for cost and expenses incurred by
Baxter as a result of Newco's shortfall, provided that, in the event such
--------
shortfall is caused by a manufacturing defect or by a manufacturing or supply
delay of Baxter under any of the Hardware and Disposables Manufacturing
Agreement, the Antibody Manufacturing and Storage Agreement, the Hardware and
Disposables Supply Agreement or the Services Agreement, Newco shall have no
responsibility for any cost, expense, liability, loss or damage incurred by
Baxter as a result of such shortfall and provided further that Newco shall have
-------- -------
no responsibility for any such cost, expense, liability, loss or damage incurred
by Baxter during the first twelve (12) months of the Term hereof. The
[Confidential Information Omitted] fill rate commitment established pursuant to
this Section may be adjusted by the parties during the Term hereof as may be
appropriate to reflect actual manufacturing experience.
5.5 Discontinuance of Product Line: Subject to Section 5.6
below, if Newco wishes to discontinue a product line which includes any
Isolex(R) and Maxsep(R) Products, Reagent Kits or other Products, the parties
will negotiate appropriate closure conditions which provide for recovery by
Baxter of any related overhead costs, any related investment and related direct
out-of-pocket expenses.
5.6 Right of First Offer: In the event Newco elects to abandon
and/or discontinues substantially all efforts to develop or market (or to have
developed or marketed) the Isolex(R) or Maxsep(R) Products, Reagent Kits and
other Products, or any of them (the "Discontinued Products"), within the Product
Field or any sub-field thereof, and Newco elects to sell Newco's right to make,
---
have made, use and sell the Discontinued Products in the Product Field or any
sub-field thereof, to a third party, Baxter shall have right of first offer to
obtain an exclusive, worldwide license under the Isolex(R) and Maxsep(R)
Technology to make, have made, use and sell, in such Product Field or sub-field,
those Discontinued Products. After Newco notifies Baxter of
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<PAGE>
Newco's intention to sell such right, Baxter will have sixty (60) days to
respond to Newco and to negotiate the material terms and conditions of such a
license. The terms and conditions of such a license shall be negotiated by
Newco and Baxter, bargaining in good faith, and documented in a written
agreement, signed by authorized representatives of both parties. If, after
notice to Baxter and expiration of sixty (60) days without completed negotiation
of the material terms of a license agreement, Newco desires to enter into an
agreement with a third party on terms and conditions that are less favorable to
Newco than the terms and conditions offered by or to Baxter (a"New Offer"), then
Newco must give Baxter notice and an additional thirty (30) days to respond to
Newco's offer on substantially the same terms and conditions as those of the New
Offer. The culmination of any transaction pursuant to this Section 5.6 is
subject to the parties entering into a definitive agreement on terms which are
agreeable to each of the parties, in their sole discretion.
6. PURCHASE OF PRODUCT.
6.1 Product Pricing: Newco will recommend to Baxter a suggested
price for the Products to be sold in the Field of Distribution ("Suggested
Retail Price"). Such Suggested Retail Price will be provided by Product Code
and by Baxter Region and Newco may specify separate Suggested Retail Prices for
use in connection with long-term contracts, industrial accounts and reagent
rental agreements. Newco will provide Suggested Retail Prices no later than
March 31, 1998. In the interim, Suggested Retail Prices will be as set forth on
Schedule 5. After March 31, 1998, Newco may adjust the Suggested Retail Price
- ----------
annually after considering factors such as historical sales data and instrument
placements, regulatory environment and status of Regulatory Approval, outcome
data relative to the Isolex(R) and Maxsep(R) Technology and certain disease
states, reimbursement conditions and general acceptance of the Isolex(R) and
Maxsep(R) Technology by the medical community, and the status of Newco's
achievement of certain milestones as described in the Acquisition Agreement,
provided that no single annual adjustment shall exceed the sum of (i)
- --------
anticipated increases in Newco's Fully Loaded Cost of the Product in question
and (ii) a percentage of the Suggested Retail Price for the immediately
preceding Agreement Year, which percentage is equal to the percentage increase
in the United States Consumer Price Index or the equivalent published inflation
index generally applied in the Baxter Region for which a Suggested Retail Price
is being adjusted. In the event that there is no published inflation index
generally applied in the Baxter Region in question, the percentage in clause
(ii) above shall be equal to the weighted average of the inflation rates for the
immediately preceding year in each of the countries in such Baxter Region,
weighted by sales volume and price for such immediately preceding year. Annual
adjustments to the Suggested Retail Price will be delivered to the Marketing
Committee for use in its preparation of the global, annual marketing plan prior
to each Agreement Year, and shall be delivered to Baxter no later than sixty
(60) days before the end of each Agreement Year. In addition, Newco may review
and adjust the Suggested Retail Price during an Agreement Year, provided that
--------
adjustments during an Agreement Year may not exceed the amount of anticipated
increases during the Agreement Year in Newco's Fully Loaded Cost of the Product
in question.
6.2 Baxter Purchase Price: Except as provided in Section 6.3,
the price of the sale of Products to Baxter will be a percentage of Newco's
Suggested Retail Price
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determined in accordance with the following schedule (based on the extent to
which Baxter is able to meet or exceed the sales projections contained in the
"Plan A" projections attached hereto as Schedule 6):
----------
Percentage of Newco's Suggested Retail Price
Portion of Sales
(Percentage of
"Plan A" Total Agreement Agreement Agreement Years
Net Sales) Years 1-3 Years 4-5 6 and Later
- ------------------- --------- --------- ---------------
[Confidential Information Omitted]
When Total Net Sales during any Agreement Year equal [Confidential Information
Omitted] of Total Net Sales for such Year shown in the "Plan A" Projections,
the price of the sale of Products to Baxter shall be adjusted to the percentage
of Suggested Retail Price shown in the above schedule for the next incremental
portion of sales, and further adjustments will be made where indicated in the
above schedule when Total Net Sales during the Agreement Year equal
[Confidential Information Omitted] and [Confidential Information Omitted] of
Total Net Sales for such Year shown in the "Plan A" Projections.
Baxter is solely responsible for establishing the price for sale to the customer
of Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products.
6.3 "Cost Recovery" Product: Newco recognizes that, prior to
regulatory approval in certain countries, the Products can only be provided to
customers under "Cost Recovery" programs. For such programs, the price of the
Products to Baxter will be the greater of (i) a percentage of the cost recovery
price to the end user that is the same as the percentage determined in
accordance with the schedule in Section 6.2 above, or (ii) Newco's Fully Loaded
Cost for the Products. Baxter will provide and distribute the Products prior to
regulatory approval to the end user at the cost recovery price.
6.4 "Minimal" or "No Charge" Sales Transactions with Customers: The
parties may, from time to time, agree to make specified Isolex(R) and Maxsep(R)
Products, Reagent Kits and other Products available to customers with a minimal
charge or at no charge, as part of an advertising and promotion program. The
Marketing Committee shall be responsible for developing and approving any such
program and shall determine the amount, if any, to be paid to Newco for such
Products in connection with the Marketing Committee's development of a
promotional program budget.
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6.5 "Plan A" Projections means the Projected Total Net Sales shown in
Schedule 6, and represent sales goals for Baxter's worldwide sales of the
- ----------
Isolex(R) and Maxsep(R) Products and Reagent Kits in the Field of Distribution.
6.6 Payment and Shipping Terms: Newco shall bill Baxter as of
the end of each calendar month for Products shipped to customers during the
month and for sales and marketing expenses for the month pursuant to Section
8.1(B). Baxter shall pay such invoices within sixty (60) days of Baxter's
receipt thereof. Isolex(R) and Maxsep(R) Products, Reagent Kits and other
Products are to be shipped F.O.B. to Baxter's destination designated in the
purchase order. Baxter's designated destination may include a Baxter facility or
a customer's facility. Unless otherwise agreed in writing, Newco shall pay all
freight charges. Baxter will be solely responsible for meeting export/import
requirements, arranging for the appropriate documentation and licenses and
paying associated fees for shipments made outside the U.S. Newco will cooperate
with Baxter as necessary to meet appropriate export/import regulations.
6.7 Acceptance of Shipment/Return of Goods: Baxter may inspect
or audit the Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products
for integrity and adherence to the product specifications. If any of the
Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products of a
continuous production run or shipment (a "Lot") are not manufactured or supplied
by Baxter under any of the Hardware and Disposables Manufacturing Agreement, the
Hardware and Disposables Supply Agreement or the Antibody Manufacturing and
Storage Agreement and fail to meet Newco's warranties or to conform to product
specifications, Baxter shall notify Newco in writing within 120 days, and
thereafter Baxter may return such Lot and, at Baxter's option and at Newco's
expense, Baxter shall receive a credit, refund or replacement for such Products.
If Newco so requests, Baxter will return any such Products to Newco at Newco's
expense.
6.8 Controlling Document: Newco shall acknowledge receipt of
each Baxter purchase order in writing within ten (10) business days after
receipt thereof and confirm delivery dates to destinations specified by Baxter.
All sales of Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products
shall be subject to the terms and conditions of this Agreement and, to the
extent they specify quantities, destinations and delivery dates, to Baxter
purchase orders. This Agreement shall not be subject to the terms, conditions
or provisions of any business form of Newco; any confirmation of Newco is
subject to this Agreement.
6.9 Baxter shall provide monthly sales reports as customarily
generated by Baxter with standard detailing of the sales volume. These reports
shall be adequate for reporting any royalties payable by Newco pursuant to the
terms of the License Agreements, shall be delivered to the attention of Donna
Waldo--Finance at Newco within thirty (30) days after the end of each month, and
shall be reviewed by the Marketing Committee.
7. COMPLIANCE WITH REGULATORY REQUIREMENTS.
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7.1 Regulatory Requirements: Except as provided below, and except
for those regulatory responsibilities allocated to Baxter pursuant to the other
Transaction Documents (as such, capitalized term is defined in the Acquisition
Agreement) between Newco and Baxter, Newco shall be responsible for meeting
regulatory requirements and for obtaining reimbursement pertaining to the
manufacturing, marketing, sales, distribution and utilization of the Isolex(R)
and Maxsep(R) Products, Reagent Kits and other Products. Newco's obligation is
applicable to each country, state, region or locality in which Baxter either
markets, sells and distributes or plans to market, sell and distribute the
Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products. To assist
Newco in meeting this obligation, Baxter shall be diligent in advising Newco of
its plans to enter, remain active, or depart from specific countries, states,
regions or localities relative to the marketing, sales and distribution of the
Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products. Further,
Baxter will be obligated to meet all applicable regulations relative to its role
as exclusive seller and distributor of the Isolex(R) and Maxsep(R) Products,
Reagent Kits and other Products. Newco's regulatory responsibilities include
conducting any necessary clinical trials to gather safety and effectiveness data
to support marketing applications to FDA or other governmental or quasi-
governmental authorities, while Baxter shall be responsible for conducting
marketing studies. Initiation of clinical studies will be coordinated between
Baxter Regions and Newco to assure minimal impact to Baxter's sales to
established customers where Baxter has previously installed an Isolex(R) or
Maxsep(R) instrument. Initiation of marketing studies will be coordinated
between Baxter Regions and Newco for continuity.
7.2 Regulatory Actions: Newco's and Baxter's responsibilities
for all regulatory actions related to the Products or components thereof
manufactured or supplied by or on behalf of Baxter will be determined in
accordance with the terms of the Hardware and Disposables Manufacturing
Agreement, the Antibody Manufacturing and Storage Agreement and the Hardware and
Disposables Supply Agreement, as the case may be. For all other Products, Newco
shall be responsible for all regulatory actions and incur all costs of such
actions, Baxter will cooperate and assist Newco, at Newco's expense, with any
regulatory action, and Baxter will maintain and provide Newco with a current
customer list as needed solely for regulatory actions. As used in this
paragraph, "regulatory actions" mean: mandatory notifications, repairs,
replacements and refunds; safety alerts; "cease distribution and notification"
and mandatory recall actions; voluntary recalls, market withdrawals or stock
recoveries; and device removals and corrections, as defined or understood under
law or FDA policy, or related or analogous actions.
7.3 Product Complaints: Baxter shall complete product complaint
forms provided by Newco to Baxter and forward any product complaint information
to Newco's post quality assurance group. Newco and Baxter will work together to
manage product complaints in an effective and responsive manner. Should Baxter
or its customers receive significant amounts of defective Product, Newco will
issue to Baxter, or to a customer if directed to do so by Baxter, a refund for
such Product or, at Baxter's option, replacement Product.
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7.4 Distributor MDR Responsibilities: To the extent required by law,
Baxter shall comply with distributor medical device reporting (MDR)
responsibilities as set forth in 21 C.F.R. Part 804 relative to the Isolex(R)
and Maxsep(R) Products, Reagent Kits and other Products.
8. MARKETING OF PRODUCT.
8.1 Obligation to Market:
A. Baxter shall strive to achieve and exceed Total Net Sales figures shown
in the "Plan A" Projections of Schedule 6. Baxter agrees to follow the
----------
Marketing Resource Plan as approved and revised by the Marketing Committee
from time to time and subject to the provisions of Section 4 of this
Agreement; and Baxter further agrees that following the receipt of Regulatory
Approval in the United States for the Isolex(R) 300SA, Baxter will expend at
least the following minimum budgeted amounts (expressed below as a percentage
of projected Total Net Sales shown in the "Plan A" Projections) for expenses
of sales and marketing of the Isolex(R) and Maxsep(R) Products and Reagent
Kits hereunder, provided that such amount shall not be less than [Confidential
--------
Information Omitted] per calendar year for each of the first four (4)
Agreement Years of the Term (a pro rata portion of such amount for 1997, the
--- ----
first Agreement Year hereunder, or, if such Regulatory Approval is not
obtained in 1997, for any subsequent Agreement Year during which such
Regulatory Approval is obtained)(the "Budgeted Expenses"):
Agreement Year Percentage of Projected Total Net Sales
-------------- ---------------------------------------
1997 [Confidential Information Omitted]
1998 [Confidential Information Omitted]
1999 [Confidential Information Omitted]
2000 [Confidential Information Omitted]
2001 [Confidential Information Omitted]
2002 [Confidential Information Omitted]
Budgeted Expenses, for this purpose, will include (a) direct,
indirect and allocated expenses (as allocated in accordance with Baxter's
standard practices applied consistently to all Baxter's divisions and
businesses) of Baxter for the sales and marketing of Products, and (b)
certain co-marketing expenses of Newco as provided in Section 8.1(B) below.
The portion of Budgeted Expenses comprising Baxter expenses includes, but
is not limited to, expenses associated with salaries, benefits,
training,installation
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of instruments, customer services, customer
operations/administration, selling and promotional
activities, warehousing, freight and delivery of Products,
field service, clinical education, documentation, reprint
acquisition and other materials and equipment such as
telephone lines and 800 number telephone services. Baxter's
sales and marketing efforts, which will comply with
regulatory requirements, may include the development of
promotional materials, certain customer letters,
sales calls, presentations and other documentation in
support of marketing and sales personnel representation of
the Isolex(R) and Maxsep(R) Products and Reagent Kits.
Baxter shall coordinate the production of promotional
materials with Newco so that the parties' marketing efforts
are complementary and so that Newco may comply with
regulatory requirements as may apply to such materials.
Baxter's efforts may also include, at its sole discretion,
the funding of marketing studies relating to the Isolex(R)
and Maxsep(R) Products and Reagent Kits in the Field of
Distribution. Baxter will coordinate the initiation and
completion of such marketing studies with Newco.
B. Newco shall provide sales and marketing personnel to perform
sales and marketing functions as specified in the Marketing
Resource Plan, to assist Baxter in marketing the Products in
the Field of Distribution. Identified in the Marketing
Resource Plan and included in the minimum Budgeted Expenses
set forth in Section 8.1(A) above, will be a mutually agreed
portion of Budgeted Expenses for product detailing to be
conducted by Newco, and related advertising expenses
(hereinafter, the "Newco Marketing Budget"). Baxter shall
pay to Newco the amount of the Newco Marketing Budget in
equal monthly installments billed to Baxter by Newco in
accordance with Section 6.6.
C. From time to time, Newco may elect, in its sole discretion,
to engage in, and to advance the cost of ("Additional
Expenses"), sales and marketing activities, in addition to
those conducted by Baxter and Newco in accordance with
Sections 8.1(A) and 8.1(B) above, related to the Products
being distributed by Baxter within the Field of
Distribution. In the event that Baxter does not expend at
least the minimum Budgeted Expenses for any of the first six
Agreement Years, then the positive difference between (i)
the minimum Budgeted Expenses for such Agreement Year as set
forth in Section 8.1(A) above, and (ii) the amounts actually
expended by Baxter for sales and marketing expenses
hereunder during such Agreement
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Year (including amounts paid to Newco pursuant to Section
8.1(B) above) (the "Baxter Marketing Expense Shortfall")
shall be applied to reimburse Newco's Additional Expenses
described in the preceding sentence of this Section 8.1(C).
Additional Expenses for this purpose, will include direct,
indirect and allocated expenses of the sales and marketing
of Isolex(R) and Maxsep(R) Products in the Field of
Distribution . During the first six (6) Agreement Years,
both the amount, if any, of Newco's unreimbursed Additional
Expenses and the amount, if any, of the Baxter Marketing
Expense Shortfall that is not applied to the reimbursement
of Newco Additional Expenses for any Agreement Year, shall
be cumulative and carried over for use in the succeeding
Agreement Years; and the negative difference between (a) the
minimum Budgeted Expenses for such Agreement Year as set
forth in Section 8.1(A) above, and (ii) the amounts actually
expended by Baxter for sales and marketing expenses
hereunder during such Agreement Year (including amounts paid
to Newco pursuant to Section 8.1(B) above) (the "Baxter
Marketing Expense Surplus") shall be cumulative and carried
over to offset any Baxter Marketing Shortfall(s) in
succeeding Agreement Years.
8.2 Technical Materials & Medical Inquiries: Newco will be
responsible for developing, publishing and revising, as appropriate, all
technical and educational materials (for example, technical articles, abstracts,
publications) relating to the Isolex(R) and Maxsep(R) Products, Reagent Kits and
other Products. These technical and educational materials will be provided to
Baxter and Baxter's customers free of charge. Newco shall retain a Medical
Affairs staff to handle the medical inquiries from Baxter and Baxter's
customers. Baxter may, from time to time, request Newco to prepare certain
technical or educational materials and Newco shall meet such requests as are
reasonable.
8.3 Newco's Right to Market, Sell and Distribute: Newco
shall be solely responsible for its own marketing, selling and distribution
efforts for the Isolex(R) and Maxsep(R) Products, Reagent Kits and other
Products outside the Field of Distribution. Newco shall apprise Baxter on a
periodic basis of its activities in this regard so that the parties' marketing
and selling efforts are complementary.
8.4 Customer Feedback: As either party develops, surveys or
otherwise receives feedback from customers, operators and others relative to the
Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products, it will share
the results and data obtained with the other. The parties may choose to jointly
seek customer feedback or use similar data to agree upon changes or improvements
to the Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products, to the
delivery, installation and maintenance of the Isolex(R) and Maxsep(R) Products,
Reagent Kits
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and other Products, the training of operators or the technical presentation of
the Isolex(R) and Maxsep(R) Products, Reagent Kits and other Products.
8.5 Use of Trademarks: Either party may use the trademarks,
trade names, service marks and corporate logos of the other party on a non-
exclusive royalty-free, worldwide basis solely in connection with the marketing,
sales and distribution of the Isolex(R) and Maxsep(R) Products, Reagent Kits and
other Products. No other use of the trademarks, trade names or corporate logos
is permitted. Nothing herein shall give either party any right, title or
interest in or to the other party's trademarks or trade names. Neither party
shall at any time assert any claim to any goodwill, reputation or ownership of
the other party's trademarks, trade names or corporate logo. All uses of a
party's trademarks or trade names shall inure to the benefit of that party. The
parties agree that the Isolex(R) and Maxsep(R) Products, Reagent Kits and other
Products as well as promotional materials will, after a reasonable transition
period of time, be labeled and primarily referred to as products of Newco and
will bear Newco's name. Baxter's name and logo may be used, particularly if and
when required by regulatory guidelines, to indicate Baxter's exclusive
appointment as the marketer, seller and distributor of the Product in the Field
of Distribution and Baxter's manufacture of any Product or component thereof.
The parties also agree that Baxter may continue to use and deplete its existing
stock of promotional materials relating to the Isolex(R) and Maxsep(R) Products,
Reagent Kits and other Products.
8.6 Service Contracts: Baxter may market and sell service
contracts for maintenance and repair of the Isolex(R) and Maxsep(R) Products
sold by Baxter hereunder and will manufacture, maintain an inventory of, and
sell or otherwise distribute, spare parts in connection therewith. All revenues
from such service contracts shall be retained by Baxter and all costs and
expenses incurred by Baxter in maintaining an inventory of spare parts,
marketing and performing pursuant to such service contracts shall be borne
solely by Baxter.
9. INSTALLATION, TRAINING AND MAINTENANCE OF INSTRUMENT PRODUCT.
9.1 Operator Training: Newco will develop, publish and
revise as needed all technical operational materials (for example, operator
manuals) relating to the Isolex(R) and Maxsep(R) instruments. Further, Newco
shall train Baxter personnel and provide technical customer support as requested
by Baxter free of charge. The costs of technical customer support activities as
requested by Baxter and performed by Newco will be part of the Newco Marketing
Budget to be mutually agreed and paid in accordance with Section 8.1(B) above.
9.2 Installation and Maintenance: Baxter will be responsible
for the installation and servicing of the Isolex(R) and Maxsep(R) Products, as
well as customer training, where Baxter has manufactured the Products under the
Hardware and Disposables Manufacturing Agreement. Baxter will also be
responsible for customer support to include customer phone hotline coverage to
handle initial customer inquiries and complaints. In addition, Baxter will
offer to customers service and maintenance contracts for Isolex(R) and Maxsep(R)
instruments for post-
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warranty servicing of the instruments, provided Baxter has manufactured the
Products under the Hardware and Disposables Manufacturing Agreement.
10. FOREIGN CURRENCY CONVERSION. Where calculations of Baxter's
Fully Loaded Cost, Newco's Fully Loaded Cost or Newco's Suggested Retail Price
relate to currency other than United States dollars, all such calculations shall
be made pursuant to Baxter's then current accounting policies and practices, as
consistently applied.
11. WITHHOLDING TAXES. Where required to do so by applicable law,
Baxter shall withhold taxes required to be paid to a taxing authority on account
of any payments to Newco hereunder, and Baxter shall furnish Newco with
satisfactory evidence of such withholding and payment in order to permit Newco
to obtain a tax credit or other such relief as may be available under applicable
laws. Baxter shall cooperate with Newco in obtaining exemption from withholding
taxes wherever available under applicable law.
12. INTEREST ON OVERDUE PAYMENTS. Interest shall accrue and be
payable on all overdue payments owing by a party under this Agreement from the
date due at the rate of [Confidential Information Omitted] per month (or the
highest rate allowed by law, if lower), compounded annually, until fully paid
(including full payment of such interest).
13. WARRANTIES.
13.1 Warranty: Newco shall warrant or shall obtain such
warranty from its suppliers and contract manufacturers that the Isolex(R) and
Maxsep(R) Products, Reagent Kits and other Products delivered to or at the
direction of Baxter hereunder (i) will have been manufactured in accordance with
the applicable specifications, procedures and product drawings/blueprints and
all applicable laws and (ii) are free from defects in workmanship. This
warranty shall be continuing and shall be binding on Newco, its suppliers and
contract manufacturers and Newco's permitted successors and assigns and shall
inure to the benefit of Baxter and its permitted successors and assigns. Baxter
shall represent to its customers that any product which it distributes on behalf
of a manufacturer other than Baxter is warranted by the manufacturer and not
Baxter.
13.2 Baxter Indemnity: Subject to Section 16 below, Baxter
agrees to indemnify Newco and hold it harmless from any liability, loss,
expense, cost, claim or judgment arising out of any claim for property damage,
personal injury or death which is caused by Baxter's failure to meet its
obligations with respect to regulatory compliance as set forth in section 7.1,
regulatory actions as set forth in section 7.2, product complaints as set forth
in section 7.3, distributor responsibilities as set forth in section 7.4, or
which arises out of Baxter's performance of service contracts or sales and
marketing activities performed by Baxter personnel. At Baxter's expense, Newco
shall cooperate fully with Baxter in defending or otherwise resolving any such
claim. Baxter shall have full control of any litigation brought against Newco
with respect to any
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claim that is indemnifiable by Baxter hereunder; but Newco may at its expense,
also be represented by its own counsel in any such litigation.
13.3 Newco Indemnity: Subject to Section 16 below, Newco
agrees to indemnify Baxter and hold it harmless from any liability, loss,
expense, cost, claim or judgment arising out of any claim for property damage,
personal injury or death which is caused by defects in the products, design,
specifications, procedures, product drawings/blueprints, label copy, or
resulting from the use of the Isolex(R) and Maxsep(R) Products, Reagent Kits and
other Products or which arises out of sales and marketing activities performed
by Newco personnel, provided, however, that Newco shall have no liability to
-------- -------
Baxter whatsoever with respect to any liability, loss, expense, cost, claim or
judgment arising out of any claim for property damage, personal injury or death
which is caused by defects in the designs, specifications, procedures, or
product drawings/blueprints acquired by Newco from Baxter pursuant to the
Acquisition Agreement, except defects in modifications to such designs,
specifications, procedures, or product drawings/blueprints made by Newco
subsequent to its acquisition thereof. At Newco's expense, Baxter shall
cooperate fully with Newco in defending or otherwise resolving any such claim.
Newco shall have full control of any litigation brought against Baxter with
respect to any claim that is indemnifiable by Newco hereunder; but Baxter may at
its expense, also be represented by its own counsel in any such litigation.
14. INDEMNIFICATION FOR INFRINGEMENT. Subject to Section 16 below,
Newco shall defend, indemnify and hold Baxter harmless with respect to any
liability incurred by Baxter as a result of activities under this Agreement with
respect to any claim of patent, trade name, trademark or copyright infringement
or misuse (i) with respect to any Isolex(R) and Maxsep(R) Products, Reagent Kits
or other Products which are not being manufactured or supplied by Baxter (or its
third party subcontractor) for or to Newco under this Agreement or an agreement
having the same date as this Agreement (or an extension or renewal thereof); or
(ii) arising from any modification to product designs, specifications,
procedures, or product drawings/blueprints made by Newco subsequent to its
acquisition thereof from Baxter. At Newco's expense, Baxter shall cooperate
fully with Newco in defending or otherwise resolving any such charges of
infringement or misuse. Newco shall have full control of any litigation brought
against Baxter alleging such infringement or misuse; but Baxter may at its
expense, also be represented by its own counsel in any such litigation.
15. FORCE MAJEURE. Neither party to this Agreement shall be liable
for delay or failure in the performance of any of its obligations hereunder if
such delay or failure is due to causes beyond its reasonable control, including
acts of God, fires, earthquakes, strikes and labor disputes, acts of war, civil
unrest or intervention of any governmental authority, but any such delay or
failure shall be remedied by such party as soon as is reasonably possible.
16. LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF
BREACH OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR
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OTHERWISE, SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
PUNITIVE, EXEMPLARY OR LIQUIDATED DAMAGES.
17. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement
or any associated transaction is required by the law of any nation to be either
approved or registered with any governmental authority, or any agency or
political subdivision thereof, Newco shall assume all legal obligations to do
so.
18. NOTICES. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
purchase orders) shall be delivered either by hand, by a nationally recognized
overnight delivery service (with delivery charges prepaid), by first class,
registered or certified United States mail (postage prepaid), or by facsimile
transmission (provided that in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter, such notices shall be delivered to:
President
Baxter Biotech Group
with a copy to: General Counsel
Baxter Healthcare Corporation
If to Baxter, other written communications shall be delivered to:
President
Venture Management
Baxter Biotech Group
with a copy to: Associate General Counsel
Baxter Healthcare Corporation
If to Newco, such notices shall be delivered to:
President
BIT Acquisition Corp.
with a copy to: Epstein Becker & Green, P.C.
250 Park Avenue, New York, NY 10177
Attn: Lowell S. Lifschultz, Esq.
If to Newco, other written communications shall be delivered to:
President
BIT Acquisition Corp.
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with a copy to: Vice President
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 18. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered by: hand or by a nationally recognized overnight
delivery service (with delivery charges prepaid) at the time of delivery; by
first class, registered or certified United States mail (postage prepaid), three
(3) business days after delivery thereof to the United States Postal Service; or
by facsimile transmission, at the time of transmission.
19. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of Delaware,
without application of conflicts of law principles, and, subject to Section 26
below, each party hereby submits to the jurisdiction and venue of any state or
federal court in the State of Delaware. To the extent permissible by law, each
of the parties hereby waives, releases and agrees not to assert, and agrees to
cause its Affiliates to waive, release and not assert, any rights such party or
its Affiliates may have under any foreign law or regulation that would be
inconsistent with the terms of this Agreement as governed by Delaware law.
20. PROVISIONS CONTRARY TO LAW/SEVERABILITY. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between and provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted herefrom, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
21. ENTIRE AGREEMENT. This Agreement, together with any schedules
attached hereto, 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
this Agreement.
22. WAIVERS AND MODIFICATIONS. The failure of any party to insist on
the performance of any obligation hereunder shall not be deemed to be a waiver
of such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing signed by the party to be bound by such waiver, modification, release or
amendment.
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23. ASSIGNMENT. Newco may assign its rights or obligations under
this Agreement to any Affiliate of Newco without the prior written consent of
Baxter, provided that such Affiliate is owned, directly or indirectly, by Baxter
and VIMRx in substantially the same proportions Newco is owned. Baxter may
assign its rights and obligations hereunder to any Affiliate of Baxter without
prior notice to or consent of Newco. No assignment by Baxter or Newco, or by
any permitted assignee, shall be effective unless and until the assignee shall
have agreed to become bound by the provisions of that certain Non-Competition
and Confidentiality Agreement by and among Baxter, Newco and VIMRx, of even date
herewith, to the same extent and in the same manner as Baxter (in the case of a
Baxter assignee) or Newco (in the case of a Newco assignee) is bound. No party
hereto may assign any of its rights or obligations under this Agreement, unless
and to the extent expressly permitted by this Section 23. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding on the
parties' permitted successors and assigns.
24. INDEPENDENT PARTIES. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venturer, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together, and shall constitute one and the same instrument.
26. DISPUTE RESOLUTION.
26.1 Provisional Remedies: The procedures specified in this
Section 26 shall be the sole and exclusive procedures for the resolution of
disputes between the parties arising out of or relating to this Agreement;
provided, however, that a party, without prejudice to these procedures, may seek
- -------- -------
a preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in
good faith in the procedures specified in this Section 26.
26.2 Negotiations Between Executives: The parties will
attempt in good faith to resolve any claim or controversy arising out of or
relating to the execution, interpretation or performance of this Agreement
(including the validity, scope and enforceability of the provisions contained in
this Section 26) promptly by negotiations under the procedures set forth in
Section 4 concerning referral of disputes to the Corporate Committee.
26.3 Arbitration: In the event that any dispute arising out
of or relating to this Agreement or its breach, termination or validity has not
been resolved after good faith negotiation pursuant to the procedures of Section
26.2, such dispute shall upon written notice by
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either party to the other, be finally settled by arbitration administered by the
Center for Public Resources in accordance with the provisions of its Commercial
Arbitration Rules and the United Stated Federal Arbitration Act, as modified
below:
A. The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators, all of whom shall be selected from a
list of neutral arbitrators supplied by the Center for Public Resources.
From such list, each of Baxter and Newco shall select one (1) arbitrator,
and the arbitrators so selected shall select a third. The panel shall
designate one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration
Act as necessary to protect the rights or property of the party pending the
decision of the arbitrators.
D. The parties shall allow and participate in limited discovery
for the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the Center
for Public Resources. All discovery shall be completed within sixty (60)
days following the filing of the answer or other responsive pleading.
Unresolved discovery disputes shall be brought to the attention of the
chair of the arbitration panel and may be disposed of by the chair.
E. Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators,
provided that the chair of the panel of arbitrators may establish such
--------
longer times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify the factual and legal basis
for the award. Judgment thereon may be entered in any court having
jurisdiction thereof.
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G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the
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arbitrators will have no authority to award special, punitive or exemplary
damages, or other money damages that are not measured by the prevailing
party's actual damages.
26.4 Performance During Dispute: Each party is required to
continue to perform its obligations under this Agreement pending final
resolution of any dispute arising out of or relating to this Agreement, unless
to do so would be commercially impossible or impractical under the
circumstances.
27. RULES OF CONSTRUCTION. In this Agreement, unless a clear
contrary intention appears:
A. The singular number includes the plural number and vice versa;
B. Reference to any party includes such party's permitted
successors and assigns;
C. Reference to any gender includes the other gender;
D. Reference to any Section, Exhibit or Schedule means such
section of this Agreement, exhibit to this Agreement or schedule to this
Agreement, as the case may be, and references in any section or definition
to any clause means such clause of such section or definition;
E. "Herein," "hereunder," "hereof," "hereto," and words of
similar import shall be deemed references to this Agreement as a whole and
not to any particular section or other provision of this Agreement;
F. "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
G. Relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding" and "through"
means "through and including";
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H. Reference to any law (including statutes and ordinances) means
such law as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder;
I. Accounting terms used herein shall have the meanings
historically attributed to them by Baxter International Inc., a Delaware
corporation, and its subsidiaries prior to the date hereof;
J. In the event of any conflict between any of the provisions of
the body of this Agreement and any exhibit or schedule hereto, the
provisions of the body of this Agreement shall control;
K. The headings contained in this Agreement have been inserted
for convenience of reference only, and are not to be used in construing
this Agreement; and
L. Any rule of construction or interpretation which might
otherwise require this Agreement to be construed or interpreted against
either party shall not apply to any construction or interpretation hereof.
28. AUDIT. Either party may audit the books and records of the other
for the purpose of determining compliance with the terms of this Agreement. The
auditing party may use independent outside auditors (who may participate fully
in such audit). In the event that an audit is proposed with respect to
information which the party to be audited wishes not to disclose to the auditing
party ("Restricted Information"), then on the written demand of the party to be
audited the individuals conducting the audit with respect to the Restricted
Information will be limited to the auditing party's independent auditors. In
such event, the party to be audited shall pay the costs of the independent
auditors conducting such audit, but only with respect to that portion of the
audit relating to the Restricted Information. Such independent auditors shall
enter into an agreement with the parties hereto, on terms that are agreeable to
both parties hereto, under which such independent auditors shall agree to
maintain the confidentiality of the information obtained during the course of
such audit and establishing what information such auditors will be permitted to
disclose in reporting the results of any audit of Restricted Information. Any
such audit shall be conducted during regular business hours in a manner that
does not interfere unreasonably with the operations of the party to be audited.
The audits conducted by any party under the provisions of this Agreement, or of
any of the License Agreements, the Hardware and Disposables Manufacturing
Agreement, the Antibody Manufacturing and Storage Agreement, the Hardware and
Disposables Supply Agreement and the Services Agreement shall not, in the
aggregate, be conducted more than once in any twelve (12) month period per
facility unless the next preceding audit disclosed a failure to conform to the
terms of any such Agreement or unless the facility
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received a Form FDA-483 in the twelve (12) months following any audit. Subject
to the foregoing limitations, any such audit shall be conducted when requested
by notice given not less than thirty (30) days prior to the commencement of the
audit.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first set forth above.
BAXTER HEALTHCARE CORPORATION BIT ACQUISITION CORP.
By:___________________________ By:______________________________
Name: Name:
Title: Title:
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EXHIBIT 10.5
NON-COMPETITION AND CONFIDENTIALITY AGREEMENT
This NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement") is
made and entered into as of this 17th day of December, 1997, by and among Baxter
Healthcare Corporation, a Delaware corporation with its principal place of
business at 1627 Lake Cook Road, Deerfield, Illinois 60015 ("Baxter"), VIMRx
Pharmaceuticals Inc., a Delaware corporation with its principal place of
business at 2751 Centerville Road, Suite 210, Wilmington, Delaware 19808
("VIMRx"), and BIT ACQUISITION CORP., a Delaware corporation with its principal
place of business at Nine Parker, Irvine, California 92718 ("Newco").
RECITALS
A. Baxter and VIMRx have agreed to enter into a strategic alliance by
engaging in the ex vivo cell therapy business through Newco (the "Transaction").
B. Pursuant to that certain Asset Purchase Agreement dated as of October
10, 1997, by and among Baxter, VIMRx and Newco (the "Acquisition Agreement"),
Baxter has transferred to Newco certain Isolex(R) and Maxsep(R) Technology as
well as other Assets of the Business (as those capitalized terms are defined in
the Acquisition Agreement).
C. Baxter has agreed pursuant to the terms of that certain Hardware and
Disposables Manufacturing Agreement of even date herewith (the "Hardware and
Disposables Manufacturing Agreement") to manufacture for Newco the Isolex(R) and
Maxsep(R) Products (as such capitalized term is defined in the Hardware and
Disposables Manufacturing Agreement) and pursuant to the Antibody Manufacturing
and Storage Agreement of even date herewith (the "Antibody Manufacturing
Agreement") to manufacture certain Antibodies, Reagents and Reagent Kits (as
such capitalized terms are defined in the Antibody Manufacturing Agreement).
D. Baxter also has agreed to supply to Newco certain other products and
components which are utilized in connection with the Business pursuant to the
terms of that certain Hardware and Disposables Supply Agreement of even date
herewith (the "Hardware and Disposables Supply Agreement").
E. Pursuant to the Marketing, Sales and Distribution Agreement of even
date herewith (the "Marketing, Sales and Distribution Agreement") (the
Acquisition Agreement, the Hardware and Disposables Supply Agreement, the
Hardware and Disposables Manufacturing Agreement, the Antibody Manufacturing
Agreement and the Marketing, Sales and Distribution Agreement, collectively
referred to as the "Acquisition and Operating Documents" and each an
"Acquisition and Operating Document"), Baxter has agreed to market, sell and
distribute Isolex(R) and Maxsep(R) Products, Reagents and Reagent Kits in the
Field of Distribution (as those capitalized terms are defined in the Marketing,
Sales and Distribution Agreement).
<PAGE>
F. Pursuant to the Acquisition and Operating Documents, Baxter and VIMRx
will be the shareholders of Newco and will undertake certain obligations with
respect to the capitalization of Newco.
G. Baxter, VIMRx and Newco recognize that (i) the ex vivo cell therapy
business to be conducted by Newco is very valuable to Newco and that the success
of Newco in that business will benefit each of Baxter and VIMRx as investors in
Newco, and (ii) Baxter's remaining business operations (other than the Business)
are very valuable to Baxter, and that the parties' above-described interests are
protectible in the manner and subject to the terms set forth in this Agreement.
H. In connection with and in furtherance of the Transaction, the VIMRx
Group has provided and will provide to Baxter certain Confidential Information
(as those capitalized terms are defined below) relating to the VIMRx Group, and
the Baxter Group (as that capitalized term is defined below) has provided and
will provide to VIMRx and Newco certain Confidential Information relating to the
Baxter Group, including but not limited to certain Confidential Information
delivered pursuant to that certain Confidentiality and Non-Solicitation
Agreement by and between Baxter and VIMRx dated as of November 11, 1996 (the
"CDA"), that certain letter agreement, dated as of July 8, 1997, by and between
Baxter and Innovir Laboratories, Inc. (the "Innovir Letter"), and Section 13 of
that certain Letter of Intent by and between Baxter and VIMRx, dated as of June
11, 1997, as subsequently extended (the "LOI") (the CDA, the Innovir Letter and
the LOI are hereinafter collectively referred to as the "Prior Confidentiality
Agreements").
I. The VIMRx Group and the Baxter Group both desire that the Recipient (as
that capitalized term is defined below) of Confidential Information reasonably
protect the confidentiality of such Confidential Information as described herein
and subject to the terms hereof.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby acknowledge and agree as follows:
1. DEFINITIONS.
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1.1. Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth therein.
1.2. As used herein, the following capitalized terms shall have the
following meanings:
(a) "Affiliate" of a party means any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by or
is under
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common Control with, the party or (ii) fifty percent (50%) or more of the
voting capital stock (or in the case of an entity which is not a
corporation, fifty percent (50%) or more of the equity interest) of which
is beneficially owned or held by a party or any of such party's
Subsidiaries. The term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of an entity (other than a natural person), whether through
the ownership of voting capital stock, by contract or otherwise.
(b) "Baxter Group" means Baxter and its Affiliates including, without
limitation, each of their respective divisions and business units.
(c) "Business" shall mean the ex vivo cell therapy business described
in Exhibit __ attached to the Acquisition Agreement.
(d) "Chiron" shall mean Chiron Corporation, a Delaware corporation.
(e) "Chiron Collaboration Agreement shall mean that certain
Collaboration Agreement by and between Baxter and Chiron dated December 27,
1996.
(f) "Confidential Information" means any information in any form of
expression or medium whatsoever (including, without limitation, whether
oral, written or electronically coded) furnished to the Recipient that is
owned by or pertains to the Owner, which is not Non-Confidential
Information, including, but not limited to, any information regarding: (i)
Confidential Information (as that term is defined in the CDA) previously
delivered by the Owner to the Recipient pursuant to the Prior
Confidentiality Agreements, (ii) business and/or strategic plans, (iii)
research, technology, development, manufacturing, marketing, sales or
distribution of products, goods or services, (iv) lists and identities of
actual or potential customers, vendors or suppliers, (v) pricing of goods
and services to, or prices of goods or services from, actual or potential
customers, vendors or suppliers, (vi) any technical or non-technical data,
formulae, patterns, compilations, programs, devices, methods, techniques,
know-how, drawings, designs, processes, procedures, inventions,
improvements, models, manuals or financial data, (vii) other confidential
intellectual property, including, without limitation, patent applications
and invention records and (viii) any information or materials the Recipient
may derive, develop or discern by reason of the Recipient's analysis,
evaluation or research regarding or in connection with any of the
foregoing, including, without limitation, any derivatives or variances
therefrom. In the event that the Recipient can prove that any part of the
Confidential Information is or has become Non-Confidential Information,
that part of the Confidential Information shall no longer be deemed
Confidential Information for the
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purposes of this Agreement, but Recipient shall continue to be bound by the
terms of this Agreement as to all other Confidential Information.
(g) "Ex Vivo Cell Processing" shall mean the active selection, and any
subsequent modification, genetic alteration, activation and/or expansion,
of nucleated cells outside the body for therapeutic purposes such as
cellular therapy or gene therapy. For the purpose of this definition,
"active selection" shall mean processing involving the action of a
biological component, such as an antibody or modified antibody, a lectin,
or a ligand, to selectively and specifically bind to a particular molecule
on the surface of the cells to be selected so as to confer specificity or
selectivity for such cells in the cell selection process.
(h) "Legitimate Origins" means that the source or channel of
communications and/or documentation relating to the Confidential
Information was entitled to permit the transmission of the relevant
information without breach of this Agreement, any other applicable
agreement or duty, or any applicable law.
(i) "Non-Confidential Information" means (i) information which is
generally known by or available to third parties, or is generally
known or available within the Owner's industry, without breach of
this Agreement, any other applicable agreement or duty, or any
applicable law by the Recipient or its Representatives; (ii)
information which is disclosed or made available to the Recipient
from Legitimate Origins other than the Owner (and such receipt
from Legitimate Origins can be demonstrated by the Recipient);
(iii) information which is in the possession of the Recipient and
was received by the Recipient from Legitimate Origins prior to
receiving such information from the Owner (and such prior
possession and receipt from Legitimate Origins can be
demonstrated by the Recipient); or (iv) information which is or
has been independently developed by the Recipient and/or its
Representatives without the use of any Confidential Information
of the Owner (and such independent development can be
demonstrated by the Recipient).
(j) "Owner" means (i) the Baxter Group, where the subject Confidential
Information is owned by or pertains to the Baxter Group, and (ii) the VIMRx
Group, where the subject Confidential Information is owned by or pertains
to the VIMRx Group.
(k) "Recipient" means (a) VIMRx or Newco, as the case may be, where
the subject Confidential Information is owned by or pertains to the Baxter
Group, and (b) Baxter, where the subject Confidential Information is owned
by or pertains to the VIMRx Group.
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(l) "Representatives" means all of Recipient's officers, directors,
employees, attorneys, tax advisors, accountants, financial consultants and
other authorized agents.
(m) "Subsidiary" shall mean, as to any party, any corporation of which
more than 50% of the outstanding capital 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 party, by one or more of its subsidiaries, or by the party and
one or more of its subsidiaries.
(n) "Supplied Products" means the Baxter Products, the Baxter Products
Components and the Spinning Membrane. For purposes of this definition,
"Baxter Products" shall have the meaning ascribed to such capitalized term
in the Hardware and Disposables Supply Agreement; "Baxter Products
Components" shall have the meaning ascribed to such capitalized term in the
Hardware and Disposables Supply Agreement; and "Spinning Membrane" shall
have the meaning ascribed to such capitalized term in the Hardware and
Disposables Supply Agreement.
(o) "VIMRx Group" means VIMRx and its Affiliates including, without
limitation, each of their respective divisions and business units and, for
purposes of this definition, Newco.
2. NON-COMPETE COVENANTS BY BAXTER.
-------------------------------
2.1. Except as otherwise agreed by Newco in writing, including in any
Acquisition and Operating Document, Baxter covenants and agrees that neither
Baxter nor any of its Affiliates shall, directly or indirectly, anywhere in the
world, (i) engage in, or (ii) render consulting or advisory services to any
entity that engages in, or (iii) be a joint venturer, partner, licensor, member,
shareholder (other than, in the case of an entity with securities that are
publicly traded, a holder of 2% or less of the voting securities of such entity)
or trustee of any entity for the purpose of engaging in, the marketing, sale or
distribution of any product which directly competes with any product of the
Business:
(a) for use in the ex vivo selection of a desired human, nucleated
cell type using a biological component, such as an antibody or modified
antibody, a lectin, or a ligand to selectively and specifically bind to a
particular molecule on the surface of the cells to be selected so as to
confer specificity or selectivity for such cells in the cell selection
process; or
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(b) for genetic alteration, modification, activation and/or expansion
in combination with such selection;
for therapeutic purposes such as cellular or gene therapy, except as Baxter is
required to manufacture, supply, market, distribute and sell products of the
Business pursuant to the Acquisition and Operating Documents. Notwithstanding
the foregoing, for purposes of this Agreement, ex vivo selection as described in
subpart (a) of this Section 2.1 shall not include an ex vivo selection process
directed to the removal of non-cell-bound antibodies from human blood using a
biological component even though such ex vivo selection process may result in
the biological component binding to human nucleated cells and thereby
incidentally selecting and separating such cells, provided that such
--------
incidentally selected cells shall not be utilized commercially.
2.2. Baxter's obligations under the foregoing covenant and agreement
shall begin on the date hereof and shall expire on the date that is the later of
(i) the date that is five (5) years after the date hereof or (ii) one year after
the first date on which Baxter neither owns at least ten percent (10%) of the
Common Stock of Newco, on a fully diluted basis, nor retains a seat on Newco's
board of directors, or (iii) the date on which the Marketing, Sales and
Distribution Agreement expires, as its term may be extended, provided that all
--------
of Baxter's obligations under the foregoing covenant and agreement shall expire
not later than the date that is fifteen (15) years after the date hereof, except
that following the date that is fifteen (15) years after the date hereof,
Baxter's obligations shall continue (a) to the extent and for the period of time
that Baxter continues to act as Newco's exclusive worldwide distributor for an
Isolex(R) or Maxsep(R) Product or Reagent Kit under the terms of the Marketing,
Sales and Distribution Agreement, but only with respect to such Isolex(R) or
Maxsep(R) Product or Reagent Kit, and (b) to the extent and for the period of
time that Baxter continues to supply any Supplied Product under the terms of the
Hardware and Disposables Supply Agreement, but only with respect to such
Supplied Product.
2.3. Notwithstanding the provisions of Section 2.1, Baxter shall not be
prohibited from acquiring any interest in any company or other entity which is
engaged in a business the products of which compete with any product of the
Business in a manner which may violate the terms of Section 2.1, provided that
--------
(i) such company or other entity becomes an Affiliate of Baxter after the date
hereof or is merged with or into Baxter or an Affiliate of Baxter after the date
hereof; and (ii) the purpose of Baxter's acquisition of such company or other
entity is not to acquire a technology which would compete with any product of
the Business in a manner otherwise prohibited by Section 2.1. Baxter shall
promptly notify Newco of any such acquisition by Baxter, and Newco will have
sixty (60) days after the receipt of such notice to negotiate the material terms
and conditions of an acquisition or other transaction to acquire rights to that
portion of the business of such company or other entity the products of which
compete with any product of the Business. The terms and conditions of such an
acquisition or other transaction with Newco shall be negotiated by Newco and
Baxter, bargaining in good faith, and documented in a written agreement, signed
by authorized representatives of both parties. If, after notice to Newco and
expiration of sixty (60) days without completed negotiation of the material
terms of such an
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acquisition or other transaction with Newco, Baxter desires to enter into an
agreement with a third party on terms and conditions that are less favorable to
Baxter than the terms and conditions offered by or to Newco (a "New Offer"),
then Baxter must give Newco notice and an additional thirty (30) days to respond
to Baxter's offer on substantially the same terms and conditions as those of the
New Offer. The culmination of any transaction pursuant to this Section 2.3 is
subject to the parties entering into a definitive agreement on terms which are
agreeable to each of the parties, in their sole discretion.
2.4. Subject to the provisions of Section 2.5, it is understood and agreed
that Baxter shall refrain from exercising the Baxter Retained License Rights and
the Baxter GmbH Retained License Rights (as those terms are defined in the First
BD Sublicense, the Second BD Sublicense, the Chiron Sublicense and the Dorken
Sublicense (collectively, the "Sublicense Agreements"), as such terms are
defined in the Acquisition Agreement).
2.5. The foregoing notwithstanding, Baxter may exercise the Baxter Retained
License Rights and the Baxter GmbH Retained License Rights in the event:
(a) the Marketing, Sales and Distribution Agreement is terminated by
Baxter as a result of Newco's breach thereof;
(b) any of the Sublicense Agreements is terminated by Baxter as a
result of Newco's breach thereof, provided that Baxter may exercise only
--------
those Baxter Retained License Rights or Baxter GmbH Retained License
Rights, as the case may be, retained with respect to such terminated
Sublicense Agreement; or
(c) a final, non-appealable decision is rendered by an arbitrator or a
court of competent jurisdiction holding that Newco has materially breached
its obligations under Section 4 hereof after having been given at least 180
days notice of such breach by Baxter;
(d) a receiver, conservator, custodian, liquidator or trustee of Newco
or of a material portion of the property of Newco, is appointed by court
order and such order remains in effect for more than ninety (90) days; or
an order for relief is entered under the federal bankruptcy laws with
respect to Newco; or all or any material portion of the property of Newco
is sequestered by court order and such order remains in effect for more
than ninety (90) days; or a petition is filed against Newco under the
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution of liquidation law of any jurisdiction, whether now or
hereafter in effect, and is not dismissed within ninety (90) days after
such filling;
(e) Newco files a voluntary petition in bankruptcy or seeking relief
under any provision of any bankruptcy, reorganization, arrangement,
insolvency,
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readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, or consents to the filing of any
petition against it under any such law; or
(f) Newco makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they become
due, or consents to the appointment of a receiver, conservator, custodian,
liquidator or trustee of the party, or of all or any material part of its
property.
2.6. Chiron Obligations:
(a) Newco hereby acknowledges that Baxter has performance obligations
under the Chiron Collaboration Agreement and agrees, at Baxter's request,
to allow Baxter to satisfy Baxter's performance obligations under the
Chiron Collaboration Agreement including, without limitation, by (i)
allowing Baxter to achieve a Qualifying Acceptance by the Seller (as that
term is defined in the Chiron Collaboration Agreement), (ii) after a
Qualifying Acceptance has been achieved, permitting Baxter to develop
and/or manufacture to Baxter's specifications, a Semi-Automated Baxter
System (as that term is defined in the Chiron Collaboration Agreement), and
(iii) allowing Baxter to perform all other obligations of Baxter, provided
--------
that the Semi-Automated Baxter System will not involve Ex Vivo Cell
Processing.
(b) Without limitation of the foregoing, and notwithstanding any terms
of this Agreement or the Acquisition and Operating Documents to the
contrary, Newco agrees, (i) at the request of Baxter, to provide to Baxter
such assistance and information (at Baxter's cost) as may be reasonably
required for Baxter to comply with its obligations under Sections 3.8 and
3.9 of the Chiron Collaboration Agreement, and (ii) to abide by the
exclusivity provisions of Section 3.1 of the Chiron Collaboration Agreement
pursuant to clause b(ii) of the third sentence of Section 3.5(a) of the
Chiron Collaboration Agreement in the same manner as such provisions apply
to Baxter. Newco further agrees that Newco will not, directly or
indirectly (in the event Newco otherwise has the right to do so), and/or
shall not require Baxter to, violate the terms of Section 8.4 of the Chiron
Collaboration Agreement.
(c) The Semi-Automated Baxter System shall be distributed by Baxter in
compliance with this Agreement.
(d) Baxter will use commercially reasonable efforts to obtain from
Chiron the right to grant a sublicense to Newco and its Affiliates under
(and on the same terms as) the license granted to Baxter in Section 2.1(b)
of the Chiron
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Collaboration Agreement. In the event that Baxter shall obtain such right,
Baxter shall grant such sublicense to Newco and its Affiliates.
(e) Baxter shall indemnify and hold harmless Newco from and against
any claims of patent or other intellectual property infringement, and any
product liability claims, incurred by Newco in connection with Baxter's
performance of its obligations under the Chiron Collaboration Agreement;
provided, however, that this indemnity shall not apply to any claims
--------
arising out of actions or omissions of Newco or the performance of Newco's
obligations under any sublicense referred to in Section 2.6(d) above, which
it may enter into with Baxter with the consent of Chiron.
2.7. Notwithstanding anything to the contrary herein, or in any of the
Acquisition and Operating Agreements, Baxter hereby agrees to refrain from
exploiting (including without limitation by way of licensing) in violation of
the provisions of Section 2.1 of this Agreement United States patent number
5,641,622, dated June 24, 1997 (entitled "Continuous Centrifugal Process for the
Separation of Biological Components from Heterogeneous Cell Populations"), and
any and all foreign counterparts of such patent, except as otherwise agreed by
Newco in writing. Baxter further agrees to refrain from enforcing such patent
and any and all foreign counterparts of such patent against Newco or any
Affiliate of Newco that is owned by Baxter and VIMRx in substantially the same
proportions as Newco is owned with respect to any product of the Business that
is manufactured or marketed for Newco by Baxter pursuant to any of the
Acquisition and Operating Agreements or that is agreed to be developed for Newco
by Baxter pursuant to the terms of that certain Services Agreement between
Baxter and Newco of even date herewith.
3. NON-COMPETE COVENANTS BY VIMRX.
------------------------------
3.1. Except as otherwise agreed by Baxter in writing, including in any
Acquisition and Operating Document, VIMRx covenants and agrees that neither
VIMRx nor any of its Affiliates (other than Newco or an entity owned by Baxter
and VIMRx in substantially the same proportions as Newco is owned) shall,
directly or indirectly, anywhere in the world, (i) engage in, or (ii) render
consulting or advisory services to any entity that engages in, or (iii) be a
joint venturer, partner, licensor, member, shareholder (other than, in the case
of an entity with securities that are publicly traded, a holder of 2% or less of
the voting securities of such entity) or trustee of any entity for the purpose
of engaging in, the production, manufacture, marketing, sale or distribution of
any product which directly competes with any Supplied Product or any product of
the Business. VIMRx's obligations under the foregoing covenant and agreement
shall begin on the date hereof and shall expire on the date that is the later of
(i) the date that is five (5) years after the date hereof or (ii) one year after
the first date on which VIMRx neither owns voting control of Newco nor retains a
seat on Newco's board of directors; provided that all of VIMRx's obligations
--------
under the foreing covenant and agreement shall expire not later than the date
that is fifteen (15) years after the date hereof, except that following the date
that is fifteen (15) years after the date hereof, VIMRx's obligations shall
continue to the extent and for the period of time that Baxter continues
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to supply any Supplied Product under the terms of the Hardware and Disposables
Supply Agreement, but only with respect to such Supplied Product.
3.2. Except as otherwise agreed by Baxter in writing, including in any
Acquisition and Operating Document, VIMRx covenants and agrees that neither
VIMRx nor any of its Affiliates shall, directly or indirectly, anywhere in the
world, (i) engage in, or (ii) render consulting or advisory services to any
entity that engages in, or (iii) be a joint venturer, partner, licensor, member,
shareholder (other than in the case of any entity with securities that are
publicly traded, a holder of 2% or less of the voting securities of such an
entity) or trustee of any entity for the purpose of engaging in the marketing,
sale or distribution of any product which directly competes with any product of
Baxter for use in the separation of human blood into its constituents, such as
platelets, plasma, red blood cells, leukocytes, and mononuclear cells, while a
live donor or patient is connected to the separation device (hereinafter
referred to as "On-Line Separation"). VIMRx's obligations under the foregoing
covenant and agreement shall begin on the date hereof and shall expire on the
date that is the later of (i) the date that is five (5) years after the date
hereof, or (ii) one year after the first date on which Baxter neither owns at
least ten percent (10%) of the Common Stock of Newco, on a fully diluted basis,
nor retains a seat on Newco's board of directors, or (iii) the date on which the
Marketing, Sales and Distribution Agreement expires, as its term may be
extended; provided that all of VIMRx's obligations under the foregoing covenant
--------
and agreement shall expire not later than the date that is fifteen (15) years
after the date hereof.
4. NON-COMPETE COVENANTS BY NEWCO.
------------------------------
4.1. Except as otherwise agreed by Baxter in writing, including in any
Acquisition and Operating Document, Newco covenants and agrees that neither
Newco nor any of its Affiliates shall, anywhere in the world, (i) engage in, or
(ii) render consulting or advisory services to any entity that engages in, or
(iii) be a joint venturer, partner, licensor, member, shareholder (other than,
in the case of an entity with securities that are publicly traded, a holder of
2% or less of the voting securities of such entity) or trustee of any entity for
the purpose of engaging in, the production, manufacture, marketing, sale or
distribution of any product which directly competes with any Supplied Product,
except as such production, manufacture, marketing, sale or distribution is
conducted by Newco or an entity owned by Baxter and VIMRx in substantially the
same proportions as Newco is owned, for use in Ex Vivo Cell Processing. Newco's
obligations under the foregoing covenant and agreement shall begin on the date
hereof and shall expire on the date that is the later of (i) eleven (11) years
after the date hereof or (ii) the date on which Baxter's obligation to supply
such Supplied Product expires or is terminated under the terms of the Hardware
and Disposables Supply Agreement for a reason other than Newco's breach;
provided that all of Newco's obligations under the foregoing covenant and
- --------
agreement shall expire not later than the date that is fifteen (15) years after
the date hereof, except that following the date that is fifteen (15) years after
the date hereof, Newco's obligations shall continue to the extent and for the
period of time that Baxter continues to supply any Supplied Product under the
terms of the Hardware and Disposables Supply Agreement, but only with respect to
such Supplied Product.
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4.2. Except as otherwise agreed by Baxter in writing, including in any
Acquisition and Operating Document, Newco covenants and agrees that neither
Newco nor any of its Affiliates shall, directly or indirectly, enable VIMRx, any
of Newco's other Affiliates, or any third party, to engage in the marketing,
sale or distribution of any product anywhere in the world which directly
competes with any product of Newco distributed or to be distributed by Baxter
pursuant to the Marketing, Sales and Distribution Agreement in the Field of
Distribution (as that capitalized term is defined in the Marketing, Sales and
Distribution Agreement), whether as a licensor or otherwise. Newco's
obligations under the foregoing covenant and agreement shall begin on the date
hereof and shall expire on the date on which the Marketing, Sales and
Distribution Agreement expires or is terminated pursuant to its terms for a
reason other than Newco's breach.
4.3. Except as otherwise agreed by Baxter in writing, including in any
Acquisition and Operating Document, Newco covenants and agrees that neither
Newco nor any of its Affiliates shall, directly or indirectly, anywhere in the
world, (i) engage in, or (ii) render consulting or advisory services to any
entity that engages in, or (iii) be a joint venturer, partner, licensor, member,
shareholder (other than in the case of any entity with securities that are
publicly traded, a holder of 2% or less of the voting securities of such an
entity) or trustee of any entity for the purpose of engaging in the marketing,
sale or distribution of any product which directly competes with any product of
Baxter for use in On-Line Separation. Nothing herein or in Section 3.2 shall
prevent or restrict Newco, or any Affiliate of Newco that is owned by Baxter and
VIMRx in substantially the same proportions as Newco is owned, from marketing,
selling or distributing any product for use in selection as described in Section
2.1(a) above, whether or not a live donor or patient is connected to the
selection device, provided that such selection does not include On-Line
--------
Separation. Newco's obligations under the foregoing covenant and agreement
shall begin on the date hereof and shall expire on the date that is the later of
(i) the date that is five (5) years after the date hereof or (ii) one year after
the first date on which Baxter neither owns at least ten percent (10%) of the
Common Stock of Newco, on a fully diluted basis, nor retains a seat on Newco's
board of directors, or (iii) the date on which the Marketing, Sales and
Distribution Agreement expires, as its term may be extended; provided that all
--------
of Newco's obligations under the foregoing covenant and agreement shall expire
not later than the date that is fifteen (15) years after the date hereof.
5. LABEL COPY.
----------
Baxter covenants and agrees that as of the date that is one (1) year after
the date hereof, no label, insert, advertising, packaging or marketing materials
used in connection with any product of Baxter or any Affiliate of Baxter that is
the same or similar to a Supplied Product and that is produced, manufactured,
marketed, sold or distributed by Baxter or any Affiliate of Baxter for uses
other than uses which would violate Section 2.1 of this Agreement will refer to
uses which would violate Section 2.1 of this Agreement or describe such product
as used or usable for uses which would violate Section 2.1 of this Agreement.
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6. ACKNOWLEDGEMENT OF CONFIDENTIAL INFORMATION.
-------------------------------------------
The Recipient, on behalf of itself and on behalf of its Representatives,
acknowledges and agrees that all information which the Recipient or its
Representatives obtained from the Owner in connection with the Prior
Confidentiality Agreements shall be deemed to constitute Confidential
Information of the Owner, provided that Newco shall be deemed to be the Owner of
--------
Confidential Information acquired by Newco pursuant to the Acquisition
Agreement.
7. AGREEMENT TO MAINTAIN CONFIDENTIALITY.
-------------------------------------
Recipient may utilize the Confidential Information only for the furtherance
of the Recipient's rights and obligations under the Acquisition and Operating
Documents. Recipient, on behalf of itself and its Representatives, agrees that
except with respect to Authorized Disclosures (as that capitalized term is
defined below) and as otherwise expressly permitted by this Agreement in
furtherance of the Recipient's rights and obligations under the Acquisition and
Operating Documents, Recipient will not, and will cause any and all of its
Representatives not to, on or after the date hereof, in any form or manner,
directly or indirectly, divulge, disclose or communicate to any person, or
utilize for its commercial benefit or for the benefit of any other person, or to
the detriment of the Owner, any Confidential Information. Notwithstanding
anything contained in this Agreement to the contrary, without the express prior
written consent of Baxter, neither VIMRx nor Newco may disclose or use any
Confidential Information received by VIMRx or Newco from the Baxter Group to or
on behalf of any of its Affiliates (other than an entity that both (i) is owned
by Baxter and VIMRx in substantially the same proportions as Newco is owned and
(ii) agrees to be bound by the provisions of this Agreement), unless such
disclosure or use constitutes an Authorized Disclosure. Notwithstanding
anything contained in this Agreement to the contrary, without the express prior
written consent of the Owner, Baxter may not disclose or use any Confidential
Information received from the VIMRx Group or Newco to or on behalf of any of
Baxter's Affiliates, unless such disclosure or use constitutes an Authorized
Disclosure. In addition, Recipient agrees to, and will cause any and all of its
Representatives to, protect and secure any Confidential Information in its
possession or in the possession of its Representatives from unauthorized
disclosure or use. The standard of care imposed on Recipient and its
Representatives for protecting Confidential Information will be the care
employed by Recipient and its Representatives to protect its confidential
information but in no event shall the care used by Recipient and its
Representatives be less than the exercise of reasonable and prudent care to
prevent unauthorized disclosure or use of such Confidential Information (except
that Recipient shall not be excused for its own negligence or the negligence of
its Representatives). In the event of the destruction, loss or theft of any
materials containing Confidential Information in the possession of Recipient or
its Representatives, Recipient shall notify Owner in writing immediately
identifying the materials so lost or destroyed.
8. AUTHORIZED DISCLOSURES.
----------------------
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Notwithstanding any provision of this Agreement to the contrary, Recipient
shall not be deemed to be in breach of Section 7 of this Agreement with respect
to the following authorized disclosures of Confidential Information ("Authorized
Disclosure(s)"):
8.1. Disclosures of Confidential Information to the extent that such
disclosures were previously authorized in writing by the Owner, including its
directors, executive officers or other authorized employees; or
8.2. Disclosures of Confidential Information permitted by the Recipient
pursuant to any Transaction Document, but only to the extent permitted by the
terms and conditions of such Transaction Document; or
8.3. Disclosures of Confidential Information which Recipient can prove is,
or had previously become, Non-Confidential Information; or
8.4. Disclosures of Confidential Information to any governmental authority,
or to officials or officers of any court, administrative court or arbitrators,
with valid and competent jurisdiction thereof, if directed to disclose such
Confidential Information to and by any of the foregoing, and in any event only
after ten (10) business days prior written notice to the Owner describing the
Confidential Information so to be disclosed, to whom it is to be disclosed, and
the reasons for disclosure (the Recipient agrees to give the Owner notice of any
pending disclosure described in this Section 8.4 within forty-eight (48) hours
after the Recipient's receipt of such direction to disclose such Confidential
Information); or
8.5. Disclosures of Confidential Information to any governmental authority,
officials or officers of any court, administrative court or arbitrators, to the
extent necessary to (i) defend against any claim, cause of action or controversy
brought against the Recipient by a third party, but only with the prior written
consent of the Owner (which consent shall not be unreasonably withheld) and
subject to a suitable protective order; and (ii) enforce any right against, or
defend against any claim, cause of action or controversy brought by, the Owner,
under this Agreement, the Acquisition and Operating Documents, or otherwise,
provided that such disclosure is subject to a suitable protective order; or
8.6. Disclosures of Confidential Information to Recipient's Representatives
who reasonably need to know such information in connection with Recipient's
furtherance of the Transaction, including Recipient's rights and obligations
under the Transaction Documents, and who have been informed of and have agreed
to be bound by the terms and conditions of this Agreement regarding the
disclosure and protection of such Confidential Information.
9. REPRODUCTION OF CONFIDENTIAL INFORMATION.
----------------------------------------
Recipient agrees that Recipient will not, and will cause any and all of its
Representatives not to, reproduce copies of any Confidential Information which
bears the legend (or its
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equivalent): DO NOT DUPLICATE. Subject to the terms of this Agreement,
Recipient and its Representatives may duplicate documents which do not bear the
aforementioned legend, provided that such duplication is reasonably required in
furtherance of the Transaction.
10. NO LICENSE OR RIGHT.
-------------------
No right or license, whether expressed or implied, in the Confidential
Information is granted to Recipient or any of its Representatives other than to
use the Confidential Information in the manner and to the extent expressly
authorized by this Agreement.
11. RETURN OF CONFIDENTIAL INFORMATION.
----------------------------------
Upon Owner's written request for any reason, Recipient and its
Representatives will promptly deliver to Owner or, at Owner's request, destroy
all correspondence, catalogs, price books, drawings, blueprints, manuals,
letters, notes, notebooks, reports, programs, plans, proposals, financial
documents, or any other documents concerning the Owner's research, technology,
development, technical information, customers, dealer network, marketing
strategies, products or processes and/or which contains Confidential
Information, and all summaries and analyses thereof created by Recipient or its
Representatives, in all cases whether in hard copy form or other media
(including, without limitation, computer software or magnetic or optical storage
media). In the event that the Owner elects to have the Recipient destroy such
materials containing Confidential Information as provided in the preceding
sentence, the Owner may require the Recipient to provide the Owner with a
statement, certified by a duly authorized officer of the Recipient, that all of
such materials were destroyed by the Recipient in a manner which will not allow
the reconstruction of such Confidential Information from such destroyed
materials. Notwithstanding anything contained in this Section 11 to the
contrary, the Recipient shall be entitled to retain one copy of the Confidential
Information in its legal archives, provided that Recipient shall at all times
--------
keep such copy in a safe or other locked and secure cabinet accessible only to
Recipient's attorneys and shall only use such copy and such Confidential
Information thereafter solely for the purpose of verifying the Recipient's or
its Representatives' compliance with their continuing obligations under this
Agreement.
12. TERM OF CONFIDENTIALITY PROVISIONS.
----------------------------------
Recipient's obligations with respect to Confidential Information as set
forth in this Agreement shall expire fifteen (15) years from the date hereof.
13. PUBLICITY.
---------
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No party to this Agreement shall issue or cause the publication of any
press release or other public announcement with respect to this Agreement or any
actions contemplated hereby without first providing a draft of such press
release or announcement to the other parties hereto and obtaining the consent of
the other parties hereto; provided, however, that nothing herein shall prevent
any party hereto from making any disclosure required by law.
14. ENFORCEMENT AND INDEMNIFICATION.
-------------------------------
In the event that any party hereto breaches any of the terms of this
Agreement (the "Breaching Party"), the Breaching Party acknowledges and agrees
that said breach will result in immediate and irreparable harm to the business
and goodwill of any non-breaching party hereto (the "Non-Breaching Party") and
that damages, if any, and remedies at law for such breach, will be inadequate
and not determinable. The Non-Breaching Party, upon a breach of this Agreement
by the Breaching Party, shall therefore be entitled to (a) subject to Sections
15 and 24 hereof, apply for and receive from any court of competent
jurisdiction, equitable relief by way of temporary or permanent injunction to
restrain any breach of this Agreement and for such further relief as such court
may deem just and proper, at law or in equity; (b) in the event that the Non-
Breaching Party shall prevail in enforcing any of its rights hereunder, the Non-
Breaching Party's reasonable costs and expenses in enforcing such rights under
this Agreement (including court costs and reasonable legal fees and expenses);
and (c) be indemnified and held harmless by the Breaching Party from and against
any and all manner of expenses, losses, claims and liabilities of any kind
incurred by the Non-Breaching Party (including its Affiliates) in connection
with such breach.
15. DISPUTE RESOLUTION.
------------------
15.1. Provisional Remedies: The procedures specified in this Section
15 shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
--------
however, that a party, without prejudice to these procedures, may seek a
- -------
preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in
good faith in the procedures specified in this Section 15.
15.2. Negotiations Between Executives: The parties will attempt in
good faith to resolve any claim or controversy arising out of or relating to the
execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
15) promptly by negotiations between their designated executives.
15.3. Arbitration: In the event that any dispute arising out of or
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith negotiation pursuant to the procedures of Section
15.2, such dispute shall upon written notice by either party
15
<PAGE>
to the other, be finally settled by arbitration administered by the Center for
Public Resources in accordance with the provisions of its Commercial Arbitration
Rules and the United Stated Federal Arbitration Act, as modified below:
(a) The arbitration shall be heard by a panel of three (3) independent
and impartial arbitrators, all of whom shall be selected from a list of
neutral arbitrators supplied by the Center for Public Resources. From such
list, each of Baxter and Newco shall select one (1) arbitrator, and the
arbitrators so selected shall select a third. The panel shall designate
one (1) among them to serve as chair.
(b) The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
(c) Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration
Act as necessary to protect the rights or property of the party pending the
decision of the arbitrators.
(d) The parties shall allow and participate in limited discovery for
the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the Center
for Public Resources. All discovery shall be completed within sixty (60)
days following the filing of the answer or other responsive pleading.
Unresolved discovery disputes shall be brought to the attention of the
chair of the arbitration panel and may be disposed of by the chair.
(e) Each party shall have up to fifty (50) hours to present evidence
and argument in a hearing before the panel of arbitrators, provided that
--------
the chair of the panel of arbitrators may establish such longer times for
presentations as the chair deems appropriate.
(f) The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the matter,
shall be in writing and shall specify the factual and legal basis for the
award. Judgment thereon may be entered in any court having jurisdiction
thereof.
(g) The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the
-------- -------
arbitrators will have no authority to award special, punitive or exemplary
damages, or other money damages that are not measured by the prevailing
party's actual damages.
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15.4. Performance During Dispute: Each party is required to continue
to perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
16. CONTINUING OBLIGATION.
---------------------
Except as set forth herein, the obligations, duties and liabilities of each
party hereto pursuant to this Agreement are continuing, absolute and
unconditional and shall remain in full force and effect as provided herein
despite any termination of any Transaction Documents.
17. FORCE MAJEURE.
-------------
No party to this Agreement shall be liable for delay or failure in the
performance of any of its obligations hereunder if such delay or failure is due
to causes beyond its reasonable control, including acts of God, fires,
earthquakes, strikes and labor dispute, acts of war, civil unrest or
intervention of any governmental authority, but any such delay or failure shall
be remedied by such party as soon as is reasonably possible.
18. PROVISIONS CONTRARY TO LAW/SEVERABILITY.
---------------------------------------
In performing this Agreement, the parties hereto shall comply with all
applicable laws, whether domestic or foreign. Nothing in this Agreement shall
be construed so as to require the violation of any law, and wherever there is
any conflict between any provision of this Agreement and any applicable law, the
applicable law shall prevail. In the event any provision of this Agreement
conflicts with any applicable law or is otherwise determined by an arbitrator or
court having valid jurisdiction thereover to be unenforceable, the affected
provision of this Agreement shall be deemed to have been modified to the extent
necessary so as not to conflict with the applicable law or to be unenforceable
or, if such modification is not possible, such provision shall be deemed to have
been deleted herefrom, without affecting, impairing or invalidating the
remaining provisions of this Agreement.
19. ASSIGNMENT.
----------
Baxter may assign its rights and obligations hereunder to any Affiliate of
Baxter with prior notice to VIMRx and Newco. VIMRx may assign its rights and
obligations hereunder to any Affiliate of VIMRx with prior notice to Baxter and
Newco. Newco may assign its rights and obligations hereunder to any Affiliate
of Newco with prior notice to and consent of Baxter and VIMRx, which consent
will not be unreasonably withheld; and Newco may assign its rights and
obligations under this Agreement to any Affiliate of Newco without the prior
written consent of Baxter or VIMRx, provided that such Affiliate is owned,
directly or indirectly, by Baxter and
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VIMRx in substantially the same proportions as Newco is owned. No party may
assign any of its rights or obligations under this Agreement, unless and to the
extent expressly permitted herein. Notwithstanding anything contained in this
Section 19 to the contrary, in the event of any permitted assignment of any
party's rights and obligations hereunder, the assigning party shall continue to
be bound by the obligations contained in Sections 2, 3, 4, 5, 7, 9, 10, 11, 13,
14, 15 and 24 applicable to it as if no assignment had occurred. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding on the
permitted successors and assigns of the parties hereto.
20. CAPACITY.
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Each party hereto hereby represents and warrants to the other parties
hereto that, in entering into this Agreement, it is not in violation of any
contract or agreement, whether written or oral, with any other person to which
it is a party or by which it is bound and will not violate or interfere with the
rights of any other person.
21. ENTIRE AGREEMENT.
----------------
This Agreement contains the entire agreement and understanding between the
parties hereto relating to the subject matter hereof. Furthermore, the parties
hereto specifically agree that all prior agreements, whether written or oral,
relating to the subject matter of this Agreement (other than the Acquisition and
Operating Documents and other Transaction Documents (as such capitalized term is
defined in the Acquisition Agreement)) shall be of no further force or effect
from and after the date hereof.
22. NOTICES.
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All notices required under this Agreement shall be in writing, and all such
notices and other written communications shall be delivered either by hand, by a
nationally recognized overnight delivery service (with delivery charges
prepaid), by first class, registered or certified United States mail (postage
prepaid), or by facsimile transmission (provided that in the case of facsimile
transmission, a confirmation copy of the notice shall be delivered by hand, by a
nationally recognized overnight delivery service (with delivery charges
prepaid), or by first class, registered or certified United States mail (postage
prepaid) within two (2) days of facsimile transmission), addressed to each party
hereto as follows:
IN THE CASE OF BAXTER, TO:
Baxter Healthcare Corporation
One Baxter Parkway
Deerfield, Illinois 60015
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Attention: President - Biotech Business Group
Facsimile:
WITH A COPY TO:
Baxter Healthcare Corporation
One Baxter Parkway
Deerfield, Illinois 60015
Attention: General Counsel - Baxter Healthcare Corporation
Facsimile:
IN THE CASE OF VIMRX, TO:
VIMRx Pharmaceuticals Inc.
2751 Centerville Road
Suite 210
Wilmington, Delaware 19808
Attention: Chief Executive Officer
Facsimile: (302) 998-3794
WITH A COPY TO:
Epstein Becker Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
Facsimile: (212) 661-0989
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IN THE CASE OF NEWCO, TO:
BIT ACQUISITION CORP.
Nine Parker
Irvine, California 92718
Attention: President
Facsimile:
WITH A COPY TO:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Lowell S. Lifschultz, Esq.
Facsimile: (212) 661-0989
or such other address as any such party may designate in writing and delivered
to the other parties hereto pursuant to this Section 22. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered: by hand or by a nationally recognized overnight
delivery service (with delivery charges prepaid), at the time of delivery; by
first class, registered or certified United States mail (postage prepaid), three
(3) business days after delivery thereof to the United States Postal Service; or
by facsimile transmission, at the time of transmission.
23. WAIVERS AND MODIFICATIONS.
-------------------------
The failure of any party hereto to insist on the performance of any
obligation hereunder shall not be deemed to be a waiver of such obligation.
Waiver of any breach of any provision hereof shall not be deemed to be a waiver
of any other breach of such provision or any other provision. No waiver,
modification, release or amendment of any obligation under or provision of this
Agreement shall be valid or effective unless in writing signed by the party to
be bound by such waiver, modification, release or amendment.
24. CHOICE OF LAW AND JURISDICTION.
------------------------------
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware, without application of conflicts of law
principles, and, subject to Section 14 hereof, each party hereto hereby submits
to the jurisdiction and venue of any state or federal court in the State of
Delaware. To the extent permissible by law, each of the parties hereto hereby
waives, releases and agrees not to assert, and agrees to cause its Affiliates to
waive, release and not assert, any rights such party or its Affiliates may have
under any foreign law or regulation that would be inconsistent with the terms of
this Agreement as governed by Delaware law.
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25. RULES OF CONSTRUCTION.
---------------------
In this Agreement, unless a clear contrary intention appears:
25.1. The singular number includes the plural number and vice versa;
25.2. Reference to any party hereto includes such party's permitted
successors and assigns;
25.3. Reference to any gender includes the other gender;
25.4. Reference to any Section means such section of this Agreement,
and references in any section or definition to any clause means such clause
of such section or definition;
25.5. "Herein," "hereunder , hereof," "hereto," and words of similar
import, shall be deemed references to this Agreement as a whole and not to
any particular section or other provision of this Agreement;
25.6. "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
25.7. Relative to the determination of any period of time, "from" means
"from and including", "to" means "to but excluding" and "through" means
"through and including";
25.8. The headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in construing this
Agreement; and
25.9. Any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against any party
hereto shall not apply to any construction or interpretation hereof.
26. COUNTERPARTS; FACSIMILE SIGNATURES.
----------------------------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, and all such counterparts together shall
constitute one and the same instrument. With respect to this Agreement and any
notices delivered pursuant to this Agreement, documents signed by facsimile
signature shall be deemed to be of the same force and effect as an original of a
manually signed copy.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
Baxter: VIMRx:
Baxter Healthcare Corporation VIMRx Pharmaceuticals Inc.
By:_________________________ By:_________________________
Name: Name:
Title: Title:
Newco:
BIT ACQUISITION CORP.
By:______________________
Name:
Title:
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EXHIBIT 10.6
CHIRON SUBLICENSE AGREEMENT
SUBLICENSE AGREEMENT ("Agreement") dated as of December 17, 1997 (the
"Effective Date"), is entered into by and between Baxter Healthcare Corporation,
a Delaware corporation having a place of business at 1627 Lake Cook Road,
Deerfield, Illinois 60015 ("Baxter"), and BIT Acquisition Corporation, a
Delaware corporation having its principal place of business at 275 Centerville
Road, Suite 210, Little Falls II, Wilmington, Delaware 19808 ("BIT").
RECITALS
A. Baxter has entered into that certain non-exclusive License Agreement
with Cetus Oncology Corporation d/b/a Chiron Therapeutics ("Chiron"), dated
____________, 1995 (the "Chiron License"), annexed as Exhibit A hereto;
B. Baxter and VIMRx Pharmaceuticals Inc. ("VIMRx"), have agreed to enter
into a strategic alliance in the ex vivo cell therapies business and have formed
BIT for that purpose pursuant to that certain Asset Purchase Agreement dated as
of October 10, 1997, by and between Baxter and VIMRx (the "Asset Purchase
Agreement"), and have agreed that Baxter will grant BIT the exclusive (subject
to the limitations set forth herein) sublicense to the Licensed Technology and
contemporaneously enter into the Manufacturing, Supply and Distribution
Agreements (as those capitalized terms are hereinafter defined).
C. Baxter is willing to grant to BIT an exclusive sublicense of all of its
rights under the Chiron License subject to Baxter's retention of the Baxter
Retained License Rights and otherwise subject to the terms and conditions
contained in the Chiron License and those set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and BIT hereby agree as follows:
1. DEFINITIONS
1.1 Terms Defined in the Chiron License. Capitalized terms not otherwise
defined herein shall have the meanings given them in the Chiron License.
1.2 As used herein, the following terms shall have the specified meanings:
<PAGE>
(a) "Affiliate" of a party shall mean any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with, the party or (ii) fifty percent (50%) or more of the
voting capital stock (or in the case of an entity which is not a corporation,
fifty percent (50%) or more of the equity interest) of which is beneficially
owned or held by a party or any of such party's Subsidiaries. The term
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity (other than a
natural person), whether through the ownership of voting capital stock, by
contract or otherwise.
(b) "Baxter Retained License Rights" means (i) the non-exclusive worldwide
right and license under the Licensed Patents as such patents relate to the
Licensed Antibodies, without the right to sublicense, to make, have made, use,
import and sell Licensed Products for use with the MaxSep and/or Isolex systems
for the selection of cells with one or more of the CD34, B Cell, or breast
cancer antibodies for the treatment, mitigation, prophylaxis or selection of/for
cancer, including the research market; and (ii) the non-exclusive worldwide
right and license, without the right to sublicense, to make, have made, use,
import and sell Licensed Products under the Chiron License for the treatment,
mitigation, prophylaxis or selection of/for cancer requiring the selection or
use of CD34+ cells, including sales into the research market. All such above
listed rights shall specifically exclude rights pertaining to the genetic
manipulation of such cells.
(c) "Manufacturing, Supply and Distribution Agreements" means, individually
and collectively, the Antibodies Manufacturing & Storage Agreement, the Hardware
Manufacturing Agreement, the Hardware & Disposables Supply Agreement and the
Marketing, Sales & Distribution Agreement, each by and between Baxter and BIT
and each of even date herewith.
(d) "Subsidiary" means, as to any party, any corporation of which more than
50% of the outstanding capital 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 party, by one or more of its
subsidiaries, or by the party and one or more of its subsidiaries.
2. THE CHIRON LICENSE
2.1 BIT agrees that this Agreement is subject to the terms and conditions
of the Chiron License, all the terms of which are hereby incorporated by
reference into this Agreement. BIT understands the obligations imposed by the
Chiron License and expressly agrees to be bound by same. The parties agree that
this Agreement shall be interpreted in a manner so as to be consistent with the
Chiron License.
2.2 BIT agrees to pay, perform, discharge or otherwise satisfy, or cause
to be paid, performed, discharged or otherwise satisfied Baxter's obligations
under the Chiron License arising on or after the date hereof, including but not
limited to Baxter's obligations to make payments due
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and owing to Chiron pursuant to Article 3 of the Chiron License with respect to
any Licensed Products for which an approval is obtained by BIT or sold by BIT as
well as to fulfill any other payment or reporting obligation under the Chiron
License by transmitting any and all such payments and reports directly to
Chiron. The foregoing notwithstanding, BIT shall have no obligation or liability
under this Agreement:
(a) arising out of or related to or constituting any act, omission,
obligation or liability of Baxter under the Chiron License arising
prior to the date hereof;
(b) arising out of or related to any exercise by Baxter of the Baxter
Retained License Rights;
(c) arising out of or related to any sales of Licensed Products by
Baxter in violation of the exclusivity provisions hereof;
(d) arising out of or related to any breach or alleged breach by
Baxter of the confidentiality provisions of the Chiron License
(except to the extent such breach or alleged breach was caused by
BIT);
(e) arising out of or related to any breach or alleged breach by
Baxter of any obligation under the Chiron License to return any
material in Baxter's actual possession (and not possessed by BIT
or provided to BIT by Baxter) at the time such obligation arises;
(f) arising out of or related to the refusal of Chiron to accept any
payment or performance by BIT in full compliance with the
provisions of the Chiron License except for the fact that such
payment or performance is tendered by BIT; provided that BIT
promptly tenders such conforming payment or performance to Baxter
so that it is not alleged by Chiron that Baxter is in breach of
the Chiron License;
(g) arising out of or related to any breach by Baxter of its
obligations under this Agreement, the Asset Purchase Agreement, or
any one or more of the Manufacturing, Supply and Distribution
Agreements;
(h) arising out of or related to any failure by Baxter to maintain the
records and provide the reports required under the Chiron License,
except, and to the extent that, BIT shall fail to satisfy its
reciprocal obligation to provide to Baxter records and/or reports
of its sales and other activities hereunder.
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3. LICENSE GRANT BY BAXTER TO BIT
3.1 Subject to the terms and conditions of this Agreement, Baxter hereby
grants to BIT and BIT hereby accepts, the exclusive, with the exception of the
Baxter Retained License Rights, worldwide sublicense to all of Baxter's rights
and remedies and the benefits of all covenants of Chiron under the Chiron
License. BIT shall have the right to sublicense its rights, provided BIT fully
complies with the requirements for sublicenses set forth in the Chiron License.
3.2 The sublicense granted hereunder and Baxter's Retained License Rights
are subject in all events, to the terms and provisions of that certain
Confidentiality and Non-Competition Agreement between Baxter and BIT of even
date herewith (the "Non-Compete Agreement").
3.3 Notwithstanding Section 3.1 above, BIT will store the antibodies to be
transferred to BIT at Baxter's facilities, and Baxter will keep such stored
antibodies at Baxter's facilities until otherwise notified by BIT, in accordance
with the terms and provisions of the Antibodies Manufacturing and Storage
Agreement of even date herewith.
4. NOTIFICATION OF BIT PAYMENTS AND REPORTS
BIT shall notify Baxter of any payment, royalty payment, FDA marketing
approval and First Commercial Sale in each country where such sale is made and
shall provide Baxter with copies of any payment or report transmitted to Chiron
concurrent with the transmittal of same to Chiron.
5. BAXTER'S RIGHTS TO AVOID TERMINATION OF THE CHIRON LICENSE; TERMINATION;
NON-MODIFICATION
5.1 BIT shall provide Baxter with written notice within three (3) business
days of the occurrence of any of the following:
(a) Failure to meet its royalty payment obligations under the Chiron
License;
(b) BIT's material breach of any other obligation under the Chiron
License;
(c) Receipt of any notification or other communication relating or
otherwise referring to BIT's alleged breach of its responsibilities
under the Chiron License or threatening termination of the Chiron
License.
5.2. After receipt of notice under Section 5.1 above, or, in the event that
Baxter, in good faith, after consultation with BIT, reasonably believes that the
Chiron License will be terminated absent action by Baxter, Baxter may, at its
option, take such actions it considers to be reasonably necessary in order to
avoid such termination. To the extent Baxter advances payments on BIT's behalf,
such payment shall be considered a loan to BIT. Interest on the amount advanced
shall accrue and be payable from the date advance at a rate of [Confidential
Information Omitted] per month (or the highest rate allowed by law, if lower)
compounded annually, until fully paid (including full payment of such interest).
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<PAGE>
5.3. Final Notice to Cure. In the event Baxter exercises its rights
under Section 5.2 above, Baxter shall be entitled to terminate the Agreement,
provided, Baxter serves BIT with thirty (30) days prior notice of its intention
to terminate, and gives BIT the opportunity to cure the breach which
necessitated Baxter's action under Section 5.2 above, including the payment of
any fees, plus interest, due and owing to Baxter, and/or a reimbursement of
Baxter's costs and expenses incurred by Baxter in exercising its rights under
Section 5.2 above. If, due to BIT's continued default, Baxter exercises its
rights under Section 5.2 above on more than two (2) occasions within the
previous twelve (12) months, Baxter shall be entitled to terminate the Agreement
without providing BIT with any final notice to cure.
5.4 Early Termination. In addition to the termination provisions of the
Chiron License, a non-breaching party may terminate this Agreement if any of the
following events (each is herein referred to as a "Material Breach") occurs:
(a) Baxter exercises its rights under Section 5.2 hereof on more than
two (2) occasions within a twelve (12) month period and Baxter
elects to terminate this Agreement as provided in Section 5.3
hereof;
(b) a final, non-appealable decision is rendered by an arbitrator or
a court of competent jurisdiction holding that BIT has materially
breached its obligations under Section 4 of the Non-Compete
Agreement after having been given at least 180 days notice of
such breach by Baxter.
5.5 Termination for BIT Bankruptcy: This Agreement and the license granted
hereunder shall automatically terminate, without further action of any kind by
Baxter, upon the bankruptcy, insolvency, assignment for the benefit of creditors
or other act of insolvency by, of or against BIT.
5.6 Assignment Upon Termination of Marketing, Sales & Distribution
Agreement: Except as a result of a breach or an alleged breach by BIT, upon
expiration or earlier termination of the Marketing, Sales & Distribution
Agreement, and the parties have not renewed or extended such agreement or
entered into a new agreement which substantially embodies the obligations
of such agreement, Baxter shall assign all of its rights under this
Agreement and the Chiron License to BIT.
5.7 BIT Termination. This Agreement and the license granted hereunder may
be terminated by BIT with sixty (60) days written notice to Baxter and after
payment in full by BIT of all outstanding royalties or any other payments due
and owing up to the date of termination. Upon any such termination pursuant to
this Section 5.7, all rights granted hereunder to BIT shall revert back to
Baxter without further action of any kind by Baxter or BIT.
5.8 Non-Modification. Except as expressly permitted herein, neither party
shall take any action to amend, extend, terminate or otherwise modify the terms
and conditions of, or the rights and obligations of the parties to, the Chiron
License without the prior written consent of
5
<PAGE>
the other party. In furtherance of the foregoing, in the event Baxter shall at
any time exercise any of the Baxter Retained License Rights, Baxter shall comply
with all terms and conditions of, and shall pay, perform, discharge or otherwise
satisfy its obligations under, the Chiron License with respect to, and to the
extent of, any exercise of such rights.
6. INDEMNIFICATION
6.1 Indemnification by BIT. BIT shall defend, indemnify and hold Baxter
and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) BIT's breach of this Agreement; (ii) BIT's breach of the Chiron License; and
(iii) for death, personal injury, illness or property damage arising out of the
manufacture, use or sale by BIT of Licensed Products or the use of any
Technology, or out of the manufacture, use, sale or other disposition of any
products under the terms of this Agreement.
6.2 Indemnification by Baxter. Baxter shall defend, indemnify and hold
BIT and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) Baxter's breach of this Agreement; (ii) Baxter's breach of the Chiron
License; and (iii) any manufacture, distribution or sale of products by Baxter
under the terms of this Agreement.
7. DISPUTE RESOLUTION
7.1 Provisional Remedies: The procedures specified in this Section 7 shall
be the sole and exclusive procedures for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that a
--------- -------
party, without prejudice to these procedures, may seek a preliminary injunction
or other provisional relief if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During such
action, the parties will continue to participate in good faith in the procedures
specified in this Section 7.
7.2 Negotiations Between Executives: The parties will attempt in good
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
7), by negotiations under the procedures set forth in Section 6 of the Hardware
Manufacturing Agreement concerning referral of disputes to the Corporate
Committee (as defined therein).
7.3 Arbitration: In the event that any dispute arising out of or relating
to this Agreement or its breach, termination or validity has not been resolved
after good faith negotiation pursuant to the procedures of Section 7.2, such
dispute shall, upon written notice by either party to the other, be finally
settled by arbitration administered by the Center for Public Resources in
accordance with the provisions of its Commercial Arbitration Rules and the
United States Federal Arbitration Act, as modified below:
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<PAGE>
A. The arbitration shall be heard by a panel of three (3) independent
and impartial arbitrators all of whom shall be selected from a list of
neutral arbitrators supplied by the Center for Public Resources. From
such list, each of Baxter and BIT shall select one (1) arbitrator, and
the arbitrators so selected shall select a third. The panel shall
designate one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal
Arbitration Act as necessary to protect the rights or property of the
party pending the decision of the arbitrators.
D. The parties shall allow and participate in limited discovery for
the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the
Center for Public Resources. All discovery shall be completed within
sixty (60) days following the filing of the answer or other responsive
pleading. Unresolved discovery disputes shall be brought to the
attention of the chair of the arbitration panel and may be disposed of
by the chair.
E. Each party shall have up to fifty (50) hours to present evidence
and argument in a hearing before the panel of arbitrators, provided
that the chair of the panel of arbitrators may establish such longer
times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify the factual and legal
basis for the award. Judgment thereon may be entered in any court
having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or
other appropriate relief to cure a breach; provided, however, that the
--------- -------
arbitrators will have no authority to award special, punitive or
exemplary damages, or other money damages that are not measured by the
prevailing party's actual damages.
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<PAGE>
7.4 Performance During Dispute: Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
8. GENERAL
8.1 Provisions Contrary to Law / Severability. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted here from, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
8.2 Foreign Government Approval or Registration. If this Agreement or any
associated transaction is required by the law of any nation to be either
approved or registered with any governmental or other regulatory agency, BIT
shall assume all legal obligations to do so.
8.3 Export Control. Each party shall observe all applicable United States
and foreign laws with respect to the transfer of Licensed Products and related
technical data to foreign nations, countries or other sovereign states.
8.4 Notices. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
facsimile transmission (provided that, in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter, such notices shall be delivered to: President
Baxter Biotech Group
with a copy to:
General Counsel
Baxter Healthcare Corporation
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<PAGE>
If to Baxter, other written communications
shall be delivered to: President
Venture Management
Baxter Biotech Group
with a copy to:
Associate General Counsel
Baxter Healthcare Corporation
If to BIT, such notices shall be delivered to:
President
BIT Acquisition Corp.
with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention:
Lowell S. Lifschultz, Esq.
If to BIT, other written communications
shall be delivered to: President
BIT Acquisition Corp.
with a copy to:
Vice President
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 8.4. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered: by hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
8.5 Force Majeure. With respect to the parties' obligations to each other
pursuant to this Agreement, neither party shall be liable for delay or failure
in the performance of any of its obligations hereunder if such delay or failure
is due to causes beyond its reasonable control. Such causes shall include,
without limitation, acts of God, fires, earthquakes, strikes and labor disputes,
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<PAGE>
acts of war, civil unrest or intervention of any governmental authority, but any
such delay or failure shall be remedied by such party as soon as is reasonably
possible.
8.6 Limitation of Liability. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF
CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY OR
LIQUIDATED DAMAGES.
8.7 Use of Names. Neither party shall use the name of the other in any
promotional materials or advertising related to Licensed Products without the
prior written consent of the other or as permitted by the Manufacturing, Supply
and Distribution Agreements.
8.8 Assignment. BIT shall not assign its rights or obligations under this
Agreement to any party during the term of any of the Manufacturing, Supply and
Distribution Agreements without the prior written consent of Baxter.
Notwithstanding the foregoing, and subject to the terms of the Stockholders
Agreement, BIT may assign its rights under this Agreement in the event of a
sale, merger or other business combination of BIT with or into another business,
provided that BIT obtains the advance written consent of Chiron. Baxter may
assign its rights and obligations hereunder to any party without prior notice to
or consent of BIT. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding on the parties' permitted successors and assigns.
8.9 Waivers and Modifications. The failure of any party to insist on the
performance of any obligation hereunder shall not be deemed to be a waiver of
such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing and signed by the party to be bound by such waiver, modification,
release or amendment.
8.10 Choice of Law and Jurisdiction. Except to the extent required under
the Chiron License this Agreement shall be governed by and construed in
accordance with the internal laws of the state of Delaware, without application
of conflict of law principles, and, subject to Section 8.9 above, each party
hereby submits to the jurisdiction and venue of any state or federal court in
the State of Delaware. To the extent allowed by the Chiron License and
permissible by law, each of the parties hereby waives, releases and agrees not
to assert, and agrees to cause its Affiliates to waive, release and not assert,
any rights such party or its Affiliates may have under any foreign law or
regulation that would be inconsistent with the terms of this Agreement as
governed by Delaware law.
8.11 Independent Parties. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venture, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
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8.12 Entire Agreement. This Agreement, the Asset Purchase Agreement, the
Non-Compete Agreement and the Manufacturing Supply and Distribution Agreements,
together with the Chiron License and the Exhibits and Schedules annexed thereto,
constitute the entire agreement between the parties as to the subject matter
hereof and supersede all prior oral negotiations, representations, agreements
and understandings.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
8.14 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any party includes such party's permitted successors and
assigns;
(c) reference to any gender includes the other gender;
(d) reference to any Section, Exhibit or Schedule means such section of
this Agreement, Exhibit to this Agreement or Schedule to this
Agreement, as the case may be, and references in any section or
definition to any clause means such clause of such section or
definition;
(e) "herein," "hereunder," "hereof," "hereto," and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular section or other provision of this Agreement;
(f) "including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(g) relative to the determination of any period of time, "from" means "from
and including", "to" means "to but excluding" and "through" means
"through and including";
(h) reference to any law (including statutes and ordinances) means such law
as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations
promulgated thereunder;
(i) accounting terms used herein shall have the meanings historically
attributed to them by Baxter prior to the date hereof;
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(j) the headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in construing
this Agreement; and
(k) any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against either
party shall not apply to any construction or interpretation hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date set forth above.
BAXTER HEALTHCARE CORPORATION
By: ___________________________________
Name:
Title:
BIT ACQUISITION CORPORATION
By: __________________________________
Name:
Title:
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EXHIBIT 10.7
DORKEN SUBLICENSE AGREEMENT
SUBLICENSE AGREEMENT ("Agreement") dated as of December 17, 1997 (the
"Effective Date"), is entered into by and between Baxter Deutschland GmbH, a
German corporation having its principal place of business at Edisonstrae 3-4,
85716 Unterschleiheim, Germany ("Baxter GmbH"), and BIT Acquisition
Corporation, a Delaware corporation having its principal place of business at
275 Centerville Road, Suite 210, Little Falls II, Wilmington, Delaware 19808
("BIT").
RECITALS
A. Baxter GmbH has entered into that certain License and Development
Agreement with Professor Bernard Dorken ("Dorken"), dated October 20, 1994 (the
"Dorken License"), annexed as Exhibit A hereto;
B. Baxter Healthcare Corporation ("Baxter"), Baxter GmbH's parent, and
VIMRx Pharmaceuticals Inc. ("VIMRx"), have agreed to enter into a strategic
alliance in the ex vivo cell therapies business and have formed BIT for that
purpose pursuant to that certain Asset Purchase Agreement dated as of October
10, 1997, by and between Baxter and VIMRx (the "Asset Purchase Agreement"), and
have agreed that Baxter GmbH will grant BIT the exclusive (subject to the
limitations set forth herein) sublicense to the Licensed Technology and
contemporaneously enter into the Manufacturing, Supply and Distribution
Agreements (as those capitalized terms are hereinafter defined).
C. Baxter GmbH is willing to grant to BIT an exclusive sublicense of all
of its rights under the Dorken License subject to Baxter GmbH's retention of the
Baxter GmbH Retained License Rights and otherwise subject to the terms and
conditions contained in the Dorken License and those set forth herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter GmbH and BIT hereby agree as follows:
1. DEFINITIONS
1.1 Terms Defined in the Dorken License. Capitalized terms not otherwise
defined herein shall have the meanings given them in the Dorken License.
1.2 As used herein, the following terms shall have the specified meanings:
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(a) "Affiliate" of a party shall mean any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with, the party or (ii) fifty percent (50%) or more of the
voting capital stock (or in the case of an entity which is not a corporation,
fifty percent (50%) or more of the equity interest) of which is beneficially
owned or held by a party or any of such party's Subsidiaries. The term
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity (other than a
natural person), whether through the ownership of voting capital stock, by
contract or otherwise.
(b) "Baxter GmbH Retained License Rights" means (i) the non-exclusive
worldwide right and license, with the right to sublicense to Baxter only, to
make, have made, use, import and sell Antibody, Manipulated Antibody or Licensed
Product for use with the MaxSep and/or Isolex systems for the selection of cells
with one or more of the CD34, B Cell, or breast cancer antibodies for the
treatment, mitigation, prophylaxis or selection of/for cancer, including the
research market; and (ii) the non-exclusive worldwide right and license, without
the right to sublicense, to make, have made, use, import and sell Licensed
Products under the Dorken License for the treatment, mitigation, prophylaxis or
selection of/for cancer requiring the selection or use of CD34+ cells, including
sales into the research market. All such above listed rights shall specifically
exclude rights pertaining to the genetic manipulation of such cells.
(c) "Manufacturing, Supply and Distribution Agreements" means, individually
and collectively, the Antibodies Manufacturing & Storage Agreement, the Hardware
Manufacturing Agreement, the Hardware & Disposables Supply Agreement and the
Marketing, Sales & Distribution Agreement, each by and between Baxter and BIT
and each of even date herewith.
(d) "Subsidiary" means, as to any party, any corporation of which more than
50% of the outstanding capital 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 party, by one or more of its
subsidiaries, or by the party and one or more of its subsidiaries.
2. THE DORKEN LICENSE
2.1 BIT agrees that this Agreement is subject to the terms and conditions
of the Dorken License, all the terms of which are hereby incorporated by
reference into this Agreement. BIT understands the obligations imposed by the
Dorken License and expressly agrees to be bound by same. The parties agree that
this Agreement shall be interpreted in a manner so as to be consistent with the
Dorken License.
2.2 BIT agrees to pay, perform, discharge or otherwise satisfy, or cause
to be paid, performed, discharged or otherwise satisfied Baxter GmbH's
obligations under the Dorken License arising on or after the date hereof,
including but not limited to Baxter GmbH's obligations to pay
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the Remuneration due and owing to Dorken pursuant to Article 4 of the Dorken
License with respect to any Licensed Products for which an approval is obtained
by BIT or sold by BIT as well as to fulfill any other payment or reporting
obligation under the Dorken License by transmitting any and all such payments
and reports directly to Dorken. The foregoing notwithstanding, BIT shall have no
obligation or liability under this Agreement:
(a) arising out of or related to or constituting any act, omission,
obligation or liability of Baxter GmbH under the Dorken License
arising prior to the date hereof;
(b) arising out of or related to any exercise by Baxter GmbH of the
Baxter GmbH Retained License Rights;
(c) arising out of or related to any sales of Licensed Products by
Baxter GmbH in violation of the exclusivity provisions hereof;
(d) arising out of or related to any breach or alleged breach by
Baxter GmbH of the confidentiality provisions of the Dorken
License (except to the extent such breach or alleged breach was
caused by BIT);
(e) arising out of or related to any breach or alleged breach by
Baxter GmbH of any obligation under the Dorken License to return
any material in Baxter GmbH's actual possession (and not possessed
by BIT or provided to BIT by Baxter GmbH) at the time such
obligation arises;
(f) arising out of or related to the refusal of Dorken to accept any
payment or performance by BIT in full compliance with the
provisions of the Dorken License except for the fact that such
payment or performance is tendered by BIT; provided that BIT
promptly tenders such conforming payment or performance to Baxter
GmbH so that it is not alleged by Dorken that Baxter GmbH is in
breach of the Dorken License;
(g) arising out of or related to any breach by Baxter GmbH of its
obligations under this Agreement, the Asset Purchase Agreement, or
any one or more of the Manufacturing, Supply and Distribution
Agreements;
(h) arising out of or related to any failure by Baxter GmbH to
maintain the records and provide the reports required under the
Dorken License, except, and to the extent that, BIT shall fail to
satisfy its reciprocal obligation to provide to Baxter GmbH
records and/or reports of its sales and other activities
hereunder.
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3. LICENSE GRANT BY BAXTER GMBH TO BIT
3.1 Subject to the terms and conditions of this Agreement, Baxter GmbH
hereby grants to BIT and BIT hereby accepts, the exclusive, with the exception
of the Baxter GmbH Retained License Rights, worldwide sublicense to all of
Baxter GmbH's rights and remedies and the benefits of all covenants of Dorken
under the Dorken License. BIT shall have the right to sublicense its rights,
provided BIT fully complies with the requirements for sublicenses set forth in
the Dorken License.
3.2 The sublicense granted hereunder and Baxter GmbH's Retained License
Rights are subject in all events, to the terms and provisions of that certain
Confidentiality and Non-Competition Agreement between Baxter GmbH and BIT of
even date herewith (the "Non-Compete Agreement").
3.3 Notwithstanding Section 3.1 above, BIT will store the antibodies to be
transferred to BIT at Baxter's and/or Baxter GmbH's facilities, and Baxter
and/or Baxter GmbH will keep such stored antibodies at such facilities until
otherwise notified by BIT, in accordance with the terms and provisions of the
Antibodies Manufacturing and Storage Agreement of even date herewith.
4. NOTIFICATION OF BIT PAYMENTS AND REPORTS
BIT shall notify Baxter and Baxter GmbH of any payment, royalty payment,
FDA marketing approval and First Commercial Sale in each country where such sale
is made and shall provide Baxter and Baxter GmbH with copies of any payment or
report transmitted to Dorken concurrent with the transmittal of same to Dorken .
5. BAXTER GMBH'S RIGHTS TO AVOID TERMINATION OF THE DORKEN LICENSE;
TERMINATION; NON-MODIFICATION
5.1 BIT shall provide Baxter and Baxter GmbH with written notice within
three (3) business days of the occurrence of any of the following:
(a) Failure to meet its royalty payment obligations under the Dorken
License;
(b) BIT's material breach of any other obligation under the Dorken
License;
(c) Receipt of any notification or other communication relating or
otherwise referring to BIT's alleged breach of its responsibilities
under the Dorken License or threatening termination of the Dorken
License.
5.2. After receipt of notice under Section 5.1 above, or, in the event that
Baxter, in good faith, after consultation with BIT, reasonably believes that the
Dorken License will be terminated
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absent action by Baxter and/or Baxter GmbH, Baxter and/or Baxter GmbH may, at
their option, take such actions they consider to be reasonably necessary in
order to avoid such termination. To the extent Baxter or Baxter GmbH advances
payments on BIT's behalf, such payment shall be considered a loan to BIT.
Interest on the amount advanced shall accrue and be payable from the date
advance at a rate of [Confidential Information Omitted] per month (or the
highest rate allowed by law, if lower) compounded annually, until fully paid
(including full payment of such interest).
5.3. Final Notice to Cure. In the event Baxter or Baxter GmbH exercises
its rights under Section 5.2 above, Baxter GmbH shall be entitled to terminate
the Agreement, provided, Baxter GmbH serves BIT with thirty (30) days prior
notice of its intention to terminate, and gives BIT the opportunity to cure the
breach which necessitated Baxter's and/or Baxter GmbH's action under Section 5.2
above, including the payment of any fees, plus interest, due and owing to Baxter
and/or Baxter GmbH, and/or a reimbursement of Baxter's and/or Baxter GmbH's
costs and expenses incurred by Baxter and/or Baxter GmbH in exercising their
rights under Section 5.2 above. If, due to BIT's continued default, Baxter GmbH
exercises its rights under Section 5.2 above on more than two (2) occasions
within the previous twelve (12) months, Baxter GmbH shall be entitled to
terminate the Agreement without providing BIT with any final notice to cure.
5.4 Early Termination. In addition to the termination provisions of the
Dorken License, a non-breaching party may terminate this Agreement if any of the
following events (each is herein referred to as a "Material Breach") occurs:
(a) Baxter GmbH exercises its rights under Section 5.2 hereof on more
than two (2) occasions within a twelve (12) month period and
Baxter GmbH elects to terminate this Agreement as provided in
Section 5.3 hereof;
(b) a final, non-appealable decision is rendered by an arbitrator or a
court of competent jurisdiction holding that BIT has materially
breached its obligations under Section 4 of the Non-Compete
Agreement after having been given at least 180 days notice of such
breach by Baxter GmbH.
5.5 Termination for BIT Bankruptcy: This Agreement and the license granted
hereunder shall automatically terminate, without further action of any kind by
Baxter GmbH, upon the bankruptcy, insolvency, assignment for the benefit of
creditors or other act of insolvency by, of or against BIT.
5.6 Assignment Upon Termination of Marketing, Sales & Distribution
Agreement: Except as a result of a breach or an alleged breach by BIT, upon
expiration or earlier termination of the Marketing, Sales & Distribution
Agreement, and the parties have not renewed or extended such agreement or
entered into a new agreement which substantially embodies the obligations
of such agreement, Baxter GmbH shall assign all of its rights under this
Agreement and the Dorken License to BIT.
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5.7 BIT Termination. This Agreement and the license granted hereunder may
be terminated by BIT with sixty (60) days written notice to Baxter GmbH and
after payment in full by BIT of all outstanding royalties or any other payments
due and owing up to the date of termination. Upon any such termination pursuant
to this Section 5.7, all rights granted hereunder to BIT shall revert back to
Baxter GmbH without further action of any kind by Baxter GmbH or BIT.
5.8 Non-Modification. Except as expressly permitted herein, neither party
shall take any action to amend, extend, terminate or otherwise modify the terms
and conditions of, or the rights and obligations of the parties to, the Dorken
License without the prior written consent of the other party. In furtherance of
the foregoing, in the event Baxter GmbH shall at any time exercise any of the
Baxter GmbH Retained License Rights, Baxter GmbH shall comply with all terms and
conditions of, and shall pay, perform, discharge or otherwise satisfy its
obligations under, the Dorken License with respect to, and to the extent of, any
exercise of such rights.
6. INDEMNIFICATION
6.1 Indemnification by BIT. BIT shall defend, indemnify and hold Baxter
GmbH and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) BIT's breach of this Agreement; (ii) BIT's breach of the Dorken License;
and (iii) for death, personal injury, illness or property damage arising out of
the manufacture, use or sale by BIT of Licensed Products or the use of any
Technology, or out of the manufacture, use, sale or other disposition of any
products under the terms of this Agreement.
6.2 Indemnification by Baxter GmbH. Baxter GmbH shall defend, indemnify
and hold BIT and its Affiliates harmless from and against any and all claims,
suits and expenses, including reasonable attorney expenses, arising out of or
relating to (i) Baxter GmbH's breach of this Agreement; (ii) Baxter GmbH's
breach of the Dorken License; and (iii) any manufacture, distribution or sale of
products by Baxter GmbH under the terms of this Agreement.
7. DISPUTE RESOLUTION
7.1 Provisional Remedies: The procedures specified in this Section 7 shall
be the sole and exclusive procedures for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that a
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party, without prejudice to these procedures, may seek a preliminary injunction
or other provisional relief if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During such
action, the parties will continue to participate in good faith in the procedures
specified in this Section 7.
7.2 Negotiations Between Executives: The parties will attempt in good
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions
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contained in this Section 7), by negotiations under the procedures set forth in
Section 6 of the Hardware Manufacturing Agreement concerning referral of
disputes to the Corporate Committee (as defined therein).
7.3 Arbitration: In the event that any dispute arising out of or relating
to this Agreement or its breach, termination or validity has not been resolved
after good faith negotiation pursuant to the procedures of Section 7.2, such
dispute shall, upon written notice by either party to the other, be finally
settled by arbitration administered by the Center for Public Resources in
accordance with the provisions of its Commercial Arbitration Rules and the
United States Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3) independent
and impartial arbitrators all of whom shall be selected from a list of
neutral arbitrators supplied by the Center for Public Resources. From
such list, each of Baxter GmbH and BIT shall select one (1)
arbitrator, and the arbitrators so selected shall select a third. The
panel shall designate one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal
Arbitration Act as necessary to protect the rights or property of the
party pending the decision of the arbitrators.
D. The parties shall allow and participate in limited discovery for
the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the
Center for Public Resources. All discovery shall be completed within
sixty (60) days following the filing of the answer or other responsive
pleading. Unresolved discovery disputes shall be brought to the
attention of the chair of the arbitration panel and may be disposed of
by the chair.
E. Each party shall have up to fifty (50) hours to present evidence
and argument in a hearing before the panel of arbitrators, provided
that the chair of the panel of arbitrators may establish such longer
times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of
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the matter, shall be in writing and shall specify the factual and
legal basis for the award. Judgment thereon may be entered in any
court having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or
other appropriate relief to cure a breach; provided, however, that the
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arbitrators will have no authority to award special, punitive or
exemplary damages, or other money damages that are not measured by the
prevailing party's actual damages.
7.4 Performance During Dispute: Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
8. GENERAL
8.1 Provisions Contrary to Law / Severability. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted here from, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
8.2 Foreign Government Approval or Registration. If this Agreement or any
associated transaction is required by the law of any nation to be either
approved or registered with any governmental or other regulatory agency, BIT
shall assume all legal obligations to do so.
8.3 Export Control. Each party shall observe all applicable United States
and foreign laws with respect to the transfer of Licensed Products and related
technical data to foreign nations, countries or other sovereign states.
8.4 Notices. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
facsimile transmission (provided that, in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service
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(with delivery charges prepaid), or by first class, registered or certified
United States mail (postage prepaid) within two (2) days of facsimile
transmission), addressed to each party as follows:
If to Baxter GmbH, such notices
shall be delivered to: President
Baxter Biotech Group
with a copy to:
President
Baxter, GmbH
General Counsel
Baxter Healthcare Corporation
If to Baxter GmbH, other written
communications shall be delivered to: President
Venture Management
Baxter Biotech Group
with a copy to:
Associate General Counsel
Baxter Healthcare Corporation
If to BIT, such notices shall be delivered to:
President
BIT Acquisition Corp.
with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention:
Lowell S. Lifschultz, Esq.
If to BIT, other written communications
shall be delivered to: President
BIT Acquisition Corp.
with a copy to:
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[Vice President]
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 8.4. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered: by hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
8.5 Force Majeure. With respect to the parties' obligations to each other
pursuant to this Agreement, neither party shall be liable for delay or failure
in the performance of any of its obligations hereunder if such delay or failure
is due to causes beyond its reasonable control. Such causes shall include,
without limitation, acts of God, fires, earthquakes, strikes and labor disputes,
acts of war, civil unrest or intervention of any governmental authority, but any
such delay or failure shall be remedied by such party as soon as is reasonably
possible.
8.6 Limitation of Liability. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF
CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY OR
LIQUIDATED DAMAGES.
8.7 Use of Names. Neither party shall use the name of the other in any
promotional materials or advertising related to Licensed Products without the
prior written consent of the other or as permitted by the Manufacturing, Supply
and Distribution Agreements.
8.8 Assignment. BIT shall not assign its rights or obligations under this
Agreement to any party during the term of any of the Manufacturing, Supply and
Distribution Agreements without the prior written consent of Baxter GmbH.
Notwithstanding the foregoing, and subject to the terms of the Stockholders
Agreement, BIT may assign its rights under this Agreement in the event of a
sale, merger or other business combination of BIT with or into another business,
provided that BIT obtains the advance written consent of Dorken. Baxter GmbH
may assign its rights and obligations hereunder to any party without prior
notice to or consent of BIT. Subject to the foregoing, this Agreement shall
inure to the benefit of and be binding on the parties' permitted successors and
assigns.
8.9 Waivers and Modifications. The failure of any party to insist on the
performance of any obligation hereunder shall not be deemed to be a waiver of
such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing and signed by the party to be bound by such waiver, modification,
release or amendment.
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8.10 Choice of Law and Jurisdiction. Except to the extent required under
the Dorken License this Agreement shall be governed by and construed in
accordance with the internal laws of the state of Delaware, without application
of conflict of law principles, and, subject to Section 8.9 above, each party
hereby submits to the jurisdiction and venue of any state or federal court in
the State of Delaware. To the extent allowed by the Dorken License and
permissible by law, each of the parties hereby waives, releases and agrees not
to assert, and agrees to cause its Affiliates to waive, release and not assert,
any rights such party or its Affiliates may have under any foreign law or
regulation that would be inconsistent with the terms of this Agreement as
governed by Delaware law.
8.11 Independent Parties. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venture, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
8.12 Entire Agreement. This Agreement, the Asset Purchase Agreement, the
Non-Compete Agreement and the Manufacturing Supply and Distribution Agreements,
together with the Dorken License and the Exhibits and Schedules annexed thereto,
constitute the entire agreement between the parties as to the subject matter
hereof and supersede all prior oral negotiations, representations, agreements
and understandings.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
8.14 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any party includes such party's permitted successors and
assigns;
(c) reference to any gender includes the other gender;
(d) reference to any Section, Exhibit or Schedule means such section of
this Agreement, Exhibit to this Agreement or Schedule to this Agreement, as
the case may be, and references in any section or definition to any clause
means such clause of such section or definition;
(e) "herein," "hereunder," "hereof," "hereto," and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular section or other provision of this Agreement;
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(f) "including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(g) relative to the determination of any period of time, "from" means "from
and including", "to" means "to but excluding" and "through" means
"through and including";
(h) reference to any law (including statutes and ordinances) means such law
as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations
promulgated thereunder;
(i) accounting terms used herein shall have the meanings historically
attributed to them by Baxter GmbH prior to the date hereof;
(j) the headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in construing
this Agreement; and
(k) any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against either
party shall not apply to any construction or interpretation hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date set forth above.
BAXTER DEUTSCHLAND GmbH
By: ___________________________________
Name:
Title:
BIT ACQUISITION CORPORATION
By: __________________________________
Name:
Title:
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EXHIBIT 10.8
FIRST BD SUBLICENSE AGREEMENT
SUBLICENSE AGREEMENT ("Agreement") dated as of December 17, 1997 (the
"Effective Date"), is entered into by and between Baxter Healthcare Corporation,
a Delaware corporation having a place of business at 1627 Lake Cook Road,
Deerfield, Illinois 60015 ("Baxter"), and BIT Acquisition Corporation, a
Delaware corporation having its principal place of business at 275 Centerville
Road, Suite 210, Little Falls II, Wilmington, Delaware 19808 ("BIT").
RECITALS
A. Baxter has entered into that certain License Agreement with Becton,
Dickenson and Company ("Becton"), dated August 24, 1990 as amended on November
10, 1993 and March 30, 1995 (the "First BD License"), annexed as Exhibit A
hereto;
B. Baxter and VIMRx Pharmaceuticals Inc. ("VIMRx"), have agreed to enter
into a strategic alliance in the ex vivo cell therapies business and have formed
BIT for that purpose pursuant to that certain Asset Purchase Agreement dated as
of October 10, 1997, by and between Baxter and VIMRx (the "Asset Purchase
Agreement"), and have agreed that Baxter will grant BIT the exclusive (subject
to the limitations set forth herein) sublicense to the technology licensed under
the First BD License on the terms set forth herein, and contemporaneously enter
into the Manufacturing, Supply and Distribution Agreements (as those capitalized
terms are hereinafter defined).
C. Baxter is willing to grant to BIT an exclusive sublicense of all of its
rights under the First BD License subject to the Prior Sublicenses (as
hereinafter defined) and Baxter's retention of the Baxter Retained License
Rights and otherwise subject to the terms and conditions contained in the First
BD License and those set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and BIT hereby agree as follows:
1. DEFINITIONS
1.1 Terms Defined in the First BD License. Capitalized terms not
otherwise defined herein shall have the meanings given them in the First BD
License.
1.2 As used herein, the following terms shall have the specified meanings:
(a) "Affiliate" of a party shall mean any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with, the party
<PAGE>
or (ii) fifty percent (50%) or more of the voting capital stock (or in the case
of an entity which is not a corporation, fifty percent (50%) or more of the
equity interest) of which is beneficially owned or held by a party or any of
such party's Subsidiaries. The term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of an entity (other than a natural person), whether through the
ownership of voting capital stock, by contract or otherwise.
(b) "Baxter Retained License Rights" means (i) the exclusive right to
maintain, continue to prosecute, enforce and settle the existing lawsuit against
CellPro (Johns Hopkins University v. CellPro, Inc., No. 94-105-RRM (D.Del.)) and
-----------------------------------------
any related action by or against CellPro, including the right to grant CellPro
any license; (ii) the non-exclusive worldwide right and license, without the
right to sublicense, to make, have made, use, import and sell Licensed Products
for use with the MaxSep and/or Isolex systems for the selection of cells with
one or more of the CD34, B Cell, or breast cancer antibodies for the treatment,
mitigation, prophylaxis or selection of/for cancer, including the research
market; and (iii) the non-exclusive worldwide right and license, without the
right to sublicense, to make, have made, use, import and sell Licensed Products
under the First BD License for the treatment, mitigation, prophylaxis or
selection of/for cancer requiring the selection or use of CD34+ cells, including
sales into the research market. All such above listed rights shall specifically
exclude rights pertaining to the genetic manipulation of such cells.
(c) "CellPro" means CellPro, Inc., its subsidiaries and Affiliates
(d) "Manufacturing, Supply and Distribution Agreements" means, individually
and collectively, the Antibody Manufacturing and Storage Agreement, the Hardware
and Disposables Manufacturing Agreement, the Hardware and Disposables Supply
Agreement and the Marketing, Sales and Distribution Agreement, each by and
between Baxter and BIT and each of even date herewith.
(e) "Prior Sublicenses" means the following Licenses granted by Baxter
relating to the Licensed Technology:
. Non-Exclusive License Agreement with Applied Immune Sciences, Inc.,
effective December 23, 1992;
. Non-Exclusive License Agreement with Dynal, Inc., effective November
24, 1993; and
. Non-Exclusive License Agreement with SyStemix, Inc., effective
December 2, 1993, as amended effective March 12, 1995.
(f) "Subsidiary" means, as to any party, any corporation of which more than
50% of the outstanding capital stock having ordinary voting power to elect a
majority of the board of
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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 party, by one or more of its subsidiaries,
or by the party and one or more of its subsidiaries.
2. THE FIRST BD LICENSE
2.1 BIT agrees that this Agreement is subject to the terms and conditions
of the First BD License, all the terms of which are hereby incorporated by
reference into this Agreement. BIT understands the obligations imposed by the
First BD License and expressly agrees to be bound by same. The parties agree
that this Agreement shall be interpreted in a manner so as to be consistent with
the First BD License.
2.2 BIT agrees to pay, perform, discharge or otherwise satisfy, or cause
to be paid, performed, discharged or otherwise satisfied Baxter's obligations
under the First BD License arising on or after the date hereof, including but
not limited to Baxter's obligations to pay the Remuneration due and owing to
Becton pursuant to Article V of the First BD License with respect to any
Licensed Products for which an approval is obtained by BIT or sold by BIT as
well as to fulfill any other payment or reporting obligation under the First BD
License by transmitting any and all such payments and reports directly to
Becton. The foregoing notwithstanding, BIT shall have no obligation or
liability under this Agreement:
(a) arising out of or related to or constituting any act, omission,
obligation or liability of Baxter under the First BD License
arising prior to the date hereof;
(b) arising out of or related to any exercise by Baxter of the Baxter
Retained License Rights;
(c) arising out of or related to any sales of Licensed Products by
Baxter in violation of the exclusivity provisions hereof;
(d) arising out of or related to any breach or alleged breach by
Baxter of the confidentiality provisions of the First BD License
(except to the extent such breach or alleged breach was caused by
BIT);
(e) arising out of or related to any breach or alleged breach by
Baxter of any obligation under the First BD License to return any
material in Baxter's actual possession (and not possessed by BIT
or provided to BIT by Baxter) at the time such obligation arises;
(f) arising out of or related to the refusal of Becton to accept any
payment or performance by BIT in full compliance with the
provisions of the First BD
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License except for the fact that such payment or performance is
tendered by BIT; provided that BIT promptly tenders such
conforming payment or performance to Baxter so that it is not
alleged by Becton that Baxter is in breach of the First BD
License;
(g) arising out of or related to any breach by Baxter of its
obligations under this Agreement, the Asset Purchase Agreement, or
any one or more of the Manufacturing, Supply and Distribution
Agreements;
(h) arising out of or related to any failure by Baxter to maintain the
records and provide the reports required under the First BD
License, except, and to the extent that, BIT shall fail to satisfy
its reciprocal obligation to provide to Baxter records and/or
reports of its sales and other activities hereunder.
3. LICENSE GRANT BY BAXTER TO BIT
3.1 Subject to the terms and conditions of this Agreement, Baxter hereby
grants to BIT and BIT hereby accepts, the exclusive, with the exception of (i)
the Prior Sublicenses and (ii) the Baxter Retained License Rights including any
potential subsequent license related to the CellPro matter described in Section
6 herein, worldwide sublicense to all of Baxter's rights and remedies and the
benefits of all covenants of Becton under the First BD License. BIT shall have
the right to sublicense its rights, provided BIT fully complies with the
requirements for sublicenses set forth in the First BD License.
3.2 The sublicense granted hereunder and Baxter's Retained License Rights
are subject in all events, to the terms and provisions of that certain
Confidentiality and Non-Competition Agreement between Baxter and BIT of even
date herewith (the "Non-Compete Agreement").
3.3 Notwithstanding Section 3.1 above, BIT will store the antibodies to be
transferred to BIT at Baxter's facilities, and Baxter will keep such stored
antibodies at Baxter's facilities until otherwise notified by BIT, in accordance
with the terms and provisions of the Antibody Manufacturing and Storage
Agreement of even date herewith.
3.4 Baxter will not assign its interest as Licensor or consent to the
assignment of any Sublicensee's interests under any of the Prior Sublicenses
without the prior written consent of BIT to any such assignment, which consent
may be granted or withheld in BIT's sole discretion.
4. NOTIFICATION OF BIT PAYMENTS AND REPORTS
BIT shall notify Baxter of any payment, royalty payment, FDA marketing
approval and First Commercial Sale in each country where such sale is made and
shall provide Baxter with copies of any payment or report transmitted to Becton
concurrent with the transmittal of same to Becton.
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5. BAXTER'S RIGHTS TO AVOID TERMINATION OF THE FIRST BD LICENSE; TERMINATION;
NON-MODIFICATION
5.1 BIT shall provide Baxter with written notice within three (3) business
days of the occurrence of any of the following:
(a) Failure to meet its royalty payment obligations under the First BD
License;
(b) BIT's material breach of any other obligation under the First BD
License;
(c) Receipt of any notification or other communication relating or
otherwise referring to BIT's alleged breach of its responsibilities
under the First BD License or threatening termination of the First BD
License.
5.2. After receipt of notice under Section 5.1 above, or, in the event that
Baxter, in good faith, after consultation with BIT, reasonably believes that the
First BD License will be terminated absent action by Baxter, Baxter may, at its
option, take such actions it considers to be reasonably necessary in order to
avoid such termination. To the extent Baxter advances payments on BIT's behalf,
such payment shall be considered a loan to BIT. Interest on the amount advanced
shall accrue and be payable from the date advance at a rate of [Confidential
Information Omitted] per month (or the highest rate allowed by law, if lower)
compounded annually, until fully paid (including full payment of such interest).
5.3. Final Notice to Cure. In the event Baxter exercises its rights under
Section 5.2 above, Baxter shall be entitled to terminate the Agreement,
provided, Baxter serves BIT with thirty (30) days prior notice of its intention
to terminate, and gives BIT the opportunity to cure the breach which
necessitated Baxter's action under Section 5.2 above, including the payment of
any fees, plus interest, due and owing to Baxter, and/or a reimbursement of
Baxter's costs and expenses incurred by Baxter in exercising its rights under
Section 5.2 above. If, due to BIT's continued default, Baxter exercises its
rights under Section 5.2 above on more than two (2) occasions within the
previous twelve (12) months, Baxter shall be entitled to terminate the Agreement
without providing BIT with any final notice to cure.
5.4 Early Termination. In addition to the termination provisions of the
First BD License, a non-breaching party may terminate this Agreement if any of
the following events (each is herein referred to as a "Material Breach") occurs:
(a) Baxter exercises its rights under Section 5.2 hereof on more than
two (2) occasions within a twelve (12) month period and Baxter
elects to terminate this Agreement as provided in Section 5.3
hereof;
(b) a final, non-appealable decision is rendered by an arbitrator or
a court of competent jurisdiction holding that BIT has materially
breached its obligations under Section 4 of the Non-Compete
Agreement after having
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been given at least 180 days notice of such breach by Baxter.
5.5 Termination for BIT Bankruptcy: This Agreement and the license granted
hereunder shall automatically terminate, without further action of any kind by
Baxter, upon the bankruptcy, insolvency, assignment for the benefit of creditors
or other act of insolvency by, of or against BIT.
5.6 Assignment Upon Termination of Marketing, Sales & Distribution
Agreement: Except as a result of a breach or an alleged breach by BIT, upon
expiration or earlier termination of the Marketing, Sales & Distribution
Agreement, and the parties have not renewed or extended such agreement or
entered into a new agreement which substantially embodies the obligations
of such agreement, Baxter shall assign all of its rights under this
Agreement and the First BD License to BIT.
5.7 BIT Termination. This Agreement and the license granted hereunder may
be terminated by BIT with sixty (60) days written notice to Baxter and after
payment in full by BIT of all outstanding royalties or any other payments due
and owing up to the date of termination. Upon any such termination pursuant to
this Section 5.7, all rights granted hereunder to BIT shall revert back to
Baxter without further action of any kind by Baxter or BIT.
5.8 Non-Modification. Except as expressly permitted herein, neither party
shall take any action to amend, extend, terminate or otherwise modify the terms
and conditions of, or the rights and obligations of the parties to, the First BD
License without the prior written consent of the other party. In furtherance of
the foregoing, in the event Baxter shall at any time exercise any of the Baxter
Retained License Rights, Baxter shall comply with all terms and conditions of,
and shall pay, perform, discharge or otherwise satisfy its obligations under,
the First BD License with respect to, and to the extent of, any exercise of such
rights.
6. CELLPRO LITIGATION
Baxter retains the exclusive right to maintain, continue to prosecute,
enforce and settle the existing lawsuit against CellPro (Johns Hopkins
-------------
University V. CellPro, Inc., No. 94-105-RRM (D.Del.)) and any related action
- ---------------------------
pertaining to the rights under this Agreement, including the right to grant any
licenses, as they relate to infringement by CellPro which will remain the
responsibility of Baxter, as set forth in Section 16.1 of the Asset Purchase
Agreement.
7. INDEMNIFICATION
7.1 Indemnification by BIT. BIT shall defend, indemnify and hold Baxter
and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) BIT's breach of this Agreement; (ii) BIT's breach of the First BD License;
(iii) BIT's unreasonable delay, withholding or failure to grant consent to
Baxter's or its Sublicensee's assignment of their respective interests under any
of the Prior Sublicenses; and (iv) for death, personal injury, illness or
property damage arising out
6
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of the manufacture, use or sale by BIT of Licensed Products or the use of any
Technology, or out of the manufacture, use, sale or other disposition of any
products under the terms of this Agreement.
7.2 Indemnification by Baxter. Baxter shall defend, indemnify and hold
BIT and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) Baxter's breach of this Agreement; (ii) Baxter's breach of the First BD
License; and (iii) any manufacture, distribution or sale of products by Baxter
under the terms of this Agreement.
8. DISPUTE RESOLUTION
8.1 Provisional Remedies: The procedures specified in this Section 8 shall
be the sole and exclusive procedures for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that a
--------- -------
party, without prejudice to these procedures, may seek a preliminary injunction
or other provisional relief if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During such
action, the parties will continue to participate in good faith in the procedures
specified in this Section 8.
8.2 Negotiations Between Executives: The parties will attempt in good
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
8), by negotiations under the procedures set forth in Section 6 of the Hardware
and Disposables Manufacturing Agreement concerning referral of disputes to the
Corporate Committee (as defined therein).
8.3 Arbitration: In the event that any dispute arising out of or relating
to this Agreement or its breach, termination or validity has not been resolved
after good faith negotiation pursuant to the procedures of Section 8.2, such
dispute shall, upon written notice by either party to the other, be finally
settled by arbitration administered by the Center for Public Resources in
accordance with the provisions of its Commercial Arbitration Rules and the
United States Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3) independent
and impartial arbitrators all of whom shall be selected from a list of
neutral arbitrators supplied by the Center for Public Resources. From
such list, each of Baxter and BIT shall select one (1) arbitrator, and
the arbitrators so selected shall select a third. The panel shall
designate one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
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C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal
Arbitration Act as necessary to protect the rights or property of the
party pending the decision of the arbitrators.
D. The parties shall allow and participate in limited discovery for
the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the
Center for Public Resources. All discovery shall be completed within
sixty (60) days following the filing of the answer or other responsive
pleading. Unresolved discovery disputes shall be brought to the
attention of the chair of the arbitration panel and may be disposed of
by the chair.
E. Each party shall have up to fifty (50) hours to present evidence
and argument in a hearing before the panel of arbitrators, provided
that the chair of the panel of arbitrators may establish such longer
times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify the factual and legal
basis for the award. Judgment thereon may be entered in any court
having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or
other appropriate relief to cure a breach; provided, however, that the
-------- -------
arbitrators will have no authority to award special, punitive or
exemplary damages, or other money damages that are not measured by the
prevailing party's actual damages.
8.4 Performance During Dispute: Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
9. GENERAL
9.1 Provisions Contrary to Law / Severability. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any
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provision of this Agreement conflicts with any applicable law or is otherwise
determined by an arbitrator or court having valid jurisdiction thereof to be
unenforceable, the affected provision of this Agreement shall be deemed to have
been modified to the extent necessary so as not to conflict with the applicable
law or to be unenforceable or, if such modification is not possible, such
provision shall be deemed to have been deleted here from, without affecting,
impairing or invalidating the remaining provisions of this Agreement.
9.2 Foreign Government Approval or Registration. If this Agreement or any
associated transaction is required by the law of any nation to be either
approved or registered with any governmental or other regulatory agency, BIT
shall assume all legal obligations to do so.
9.3 Export Control. Each party shall observe all applicable United States
and foreign laws with respect to the transfer of Licensed Products and related
technical data to foreign nations, countries or other sovereign states.
9.4 Notices. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
facsimile transmission (provided that, in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter, such notices shall be delivered to: President
Baxter Biotech Group
with a copy to:
General Counsel
Baxter Healthcare Corporation
If to Baxter, other written communications
shall be delivered to: President
Venture Management
Baxter Biotech Group
with a copy to:
Associate General Counsel
Baxter Healthcare Corporation
If to BIT, such notices shall be delivered to:
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President
BIT Acquisition Corp.
with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention:
Lowell S. Lifschultz, Esq.
If to BIT, other written communications
shall be delivered to: President
BIT Acquisition Corp.
with a copy to:
[Vice President]
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 9.4. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered: by hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
9.5 Force Majeure. With respect to the parties' obligations to each other
pursuant to this Agreement, neither party shall be liable for delay or failure
in the performance of any of its obligations hereunder if such delay or failure
is due to causes beyond its reasonable control. Such causes shall include,
without limitation, acts of God, fires, earthquakes, strikes and labor disputes,
acts of war, civil unrest or intervention of any governmental authority, but any
such delay or failure shall be remedied by such party as soon as is reasonably
possible.
9.6 Limitation of Liability. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF
CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY OR
LIQUIDATED DAMAGES.
9.7 Use of Names. Neither party shall use the name of the other in any
promotional materials or advertising related to Licensed Products without the
prior written consent of the other or as permitted by the Manufacturing, Supply
and Distribution Agreements.
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9.8 Assignment. BIT shall not assign its rights or obligations under this
Agreement to any party during the term of any of the Manufacturing, Supply and
Distribution Agreements without the prior written consent of Baxter.
Notwithstanding the foregoing, and subject to the terms of the Stockholders
Agreement, BIT may assign its rights under this Agreement in the event of a
sale, merger or other business combination of BIT with or into another business,
provided that BIT obtains the advance written consent of Becton. Baxter may
assign its rights and obligations hereunder to any party without prior notice to
or consent of BIT. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding on the parties' permitted successors and assigns.
9.9 Waivers and Modifications. The failure of any party to insist on the
performance of any obligation hereunder shall not be deemed to be a waiver of
such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing and signed by the party to be bound by such waiver, modification,
release or amendment.
9.10 Choice of Law and Jurisdiction. Except to the extent required under
the First BD License this Agreement shall be governed by and construed in
accordance with the internal laws of the state of Delaware, without application
of conflict of law principles, and, subject to Section 9.9 above, each party
hereby submits to the jurisdiction and venue of any state or federal court in
the State of Delaware. To the extent allowed by the First BD License and
permissible by law, each of the parties hereby waives, releases and agrees not
to assert, and agrees to cause its Affiliates to waive, release and not assert,
any rights such party or its Affiliates may have under any foreign law or
regulation that would be inconsistent with the terms of this Agreement as
governed by Delaware law.
9.11 Independent Parties. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venture, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
9.12 Entire Agreement. This Agreement, the Asset Purchase Agreement, the
Non-Compete Agreement and the Manufacturing Supply and Distribution Agreements,
together with the First BD License and the Exhibits and Schedules annexed
thereto, constitute the entire agreement between the parties as to the subject
matter hereof and supersede all prior oral negotiations, representations,
agreements and understandings.
9.13 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
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9.14 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any party includes such party's permitted successors and
assigns;
(c) reference to any gender includes the other gender;
(d) reference to any Section, Exhibit or Schedule means such section of
this Agreement, Exhibit to this Agreement or Schedule to this
Agreement, as the case may be, and references in any section or
definition to any clause means such clause of such section or
definition;
(e) "herein," "hereunder," "hereof," "hereto," and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular section or other provision of this Agreement;
(f) "including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(g) relative to the determination of any period of time, "from" means "from
and including", "to" means "to but excluding" and "through" means
"through and including";
(h) reference to any law (including statutes and ordinances) means such law
as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations
promulgated thereunder;
(i) accounting terms used herein shall have the meanings historically
attributed to them by Baxter prior to the date hereof;
(j) the headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in construing
this Agreement; and
(k) any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against either
party shall not apply to any construction or interpretation hereof.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date set forth above.
BAXTER HEALTHCARE CORPORATION
By: ___________________________________
Name:
Title:
BIT ACQUISITION CORPORATION
By: __________________________________
Name:
Title:
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EXHIBIT 10.9
SECOND BD SUBLICENSE AGREEMENT
SUBLICENSE AGREEMENT ("Agreement") dated as of December 17, 1997 (the
"Effective Date"), is entered into by and between Baxter Healthcare Corporation,
a Delaware corporation having its a place of business at 1627 Lake Cook Road,
Deerfield, Illinois 60015 ("Baxter"), and BIT Acquisition Corporation, a
Delaware corporation having its principal place of business at 275 Centerville
Road, Suite 210, Little Falls II, Wilmington, Delaware 19808 ("BIT").
RECITALS
A. Baxter has entered into that certain License Agreement with Becton,
Dickenson and Company ("Becton"), dated June 1, 1993 (the "Second BD License"),
annexed as Exhibit A hereto;
B. Baxter and VIMRx Pharmaceuticals Inc. ("VIMRx"), have agreed to enter
into a strategic alliance in the ex vivo cell therapies business and have formed
BIT for that purpose pursuant to that certain Asset Purchase Agreement dated as
of October 10, 1997, by and between Baxter and VIMRx (the "Asset Purchase
Agreement"), and have agreed that Baxter will grant BIT the exclusive (subject
to the limitations set forth herein) sublicense to the Licensed Technology and
contemporaneously enter into the Manufacturing, Supply and Distribution
Agreements (as those capitalized terms are hereinafter defined).
C. Baxter is willing to grant to BIT an exclusive sublicense of all of its
rights under the Second BD License subject to Baxter's retention of the Baxter
Retained License Rights and otherwise subject to the terms and conditions
contained in the Second BD License and those set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and BIT hereby agree as follows:
1. DEFINITIONS
1.1 Terms Defined in the Second BD License. Capitalized terms not
otherwise defined herein shall have the meanings given them in the Second BD
License.
1.2 As used herein, the following terms shall have the specified meanings:
(a) "Affiliate" of a party shall mean any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by or is
under common Control with, the party
<PAGE>
or (ii) fifty percent (50%) or more of the voting capital stock (or in the case
of an entity which is not a corporation, fifty percent (50%) or more of the
equity interest) of which is beneficially owned or held by a party or any of
such party's Subsidiaries. The term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of an entity (other than a natural person), whether through the
ownership of voting capital stock, by contract or otherwise.
(b) "Baxter Retained License Rights" means (i) the non-exclusive worldwide
right and license, without the right to sublicense, to make, have made, use,
import and sell Licensed Antibodies and Licensed Products for use with the
MaxSep and/or Isolex systems for the selection of cells with one or more of the
CD34, B Cell, or breast cancer antibodies for the treatment, mitigation,
prophylaxis or selection of/for cancer, including the research market; and (ii)
the non-exclusive worldwide right and license, without the right to sublicense,
to make, have made, use, import and sell Licensed Products under the Second BD
License for the treatment, mitigation, prophylaxis or selection of/for cancer
requiring the selection or use of CD34+ cells, including sales into the research
market. All such above listed rights shall specifically exclude rights
pertaining to the genetic manipulation of such cells.
(c) "Manufacturing, Supply and Distribution Agreements" means, individually
and collectively, the Antibodies Manufacturing & Storage Agreement, the Hardware
Manufacturing Agreement, the Hardware & Disposables Supply Agreement and the
Marketing, Sales & Distribution Agreement, each by and between Baxter and BIT
and each of even date herewith.
(d) "Subsidiary" means, as to any party, any corporation of which more than
50% of the outstanding capital 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 party, by one or more of its
subsidiaries, or by the party and one or more of its subsidiaries.
2. THE SECOND BD LICENSE
2.1 BIT agrees that this Agreement is subject to the terms and conditions
of the Second BD License, all the terms of which are hereby incorporated by
reference into this Agreement. BIT understands the obligations imposed by the
Second BD License and expressly agrees to be bound by same. The parties agree
that this Agreement shall be interpreted in a manner so as to be consistent with
the Second BD License.
2.2 BIT agrees to pay, perform, discharge or otherwise satisfy, or cause
to be paid, performed, discharged or otherwise satisfied Baxter's obligations
under the Second BD License arising on or after the date hereof, including but
not limited to Baxter's obligations to pay the Royalties due and owing to Becton
pursuant to Article 3 of the Second BD License with respect to any Licensed
Antibodies or Licensed Products for which an approval is obtained by BIT or sold
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by BIT as well as to fulfill any other payment or reporting obligation under the
Second BD License by transmitting any and all such payments and reports directly
to Becton. The foregoing notwithstanding, BIT shall have no obligation or
liability under this Agreement:
(a) arising out of or related to or constituting any act, omission,
obligation or liability of Baxter under the Second BD License
arising prior to the date hereof;
(b) arising out of or related to any exercise by Baxter of the Baxter
Retained License Rights;
(c) arising out of or related to any sales of Licensed Products by
Baxter in violation of the exclusivity provisions hereof;
(d) arising out of or related to any breach or alleged breach by
Baxter of the confidentiality provisions of the Second BD License
(except to the extent such breach or alleged breach was caused by
BIT);
(e) arising out of or related to any breach or alleged breach by
Baxter of any obligation under the Second BD License to return any
material in Baxter's actual possession (and not possessed by BIT
or provided to BIT by Baxter) at the time such obligation arises;
(f) arising out of or related to the refusal of Becton to accept any
payment or performance by BIT in full compliance with the
provisions of the Second BD License except for the fact that such
payment or performance is tendered by BIT; provided that BIT
promptly tenders such conforming payment or performance to Baxter
so that it is not alleged by Becton that Baxter is in breach of
the Second BD License;
(g) arising out of or related to any breach by Baxter of its
obligations under this Agreement, the Asset Purchase Agreement, or
any one or more of the Manufacturing, Supply and Distribution
Agreements;
(h) arising out of or related to any failure by Baxter to maintain the
records and provide the reports required under the Second BD
License, except, and to the extent that, BIT shall fail to satisfy
its reciprocal obligation to provide to Baxter records and/or
reports of its sales and other activities hereunder.
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3. LICENSE GRANT BY BAXTER TO BIT
3.1 Subject to the terms and conditions of this Agreement, Baxter hereby
grants to BIT and BIT hereby accepts, the exclusive, with the exception of the
Baxter Retained License Rights, worldwide sublicense to all of Baxter's rights
and remedies and the benefits of all covenants of Becton under the Second BD
License. BIT shall have the right to sublicense its rights, provided BIT fully
complies with the requirements for sublicenses set forth in the Second BD
License.
3.2 The sublicense granted hereunder and Baxter's Retained License Rights
are subject in all events, to the terms and provisions of that certain
Confidentiality and Non-Competition Agreement between Baxter and BIT of even
date herewith (the "Non-Compete Agreement").
3.3 Notwithstanding Section 3.1 above, BIT will store the antibodies to be
transferred to BIT at Baxter's facilities, and Baxter will keep such stored
antibodies at Baxter's facilities until otherwise notified by Bit, in accordance
with the terms and provisions of the Antibodies Manufacturing and Storage
Agreement of even date herewith.
4. NOTIFICATION OF BIT PAYMENTS AND REPORTS
BIT shall notify Baxter of any payment, royalty payment, FDA marketing
approval and First Commercial Sale in each country where such sale is made and
shall provide Baxter with copies of any payment or report transmitted to Becton
concurrent with the transmittal of same to Becton.
5. BAXTER'S RIGHTS TO AVOID TERMINATION OF THE SECOND BD LICENSE; TERMINATION;
NON-MODIFICATION
5.1 BIT shall provide Baxter with written notice within three (3) business
days of the occurrence of any of the following:
(a) Failure to meet its royalty payment obligations under the Second BD
License;
(b) BIT's material breach of any other obligation under the Second BD
License;
(c) Receipt of any notification or other communication relating or
otherwise referring to BIT's alleged breach of its responsibilities
under the Second BD License or threatening termination of the Second
BD License.
5.2. After receipt of notice under Section 5.1 above, or, in the event that
Baxter, in good faith, after consultation with BIT, reasonably believes that the
Second BD License will be terminated absent action by Baxter, Baxter may, at its
option, take such actions it considers to be reasonably necessary in order to
avoid such termination. To the extent Baxter advances payments on BIT's behalf,
such payment shall be considered a loan to BIT. Interest on the amount advanced
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shall accrue and be payable from the date advance at a rate of [Confidential
Information Omitted] per month (or the highest rate allowed by law, if lower)
compounded annually, until fully paid (including full payment of such interest).
5.3. Final Notice to Cure. In the event Baxter exercises its rights
under Section 5.2 above, Baxter shall be entitled to terminate the Agreement,
provided, Baxter serves BIT with thirty (30) days prior notice of its intention
to terminate, and gives BIT the opportunity to cure the breach which
necessitated Baxter's action under Section 5.2 above, including the payment of
any fees, plus interest, due and owing to Baxter, and/or a reimbursement of
Baxter's costs and expenses incurred by Baxter in exercising its rights under
Section 5.2 above. If, due to Bit's continued default, Baxter exercises its
rights under Section 5.2 above on more than two (2) occasions within the
previous twelve (12) months, Baxter shall be entitled to terminate the Agreement
without providing BIT with any final notice to cure.
5.4 Early Termination. In addition to the termination provisions of the
Second BD License, a non-breaching party may terminate this Agreement if any of
the following events (each is herein referred to as a "Material Breach") occurs:
(a) Baxter exercises its rights under Section 5.2 hereof on more than
two (2) occasions within a twelve (12) month period and Baxter
elects to terminate this Agreement as provided in Section 5.3
hereof;
(b) a final, non-appealable decision is rendered by an arbitrator or
a court of competent jurisdiction holding that BIT has materially
breached its obligations under Section 4 of the Non-Compete
Agreement after having been given at least 180 days notice of
such breach by Baxter.
5.5 Termination for BIT Bankruptcy: This Agreement and the license granted
hereunder shall automatically terminate, without further action of any kind by
Baxter, upon the bankruptcy, insolvency, assignment for the benefit of creditors
or other act of insolvency by, of or against Bit.
5.6 Assignment Upon Termination of Marketing, Sales & Distribution
Agreement: Except as a result of a breach or an alleged breach by Bit, upon
expiration or earlier termination of the Marketing, Sales & Distribution
Agreement, and the parties have not renewed or extended such agreement or
entered into a new agreement which substantially embodies the obligations of
such agreement, Baxter shall assign all of its rights under this Agreement and
the Second BD License to Bit.
5.7 BIT Termination. This Agreement and the license granted hereunder may
be terminated by BIT with sixty (60) days written notice to Baxter and after
payment in full by BIT of all outstanding royalties or any other payments due
and owing up to the date of termination. Upon any such termination pursuant to
this Section 5.7, all rights granted hereunder to BIT shall revert back to
Baxter without further action of any kind by Baxter or Bit.
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5.8 Non-Modification. Except as expressly permitted herein, neither party
shall take any action to amend, extend, terminate or otherwise modify the terms
and conditions of, or the rights and obligations of the parties to, the Second
BD License without the prior written consent of the other party. In furtherance
of the foregoing, in the event Baxter shall at any time exercise any of the
Baxter Retained License Rights, Baxter shall comply with all terms and
conditions of, and shall pay, perform, discharge or otherwise satisfy its
obligations under, the Second BD License with respect to, and to the extent of,
any exercise of such rights.
6. INDEMNIFICATION
6.1 Indemnification by BIT. BIT shall defend, indemnify and hold Baxter
and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) Bit's breach of this Agreement; (ii) Bit's breach of the Second BD License;
and (iii) for death, personal injury, illness or property damage arising out of
the manufacture, use or sale by BIT of Licensed Products or the use of any
Technology, or out of the manufacture, use, sale or other disposition of any
products under the terms of this Agreement.
6.2 Indemnification by Baxter. Baxter shall defend, indemnify and hold
BIT and its Affiliates harmless from and against any and all claims, suits and
expenses, including reasonable attorney expenses, arising out of or relating to
(i) Baxter's breach of this Agreement; (ii) Baxter's breach of the Second BD
License; and (iii) any manufacture, distribution or sale of products by Baxter
under the terms of this Agreement.
7. DISPUTE RESOLUTION
7.1 Provisional Remedies: The procedures specified in this Section 7 shall
be the sole and exclusive procedures for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that a
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party, without prejudice to these procedures, may seek a preliminary injunction
or other provisional relief if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During such
action, the parties will continue to participate in good faith in the procedures
specified in this Section 7.
7.2 Negotiations Between Executives: The parties will attempt in good
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
7), by negotiations under the procedures set forth in Section 6 of the Hardware
Manufacturing Agreement concerning referral of disputes to the Corporate
Committee (as defined therein).
7.3 Arbitration: In the event that any dispute arising out of or relating
to this Agreement or its breach, termination or validity has not been resolved
after good faith negotiation pursuant to the procedures of Section 7.2, such
dispute shall, upon written notice by either party to the
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other, be finally settled by arbitration administered by the Center for Public
Resources in accordance with the provisions of its Commercial Arbitration Rules
and the United States Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3) independent
and impartial arbitrators all of whom shall be selected from a list of
neutral arbitrators supplied by the Center for Public Resources. From
such list, each of Baxter and BIT shall select one (1) arbitrator, and
the arbitrators so selected shall select a third. The panel shall
designate one (1) among them to serve as chair.
B. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal
Arbitration Act as necessary to protect the rights or property of the
party pending the decision of the arbitrators.
D. The parties shall allow and participate in limited discovery for
the production of documents and taking of depositions, which shall be
conducted in accordance with the Commercial Arbitration Rules of the
Center for Public Resources. All discovery shall be completed within
sixty (60) days following the filing of the answer or other responsive
pleading. Unresolved discovery disputes shall be brought to the
attention of the chair of the arbitration panel and may be disposed of
by the chair.
E. Each party shall have up to fifty (50) hours to present evidence
and argument in a hearing before the panel of arbitrators, provided
that the chair of the panel of arbitrators may establish such longer
times for presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the
matter, shall be in writing and shall specify the factual and legal
basis for the award. Judgment thereon may be entered in any court
having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or
other appropriate relief to cure a breach; provided, however, that the
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arbitrators will have no authority to award special, punitive or
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exemplary damages, or other money damages that are not measured by the
prevailing party's actual damages.
7.4 Performance During Dispute: Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
8. GENERAL
8.1 Provisions Contrary to Law / Severability. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted here from, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
8.2 Foreign Government Approval or Registration. If this Agreement or any
associated transaction is required by the law of any nation to be either
approved or registered with any governmental or other regulatory agency, BIT
shall assume all legal obligations to do so.
8.3 Export Control. Each party shall observe all applicable United States
and foreign laws with respect to the transfer of Licensed Products and related
technical data to foreign nations, countries or other sovereign states.
8.4 Notices. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
product orders and invoices) shall be delivered either by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), by first
class, registered or certified United States mail (postage prepaid), or by
facsimile transmission (provided that, in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter, such notices shall be delivered to: President
Baxter Biotech Group
with a copy to:
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General Counsel
Baxter Healthcare Corporation
If to Baxter, other written communications
shall be delivered to: President
Venture Management
Baxter Biotech Group
with a copy to:
Associate General Counsel
Baxter Healthcare Corporation
If to Bit, such notices shall be delivered to:
President
BIT Acquisition Corp.
with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attention:
Lowell S. Lifschultz, Esq.
If to Bit, other written communications
shall be delivered to: President
BIT Acquisition Corp.
with a copy to:
[Vice President]
BIT Acquisition Corp.
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 8.4. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered: by hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
8.5 Force Majeure. With respect to the parties' obligations to each other
pursuant to this Agreement, neither party shall be liable for delay or failure
in the performance of any of its obligations hereunder if such delay or failure
is due to causes beyond its reasonable control. Such
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causes shall include, without limitation, acts of God, fires, earthquakes,
strikes and labor disputes, acts of war, civil unrest or intervention of any
governmental authority, but any such delay or failure shall be remedied by such
party as soon as is reasonably possible.
8.6 Limitation of Liability. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF
CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY OR
LIQUIDATED DAMAGES.
8.7 Use of Names. Neither party shall use the name of the other in any
promotional materials or advertising related to Licensed Products without the
prior written consent of the other or as permitted by the Manufacturing, Supply
and Distribution Agreements.
8.8 Assignment. BIT shall not assign its rights or obligations under this
Agreement to any party during the term of any of the Manufacturing, Supply and
Distribution Agreements without the prior written consent of Baxter.
Notwithstanding the foregoing, and subject to the terms of the Stockholders
Agreement, BIT may assign its rights under this Agreement in the event of a
sale, merger or other business combination of BIT with or into another business,
provided that BIT obtains the advance written consent of Becton. Baxter may
assign its rights and obligations hereunder to any party without prior notice to
or consent of Bit. Subject to the foregoing, this Agreement shall inure to the
benefit of and be binding on the parties' permitted successors and assigns.
8.9 Waivers and Modifications. The failure of any party to insist on the
performance of any obligation hereunder shall not be deemed to be a waiver of
such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing and signed by the party to be bound by such waiver, modification,
release or amendment.
8.10 Choice of Law and Jurisdiction. Except to the extent required under
the Second BD License this Agreement shall be governed by and construed in
accordance with the internal laws of the state of Delaware, without application
of conflict of law principles, and, subject to Section 8.9 above, each party
hereby submits to the jurisdiction and venue of any state or federal court in
the State of Delaware. To the extent allowed by the Second BD License and
permissible by law, each of the parties hereby waives, releases and agrees not
to assert, and agrees to cause its Affiliates to waive, release and not assert,
any rights such party or its Affiliates may have under any foreign law or
regulation that would be inconsistent with the terms of this Agreement as
governed by Delaware law.
8.11 Independent Parties. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venture,
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or legal representative and neither party has express or implied authority to
bind the other in any manner whatsoever.
8.12 Entire Agreement. This Agreement, the Asset Purchase Agreement, the
Non-Compete Agreement and the Manufacturing Supply and Distribution Agreements,
together with the Second BD License and the Exhibits and Schedules annexed
thereto, constitute the entire agreement between the parties as to the subject
matter hereof and supersede all prior oral negotiations, representations,
agreements and understandings.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
8.14 Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
(a) the singular number includes the plural number and vice versa;
(b) reference to any party includes such party's permitted successors and
assigns;
(c) reference to any gender includes the other gender;
(d) reference to any Section, Exhibit or Schedule means such section of
this Agreement, Exhibit to this Agreement or Schedule to this
Agreement, as the case may be, and references in any section or
definition to any clause means such clause of such section or
definition;
(e) "herein," "hereunder," "hereof," "hereto," and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular section or other provision of this Agreement;
(f) "including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding
such term;
(g) relative to the determination of any period of time, "from" means "from
and including", "to" means "to but excluding" and "through" means
"through and including";
(h) reference to any law (including statutes and ordinances) means such law
as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations
promulgated thereunder;
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(i) accounting terms used herein shall have the meanings historically
attributed to them by Baxter prior to the date hereof;
(j) the headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in construing
this Agreement; and
(k) any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against either
party shall not apply to any construction or interpretation hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date set forth above.
BAXTER HEALTHCARE CORPORATION
By: ___________________________________
Name:
Title:
BIT ACQUISITION CORPORATION
By: __________________________________
Name:
Title:
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