<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
-------
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
OR
_______ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File No. 0-19153
________________________
NEXELL THERAPEUTICS INC.
(Exact name of Registrant as specified in its Charter)
________________________
Delaware 06-1192468
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
9 Parker, Irvine, CA 92618
(Address of principal executive offices)
Registrant's telephone number, including area code: (949) 470-9011
VIMRx Pharmaceuticals Inc., 2751 Centerville Road, Suite 210, Wilmington, DE
----------------------------------------------------------------------------
19808
-----
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ______
-------
The aggregate number of Registrant's shares outstanding on August 11, 1999
was 72,636,089 shares of Common Stock, $.001 par value.
________________________
<PAGE>
NEXELL THERAPEUTICS INC.
INDEX
-----
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets (unaudited) as of
June 30, 1999 and December 31, 1998............................................ 3
Condensed Consolidated Statements of Operations (unaudited)
for the three and six months ended June 30, 1999 and 1998...................... 4
Condensed Consolidated Statements of Cash Flows (unaudited)
for the six months ended June 30, 1999 and 1998................................ 5
Notes to Condensed Consolidated Financial
Statements (unaudited)......................................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................. 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................................... 14
Item 2. Changes in Securities and Use of Proceeds.............................................. 14
Item 3. Defaults upon Senior Securities........................................................ 14
Item 4. Submission of Matters to a Vote of Security Holders.................................... 14
Item 5. Other Information...................................................................... 15
Item 6. Exhibits and Reports on Form 8-K....................................................... 15
SIGNATURES............................................................................................ 17
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NEXELL THERAPEUTICS INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------------- ---------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 23,539,000 $ 33,091,000
Receivables from related party 1,719,000 2,450,000
Inventory - finished goods 1,235,000 2,389,000
Other current assets 993,000 842,000
------------------- ---------------------
Total current assets 27,486,000 38,772,000
Fixed assets, net 10,406,000 10,942,000
Intangible assets, net 45,157,000 37,635,000
Other assets 247,000 252,000
------------------- ---------------------
Total assets $ 83,296,000 $ 87,601,000
=================== =====================
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 6,611,000 $ 6,487,000
Long-term debt current portion -- 96,000
Capital leases current portion 130,000 172,000
------------------- ---------------------
Total current liabilities 6,741,000 6,755,000
Long-term debt due to related party 33,059,000 32,031,000
------------------- ---------------------
Total liabilities 39,800,000 38,786,000
------------------- ---------------------
Commitments and Contingencies -- --
SHAREHOLDERS' EQUITY
Class A Convertible Preferred Stock; $.001 par value
1,150,000 authorized shares; 70,282 issued and outstanding at June 30,
1999 and at December 31, 1998 (liquidation value $72,547,000 and 100 100
$70,458,000).
Common Stock; $.001 par value, 160,000,000 shares authorized,
72,636,000 and 67,830,000 shares issued and outstanding
at June 30, 1999 and December 31, 1998, respectively. 73,000 68,000
Additional paid-in capital 192,342,900 182,537,900
Unearned compensation (264,000) (278,000)
Accumulated other comprehensive income (loss) (13,000) 20,000
Accumulated deficit (148,643,000) (133,533,000)
------------------- ---------------------
Total shareholders' equity 43,496,000 48,815,000
------------------- ---------------------
Total liabilities and shareholders' equity $ 83,296,000 $ 87,601,000
=================== =====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NEXELL THERAPEUTICS INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenue $ 1,563,000 $ 3,267,000 $ 7,077,000 $ 6,086,000
Cost of goods sold 1,580,000 2,102,000 4,738,000 4,157,000
------------- ------------- ------------- -------------
Gross Profit (17,000) 1,165,000 2,339,000 1,929,000
------------- ------------- ------------- -------------
Operating expenses:
Research and development 4,464,000 6,628,000 8,241,000 14,972,000
General and administrative 2,349,000 3,650,000 4,510,000 6,650,000
Goodwill amortization 922,000 883,000 1,747,000 1,761,000
Selling and marketing 1,172,000 719,000 2,123,000 1,053,000
Restructuring costs --- -- 504,000 --
------------- ------------- ------------- -------------
Total operating expenses 8,907,000 11,880,000 17,125,000 24,436,000
Operating (loss) (8,924,000) (10,715,000) (14,786,000) (22,507,000)
------------- ------------- ------------- -------------
Other (income) expenses:
Royalty and licensing income (300,000) (212,000) (301,000) (470,000)
Royalty expense 40,000 100,000 40,000 150,000
Minority interest in net loss of
consolidated subsidiaries -- (1,146,000) -- (2,917,000)
Interest income (215,000) (705,000) (590,000) (1,482,000)
Interest expense 542,000 527,000 1,030,000 1,046,000
Other, net -- 32,000 145,000 241,000
------------- ------------- ------------- -------------
Total other (income) expenses 67,000 (1,404,000) 324,000 (3,432,000)
Net (loss) (8,991,000) (9,311,000) (15,110,000) (19,075,000)
Preferred Stock Dividends (1,051,000) (986,000) (2,091,000) (1,976,000)
------------- ------------- ------------- -------------
Net (loss) applicable to Common Stock $ (10,042,000) (10,297,000) (17,201,000) (21,051,000)
============= ============= ============= =============
Basic and diluted loss per share $ (0.14) $ (0.15) $ (0.25) $ (0.31)
------------- ------------- ------------- -------------
Weighted average number of shares of
common stock outstanding-basic and diluted 70,672,000 66,903,000 70,150,000 66,903,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
NEXELL THERAPEUTICS INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------------------------------------
1999 1998
-------------------- ---------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................................ $ (15,110,000) $ (19,075,000)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Depreciation and amortization........................................ 3,191,000 3,214,000
Noncash compensation................................................. 95,000 85,000
Fixed asset impairment............................................... 112,000 --
Minority interest in net loss........................................ -- (2,891,000)
Changes in operating assets and liabilities:
Decrease in other current assets and other assets.................. 1,716,000 2,399,000
Increase (decrease) in accounts payable and accrued expenses....... 124,000 6,023,000
-------------------- ---------------------
Net cash (used in) operating activities.................................... (9,872,000) (10,245,000)
-------------------- ---------------------
Cash flows from investing activities:
Unrealized gain on securities........................................... -- 126,000
Purchases of equipment.................................................. (1,023,000) (1,069,000)
Proceeds from sale of equipment......................................... 150,000 --
-------------------- ---------------------
Net cash (used in) investing activities.................................... (873,000) (943,000)
Cash flows from financing activities:
Proceeds from issuance of common stock in connection with the
Exercise of warrants.................................................. 921,000 --
Repurchase/retirement of common stock................................... (627,000) --
Increase in long term debt due to related party......................... 1,028,000 981,000
Repayment of long term debt............................................. (96,000) --
Repayment of capital leases............................................. (42,000) (194,000)
-------------------- ---------------------
Net cash provided by financing activities............................... 1,184,000 787,000
-------------------- ---------------------
Effect of exchange rate changes on cash.................................... 9,000 1,000
-------------------- ---------------------
Net decrease in cash and cash equivalents.................................. (9,552,000) (10,400,000)
Cash and cash equivalents at beginning of period........................... 33,091,000 57,830,000
-------------------- ---------------------
Cash and cash equivalents at end of period................................ $ 23,539,000 $ 47,430,000
==================== =====================
Supplemental disclosure of cash flow information:
. Cash paid during the period for:
--- Interest -- --
--- Income Taxes -- --
</TABLE>
Non-cash investing and financing activities:
. In January 1999, the Company issued 1,882,215 shares of common stock valued
at $3,000,000 in exchange for certain intangible assets.
. In May 1999, the Company issued 3,000,000 shares of common stock valued at
$6,282,000 to Baxter Healthcare Corporation in exchange for its minority
interest in Nexell of California, Inc.
. In June 1999, the Company issued 70,000 shares of common stock valued at
$153,000 to certain Innovir shareholders in exchange for their outstanding
Innovir preferred stock.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
NEXELL THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(unaudited)
(1) Financial Statement Presentation
The unaudited condensed consolidated financial statements and notes thereto
of Nexell Therapeutics Inc. ("Nexell") and subsidiaries (collectively, the
"Company") herein have been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC"), and in the opinion of
management, reflect all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the results of operations for the
interim periods presented. Certain information and footnote disclosures
normally included in financial statements, prepared in accordance with
generally accepted accounting principles, have been condensed or omitted
pursuant to such rules and regulations. However, management believes that
the disclosures are adequate to make the information presented not
misleading. These condensed consolidated unaudited financial statements and
notes thereto have been prepared in conformity with the accounting
principles applied in our 1998 Annual Report on Form 10-K for the year
ended December 31, 1998 and should be read in conjunction with such Report.
The results for the interim periods are not necessarily indicative of the
results for the full fiscal year.
(2) Principles of Consolidation
These condensed consolidated financial statements include the accounts of
Nexell, Nexell of California, Inc. ("NCI"), VIMRX Genomics, Inc. ("VGI"),
Innovir Laboratories, Inc. ("Innovir") and its subsidiaries. All
significant intercompany balances and transactions have been eliminated.
(3) Comprehensive Loss
The Company's total comprehensive loss is summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------
1999 1998
------------------------- -----------------------
<S> <C> <C>
Net loss $15,110,000 $19,075,000
Foreign currency translation adjustment 33,000 7,000
Unrealized gain on investments --- (126,000)
------------------------- -----------------------
Comprehensive loss $15,143,000 $18,956,000
========================= =======================
</TABLE>
6
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(4) Per Share Information
Stock options and warrants outstanding were excluded from the computation
of diluted loss per share as the impact would be antidilutive.
(5) Restructuring Costs
In 1998, the Company discontinued funding its 85% owned subsidiary,
Innovir, and in order to reduce operating expenses, Innovir closed all
operations and discontinued research and development activities. Innovir
continues to seek partners, licensees or purchasers of its technology.
The three Innovir operating locations, Cambridge, England; Gottingen,
Germany; and New York, New York were closed in 1998. The total number of
employees terminated as a result of the restructuring was 44, all of which
were terminated by December 31, 1998. Termination payments, however, will
continue into 1999.
Fixed assets of the closed facilities consisting mainly of laboratory
equipment, were sold or are held for sale. Costs of $2,625,000 related to
the restructuring were expensed in 1998. During the first six months of
1999, the Company made restructuring related cash payments of $275,000. The
balance of the remaining restructuring related accrual, which is for
severance payments, was $106,000 at June 30, 1999, and cash payments will
be made throughout 1999.
In January 1999, the Company announced that it intended to acquire 100% of
its 80.5% held subsidiary, NCI, and to restructure the Company by changing
its name from VIMRX Pharmaceuticals Inc. to Nexell Therapeutics Inc. and
relocating its corporate headquarters to NCI's offices in Irvine,
California. This transaction was completed during May 1999. A total of
eight employees were terminated as a result of the restructuring. Related
expenses consist of the following:
<TABLE>
<CAPTION>
Restructuring Balance
Provision Applied June 30, 1999
-------------------------------------------------------------------
<S> <C> <C> <C>
Severance related $392,000 $171,000 $221,000
Fixed asset impairment 112,000 112,000 ---
-------------------------------------------------------------------
Total $504,000 $283,000 $221,000
===================================================================
</TABLE>
7
<PAGE>
(6) Restructuring of Sales, Marketing and Distribution Arrangement with Baxter
Effective June 30, 1999, Nexell signed final agreements with Baxter Healthcare
Corporation ("Baxter") for the transfer of sales, marketing and distribution
responsibilities for the Company's' Isolex(R) systems and other cell therapy
products from Baxter to Nexell, giving Nexell direct control of sales and
distribution of such products. Baxter will receive royalties on Nexell's sales
of Isolex(R) and related products. As part of this process, Nexell will
repurchase inventory previously sold to Baxter. The cost of repurchasing the
U.S. inventory is reflected as a reduction in Nexell's reported second quarter
sales, with the European inventory repurchase to be reported as a reduction in
third quarter sales. Nexell recorded related charges associated with the U.S.
transfer of approximately $500,000 at June 30, 1999 and additional charges
related to the European transfer will be booked in the third quarter of 1999.
Baxter will continue to manufacture and provide equipment service support for
the Isolex(R) systems and also agreed to provide a $20,000,000 line of credit.
The full integration of U.S. sales and distribution operations by Nexell called
for in the agreement, including the transfer of certain Baxter personnel to
Nexell's new 20-person U.S. field sales group, has been completed, with an
interim arrangement in place in Europe until the completion of the European
transition, currently expected to be finalized by the end of the third quarter
of 1999. European operations will be based in Nexell's new European headquarters
in Belgium.
Under the Credit Agreement with Baxter effective June 30, 1999, the Company may
borrow up to $20,000,000 in no more than three advances until the Termination
Date, with no more than one advance in any calendar quarter. Interest on each
advance accrues at the rate of 6.5% per annum until December 31, 2001, and
thereafter becomes payable quarterly with the final installment due on October
1, 2006. The Termination Date is the earlier of September 30, 2000, the maturity
date or a Financing Event, defined in the Agreement as a financing where the net
cash proceeds to the Company equal or exceed $50,000,000.
(7) Acquisition of CellPro Assets
On January 29, 1999, NCI consummated an agreement (the "CellPro Acquisition
Agreement") with CellPro Incorporated ("CellPro"), formerly one of NCI's
principal competitors, to purchase substantially all the intellectual
property assets of CellPro, together with certain related tangible and
intangible assets in exchange for 1,882,215 shares of Nexell's common
stock, $.001 par value (the "Common Stock"),valued by the parties at
$3,000,000.
In March 1999, the Company repurchased from CellPro 627,405 shares of
Common Stock at $1.00 per share.
(8) Acquisition of Minority Interest in NCI
In May 1999, Nexell changed its name from VIMRX Pharmaceuticals Inc. to
Nexell Therapeutics Inc. and acquired the minority interest of Baxter in
the Company's principal business unit and then 80.5% subsidiary, Nexell of
California, Inc. (formerly Nexell
8
<PAGE>
Therapeutics Inc.). NCI is now a wholly-owned subsidiary of Nexell. Baxter
retained its right to certain milestone payments in NCI.
Baxter's 19.5% interest in NCI (consisting of common stock, warrants and
convertible subordinated debentures), was exchanged for:
. 3,000,000 shares of Common Stock;
. an adjustment of the conversion price of the 70,282 outstanding shares
of the Company's Series A Preferred Stock owned by Baxter from $5.50
per share to $2.75 per share, which Series A Preferred Stock is
convertible after June 17, 1999 into approximately 25, 577,000 shares
of Common Stock, subject to adjustment for stock splits and
combinations, certain dividends and distributions and
reclassification, exchange or substitution;
. a warrant expiring May 27, 2006 to purchase 5,200,000 shares of Common
Stock at a price of $1.15 per share, subject to adjustment from time
to time in the event of cash dividends, stock dividends, stock
subdivisions, stock splits, stock combinations or reverse stock
splits; and
. $32,884,537.50 principal amount of 6 1/2% Convertible Subordinated
Debentures ("Debentures") (replacing the $30,000,000 principal amount
of Nexell's 6 1/2% convertible subordinated debentures plus accrued
interest through the closing date of the acquisition) convertible,
commencing November 30, 2002, into Common Stock at a conversion price
equal to 95% of the average of the closing prices of the Common Stock
on the NASDAQ Stock Market for the 30 consecutive trading days
preceding the date of conversion. The Debentures bear interest at 6
1/2% per annum and are due November 30, 2004. Interest accrues until
November 30, 2002, and, together with one-third of the outstanding
principal, is payable annually commencing November 30, 2002.
Approximately $22,000,000 in principal amount of Debentures is
convertible into Common Stock commencing November 30, 2002 at the
discretion of Baxter, and approximately $11,000,000 in principal
amount of Debentures is convertible only with the permission of
Nexell.
(9) Equity
In January 1999, DH Blair exercised 481,140 underwriter options to purchase
Common Stock at an exercise price of $1.91.
In May 1999, the Company issued 3,000,000 shares of Common Stock valued at
$6,282,000 to Baxter in exchange for Baxter's minority interest in NCI.
Baxter retains the rights to certain milestone payments.
In June 1999, the Company issued 70,000 shares of Common Stock valued at
$153,000 to certain Innovir shareholders in exchange for their outstanding
Innovir preferred stock.
9
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NEXELL THERAPEUTICS INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto included elsewhere in this Quarterly
Report on Form 10-Q and with the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
Three Months Ended June 30, 1999 and 1998
For the quarter ended June 30, 1999, total revenues were $1,563,000, a decrease
of $1,704,000 compared to the quarter ended June 30, 1998. These revenues
reflect product sales by NCI to its former distributor Baxter. The decrease
primarily reflects the repurchase of U.S. inventory previously sold to Baxter
under the sales, marketing and distribution arrangement with Baxter (the "Baxter
Distribution Arrangement") which was restructured on June 30, 1999. The decrease
in gross profit was primarily the result of spreading substantially constant
costs over a smaller sales base, and the charges related to the Baxter
Distribution Arrangement restructuring recorded in 1999.
Total operating expenses decreased by $2,973,000 or 25% due to decreases in
research and development expenses of $2,164,000 or 33%, general and
administrative expenses of $1,301,000 or 36%, partially offset by increases in
goodwill amortization of $39,000 or 4%, and selling and marketing expenses of
$453,000 or 63%.
The decrease in research and development expenses results primarily
from discontinuing all Innovir operations and related research and development
activities and scaling back research programs within the Company for development
projects other than VIMRxyn(R), the Company's chemically synthesized hypericin
product, and the Company's wound healing agent, VM301.
General and administrative expenses decreased primarily due to the closing of
Innovir operations and the relocation of the Company's headquarters to Irvine,
California.
The increase in selling and marketing expenses relates to the ramp up of NCI's
sales and marketing efforts for the U.S. launch of the Isolex(R)300 and
Isolex(R)300i which received final approval from the U.S. Food and Drug
Administration on July 2, 1999.
Royalty and licensing income increased $88,000. A $300,000 licensing payment
was received from Amgen Inc. by Innovir in the second quarter of 1999. CellPro
infringement royalty income, previously received from Baxter, was terminated in
the second quarter of 1998.
The minority interest in the net loss of consolidated subsidiaries was fully
recognized in 1998.
The decrease in interest income of $490,000 or 69% is due to the decrease in the
cash and cash equivalents average balance in 1999 as compared to the average
balance in the same period in
10
<PAGE>
1998, and an unrealized loss on investments, which are classified as trading
securities, in the second quarter of 1999 of $196,000.
Six Months Ended June 30, 1999 and 1998
For the six months ended June 30, 1999, total revenues were $7,077,000, an
increase of $991,000 compared to the six months ended June 30, 1998. The
increase primarily reflects increased sales levels in Europe, offset by the
inventory repurchase from Baxter. Gross profit on sales of $2,339,000 in the
first six months of 1999 represents a $410,000 increase over the same period in
1998. The gross profit percentage was substantially the same in both periods at
approximately 33%. The impact of spreading substantially constant costs over a
larger sales base in 1999 was offset by the impact of the inventory repurchase.
Total operating expenses decreased by $7,311,000 or 30% due to decreases in
research and development expenses of $6,731,000 or 45%, and general and
administration expenses of $2,140,000 or 32%, partially offset by an increase in
sales and marketing expenses of $1,070,000 or 102% and restructuring costs of
$504,000.
The decrease in research and development expenses results primarily
from discontinuing all Innovir operations and related research and development
activities and scaling back research programs within the Company for development
projects other than VIMRxyn(R), the Company's chemically synthesized hypericin
product, and the Company's wound healing agent, VM301.
General and administrative expenses decreased primarily due to the closing of
Innovir operations and the relocation of the Company's headquarters to Irvine,
California.
The increase in sales and marketing expenses relates to the ramp up of NCI's
marketing efforts for the U.S. launch of the Isolex(R)300 and Isolex(R)300i
which received final approval from the U.S. Food and Drug Administration on July
2, 1999.
Costs related to the restructuring and relocation of the corporate headquarters
were expensed during the first quarter of 1999 ($504,000).
Royalty and licensing income decreased $169,000 due to the termination in the
second quarter of 1998 of the CellPro infringement royalty income from Baxter.
This was partially offset by licensing income received from Amgen Inc. by
Innovir in the second quarter of 1999.
The minority interest in the net loss of consolidated subsidiaries was fully
recognized in 1998.
The decrease in interest income of $892,000 or 60% is due to the decrease in the
cash and cash equivalents average balance in 1999 as compared to the average
balance in the same period in 1998 and an unrealized loss on investments, which
are classified as trading securities, for the first six months of 1999 of
$299,000.
11
<PAGE>
Liquidity and Capital Resources
Before fiscal 1997, the Company had not realized any operating revenues and had
financed its operations through the sale of its securities.
The Company had $23,539,000 in cash and cash equivalents as of June 30, 1999 as
compared to $33,091,000 as of December 31, 1998, and working capital of
$20,745,000 at June 30, 1999 as compared to $32,017,000 at December 31, 1998.
Most of the decrease in cash and cash equivalents resulted from cash used in the
operations of the Company of $9,872,000 and purchases of equipment for
$1,023,000.
Net cash used in operating activities decreased $373,000 or 4% over the cash
used in operating activities in the six months ended June 30, 1998 due
principally to the increased sales activity of NCI and decreased spending by
Innovir.
Effective June 30, 1999, Nexell signed a Credit Agreement with Baxter under
which the Company may borrow up to $20,000,000. The Company currently has no
outstanding borrowing under this line of credit. See Note (6) to the Condensed
Consolidated Financial Statements.
The Company expects to incur substantial expenditures in the foreseeable future
for the research and development and commercialization of its proposed products
as well as the step-up of marketing activities at NCI. Based on current
projections, which are subject to change, the Company's management believes that
the current balance of cash and cash equivalents, together with a $20 million
line of credit available from Baxter, is sufficient to fund its operations for
over two years. Thereafter, the Company will require additional funds, which it
may seek to raise through public or private equity or debt financings,
collaborative or other arrangements with corporate sources, or through other
sources of financing. There can be no guarantee that the Company's present cash
and cash equivalents balance and the Baxter line of credit will be sufficient to
fund operations for the period expected, or that additional funds will be
available to the Company at the expiration of such period on terms favorable to
the Company, or at all.
Year 2000 Issues
The Company is aware of and has addressed many of the "Year 2000" issues
associated with both information technology ("IT") and non-IT systems which
could cause problems and network failures should the systems fail to recognize
year designations after 1999.
The Company has reviewed its own computer, communication, software and operating
systems and is satisfied they are Year 2000 compliant. Furthermore, the Company
has taken proactive measures to ensure the system servers and workstations' BIOS
have been reprogrammed and are Year 2000 compliant (BIOS are responsible for
starting the computer by providing a basic set of instructions. It performs all
the tasks which need to be done at start-up time).
The Company has upgraded all productivity, communication and accounting software
to meet Year 2000 compliance. The Company has tested the accounting systems with
the Year 2000 date and management is confident that they are compliant.
12
<PAGE>
The Company has completed most of the identification and testing in the second
quarter of 1999. The Company will continue system-wide testing in the third
quarter of 1999. Any system failures will be identified and corrected no later
than the end of the third quarter of 1999. The Company feels its Year 2000 risks
are minimal. The Company spent approximately $750,000 in 1998 to upgrade its
systems which brought it into Year 2000 readiness. Management does not expect
any additional significant upgrade costs.
The Company will continue to contact critical suppliers, collaborators, partners
and vendors to determine if their operations, as they relate to the Company, are
Year 2000 compliant. During the third and fourth quarters of 1999, the Company
will develop and implement certain contingency plans if any such critical third
parties are determined to be Year 2000 non-compliant.
Although the Company will take all practical measures to prevent problems
related with the Year 2000 programming issue, such problems and failures may
occur which could seriously affect the Company's operations. Because of the
unprecedented nature of such problems, the extent of the effect on the Company's
operations cannot be certain.
Disclosure Regarding Forward Looking Statements
This Report on Form 10-Q contains certain statements that are "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Those statements include, among other things, the discussions of the Company's
expectations contained in "Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations." Although the Company believes
that the expectations reflected in Forward Looking Statements are reasonable,
management can give no assurance that such expectations will prove to have been
correct. Generally, these statements relate to business plans or strategies,
projected or anticipated benefits or other consequences of such plans or
strategies, or projections involving anticipated revenues, expenses, earnings,
levels of capital expenditures, liquidity or indebtedness or other aspects of
operating results of financial position. All phases of the operations of the
Company are subject to a number of uncertainties, risks and other influences
(including the timely commencement and success of the Company's clinical trials
and other research endeavors, delays in receiving FDA or other regulatory
approvals, the development of competing therapies and/or technologies, the terms
of any future strategic alliances, and the possible need for additional
capital), many of which are outside the control of the Company and any one of
which, or a combination of which, could materially affect the results of the
Company's operations and whether the Forward Looking Statements made by the
Company ultimately prove to be accurate.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company maintains excess cash in a mutual fund, the "BlackRock Low Duration
Bond Portfolio" (the "Fund"), which invests in asset backed securities, bonds
and various other commercial obligations. The Fund may, from time to time, use
certain derivatives in its investment strategy.
Two of the main risks disclosed by the Fund are interest rate risk and credit
risk. Typically, when interest rates rise, there is a corresponding decline in
the market value of bonds such as those held by the Fund. Credit risk refers to
the possibility that the issuer of the bond will not be able to make principal
and interest payments.
13
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
On May 28, 1999, the Company issued securities to Baxter in exchange for
Baxter's minority interest in NCI. See Note (8) to the Condensed Consolidated
Financial Statements. Such securities were issued pursuant to the exemption from
registration requirements under Section 4(2) of the Securities Act of 1933 (the
"Securities Act"). In June 1999, the Company issued an aggregate of 70,000
shares of Common Stock to four persons in exchange for an aggregate of 280,000
shares of Class B Preferred Stock of the Company's subsidiary Innovir
Laboratories, Inc. Mr. and Mrs. William Lee Autry were issued 32,500 shares of
Common Stock, W. Joint Venture was issued 20,000 shares of Common Stock, and
each of Wolfson Equities and EDN Equities was issued 8,750 shares of Common
Stock. Such shares were issued pursuant to the exemption from registration
requirements under Section 4(2) of the Securities Act. In accordance with
registration rights granted to the recipients of such shares, the Company
registered the shares for resale by the recipients pursuant to a registration
statement on Form S-3.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The 1999 annual meeting of stockholders of the Company occurred on May 25,
1999. The following matters were voted upon at the meeting: (i) the election as
directors of the Company of each of Richard L. Dunning, Eric A. Rose, M.D.,
Victor W. Schmitt and Donald G. Drapkin, (ii) to approve the Company's
acquisition of the minority interest of Baxter in NCI; (iii) to approve an
increase in the number of shares of Common Stock issuable under the Company's
1997 Incentive and Non-Incentive Stock Option Plan from 2,000,000 shares to
3,000,000 shares; (iv) to ratify the appointment of KPMG LLP as independent
auditors of the Company for the year ended December 31, 1999; and (v) to approve
amendments to the Company's Certificate of Incorporation to (1) change its name
to Nexell Therapeutics Inc.; (2) change the terms of the Company's Series A
Preferred Stock as described in Note (8) to the Condensed Consolidated Financial
Statements; and (3) increase the authorized capital stock from 120,150,000
shares to 161,150,000 shares, of which 1,000,000 shares would be a newly
authorized class of "blank check" preferred stock.
14
<PAGE>
Matter Voted Votes Cast For Authority Withheld
1. Election of Directors
Richard L. Dunning 65,990,065 505,387
Eric A. Rose, M.D. 65,980,165 515,287
Victor W. Schmitt 65,990,065 505,387
Donald G. Drapkin 65,990,165 505,287
<TABLE>
<CAPTION>
Votes Cast Broker
For Against Abstentions Non-Votes
<S> <C> <C> <C> <C>
2. Approval of acquisition 36,582,148 433,786 306,860 29,172,658
of Baxter's interest in NCI
3. Approval of amendment to 62,886,174 3,282,493 326,785 --
1997 Option Plan
4. Approval of amendments to 35,691,727 1,317,182 313,885 29,172,658
the Company's Certificate of
Incorporation*
5. Ratification of KPMG LLP 65,871,897 317,997 305,558 --
</TABLE>
* All of the outstanding shares of the Company's Series A Preferred Stock (which
is owned by Baxter) voted in favor of this matter.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
---------
2.5 Asset Acquisition Agreement dated February 18, 1999 between Nexell and
Baxter (incorporated by reference to Annex A to the Registrant's Proxy
Statement dated April 9, 1999 and filed with the Commission on April
13, 1999 and to Exhibit 2.5 to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
3.1 Registrant's Amended and Restated Certificate of Incorporation dated
July 10, 1990, as amended to date, including Certificate of Amendment
of Certificate of Incorporation filed with the Delaware Secretary of
State on May 25, 1999 (incorporated by reference to Exhibit 3.1 on the
Form 8-K filed with the Commission on June 29, 1999).
15
<PAGE>
4.6 Registrant's Certificate of Amendment of
Certificate of Incorporation filed with the
Delaware Secretary of State on May 25, 1999
modifying the Class A Preferred Stock (included in
Exhibit 3.1 above).
4.7 Registrant's Series 1, 6 1/2% Convertible
Subordinated Debenture Due November 30, 2004
issued May 28, 1999 to Baxter (incorporated by
reference to Exhibit 4.7 on the Form 8-K filed
with the Commission on June 29, 1999)
4.8 Registrant's Series 2, 6 1/2% Convertible
Subordinated Debenture Due November 30, 2004
issued May 28, 1999 to Baxter (incorporated by
reference to Exhibit 4.8 on the Form 8-K filed
with the Commission on June 29, 1999)
10.39 Registrant's Common Stock Purchase Warrant issued
May 28, 1999 to Baxter (incorporated by reference
to Exhibit 10.39 on the Form 8-K filed with the
Commission on June 29, 1999)
10.40 Asset Transfer Agreement dated June 30, 1999 Filed herewith
between Nexell and Baxter electronically
10.41 Royalty Agreement dated June 30, 1999 between Filed herewith
Nexell and Baxter electronically
10.42 Credit Agreement dated June 30, 1999 between Filed herewith
Nexell and Baxter electronically
27 Financial Data Schedule.
(b) Reports on Form 8-K:
-------------------
The Company filed a Current Report on Form 8-K dated May 28, 1999, under
Item 5, announcing the completion of its previously announced acquisition
of the minority interest of Baxter - other than Baxter's right to certain
milestone payments - in NCI, thereby making NCI a wholly-owned, rather
than 80.5%, subsidiary of the Company.
16
<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 thereunto duly authorized.
Dated: August 13, 1999
NEXELL THERAPEUTICS INC.
a Delaware Corporation
(Registrant)
By: /s/ Richard L. Dunning .
-----------------------------------------
Richard L. Dunning
Chairman of the Board and
Chief Executive Officer
By: /s/ William A. Albright .
------------------------------------------
William A. Albright
Chief Financial Officer
17
<PAGE>
Exhibit 10.40
ASSET TRANSFER AGREEMENT
by and among
BAXTER HEALTHCARE CORPORATION,
NEXELL THERAPEUTICS INC.,
and
NEXELL OF CALIFORNIA, INC.
<PAGE>
ASSET TRANSFER AGREEMENT
------------------------
ASSET TRANSFER AGREEMENT ("Agreement"), made this 30th day of June, 1999,
by and among BAXTER HEALTHCARE CORPORATION, a Delaware corporation with offices
at 1627 Lake Cook Road, Deerfield, Illinois 60015 ("Baxter"), NEXELL
THERAPEUTICS INC., a Delaware corporation f/k/a VIMRx Pharmaceuticals Inc.
("Nexell"), and NEXELL OF CALIFORNIA, INC., a Delaware corporation f/k/a Nexell
Therapeutics, Inc. ("Nexell California"). Nexell and Nexell California, which
are collectively referred to from time to time herein as the "Nexell Group",
have offices located at Nine Parker, Irvine, California 92618. Nexell has
executed this Agreement, intending to be bound hereby, solely with respect to
Sections 1, 3, 5, 8, 9, 15, 18, 19, 20, 21 and 23 of this Agreement.
RECITALS
WHEREAS, Baxter and the Nexell Group have entered into a strategic alliance
in the ex vivo cell therapies business;
WHEREAS, pursuant to that certain Asset Purchase Agreement by and among
Baxter, Nexell and Nexell California, dated as of October 10, 1997 (as amended,
the "Asset Purchase Agreement"), on December 17, 1997, Baxter sold to Nexell
California certain Assets relating to its Division (as that capitalized term is
defined in the Asset Purchase Agreement) and Business (as that capitalized term
is defined in the Asset Purchase Agreement);
WHEREAS, any capitalized terms used but not defined in this Agreement shall
bear the meaning ascribed to such terms in the Asset Purchase Agreement;
WHEREAS, pursuant to Section 6.2(J) of the Asset Purchase Agreement, Baxter
and Nexell California agreed to reconcile the Net Book Value of certain Assets
against a stated value for such Assets as set forth in Section 6.2(J) of the
Asset Purchase Agreement (the "Asset Reconciliation");
WHEREAS, contemporaneously with the Closing of the transactions
contemplated by the Asset Purchase Agreement, Baxter and Nexell California
entered into a number of other agreements, including the Distribution Agreement
and the Services Agreement;
WHEREAS, Baxter and the Nexell Group have entered into that certain Letter
of Intent, dated as of May 6, 1999 ("LOI"), wherein Baxter and the Nexell Group
have indicated their desire and intent that among other things (subject to the
terms and conditions contained in the LOI, including the parties' execution and
delivery of this Agreement and the other Definitive Agreements, as that
capitalized term is defined in the LOI): (a) Baxter shall provide a line of
credit not to exceed $20,000,000.00 to Nexell; (b) the Distribution Agreement
and the Services Agreement shall be terminated; (c) Baxter shall transfer
certain assets (including certain leased hardware and related assets) to Nexell
California and Nexell California will make offers of employment to certain
employees of Baxter relating to the sales and marketing of Nexell California
products previously distributed by Baxter; (d) contemporaneously with the
termination of the Distribution Agreement
<PAGE>
and the Services Agreement described in item (b) above, the other Operating
Agreements (as that capitalized term is defined below) will be amended; and (e)
Baxter and the Nexell Group will resolve the Asset Reconciliation;
WHEREAS, in consideration of, as a condition precedent to, and
contemporaneously with the execution and delivery of this Agreement: (a) Baxter
and Nexell have executed and delivered that certain Credit Agreement, of even
date herewith; (b) Nexell has executed and delivered to Baxter that certain
Promissory Note in the principal amount of up to $20,000,000 of even date
herewith; (c) Baxter and Nexell California have executed and delivered that
certain United States and Canada Instrument Services Agreement of even date
herewith; (d) Baxter S.A. and Nexell S.A. have executed and delivered that
certain Management Services Agreement of even date herewith (the "Management
Agreement"); (e) Baxter, Nexell and Nexell California have executed and
delivered that certain Royalty Agreement of even date herewith (the "Royalty
Agreement"); and (f) Baxter and Nexell California have executed and delivered
that certain Ceprate(R) Sub-Distributorship Agreement of even date herewith (the
agreements and instruments listed in items (a) through (f) of this paragraph,
inclusive, are hereinafter referred to collectively as the "Related Documents");
and
WHEREAS, Baxter, Nexell and Nexell California desire to provide for (a) the
termination of the Distribution Agreement and the Services Agreement; (b) the
transfer of certain assets (including certain leased hardware and related
assets) to Nexell California utilized in or relating to the sales and marketing
of Nexell California products previously distributed by Baxter under the
Distribution Agreement; (c) Nexell California's employment of certain employees
of Baxter relating to the sales and marketing of Nexell California products
previously distributed by Baxter under the Distribution Agreement; (d) the
resolution of the Asset Reconciliation; and (e) the assumption by Nexell of
Baxter's Adjusted P&L pending the ROW Asset Transfer Closing, as those
capitalized terms are hereinafter defined; all upon and subject to the terms and
conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained, the parties agree as follows:
TERMS
1. Definitions and Interpretation.
------------------------------
1.1 Definitions. The following capitalized terms used herein shall have
-----------
the following meanings:
"Adjusted P&L" shall mean the worldwide (excluding the United States and
Canada) net income or losses of Baxter's and its Affiliates' cell therapy
business related to the Distributed Products (as that capitalized term is
defined in the Royalty Agreement), as shown on an adjusted unaudited
consolidated statement of income and losses for the period beginning and
including July 1, 1999, through and including the ROW Asset Transfer
Closing Date, and delivered by Baxter to Nexell California prior to the ROW
Asset Transfer Settlement Date pursuant to Section 3.4 of this Agreement.
The Adjusted P&L shall present fairly (although
2
<PAGE>
not necessarily in accordance with GAAP) the consolidated results of
operations of Baxter's and its Affiliates' worldwide cell therapy business
relating to the Distributed Products, excluding the United States and
Canada, for such period and will be prepared on a basis consistent with the
pro-forma adjusted unaudited consolidated statement of income for Baxter's
and its Affiliates' European cell therapy business related to the
Distributed Products attached hereto as Schedule 1.1(a) (the "Pro-Forma").
"Asset Transfer Closing" shall mean the US Asset Transfer Closing and the
ROW Asset Transfer Closing, individually or collectively, as the context
requires.
"Asset Transfer Closing Date" shall mean the US Asset Transfer Closing Date
and the ROW Asset Transfer Closing Date, individually or collectively, as
the context requires.
"Asset Transfer Settlement" shall mean shall mean the US Asset Transfer
Settlement and the ROW Asset Transfer Settlement, individually or
collectively, as the context requires.
"Asset Transfer Settlement Date" shall mean the US Asset Transfer
Settlement Date and the ROW Asset Transfer Settlement Date, individually or
collectively, as the context requires.
"Assigned Agreements" shall mean the US Assigned Agreements and the ROW
Assigned Agreements.
"Assumed Liabilities" shall mean any liabilities and obligations of Baxter
under any Assigned Agreements of Baxter which (a) are validly and
effectively assigned to Nexell California pursuant to this Agreement and
(b) conform to the representations and warranties with respect thereto
contained in this Agreement, subject to the following: (i) in the case of
rental or other payments, only to the extent that such rental or other
payments relate to periods after the applicable Asset Transfer Closing
Date, and (ii) in the case of all other obligations under the Assigned
Agreements, only to the extent that the obligation (including payment) is
by its terms first to be performed after the applicable Asset Transfer
Closing Date, all of which are set forth in Schedule 1.1(e) attached hereto
---------------
or will be scheduled pursuant to Section 2.4 hereof.
"Leased Transferred Assets" shall bear the meaning set forth in Section
2.1(D).
"Leased Transferred Assets Purchase Price" shall mean the book value of all
Leased Transferred Assets transferred to Nexell California appearing on the
financial statements of Baxter, as initially determined as of the
applicable Asset Transfer Closing and subsequently adjusted and agreed to
by Baxter and Nexell California as of the applicable Asset Transfer
Settlement pursuant to Section 2.2 of this Agreement.
3
<PAGE>
"Management P&L" shall mean a monthly adjusted unaudited consolidated
statement of net income and losses of Baxter's and its Affiliates'
worldwide (excluding the United States and Canada) cell therapy business
related to the Distributed Products.
"Nexell European Affiliate" shall mean European Affiliate(s) of Nexell
California reasonable acceptable to Baxter.
"Operating Agreements" shall mean the Antibody Manufacturing and Storage
Agreement (the "Antibody Agreement"), Hardware and Disposables
Manufacturing Agreement (the "Manufacturing Agreement"), and Hardware and
Disposables Supply Agreement (the "Supply Agreement").
"ROW Asset Transfer Closing" shall mean the consummation of the sale and
transfer of the ROW Transferred Assets by Baxter (or its Affiliates) to
Nexell California (or a Nexell European Affiliate), and the consummation of
the other transactions contemplated by this Agreement relating to the
transfer of the ROW Transferred Assets by Baxter (or its Affiliates) to
Nexell California (or a Nexell European Affiliate).
"ROW Asset Transfer Closing Date" shall mean any date prior to December 1,
1999, upon which, pursuant to a written notice delivered by Nexell
California to Baxter at least thirty (30) days prior to such date, Nexell
California elects to hold the ROW Asset Transfer Closing. Notwithstanding
any term or condition of this Agreement to the contrary, in the event that
the ROW Asset Transfer Closing shall not have occurred on or before the
close of business on November 29, 1999, the ROW Asset Transfer Closing Date
shall be November 30, 1999.
"ROW Asset Transfer Settlement" shall bear the meaning set forth in Section
2.2(A) of this Agreement.
"ROW Asset Transfer Settlement Date" shall mean the first business day that
is thirty (30) days after the ROW Asset Transfer Closing. Notwithstanding
any term or condition of this Agreement to the contrary, the ROW Asset
Transfer Settlement Date shall not be later than December 30, 1999.
"ROW Assigned Agreements" shall mean any leases of personal property
relating to the ROW Transferred Assets to which Baxter or any Baxter
Affiliate is a party as of the ROW Asset Transfer Closing and which are
identified in a written notice to be delivered by Baxter to Nexell
California prior to the ROW Asset Transfer Closing pursuant to Section 2.4
hereof, which notice shall include true and correct copies of such leases.
"ROW Assumed Liabilities" shall mean all Assumed Liabilities as of the ROW
Asset Transfer Closing Date, other than US Assumed Liabilities, identified
by Baxter in a written notice to Nexell California prior to the ROW Asset
Transfer Closing pursuant to Section 2.4 of this Agreement.
4
<PAGE>
"ROW Service Contracts" shall mean all service contracts relating to
Isolex(R) and Maxsep(R) Products as of the ROW Asset Transfer Closing,
other than US Service Contracts, identified by Baxter in a written notice
to Nexell California prior to the ROW Asset Transfer Closing pursuant to
Section 2.4 of this Agreement (which notice shall also identify any
outstanding balances due on any prepaid amounts under the ROW Service
Contracts as of the ROW Asset Transfer Closing).
"ROW Transferred Assets" shall mean (a) the finished goods inventory
(including CEPRATE(R) Cell Selection Kits, if any, but excluding spare
parts and obsolete, short dated or outdated materials) of Baxter (or its
Affiliates) which were previously sold by Baxter (or its Affiliates) as a
distributor pursuant to and under the Distribution Agreement outside of the
United States and Canada and identified by Baxter in a written notice to
Nexell California prior to the ROW Asset Transfer Closing pursuant to
Section 2.4 of this Agreement; (b) copies of all customer lists, accounting
books and records, sales history, and accounts receivable statements and
agings which were used by Baxter with respect to Baxter's or its
Affiliate's prior obligations with respect to marketing and sales in all
jurisdictions outside of the United States and Canada under the
Distribution Agreement and which do not include additional proprietary
information of Baxter (or its Affiliates) which is unrelated to Baxter's
activities under the Distribution Agreement; (c) the hardware and related
assets leased or owned by Baxter (or its Affiliates) relating to its prior
obligations for marketing and sales under the Distribution Agreement
outside of the United States and Canada and identified by Baxter in a
written notice to Nexell California prior to the ROW Asset Transfer Closing
pursuant to Section 2.4 of this Agreement, (d) all ROW Assigned Agreements,
and (e) all ROW Service Contracts (including all payments due under the ROW
Service Contracts and the aggregate pro rata share of any outstanding
balance due on any prepaid amounts under any ROW Service Contract). For
the purposes of this Agreement, the term "pro rata share of any outstanding
balance due on any prepaid amount under any ROW Service Contract" shall
mean, with respect to each such ROW Service Contract, an amount computed
according to the following formula: The amount, if any, prepaid by a
customer under a ROW Service Contract, divided by the number of days of the
original term of such ROW Service Contract, and multiplied by the unexpired
number of days of the original term of such ROW Service Contract following
the ROW Asset Transfer Closing Date.
"ROW Transferred Assets Purchase Price" shall mean the aggregate US dollar
value of (a) the price at which Baxter (or its Affiliates) purchased from
Nexell California the finished goods inventory (but excluding Leased
Transferred Assets, spare parts and obsolete, short dated or outdated
materials) of Baxter (or its Affiliates) which forms part of the ROW
Transferred Assets, plus (b) the book value of all other ROW Transferred
----
Assets (excluding Leased Transferred Assets) appearing on the financial
statements of Baxter (or its Affiliates), all as initially determined as of
the ROW Asset Transfer Closing and subsequently adjusted and agreed to by
Baxter and Nexell California as of the ROW Asset Transfer Settlement
pursuant to Section 2.2(B) of this Agreement.
"Service Contracts" shall mean all US Service Contracts and all ROW Service
Contracts.
5
<PAGE>
"Transferred Assets" shall mean US Transferred Assets and ROW Transferred
Assets.
"Transferred Assets Purchase Price" shall mean US Transferred Assets
Purchase Price, ROW Transferred Assets Purchase Price, and Leased
Transferred Assets Purchase Price.
"US Asset Transfer Closing" shall mean the consummation of the sale and
transfer of the US Transferred Assets by Baxter to Nexell California, and
the consummation of the related transactions contemplated by this Agreement
relating to the transfer of the US Transferred Assets by Baxter to Nexell
California.
"US Asset Transfer Closing Date" shall mean June 30, 1999.
"US Asset Transfer Settlement" shall bear the meaning set forth in Section
2.2(A) of this Agreement.
"US Asset Transfer Settlement Date" shall mean July 9, 1999.
"US Assigned Agreements" shall mean any leases of personal property
relating to the US Transferred Assets to which Baxter or any Baxter
Affiliate is a party and identified on Schedules 1.1(b) or 1.1(c) attached
---------------- ------
hereto, true and correct copies of which shall be delivered by Baxter to
Nexell California prior to the US Asset Transfer Settlement Date.
"US Assumed Liabilities" shall mean those Assumed Liabilities identified on
Schedule 1.1(e) attached hereto.
---------------
"US Service Contracts" shall mean all service contracts relating to
Isolex(R) and Maxsep(R) Products, as identified on Schedule 1.1(d) attached
---------------
hereto (Schedule 1.1(d) also identifies any outstanding balances due on any
---------------
prepaid amounts under the Service Contracts as of the date set forth
therein).
"US Transferred Assets" shall mean (a) the finished goods inventory
(including CEPRATE(R) Cell Selection Kits, but excluding spare parts and
obsolete, short dated or outdated materials) of Baxter as identified on
Schedule 1.1(b) attached hereto; (b) copies of all customer lists,
---------------
accounting books and records, sales history, and accounts receivable
statements and agings which were used by Baxter with respect to Baxter's
prior obligations for marketing and sales in the United States and Canada
under the Distribution Agreement and which do not include additional Baxter
proprietary information unrelated to Baxter's activities under the
Distribution Agreement; (c) the hardware and related assets leased or owned
by Baxter relating to its prior obligations for marketing and sales in the
United States and Canada under the Distribution Agreement and identified on
Schedule 1.1(c) attached hereto, (d) all US Assigned Agreements, and (e)
---------------
all US Service Contracts (including all payments due under the US Service
Contracts and the aggregate pro rata share of any outstanding balance due
on any prepaid amounts under any US Service Contract). For the
6
<PAGE>
purposes of this Agreement, the term "pro rata share of any outstanding
balance due on any prepaid amount under any US Service Contract" shall
mean, with respect to each such US Service Contract, an amount computed
according to the following formula: The amount, if any, prepaid by a
customer under a US Service Contract, divided by the number of days of the
original term of such US Service Contract, and multiplied by the unexpired
number of days of the original term of such US Service Contract following
the US Asset Transfer Closing Date.
"US Transferred Assets Purchase Price" shall mean the aggregate US dollar
value of (a) the price at which Baxter purchased from Nexell California the
finished goods inventory (but excluding Leased Transferred Assets, spare
parts and obsolete, short dated or outdated materials) of Baxter as
identified on Schedule 1.1(b) attached hereto, plus (b) the price at which
--------------- ----
Baxter purchased from CellPro, Inc., the CEPRATE(R) Cell Selection Kits
(but excluding Leased Transferred Assets, spare parts and obsolete, short
dated or outdated materials) identified on Schedule 1.1(b) attached hereto,
---------------
plus (c) the book value of all other US Transferred Assets (excluding
----
Leased Transferred Assets) appearing on the financial statements of Baxter,
all as initially determined as of the US Asset Transfer Closing and
subsequently adjusted and agreed to by Baxter and Nexell California as of
the US Asset Transfer Settlement pursuant to Section 2.2(A) of this
Agreement.
1.2 Interpretation.
--------------
(A) In respect of any of Baxter or the Nexell Group, 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
Baxter, the term "Relevant Persons" shall be deemed to refer to Victor W.
Schmitt, Cynthia L. Collins, Tara S. Clark and Jennifer Rodgers. In respect of
the Nexell Group, the term "Relevant Persons" shall be deemed to refer to
Richard L. Dunning and L. William McIntosh.
(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 Asset Transfer Closing Date.
(E) Whenever in this Agreement the term "agreement" is used, it shall
be deemed to refer to commitments, leases, licenses, contracts and agreements.
7
<PAGE>
(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) 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.
1.3 Definitions from Asset Purchase Agreement. Any other capitalized
-----------------------------------------
terms used but not defined in this Agreement shall bear the meaning ascribed to
such terms in the Asset Purchase Agreement.
2. Purchase, Sale and Delivery of the Transferred Assets.
-----------------------------------------------------
2.1 Purchase, Sale and Delivery.
----------------------------
(A) In reliance on the representations and warranties contained herein and
subject to all of the terms and conditions hereof, Baxter hereby agrees to
sell, assign, transfer and deliver (or cause to be sold, assigned,
transferred and delivered) to Nexell California, and Nexell California
agrees to purchase from Baxter:
(i) At the US Asset Transfer Closing, all of Baxter's right, title
and interest in and to the US Transferred Assets; and
(ii) At the ROW Asset Transfer Closing, all of Baxter's (or its
Affiliates') right, title and interest in and to the ROW Transferred
Assets.
(B) With respect to the US Asset Transfer Closing, Baxter has delivered all
of the US Transferred Assets to Nexell California, except for the US
Transferred Assets identified on Schedule 2.1(B) attached hereto, which
---------------
assets shall be delivered to Nexell California prior to the US Asset
Transfer Settlement Date. All US Transferred Assets will be delivered by
Baxter to Nexell California pursuant to this Section 2.1 FOB each such
Baxter facility where such US Transferred Assets are located per Nexell
California's notice of delivery.
(C) With respect to the ROW Asset Transfer Closing, Baxter (or its
Affiliates) will deliver all of the ROW Transferred Assets which are in the
possession of Baxter (or its Affiliates) at the ROW Asset Transfer Closing
to Nexell California (or a Nexell European Affiliate) at least ten (10)
days prior to the ROW Asset Transfer Settlement Date provided that Nexell
California (or a Nexell European Affiliate) provides a written notice to
Baxter on or before the ROW Asset Transfer Closing specifying the method of
delivery and destination of such ROW Transferred Assets. All ROW
Transferred Assets which are in the possession of Baxter (or its
Affiliates) at the ROW Asset Transfer Closing will be delivered by Baxter
(or its Affiliates) to Nexell California (or a Nexell European Affiliate)
pursuant
8
<PAGE>
to this Section 2.1 FOB each such Baxter (or its Affiliates') facility
where such ROW Transferred Assets are located per Nexell California's
notice of delivery.
(D) Baxter and Nexell California acknowledge that certain of the US
Transferred Assets which are leased to Baxter customers pursuant to US
Assigned Agreements and identified on Schedules 1.1(b) or 1.1(c) are, and
---------------- ------
that ROW Transferred Assets which are or will be leased to customers of
Baxter (or its Affiliates) pursuant to ROW Assigned Agreements (which
Baxter will identify to Nexell California in schedules to be delivered by
Baxter to Nexell California on or before the ROW Asset Transfer Closing
pursuant to Section 2.4 of this Agreement) will be, on the applicable Asset
Transfer Closing, in the possession of customers of Baxter (or its
Affiliates) and that possession of such US Transferred Assets and ROW
Transferred Assets will remain in the possession of such customers after
the applicable Asset Transfer Closing (collectively, the "Leased
Transferred Assets") until such time as Nexell California directs
otherwise, subject to applicable contractual obligations and law. Upon and
after the applicable Asset Transfer Closing Date Nexell California (or a
Nexell European Affiliate) shall be solely responsible for so obtaining
delivery and possession of such Leased Transferred Assets from such
customers.
(E) Except for Leased Transferred Assets, Baxter (or its Affiliates) shall
bear the costs for de-installing and packing the US Transferred Assets and
ROW Transferred Assets for shipment.
2.2 Purchase Consideration.
----------------------
(A) Except with respect to Leased Transferred Assets, on or before the US
Asset Transfer Settlement Date, Nexell California, at its sole cost and
expense, shall conduct a physical inventory of US Transferred Assets
delivered to Nexell California pursuant to Section 2.1 above and the
parties agree to negotiate in good faith any adjustment to the US
Transferred Asset Purchase Price resulting from such physical inventory
(the "US Asset Transfer Settlement"). Except with respect to Leased
Transferred Assets, in consideration of the sale, assignment and transfer
of the US Transferred Assets pursuant to Section 2.1 hereof, Nexell
California agrees to pay to Baxter the US Transferred Asset Purchase Price
in United States funds by wire transfer or by certified or bank cashier's
check within six (6) months of the US Asset Transfer Settlement Date. In
the event that the Nexell Financing Event occurs on or before December 31,
1999, and the amount of the Nexell Financing Event is increased from
$60,000,000 to $63,000,000, the total payment owing to Baxter pursuant to
the immediately preceding sentence will automatically be due and payable in
full not later than December 31, 1999.
(B) Except with respect to Leased Transferred Assets, on or before the ROW
Asset Transfer Settlement Date, Nexell California (or a Nexell European
Affiliate), at its sole cost and expense, shall conduct a physical
inventory of ROW Transferred Assets delivered to Nexell California (or a
Nexell European Affiliate) pursuant to Section 2.1 above and the parties
agree to negotiate in good faith any adjustment to the ROW Transferred
Asset
9
<PAGE>
Purchase Price resulting from such physical inventory (the "ROW Asset
Transfer Settlement"). Except with respect to Leased Transferred Assets, in
consideration of the sale, assignment and transfer of the ROW Transferred
Assets pursuant to Section 2.1 hereof, Nexell California agrees to pay or
cause a Nexell European Affiliate to pay to Baxter (or its Affiliates) the
ROW Transferred Asset Purchase Price in United States funds by wire
transfer or by certified or bank cashier's check within six months of the
ROW Asset Transfer Settlement Date. In the event that the Nexell Financing
Event occurs on or before December 31, 1999, and the amount of the Nexell
Financing Event is increased from $60,000,000 to $63,000,000, the total
payment owing to Baxter pursuant to the immediately preceding sentence will
automatically be due and payable in full not later than December 31, 1999.
(C) With respect to any Leased Transferred Assets for which title is
transferred to Nexell California (or a Nexell European Affiliate) at any
Asset Transfer Closing, Nexell California shall review the schedules of
Leased Transferred Assets and the Assigned Agreements and the parties agree
to negotiate in good faith any adjustment to the applicable Leased
Transferred Assets Purchase Price resulting from any discrepancies
contained in such schedules, on or before the applicable Asset Transfer
Settlement Date. Nexell California or cause a Nexell European Affiliate to
pay to Baxter (or its Affiliates) the Leased Transferred Asset Purchase
Price with respect to such Leased Transferred Assets over a period of three
(3) years, in twelve (12) equal consecutive quarterly installments, payable
as follows: The first quarterly installment shall be payable by Nexell
California not later than the last business day of the first full three (3)
month period following the applicable Asset Transfer Settlement Date, and
each of the remaining quarterly installments shall be payable not later
than the last business day of each successive three (3) month period until
the Leased Transferred Asset Purchase Price is fully paid. All such
quarterly installments shall be payable by Nexell California to Baxter in
United States funds by wire transfer or by certified or bank cashier's
check. In the event that the Nexell Financing Event occurs on or before
December 31, 1999, and the amount of the Nexell Financing Event is
increased from $60,000,000 to $63,000,000, the total payment owing to
Baxter pursuant to the immediately preceding sentence will automatically be
accelerated and shall be due and payable in full not later than December
31, 1999.
(D) Baxter shall deliver to Nexell California such federal funds wire
transfer instructions and/or an address for the delivery of payment of
funds by Nexell California pursuant to this Section 2.2 not later than the
US Asset Transfer Settlement Date and may change such wire transfer
instructions or address at any time thereafter pursuant to Section 19
hereof.
2.3 Liabilities.
-----------
(A) Liabilities Not Assumed. Except as specifically provided in
-----------------------
Section 2.3(B) and except with respect to the Adjusted P&L, Nexell California
neither assumes nor shall be obligated to pay, perform or discharge, and Baxter
hereby agrees to pay, perform, discharge or otherwise satisfy in due course and
to hold the Nexell Group harmless from, any and all debts, liabilities and
obligations of Baxter, whether known or unknown, fixed, contingent or otherwise,
10
<PAGE>
including, without limitation, all Taxes and liabilities under Environmental
Laws relating to, any of (i) the US Transferred Assets and arising prior to or
on the US Asset Transfer Closing Date, or (ii) the ROW Transferred Assets and
arising prior to or on the ROW Asset Transfer 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 applicable Asset Transfer Closing
Date, Nexell California hereby assumes only (i) the US Assumed Liabilities as of
the US Asset Transfer Closing Date and (ii) the ROW Assumed Liabilities as of
the ROW Asset Transfer Closing Date.
(C) Nexell Group Liabilities. Baxter shall have no liability for any
------------------------
obligations of the Nexell Group that are incurred or arise after the applicable
Asset Transfer Closing Date with respect to the US Transferred Assets or the ROW
Transferred Assets except to the extent (i) otherwise provided in this Agreement
or (ii) that any such liability arises from a wrongful act or omission on the
part of Baxter, any Affiliate of Baxter, or any Representative of any of the
foregoing.
(D) Nexell Financing. Baxter will provide support to Nexell for the
----------------
completion of a Financing Event (as defined in the LOI) substantially similar to
the transaction described in the document entitled "Nexell Therapeutics Inc.
Sale of Units", dated April 23, 1999, and attached to the LOI as Exhibit A (such
an event, a "Nexell Financing Event"), as follows: In connection with the
issuance by Nexell of Series B Preferred Stock (a Nexell Financing Event),
Baxter has agreed to accept a "Put Right" (as that term is defined in the
Exhibit A to the LOI) and shall take all steps reasonably required to complete
its obligations thereunder as and when appropriate.
2.4 Delivery of Schedules by Baxter With Respect to the ROW Asset Transfer
----------------------------------------------------------------------
Closing. Baxter shall deliver to Nexell, at least thirty (30) days prior to the
- -------
ROW Asset Transfer Closing, the following schedules: Schedule of ROW Service
Contracts (identifying any outstanding balances due on any prepaid amounts under
the ROW Service Contracts as of the ROW Asset Transfer Closing); Schedule of
finished goods inventory forming part of the ROW Transferred Assets; Schedule of
hardware and related assets forming part of the ROW Transferred Assets; Schedule
of ROW Assigned Agreements forming part of the ROW Transferred Assets; Schedule
of ROW Service Contracts forming part of the ROW Transferred Assets (including
all payments due under the ROW Service Contracts and the aggregate pro rata
share of any outstanding balance due on any prepaid amounts under any ROW
Service Contract); Schedule of ROW Assumed Liabilities; and a Schedule of ROW
Leased Transferred Assets.
3. Termination of Distribution Agreement and Adjusted P&L.
------------------------------------------------------
11
<PAGE>
3.1 Termination of Distribution Agreement For US and Canada. The
-------------------------------------------------------
Distribution Agreement is hereby terminated effective as of the US Asset
Transfer Closing Date, and all obligations of both Baxter and Nexell California
thereunder are terminated, null and void as of the US Asset Transfer Closing
Date (including the provisions of Section 2.3 of the Distribution Agreement),
only with respect to the United States and Canada, provided that each of Baxter
-------------
and Nexell California agree that notwithstanding the termination of the
Distribution Agreement with respect to the United States and Canada:
(A) Baxter will fulfill any obligations with respect to any Products
in transit to customers in the United States and Canada on the date hereof
pursuant to the terms and conditions of the Distribution Agreement;
(B) Subject to Section 3.1(C) below, each of Baxter and/or Nexell
California shall pay any amounts to the other party to the Distribution
Agreement which have accrued but not yet been paid as of the date of this
Agreement, or which will accrue and will be payable for services performed or
Products sold as of the date of this Agreement, with respect to the United
States and Canada pursuant to the terms and conditions of the Distribution
Agreement; and
(C) Baxter will collect and retain for its own account any accounts
receivable arising in the ordinary course of business from its sales of Products
under the Distribution Agreement prior to the date of this Agreement with
respect to the United States and Canada.
3.2 Distribution in the Rest of the World.
--------------------------------------
(A) Baxter (or its designated Affiliates) shall remain as the
exclusive distributor of Products under the terms and conditions of the
Distribution Agreement in the Baxter Region (as that capitalized term is defined
in the Distribution Agreement), excluding the United States and Canada (the
"ROW"), pursuant to the terms and conditions of the Distribution Agreement
through and including the ROW Asset Transfer Closing Date (the "ROW Distribution
Obligations"). Baxter (or its designated Affiliates) will collect and retain
for its own account any accounts receivable arising in from its sales of
Products in the ROW through and including the ROW Asset Transfer Closing Date.
(B) The Non-Competition and Confidentiality Agreement dated as of
December 17, 1997, by and among Baxter, Nexell and Nexell California, as
amended, shall remain in full force and effect according to its terms as if the
Distribution Agreement were not terminated at any Asset Transfer Closing Date,
provided that this Section 3.2(B) shall not otherwise extend the term of the
Non-Competition and Confidentiality Agreement.
(C) From the US Asset Transfer Closing Date until the termination of
Baxter's ROW Distribution Obligations, and subject to the terms and conditions
of this Agreement, Baxter (or its designated Affiliates) shall continue to act
in the ordinary course of business with respect to Baxter's ROW Distribution
Obligations and its obligations under the Distribution Agreement and the
Operating Agreements.
12
<PAGE>
3.3 Termination of Distribution Agreement For ROW. Subject to the early
----------------------------------------------
termination of the provisions of the Distribution Agreement with respect to the
United States and Canada pursuant to Section 3.1 hereof, the Distribution
Agreement shall automatically terminate effective as of the ROW Asset Transfer
Closing Date, and all obligations of both Baxter (or its Affiliates) and Nexell
California thereunder shall be terminated, null and void as of the ROW Asset
Transfer Closing Date (including the provisions of Section 2.3 of the
Distribution Agreement) with respect to the ROW, provided that each of Baxter
-------------
and Nexell California agree that notwithstanding the termination of the
Distribution Agreement with respect to the ROW:
(A) Baxter (or its Affiliates) will fulfill any obligations with
respect to any Products in transit to customers in the ROW on the ROW Asset
Transfer Closing Date pursuant to the terms and conditions of the Distribution
Agreement;
(B) Subject to Section 3.3(C) below, each of Baxter (or its
Affiliates) and/or Nexell California shall pay any amounts to the other party to
the Distribution Agreement which have accrued but not yet been paid as of the
ROW Asset Transfer Closing Date, or which will accrue and will be payable for
services performed or Products sold as of the ROW Asset Transfer Closing Date,
with respect to the ROW pursuant to the terms and conditions of the Distribution
Agreement; and
(C) Baxter (or its Affiliates) will collect and retain for its own
account any accounts receivable arising in the ordinary course of business from
its sales of Products under the Distribution Agreement prior to the ROW Asset
Transfer Closing Date with respect to the ROW.
3.4 Adjusted P&L. Baxter shall deliver the Adjusted P&L to Nexell
------------
California at least ten (10) days prior to the ROW Asset Transfer Settlement
Date. Both Nexell California and Baxter will review the Adjusted P&L and, in
the event that Nexell California disputes any part of the Adjusted P&L, Baxter
and Nexell will negotiate in good faith the Adjusted P&L to the end that the
parties shall agree to the Adjusted P&L not later than the ROW Asset Transfer
Settlement Date. In consideration of Baxter's agreement to continue to act as
the distributor for Nexell California in the ROW pursuant to Section 3.2 above,
Baxter and Nexell agree as follows:
(A) In the event that the Adjusted P&L indicates a loss, Nexell shall
indemnify and hold Baxter (and its Affiliates) harmless in respect of the
aggregate of all losses of Baxter as indicated in the Adjusted P&L and shall pay
the aggregate amount of such losses to Baxter in immediately available United
States funds by wire transfer or by certified or bank cashier's check within six
(6) months of the ROW Asset Transfer Settlement Date.
(B) In the event that the Adjusted P&L indicates a profit, Baxter
shall pay the profit as indicated in the Adjusted P&L to Nexell California in
immediately available United States funds by wire transfer or by certified or
bank cashier's check within six (6) months of the ROW Asset Transfer Settlement
Date. Nexell California shall provide to Baxter federal funds wire transfer
instructions at the ROW Asset Transfer Settlement Date.
13
<PAGE>
3.5 Management P&L. Baxter shall deliver the Management P&L to Nexell
--------------
California from the US Asset Transfer Closing Date until the ROW Asset Transfer
Closing Date on a monthly basis for each month during such period in the
ordinary course of Baxter's business.
4. Services Agreements and LOI.
----------------------------
4.1 Termination of Services Agreement. The Services Agreement is hereby
---------------------------------
terminated effective as of the US Asset Transfer Closing Date, provided that
-------------
each of Baxter and Nexell California agree that notwithstanding the termination
of the Services Agreement, each of Baxter and/or Nexell California shall pay any
amounts due to the other party pursuant to the terms and conditions of the
Services Agreement, if any, which have accrued but have not yet been paid as of
the date of this Agreement. Following the US Asset Transfer Closing Date, all
warehousing and distribution, customer service, service contracts and billing
and collection previously performed by Baxter under the Distribution Agreement
and the Services Agreement shall be performed with respect to the United States
and Canada by or at the direction of Nexell California.
4.2 New Services Agreement. Nexell and Baxter hereby agree to continue
----------------------
to negotiate in good faith between the US Asset Transfer Closing Date and the
ROW Asset Transfer Closing Date a services agreement relating to Nexell's
European operations on terms and conditions mutually satisfactory to each of
Nexell and Baxter in their sole discretion.
4.3 Termination of LOI. The LOI is hereby terminated effective as of the
------------------
date of this Agreement.
4.4 Waiver of Interest. Baxter hereby agrees to waive any prepayment
------------------
penalty due and payable to Baxter pursuant to the terms of Nexell's outstanding
convertible debentures held by Baxter as of the date of this Agreement only if
such prepayment penalty becomes due and payable as a result of Nexell's
redemption of such debentures using proceeds from the Nexell Financing Event.
5. Operating Agreements. Subject to the remaining terms of the Operating
--------------------
Agreements, Nexell California and Baxter acknowledge and agree that
notwithstanding the termination of the Distribution Agreement pursuant to
Section 3 above, Baxter's obligations with respect to the delivery of Products
to Nexell California pursuant to Section 19 of the Antibody Agreement, Section
19 of the Manufacturing Agreement, and Section 18 of the Supply Agreement,
during the period between the US Asset Transfer Closing and the ROW Asset
Transfer Closing, and as of and following the ROW Asset Transfer Closing, are as
set forth in Schedule 5 to this Agreement and that the Operating Agreements
----------
shall remain in full force and effect.
6. Representations and Warranties of Baxter. Baxter represents and warrants
-----------------------------------------
to Nexell California as of the US Asset Transfer Closing and the ROW Asset
Transfer Closing, as applicable, that:
14
<PAGE>
6.1 Good Standing. Baxter is a corporation organized, validly existing and
-------------
in good standing under the laws of the State of Delaware, and with respect to
the Transferred Assets and the transactions contemplated by this Agreement, has
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.
6.2 Authority. Baxter possesses full right, corporate power and legal
---------
authority to execute and deliver this Agreement and the Related Documents to be
executed by Baxter 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 Related
Documents to be executed by Baxter 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 Baxter. This
Agreement and the Related Documents to be executed by Baxter have been duly and
validly executed by Baxter and constitute the legal, valid and binding
obligations of Baxter 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. The execution and delivery of this Agreement
by Baxter and the Related Documents to be executed by Baxter 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
Baxter, 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 Transferred Assets of Baxter pursuant to, (3) accelerate or create,
or permit the acceleration or creation of, any liability or obligation of Baxter
under, or (4) cause a termination under or give rise to a right of termination
under the terms of, any mortgage, lien, agreement, indenture, trust, instrument,
order, judgment or decree to which Baxter is a party or which is binding upon
Baxter (it being agreed that this subsection (B) shall be deemed to refer only
to the Transferred Assets and those liabilities, obligations, mortgages, liens,
agreements, indentures, trusts, instruments, orders, judgments and decrees which
relate to or affect the Transferred Assets and/or the Assumed Liabilities and
which are being transferred to or assumed by Nexell California).
6.3 Title to Transferred Assets. Baxter (or its Affiliates) is the sole
---------------------------
and exclusive owner of and has good and valid title to all of the Transferred
Assets, free and clear of all Encumbrances, except for Permitted Encumbrances
and for the rights of any third party lessee arising under applicable leases
relating to the Leased Transferred Assets, and, except as otherwise provided in
any agreement between Baxter, Nexell or Nexell California or by applicable law,
rule or regulation there exists no restriction on the use, ownership or transfer
of the any Transferred Assets by Baxter to Nexell California. All Transferred
Assets consisting of finished goods inventory (excluding spare parts) shall be
transferred by Baxter to Nexell California subject to the representations,
warranties and indemnification obligations of the parties contained in Section
22 of the Antibody Agreement, Section 22 of the Manufacturing Agreement, and
Sections 20 and 23 of the Supply Agreement.
15
<PAGE>
6.4 Assigned Agreements.
-------------------
(A) To Baxter's knowledge, there is no existing material breach of any
of the Assigned Agreements by Baxter, 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 Baxter or give rise to a
right on the part of any of the other parties thereto to terminate such
agreement or to deprive Baxter of any material right, or accelerate any of its
material obligations, thereunder.
(B) To Baxter's knowledge, there is no existing material breach of any
of the Assigned Agreements by any party (other than Baxter) 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 Baxter to terminate such agreement or to
deprive the other party of any right, or accelerate any obligation of such
party, thereunder.
6.5 Schedules of Transferred Assets. Schedules 1.1(b) and 1.1(c) set
------------------------------- ---------------- ------
forth the book value and accumulated depreciation of the US Transferred Assets
as of the dates set forth therein on the books and records of Baxter, the
location and original cost to Baxter of the US Transferred Assets as of the
dates set forth therein, the names and addresses of persons with custody of any
US Transferred Assets not in the possession of Baxter and the related serial
number and version of such instruments, and all US Assigned Agreements related
thereto, and prior to the US Asset Transfer Settlement Date Baxter shall deliver
to Nexell California true and correct copies of all US Assigned Agreements
described therein. As of the ROW Asset Transfer Closing, the schedules to be
delivered by Baxter to Nexell California pursuant to Section 2.4 of this
Agreement shall set forth the book value and accumulated depreciation of the ROW
Transferred Assets as of the dates set forth therein on the books and records of
Baxter, to Baxter's knowledge the location and original cost to Baxter of the
Leased Transferred Assets forming part of the ROW Transferred Assets as of the
dates set forth therein, the location and original cost to Baxter of the other
ROW Transferred Assets as of the dates set forth therein, to Baxter's knowledge
the names and addresses of persons with custody of any of the Leased Transferred
Assets forming part of the ROW Transferred Assets not in the possession of
Baxter and the related serial number and version of such instruments, the names
and addresses of persons with custody of any other ROW Transferred Assets not in
the possession of Baxter and the related serial number and version of such
instruments, and all ROW Assigned Agreements related thereto, and true and
correct copies of all ROW Assigned Agreements will be attached thereto. In the
event that the schedules so supplied by Baxter (a) setting forth the location
and original cost to Baxter of the Leased Transferred Assets forming part of the
ROW Transferred Assets and/or (b) setting forth the names and addresses of
persons with custody of any of the Leased Transferred Assets forming part of the
ROW Transferred Assets not in the possession of Baxter and the related serial
number and version of such instruments, are inaccurate to the detriment of
Nexell and disputed by Nexell prior to the ROW Asset Transfer Settlement Date,
the parties shall meet to resolve such dispute pursuant to Section 23.6 of this
Agreement.
7. Representations and Warranties of Nexell California. Nexell California
----------------------------------------------------
represents and warrants to Baxter as of the US Asset Transfer Closing and the
ROW Asset Transfer Closing, as applicable, that:
16
<PAGE>
7.1 Good Standing. Nexell California is a corporation organized, validly
-------------
existing and in good standing under the laws of the State of Delaware and has
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.
7.2 Authority. Nexell California possesses full right, corporate power and
---------
legal authority to execute and deliver this Agreement and the Related Documents
to be executed by Nexell California 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 by
Nexell California and the Related Documents to be executed by Nexell California
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 Nexell California. This Agreement and the Related Documents to be
executed by Nexell California have been duly and validly executed by Nexell
California and constitute the legal, valid and binding obligations of Nexell
California 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. The execution and delivery of this Agreement by Nexell
California and the Related Documents to be executed by Nexell California 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 Nexell California, 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 Nexell California pursuant to, (3) accelerate or
create, or permit the acceleration or creation of, any liability or obligation
of Nexell California under, or (4) cause a termination under or give rise to a
right of termination under the terms of, any mortgage, lien, agreement,
indenture, trust, instrument, order, judgment or decree to which Nexell
California is a party or which is binding upon Nexell California.
8. Representations and Warranties of Nexell. Nexell represents and warrants
-----------------------------------------
to Baxter as of the US Asset Transfer Closing and the ROW Asset Transfer
Closing, as applicable, that:
8.1 Good Standing. Nexell is a corporation organized, validly existing and
-------------
in good standing under the laws of the State of Delaware and has 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.
17
<PAGE>
8.2 Authority. Nexell possesses full right, corporate power and legal
---------
authority to execute and deliver this Agreement and the Related Documents to be
executed by Nexell 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 by Nexell and the
Related Documents to be executed by Nexell 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 Nexell. This
Agreement and the Related Documents to be executed by Nexell have been duly and
validly executed by Nexell and constitute the legal, valid and binding
obligations of Nexell 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. The execution and delivery of this Agreement
by Nexell and the Related Documents to be executed by Nexell 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
Nexell, 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 Nexell pursuant to, (3) accelerate or create, or permit the
acceleration or creation of, any liability or obligation of Nexell under, or (4)
cause a termination under or give rise to a right of termination under the terms
of, any mortgage, lien, agreement, indenture, trust, instrument, order, judgment
or decree to which Nexell is a party or which is binding upon Nexell.
9. Asset Reconciliation. Baxter, Nexell and Nexell California hereby (a)
--------------------
agree that Section 6.2(J) of the Asset Purchase Agreement is hereby terminated,
null and void, ab initio, and (b) waive, release and forgive any and all claims,
rights, contractual remedies and causes of action of any kind whatsoever with
respect to the Asset Reconciliation, ab initio.
10. Assignment of Assigned Agreements. To the extent that any Assigned
---------------------------------
Agreement is not capable of being 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 Nexell California, Baxter shall use its commercially reasonable best
efforts, both prior and subsequent to the applicable Asset Transfer Closing
Date, to obtain all necessary approvals, consents or waivers necessary to convey
to Nexell California each such Assigned Agreement as soon as reasonably
practicable; provided, however, that Baxter shall not be required to pay any
-------- -------
additional consideration in order to obtain such approvals, consents or waivers.
Schedules 1.1(b) and 1.1(c) identify those US Assigned Agreements for which
- ---------------- ------
Baxter has not received the necessary approvals, consents or waivers as of the
date of this Agreement. As of the ROW Asset Transfer Closing, the schedules to
be delivered by Baxter to Nexell California pursuant to Section 2.4 of this
Agreement
18
<PAGE>
shall identify those ROW Assigned Agreements for which Baxter has not received
the necessary approvals, consents or waivers as of the date of such schedules.
To the extent any of the approvals, consents or waivers referred to in this
Section 10 have not been obtained as of the applicable Asset Transfer Closing
Date, Baxter shall, during the remaining term of the applicable Assigned
Agreement (and without limiting Nexell California's right to have Baxter
persist, following the applicable Asset Transfer Closing Date, in attempting to
obtain any such approval, consent or waiver), exercise commercially reasonable
best efforts to cooperate with Nexell California in any reasonable and lawful
arrangements designed to provide the benefits of such Assigned Agreement to
Nexell California.
11. Facilitation of Possession. Subject to Section 2.1(D), subsequent to the
--------------------------
applicable Asset Transfer Closing Date, Baxter, at the request of Nexell
California, 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 Nexell California of the
applicable Transferred Assets.
12. Employment of Key North American Employees.
------------------------------------------
(A) Nexell California represents and warrants to Baxter that Nexell
California has extended written offers of employment ("Nexell California's
Offer") to all Baxter North America employees set forth on Schedule 12(A) who
have previously provided marketing, sales or other related services under the
Distribution Agreement (the "Key Employees"), including descriptions of the
compensation and benefits being offered (which were, in the aggregate, at least
as favorable as the compensation and benefits previously provided by Baxter to
such Key Employees) and descriptions of any material change in the terms or
conditions of the Key Employees employment with Baxter, and conditioning such
offers on Nexell California's receipt of the offeree's written acceptance of the
offer not later than June 15, 1999. In addition, Nexell California shall provide
severance benefits in accordance with Baxter's severance pay policies in effect
immediately prior to the Closing as set forth on the Baxter Disclosure Schedule
(the "Severance Pay Policies") in the event that his or her employment is
terminated by Nexell California within one year of the Closing.
(B) Except as set forth in Schedule 12(B), no Key Employee has any
--------------
agreement as to length of notice required to terminate his or her employment,
other than such as results by law from the employment of an employee without
agreement as to such notice or as to length of employment.
(C) Nexell California represents and warrants to Baxter that as of the
date of this Agreement the Key Employees identified on Schedule 12(B) have
--------------
delivered their written acceptance of Nexell California's Offer pursuant to
Section 12(A) above ("New Nexell California Employees").
(D) Effective as of July 1, 1999, all New Nexell California Employees
shall be terminated from employment with Baxter and shall begin working for
Nexell California; provided, however, that Baxter shall remain responsible for
the payment of each such employee's salary, wages, vacation, sick pay, bonus or
similar compensation or benefits accrued up to and including the date of
termination of such employee's employment with Baxter.
19
<PAGE>
(E) Nexell California and Baxter acknowledge, agree and stipulate that no
assets shall be directly transferred from any Baxter employee benefit plan to
any Nexell Group employee benefit plan in conjunction with the transactions
contemplated by this Agreement.
(F) Except as otherwise provided in this paragraph, Nexell California
agrees that for a period of one (1) year following the date of this Agreement,
Nexell California will replicate all material terms of the Baxter Severance Pay
Plan and shall assume, and be solely responsible for, the past service liability
of Baxter under the Severance Pay Policies for one year following the date of
this Agreement and as otherwise imposed by law in respect of all New Nexell
California Employees. Although Nexell California shall be solely responsible for
payment of any benefits under the Severance Pay Policies pursuant to this
paragraph, Baxter and Nexell California shall each bear one half of the
financial cost of any liabilities under the Severance Pay Policies incurred
during the one year period following the US Asset Transfer Closing Date in
respect of all New Nexell California Employees.
(G) With respect to Key Employees who are not New Nexell California
Employees ("Rejecting Employees"), Baxter represents and warrants to Nexell
California that Baxter did not make any competing employment offer, offer any
other inducement or incentives, or otherwise attempt to discourage or prevent
the Rejecting Employees from accepting Nexell California's Offer.
(H) Baxter agrees with Nexell California that Baxter shall indemnify and
hold harmless Nexell California for compensation and benefits, if any, due any
Rejecting Employees following any termination of such Rejecting Employees by
Baxter.
(I) Baxter does not contribute, and is not obligated to contribute, to any
multiemployer plan (within the meaning of section 4001 of ERISA) with respect to
the Key Employees.
(J) Benefit Plans and Pension Plans. Except to the extent otherwise
provided herein, Nexell California shall not assume any obligations arising
under any "employee benefit plan" (as such term is defined in Section 3(3) of
ERISA) which Baxter maintains relating to any New Nexell California Employees
(collectively the "Plans"). The active participation of the New Nexell
California Employees in the Plans shall terminate as of the US Asset Transfer
Closing Date, in each case except to the extent that any rights under the Plans
shall have vested, or may vest upon fulfillment of certain conditions, in
accordance with the terms contained therein; provided, however, that New Nexell
California Employees shall be 100% vested in their account balances under the
Baxter's Savings Plan and in their accrued benefits under the Baxter
International Inc. and Subsidiaries Pension Plan.
(K) Nexell California shall provide for the participation, commencing on
the US Asset Transfer Closing Date, by such of the New Nexell California
Employees who participated in the Plans prior to the US Asset Transfer Closing
Date, in Nexell California's employee benefits plans, provided that for purposes
of eligibility to participate and vesting under Nexell California's plans,
including but not limited to Nexell California's sick and disability pay
plan(s), (but not for purposes of benefit accruals), Nexell California shall
take any and all action necessary (including amendment
20
<PAGE>
of Nexell California's plans) to recognize each New Nexell California Employee's
service with Baxter. No New Nexell California Employee's participation in any of
Nexell California's employee benefit plans shall be limited or restricted due to
a preexisting condition limitation in such plan. Nexell California shall credit
New Nexell California Employees with any amounts paid under Baxter's Plans prior
to the US Asset Transfer Closing Date toward satisfaction of the applicable
deductible amounts and copayment minimums under the corresponding welfare plans
of Nexell California.
(L) Baxter shall retain liability for employees (and their qualified
beneficiaries) receiving continuation coverage as of the US Asset Transfer
Closing Date under Baxter's group health plans. With respect to group health
plans established by Nexell California or its Affiliates on or after the US
Asset Transfer Closing Date and for the benefit of New Nexell California
Employees shall comply with all obligations under Part 6 of Title I of ERISA and
Section 4980B of the Code applicable to those plans.
(M) Nexell California shall comply with all notice and other requirements
under the Workers Adjustment and Retraining Notification Act ("WARN") and any
similar state, local, or foreign country statute with respect to all Key
Employees who accept employment with Nexell California and all other employees
of Nexell California. Baxter shall comply with all notice and any other
requirements under WARN and any similar state, local, or foreign country statute
with respect to all employees who either are not offered employment with Nexell
California or who decline offers of employment with Nexell California as well as
all other employees of Baxter.
13. Key European Employees.
----------------------
(A) Nexell California agrees that, prior to the ROW Asset Transfer Closing
Date, Nexell California will cause a Nexell European Affiliate to extend offers
of employment to all employees predominantly connected with the Nexell business
in Europe, and as identified on Schedule 13 ("European Key Employees"), with
-----------
terms and conditions at least as favorable in the aggregate, as the European Key
Employees' terms of employment while employed by Baxter. Nexell California
agrees to cause such Nexell European Affiliate to assume all liabilities for all
European Key Employees whose employment with Baxter is terminated as a result of
the Nexell European Affiliate's offer of employment in connection with this
transaction, effective as of the ROW Asset Transfer Closing Date, as required
under applicable law.
(B) Nexell California and Baxter agree to negotiate in good faith to the
end that within sixty (60) days of the US Asset Transfer Closing Date Nexell
California and Baxter shall agree on the specific European country issues
relating to the employment of the European Key Employees by the Nexell European
Affiliate, including the parties' intention that:
(i) subject to applicable law, for a period of one (1) year following
the ROW Asset Transfer Closing Date, with respect to European Key
Employees hired by Nexell European Affiliate, the Nexell European
Affiliate will replicate all material terms of any severance pay
benefits available to such European Key Employees while they
21
<PAGE>
were employed by Baxter ("Severance Pay Benefits") and shall assume,
and be solely responsible for, the past service liability of Baxter
with respect to such Severance Pay Benefits for one (1) year following
the ROW Asset Transfer Closing Date and as otherwise imposed by law;
and
(ii) subject to applicable law, that although the Nexell European
Affiliate shall be solely responsible for payment of any such
Severance Pay Benefits, Baxter and Nexell California shall each bear
one half of the financial cost of any liabilities under the Severance
Pay Policies incurred during the one year period following the US
Asset Transfer Closing Date in respect of all European Key Employees
hired by the Nexell European Affiliate.
14. Baxter's Deliveries. At each Asset Transfer Closing Date, Baxter shall
-------------------
deliver, or cause to be delivered, the following:
(A) a bill of sale from Baxter and from each other entity, if any,
which shall then own any applicable Transferred Asset(s), conveying the
applicable Transferred Assets to Nexell California, each to be in a form
reasonably satisfactory to the Nexell Group;
(B) individual or general contract assignments of the applicable
Assigned Agreements and Service Contracts to Nexell California; and
(C) such other executed assignments, bills of sale, endorsements,
notices, consents, novations, assurances and such other instruments of
conveyance and transfer as counsel for Nexell California has reasonably
requested and as shall be effective to vest in Nexell California Baxter's
rights, title and interest in the applicable Transferred Assets.
15. Survival of Representations. All representations and warranties contained
---------------------------
in, or in any certificate delivered pursuant to or in connection with, this
Agreement shall survive the applicable Asset Transfer Closing Date of the
transactions contemplated under this Agreement until one (1) year from the
applicable Asset Transfer Closing Date. All covenants and agreements contained
in this Agreement shall survive in accordance with their terms.
16. Transactional Taxes. Each of Nexell California and Baxter shall bear and
-------------------
pay one half (50%) of any and all applicable Transactional Taxes with respect to
the sale, transfer, or assignment of the Transferred Assets or otherwise on
account of this Agreement or the transactions contemplated herein.
17. Personal Property Taxes. All personal property taxes relating to any and
-----------------------
all personal property conveyed pursuant to this Agreement shall be pro-rated
between Nexell California and Baxter in accordance with the relationship of the
applicable Asset Transfer Closing Date to the entire relevant tax year.
22
<PAGE>
18. Further Assurances and Cooperation. Following the date hereof, and subject
----------------------------------
to the terms and conditions hereof, each of Baxter and the Nexell Group 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 each
applicable Asset Transfer Closing Date, each party 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.
19. 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 Federal Express) 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 set forth above of the party or
the facsimile number stated below of the party to which notice is given, or to
such other address or facsimile number as such party may have fixed by notice
given in accordance with the terms hereof:
To any member of the Nexell Group, to:
President
Nexell Therapeutics Inc.
Facsimile Number: (949) 470-6645
President
Nexell of California, Inc.
Facsimile Number: (949) 470-6645
With a copy to:
Bryan Cave LLP
700 Thirteenth Street, N.W.
Washington, DC 20005-3960
Attn: Eric F. Stoer, Esq.
Facsimile Number: (202) 508-6200
To Baxter:
President - Venture Management
Facsimile Number: (847) 940-6271
Amy Rockwell, Esq. - Assistant General Counsel
23
<PAGE>
Facsimile Number: (847) 270-2658
With a copy to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Chicago, Illinois 60603-5803
Attn: Christopher A. Lause, Esq.
Facsimile Number: (312) 269-8869
Any notice, sent as provided above, shall be deemed given if personally
delivered or, 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.
20. Expenses. Subject to the terms of Sections 2.1, 12, 16 and 17 hereof, each
--------
party hereto shall bear its own expenses (including all attorneys',
accountants', investment bankers', brokers', representatives' and consultants'
fees) incurred in connection with the negotiation, preparation, consummation and
performance of this Agreement and the other Related Documents and the
transactions contemplated hereby and thereby.
21. Disclaimer. Baxter shall not be deemed to have made to the Nexell Group
----------
any representation or warranty other than as expressly made by Baxter in Section
6 hereof. Without limiting the generality of the foregoing, BAXTER MAKES NO
REPRESENTATION OR WARRANTY TO THE ANY MEMBER OF THE NEXELL GROUP WITH RESPECT
TO:
(A) EXCEPT FOR THE ADJUSTED P&L, ANY FINANCIAL INFORMATION OR ANY
PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO
ANY MEMBER OF THE NEXELL GROUP OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR
FUTURE RESULTS OF OPERATIONS; OR
(B) EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6 HEREOF OR AS OTHERWISE
PROVIDED IN ANY EXPRESS WRITTEN WARRANTIES THAT ACCOMPANY INDIVIDUAL TRANSFERRED
ASSETS MANUFACTURED BY BAXTER, ANY OF THE TRANSFERRED ASSETS AND EXPRESSLY
DISCLAIMS ANY WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE (ALL SUCH TRANSFERRED ASSETS BEING SOLD TO NEXELL
CALIFORNIA ON AN "AS IS, WHERE IS" BASIS).
22. Allocation of Consideration. The parties shall exercise their good faith
---------------------------
efforts to agree upon how the consideration paid or given for the Transferred
Assets (including the Transferred Asset Purchase Price) 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
24
<PAGE>
of any kind whatsoever), to be allocated to the Transferred Assets in accordance
therewith and, without limiting the foregoing, any IRS Forms 8594 shall be
prepared consistent therewith.
23. Miscellaneous.
-------------
23.1 Entire Agreement: No Modification. This Agreement, including the
---------------------------------
Schedules, documents 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. This Agreement shall
not be changed or amended except by a writing signed by the Nexell Group and
Baxter.
23.2 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.
23.3 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, Baxter shall have
the right to assign this Agreement, and any rights and obligations arising
hereunder, to an Affiliate of Baxter without the prior written consent of any
other party hereto; provided, that no such assignment shall relieve Baxter of
any of its obligations hereunder. Any purported assignment or delegation in
violation of this Section 23.3 shall be null and void ab initio.
-- ------
23.4 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.
23.5 Governing Law; 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 23.6 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.
25
<PAGE>
23.6 Dispute Resolution.
------------------
A. Provisional Remedies: The procedures specified in this Section 23.6
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 23.6.
B. 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 23.6), promptly by negotiation
between their designated executives.
C. 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 23.6(B), 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:
i. 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 Nexell 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.
ii. The arbitration proceedings shall be conducted in Los Angeles
County or Orange County in the State of California.
iii. 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.
iv. 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.
26
<PAGE>
v. 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.
vi. 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.
vii. 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.
D. 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.
23.7 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.
23.8 Exhibits and 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.
23.9 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.
23.10 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, which consent shall not be unreasonably
withheld; provided, however, that nothing herein shall prevent any party from
-------- -------
making
27
<PAGE>
any disclosure required by law, including, without limitation, the requirements
of the SEC, the Securities Act and the rules promulgated thereunder, or any
applicable stock exchange or the Nasdaq Stock Market.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the date first above written.
BAXTER HEALTHCARE CORPORATION
By:_________________________________________________________
Title:______________________________________________________
NEXELL THERAPEUTICS INC.
By:_________________________________________________________
Title:______________________________________________________
NEXELL OF CALIFORNIA, INC.
By:_________________________________________________________
Title:______________________________________________________
29
<PAGE>
SCHEDULE 1.1(a)
PRO-FORMA
<PAGE>
SCHEDULE 1.1(b)
BAXTER FINISHED GOODS INVENTORY (US)
<PAGE>
SCHEDULE 1.1(c)
BAXTER HARDWARE AND RELATED ASSETS (US)
<PAGE>
SCHEDULE 1.1(d)
US SERVICE CONTRACTS AND PREPAID AMOUNTS
NONE
<PAGE>
SCHEDULE 1.1(e)
US ASSUMED LIABILITIES
<PAGE>
SCHEDULE 2.1(B)
US TRANSFERRED ASSETS NOT DELIVERED AT US ASSET TRANSFER CLOSING
<PAGE>
SCHEDULE 5
CHAIN OF DELIVERY OF PRODUCTS BY BAXTER TO NEXELL CALIFORNIA
UNDER THE OPERATING AGREEMENTS
Figure 1: Baxter US and Canada Delivery of Products as of July 1, 1999, through
ROW Asset Transfer Closing (Non-Antibody / Non-Ceprate).
Figure 2: Baxter ROW Delivery of Products as of July 1, 1999, through ROW Asset
Transfer Closing (Non-Antibody / Non-Ceprate).
Figure 3: Baxter Delivery of Antibody Products as of July 1, 1999, ROW Asset
Transfer Closing.
Figure 4: Baxter US and Canada Delivery of Products Post ROW Asset Transfer
Closing (Non-Antibody / Non-Ceprate).
Figure 5: Baxter ROW Delivery of Products Post ROW Asset Transfer Closing (Non-
Antibody / Non-Ceprate).
Figure 6: Baxter Delivery of Antibody Products Post ROW Asset Transfer Closing.
<PAGE>
Schedule 12 (A)
Baxter North American Employees to Whom
Nexell of California Extended Offers
Geralyn Annett
Tara Clark
Charles Dozier
Kevin Murcko
Chris Pates
Normand Pilon
Trish Swinney
<PAGE>
SCHEDULE 12(B)
NEW NEXELL CALIFORNIA EMPLOYEES
Kevin Murcko
Chris Pates
Normand Pilon*
Geralyn Annett
Charles Dozier
Trish Swinney
_______________
* Pending based on obtaining proper work visa from Canada
<PAGE>
SCHEDULE 13
KEY EUROPEAN EMPLOYEES
<PAGE>
Exhibit 10.41
ROYALTY AGREEMENT
This ROYALTY AGREEMENT ("Agreement"), dated as of June 30, 1999, 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"), Nexell Therapeutics Inc., a Delaware corporation having a place of
business at Nine Parker, Irvine, California 92618 ("Nexell Therapeutics"), and
Nexell of California, Inc., a Delaware corporation having a place of business at
Nine Parker, Irvine, California 92618 ("Nexell California").
RECITALS
WHEREAS, Baxter and Nexell entered into a strategic alliance in the ex vivo
cell therapies business in 1997, pursuant to that certain Asset Purchase
Agreement (the "Acquisition Agreement") dated as of October 10, 1997, and those
certain related agreements referred to therein, dated as of December 17, 1997,
including, inter alia:
- the Hardware and Disposables Manufacturing Agreement (as amended, the
"Manufacturing Agreement");
- the Hardware and Disposables Supply Agreement (as amended, the "Supply
Agreement");
- the Antibody Manufacturing and Storage Agreement (as amended, the
"Antibody Agreement");
- the Services Agreement (as amended, the "Original Services Agreement");
- the Marketing, Sales and Distribution Agreement (as amended, the
"Distribution Agreement"); and
- the Non-Competition and Confidentiality Agreement (as amended, the "Non-
Compete Agreement").
WHEREAS, pursuant to the Acquisition Agreement, Baxter sold to Nexell
certain Assets relating to its Division (as that capitalized term is defined in
the Acquisition Agreement) and Business (as that capitalized term is defined in
the Acquisition Agreement).
WHEREAS, Baxter and Nexell have agreed to (a) modify the terms of their
relationship with respect to services provided by Baxter to Nexell, as set forth
in the Original Services Agreement; (b) terminate the Original Services
Agreement; (c) enter into a United States and Canada Instrument Services
Agreement and a Management Services Agreement of even date herewith, as those
capitalized terms are defined in, and pursuant to, that certain Asset Transfer
Agreement, by and among Baxter and Nexell of even date herewith (the "Asset
Transfer Agreement"); and (d) enter into
1
<PAGE>
a European Services Agreement and additional instrument service agreements for
the rest of the world (other than the United States and Canada) to be negotiated
and agreed to by the parties on or before the ROW Asset Transfer Closing, as
those capitalized terms are defined in, and pursuant to, that certain Asset
Transfer Agreement.
WHEREAS, Baxter and Nexell have also agreed to terminate the Distribution
Agreement, pursuant to the terms of the Asset Transfer Agreement.
WHEREAS, Baxter and Nexell have agreed to enter into this Royalty Agreement
as further consideration for the Asset Transfer Agreement and in consideration
for the transfer of certain intellectual property pursuant to the Acquisition
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and Nexell 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. "Distributed Products" shall bear the meaning set forth in
Schedule 1.2(B) attached hereto.
---------------
C. "Field of Distribution" means the worldwide 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
2
<PAGE>
upon the selection or use of CD 34+ cells,
including the research market; but excluding the genetic
manipulation of such cells.
D. "Net Sales" shall mean gross sales less returns, rebates,
and trade and cash discounts.
E. "Nexell" shall mean, individually and collectively, jointly
and severally, Nexell Therapeutics and Nexell California.
F. "Nexell Group" shall mean, individually and collectively,
jointly and severally, Nexell and any and all of Nexell's
Affiliates.
G. "Royalty Effective Date" means the first to occur of: (1)
January 1 of the first year in which annual, aggregate Net
Sales of Distributed Products in the Field of Distribution
are at least fifty million dollars ($50,000,000); or (2)
January 1, 2001.
H. "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.
2. Term.
2.1 Term: This Agreement shall expire on December 17, 2008.
3. Royalties and Reports
3.1 Royalties: For all Distributed Products sold by the Nexell Group
on or after January 1, 2001 in the Field of Distribution, Nexell will pay
to Baxter an earned royalty of five percent (5%) of such Net Sales of
Distributed Products by the Nexell Group. If the Royalty Effective Date
occurs before January 1, 2001, Nexell will pay to Baxter an earned royalty
of: (1) five percent (5%) of worldwide Net Sales of Distributed Products by
the Nexell Group in excess of fifty million dollars ($50,000,000) per
calendar year in and for the calendar year in which the Royalty Effective
Date occurs; and (2) five percent (5%) of all worldwide Net Sales of
Distributed Products by the Nexell Group in subsequent calendar quarters.
3.2 Reports
3
<PAGE>
(a) Nexell agrees to make written reports to Baxter quarterly, within
sixty (60) days next following the end of each calendar quarter
during the term of this Agreement, identifying in each such report
the Nexell Group's worldwide Net Sales of Distributed Products
during the preceding calendar quarter and the amount of royalty
due. Calendar quarters shall begin January 1, April 1, July 1, and
October 1 of each year. The first such report shall include all
such sales granted between June 30, 1999 and the end of the
quarter that follows the date of this Agreement.
(b) Nexell agrees to make a last written report to Baxter within sixty
(60) days after the date of termination of this Agreement for
worldwide Net Sales of Distributed Products by the Nexell Group
upon which royalties are payable hereunder but which were not
previously reported. The obligation to make reports and to pay
royalties shall terminate upon termination of this Agreement,
except that royalties accrued but not paid prior to such
termination shall be payable with the last written report of this
Section 3.2.
(c) During the term of this Agreement and for one (1) year thereafter,
Nexell agrees to keep records of all worldwide Net Sales of
Distributed Products by the Nexell Group in sufficient detail to
enable the royalties paid hereunder to be determined. Baxter may
audit the Nexell Group's books and records for the purpose of
determining compliance with the terms of this Agreement. Baxter
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 Nexell wishes not to disclose to Baxter
("Restricted Information"), then on the written demand of Nexell
the individuals conducting the audit with respect to the
Restricted Information will be limited to Baxter's independent
auditors. In such event, Nexell 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 Nexell. The
aggregate number of audits of Nexell's books and records conducted
under this Agreement shall not exceed one (1) financial audit in
any twelve (12) month period unless the next preceding audit
disclosed a failure to conform to the terms of this Agreement.
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. If by such audit
Baxter discovers unauthorized activities, or if the amount of
royalties due set forth in the auditor's report deviates by more
than ten percent (10%) from the amount of royalties due reported
by Nexell for the same period, Nexell shall reimburse Baxter for
the cost of the audit. Any additional amounts due to Baxter from
Nexell as the result of such an audit shall be paid by Nexell
within thirty (30) days of receipt by Nexell of a copy of the
auditor's report and a notice from Baxter of the additional
amounts due
4
<PAGE>
3.3 Payment of Royalties: Together with each report referred to in
Section 3.2 hereof, Nexell shall pay to Baxter the applicable
royalties due as specified in this Section 3 for the worldwide Net
Sales of Distributed Products by the Nexell Group covered by the
report. All royalties or portions of royalties that remain unpaid at
the end of this 60-day period will accrue interest at a rate of 1.5%
per month or such maximum rate permitted by applicable law.
4. Baxter's Continuing Rights
4.1 Co-promotion of Distributed Products: Baxter shall be provided
the opportunity to co-promote any or all of the Distributed Products
in the Field of Distribution. Specifically, Baxter may provide
information about the Distributed Products to potential customers,
provided that any such written information (other than correspondence
-------------
that does not include information regarding the performance of the
Distributed Products) so provided by Baxter shall have been pre-
approved by an appropriate member of the Nexell Group. In the event
that such a potential customer expresses an interest in the
Distributed Products, Baxter shall refer the potential customer to an
appropriate member of the Nexell Group for further contact by the
appropriate member of the Nexell Group. No member of the Nexell Group
shall provide any Distributed Products to any such customer before
informing such customer that (a) the business and sales relationship
evidenced by such agreement is between Nexell and the customer, and
(b) that Baxter is not an agent for the Nexell Group nor a party to
the agreement between the Nexell Group and the customer. Nothing in
this Royalty Agreement shall be construed as an obligation by Baxter
to sell, market or distribute any of the Distributed Products.
4.2 Right of First Negotiation: In the event that Nexell elects to
abandon and/or discontinue substantially all efforts to develop or
market (or to have developed or marketed) the Distributed Products, or
any of them (the "Discontinued Products"), within the Field of
Distribution or any sub-field thereof, and Nexell elects to sell
---
Nexell'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 negotiation to obtain an
exclusive worldwide license to make, have made, use and sell in such
Product Field or sub-field, those Discontinued Products. After Nexell
notifies Baxter of Nexell's intention to sell such right, Baxter will
have sixty (60) days to respond to Nexell and to negotiate the
material terms and conditions of such a license. The terms and
conditions of such a license shall be negotiated by Nexell 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 with respect
to any Discontinued Product described in such notice, Nexell shall
have no further obligations to Baxter with respect to such specific
Discontinued Products under this Section 4.2.
5. Dispute Resolution.
5.1 Provisional Remedies: The procedures specified in this
Section 5 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
5
<PAGE>
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 5.
5.2 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
5), promptly by negotiation between their designated
executives.
5.3 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 5.2, 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 Nexell 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
6
<PAGE>
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.
5.4 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.
6. 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 5 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.
7. 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.
8. 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
7
<PAGE>
understandings are merged into, extinguished by and completely
expressed by this Agreement.
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 signed by the party to be
bound by such waiver, modification, release or amendment.
10. No Other Licenses. Except 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. Neither party shall at any time assert any claim
to any goodwill, reputation or ownership of the other party's
Intellectual Property (as that capitalized term is defined in the
Manufacturing Agreement) and all uses of a party's Intellectual
Property shall inure to the benefit of that party.
12. Assignment. Nexell may assign its rights and obligations hereunder to
any Affiliate of Nexell without prior notice to or consent of Baxter,
provided that Nexell shall remain liable hereunder to Baxter
-------- ----
for all liabilities, obligations and/or duties of Nexell so assigned
to such Affilitate. Baxter may assign its rights and obligations
hereunder to any Affiliate of Baxter without prior notice to or
consent of Nexell. No assignment by Baxter or by Nexell, 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 Nexell (in the case of a Nexell
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 12. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding on the parties' permitted
successors and assigns.
13. 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.
14. Counterparts / Facsimile Signatures. 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. Facsimile signatures of the parties shall be
binding with respect to execution of this Agreement.
15. Rules of Construction. In this Agreement, unless a clear contrary
intention appears:
8
<PAGE>
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. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP in effect on the date hereof -
"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 statement and pronouncements of the Financial
Accounting Standards Board, applied on a consistent basis.
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.
16. Notices. All notices, requests, demands, and other communications
permitted or required under this Agreement shall be in writing and
shall be either personally
9
<PAGE>
delivered (including couriers such as Federal Express) 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 set
forth above of the party or the facsimile number stated below of the
party to which notice is given, or to such other address or facsimile
number as such party may have fixed by notice given in accordance with
the terms hereof:
To any member of the Nexell Group, to:
President
Nexell Therapeutics Inc.
Facsimile Number: (949) 470-6645
President
Nexell of California, Inc.
Facsimile Number: (949) 470-6645
With a copy to:
Bryan Cave LLP
700 Thirteenth Street, N.W.
Washington, DC 20005-3960
Attn: Eric F. Stoer, Esq.
Facsimile Number: (202) 508-6200
To Baxter:
President - Venture Management
Facsimile Number: (847) 940-6271
Amy L. Rockwell, Esq. - Assistant General Counsel
Facsimile Number: (847) 940-6656
With a copy to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Chicago, Illinois 60603-5803
Attn: Christopher A. Lause, Esq.
Facsimile Number: (312) 269-8869
Any notice, sent as provided above, shall be deemed given if
personally delivered or, if sent by certified mail, upon delivery at
the address provided for above (or, in the
10
<PAGE>
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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
11
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first set forth above.
BAXTER HEALTHCARE CORPORATION
By:______________________________
Name:
Title:
NEXELL THERAPEUTICS INC
By:______________________________
Name:
Title:
NEXELL OF CALIFORNIA, INC
By:______________________________
Name:
Title:
12
<PAGE>
Schedule 1.2(B)
For the purposes of Section 1.2(B) of the Royalty Agreement, the defined
term "Distributed 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 this Schedule
1.2(B).
For the purposes of this definition, Isolex(R) and Maxsep(R) Products
means, individually and collectively, the products listed on this Schedule
1.2(B), which includes Isolex(R) and Maxsep(R) instruments and Isolex(R) and
Maxsep(R) disposable sets, in each case as produced by Baxter as of December 17,
1997, which utilize automated systems for positive and negative immunomagnetic
cell selection. From time to time, the products listed on this Schedule 1.2(B)
will be changed by the parties to add new products, line extensions and
improvements which were under development or were in research as of December 17,
1997, or have been identified as proposed new products in Schedule 1 of the
Manufacturing Agreement, or that Baxter agreed to develop pursuant to the
Original Services Agreement, in each case as consistent with the nature of the
Isolex(R) and Maxsep(R) Products existing as of December 17, 1997 and with
Baxter's legal obligations and technological capabilities (including, without
limitation, regulatory requirements applicable to Baxter) up to the US Asset
Transfer Closing Date (as defined in the Asset Transfer Agreement), and such new
products, line extensions and improvements added to this Schedule 1.2(B) shall
thereafter be treated as Isolex(R) and Maxsep(R) Products for all purposes of
this Agreement.
For the purposes of this definition, Reagent Kits means the reagent kits
specified in Schedule 1 to the Antibody Agreement and such other reagent kits as
may be used from time to time in connection with the Isolex(R) and Maxsep(R)
Products.11234
1
<PAGE>
Distributed Products as of June 30, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SELECTION REAGENTS
Breast Cancer Tumor Removal
- -------------------------------------------------------------------------------
<S> <C>
RAR9941 MaxSep Breast Tumor 55KD MAb, Research Ex-Vivo Use
- -------------------------------------------------------------------------------
RAR9938 MaxSep Breast Tumor 200KD MAb, Research Ex-Vivo Use
- -------------------------------------------------------------------------------
RAR9948 MaxSep Breast Tumor 42KD MAb, Research Ex-Vivo Use
- -------------------------------------------------------------------------------
ITX1041 Anti-Breast Cancer MAb Inv. Kit
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION REAGENTS
B-Cell Removal
Anti-CD19 Antibodies
- -------------------------------------------------------------------------------
FAR9929 Anti-Human CD19-Research Use Only
- -------------------------------------------------------------------------------
RAR9909 Anti-Human CD19, CE Mark
- -------------------------------------------------------------------------------
FAR9590 CTI-Anti-Human CD19, Immunoselection MAbs
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Anti-CD20 Antibodies
- -------------------------------------------------------------------------------
RAR9920 Anti-Human CD20 (CE Mark)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Isolex B-Cell Positive/Negative/With CD19/CD20
- -------------------------------------------------------------------------------
ITX1035 Isolex 300 Reagent Kit +/- B-Cell Kit
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Anti-CD10 Antibodies
- -------------------------------------------------------------------------------
RAR9901 Anti Human CD10
- -------------------------------------------------------------------------------
ITX1031 Anti-Human CD10, Investigational, Eng. Lang.
- -------------------------------------------------------------------------------
ITX1032 Anti-Human CD10, Investigational, Ger. Lang.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Anti-CD22 Antibodies
- -------------------------------------------------------------------------------
FAR9927 Anti-Human CD22 - Research Use Only
- -------------------------------------------------------------------------------
RAR9926 Anti-Human CD22- CE Mark
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Anti-CD23 Antibodies
- -------------------------------------------------------------------------------
RAR9931 Anti-Human CD23
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Anti-CD37 Antibodies
- -------------------------------------------------------------------------------
RAR9934 Anti-Human CD37
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION REAGENTS
T-Cell Selection
- -------------------------------------------------------------------------------
FAR9908 MAb, CD8, Research Use
- -------------------------------------------------------------------------------
FAR9904 MAb, CD4, Research Use
- -------------------------------------------------------------------------------
ITX1038 MAb, CD8, Clinical, German Labeled
- -------------------------------------------------------------------------------
ITX1037 MAb, CD4, Clinical, German Labeled
- -------------------------------------------------------------------------------
ITX1021 MAb, CD4, Research
- -------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
ITX1022 MAb, CD8, Research
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION REAGENTS
Process Solutions
EDR9865Phosphate Buffered Saline, 3 LT
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
SELECTION REAGENTS
NON-GMP DYNAL PRODUCTS
(U.S. only)
- -------------------------------------------------------------------------------
<S> <C>
4R5425 Dynabeads (M-450 Sheep antiMouse IgG) 10 mL
- -------------------------------------------------------------------------------
4R9947 DETACHabead 4/8 5mL
- -------------------------------------------------------------------------------
4R9949 Dynabeads M-450 CD14 10 mL
- -------------------------------------------------------------------------------
4R5439 Dynabeads (M-450 CD4) IgM 10 mL
- -------------------------------------------------------------------------------
4R4513 MPC-1 Magnetic Particle Concentrator
- -------------------------------------------------------------------------------
4R5429 Dynabeads (M-450 goat antiMouse IgG) 10 mL
- -------------------------------------------------------------------------------
4R5421 Dynabeads (M-450 Uncoated) 10 mL
- -------------------------------------------------------------------------------
4R5441 Dynabeads (M-450 CD8) 10 mL
- -------------------------------------------------------------------------------
4R5435 Dynabeads (M-450 Pan-T CD2) 10 mL
- -------------------------------------------------------------------------------
4R5453 Dynabeads M-450 Sheep anti Mouse IgG1 (fc)ST, 10 mL
- -------------------------------------------------------------------------------
4R5427 Dynabeads M-450 Sheep anti Mouse IgG1 (fc), 10 ml
- -------------------------------------------------------------------------------
4R5431 Dynabeads M-450 Sheep anti-Rat IgG(Fc) 10 ml
- -------------------------------------------------------------------------------
4R5437 Dynabeads M-450 Pan-B, 10 ml
- -------------------------------------------------------------------------------
4R5423 Dynabeads M-450 Tosyl activated, 10 ml
- -------------------------------------------------------------------------------
4R5443 Dynabeads M-280 Streptavidin, 10ml
- -------------------------------------------------------------------------------
4R5445 Dynabeads M-280 Sheep anti Mouse IgG 10 ml
- -------------------------------------------------------------------------------
4R5447 Dynabeads M-280 Sheep anti-Rabbit IgG 10 ml
- -------------------------------------------------------------------------------
4R5449 Dynabeads M-450 Tosyl-Activated, 10 ml
- -------------------------------------------------------------------------------
4R5410 DETACHabead
- -------------------------------------------------------------------------------
4R9947 DETACHabead 4/8
- -------------------------------------------------------------------------------
4R5413 Dynabeads M-450 CD4
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
NON-SELECTION DISPOSABLES
Storage
- -------------------------------------------------------------------------------
<S> <C>
4R9952 Cryocyte 250 ml
- -------------------------------------------------------------------------------
4R9951 Cryocyte 50 ml with label pocket
- -------------------------------------------------------------------------------
4R9953 Cryocyte 250 ml with label pocket
- -------------------------------------------------------------------------------
4R9959 Cryocyte 1000 ml with label pocket
- -------------------------------------------------------------------------------
4R9954 Cryocyte 500 ml
- -------------------------------------------------------------------------------
4R9956 Cryocyte 750 ml
- -------------------------------------------------------------------------------
4R9958 Cryocyte 1000 ml
- -------------------------------------------------------------------------------
4R9955 Cryocyte 500 ml with label pocket
- -------------------------------------------------------------------------------
4R9957 Cryocyte 750 ml with label pocket
- -------------------------------------------------------------------------------
4R5460 Cryocyte Manifold Set
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NON-SELECTION DISPOSABLES
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Expansion/Modification
PL732-Lifecell, Solution Transfer, Harvester, Cell Wash
- -------------------------------------------------------------------------------
<S> <C>
4C2475 Lifecell Filter Adapter Set
- -------------------------------------------------------------------------------
4C2476 Lifecell Adapter Set
- -------------------------------------------------------------------------------
4C2474 Lifecell Transfer Set (obsolete >4R9605)
- -------------------------------------------------------------------------------
4R9834 Centrifuge Adapter
- -------------------------------------------------------------------------------
4R9833 Cell Wash Set
- -------------------------------------------------------------------------------
4R2113 Lifecell PL732 Tissue Culture
- -------------------------------------------------------------------------------
4R2110 Lifecell PL732 Tissue Culture
- -------------------------------------------------------------------------------
3L2100 33 mm Cap and Septum Combination
- -------------------------------------------------------------------------------
4R2113P Lifecell PL732 Tissue Culture
- -------------------------------------------------------------------------------
4R2111 Lifecell PL732 Tissue Culture
- -------------------------------------------------------------------------------
4C2470 Lifecell Transfer Set w/Integral Airway Connector
- -------------------------------------------------------------------------------
5C4446 5 Prong Manifold Set
- -------------------------------------------------------------------------------
5C4447 10 Prong Manifold Set
<CAPTION>
- -------------------------------------------------------------------------------
HARVESTER SYSTEM
- -------------------------------------------------------------------------------
<S> <C>
4R2997 Harvester Disposable Set
- -------------------------------------------------------------------------------
4R2999 Reservoir Set, used w/Harvester
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
NON-SELECTION DISPOSABLES
EXPANSION/MODIFICATION
PL2417 - Lifecell, Expansion
- -------------------------------------------------------------------------------
<S> <C>
ITX1009 PL2417 Tissue Culture Flask (100-500 mL)
- -------------------------------------------------------------------------------
ITX1008 PL2417 Tissue Culture Flask (500-2000 mL)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NON-SELECTION HARDWARE
Harvester System
- -------------------------------------------------------------------------------
4R4960 Fenwal Cell Harvester System
- -------------------------------------------------------------------------------
4R4961 Cell Harvester System - International
- -------------------------------------------------------------------------------
4R9832 Harvester Workstation
- -------------------------------------------------------------------------------
4R4960R Fenwal Cell Harvester System (Refurbished)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NON-SELECTION HARDWARE
Solution Transfer Pump
- -------------------------------------------------------------------------------
4R4345 Solution Transfer Pump
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DISTRIBUTED ASSAY KITS
- -------------------------------------------------------------------------------
4R9900 Stem Cell CFU Kit for Research Use 35 tests
- -------------------------------------------------------------------------------
FAR9864 Epimet Epithelial Cell Detection Fixation Sol. B
- -------------------------------------------------------------------------------
FAR9863 Epimet Epithelial Cell Detection Kit
- -------------------------------------------------------------------------------
FAR9871 Epimet Epithelial Cell Detection Sample Kit
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION HARDWARE
MaxSep
- -------------------------------------------------------------------------------
4R4511 MaxSep Magnetic Cell Separator
- -------------------------------------------------------------------------------
4R4511R MaxSep Magnetic Cell Separator (refurbished)
- -------------------------------------------------------------------------------
R4R9709 MaxSep Magnetic Cell Separator
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION HARDWARE
Isolex 50
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
4R4519 Isolex 50 Magnetic Cell Separator
- -------------------------------------------------------------------------------
4R4516 Rotator-Adapter for Isolex 50
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION HARDWARE
Isolex 300SA
- -------------------------------------------------------------------------------
ITX1048 Isolex(TM) 300SA, Research Labeled
- -------------------------------------------------------------------------------
OFTX1027 Isolex(TM) 300SA, Investigational
- -------------------------------------------------------------------------------
OR4R9722 Isolex(TM) 300SA (CE-Marked)
- -------------------------------------------------------------------------------
OITX1006 Isolex 300 Adapter for 50mL Chamber
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION HARDWARE
Isolex 300i
- -------------------------------------------------------------------------------
ITX1051 Isolex 300i Instrument, Research Labeling
- -------------------------------------------------------------------------------
ITX1017 Isolex 300i Instrument
- -------------------------------------------------------------------------------
R4R9750 Isolex 300(i) (CE-Marked)
SELECTION DISPOSABLES
MaxSep
- -------------------------------------------------------------------------------
4R5401 MaxSep Disposable Set
- -------------------------------------------------------------------------------
ITX1011 MaxSep Disposables (Clinical)
- -------------------------------------------------------------------------------
R4R9700 MaxSep Disposable Set CE Mark
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
SELECTION DISPOSABLES
Isolex 50
- -------------------------------------------------------------------------------
<S> <C>
4R5402 Disposable Set for Isolex 50
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION DISPOSABLES
Isolex 300SA
- -------------------------------------------------------------------------------
ITX1050 Isolex(TM) 300 Disposable Set, Research Labeling
- -------------------------------------------------------------------------------
OFTX1028 Isolex(TM) 300 Disposable Set
- -------------------------------------------------------------------------------
OR4R9720 Isolex(TM) 300 Disposable Set (CE-Mark)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION DISPOSABLES
Isolex 300i
- -------------------------------------------------------------------------------
ITX1052 Isolex 300i Disposable Set, Research Labeling
- -------------------------------------------------------------------------------
ITX1016 Isolex 300i Disposable Set
- -------------------------------------------------------------------------------
R4R9751 Isolex 300 (i) Disposable Set (CE-Marked)
- -------------------------------------------------------------------------------
SELECTION REAGENTS
CD34 Positive Selection
- -------------------------------------------------------------------------------
4R9540 Isolex 50 Stem Cell Res. Kit w/Peptide
- -------------------------------------------------------------------------------
ITX1049 Isolex 300 SA/I Reagent Kit, Research
- -------------------------------------------------------------------------------
ITX1030 Isolex 300 Reagent Kit (1-1-1) w/SC Releasing Agnt
- -------------------------------------------------------------------------------
R4R9752 Isolex 300 Stem Cell Reagent Kit (CE-Marked)
- -------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION REAGENTS
Beads for Magnetic Selection
- -------------------------------------------------------------------------------
<S> <C>
4R9950 Dynabeads SAM IgG 10ml GMP, Research Label
- -------------------------------------------------------------------------------
ITX1053 Dynabeads SAM IgG 10ml GMP, Invest. Labeling
- -------------------------------------------------------------------------------
RAR9950 Dynabeads SAM IgG 10ml GMP (CE Marked)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SELECTION REAGENTS
Bulk Purified Sheep-Anti Mouse Contract Manufacture for Dynal
- -------------------------------------------------------------------------------
RAR9905 Sheep, Anti-Mouse MAB to Dynal
- -------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Exhibit 10.42
CREDIT AGREEMENT
Dated as of June 30, 1999
BAXTER HEALTHCARE CORPORATION, a Delaware corporation (the "Lender"),
and Nexell Therapeutics Inc., a Delaware corporation (the "Borrower") hereby
agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 1.01. The Advances. The Lender agrees, on the terms and
------------
conditions hereinafter set forth, to make up to three advances (the "Advances")
to the Borrower from time to time on any Business Day (as hereinafter defined)
during the period from the date hereof until the Termination Date (as
hereinafter defined) in an aggregate amount not to exceed twenty million dollars
($20,000,000.00)(the "Commitment"). The "Termination Date" shall be the earlier
of (i) September 30, 2000, (ii) the Maturity Date (as hereinafter defined), or
(iii) a Financing Event (as hereinafter defined). Each Advance shall be in an
amount not greater than ten million dollars ($10,000,000.00). Amounts borrowed
hereunder and repaid or prepaid may not be re-borrowed. No more than one Advance
may be made in any calendar quarter. A promissory note of the Borrower, in
substantially the form attached as Exhibit A hereto (the "Note"), shall evidence
the indebtedness resulting from such Advances and be delivered to the Lender
pursuant to Article II.
SECTION 1.02. Making the Advances. (a) Each Advance shall be made
-------------------
on notice, given not later than 11:00 A.M. (Chicago time) on the fifth Business
Day prior to the date of the proposed Advance, by the Borrower to the Lender,
specifying the date and amount thereof. Not later than 11:00 A.M. (Chicago
time) on the date of such Advance and upon fulfillment of the applicable
conditions set forth in Article II, the Lender will wire-transfer funds in the
amount of such Advance to the following account of the Borrower: Union Bank of
California, 2001 Michelson Drive, Irvine, CA 92612 - ABA No. 122000496 / Acct.
No. 0630050944, in same day funds.
(b) Each notice from the Borrower to the Lender requesting an Advance
shall be irrevocable and binding on the Borrower. The Borrower shall indemnify
the Lender against any loss, cost or expense incurred by the Lender as a result
of any failure to fulfill on or before the date specified in such notice for
such Advance the applicable conditions set forth in Article II, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Lender to
fund the Advance when the Advance, as a result of such failure, is not made on
such date.
SECTION 1.03. Repayment. Subject to Section 1.07 hereof, the
---------
Borrower shall repay the aggregate unpaid principal amount of all Advances plus
interest on the unpaid principal
<PAGE>
amount of each Advance from the date of such Advance until December 31, 2001, at
a rate per annum equal to 6.5% compounded annually (collectively the
"Outstanding Balance"), in twenty equal quarterly installments on the first day
of January, April, July and October of each year beginning on January 1, 2002,
with the final installment due and payable on the Maturity Date. The term
"Maturity Date" shall mean October 1, 2006, or such earlier date that the Note
and all interest thereon becomes due and payable by acceleration or otherwise,
as provided in Sections 5.01 and 5.02 hereof.
SECTION 1.04. Interest. The Borrower shall pay interest on the
--------
Outstanding Balance from January 1, 2002 until such Outstanding Balance shall be
paid in full, at a rate per annum equal to 6.5% ("Interest Rate"), in arrears on
the first day of January, April, July and October of each year, beginning on
January 1, 2002 (each, together with the Outstanding Balance installment payable
on such date, an "Installment"), with the final Installment due and payable on
the Maturity Date. In the event that any Events of Default shall occur, and for
and during any period in which any Events of Default shall be continuing, the
term "Interest Rate" shall mean a rate per annum equal to 8.5%.
SECTION 1.05. Prepayments. The Borrower may, upon at least five
-----------
Business Days' notice to the Lender stating the proposed date and principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amounts of any Advance in whole or in part, together
with accrued but unpaid interest to the date of such prepayment on the principal
amount prepaid. All prepayments shall be first to accrued but unpaid interest
and second to principal.
SECTION 1.06. Payments and Computations. (a) The Borrower shall
-------------------------
make each payment hereunder or under the Note not later than 10:00 a.m.(Chicago
time) on the day when due in U.S. dollars to the following account of the
Lender: The First National Bank of Chicago, One First National Plaza, Chicago,
IL 60670 - ABA No. 071000013 / Acct. No. 5253284, in same day funds.
(b) All computations of interest shall be made by the Lender on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
(c) Whenever any payment hereunder or under the Note shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest. The term "Business Day"
------------
means a day of the year on which banks are not required or authorized to close
in Chicago.
SECTION 1.07. Financing Event. Upon the occurrence of any Financing
---------------
Event (as hereinafter defined), 100% of the cash proceeds of the Financing Event
(net of the expenses the Borrower incurred in connection with the Financing
Event) shall be utilized to repay the principal and accrued but unpaid interest
(first to accrued but unpaid interest and second to principal) of the Advances
until the Advances, together with all accrued but unpaid interest, and all other
amounts payable under this Agreement or the Note, have been fully paid. The
term "Financing Event" means
2
<PAGE>
that the Borrower shall have completed a sale or sales of securities of the
Borrow (whether represented by debt, equity or a combination thereof) and/or
shall have obtained debt financing or financings following the date of this
Agreement where the cash proceeds thereof (net of the expenses of the Borrower
incurred in connection with the Financing Event) is equal to or exceeds fifty
million dollars ($50,000,000.00) in the aggregate.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.01. Conditions Precedent to Initial Advance. The obligation
---------------------------------------
of the Lender to make its initial Advance is subject to the conditions precedent
that the Lender shall have received on or before the day of such Advance the
following, each dated such day, in form and substance satisfactory to the
Lender:
(a) The original fully executed Note;
(b) Certified copies of the resolutions of the Board of Directors of
the Borrower approving each Loan Document (as defined in Section 6.04) to
which it is a party, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to each
such Loan Document;
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign each Loan Document to which it is a party and
the other documents to be delivered hereunder; and
(d) Such other approvals or documents as the Lender may reasonably
request.
SECTION 2.02. Conditions Precedent to All Advances. The obligation
------------------------------------
of the Lender to make each Advance (including the initial Advance) shall be
subject to the further conditions precedent that on the date of such Advance (a)
the following statements shall be true and each of the giving of the applicable
notice requesting such Advance and the acceptance by the Borrower of the
proceeds of such Advance shall constitute a representation and warranty by the
Borrower that on the date of the notice and on the date of such Advance such
statements are true:
(i) The representations and warranties contained in Section 3.01 of
this Agreement, are correct on and as of the date of the Notice and of such
Advance, before and after giving effect to such Advance and to the application
of the proceeds therefrom, as though made on and as of such date;
(ii) No material adverse change in the business condition (financial
or otherwise), since the date of the most recent Advance to the Borrower shall
have occurred and be continuing; and
3
<PAGE>
(iii) No event has occurred and is continuing, or would result from
such Advance or from the application of the proceeds therefrom, which
constitutes an Event of Default (as defined in Section 5.01 hereof) or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both;
and (b) the Lender shall have received such other approvals or documents as the
Lender may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Borrower. The
----------------------------------------------
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Note are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene (i) the
Borrower's charter or by-laws or (ii) any law or any contractual restriction
binding on or affecting the Borrower, and do not result in or require the
creation of any lien, security interest or other charge or encumbrance (other
than pursuant hereto) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the Note.
(d) Each of this Agreement and the Note constitutes the legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its respective terms.
(e) The balance sheets of the Borrower and its subsidiaries as at
December 31, 1998, and the related statements of income and retained earnings of
the Borrower and its subsidiaries for the fiscal year then ended, copies of
which have been furnished to the Lender, fairly present the financial condition
of the Borrower and its subsidiaries as at such date and the results of the
operations of the Borrower and its subsidiaries for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied, and since December 31, 1998, there has been no material
adverse change in such condition or operations.
(f) There is no pending or threatened action or proceeding affecting
the Borrower or any of its subsidiaries before any court, governmental agency or
arbitrator, which may materially adversely affect the financial condition or
operations of the Borrower or any subsidiary or which purports to affect the
legality, validity or enforceability of this Agreement or any Loan Document to
which the Borrower is or will be a party.
4
<PAGE>
(g) No proceeds of any Advance will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
(h) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
ARTICLE IV
COVENANTS OF THE BORROWER
SECTION 4.01. Affirmative Covenants. So long as the Note shall
---------------------
remain unpaid or the Lender shall have any Commitment hereunder, the Borrower
will, unless the Lender shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its
-------------------------
subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith.
(b) Reporting Requirements. Furnish to the Lender:
----------------------
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Borrower,
balance sheets of the Borrower and its subsidiaries as of the end of such
quarter and statements of income and retained earnings of the Borrower and its
subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, certified by the chief financial
officer of the Borrower;
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the annual report for
such year for the Borrower and its subsidiaries, containing financial statements
for such year certified in a manner acceptable to the Lender by KPMG LLP or
other independent public accountants reasonably acceptable to the Lender;
(iii) as soon as possible and in any event within five Business
Days after the occurrence of each Event of Default and each event which, with
the giving of notice or lapse of time, or both, would constitute an Event of
Default, continuing on the date of such statement, a statement of the chief
financial officer of the Borrower setting forth details of such Event of Default
or event and the action which the Borrower has taken and proposes to take with
respect thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its security holders, and copies of
all reports and registration statements
5
<PAGE>
which the Borrower or any subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(v) promptly after the filing or receiving thereof, copies of
all reports and notices which the Borrower or any subsidiary files under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which the Borrower or any subsidiary receives from such
Corporation; and
(vi) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its subsidiaries
as the Lender may from time to time reasonably request.
SECTION 4.02. Negative Covenants. So long as the Note shall remain
------------------
unpaid or the Lender shall have any Commitment hereunder, the Borrower will not,
without the written consent of the Lender, declare or make any dividend payment
or other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of capital stock of the
Borrower, or purchase, redeem or otherwise acquire for value (or permit any of
its subsidiaries to do so) any shares of any class of capital stock of the
Borrower or any warrants, rights or options to acquire any such shares, now or
hereafter outstanding, except that the Borrower may (i) declare and make any
dividend payment or other distribution payable in common stock of the Borrower,
and (ii) purchase, redeem or otherwise acquire shares of its common stock or
warrants, rights or options to acquire any such shares with the proceeds
received from the substantially concurrent issue of new shares of its common
stock, provided, that, immediately after giving effect to such proposed action,
--------
no Event of Default or event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default would exist.
ARTICLE V
EVENTS OF DEFAULT; CHANGE OF CONTROL
SECTION 5.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of, or interest on,
the Note when the same becomes due and payable; or
(b) Any representation or warranty made by the Borrower (or any of
its officers) under or in connection with this Agreement shall prove to have
been incorrect in any material respect when made; or
(c) (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 4.01 or 4.02 for a period of 30 days,
or (ii) the Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement, the Note
6
<PAGE>
on its part to be performed or observed if such failure shall remain unremedied
for 30 days after written notice thereof shall have been given to such person by
the Lender; or
(d) The Borrower shall fail to pay any principal of or premium or
interest on any Debt (as defined in Section 4.02(a)) which is outstanding in a
principal amount of at least $500,000.00 in the aggregate (but excluding Debt
evidenced by the Note) of such Person or such subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or
(e) The Borrower shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Borrower seeking to adjudicate
it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 120 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Borrower shall take any corporate action to authorize any of
the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$500,000.00 shall be rendered against the Borrower and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 60 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
then, and in any such event, the Lender (i) may, by notice to the
Borrower, declare its obligation to make Advances to be terminated, whereupon
the same shall forthwith terminate, and (ii) may, by notice to the Borrower,
declare the Note, all interest thereon and all other amounts payable under this
Agreement or the Note to be forthwith due and payable, whereupon the Note, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, that in the
--------
event of an actual or deemed entry of an order for relief with respect to the
Borrower or any of its subsidiaries under the Federal Bankruptcy Code, (A) the
7
<PAGE>
obligation of the Lender to make Advances shall automatically be terminated and
(B) the Advances, the Note, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
SECTION 5.02. Change of Control. Upon the occurrence of a Change of
-----------------
Control (as defined below) of the Borrower, the Note, all interest thereon and
all other amounts payable under this Agreement or the Note shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
The term "Change of Control" shall occur when (i) any Person or two or more
Persons acting in concert (other than Lender) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or indirectly,
of securities of the Borrower (or other securities convertible into such
securities) representing 40% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of directors, or
(ii) without the written consent of Baxter: (a) during any period of up to 24
consecutive months, commencing on and after the date of the Agreement,
individuals who at the beginning of such 24-month period were directors of the
Borrower shall cease for any reason to constitute a majority of the board of
directors of the Borrower; or (b) any Person or two or more Persons acting in
concert (other than Lender) shall have acquired by contract of otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of powers reserved to the board of directors
of the Borrower. Borrower and Lender acknowledge and agree that as of the date
of this Agreement, only four of seven members have been elected to the board of
directors of the Borrower and that the election of three directors to fill the
current vacancies on the board of directors of the Borrower (the "New
Directors"), with the written consent of the Lender to the New Directors so
elected (which consent shall not be unreasonably withheld), shall not constitute
a Change of Control for the purposes of Section 5.02(ii)(b).
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement or the Note, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 6.02. Notices, Etc. All notices and other communications
------------
provided for hereunder shall be in writing (including facsimile communication)
and sent via overnight mail or facsimile, if to the Borrower, at its address at
2751 Centerville Road, Suite 210, Wilmington, DE 19808, Attention: Richard L.
Dunning; and if to the Lender, at its address at One Baxter Parkway, Deerfield,
Illinois 60015, Attention: Treasurer, with a copy to the General Counsel at
the same address; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall, when sent via overnight mail
8
<PAGE>
or facsimile shall be effective when sent and confirmation of delivery is
received, except that notices to the Lender pursuant to the provisions of
Article I shall not be effective until actually received by the Lender.
SECTION 6.03. No Waiver; Remedies. No failure on the part of the
-------------------
Lender to exercise, and no delay in exercising, any right hereunder or under the
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies provided hereunder or under the Note are
cumulative and not exclusive of any remedies provided by law.
SECTION 6.04. Costs, Expenses and Taxes. The Borrower further agrees
-------------------------
to pay on demand all costs and expenses, if any (including reasonable counsel
fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Note, and
all other instruments, documents and agreements executed in connection therewith
(the "Loan Documents"), including, without limitation, reasonable counsel fees
and expenses in connection with the enforcement of rights under this Section
6.04. In addition, the Borrower shall pay any and all stamp and other taxes
payable or determined to be payable in connection with the execution, delivery,
filing and recording of the Loan Documents and the other documents to be
delivered under the Loan Documents, and agrees to save the Lender harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes.
SECTION 6.05. Right of Set-off. Upon the occurrence and during the
----------------
continuance of any Event of Default the Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Document,
whether or not the Lender shall have made any demand under such Loan Document
and although such obligations may be unmatured. The Lender agrees promptly to
notify the Borrower after any such set-off and application, provided that the
--------
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which the Lender may have.
SECTION 6.06. Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender.
SECTION 6.07. Governing Law. This Agreement and the Note shall be
-------------
governed by, and construed in accordance with, the laws of the State of
Illinois.
SECTION 6.08. Counterparts / Facsimile Signatures. This Agreement
-----------------------------------
may be executed in any number of counterparts, each of which shall be deemed an
original. Facsimile signatures of the parties shall be binding with respect to
execution of this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
NEXELL THERAPEUTICS INC.
By__________________________
Name:
Title:
BAXTER HEALTHCARE CORPORATION
By__________________________
Name:
Title
10
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$20,000,000.00 Dated: June 30, 1999
FOR VALUE RECEIVED, the undersigned, Nexell Therapeutics Inc., a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
BAXTER HEALTHCARE CORPORATION (the "Lender") the principal sum of Twenty
million dollars ($20,000,000.00) or, if less, the aggregate principal amount of
all Advances (as hereinafter defined) made by the Lender to the Borrower
pursuant to the Credit Agreement (as hereinafter defined) outstanding on the
Termination Date (as defined in the Credit Agreement), at such times as are
specified in the Credit Agreement.
The Borrower promises to pay interest on the principal amount of each
Advance from the date of such Advance until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement referred to below.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at the account set forth in the Credit Agreement
in same day funds. Each Advance made by the Lender to the Borrower and the
maturity thereof, and all payments made on account of the principal amount
thereof, shall be recorded by the Lender and, prior to any transfer hereof,
endorsed on the grid attached hereto which is a part of this Promissory Note.
This Promissory Note is the Note referred to in, and is entitled to
the benefits of, the Credit Agreement dated as of June 30, 1999 (the "Credit
Agreement"), between the Borrower and the Lender. The Credit Agreement, among
other things, (i) provides for the making of advances (the "Advances") by the
Lender to the Borrower from time to time in an aggregate amount not to exceed
the U.S. dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Advance being evidenced by this Promissory Note, and
(ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
NEXELL THERAPEUTICS INC.
By__________________________
Name:
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Principal Paid Unpaid
or Prepaid Principal
Amount of Balance Notation Made
Date Advance By
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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</TABLE>
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> JUN-30-1999 JUN-30-1998
<CASH> 23,539,000 47,430,000
<SECURITIES> 0 0
<RECEIVABLES> 1,719,000 2,987,000
<ALLOWANCES> 0 0
<INVENTORY> 1,235,000 1,625,000
<CURRENT-ASSETS> 27,486,000 52,434,000
<PP&E> 15,631,000 18,610,000
<DEPRECIATION> 5,225,000 3,509,000
<TOTAL-ASSETS> 83,296,000 106,993,000
<CURRENT-LIABILITIES> 6,741,000 9,843,000
<BONDS> 0 0
0 0
100 100
<COMMON> 73,000 67,000
<OTHER-SE> 43,422,900 64,608,9000
<TOTAL-LIABILITY-AND-EQUITY> 85,296,000 106,993,000
<SALES> 7,077,000 6,086,000
<TOTAL-REVENUES> 7,077,000 6,086,000
<CGS> 4,738,000 4,157,000
<TOTAL-COSTS> 16,621,000 24,436,000
<OTHER-EXPENSES> 504,000 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,030,000 1,046,000
<INCOME-PRETAX> (15,110,000) (19,075,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (15,110,000) (19,075,000)
<EPS-BASIC> (0.25) (0.31)
<EPS-DILUTED> (0.25) (0.31)
</TABLE>
