SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 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 September 30, 1997
Commission File No. 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
35 West Watkins Mill Road, Gaithersburg, MD 20878
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301)417-0770
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 [ ]
As of September 30, 1997, 24,136,842 shares of Common Stock, par
value $0.01 per share, were outstanding.
MEDIMMUNE, INC.
Index to Form 10-Q
Part I Financial Page
Item 1. Financial Statements
Balance Sheets 1-2
Statements of Operations 3
Condensed Statements of Cash Flows 4
Notes to Financial Statements 5-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-11
Part II Other Information 12-13
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
CytoGam and RespiGam are registered trademarks of the
Company.
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
MEDIMMUNE, INC.
BALANCE SHEETS
(in thousands, except share data)
<S> <C> <C>
September 30, December 31,
1997 1996
---------- ----------
ASSETS: (Unaudited)
Cash and cash equivalents $ 3,515 $ 12,629
Marketable securities 27,273 102,136
Trade receivables, net 7,329 8,123
Contract receivables, net 4,103 2,164
Inventory, net 28,793 6,060
Other current assets 1,632 1,713
---------- ----------
Total Current Assets 72,645 132,825
Property and equipment, net 60,711 29,087
Other assets 2,724 2,059
---------- ----------
Total Assets $136,080 $163,971
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $ 4,358 $ 3,942
Accrued expenses 14,634 10,509
Product royalties payable 1,410 2,559
Accrued interest 1,356 2,057
Other current liabilities 1,220 469
--------- ----------
Total Current Liabilities 22,978 19,536
Long term debt 76,292 70,874
Other liabilities 754 696
---------- ----------
Total Liabilities 100,024 91,106
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,524,525 shares; none issued or outstanding -- --
Common stock, $.01 par value; authorized
60,000,000 shares; issued and outstanding
24,136,842 at September 30, 1997 and
21,836,763 at December 31, 1996 241 218
Paid-in capital 175,380 172,024
Accumulated deficit (139,565) (99,377)
---------- ----------
(1)
Total Shareholders' Equity 36,056 72,865
---------- ----------
Total Liabilities and Shareholders' Equity $136,080 $163,971
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(2)
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<CAPTION>
MEDIMMUNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
For the For the
three months ended nine months ended
September 30, September 30,
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 10,575 $ 4,632 $ 26,931 $ 18,086
Contracts 84 148 277 5,055
-------- -------- -------- --------
Total revenues 10,659 4,780 27,208 23,141
-------- -------- -------- --------
Costs and Expenses:
Cost of sales 5,258 2,924 13,903 11,046
Research and development 9,342 7,817 33,283 20,059
Selling, administrative
and general 6,603 5,043 17,371 13,602
Other operating expenses 3,094 -- 3,718 --
-------- -------- -------- --------
Total expenses 24,297 15,784 68,275 44,707
-------- -------- -------- --------
Operating Loss (13,638) (11,004) (41,067) (21,566)
Interest income 767 1,806 3,486 3,880
Interest expense (786) (964) (2,607) (1,084)
--------- --------- --------- ---------
Net Loss ($13,657) ($10,162) ($40,188) ($18,770)
======== ======== ========= =========
Loss Per Common Share ($0.57) ($0.47) ($1.77) ($0.90)
======== ======== ======== ========
Shares Used in Computing
Loss Per Share 23,938 21,656 22,718 20,782
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(3)
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<CAPTION>
MEDIMMUNE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands) For the
nine months ended
September 30,
1997 1996
-------- --------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($40,188) ($18,770)
Noncash items:
Depreciation and amortization 1,774 1,337
Amortization of premium (discount) on
marketable securities 689 (494)
Allowance for bad debt -- 739
Other 305 62
Other changes in assets and liabilities (22,019) (5,394)
-------- --------
Net cash used in operating activities (59,439) (22,520)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in marketable 74,174 (96,280)
securities
Capital expenditures (33,398) (11,889)
-------- --------
Net cash provided by (used in)
investing activities 40,776 (108,169)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
stock and exercise of stock options 3,379 58,534
Increase in long term debt 6,170 61,354
-------- --------
Net cash provided by financing 9,549 119,888
activities
-------- --------
Net decrease in cash and cash equivalents (9,114) (10,801)
Cash and cash equivalents at beginning
of period 12,629 14,165
-------- --------
Cash and cash equivalents at end of period $3,515 $3,364
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
(4)
MEDIMMUNE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
General
The financial information presented as of September 30, 1997, and for the
periods ended September 30, 1997 and 1996, is unaudited. In the opinion of
the Company's management, the financial information contains all
adjustments (which consist only of normal recurring adjustments) necessary
for a fair presentation of such financial information.
Inventory
Inventory is comprised of the following (in thousands):
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<CAPTION>
<S> <C> <C>
September 30, December 31,
1997 1996
------------- -------------
Raw Materials $11,237 $2,073
Work in Process 15,446 2,758
Finished Goods 2,417 1,229
------ ------
29,100 6,060
Less noncurrent inventory (307) (0)
------ ------
$28,793 $6,060
====== ======
</TABLE>
At September 30, 1997, inventory for which a biologic license application
("BLA") is expected to be submitted before year end 1997 to the U.S. Food
and Drug Administration ("FDA") was classified as non-current because it
was not expected to be sold within the next operating cycle.
(5)
Property and Equipment
Property and equipment, stated at cost, is comprised of the following (in
thousands):
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<CAPTION>
<S> <C> <C>
September 30, December 31,
1997 1996
---------- -----------
Land $ 1,521 $ 1,521
Leasehold improvements 10,989 6,860
Laboratory equipment 9,544 7,427
Office furniture, computers, and
equipment 3,960 3,235
Construction in progress 43,803 17,376
-------- --------
69,817 36,419
Less accumulated depreciation and (9,106) (7,332)
amortization
-------- --------
$60,711 $29,087
======== ========
</TABLE>
Property and equipment at September 30, 1997 includes $1.8 million of
capitalized interest compared to $0.3 million at December 31, 1996 related
to the design and construction of the Company's manufacturing facility in
Frederick, Maryland and its pilot plant facility in Gaithersburg, Maryland.
Equity Transactions
In July 1997, the Company announced the adoption of a Stockholder Rights
Plan designed to prevent an acquirer from gaining control of the Company
without offering a fair price to all of the Company's stockholders. The
Plan called for the distribution of common stock purchase Rights as a
dividend to stockholders of record as of the close of business on July 21,
1997 at the rate of one Right for each share of common stock. The Rights
will be exercisable only if a twenty percent or more stake in the Company
is acquired without approval of a majority of the Continuing Directors, as
defined in the Rights Plan.
(6)
Earnings per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share, effective
for financial statements for both interim and annual periods ending after
December 15, 1997. This Statement replaces the existing presentation of
primary and fully diluted earnings per share with basic and diluted
earnings per share. The changes in calculation and presentation are not
expected to have a material effect on the Company's disclosure of earnings
per share.
Reclassifications
Certain 1997 amounts have been reclassified to conform with the current
presentation.
Other Operating Expenses
Other operating expenses consists of start-up and validation costs
associated with the Company's manufacturing facility in Frederick, Maryland
and it's pilot plant in Gaithersburg, Maryland. Also included are costs
associated with scale-up of MEDI-493 manufacturing processes, including
payments to various contract manufacturers for additional production
capacity.
(7)
ITEM 2.
MEDIMMUNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Product sales increased 128% to $10.6 million in third quarter 1997 from
$4.6 million in third quarter 1996. Sales of RespiGam increased $6.5
million to $7.0 million in third quarter 1997 from $0.5 million in third
quarter 1996, reflecting increased demand for the product. CytoGam sales
in the 1997 quarter were $3.6 million compared to $4.1 million in the 1996
quarter, a decrease of 13%. The change is a result of a 29% decrease in
units sold offset by a price increase that took effect July 1, 1997. The
decrease in units sold was attributable to wholesaler stocking that
occurred in third quarter 1996 as well as increased competition in the
United States from antiviral products, particularly oral ganciclovir,
licensed by the FDA to Hoffman La Roche Inc. in December 1996 for
prevention of cytomegalovirus in solid organ transplant recipients. In
addition, 1996 third quarter CytoGam sales were adversely impacted by a
$0.7 million charge as a result of a bankruptcy by a pharmaceutical
wholesaler.
Cost of sales increased to $5.3 million in the 1997 period from $2.9
million in the 1996 period, an increase of 80%. This increase was
primarily attributable to a net increase of 71% in unit volume and higher
royalty costs. Research, development and clinical spending increased 20% to
$9.3 million in this year's quarter from $7.8 million in last year's
quarter, primarily reflecting the costs of concluding the Company's 1,502
patient Phase 3 IMpact-RSV (MEDI-493 RSV monoclonal antibody) clinical
trial as well as $1.3 million in licensing payments related to MEDI-493 and
MEDI-507. Selling, administrative and general expenses increased to $6.6
million in this year's quarter versus $5.0 million in the 1996 quarter, an
increase of 31%. Under the terms of the Company's collaborative
arrangements with American Home Products ("AHP"), the Company and AHP share
in the profits and losses of RespiGam. Reimbursements from AHP for losses
are deducted from selling, administrative and general expenses and payments
to AHP for profits are added to selling, administrative and general
expenses. The increase in selling, administrative and general expenses in
the 1997 period was due in part to lower reimbursement from AHP, as losses
on RespiGam declined due to lower RespiGam selling expenses and higher
RespiGam sales. The Company anticipates higher RespiGam sales in the
fourth quarter due to the arrival of the flu season. This may result in a
profit on RespiGam sales and, in turn, profit sharing payments to AHP which
would cause the Company's selling, administrative and general expenses to
increase. The $3.1 million of other operating expenses includes start-up
and validation costs associated with the Company's manufacturing facilities
and scale-up of MEDI-493 manufacturing processes, including payments to
contract manufacturers for additional production capacity.
(8)
These activities are expected to continue through 1998.
Interest income of $0.8 million was earned in the 1997 period versus $1.8
million in the 1996 period. This decrease was attributable to lower cash
balances available for investment in the 1997 period. Interest expense of
$0.8 million and $1.0 million was incurred in the 1997 and 1996 quarters
respectively, primarily reflecting interest due on the convertible debt
issued in July 1996, net of capitalized interest.
The net loss for the 1997 third quarter was $13.7 million, or $0.57 per
common share, compared to a net loss for the third quarter of 1996 of $10.2
million, or $0.47 per common share. Shares used in computing loss per
share were 23.9 million and 21.7 million for the 1997 and 1996 quarters,
respectively.
MEDI-493 is a humanized monoclonal antibody which has been evaluated in a
Phase 3 double-blind, placebo-controlled clinical trial for its ability to
prevent respiratory syncytial virus ("RSV") disease in high-risk infants.
Based on this and other studies, the Company expects by year end to submit
to the FDA a BLA requesting marketing clearance of MEDI-493 in the United
States. There can be no assurance that MEDI-493 will be licensed for
marketing by regulatory authorities.
These results were consistent with the Company's objectives for the quarter
and with the continued development of its products. Quarterly financial
results may vary significantly due to seasonality of RespiGam product
sales, fluctuation in sales of CytoGam, research funding, and expenditures
for research, development and marketing programs. RespiGam sales are
expected to occur primarily during, and in proximity to, the RSV season,
which typically occurs between November and April in the United States.
The Company has experienced product supply constraints in the past and no
assurances can be given that adequate product supply will be available to
meet future demand.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Product sales for the nine months ended September 30, 1997 increased 49% to
$26.9 million from $18.1 million in the 1996 nine months. RespiGam sales
increased 276% to $13.1 million in the 1997 nine months from $3.5 million
in the 1996 nine months. RespiGam was approved for marketing by the FDA in
January 1996 and was fully launched by the Company's sales force in the
fall of 1996. Supply constraints limited first quarter 1997 sales of
RespiGam. Sales of CytoGam totaled $13.9 million in the 1997 period
compared to $14.6 million in the 1996 period, reflecting an 11% decrease in
units sold, offset by a price increase that took effect on July 1, 1997.
CytoGam sales in 1996 also included a $0.7 million charge as a result of a
bankruptcy filing by a pharmaceutical wholesaler. Contract revenue in the
1996 nine months of $5.1 million included final milestone and research
funding payments under the Company's strategic alliance with AHP.
(9)
Under the terms of the alliance, the Company and AHP share in the profits
or losses of RespiGam; reimbursements or payments under this arrangement
are deducted from or added to operating expenses.
Cost of sales for the 1997 period increased 26% to $13.9 million from $11.0
million in the 1996 period, reflecting a net increase of 32% in units sold,
offset by lower per unit costs. Per unit costs of product are expected to
increase in the 1997 fourth quarter and the 1998 first quarter as a result
of adding capacity at a higher cost to attempt to meet the demand for
RespiGam. Research, development and clinical spending grew to $33.3
million from $20.1 million, an increase of 66% over the 1996 period. The
increase was mostly attributable to the costs of conducting the Company's
1,502 patient Phase 3 IMpact-RSV (MedI-493 RSV monoclonal antibody)
clinical trial. In addition, 1997 expenses include $1.6 million in
licensing payments related to MEDI-493 and MEDI-507. Selling,
administrative and general expenses increased 28% to $17.4 million in the
1997 nine months from $13.6 million in the 1996 period. The increase
reflects a $2.2 million decrease in the amount due from AHP for their share
of RespiGam product line loss primarily as a result of the increased
RespiGam sales. The increase over 1996 also reflects increased sales force
commission costs as a result of the increased RespiGam sales. General and
administrative expenses increased $0.5 million primarily as a result of
higher legal costs. Other operating expenses of $3.7 million in 1997
include start-up and validation costs for the Company's manufacturing
facilities and scale-up of manufacturing processes.
Interest income of $3.5 million was recorded for the 1997 nine months
versus $3.9 million in the 1996 period, reflecting lower cash balances
available for investment. Interest expense increased to $2.6 million from
$1.1 million in the 1996 nine months primarily as a result of interest due
on the convertible debt issued in July 1996, net of capitalized interest.
The net loss for the 1997 nine months of $40.2 million, or $1.77 per common
share, compared to a net loss of $18.8 million, or $0.90 per common share
for the 1996 nine months. Shares used in computing loss per share were
22.7 million and 20.8 million for the 1997 and 1996 periods, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash and marketable securities at September 30, 1997 were $30.8 million
compared to $114.8 million at 1996 year end. Net cash used in operating
activities in the nine months ended September 30, 1997 was $59.4 million,
reflecting primarily the net loss for the period and a $22.7 million
increase in inventory. The increased inventory reflects higher RespiGam
inventory in anticipation of the RSV season as well as increased raw
materials for CytoGam. Capital expenditures of $33.4 million for the nine
months were primarily for construction of the manufacturing facility in
Frederick, Maryland, expansion of the pilot plant located at the Company's
Gaithersburg, Maryland headquarters, and lab equipment.
(10)
The total cost for the construction of the manufacturing facility and the
expansion of the pilot plant is expected to be approximately $56 million,
of which $52.0 million had been spent as of September 30, 1997. The
Company anticipates the need to obtain additional financing and intends to
do so through a variety of means, which may include corporate
collaborations, a working capital line of credit or placement of additional
equity or debt securities. While the Company anticipates that such
financing will be available from a variety of sources, there can be no
assurance that such financings will, in fact, be available to the Company,
on favorable terms or otherwise.
____________________
THE STATEMENTS IN THIS QUARTERLY REPORT THAT ARE NOT DESCRIPTIONS OF
HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS
REFLECT MANAGEMENT'S CURRENT VIEWS, ARE BASED ON CERTAIN ASSUMPTIONS AND
ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO,
FACTORS SUCH AS PRODUCT DEMAND AND MARKET ACCEPTANCE RISKS, THE EARLY STAGE
OF PRODUCT DEVELOPMENT, COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES,
CAPACITY AND SUPPLY CONSTRAINTS AND OTHER RISKS DETAILED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AS A RESULT OF THE
FOREGOING OR OTHER FACTORS. THERE CAN BE NO ASSURANCES THAT LICENSING
AGREEMENTS WILL BE COMPLETED OR THAT THEY WILL BE OF SUFFICIENT CASH VALUE
TO MATERIALLY AFFECT LIQUIDITY.
(11)
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities
In July 1997 the Company announced the adoption of a Stockholder
Rights Plan. See Notes to Financial Statements - Equity
Transactions.
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
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Exhibit<F1> Description
10.72 Master Loan & Security Agreement,
dated June 16, 1997 by and between
Transamerica and MedImmune, Inc.
10.73 Patent License Agreement, (MEDI-493)
dated July 17, 1997 by and between
Protein Design Labs and MedImmune, Inc.
10.74 Patent License Agreement, (MEDI-507)
dated July 17, 1997 by and between
Protein Design Labs and MedImmune, Inc.
<FN>
<F1> Confidential Treatment has been requested for certain portions of
Exhibits 10.73 and 10.74.
</TABLE>
(b) Reports on Form 8-K:
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<C> <S>
Report Date Event reported
7/9/97 MedImmune, Inc. Board of Directors
Declared a Dividend Distribution of
One Preferred Stock Purchase Right for
Each Outstanding Share of Common Stock
7/17/97 MedImmune Reports Positive MEDI-493
Phase 3 Clinical Results
(12)
7/25/97 Letter to Shareholders Announcing the
Adoption of the Stockholder Rights
Plan
8/6/97 MedImmune Received Marketing Approval
For CytoGam in Canada
8/21/97 MedImmune Receives Marketing Approval
For RespiGam in Canada Launch Planned
at ICAAC in September
</TABLE>
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.
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<S> <C>
(REGISTRANT) MEDIMMUNE, INC.
BY (SIGNATURE) /s/ David M. Mott
(NAME AND TITLE) David M. Mott, President and Chief Operating Officer
(Principal accounting and financial officer)
(DATE) November 14, 1997
(13)
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EXHIBIT 10.72
MASTER LOAN AND SECURITY AGREEMENT
THIS AGREEMENT dated as of June 16, 1997, is made by MedImmune,
Inc. (the "Borrower"), a Delaware corporation having its principal place of
business and chief executive office at 35 West Watkins Hill Road,
Gaithersburg, Maryland 20878, in favor of Transamerica Business Credit
Corporation, a Delaware corporation (the "Lender"), having its principal
office at Riverway II, West Office Tower, 9399 West Higgins Road, Rosemont,
Illinois 60018.
WHEREAS, the Borrower has requested that the Lender make Loans to
it from time to time; and
WHEREAS, the Lender has agreed to make such Loans on the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to extend credit, the Borrower hereby agrees with the Lender as
follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following
meanings, and shall be equally applicable to both the singular and plural
forms of the terms defined:
Agreement shall mean this Master Loan and Security Agreement together with
all schedules and exhibits hereto, as amended, supplemented, or otherwise
modified from time to time.
Applicable Law shall mean the laws of the State of Illinois (or any other
jurisdiction whose laws are mandatorily applicable notwithstanding the
parties' choice of Illinois law) or the laws of the United States of
America, whichever laws allow the greater interest, as such laws now exist
or may be changed or amended or come into effect in the future.
Business Day shall mean any day other than a Saturday, Sunday, or public
holiday or the equivalent for banks in New York City.
Code shall have the meaning specified in Section 8(d).
Collateral shall have the meaning specified in Section 2.
Collateral Access Agreement shall mean any landlord waiver, mortgagee
waiver, bailee letter, or similar acknowledgment of any warehouseman or
processor in possession of any Equipment, in each case substantially in the
form of ExhibitA.
Effective Date shall mean the date on which all of the conditions specified
in Section 3.3 shall have been satisfied.
Equipment shall have the meaning specified in Section 2.
Event of Default shall mean any event specified in Section 7.
Financial Statements shall have the meaning specified in Section 6.1.
GAAP shall mean generally accepted accounting principles in the United
States of America, as in effect from time to time.
Loans shall mean the loans and financial accommodations made by the Lender
to the Borrower in accordance with the terms of this Agreement and the
Notes.
Loan Documents shall mean, collectively, this Agreement, the Notes, and all
other documents, agreements, certificates, instruments, and opinions
executed and delivered in connection herewith and therewith, as the same
may be modified, extended, restated, or supplemented from time to time.
Material Adverse Change shall mean, with respect to any Person, a material
adverse change in the business, prospects, operations, results of
operations, assets, liabilities, or condition (financial or otherwise) of
such Person taken as a whole.
Material Adverse Effect shall mean, with respect to any Person, a material
adverse effect on the business, prospects, operations, results of
operations, assets, liabilities, or condition (financial or otherwise) of
such Person taken as a whole.
Note shall mean each Promissory Note made by the Borrower in favor of the
Lender, as amended, supplemented, or otherwise modified from time to time,
in each case substantially in the form of Exhibit B.
Obligations shall mean all indebtedness, obligations, and liabilities of
the Borrower under the Notes and under this Agreement, whether on account
of principal, interest, indemnities, fees (including, without limitation,
attorneys' fees, remarketing fees, origination fees, collection fees, and
all other professionals' fees), costs, expenses, taxes, or otherwise.
Permitted Liens shall mean such of the following as to which no
enforcement, collection, execution, levy, or foreclosure proceeding shall
have been commenced: (a)liens for taxes, assessments, and other
governmental charges or levies or the claims or demands of landlords,
carriers, warehousemen, mechanics, laborers, materialmen, and other like
Persons arising by operation of law in the ordinary course of business for
sums which are not yet due and payable, or liens which are being contested
in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves are maintained to the extent required by
GAAP; (b)deposits or pledges to secure the payment of workmen's
compensation, unemployment insurance, or other social security benefits or
obligations, public or statutory obligations, surety or appeal bonds, bid
or performance bonds, or other obligations of a like nature incurred in the
ordinary course of business; (c)licenses, restrictions, or covenants for or
on the use of the Equipment which do not materially impair either the use
of the Equipment in the operation of the business of the Borrower or the
value of the Equipment; and (d) attachment or judgment liens that do not
constitute an Event of Default.
Person shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party, or government (including any division, agency,
or department thereof), and the successors, heirs, and assigns of each.
Schedule shall mean each Schedule in the form of Schedule A hereto
delivered by the Borrower to the Lender from time to time.
Solvent means, with respect to any Person, that as of the date as to which
such Person's solvency is measured:
(a) the fair saleable value of its assets is in excess of the
total amount of its liabilities (including contingent liabilities as valued
in accordance with GAAP) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able generally to meet its debts as they mature.
Taxes shall have the meaning specified in Section 5.5.
SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL.
The Borrower hereby assigns and grants to the Lender a continuing lien on,
and security interest in, all the Borrower's right, title, and interest in
and to the collateral described in the next sentence (the "Collateral") to
secure the payment and performance of all the Obligations. The Collateral
consists of all equipment set forth on all the Schedules delivered from
time to time under the terms of this Agreement (the "Equipment"), together
with all present and future additions, parts, accessories, attachments,
substitutions, repairs, improvements, and replacements thereof or thereto,
and any and all proceeds thereof, including, without limitation, proceeds
of insurance and all manuals, blueprints, know-how, warranties, and records
in connection therewith, all rights against suppliers, warrantors,
manufacturers, sellers, or others in connection therewith, and together
with all substitutes for any of the foregoing. The Borrower agrees that in
order to facilitate the first priority status of the security interest
granted herein, it will not to grant to any other party any consensual
security interest in the Collateral.
SECTION 3. THE CREDIT FACILITY.
SECTION 3.1. Borrowings. Each Loan shall be in an amount
not less than $100,000, and in no event shall the sum of the aggregate
Loans made exceed the amount of the Lender's written commitment to the
Borrower in effect from time to time. Notwithstanding anything herein to
the contrary, the Lender shall be obligated to make the initial Loan and
each other Loan only after the Lender, in its reasonable judgment,
determines that the applicable conditions for borrowing contained in
Sections 3.3 and 3.4 are satisfied. The timing and financial scope of
Lender's obligation to make Loans hereunder are limited as set forth in a
commitment letter executed by Lender and Borrower, dated as of May 23, 1997
and attached hereto as ExhibitC (the "Commitment Letter").
SECTION 3.2. Application of Proceeds. The Borrower shall
not directly or indirectly use any proceeds of the Loans, or cause, assist,
suffer, or permit the use of any proceeds of the Loans, for any purpose
other than for the purchase, acquisition, installation, or upgrading of
Equipment or the reimbursement of the Borrower for its purchase,
acquisition, installation, or upgrading of Equipment.
SECTION 3.3. Conditions to Initial Loan.
(a) The obligation of the Lender to make the initial Loan is
subject to the Lender's receipt of the following, each dated the date of
the initial Loan or as of an earlier date acceptable to the Lender, in form
and substance satisfactory to the Lender and its counsel:
(i) completed requests for information (Form UCC-11)
listing all effective Uniform Commercial Code financing
statements naming the Borrower as debtor and all tax lien,
judgment, and litigation searches for the Borrower as the Lender
shall deem necessary or desirable;
(ii) Uniform Commercial Code financing statements (Form UCC-
1) duly executed by the Borrower (naming the Lender as secured
party and the Borrower as debtor and in form acceptable for
filing in all jurisdictions that the Lender deems necessary or
desirable to perfect the security interests granted to it
hereunder) and, if applicable, termination statements or other
releases duly filed in all jurisdictions that the Lender deems
necessary or desirable to perfect and protect the priority of the
security interests granted to it hereunder in the Equipment
related to such initial Loan;
(iii)a Note duly executed by the Borrower evidencing the
amount of such Loan;
(iv) a Collateral Access Agreement duly executed by the
lessor or mortgagee, as the case may be, of each premises where
the Equipment is located;
(v) certificates of insurance required under Section 5.4 of
this Agreement together with loss payee endorsements for all such
policies naming the Lender as lender loss payee and as an
additional insured;
(vi) a copy of the resolutions of the Board of Directors of
the Borrower (or a unanimous consent of directors in lieu
thereof) authorizing the execution, delivery, and performance of
this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, attached to which is a
certificate of the Secretary or an Assistant Secretary of the
Borrower certifying (A)that the copy of the resolutions is true,
complete, and accurate, that such resolutions have not been
amended or modified since the date of such certification and are
in full force and effect and (B)the incumbency, names, and true
signatures of the officers of the Borrower authorized to sign the
Loan Documents to which it is a party;
(vii) the opinion of counsel for the Borrower covering
such matters incident to the transactions contemplated by this
Agreement as the Lender may reasonably require; and
(viii) such other agreements and instruments as the Lender
may reasonably request in connection with the transactions
contemplated hereby.
(b) There shall be no pending or, to the knowledge of the
Borrower after due inquiry, threatened litigation, proceeding, inquiry, or
other action (i)seeking an injunction or other restraining order, damages,
or other relief with respect to the transactions contemplated by this
Agreement or the other Loan Documents or thereby or (ii)which affects or
could affect the business, prospects, operations, assets, liabilities, or
condition (financial or otherwise) of the Borrower, except, in the case of
clause(ii), where such litigation, proceeding, inquiry, or other action
could not be expected to have a Material Adverse Effect in the judgment of
the Lender.
(c) The Borrower shall have paid all fees and expenses required
to be paid by it to the Lender as of such date.
(d) The security interests in the Equipment related to the
initial Loan granted in favor of the Lender under this Agreement shall have
been duly perfected and shall constitute first priority liens.
SECTION 3.4. Conditions Precedent to Each Loan. The
obligation of the Lender to make each Loan is subject to the satisfaction
of the following conditions precedent:
(a) the Lender shall have received the documents, agreements,
and instruments set forth in Section 3.3(a)(i) through (v) applicable to
such Loan, each in form and substance satisfactory to the Lender and its
counsel and each dated the date of such Loan or as of an earlier date
acceptable to the Lender;
(b) the Lender shall have received a Schedule of the Equipment
related to such Loan, in form and substance satisfactory to the Lender and
its counsel, and the security interests in such Equipment related to such
Loan granted in favor of the Lender under this Agreement shall have been
duly perfected and shall constitute first priority liens;
(c) all representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Loan as if then made, other
than representations and warranties that expressly relate solely to an
earlier date, in which case they shall have been true and correct as of
such earlier date;
(d) no Event of Default or event which with the giving of notice
or the passage of time, or both, would constitute an Event of Default shall
have occurred and be continuing or would result from the making of the
requested Loan as of the date of such request;
(e) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender; and
(f) the Borrower shall not have suffered a Material Adverse
Change.
SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
SECTION 4.1. Good Standing; Qualified to do Business. The
Borrower (a)is duly organized, validly existing, and in good standing under
the laws of the State of its organization, (b)has the power and authority
to own its properties and assets and to transact the businesses in which it
is presently, or proposes to be, engaged, and (c)is duly qualified and
authorized to do business and is in good standing in every jurisdiction in
which the failure to be so qualified could reasonably be expected to have a
Material Adverse Effect on (i)the Borrower, (ii)the Borrower's ability to
perform its obligations under the Loan Documents, or (iii)the rights of the
Lender hereunder.
SECTION 4.2. Due Execution, etc. The execution, delivery,
and performance by the Borrower of each of the Loan Documents to which it
is a party are within the powers of the Borrower, do not contravene the
organizational documents, if any, of the Borrower, and do not (a)violate
any law or regulation, or any order or decree of any court or governmental
authority, (b)conflict with or result in a breach of, or constitute a
default under, any material indenture, mortgage, or deed of trust or any
material lease, agreement, or other instrument binding on the Borrower or
any of its properties, or (c)require the consent, authorization by, or
approval of or notice to or filing or registration with any governmental
authority or other Person. This Agreement is, and each of the other Loan
Documents to which the Borrower is or will be a party, when delivered
hereunder or thereunder, will be, the legal, valid, and binding obligation
of the Borrower enforceable against the Borrower in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally and by general
principles of equity.
SECTION 4.3. Solvency; No Liens. The Borrower is Solvent
and will be Solvent upon the completion of all transactions contemplated to
occur hereunder (including, without limitation, the Loan to be made on the
Effective Date); the security interests granted herein constitute and shall
at all times constitute the first and only liens on the Collateral other
than Permitted Liens; and the Borrower is, or will be at the time
additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, consign, transfer, and create a
security interest therein, free and clear of any and all claims or liens in
favor of any other Person other than Permitted Liens.
SECTION 4.4. No Judgments, Litigation. No judgments are
outstanding against the Borrower nor is there now pending or, to the best
of the Borrower's knowledge after diligent inquiry, threatened any
litigation, contested claim, or governmental proceeding by or against the
Borrower except judgments and pending or threatened litigation, contested
claims, and governmental proceedings which would not, in the aggregate,
have a Material Adverse Effect on the Borrower.
SECTION 4.5. No Defaults. The Borrower is not in default
or has not received a notice of default under any material contract, lease,
or commitment to which it is a party or by which it is bound. The Borrower
knows of no dispute regarding any contract, lease, or commitment which
could reasonably be expected to have a Material Adverse Effect on the
Borrower.
SECTION 4.6. Collateral Locations. On the date hereof,
each item of the Collateral is located at the place of business specified
in the applicable Schedule.
SECTION 4.7. No Events of Default. No Event of Default
has occurred and is continuing nor has any event occurred which, with the
giving of notice or the passage of time, or both, would constitute an Event
of Default.
SECTION 4.8. No Limitation on Lender's Rights. Except as
permitted herein, none of the Collateral is subject to contractual
obligations that may restrict or inhibit the Lender's rights or abilities
to sell or dispose of the Collateral or any part thereof after the
occurrence of an Event of Default.
SECTION 4.9. Perfection and Priority of Security Interest.
This Agreement creates a valid and, upon completion of all required filings
of financing statements, the Lender will have a perfected first priority
security interest in the Collateral, securing the payment of all the
Obligations.
SECTION 4.10. Model and Serial Numbers. The Schedules set
forth the true and correct model number and serial number of each item of
Equipment that constitutes Collateral.
SECTION 4.11. Accuracy and Completeness of Information.
All data, reports, and information heretofore, contemporaneously, or
hereafter furnished by or on behalf of the Borrower in writing to the
Lender or for purposes of or in connection with this Agreement or any other
Loan Document, or any transaction contemplated hereby or thereby, are or
will be true and accurate in all material respects on the date as of which
such data, reports, and information are dated or certified and not
incomplete by omitting to state any material fact necessary to make such
data, reports, and information not misleading at such time. There are no
facts now known to the Borrower which individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect and which
have not been specified herein, in the Financial Statements, or in any
certificate, opinion, or other written statement previously furnished by
the Borrower to the Lender.
SECTION 4.12. Price of Equipment. The cost of each item of
Equipment does not exceed the fair and usual price for such type of
equipment purchased in like quantity and reflects all discounts, rebates
and allowances for the Equipment (including, without limitation, discounts
for advertising, prompt payment, testing, or other services) given to the
Borrower by the manufacturer, supplier, or any other person.
SECTION 5. COVENANTS OF THE BORROWER.
SECTION 5.1. Existence, etc. The Borrower shall:
(a)retain its existence and its current yearly accounting cycle,
(b)maintain in full force and effect all licenses, bonds, franchises,
leases, trademarks, patents, contracts, and other rights necessary or
desirable to the profitable conduct of its business unless the failure to
do so could not reasonably be expected to have a Material Adverse Effect on
the Borrower, (c)continue in, and limit its operations to, the same general
lines of business as those presently conducted by it and any other business
related thereto, and (d)comply with all applicable laws and regulations of
any federal, state, or local governmental authority, except for such laws
and regulations the violations of which would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Borrower.
Notwithstanding anything herein to the contrary, Borrower may merge or
consolidate with, or sell substantially all of its assets to, another
entity, provided that the surviving entity agrees to assume and be liable
for all of Borrower's obligations hereunder.
SECTION 5.2. Notice to the Lender. As soon as possible,
and in any event within five days after an officer of the Borrower learns
of the following, the Borrower will give written notice to the Lender of
(a)any proceeding instituted or threatened to be instituted by or against
the Borrower in any federal, state, local, or foreign court or before any
commission or other regulatory body (federal, state, local, or foreign)
involving a sum, together with the sum involved in all other similar
proceedings, in excess of $250,000 in the aggregate, (b) any contract that
is terminated or amended and which has had or could reasonably be expected
to have a Material Adverse Effect on the Borrower, (c)the occurrence of any
Material Adverse Change with respect to the Borrower, and (d) the
occurrence of any Event of Default or event or condition which, with notice
or lapse of time or both, would constitute an Event of Default, together
with a statement of the action which the Borrower has taken or proposes to
take with respect thereto.
SECTION 5.3. Maintenance of Books and Records. The
Borrower will maintain books and records pertaining to the Collateral in
such detail, form, and scope as the Lender shall require in its
commercially reasonable judgment. The Borrower agrees that the Lender or
its agents may upon reasonable notice enter upon the Borrower's premises at
any time and from time to time during normal business hours, and at any
time upon the occurrence and continuance of an Event of Default, for the
purpose of inspecting the Collateral and any and all records pertaining
thereto.
SECTION 5.4. Insurance. The Borrower will maintain
insurance on the Collateral in accordance with the schedule of insurance
requirements attached hereto as Exhibit C. All such policies shall be made
payable to the Lender, in case of loss, under a standard non-contributory
"lender" or "secured party" clause and are to contain such other provisions
as the Lender may reasonably require to protect the Lender's interests in
the Collateral and to any payments to be made under such policies.
Certificates of insurance policies are to be delivered to the Lender,
premium prepaid, with the loss payable endorsement in the Lender's favor,
and shall provide for not less than thirty days' prior written notice to
the Lender, of any alteration or cancellation of coverage. If the Borrower
fails to maintain such insurance, the Lender may arrange for (at the
Borrower's expense and without any responsibility on the Lender's part for)
obtaining the insurance. After the occurrence and during the continuance
of an Event of Default, unless the Lender shall otherwise agree with the
Borrower in writing, the Lender shall have the sole right, in the name of
the Lender or the Borrower, to file claims under any insurance policies, to
receive and give acquaintance for any payments that may be payable
thereunder, and to execute any endorsements, receipts, releases,
assignments, reassignments, or other documents that may be necessary to
effect the collection, compromise, or settlement of any claims under any
such insurance policies.
SECTION 5.5. Taxes. The Borrower will pay, when due, all
taxes, assessments, claims, and other charges ("Taxes") lawfully levied or
assessed against the Borrower or the Collateral other than taxes that are
being diligently contested in good faith by the Borrower by appropriate
proceedings promptly instituted and for which an adequate reserve is being
maintained by the Borrower in accordance with GAAP. If any Taxes remain
unpaid after the date fixed for the payment thereof, or if any lien shall
be claimed therefor, then, without notice to the Borrower, but on the
Borrower's behalf, the Lender may pay such Taxes, and the amount thereof
shall be included in the Obligations.
SECTION 5.6. Borrower to Defend Collateral Against Claims;
Fees on Collateral. The Borrower will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any
interest therein. The Borrower will not permit any notice creating or
otherwise relating to liens on the Collateral or any portion thereof to
exist or be on file in any public office other than Permitted Liens. The
Borrower shall promptly pay, when payable, all transportation, storage, and
warehousing charges and license fees, registration fees, assessments,
charges, permit fees, and taxes (municipal, state, and federal) which may
now or hereafter be imposed upon the ownership, leasing, renting,
possession, sale, or use of the Collateral, other than taxes on or measured
by the Lender's income and fees, assessments, charges, and taxes which are
being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP.
SECTION 5.7. No Change of Location, Structure, or
Identity. The Borrower will not (a) change the location of its chief
executive office or establish any place of business other than those
specified herein or (b)move or permit the movement of any item of
Collateral from the location specified in the applicable Schedule, except
that the Borrower may change its chief executive office and keep Collateral
at other locations within the United States provided that the Borrower has
delivered to the Lender (i) prior written notice thereof and (ii) duly
executed financing statements and other agreements and instruments (all in
form and substance satisfactory to the Lender) necessary or, in the opinion
of the Lender, desirable to perfect and maintain in favor of the Lender a
first priority security interest in the Collateral. Notwithstanding
anything to the contrary in the immediately preceding sentence, the
Borrower may keep any Collateral consisting of motor vehicles or rolling
stock at any location in the United States provided that the Lender's
security interest in any such Collateral is conspicuously marked on the
certificate of title thereof and the Borrower has complied with the
provisions of Section 5.9.
SECTION 5.8. Use of Collateral; Licenses; Repair. The
Collateral shall be operated by competent, qualified personnel in
connection with the Borrower's business purposes, for the purpose for which
the Collateral was designed and in all material respects in accordance with
applicable operating instructions, laws, and government regulations, and
the Borrower shall take reasonable steps to prevent loss or damage to the
Collateral from fire and other hazards. The Collateral shall not be used
or operated for personal, family, or household purposes. The Borrower
shall procure and maintain in effect all orders, licenses, certificates,
permits, approvals, and consents required by federal, state, or local laws
or by any governmental body, agency, or authority in connection with the
delivery, installation, use, and operation of the Collateral except for
such failures which would not be reasonably expected to have a Material
Adverse Effect on the Borrower. The Borrower shall keep all of the
Equipment in a satisfactory state of repair and satisfactory operating
condition in accordance with industry standards, and will make all repairs
and replacements when and where necessary and practical. The Borrower will
not waste or destroy the Equipment or any part thereof, and will not be
negligent in the care or use thereof. The Equipment shall not be annexed
or affixed to or become part of any realty without the Lender's prior
written consent.
SECTION 5.9. Further Assurances. The Borrower will,
promptly upon request by the Lender, execute and deliver or use its
commercially reasonable efforts to obtain any document required by the
Lender (including, without limitation, warehouseman or processor
disclaimers, mortgagee waivers, landlord disclaimers, or subordination
agreements with respect to the Obligations and the Collateral), give any
notices, execute and file any financing statements, mortgages, or other
documents (all in form and substance satisfactory to the Lender), mark any
chattel paper, deliver any chattel paper or instruments to the Lender, and
take any other actions that are necessary or, in the opinion of the Lender,
desirable to perfect or continue the perfection and the first priority of
the Lender's security interest in the Collateral, to protect the Collateral
against the rights, claims, or interests of any Persons, or to effect the
purposes of this Agreement. The Borrower hereby authorizes the Lender to
file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Collateral without the
signature of the Borrower where permitted by law. A carbon, photographic,
or other reproduction of this Agreement or any financing statement covering
the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. To the extent required under this
Agreement, the Borrower will pay all costs incurred in connection with any
of the foregoing.
SECTION 5.10. No Disposition of Collateral. The Borrower
will not in any way hypothecate or create or permit to exist any lien,
security interest, charge, or encumbrance on or other interest in any of
the Collateral, except for the lien and security interest granted hereby
and Permitted Liens, and the Borrower will not sell, transfer, assign,
pledge, collaterally assign, exchange, or otherwise dispose of any of the
Collateral; provided, however, that Borrower may sell Collateral having a
book value in excess of $1,000 if the proceeds of such sale are used to
prepay the Loans. Collateral having a book value of less than $1000 may be
sold or otherwise disposed with any proceeds retained by the Borrower. In
the event the Collateral, or any part thereof, is sold, transferred,
assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest of the Lender shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange, or other disposition, and the Borrower will hold the proceeds
thereof in a separate account for the benefit of the Lender. Following
such a sale, the Borrower will transfer such proceeds to the Lender in
kind.
SECTION 5.11. No Limitation on Lender's Rights. The
Borrower will not enter into any contractual obligations which may restrict
or inhibit the Lender's rights or ability to sell or otherwise dispose of
the Collateral or any part thereof.
SECTION 5.12. Protection of Collateral. Upon notice to the
Borrower (provided that if an Event of Default has occurred and is
continuing the Lender need not give any notice), the Lender shall have the
right at any time to make any payments and do any other acts the Lender may
deem necessary to protect its security interests in the Collateral,
including, without limitation, the rights to satisfy, purchase, contest, or
compromise any encumbrance, charge, or lien which, in the reasonable
judgment of the Lender, appears to be prior to or superior to the security
interests granted hereunder, and appear in, and defend any action or
proceeding purporting to affect its security interests in, or the value of,
any of the Collateral. The Borrower hereby agrees to reimburse the Lender
for all payments made and expenses incurred under this Agreement including
fees, expenses, and disbursements of attorneys and paralegals (including
the allocated costs of in-house counsel) acting for the Lender, including
any of the foregoing payments under, or acts taken to protect its security
interests in, any of the Collateral, which amounts shall be secured under
this Agreement, and agrees it shall be bound by any payment made or act
taken by the Lender hereunder absent the Lender's gross negligence or
willful misconduct. The Lender shall have no obligation to make any of the
foregoing payments or perform any of the foregoing acts.
SECTION 5.13. Delivery of Items. The Borrower will
(a)promptly (but in no event later than five Business Days) after its
receipt thereof, deliver to the Lender any documents or certificates of
title issued with respect to any property included in the Collateral, and
any promissory notes, letters of credit or instruments related to or
otherwise in connection with any property included in the Collateral, which
in any such case come into the possession of the Borrower, or shall cause
the issuer thereof to deliver any of the same directly to the Lender, in
each case with any necessary endorsements in favor of the Lender and
(b)deliver to the Lender as soon as available copies of any and all press
releases and other similar communications issued by the Borrower.
SECTION 5.14. Solvency. The Borrower shall be and remain
Solvent at all times.
SECTION 5.15. Name Change. The Borrower shall not amend or
modify its name, unless the Borrower delivers to the Lender thirty days
prior to any such proposed amendment or modification written notice of such
amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements
(in form and substance satisfactory to the Lender).
SECTION 5.16. Additional Requirements. The Borrower shall
take all such further actions and execute all such further documents and
instruments as the Lender may reasonably request in order to perfect its
security interest.
SECTION 6. FINANCIAL STATEMENTS.
Until the payment and satisfaction in full of all Obligations, the Borrower
shall deliver to the Lender the following financial information:
SECTION 6.1. Annual Financial Statements. As soon as
available, but not later than 120 days after the end of each fiscal year of
the Borrower and its consolidated subsidiaries, the consolidated balance
sheet, income statement, and statements of cash flows and shareholders
equity for the Borrower and its consolidated subsidiaries (the "Financial
Statements") for such year, reported on by independent certified public
accountants without an adverse qualification; and
SECTION 6.2. Quarterly Financial Statements. As soon as
available, but not later than 60 days after the end of each of the first
three fiscal quarters in any fiscal year of the Borrower and its
consolidated subsidiaries, the Financial Statements for such fiscal
quarter, together with a certification duly executed by a responsible
officer of the Borrower that such Financial Statements have been prepared
in accordance with GAAP and are fairly stated in all material respects
(subject to normal year-end audit adjustments).
SECTION 7. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an Event of
Default hereunder:
(a) the Borrower shall fail to pay within five days of when
due any amount required to be paid by the Borrower under or in connection
with any Note and this Agreement;
(b) any representation or warranty made or deemed made by
the Borrower under or in connection with any Loan Document or any Financial
Statement shall prove to have been false or incorrect in any material
respect when made;
(c) the Borrower shall fail to perform or observe (i) any
of the terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10,
5.14, or 5.15 hereof or (ii) any other term, covenant, or agreement
contained in any Loan Document (other than the other Events of Default
specified in this Section 7) and such failure remains unremedied for the
earlier of thirty days from (A) the date on which the Lender has given the
Borrower written notice of such failure and (B) the date on which the
Borrower knew or should have known of such failure;
(d) any material provision of any Loan Document to which
the Borrower is a party shall for any reason cease to be valid and binding
on the Borrower, or the Borrower shall so state;
(e) dissolution, liquidation, winding up, or cessation of
the Borrower's business, failure of the Borrower generally to pay its debts
as they mature, admission in writing by the Borrower of its inability
generally to pay its debts as they mature, or calling of a meeting of the
Borrower's creditors for purposes of compromising any of the Borrower's
debts;
(f) the commencement by or against the Borrower of any
bankruptcy, insolvency, arrangement, reorganization, receivership, or
similar proceedings under any federal or state law and, in the case of any
such involuntary proceeding, such proceeding remains undismissed or
unstayed for sixty days following the commencement thereof, or any action
by the Borrower is taken authorizing any such proceedings;
(g) an assignment for the benefit of creditors is made by
the Borrower, whether voluntary or involuntary, the appointment of a
trustee, custodian, receiver, or similar official for the Borrower or for
any substantial property of the Borrower, or any action by the Borrower
authorizing any such proceeding;
(h) the Borrower shall default in (i)the payment of
principal or interest on any indebtedness in excess of $250,000 (other than
the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such indebtedness was created; or
(ii)the observance or performance of any other agreement or condition
relating to any such indebtedness or contained in any instrument or
agreement relating thereto, or any other event shall occur or condition
exist, in each case beyond any applicable period of grace or unless cured
or waived within 10 days, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
indebtedness to cause, with the giving of notice if required, such
indebtedness to become due prior to its stated maturity;
(i) any tax lien, other than a Permitted Lien, is filed of
record against the Borrower and is not bonded or discharged within fifteen
Business Days;
(j) any judgment which has had or could reasonably be
expected to have a Material Adverse Effect on the Borrower and such
judgment shall not be stayed, vacated, bonded, or discharged within sixty
days; or
(k) any material covenant, agreement, or obligation, as
determined in the sole discretion of the Lender, made by the Borrower and
contained in or evidenced by any of the Loan Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with
its terms; the Borrower shall deny or disaffirm the Obligations under any
of the Loan Documents or any liens granted in connection therewith; or any
liens granted on any of the Collateral in favor of the Lender shall be
determined to be void, voidable, or invalid, or shall not be given the
priority contemplated by this Agreement.
SECTION 8. REMEDIES.
If any Event of Default shall have occurred and be continuing:
(a) The Lender may, without prejudice to any of its other
rights under any Loan Document or Applicable Law, declare all Obligations
to be immediately due and payable (except with respect to any Event of
Default set forth in Section 7(f) hereof, in which case all Obligations
shall automatically become immediately due and payable without necessity of
any declaration) without presentment, representation, demand of payment, or
protest, which are hereby expressly waived.
(b) The Lender may take possession of the Collateral and,
for that purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral or any part hereof is, or may be
placed, and remove the same.
(c) The obligation of the Lender, if any, to make
additional Loans or financial accommodations of any kind to the Borrower
shall immediately terminate.
(d) The Lender may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein (or in any
Loan Document) or otherwise available to it, all the rights and remedies of
a secured party under the applicable Uniform Commercial Code (the "Code")
whether or not the Code applies to the affected Collateral and also may
(i)require the Borrower to, and the Borrower hereby agrees that it will at
its expense and upon request of the Lender forthwith, assemble all or part
of the Collateral as directed by the Lender and make it available to the
Lender at a place to be designated by the Lender that is reasonably
convenient to both parties and (ii)without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Lender's offices or elsewhere, for
cash, on credit, or for future delivery, and upon such other terms as the
Lender may deem commercially reasonable. The Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice
to the Borrower of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Lender may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(e) All cash proceeds received by the Lender in respect of
any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Lender, be held by the Lender
as collateral for, or then or at any time thereafter applied in whole or in
part by the Lender against, all or any part of the Obligations in such
order as the Lender shall elect. Any surplus of such cash or cash proceeds
held by the Lender and remaining after the full and final payment of all
the Obligations shall be paid over to the Borrower or to such other Person
to which the Lender may be required under applicable law, or directed by a
court of competent jurisdiction, to make payment of such surplus.
SECTION 9. MISCELLANEOUS PROVISIONS.
SECTION 9.1. Notices. Except as otherwise provided
herein, all notices, approvals, consents, correspondence, or other
communications required or desired to be given hereunder shall be given in
writing and shall be delivered by overnight courier, hand delivery, or
certified or registered mail, postage prepaid, if to the Lender, then to
Transamerica Technology Finance Division, 76 Batterson Park Road,
Farmington, Connecticut 06032, Attention: Assistant Vice President, Lease
Administration, with a copy to the Lender at Riverway II, West Office
Tower, 9399 West Higgins Road, Rosemont, Illinois 60018, Attention: Legal
Department, and if to the Borrower, then to MedImmune, Inc., 35 West
Watkins Hill Road, Gaithersburg, Maryland 20878, Attn: Chief Executive
Officer, or such other address as shall be designated by the Borrower or
the Lender to the other party in accordance herewith. All such notices and
correspondence shall be effective when received.
SECTION 9.2. Headings. The headings in this Agreement are
for purposes of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
SECTION 9.3. Assignments. The Borrower shall not have the
right to assign any Note or this Agreement or any interest therein unless
the Lender shall have given the Borrower prior written consent and the
Borrower and its assignee shall have delivered assignment documentation in
form and substance satisfactory to the Lender in its sole discretion. The
Lender may assign its rights and delegate its obligations under any funded
Note or this Agreement as it pertains to funded amounts. Lender will
provide notice to Borrower of any such assignment, and will use
commercially reasonable efforts to effect such assignment in a manner which
is "seamless" to the Borrower.
SECTION 9.4. Amendments, Waivers, and Consents. Any
amendment or waiver of any provision of this Agreement and any consent to
any departure by the Borrower from any provision of this Agreement shall be
effective only by a writing signed by the Lender and shall bind and benefit
the Borrower and the Lender and their respective successors and assigns,
subject, in the case of the Borrower, to the first sentence of Section 9.3.
SECTION 9.5. Interpretation of Agreement. All terms not
defined herein or in a Note shall have the meaning set forth in the
applicable Code, except where the context otherwise requires. To the
extent a term or provision of this Agreement conflicts with any Note, or
any term or provision thereof, and is not dealt with herein with more
specificity, this Agreement shall control with respect to the subject
matter of such term or provision. Acceptance of or acquiescence in a
course of performance rendered under this Agreement shall not be relevant
in determining the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
SECTION 9.6. Continuing Security Interest. This Agreement
shall create a continuing security interest in the Collateral and shall
(i)remain in full force and effect until the indefeasible payment in full
of the Obligations, (ii)be binding upon the Borrower and its successors and
assigns and (iii)inure, together with the rights and remedies of the Lender
hereunder, to the benefit of the Lender and its successors, transferees,
and assigns.
SECTION 9.7. Reinstatement. To the extent permitted by
law, this Agreement and the rights and powers granted to the Lender
hereunder and under the Loan Documents shall continue to be effective or be
reinstated if at any time any amount received by the Lender in respect of
the Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation, or
reorganization of the Borrower or upon the appointment of any receiver,
intervenor, conservator, trustee, or similar official for the Borrower or
any substantial part of its assets, or otherwise, all as though such
payments had not been made.
SECTION 9.8. Survival of Provisions. All representations,
warranties, and covenants of the Borrower contained herein shall survive
the execution and delivery of this Agreement, and shall terminate only upon
the full and final payment and performance by the Borrower of the
Obligations secured hereby.
SECTION 9.9. Indemnification. The Borrower agrees to
indemnify and hold harmless the Lender and its directors, officers, agents,
employees, and counsel from and against any and all costs, expenses,
claims, or liability incurred by the Lender or such Person hereunder and
under any other Loan Document or in connection herewith or therewith,
unless such claim or liability shall be due to willful misconduct or gross
negligence on the part of the Lender or such Person.
SECTION 9.10. Counterparts; Telecopied Signatures. This
Agreement may be executed in counterparts, each of which when so executed
and delivered shall be an original, but both of which shall together
constitute one and the same instrument. This Agreement and each of the
other Loan Documents and any notices given in connection herewith or
therewith may be executed and delivered by telecopier or other facsimile
transmission all with the same force and effect as if the same was a fully
executed and delivered original manual counterpart.
SECTION 9.11. Severability. In case any provision in or
obligation under this Agreement or any Note or any other Loan Document
shall be invalid, illegal, or unenforceable in any jurisdiction, the
validity, legality, and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 9.12. Delays; Partial Exercise of Remedies. No
delay or omission of the Lender to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair
any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default. No single or partial exercise by the Lender of any
right or remedy shall preclude any other or further exercise thereof, or
preclude any other right or remedy.
SECTION 9.13. Entire Agreement. The Borrower and the
Lender agree that this Agreement, the Schedule hereto, a certain letter
from the Lender to the Borrower dated May 23, 1997 concerning FDA
approvals, and the Commitment Letter are the complete and exclusive
statement and agreement between the parties with respect to the subject
matter hereof, superseding all proposals and prior agreements, oral or
written, and all other communications between the parties with respect to
the subject matter hereof. Should there exist any inconsistency between
the terms of the Commitment Letter and this Agreement, the terms of this
Agreement shall prevail.
SECTION 9.14. Setoff. In addition to and not in limitation
of all rights of offset that the Lender may have under Applicable Law, and
whether or not the Lender has made any demand or the Obligations of the
Borrower have matured, the Lender shall have the right to appropriate and
apply to the payment of the Obligations of the Borrower all deposits and
other obligations then or thereafter owing by the Lender to or for the
credit or the account of the Borrower.
SECTION 9.15. WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
SECTION 9.16. GOVERNING LAW. THE VALIDITY, INTERPRETATION,
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 9.17. Venue; Service of Process. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN COOK COUNTY,
OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER
HEREBY IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING, (a)ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (b)THE RIGHT TO INTERPOSE
ANY NONCOMPULSORY SETOFF, COUNTERCLAIM, OR CROSS-CLAIM. THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE
ADDRESS FOR IT SPECIFIED IN SECTION 9.1 HEREOF. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDICTION, SUBJECT IN EACH INSTANCE TO
THE PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
IN WITNESS WHEREOF, the undersigned Borrower has caused this
Agreement to be duly executed and delivered by its proper and duly
authorized officer as of the date first set forth above.
MEDIMMUNE, INC.
By: (SIGNATURE) /s/ David M. Mott
Name: David M. Mott
Title: President and Chief Operating Officer
Federal Identification Number 52-1555759
Accepted as of the
16 day of June, 1997
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: (SIGNATURE) /s/ Gary P. Moro
Name: Gary P. Moro
Title: Vice President
EXHIBIT A
COLLATERAL ACCESS AGREEMENT
TRANSAMERICA BUSINESS CREDIT CORPORATION
9399 West Higgins Road, Suite 600
Rosemont, Illinois 60018
June 18, 1997
Alexandria Real Estate Equities, Inc.
11440 West Bernardo Court, Suite 170
San Diego, CA 92127
Attn: Steven Stone, Corporate Vice President
Re: MedImmune, Inc.
Ladies and Gentlemen:
We have been asked by MedImmune, Inc., a Delaware corporation (the
"Company") to finance certain equipment listed on Exhibit A attached hereto
(the "Equipment"), which will be located at the address identified on
Schedule A (the "Premises"). The obligations of the Company to us will be
secured by, among other things, the Equipment. We understand that the
Company leases the Premises from you pursuant to a lease or is the owner of
the Premises, which is subject to a lien in favor of you pursuant to a
mortgage (such lease or mortgage being referred to as the "Agreement").
In connection with the extensions of credit to be made to the Company,
Transamerica Business Credit Corporation, ("Transamerica") will be making
customary Uniform Commercial Code filings on behalf of Transamerica with
respect to the Equipment. In addition, we request your acknowledgment and
cooperation for preserving and enforcing Transamerica's security interests.
To expedite the consummation of the proposed financing, we would appreciate
your execution of this letter.
To induce Transamerica to finance the Equipment, and for other good
and valuable consideration, you confirm and acknowledge the following
matters to us:
You will allow us, or our auditors or other designees, reasonable
access to the Premises to inspect the Equipment from time to time. In
addition, upon our request, you will grant us and our designees access to
the Premises for 90 days at reasonable times to show the Equipment to
potential purchasers and to remove the Equipment from the Premises.
Transamerica will reimburse you for any costs or expenses incurred by you
resulting from damage caused by our removal of the Equipment from the
Premises.
In the event that the Company defaults in its obligations under
the Agreement or you desire or elect to terminate or exercise remedies
under the Agreement for any reason, including a default by the Company
under the Agreement, you will notify us in writing of this fact prior to
your terminating or exercising remedies under the Agreement and retaking
possession of the Premises. You hereby confirm and acknowledge to us that
you do not and will not have any claim to or lien on any of the Equipment,
whether such Equipment constitutes fixtures or personal property.
We would appreciate your confirming to us your agreement to the
foregoing provisions of this letter by signing and returning to us this
letter at our address shown above.
Very truly yours,
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: (SIGNATURE) /s/Meg Lengson
Name: Meg Lengson
Title: Assistant Vice President
ACKNOWLEDGED AND AGREED:
By: (SIGNATURE) /s/David M. Mott
Name: David M. Mott
Title: President and Chief Operating Officer
EXHIBIT B
PROMISSORY NOTE SAMPLE
Date: June 24, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the order
of Transamerica Business Credit Corporation or its assigns (the "Payee") at
its office located at Riverway II, West Office Tower, 9399 West Higgins
Road, Rosemont, Illinois 60018, or at such other place as the Payee or the
holder hereof may designate in writing, the principal amount of One Hundred
Thousand Dollars ($100,000.00) received by the undersigned, plus interest,
in lawful money of the United States and in immediately available funds.
This Note shall be payable commencing with a first installment of Two
Thousand, Five Hundred Seventy Three and 55/100 Dollars ($2,573.55) payable
on July 1, 1997 and thereafter in 71 consecutive equal monthly installments
of One Thousand, Four Hundred Sixty Five and 05/100 Dollars ($30,465.05)
commencing August 1, 1997 and a final balloon payment payable on June 30,
2003 of Ten Thousand 00/100 Dollars ($10,000.00) together with any amounts
due and owing to Lender. No amount of principal paid or prepaid hereunder
may be reborrowed.
This Note is one of the Notes referred to in the Master Loan and
Security Agreement dated as of June ___, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"), between the
undersigned and the Payee and is subject and entitled to all provisions and
benefits thereof. Capitalized terms used but not defined herein shall have
the meanings set forth in the Agreement.
If any installment of this Note is not paid within three Business
Days after the Borrower is notified of such failure to pay, the undersigned
agrees to pay on demand, in addition to the amount of such installment, an
amount equal to 5% of such installment, but only to the extent permitted by
Applicable Law.
Provided that all payments due hereunder have been timely made,
the undersigned shall have the right to prepay this Note at any time on or
after July 1, 1999 on thirty days' prior written notice to the Payee. On
the date of any such prepayment, the undersigned shall pay, together with
all interest, fees and other amounts payable on the amount so prepaid or in
connection therewith to the date of such prepayment, and a prepayment
premium in the following amount: 3% of the principal amount being prepaid
if such prepayment is made on or after July 1, 1999 but before June 30,
2000; 2% of the principal amount being prepaid if such prepayment is made
on or after July 1, 2000 but before June 30, 2001; and 1% of the principal
amount being prepaid if such prepayment is made on or after July 1, 2001
but before June 30, 2002. No prepayment premium will be required for
prepayments made on or after July 1, 2002. Any prepayments shall be
applied to the installments hereof in the inverse order of maturity.
Upon the maturity of this Note or the acceleration of the
maturity of this Note in accordance with the terms of the Agreement, the
entire unpaid principal amount on this Note, together with all interest,
fees and other amounts payable hereon or in connection herewith, shall be
immediately due and payable without further notice or demand, with interest
on all such amounts at a rate not to exceed the lawful limit, from the date
of such maturity or acceleration, as the case may be, until all such
amounts have been paid.
If any payment on this Note becomes payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day.
The undersigned hereby waives diligence, demand, presentment,
protest and notice of any kind, and assents to extensions of the time of
payment, release, surrender or substitution of security, or forbearance or
other indulgence, without notice. The undersigned agrees to pay all
amounts under this Note without offset, deduction, claim, counterclaim,
defense or recoupment, all of which are hereby waived.
The Payee, the undersigned and any other parties to the Loan
Documents intend to contract in strict compliance with applicable usury law
from time to time in effect. In furtherance thereof such Persons stipulate
and agree that none of the terms and provisions contained in the Loan
Documents shall ever be construed to create a contract to pay, for the use,
forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by Applicable Law from time to time in
effect. Neither the undersigned nor any present or future guarantors,
endorsers, or other Persons hereafter becoming liable for payment of any
Obligation shall ever be liable for unearned interest thereon or shall ever
be required to pay interest thereon in excess of the maximum amount that
may be lawfully charged under Applicable Law from time to time in effect,
and the provisions of this paragraph shall control over all other
provisions of the Loan Documents which may be in conflict or apparent
conflict herewith. The Payee expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the event the
maturity of any Obligation is accelerated. If (a) the maturity of any
Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the legal maximum, or (c) the Payee or any other holder of any or
all of the Obligations shall otherwise collect amounts which are determined
to constitute interest which would otherwise increase the interest on any
or all of the Obligations to an amount in excess of that permitted to be
charged by Applicable Law then in effect, then all sums determined to
constitute interest in excess of such legal limit shall, without penalty,
be promptly applied to reduce the then outstanding principal of the related
Obligations or, at the Payee's or such holder's option, promptly returned
to the undersigned upon such determination. In determining whether or not
the interest paid or payable, under any specific circumstance, exceeds the
maximum amount permitted under Applicable Law, the Payee and the
undersigned (and any other payers thereof) shall to the greatest extent
permitted under Applicable Law, (i) characterize any non-principal payment
as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize, prorate,
allocate, and spread the total amount of interest through the entire
contemplated term of this Note in accordance with the amount outstanding
from time to time thereunder and the maximum legal rate of interest from
time to time in effect under Applicable Law in order to lawfully charge the
maximum amount of interest permitted under Applicable Law.
This Note may not be changed, modified or terminated orally, but
only by an agreement in writing signed by the undersigned and the Payee or
any holder hereof.
The undersigned shall, upon demand, pay to the Payee all costs
and expenses incurred by the Payee (including the fees and disbursements of
counsel and other professionals) in connection with the preparation,
execution and delivery of this Note and all other Loan Documents, and in
connection with the administration, modification and amendment of the Loan
Documents, and pay to the Payee all costs and expenses (including the fees
and disbursements of counsel and other professionals) paid or incurred by
the Payee in (A) enforcing or defending its rights under or in respect of
this Note or any of the other Loan Documents, (B) collecting any of the
liabilities by the undersigned to the Payee or otherwise administering the
Loan Documents, (C) foreclosing or otherwise collecting upon any collateral
and (D) obtaining any legal, accounting or other advice in connection with
any of the foregoing.
This Note shall be binding upon the successors and assigns of the
undersigned and inure to the benefit of the Payee and its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
EACH OF THE UNDERSIGNED AND, BY ITS ACCEPTANCE HEREOF, THE PAYEE
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT
ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW.
MEDIMMUNE, INC.
By:___________________________
Name:
Title:
EXHIBIT C
May 23, 1997
REVISED
Mr. David M. Mott
President and Chief Operating Officer
MedImmune, Inc.
35 West Watkins Hill Road
Gaithersburg, Maryland 20878
Dear David:
Transamerica Business Credit Corporation-Technology Finance Division
("Lender) is pleased to offer financing for the Equipment described below
to MedImmune, Inc. ("Borrower"). This Commitment supersedes all prior
correspondence, proposals, and oral or other communications relating to
lending arrangements between Borrower and Lender.
<TABLE>
<CAPTION>
The outline of this offer is as follows:
<S> <C>
Borrower: MedImmune, Inc.
Lender: Transamerica Business Credit Corporation-
Technology Finance Division ("TFD") and/or its
affiliates, successors or assigns.
Guarantors: None
Equipment: Lender shall be granted a perfected first
priority security interest in Manufacturing,
Laboratory, Office and Computer Equipment and
Computer Software being financed by this
facility, and all cash and non-cash proceeds
(including insurance proceeds) of all of the
foregoing, including without limitation, all
additions, improvements, repairs,
appurtenances, substitutions, and attachments
(the "Equipment").
Loans: Lender shall make a loan or a series of loans
for the Equipment (each a "Loan").
Amount of Loan: Not to exceed $15,000,000 for the Equipment,
of which up to 5% of the total loan amount
($750,000) may be used for Computer Software.
Equipment at the Borrower's facilities in Gaithersburg,
Location: Maryland and Frederick, Maryland.
Anticipated Through May 31, 1998.
Delivery:
Termination of This commitment will terminate if the first
Commitment: delivery of Equipment and funding is not
completed on or before June 30, 1997.
Loan Term
Commencement: Upon funding each Loan, which will occur upon
each completion of deliveries of items of
Equipment with aggregate cost of not less than
$100,000, and shall be no later than May 31,
1998.
Term: From each Loan Term Commencement until 72
months from the first day of the month next
following or coincident with that Loan Term
Commencement.
Repayment Terms: Monthly Payments equal to 1.7942% of the Loan
shall be payable monthly in advance. The
first month's payment shall be payable upon
funding each Loan.
As of the date of each Loan Term Commencement,
the Monthly Payments shall be fixed for the
term. A schedule of the actual Monthly
Payments shall be provided by the Lender
following each Loan Term Commencement.
The Lender shall adjust the Monthly Payments
as of the date of each Loan Term Commencement
based on any change in the weekly average of
the interest rates of six-year U.S. Treasury
Notes from 6.83% (the "Base Rate") at the end
of the week preceding the date of each Loan
Term Commencement, as published in the Wall
Street Journal. For each basis point change
from the Base Rate, the rate implicit in the
Monthly Payments will be adjusted by one basis
point and a new Monthly Payment calculated.
Balloon Payment: At the end of each 72 month Loan, the Borrower
shall be obligated to make one final balloon
payment equal to 10% of the original principal
amount of such Loan, plus any other amounts
then due and owing to Lender.
Interim In the event that any Loan Term Commencement
Payments: is not on the first day of a month, Interim
Payments shall accrue from each Loan Term
Commencement until the next following first
day of a month and shall be payable at the end
of that month. Interim Payments shall be
calculated at the rate equal to the prime rate
as published in the Wall Street Journal plus
3.5%.
Documentation: The documentation relating to this transaction
shall implement the transaction contemplated
by this commitment letter to the satisfaction
of Lender and its counsel, shall contain
conditions precedent, representations,
warranties and covenants by Borrower and shall
provide for events of defaults and remedies,
all as required by Lender for transactions of
this type. The documentation shall include,
but not be limited to, the terms and
conditions described in this commitment
letter.
Insurance: Prior to any delivery of Equipment, the
Borrower shall furnish a certificate of
insurance acceptable to the Lender in amount,
type and term, covering the Equipment
including primary, all risk, physical damage,
property damage and bodily injury with
appropriate loss payee and additional insured
endorsements in favor of Lender.
Representation There shall be no actual or threatened
and Additional conflict with, or violation of, any regulatory
Covenants: statute, standard or rule relating to the
Borrower, its present or future operations, or
the Equipment.
Borrower shall be required to provide
quarterly financial information to Lender.
All information supplied by the Borrower shall
be correct in all material respects and shall
not omit any statement the omission of which
would cause the information supplied to be
misleading. There shall be no material breach
of the representations and warranties of the
Borrower in the Loan. The representations
shall include that the cost of each item of
Equipment does not exceed the fair and usual
price for such type of equipment purchased in
like quantity and reflects all discounts,
rebates and allowances for the Equipment given
to Borrower by the manufacturer, supplier or
any other person including, without
limitation, discounts for advertising, prompt
payment, testing or other services. There are
no other negative covenants contemplated in
this transaction.
Conditions 1. No material adverse change in the
Precedent to financial condition, operations or prospects
Lending: of the Borrower prior to funding.
2. Completion of the documentation and final
terms of the proposed financing satisfactory
to Lender and Lender's counsel.
3. Results of all due diligence, including
lien, judgment and tax search and other
matters Lender may request shall be
satisfactory to Lender and Lender's counsel.
4. Receipt by Lender of duly executed loan
documentation in form and substance
satisfactory to Lender and its counsel.
5. Lender shall receive a valid and
perfected first priority lien and security
interest in the Equipment and Lender shall
have received satisfactory evidence that there
are no liens on any Equipment except as
expressly permitted in the loan documents.
6. Evidence of repayment of existing
indebtedness relating to any of the Equipment,
and UCC and other lien releases, as Lender
deems appropriate.
Prepayment: Borrower shall have the option to prepay each
Loan after 24 consecutive payments. A
prepayment premium of 3% of the principal
amount being prepaid will be charged for
prepayments made during months 25-36, 2% for
prepayments made during months 37-48 and 1%
for prepayments made during months 49-60. No
prepayment premium will be charged for
prepayments made after month 60.
Fees and Borrower will be responsible for Lender's
Expenses: reasonable expenses (including expenses of
counsel and/or accountants) in connection with
the transaction, which expenses will not
exceed $7,500 without the written consent of
Borrower. Maryland recordation tax equal to
$2.20 per $500 of indebtedness is required
Law: This letter and the proposed Loan are intended
to be governed by and construed in accordance
with Illinois law without regard to its
conflict of law provisions.
Indemnity: Borrower agrees to indemnify and to hold
harmless Lender and its officers, directors
and employees against all claims, damages,
liabilities and expenses which may be incurred
by or asserted against any such person in
connection with or arising out of this letter
and the transactions contemplated hereby,
other than for claims, damages, liability, and
expense resulting from such person's gross
negligence or willful misconduct.
Confidentiality: This letter is delivered to you with the
understanding that neither it nor its
substance shall be disclosed publicly or
privately to any third person except those who
are in a confidential relationship to you
(such as your legal counsel and accountants),
or where the same is required by law.
Upon completion of the initial takedown by
Borrower, the Borrower will no longer be
required to obtain Lender's prior written
consent to disclose the transaction
contemplated hereby.
Conditions of This Commitment Letter is intended to be a
Acceptance: summary of the most important elements of the
agreement to enter into a financing
transaction with Borrower, and is subject to
all requirements and conditions contained in
loan documentation proposed by Lender or its
counsel in the course of closing the financing
described herein. Not every provision that
imposes duties, obligations, burdens, or
limitations on Borrower is contained herein,
but shall be contained in the final loan
documentation satisfactory to Lender and its
counsel.
EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY SUIT, ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS
LETTER OR THE TRANSACTION DESCRIBED IN THIS
LETTER.
Commitment Fee: A Commitment Fee equal to 0.5% or $75,000 is
required from Borrower. The $25,000
Application Fee previously paid by Borrower
will be applied to the Commitment Fee and the
balance of $50,000 is payable upon acceptance
of this Commitment. The Commitment Fee shall
be applied to Lender's reasonable expenses not
to exceed $7,500 without Borrower's written
consent and the remaining balance will be
applied on a prorata basis to the second
Monthly Payment on each Loan.
Commitment This Commitment shall expire on May 27, 1997,
Expiration: unless prior thereto either extended in
writing by the Lender or accepted as provided
below by the Borrower.
</TABLE>
Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed
duplicate copy of this letter to me by May 27, 1997.
Yours truly,
TRANSAMERICA BUSINESS CREDIT
CORPORATION-TECHNOLOGY FINANCE
DIVISION
By:(SIGNATURE)/s/ Gerald A. Michaud
Name: Gerald A. Michaud
Title: Senior Vice President - Marketing
Accepted this 23rd day of May, 1997
MEDIMMUNE, INC.
By: (SIGNATURE) /S/David M. Mott
Name: David M. Mott
Title: President and Chief Operating Officer
EXHIBIT 10.73
PATENT LICENSE AGREEMENT
between
PROTEIN DESIGN LABS, INC.
and
MEDIMMUNE, INC.
This Agreement ("Agreement"), effective as of July 17, 1997 ("Effective
Date"), is made by and between PROTEIN DESIGN LABS, INC., a Delaware
corporation having offices at 2375 Garcia Avenue, Mountain View, CA
94043, USA (hereinafter "PDL") and MEDIMMUNE, INC., a Delaware
corporation, having offices at 35 West Watkins Mill Road, Gaithersburg,
MD 20878 (hereinafter "MEDIMMUNE").
RECITALS
A. MEDIMMUNE desires to license certain patents owned or controlled by
PDL related to a humanized antibody directed against RSV (as defined
below), which antibody has involved significant development efforts
undertaken by MEDIMMUNE (including without limitation the antibody known
as "MEDI-493"); and
B. PDL is willing to license to MEDIMMUNE such rights under the terms
and conditions of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound, the parties agree as follows:
1. DEFINITIONS
All references to Exhibits, Articles and Sections shall be references
to Exhibits, Articles and Sections of this Agreement. In addition,
except as otherwise expressly provided herein, the following terms in
this Agreement shall have the following meanings:
1.01 "Affiliate" means, with respect to a party hereto, any corporate
or other entity which, directly or indirectly, controls, is controlled
by, or is under common control with such party where "control" means the
ownership of not less than 50% of the voting shares of a corporation, or
decision-making authority as to an unincorporated entity.
1.02 "Combination Product(s)" shall mean any product containing both a
pharmaceutically active agent or ingredient which constitutes a Licensed
Product and one or more other pharmaceutically active agents or
ingredients which do not constitute Licensed Products.
1.03 "Field" means the field of human prophylaxis and therapy.
1.04 "Licensed Product(s)" shall mean an Antibody for which MEDIMMUNE
has undertaken significant development efforts (e.g., conducted or
sponsored a human clinical trial), which product is an Antibody that
binds to RSV (including without limitation, the MEDI-493 product of
MEDIMMUNE or MEDIMMUNE's sublicensees and any modifications or
improvements) whose development, importation, manufacture, use or sale
would, but for a license under this Agreement, infringe a Valid Claim.
"Antibody" as used in the preceding sentence shall include, without
limitation, monospecific and bispecific antibodies; less than full-length
antibody forms such as Fv, Fab, and F(ab')(2); single-chain antibodies;
and antibody conjugates bound to a toxin, label or other moiety.
1.05 "Net Sales" shall mean the aggregate gross revenues, whether in
cash or in kind, derived by or payable from or on account of the sale of
Licensed Products, less an allowance of Five Percent (5%) to cover
factors such as (a) credits or allowances, if any, actually granted on
account of price adjustments, recalls, rejection or return of items
previously sold, (b) excise and sales taxes, duties or other taxes
imposed on and paid with respect to such sales (excluding income or
franchise taxes of any kind) and (c) outer packing, freight and freight
insurance costs. If MEDIMMUNE or any of its Affiliates or sublicensees
receive non-cash consideration for any Licensed Product sold or otherwise
transferred to an independent third party not an Affiliate of the seller
or transferor, the fair market value of such non-cash consideration on
the date of such transfer as known to MEDIMMUNE, or as reasonably
estimated by MEDIMMUNE if unknown, shall be included in the definition of
Net Sales.
1.06 "PDL Patent Rights" means the patents (as well as any foreign
counterparts or patent applications thereto) identified on Exhibit A,
including any addition, continuation, continuation-in-part or division
thereof or any substitute application therefor; any patent issued with
respect to such patent application, any reissue, extension or patent term
extension of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent.
1.07 "Territory" means the world.
1.08 "Valid Claim" means any claim in any issued patent included in
the PDL Patent Rights which has not been disclaimed or held unenforceable
or invalid by a governmental agency or court of competent jurisdiction by
a decision beyond right of review.
1.09 "Europe" means one or more the following countries: U.K.,
France, Germany, Italy and Spain.
2. LICENSE
2.01 License Grant. Subject to the terms and conditions of this
Agreement, PDL hereby grants and MEDIMMUNE hereby accepts a nonexclusive
license under the PDL Patent Rights limited to the Field and Territory,
including the right to grant sublicenses (subject to Section 2.02), to
make, import, have made, use or sell Licensed Products.
2.02 Limitation on Sublicenses; Notification of Grant of Sublicense.
MEDIMMUNE shall have the right to grant sublicenses of its rights under
Section 2.01 only in connection with the assignment or license by it of a
Licensed Product to a third party and only with respect to that Licensed
Product. The right to grant sublicenses under Section 2.01 shall be on
terms and conditions which are subject to and subordinate to the terms of
this Agreement. Promptly following execution of any sublicense
hereunder, but in any event not less than ten (10) days thereafter,
MEDIMMUNE shall notify PDL of the identity of the sublicensee and the
scope of the sublicense.
2.03 Notification of Other Potential Licensee. PDL shall use
commercially reasonable efforts to notify MEDIMMUNE in the event that a
third party proposes to obtain a license under the PDL Patent Rights in
the Field. MEDIMMUNE shall have a period of ten (10) business days from
notification to propose terms for an amendment to this Agreement for an
exclusive license in the Field and Territory. PDL agrees to reasonably
consider any proposal to enter into an amendment to this Agreement for an
exclusive license proposed by MEDIMMUNE, but neither party shall have any
obligation to enter into such amendment.
2.04 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
3. MILESTONE PAYMENTS; ROYALTIES, REPORTS
3.01 Payments. In consideration for the license granted by PDL under
Article 2 of this Agreement MEDIMMUNE shall pay the amounts set forth in
this Section 3.01.
(a) Initial Payment. Unless this Agreement is terminated as
provided in Section 7.02(a), not later than September 1, 1997 MEDIMMUNE
shall pay to PDL a nonrefundable signing and licensing fee in the sum of
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(b) Milestone Payments.
i. Filing of Biologics License Application(s). Within thirty
(30) days following the submission of a biologics license application (or
foreign counterpart thereto) to regulatory authorities with respect to a
Licensed Product in any country in the Territory, MEDIMMUNE shall pay to
PDL a one time nonrefundable sum of (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED).
ii. Approval to Market in the U.S. Within thirty (30) days
following the initial approval to market a Licensed Product in the U.S.,
MEDIMMUNE shall pay to PDL the nonrefundable sum of (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED).
iii. Approval to Market in Europe. Within thirty (30) days
following the initial approval to market a Licensed Product in any
country in Europe, MEDIMMUNE shall pay to PDL the nonrefundable sum of
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
iv. First Sale in the U.S. Within thirty (30) days following the
initial sale of a Licensed Product that, but for the licenses granted to
MEDIMMUNE under this Agreement would infringe a Valid Claim in the U.S.,
MEDIMMUNE shall pay to PDL the nonrefundable sum of (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED).
v. First Sale in Europe. Within thirty (30) days following the
initial sale of a Licensed Product that, but for the licenses granted to
MEDIMMUNE under this Agreement would infringe a Valid Claim in any
country in Europe, MEDIMMUNE shall pay to PDL the nonrefundable sum of
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
Each milestone set forth in this Section 3.01 shall be deemed achieved
and the corresponding milestone payment due upon the achievement of the
milestone, whether by MEDIMMUNE, its Affiliates or sublicensees. Any
payment made by MEDIMMUNE for the achievement of any milestone herein
shall be paid by MEDIMMUNE only once.
3.02 Annual Maintenance Fee. In further consideration of the
license granted under Article 2, not later than June 30, 2000 and not
later than May 31 each year thereafter, MEDIMMUNE shall pay PDL a
nonrefundable annual maintenance fee in the amount of (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED).
3.03 Royalties to PDL; Credits Against Royalties.
(a) In further consideration of the rights and licenses granted
under Article 2, MEDIMMUNE shall pay to PDL a royalty of (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED) of the Net Sales of all Licensed Products
sold by MEDIMMUNE or its Affiliates or sublicensees to non-Affiliated
third parties in each country in the Territory until the last date on
which there is a Valid Claim that, but for the licenses granted to
MEDIMMUNE under this Agreement, would be infringed by the making,
importing, using, having made or sale of that Licensed Product in such
country in the Territory or by the manufacture of Licensed Product in the
country of manufacture.
(b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
3.04 Sales Among Affiliates. Sales between and among MEDIMMUNE, its
sublicensees and its Affiliates of Licensed Products which are
subsequently resold or to be resold by such sublicensees or Affiliates
shall not be subject to royalty, but in such cases royalties shall accrue
and be calculated on any subsequent sale of such Licensed Products to a
non-affiliated third party.
3.05 Combination Products. Net Sales in a particular country in the
Territory, in the case of Combination Products for which the
pharmaceutically active agent or ingredient constituting a Licensed
Product and each of the other pharmaceutically active agents or
ingredients not constituting Licensed Products have established market
prices in that country in the Territory when sold separately, shall be
determined by multiplying the Net Sales for each such Combination Product
by a fraction, the numerator of which shall be the established market
price for the Licensed Product(s) contained in the Combination Product
and the denominator of which shall be the sum of the established market
prices for the Licensed Product(s) plus the established market prices for
the other pharmaceutically active agents or ingredients contained in the
Combination Product. When such separate market prices are not
established in that country in the Territory, then the parties shall
negotiate in good faith to determine a fair and equitable method of
calculating Net Sales in that country for the Combination Product in
question.
3.06 Withholding.
(a) Payments. MEDIMMUNE shall pay all amounts payable to PDL under
Section 3.01 and Section 3.02 from a U.S. bank account. Any deductions
for any taxes or other withholding that may be applicable to the payments
to PDL under Sections 3.01 and 3.02 shall be promptly paid by MEDIMMUNE
to the appropriate governmental authority and MEDIMMUNE shall provide
proof of payment to PDL..
(b) Royalty Payments. MEDIMMUNE may withhold from royalties due to
PDL amounts for payment of any withholding tax that MEDIMMUNE has paid to
any taxing authority with respect to royalties due on account of the sale
or manufacture of Licensed Products in the Territory. MEDIMMUNE agrees
to reasonably cooperate with PDL in obtaining a foreign tax credit in the
U.S. with respect to royalties due to PDL on the sale or manufacture of
Licensed Products.
3.07 Currency Conversion. All amounts payable to PDL under this
Agreement shall be payable in U.S. Dollars by wire transfer to-a bank
account designated by PDL. In the case of royalties on Net Sales, all
amounts payable shall first be calculated in the currency of sale and
then converted into U.S. Dollars using the average of the daily exchange
rates for such currency quoted by Citibank, N.A. for each of the last
fifteen (15) banking days of each calendar quarter.
3.08 Royalty Reports.
(a) Current Reports. MEDIMMUNE agrees to make written reports and
royalty payments to PDL within forty-five (45) days after the close of
each calendar quarter during the term of this Agreement, beginning with
the calendar quarter in which the date of first commercial sale occurs.
These reports shall show for the calendar quarter in question Net Sales
by MEDIMMUNE, its Affiliates and sublicensees of the Licensed Products in
the Territory on a country-by-country basis, details of the quantities of
Licensed Products sold in each country and the country of manufacture if
different, and the royalty due to PDL thereon pursuant to Article 2.
Concurrently with the making of each such report, MEDIMMUNE shall make
any payment due to PDL of royalties for the period covered by such
report.
(b) Termination Report. For each Licensed Product, MEDIMMUNE also
agrees to make a written report to PDL within ninety (90) days after the
date on which MEDIMMUNE, its Affiliates or sublicensees last sell that
Licensed Product in the Territory stating in such report the same
information required by quarterly reports for all such Licensed Products
made, sold or otherwise disposed of which were not previously reported to
PDL.
3.09 Inspection MEDIMMUNE agrees to keep clear, accurate and complete
records for a period of at least three (3) years (or such longer period
as may correspond to MEDIMMUNE's internal records retention policy) for
each reporting period in which Net Sales occur showing the manufacturing,
sales, use and other disposition of Licensed Products in the Territory in
sufficient detail to enable the royalties payable hereunder to be
determined, and further agrees to permit its books and records to be
examined by an independent accounting firm selected by PDL and reasonably
satisfactory to MEDIMMUNE, from time-to-time to the extent necessary,
during normal business hours and upon reasonable notice, but not more
than once a year. Such examination is to be made at the expense of PDL,
except in the event that the results of the audit reveal that MEDIMMUNE
underpaid PDL by five percent (5%) or more, then the audit fees shall be
paid by MEDIMMUNE. Any such discrepancies will be promptly corrected by
a payment or refund, as appropriate.
4. PATENT UPDATE
4.01 Updates. Upon the written request of MEDIMMUNE (which request
shall not be made more than once per calendar year), PDL agrees to
provide a written update of the information relating to the PDL Patent
Rights as set forth on Exhibit A.
4.02 Defense of PDL Patent Rights. With respect to the PDL Patent
Rights licensed under this Agreement, PDL at its sole cost and expense
agrees to take all steps and proceedings and to undertake such other acts
as PDL may, in its sole discretion, deem necessary or advisable to
restrain any infringement or improper or unlawful use of the PDL Patent
Rights in the Field and Territory. MEDIMMUNE shall permit PDL to have
the sole right to take such steps, conduct any such proceedings or
undertake any such actions to restrain any infringement or improper or
unlawful use of the PDL Patent Rights in the Territory, whether or not
MEDIMMUNE is a party to such steps, proceedings or actions. Any Moines
recovered from alleged infringers shall be retained by PDL.
4.03 Notification. MEDIMMUNE shall promptly notify PDL in writing of
any actual or suspected infringement of any PDL Patent Right, which
notification shall specify in reasonable detail the nature of such actual
or suspected infringement. If, in MEDIMMUNE's reasonable opinion, PDL
has not undertaken action reasonably designed to restrain any
infringement or improper or unlawful use of the PDL Patent Rights with
respect to an Antibody directed against RSV by such third party in the
particular country and MEDIMMUNE's market share of the indications for
which Licensed Products are sold in that country is reduced by
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) or more as a result of the
infringing or unlawful use of PDL Patent Rights with respect to an
Antibody directed against RSV, then MEDIMMUNE shall be entitled to reduce
the royalties payable on Net Sales of Licensed Products in that country
as follows: (a) by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) if
MEDIMMUNE's market share is reduced by (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED) up to CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), and (b) by
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) if MEDIMMUNE's market share is
reduced by CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) or more; provided
that the royalty rate on Net Sales of Licensed Products in that country
shall revert to the applicable royalty rate under Section 3.03 at such
time as the infringement is abated.
5. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.01 Valid Agreement. Each party represents and warrants to the other
that it knows of no legal reason to prevent it from entering into this
Agreement and that the signatory hereto is duly authorized to execute and
deliver this Agreement. In addition, PDL represents and warrants that it
is the owner of the PDL Patent Rights.
5.02 No Warranty of Validity, Non-Infringement. Nothing in this
Agreement shall be construed as (a) a warranty or representation by PDL
as to the validity or scope of any PDL Patent Rights; or (b) a warranty
or representation that any Licensed Product made, used, sold or otherwise
disposed of under the license granted in this Agreement is or will be
free from infringement of patents, copyrights, trademarks, trade secrets
or other rights of third parties.
5.03 No Other Warranties. EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE
5, PDL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, WITH RESPECT TO ANY CELL LINES, ANTIBODIES, LICENSED PRODUCTS
DEVELOPED BY MEDIMMUNE UNDER THE LICENSE SET FORTH IN THIS AGREEMENT AND
PDL FURTHER MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF ANY CELL LINES,
ANTIBODIES, LICENSED PRODUCTS OR OTHER MATERIALS DEVELOPED BY MEDIMMUNE
UNDER THE LICENSE SET FORTH IN THIS AGREEMENT WILL NOT INFRINGE ANY THIRD
PARTY RIGHTS.
5.04 Indemnification. MEDIMMUNE shall at all times, during the term
of this Agreement and thereafter, defend, indemnify and hold harmless PDL
and its Affiliates, sublicensees, directors, officers, agents and
employees from any third party claim, proceeding, loss, expense, and
liability of any kind whatsoever (including but not limited to those
resulting from death, personal injury, illness or property damage and
including legal expenses and reasonable attorneys' fees) arising out of
or resulting from the development, manufacture, holding, use, testing,
advertisement, sale or other disposition by MEDIMMUNE, its Affiliates or
sublicensees, or any distributor, customer or representative of MEDIMMUNE
or any one in privity therewith, of any Licensed Product. PDL shall give
MEDIMMUNE prompt notice of any such claim, proceeding or action and
MEDIMMUNE shall control the defense, settlement or compromise of any such
claim, proceeding or action; provided that the control granted to
MEDIMMUNE hereunder shall not include any right to grant licenses or
sublicenses under the PDL Patent Rights without the prior written consent
of PDL, which consent may be withheld in PDL's sole discretion.
6. CONFIDENTIALITY
6.01 Confidentiality. PDL and MEDIMMUNE acknowledge that in the
course of negotiations and furtherance of the interests of the parties
hereunder that it ("Recipient") may receive confidential information of
the other party ("Provider"). "Confidential Information" means any and
all data and information which (a) has been reduced to tangible form and
marked clearly and conspicuously with a legend identifying its
confidential or proprietary nature; or (b) with respect to any oral
presentation or communication, is designated as confidential immediately
before, during, or within a reasonable time after the oral presentation
or communication and such designation is subsequently confirmed in
writing; or (c) is otherwise characterized by Provider as confidential
information.
6.02 Limitations on Use; Information Not Considered Confidential.
Except as expressly provided in Section 8.03(a), each party shall keep
confidential, and shall not use the Confidential Information of the other
party for any purpose other than the development and commercial
exploitation of Licensed Products in the Territory, during the term of
this Agreement and for five (5) years after termination hereof, all
Confidential Information heretofore and hereafter supplied by the other,
provided however, that the foregoing obligation of confidentiality shall
not apply to the extent that any Confidential Information (a) is already
known to the recipient at the time of disclosure or is developed by
recipient thereafter in the course of work entirely independent of any
disclosure by the other party; (b) is publicly known prior to or becomes
publicly known after disclosure other than through acts or omissions of
the recipient; (c) is disclosed in good faith to recipient by a third
party under a reasonable claim of right, or (d) is required to be
disclosed pursuant to an order of a court of law or governmental agency;
provided that the disclosing party shall advise the other party promptly
of any such disclosure requirement in order to permit such other party to
undertake efforts to restrict or limit the required disclosure.
7. TERM AND TERMINATION
7.01 Term. Unless earlier terminated as provided in this Article 7,
this Agreement shall come into force on the date first set forth above
and shall continue until the expiration of the obligation to pay
royalties to PDL in accordance with Article 3 above. Thereafter, this
Agreement shall terminate and all licenses or sublicenses granted
hereunder shall become fully paid-up, irrevocable licenses.
7.02 Termination.
(a) This Agreement may be terminated by MEDIMMUNE (I) immediately
upon written notice that it is terminating further development of MEDI-
493 (or any successor thereto); or (II) for convenience on thirty (30)
days prior written notice.
(b) If either party shall at any time default in the payment of any
royalty, or the making of any report hereunder, or shall commit any
material breach of any covenant or agreement herein contained or shall
make any false report, and shall fail to have initiated and actively
pursued remedy of any such default or breach within (I) in the case of
default in payment, ten (10) days, and (II) in all other cases of default
or breach, thirty (30) days after receipt of written notice thereof by
the other party, that other party may, at its option, cancel this
Agreement and revoke any rights and licenses herein granted and directly
affected by the default or breach by notice in writing to such effect,
but such act shall not prejudice the right of the party giving notice to
recover any royalty or other sums due at the time of such cancellation,
it being understood, however, that if within the specified cure period
after receipt of any such notice the receiving party shall have initiated
and actively pursued remedy of its default, then the rights and licenses
herein granted shall remain in force as if no breach or default had
occurred on the part of the receiving party, unless such breach or
default is not in fact remedied within a reasonable period of time.
(c) This Agreement may be terminated by either party upon the
occurrence of any of the following which is not stayed or vacated within
ninety (90) days of such occurrence: (i) petition in bankruptcy filed by
or against the other party; (ii) adjudication of the other party as
bankrupt or insolvent; (iii) appointment of a liquidator, receiver or
trustee for all or a substantial part of the other party's property; or
(iv) an assignment for the benefit of creditors of the other party.
7.03 No Waiver. The right of either party to terminate this
Agreement as provided herein shall not be affected in any way by its
waiver of, or failure to take action with respect to, any previous
failure to perform hereunder.
7.04 Survival. Termination for any reason hereunder shall not
affect any accrued rights or obligations of the parties arising in any
manner under this Agreement as of the date of termination. In any event,
the confidentiality and indemnity obligations and any accrued payment
obligations under Articles 3, 5 and 6 shall survive any termination of
this Agreement.
7.05 Direct License. In the event that this Agreement terminates,
any sublicense granted under the terms of Section 2.02 hereunder shall,
upon the written request of the sublicensee, become a direct license
between PDL and that sublicensee so long as the (a) sublicense does not
impose obligations on PDL beyond those set forth in this Agreement, and
(b) sublicensee is not in breach of its sublicense agreement or, mutatis
mutandis, the terms of this Agreement.
8. MISCELLANEOUS
8.01 Force Majeure. Neither party shall be responsible to the other
for failure or delay in performing any of its obligations under this
Agreement or for other non-performance hereof provided that such delay or
non-performance is occasioned by a cause beyond the reasonable control
and without fault or negligence of such party, including, but not limited
to earthquake, fire, flood, explosion, discontinuity in the supply of
power, court order or governmental interference, act of God, strike or
other labor trouble and provided that such party will inform the other
party as soon as is reasonably practicable and that it will entirely
perform its obligations immediately after the relevant cause has ceased
its effect.
8.02 Validity. Should one or several provisions of the Agreement be
or become invalid, then the parties hereto shall substitute such invalid
provisions by valid ones, which in their economic effect come so close to
the invalid provisions that it can be reasonably assumed that the parties
would have contracted this Agreement with those new provisions. In the
event that such provisions cannot be determined or are legally
impermissible, the invalidity of one or several provisions of the
Agreement shall not affect the validity of the Agreement as a whole,
unless the invalid provisions are of such essential importance for this
Agreement that it is to be reasonably assumed that the parties would not
have contracted this Agreement without the invalid provisions.
8.03 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
8.04 Notices. Any notice or report required or permitted to be given
under this Agreement shall be in writing and shall be sent by expedited
delivery or telecopied and confirmed by mailing, as follows and shall be
effective three (3) days after such delivery:
If to PDL: Protein Design Labs, Inc.
2375 Garcia Avenue
Mt. View, California 94043 USA
Attention: Chief Executive Officer
Copy to: Protein Design Labs, Inc.
2375 Garcia Avenue
Mt. View, California 94043 USA
Attention: General Counsel
If to MEDIMMUNE: MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, MD 20878
Attention: Chief Executive Officer
Copy to: Elliot M. Olstein, Esq.
Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, NJ 07068
8.05 Governing Law. The validity, performance, construction, and
effect of this Agreement shall be governed by the laws of the State of
California without regard to choice of law principles .
8.06 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with respect to the within subject
matter and supersedes all previous Agreements, whether written or oral.
This Agreement shall not be changed or modified orally, but only by an
instrument in writing signed by both parties.
8.07 Assignment. The rights of either party under this Agreement may
not be assigned, and the duties of either party under this Agreement may
not be delegated, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided however, that
either party may assign this Agreement without prior written consent to a
party which acquires all or substantially all of the assignor's business,
whether by merger, sale of assets or otherwise.
8.08 Publicity. PDL may issue a press release identifying the identity
of MEDIMMUNE, the parties' entry into this Agreement, with the content of
such release to be approved in advance by MEDIMMUNE, which approval shall
not be unreasonably withheld. Except as required by law, neither party
shall publicly disclose the terms and conditions of this Agreement unless
expressly authorized to do so by the other party, which authorization shall
not be unreasonably withheld. In the event that it is determined that a
disclosure shall be made by either or both of the parties hereunder, then
the parties will work together to develop a mutually acceptable disclosure.
MEDIMMUNE agrees to provide PDL with press releases or other information
regarding the development status of the Licensed Products hereunder;
provided that PDL shall have no obligation to publicly update the status of
any Licensed Product.
8.09 Headings. The captions used herein are inserted for convenience of
reference only and shall not be construed to create obligations, benefits,
or limitations.
8.10 Export. Each party acknowledges that the laws and regulations of
the United States restrict the export and re-export of commodities and
technical data of United States origin. Each party agrees that it will
not export or re-export restricted commodities or the technical data of
the other party in any form without the appropriate United States and
foreign government licenses.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PDL: MEDIMMUNE:
PROTEIN DESIGN LABS, INC. MEDIMMUNE, INC.
By: (SIGNATURE) By: (SIGNATURE)
/S/Jon Saxe /s/David M. Mott
Title: President Title: President and Chief Operating
Officer
EXHIBIT A
PDL Patent Rights
The following are patents (the "Queen Patent") issued in certain countries
in the world as of the Effective Date and licensed under the Agreement. The
Queen Patent shall expressly include any patent applications and foreign
counterparts thereto filed by PDL before or during the term of this
Agreement.
1. European Patent number 0451216B1, Queen, "Humanized Immunoglobulins and
their production and use".
2. U.S. patent application number 5,530,101, Queen, "Improved Humanized
Immunoglobulins".
3. U.S. patent continuations, continuations-in-part, and divisional
applications numbers (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)of issued
U.S. patent number 5,530,101, Queen, "Improved Humanized Immunoglobulins".
4. Japan patent application number (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED), Queen, "Improved Humanized Immunoglobulins".
EXHIBIT 10.74
PATENT LICENSE AGREEMENT
between
PROTEIN DESIGN LABS, INC.
and
MEDIMMUNE, INC.
This Agreement ("Agreement"), effective as of July 17, 1997 ("Effective
Date"), is made by and between PROTEIN DESIGN LABS, INC., a Delaware
corporation having offices at 2375 Garcia Avenue, Mountain View, CA 94043,
USA (hereinafter "PDL") and MEDIMMUNE, INC., a Delaware corporation, having
offices at 35 West Watkins Mill Road, Gaithersburg, MD 20878 (hereinafter
"MEDIMMUNE").
RECITALS
A. MEDIMMUNE desires to license certain patents owned or controlled by PDL
related to a humanized antibody directed against CD-2 for the treatment of
acute organ rejection, transplantation and autoimmunity, which antibody has
involved significant development efforts undertaken by MEDIMMUNE (including
without limitation that certain antibody known as "MEDI-507"); and
B. PDL is willing to license to MEDIMMUNE such rights under the terms and
conditions of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound, the parties agree as follows:
1. DEFINITIONS
All references to Exhibits, Articles and Sections shall be references to
Exhibits, Articles and Sections of this Agreement. In addition, except as
otherwise expressly provided herein, the following terms in this Agreement
shall have the following meanings:
1.01 "Affiliate" means, with respect to a party hereto, any corporate or
other entity which, directly or indirectly, controls, is controlled by, or is
under common control with such party where "control" means the ownership of
not less than 50% of the voting shares of a corporation, or decision-making
authority as to an unincorporated entity.
1.02 "Combination Product(s)" shall mean any product containing both a
pharmaceutically active agent or ingredient which constitutes a Licensed
Product and one or more other pharmaceutically active agents or ingredients
which do not constitute Licensed Products.
1.03 "Field" means the field of human prophylaxis and therapy.
1.04 "Licensed Product(s)" shall mean an Antibody for which MEDIMMUNE has
undertaken significant development efforts (e,g., conducted or sponsored a
human clinical trial), which product is an Antibody that binds to CD-2
(including without limitation, the MEDI-507 product of MEDIMMUNE or
MEDIMMUNE's sublicensees and any modifications or improvements) whose
development, importation, manufacture, use or sale would, but for a license
under this Agreement, infringe a Valid Claim. "Antibody" as used in the
preceding sentence shall include, without limitation, monospecific and
bispecific antibodies; less than full-length antibody forms such as Fv, Fab,
and F(ab')(2); single-chain antibodies; and antibody conjugates bound to a
toxin, label or other moiety.
1.05 "Net Sales" shall mean the aggregate gross revenues, whether in cash
or in kind, derived by or payable from or on account of the sale of Licensed
Products, less an allowance of Five Percent (5%) to cover factors such as (a)
credits or allowances, if any, actually granted on account of price
adjustments, recalls, rejection or return of items previously sold, (b)
excise and sales taxes, duties or other taxes imposed on and paid with
respect to such sales (excluding income or franchise taxes of any kind) and
(c) outer packing, freight and freight insurance costs. If MEDIMMUNE or any
of its Affiliates or sublicensees receive non-cash consideration for any
Licensed Product sold or otherwise transferred to an independent third party
not an Affiliate of the seller or transferor, the fair market value of such
non-cash consideration on the date of such transfer as known to MEDIMMUNE,
or as reasonably estimated by MEDIMMUNE if unknown, shall be included in the
definition of Net Sales.
1.06 "PDL Patent Rights" means the patents (as well as any foreign
counterparts or patent applications thereto) identified on Exhibit A,
including any addition, continuation, continuation-in-part or division
thereof or any substitute application therefor; any patent issued with
respect to such patent application, any reissue, extension or patent term
extension of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent.
1.07 "Territory" means the world.
1.08 "Valid Claim" means any claim in any issued patent included in the
PDL Patent Rights which has not been disclaimed or held unenforceable or
invalid by a governmental agency or court of competent jurisdiction by a
decision beyond right of review.
2. LICENSE
2.01 License Grant. Subject to the terms and conditions of this
Agreement, PDL hereby grants and MEDIMMUNE hereby accepts a nonexclusive
license under the PDL Patent Rights limited to the Field and Territory,
including the right to grant sublicenses (subject to Section 2.02), to make,
import, have made, use or sell Licensed Products.
2.02 Limitation on Sublicenses; Notification of Grant of Sublicense.
MEDIMMUNE shall have the right to grant sublicenses of its rights under
Section 2.01 only in connection with the assignment or license by it of a
Licensed Product to a third party and only with respect to that Licensed
Product. Promptly following execution of any sublicense hereunder, but in
any event not less than ten (10) days thereafter, MEDIMMUNE shall notify PDL
of the identity of the sublicensee and the scope of the sublicense. In any
event, the grant a sublicense under Section 2.01 shall be on terms and
conditions which are subject to and subordinate to the terms of this
Agreement. With respect to BioTransplant Incorporated ("BioTransplant"), the
right of MEDIMMUNE to grant a sublicense under Section 2.01 shall be on terms
and conditions which are subject to and subordinate to the terms of this
Agreement and shall be evidenced by delivery of a letter from BioTransplant
hereunder substantially in the form attached hereto as Exhibit B.
2.03 Notification of Other Potential Licensee. PDL shall use commercially
reasonable efforts to notify MEDIMMUNE in the event that a third party
proposes to obtain a license under the PDL Patent Rights in the Field.
MEDIMMUNE shall have a period of ten (10) business days from notification to
propose terms for an amendment to this Agreement for an exclusive license in
the Field and Territory. PDL agrees to reasonably consider any proposal to
enter into an amendment to this Agreement for an exclusive license proposed
by MEDIMMUNE, but neither party shall have any obligation to enter into such
amendment.
2.04 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
3. MILESTONE PAYMENTS; ROYALTIES, REPORTS
3.01 Payments. In consideration for the license granted by PDL under
Article 2 of this Agreement MEDIMMUNE shall pay the amounts set forth in this
Section 3.01.
(a) Licensing and Signing Fee. Within ten (10) days following the
execution of this Agreement MEDIMMUNE shall pay to PDL a nonrefundable
signing and licensing fee in the sum of (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED).
(b) Milestone Payments.
i. Initiation of Phase III Clinical Trials(s). Within thirty (30)
days following entry of a Licensed Product into a Phase III clinical trial in
any country in the Territory, CLIENT shall pay to PDL a one time
nonrefundable sum of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
ii. Approval to Market in the U.S. Within thirty (30) days following
the initial approval to market a Licensed Product in the U.S., MEDIMMUNE
shall pay to PDL the nonrefundable sum of (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED).
iii. First Sale in the U.S. Within thirty (30) days following the
initial sale of a Licensed Product that, but for the licenses granted to
MEDIMMUNE under this Agreement would infringe a Valid Claim in the U.S.,
MEDIMMUNE shall pay to PDL the nonrefundable sum of (CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED).
iv. First Sale in Europe. Within thirty (30) days following the
initial sale of a Licensed Product that, but for the licenses granted to
MEDIMMUNE under this Agreement would infringe a Valid Claim in any country in
Europe, MEDIMMUNE shall pay to PDL the nonrefundable sum of (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED).
Each milestone set forth in this Section 3.01 shall be deemed achieved and
the corresponding milestone payment due upon the achievement of the
milestone, whether by MEDIMMUNE, its Affiliates or sublicensees. Any payment
made by MEDIMMUNE for the achievement of any milestone herein shall be paid
by MEDIMMUNE only once.
3.02 Annual Maintenance Fee. In further consideration of the license
granted under Article 2, not later than June 30, 2000 and not later than May
31 each year thereafter, MEDIMMUNE shall pay PDL a nonrefundable annual
maintenance fee in the amount of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
3.03 Royalties to PDL; Credits Against Royalties.
(a) In further consideration of the rights and licenses granted under
Article 2, MEDIMMUNE shall pay to PDL a royalty of (CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED) of the Net Sales of all Licensed Products sold by
MEDIMMUNE or its Affiliates or sublicensees to non-Affiliated third parties
in each country in the Territory until the last date on which there is a
Valid Claim that, but for the licenses granted to MEDIMMUNE under this
Agreement, would be infringed by the making, importing, using, having made or
sale of that Licensed Product in such country in the Territory or by the
manufacture of Licensed Product in the country of manufacture.
(b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
3.04 Sales Among Affiliates. Sales between and among MEDIMMUNE, its
sublicensees and its Affiliates of Licensed Products which are subsequently
resold or to be resold by such sublicensees or Affiliates shall not be
subject to royalty, but in such cases royalties shall accrue and be
calculated on any subsequent sale of such Licensed Products to a non-
affiliated third party.
3.05 Combination Products. Net Sales in a particular country in the
Territory, in the case of Combination Products for which the pharmaceutically
active agent or ingredient constituting a Licensed Product and each of the
other pharmaceutically active agents or ingredients not constituting Licensed
Products have established market prices in that country in the Territory when
sold separately, shall be determined by multiplying the Net Sales for each
such Combination Product by a fraction, the numerator of which shall be the
established market price for the Licensed Product(s) contained in the
Combination Product and the denominator of which shall be the sum of the
established market prices for the Licensed Product(s) plus the established
market prices for the other pharmaceutically active agents or ingredients
contained in the Combination Product. When such separate market prices are
not established in that country in the Territory, then the parties shall
negotiate in good faith to determine a fair and equitable method of
calculating Net Sales in that country for the Combination Product in
question.
3.06 Withholding.
(a) Payments. MEDIMMUNE shall pay all amounts payable to PDL under
Section 3.01 and Section 3.02 from a U.S. bank account. Any deductions for
any taxes or other withholding that may be applicable to the payments to PDL
under Sections 3.01 and 3.02 shall be promptly paid by MEDIMMUNE to the
appropriate governmental authority and MEDIMMUNE shall provide proof of
payment to PDL.
(b) Royalty Payments. MEDIMMUNE may withhold from royalties due to PDL
amounts for payment of any withholding tax that MEDIMMUNE has paid to any
taxing authority with respect to royalties due on account of the sale or
manufacture of Licensed Products in the Territory. MEDIMMUNE agrees to
reasonably cooperate with PDL in obtaining a foreign tax credit in the U.S.
with respect to royalties due to PDL on the sale or manufacture of Licensed
Products.
3.07 Currency Conversion. All amounts payable to PDL under this Agreement
shall be payable in U.S. Dollars by wire transfer to-a bank account
designated by PDL. In the case of royalties on Net Sales, all amounts
payable shall first be calculated in the currency of sale and then converted
into U.S. Dollars using the average of the daily exchange rates for such
currency quoted by Citibank, N.A. for each of the last fifteen (15) banking
days of each calendar quarter.
3.08 Royalty Reports.
(a) Current Reports. MEDIMMUNE agrees to make written reports and
royalty payments to PDL within forty-five (45) days after the close of each
calendar quarter during the term of this Agreement, beginning with the
calendar quarter in which the date of first commercial sale occurs. These
reports shall show for the calendar quarter in question Net Sales by
MEDIMMUNE, its Affiliates and sublicensees of the Licensed Products in the
Territory on a country-by-country basis, details of the quantities of
Licensed Products sold in each country and the country of manufacture if
different, and the royalty due to PDL thereon pursuant to Article 2.
Concurrently with the making of each such report, MEDIMMUNE shall make any
payment due to PDL of royalties for the period covered by such report.
(b) Termination Report. For each Licensed Product, MEDIMMUNE also
agrees to make a written report to PDL within ninety (90) days after the date
on which MEDIMMUNE, its Affiliates or sublicensees last sell that Licensed
Product in the Territory stating in such report the same information required
by quarterly reports for all such Licensed Products made, sold or otherwise
disposed of which were not previously reported to PDL.
3.09 Inspection MEDIMMUNE agrees to keep clear, accurate and complete
records for a period of at least three (3) years (or such longer period as
may correspond to MEDIMMUNE's internal records retention policy) for each
reporting period in which Net Sales occur showing the manufacturing, sales,
use and other disposition of Licensed Products in the Territory in sufficient
detail to enable the royalties payable hereunder to be determined, and
further agrees to permit its books and records to be examined by an
independent accounting firm selected by PDL and reasonably satisfactory to
MEDIMMUNE, from time-to-time to the extent necessary, during normal business
hours and upon reasonable notice, but not more than once a year. Such
examination is to be made at the expense of PDL, except in the event that the
results of the audit reveal that MEDIMMUNE underpaid PDL by five percent (5%)
or more, then the audit fees shall be paid by MEDIMMUNE. Any such
discrepancies will be promptly corrected by a payment or refund, as
appropriate.
4. PATENT UPDATE
4.01 Updates. Upon the written request of MEDIMMUNE (which request shall
not be made more than once per calendar year), PDL agrees to provide a
written update of the information relating to the PDL Patent Rights as set
forth on Exhibit A.
4.02 Defense of PDL Patent Rights. With respect to the PDL Patent Rights
licensed under this Agreement, PDL at its sole cost and expense agrees to
take all steps and proceedings and to undertake such other acts as PDL may,
in its sole discretion, deem necessary or advisable to restrain any
infringement or improper or unlawful use of the PDL Patent Rights in the
Field and Territory. MEDIMMUNE shall permit PDL to have the sole right to
take such steps, conduct any such proceedings or undertake any such actions
to restrain any infringement or improper or unlawful use of the PDL Patent
Rights in the Territory, whether or not MEDIMMUNE is a party to such steps,
proceedings or actions. Any Moines recovered from alleged infringers shall
be retained by PDL.
4.03 Notification. MEDIMMUNE shall promptly notify PDL in writing of any
actual or suspected infringement of any PDL Patent Right, which notification
shall specify in reasonable detail the nature of such actual or suspected
infringement. If, in MEDIMMUNE's reasonable opinion, PDL has not undertaken
action reasonably designed to restrain any infringement or improper or
unlawful use of the PDL Patent Rights with respect to an Antibody directed
against CD-2 by such third party in the particular country and MEDIMMUNE's
market share of the indications for which Licensed Products are sold in that
country is reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) or more as
a result of the infringing or unlawful use of PDL Patent Rights with respect
to an Antibody directed against CD-2, then MEDIMMUNE shall be entitled to
reduce the royalties payable on Net Sales of Licensed Products in that
country as follows: (a) by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) if
MEDIMMUNE's market share is reduced by (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED) up to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), and (b) by
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) if MEDIMMUNE's market share is
reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) or more; provided that
the royalty rate on Net Sales of Licensed Products in that country shall
revert to the applicable royalty rate under Section 3.03 at such time as the
infringement is abated.
5. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.01 Valid Agreement. Each party represents and warrants to the other
that it knows of no legal reason to prevent it from entering into this
Agreement and that the signatory hereto is duly authorized to execute and
deliver this Agreement. In addition, PDL represents and warrants that it is
the owner of the PDL Patent Rights.
5.02 No Warranty of Validity, Non-Infringement. Nothing in this Agreement
shall be construed as (a) a warranty or representation by PDL as to the
validity or scope of any PDL Patent Rights; or (b) a warranty or
representation that any Licensed Product made, used, sold or otherwise
disposed of under the license granted in this Agreement is or will be free
from infringement of patents, copyrights, trademarks, trade secrets or other
rights of third parties.
5.03 No Other Warranties. EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE 5,
PDL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO ANY CELL LINES, ANTIBODIES, LICENSED PRODUCTS
DEVELOPED BY MEDIMMUNE UNDER THE LICENSE SET FORTH IN THIS AGREEMENT AND PDL
FURTHER MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, OR THAT THE USE OF ANY CELL LINES, ANTIBODIES,
LICENSED PRODUCTS OR OTHER MATERIALS DEVELOPED BY MEDIMMUNE UNDER THE LICENSE
SET FORTH IN THIS AGREEMENT WILL NOT INFRINGE ANY THIRD PARTY RIGHTS.
5.04 Indemnification. MEDIMMUNE shall at all times, during the term of
this Agreement and thereafter, defend, indemnify and hold harmless PDL and
its Affiliates, sublicensees, directors, officers, agents and employees from
any third party claim, proceeding, loss, expense, and liability of any kind
whatsoever (including but not limited to those resulting from death, personal
injury, illness or property damage and including legal expenses and
reasonable attorneys' fees) arising out of or resulting from the development,
manufacture, holding, use, testing, advertisement, sale or other disposition
by MEDIMMUNE, its Affiliates or sublicensees, or any distributor, customer or
representative of MEDIMMUNE or any one in privity therewith, of any Licensed
Product. PDL shall give MEDIMMUNE prompt notice of any such claim,
proceeding or action and MEDIMMUNE shall control the defense, settlement or
compromise of any such claim, proceeding or action; provided that the control
granted to MEDIMMUNE hereunder shall not include any right to grant licenses
or sublicenses under the PDL Patent Rights without the prior written consent
of PDL, which consent may be withheld in PDL's sole discretion.
6. CONFIDENTIALITY
6.01 Confidentiality. PDL and MEDIMMUNE acknowledge that in the course of
negotiations and furtherance of the interests of the parties hereunder that
it ("Recipient") may receive confidential information of the other party
("Provider"). "Confidential Information" means any and all data and
information which (a) has been reduced to tangible form and marked clearly
and conspicuously with a legend identifying its confidential or proprietary
nature; or (b) with respect to any oral presentation or communication, is
designated as confidential immediately before, during, or within a reasonable
time after the oral presentation or communication and such designation is
subsequently confirmed in writing; or (c) is otherwise characterized by
Provider as confidential information.
6.02 Limitations on Use; Information Not Considered Confidential. Except
as expressly provided in Section 8.03(a), each party shall keep confidential,
and shall not use the Confidential Information of the other party for any
purpose other than the development and commercial exploitation of Licensed
Products in the Territory, during the term of this Agreement and for five (5)
years after termination hereof, all Confidential Information heretofore and
hereafter supplied by the other, provided however, that the foregoing
obligation of confidentiality shall not apply to the extent that any
Confidential Information (a) is already known to the recipient at the time
of disclosure or is developed by recipient thereafter in the course of work
entirely independent of any disclosure by the other party; (b) is publicly
known prior to or becomes publicly known after disclosure other than through
acts or omissions of the recipient; (c) is disclosed in good faith to
recipient by a third party under a reasonable claim of right, or (d) is
required to be disclosed pursuant to an order of a court of law or
governmental agency; provided that the disclosing party shall advise the
other party promptly of any such disclosure requirement in order to permit
such other party to undertake efforts to restrict or limit the required
disclosure.
7. TERM AND TERMINATION
7.01 Term. Unless earlier terminated as provided in this Article 7, this
Agreement shall come into force on the date first set forth above and shall
continue until the expiration of the obligation to pay royalties to PDL in
accordance with Article 3 above. Thereafter, this Agreement shall terminate
and all licenses or sublicenses granted hereunder shall become fully paid-up,
irrevocable licenses.
7.02 Termination.
(a) This Agreement may be terminated by MEDIMMUNE (I) immediately upon
written notice that it is terminating further development of MEDI-507 (or any
successor thereto); or (II) for convenience on thirty (30) days prior written
notice.
(b) If either party shall at any time default in the payment of any
royalty, or the making of any report hereunder, or shall commit any material
breach of any covenant or agreement herein contained or shall make any false
report, and shall fail to have initiated and actively pursued remedy of any
such default or breach within (I) in the case of default in payment, ten (10)
days, and (II) in all other cases of default or breach, thirty (30) days
after receipt of written notice thereof by the other party, that other party
may, at its option, cancel this Agreement and revoke any rights and licenses
herein granted and directly affected by the default or breach by notice in
writing to such effect, but such act shall not prejudice the right of the
party giving notice to recover any royalty or other sums due at the time of
such cancellation, it being understood, however, that if within the specified
cure period after receipt of any such notice the receiving party shall have
initiated and actively pursued remedy of its default, then the rights and
licenses herein granted shall remain in force as if no breach or default had
occurred on the part of the receiving party, unless such breach or default is
not in fact remedied within a reasonable period of time.
(c) This Agreement may be terminated by either party upon the
occurrence of any of the following which is not stayed or vacated within
ninety (90) days of such occurrence: (i) petition in bankruptcy filed by or
against the other party; (ii) adjudication of the other party as bankrupt or
insolvent; (iii) appointment of a liquidator, receiver or trustee for all or
a substantial part of the other party's property; or (iv) an assignment for
the benefit of creditors of the other party.
7.03 No Waiver. The right of either party to terminate this Agreement
as provided herein shall not be affected in any way by its waiver of, or
failure to take action with respect to, any previous failure to perform
hereunder.
7.04 Survival. Termination for any reason hereunder shall not affect
any accrued rights or obligations of the parties arising in any manner under
this Agreement as of the date of termination. In any event, the
confidentiality and indemnity obligations and any accrued payment obligations
under Articles 3, 5 and 6 shall survive any termination of this Agreement.
7.05 Direct License. In the event that this Agreement terminates, any
sublicense granted under the terms of Section 2.02 hereunder shall, upon the
written request of the sublicensee, become a direct license between PDL and
that sublicensee so long as the (a) sublicense does not impose obligations on
PDL beyond those set forth in this Agreement, and (b) sublicensee is not in
breach of its sublicense agreement or, mutatis mutandis, the terms of this
Agreement.
8. MISCELLANEOUS
8.01 Force Majeure. Neither party shall be responsible to the other for
failure or delay in performing any of its obligations under this Agreement or
for other non-performance hereof provided that such delay or non-performance
is occasioned by a cause beyond the reasonable control and without fault or
negligence of such party, including, but not limited to earthquake, fire,
flood, explosion, discontinuity in the supply of power, court order or
governmental interference, act of God, strike or other labor trouble and
provided that such party will inform the other party as soon as is reasonably
practicable and that it will entirely perform its obligations immediately
after the relevant cause has ceased its effect.
8.02 Validity. Should one or several provisions of the Agreement be or
become invalid, then the parties hereto shall substitute such invalid
provisions by valid ones, which in their economic effect come so close to the
invalid provisions that it can be reasonably assumed that the parties would
have contracted this Agreement with those new provisions. In the event that
such provisions cannot be determined or are legally impermissible, the
invalidity of one or several provisions of the Agreement shall not affect the
validity of the Agreement as a whole, unless the invalid provisions are of
such essential importance for this Agreement that it is to be reasonably
assumed that the parties would not have contracted this Agreement without the
invalid provisions.
8.03 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
8.04 Notices. Any notice or report required or permitted to be given
under this Agreement shall be in writing and shall be sent by expedited
delivery or telecopied and confirmed by mailing, as follows and shall be
effective three (3) days after such delivery:
If to PDL: Protein Design Labs, Inc.
2375 Garcia Avenue
Mt. View, California 94043 USA
Attention: Chief Executive Officer
Copy to: Protein Design Labs, Inc.
2375 Garcia Avenue
Mt. View, California 94043 USA
Attention: General Counsel
If to MEDIMMUNE: MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, MD 20878
Attention: Chief Executive Officer
Copy to: Elliot M. Olstein, Esq.
Carella, Byrne, Bain, Gilfillan, Cecchi,
Stewart & Olstein
6 Becker Farm Road
Roseland, NJ 07068
8.05 Governing Law. The validity, performance, construction, and effect
of this Agreement shall be governed by the laws of the State of California
without regard to choice of law principles .
8.06 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with respect to the within subject matter and
supersedes all previous Agreements, whether written or oral. This Agreement
shall not be changed or modified orally, but only by an instrument in writing
signed by both parties.
8.07 Assignment. The rights of either party under this Agreement may not
be assigned, and the duties of either party under this Agreement may not be
delegated, without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided however, that either
party may assign this Agreement without prior written consent to a party
which acquires all or substantially all of the assignor's business, whether
by merger, sale of assets or otherwise.
8.08 Publicity. PDL may issue a press release identifying the identity of
MEDIMMUNE, the parties' entry into this Agreement , with the content of such
release to be approved in advance by MEDIMMUNE, which approval shall not be
unreasonably withheld. Except as required by law, neither party shall
publicly disclose the terms and conditions of this Agreement unless expressly
authorized to do so by the other party, which authorization shall not be
unreasonably withheld. In the event that it is determined that a disclosure
shall be made by either or both of the parties hereunder, then the parties
will work together to develop a mutually acceptable disclosure. MEDIMMUNE
agrees to provide PDL with press releases or other information regarding the
development status of the Licensed Products hereunder; provided that PDL
shall have no obligation to publicly update the status of any Licensed
Product.
8.09 Headings. The captions used herein are inserted for convenience of
reference only and shall not be construed to create obligations, benefits, or
limitations.
8.10 Export. Each party acknowledges that the laws and regulations of the
United States restrict the export and re-export of commodities and technical
data of United States origin. Each party agrees that it will not export or
re-export restricted commodities or the technical data of the other party in
any form without the appropriate United States and foreign government
licenses.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
PDL: MEDIMMUNE:
PROTEIN DESIGN LABS, INC. MEDIMMUNE, INC.
By: (SIGNATURE) By: (SIGNATURE)
/s/Jon Saxe /s/David M. Mott
Title: President Title: President and Chief Operating Officer
EXHIBIT A
PDL Patent Rights
The following are patents (the "Queen Patent") issued in certain countries in
the world as of the Effective Date and licensed under the Agreement. The Queen
Patent shall expressly include any patent applications and foreign counterparts
thereto filed by PDL before or during the term of this Agreement.
1. European Patent number 0451216B1, Queen, "Humanized Immunoglobulins and
their production and use".
2. U.S. patent application number 5,530,101, Queen, "Improved Humanized
Immunoglobulins".
3. U.S. patent continuations, continuations-in-part, and divisional
applications numbers (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of issued U.S.
patent number 5,530,101, Queen, "Improved Humanized Immunoglobulins".
4. Japan patent application number (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED),
Queen, "Improved Humanized Immunoglobulins".
EXHIBIT B
Form of Letter from BioTransplant Incorporated to PDL
[Letterhead]
Date
Protein Design Labs, Inc.
2375 Garcia Avenue
Mountain View, CA 94043
Attn: Vice President, Licensing
and Corporate Services
Re: Acknowledgment of Terms of Sublicense
Dear Sir:
The undersigned duly authorized representative of BioTransplant Incorporated, is
a sublicensee ("Sublicensee") of MedImmune, Inc. ("MedImmune") pursuant to that
certain Patent License Agreement dated as of July , 1997 ("Agreement") with
respect to the grant of a license under certain patents of PDL which cover an
anti CD-2 product designated as "MEDI-507" ("Licensed Product"). A condition to
the grant of a sublicense is the delivery of this letter.
Sublicensee hereby acknowledges and agrees to be bound by the applicable terms
and conditions of the Agreement, excepting licensing and signing fees and
milestones but including without limitation the obligation to pay royalties to
PDL directly with respect to the making, importing, using and selling of
Licensed Products. Sublicensee further agrees that Protein Design Labs, Inc. is
a third party beneficiary of the agreement between MedImmune and Sublicensee
with respect to the rights sublicensed to Sublicensee.
Very truly yours,
BioTransplant Incorporated
By
Title
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIMMUNE,
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