UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from: ________________ to _______________
Commission file number: 0-5958
MERIDIAN MEDICAL TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-0898764
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
10240 Old Columbia Road, Columbia, Maryland 21046
- ------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 410-309-6830
------------
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of December 15, 1999
- ---------------------------- -----------------------------------
Common Stock, $.10 par value 2,994,930 Shares
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
<TABLE>
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Page No.
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PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
October 31, 1999 and July 31, 1999............................................................... 4
Consolidated Statements of Operations for
the Three Months Ended October 31, 1999 and 1998 ................................................ 5
Consolidated Statements of Cash Flows for
the Three Months Ended October 31, 1999 and 1998................................................. 6
Notes to Consolidated Financial Statements.......................................................... 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................. 8
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk.......................................... 11
PART II. OTHER INFORMATION
- --------------------------
ITEM 6. Exhibits and Reports on Form 8-K................................................................... 12
SIGNATURES.......................................................................................................... 13
EXHIBIT INDEX....................................................................................................... 14
</TABLE>
2
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
INTRODUCTION
Meridian Medical Technologies, Inc. ("MMT', "Meridian", or the "Company") is a
medical device and drug delivery system company focusing on Early Intervention
Healthcare and Emergency Medical Technologies. The Company has three areas of
business. The Injectable Drug Delivery Systems business focuses on injectable
drug delivery devices with an emphasis on commercial auto-injectors. This
business also supplies customized drug delivery system design, pharmaceutical
research and development, and sterile product manufacturing to pharmaceutical
and biotechnology companies. The Cardiopulmonary Systems business focuses on
non-invasive cardiac diagnostics and telemedicine. The Cardiopulmonary Systems
business is preparing to begin the European distribution phase for the PRIME ECG
system, an 80-lead cardiac mapping system designed for rapid and improved
diagnostic accuracy of cardiac ischemia. Multiple distributors in major western
European markets are being targeted and, subject to the completion of
negotiations and execution of distribution agreements, will become distributors
of the system over the coming months. A U.S. based FDA clinical study of the
PRIME ECG system began in November 1999. Meridian intends to complete the U.S.
clinical study by the fourth quarter of fiscal 2000. Subject to a successful
completion of the clinical, a 510(k) application will be made to the FDA for
approval to market the product in the U.S. The Government Systems business
focuses on the world-wide market for auto-injectors used for self-administration
of nerve agent antidotes, morphine and diazepam, and markets to the U.S. and
allied governments, as well as local governments for civil defense applications.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act with respect to financial performance
and other financial and business matters. Forward-looking statements are
typically identified by future or conditional verbs or similar expressions
regarding events that have yet to occur. These forward-looking statements are
based on the Company's current expectations and are subject to numerous
assumptions, risks and uncertainties. The following factors, among others, could
cause actual results to differ materially from forward-looking statements: (i)
economic and competitive conditions in markets and countries where the Company
offer products and services; (ii) changes in capital availability or costs;
(iii) fluctuations in demand, including changes in government procurement
policy; (iv) technological challenges associated with the development and
manufacture of current and anticipated products; (v) commercial acceptance of
auto-injectors and competitive pressure from traditional and new drug delivery
methods; (vi) delays, costs and uncertainties associated with government
approvals required to market new drugs and medical devices; (vii) availability
of raw materials in adequate quantities at reasonable prices and sufficient
quality; (viii) costs of the Company's EpiPen voluntary recall and/or EpiEZPen
voluntary product exchange associated with differences from management's
estimate of the number of returned units, total costs or adverse impact on
future sales; (ix) success and timing of cost reduction programs; (x) adequacy
of product liability insurance; (xi) factors related to PRIME ECG including
successful product completion, results of clinical testing and applications for
regulatory approvals, degree of market acceptance and ability to obtain
strategic alliances; (xii) expiration of patents and the ability of competitors
to design around the Company's patent protection; and (xiii) factors relating to
Year 2000 issues. Additional information is included in our Annual Report on
Form 10-K. Meridian assumes no duty to update forward-looking statements.
3
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
PART I. FINANCIAL INFORMATION
- -----------------------------
ITEM 1. Financial Statements
MERIDIAN MEDICAL TECHNOLOGIES, INC.
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands, except share data)
---------------------------------
<TABLE>
<CAPTION>
October 31, July 31,
Assets 1999 1999
------ ----------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 432 $ 227
Restricted cash 280 278
Receivables, less allowances of $544 and $467, respectively 9,624 9,557
Inventories 8,122 6,889
Deferred income taxes 1,965 1,965
Prepaid income taxes 316 546
Other current assets 700 771
---------- ----------
Total current assets 21,439 20,233
---------- ----------
Property, plant and equipment 21,835 21,407
Less - Accumulated depreciation 5,996 5,581
---------- ----------
Net property, plant and equipment 15,839 15,826
---------- ----------
Deferred financing fees 738 749
Capitalized software costs 1,588 1,588
Excess of cost over net assets acquired, net 7,138 7,403
Other intangible assets, net 1,869 1,952
---------- ----------
Total assets $ 48,611 $ 47,751
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $ 7,693 $ 7,080
Note payable to bank 7,403 7,317
Customer deposits 54 54
Current portion of long-term debt 1,370 1,409
---------- ----------
Total current liabilities 16,520 15,860
---------- ----------
Long-term debt - notes payable, net of discount 17,393 17,582
Long-term debt - other 33 57
Deferred income taxes 1,793 1,793
Other non-current liabilities 754 721
Shareholders' equity:
Common stock
Par value $.10 per share; 18,000,000 shares authorized;
2,994,930 and 2,994,930 shares issued and outstanding 299 299
Additional capital 32,187 32,187
Cumulative translation adjustment 3 (14)
Accumulated deficit (20,097) (20,451)
Unearned stock option compensation (61) (70)
Treasury stock, at cost (213) (213)
---------- ----------
Total shareholders' equity 12,118 11,738
---------- ----------
Total liabilities and shareholders' equity $ 48,611 $ 47,751
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
MERIDIAN MEDICAL TECHNOLOGIES, INC.
-----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(In thousands, except per share data)
-------------------------------------
Three Months Ended
October 31,
1999 1998
---- ----
Net sales $ 11,755 $ 10,850
Cost of sales 7,067 6,673
--------- ---------
Gross profit 4,688 4,177
Selling, general, and administrative expenses 1,883 1,830
Research and development expenses 517 248
Depreciation and amortization 806 902
--------- ---------
3,206 2,980
--------- ---------
Operating income 1,482 1,197
Other (expense) income:
Interest expense (843) (848)
Other (expense) income (58) 10
--------- ---------
(901) (838)
--------- ---------
Income before income taxes 581 359
Provision for income taxes 227 93
--------- ---------
Net income $ 354 $ 266
========= =========
Net income per share:
Basic $ .12 $ .09
========= =========
Diluted $ .11 $ .08
========= =========
Weighted average shares:
Basic 2,994 2,991
Diluted 3,189 3,281
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
MERIDIAN MEDICAL TECHNOLOGIES, INC.
-----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
--------------
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 354 $ 266
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 806 902
Amortization of notes payable discount and deferred
financing fees 92 111
Changes in assets and liabilities
Receivables (144) (922)
Inventories (1,233) (2,379)
Other current assets 301 27
Accounts payable and other accrued liabilities 646 48
Other 60 48
---------- -----------
Net cash provided by (used for) operating activities 882 (1,899)
INVESTING ACTIVITIES
Purchase of fixed assets (428) (265)
(Increase) decrease in restricted cash (2) (2)
---------- -----------
Net cash used for investing activities (430) (267)
FINANCING ACTIVITIES
Net proceeds from line of credit 86 2,303
Net (payment) on long-term debt (313) -
Net (payment) proceeds on other long-term debt - (83)
Payment of financing fees (20) -
---------- -----------
Net cash provided by (used for) financing activities (247) 2,220
---------- -----------
Net increase in cash 205 54
Cash at beginning of period 227 284
---------- -----------
Cash at end of period $ 432 $ 338
========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the Company's financial
position as of October 31, 1999, and the results of its operations and
cash flows for the three month periods ended October 31, 1999 and 1998.
The results of operations for the three month period ended October 31,
1999 are not necessarily indicative of the results that may be expected
for the fiscal year ending July 31, 2000.
2. Inventories consisted of the following:
October 31, July 31,
1999 1999
---- ----
Components and subassemblies $ 5,320 $ 3,667
Work in process 2,587 3,325
Finished goods 553 335
---------- ---------
8,460 7,327
Less: inventory valuation allowance (338) (438)
---------- ---------
$ 8,122 $ 6,889
========== =========
3. A reconciliation of net income to comprehensive income is as follows:
Three Months Ended October 31,
1999 1998
---- ----
Net income $ 354 $ 266
Foreign exchange translation adjustment 17 60
------ ------
Comprehensive income $ 371 $ 326
====== ======
7
<PAGE>
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Quarter in Review
MMT's net income was $354,000($.12 basic and $.11 diluted earnings per share) on
sales of $11.8 million for the quarter ended October 31, 1999, the first quarter
of fiscal 2000. This compares with net income of $266,000 ($0.09 basic and $.08
diluted earnings per share) on sales of $10.9 million in the same period of
fiscal 1999.
This represents a 33% increase in net income and an 8% increase in sales.
Revenues of MMT's three areas of business and total gross profit for the
quarters ended October 31, 1999 and 1998 are as follows:
Three months ended October 31,
($thousands) 1999 1998
---- ----
Drug Delivery Systems $ 6,123 $ 6,021
Government Systems 5,491 4,676
Cardiopulmonary Systems 141 153
----------- -----------
Total Revenues 11,755 10,850
=========== ===========
Gross Profit $ 4,688 $ 4,177
=========== ===========
Gross Profit % 39.9% 38.5%
Drug Delivery Systems business revenue in the fiscal first quarter ended October
31, 1999 was $6.1 million, $0.1 million higher than in the comparable prior year
period. The 2% increase in revenue resulted from a consistent level of EpiPen
sales and higher R&D and pharmaceutical manufacturing revenues. First quarter
activities of the Drug Delivery Systems business included a continuation of the
FDA approval process for generic drugs under the alliance with Mylan
Laboratories with revenues continuing into fiscal 2000. This resulted in the
approval of the third generic drug in November 1999. The Company believes
demand for the EpiPen product line is strong and expects sales to reach a record
level in fiscal 2000.
Government Systems revenues were $5.5 million in the first quarter of fiscal
2000 compared to $4.7 million in the prior year comparable period. The 17%
higher revenues resulted primarily from increased fees under the renewed base
maintenance contract with the U.S. DoD, as well as higher sales to foreign
governments. The Company continues to develop the multi-chambered auto-injector
(MA), the next-generation military drug delivery system. The MA features a dual
chamber that allows the automatic injection of two drugs in succession using the
same device. A New Drug Application (NDA) for the MA has been submitted to the
FDA. Production is anticipated to begin in the first half fiscal 2001, subject
to the requisite approvals and government purchase orders.
Cardiopulmonary Systems revenues were $141,000 in the current year fiscal first
quarter compared to $153,000 in the prior year fiscal first quarter. The
revenues reflected fairly consistent sales of the Company's telemedicine line of
products. MMT received clearance from the FDA of its Investigative Device
Evaluation (IDE) application in September to begin clinical trials on the PRIME
ECG cardiac mapping system. The PRIME ECG is a unique, 80-lead electrocardiac
mapping system that offers the potential to significantly improve the diagnosis
and treatment of heart disease. Clinical trials began in November 1999 at the
Medical College of Virginia, and the Company intends to complete the trials and
submit results to the FDA for marketing approval by the end of fiscal 2000.
Gross profits were $4.7 million or 39.9% of revenues during the first quarter of
2000, up from the 38.5% reported for the prior year comparable period.
8
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
Operating costs were $3.2 million in the fiscal 2000 first quarter, $226,000
higher than in the first quarter of last year. Selling, general and
administrative expenses (SG&A) were at a consistent level with the same period
last year. The Company is not presently capitalizing any software development
costs related to PRIME as the product progresses through U.S. clinical trials.
R&D expenses for the first quarter increased by $269,000 reflecting the absence
of this cost capitalization, which was $373,000 in the first quarter of last
year.
Interest expense was $843,000 in the first quarter of fiscal 2000, consistent
with that of the comparable prior year period.
The provision for income taxes in the first quarter of fiscal 2000 was $227,000
reflecting an estimated effective tax rate of 39% for the year. The tax
provision incorporates estimated benefits from utilization of operating loss
carryforwards, offset by permanent book to tax differences.
Liquidity and Capital Resources
Total cash as of October 31, 1999 was $432,000, an increase of $205,000 from the
prior year ended July 31, 1999. The Company generated $882,000 of cash from
operations in the first quarter of fiscal 2000 attributable mostly to net income
plus non-cash expenses. Investing activities in the three months of fiscal 2000
used $430,000 of cash for capital additions. Financing activities used $247,000,
primarily due to a scheduled principal payment on the term loan from ING
CAPITAL. Availability under the working capital lines of credit was $1.3 million
at October 31, 1999.
Working capital at October 31, 1999 was $4.9 million, up from $4.4 million at
July 31, 1999. The increase was primarily attributable to higher inventories
($1.2 million) partially offset by higher accounts payable and other accrued
liabilities ($613,000). At October 31, 1999, accounts receivable were $9.6
million, representing 73 days-sales-outstanding, and inventories were $8.1
million representing a turn-over rate of 3.8 times per year.
Year 2000
The Company's Program - The Company has undertaken a program to address the Year
2000 issue ("Y2K") with respect to the following: (i) the Company's information
technology and operating systems (including its billing, accounting and
financial reporting systems); (ii) the Company's non-information technology
systems (such as buildings, plant, equipment and other infrastructure systems
that may contain embedded micro-controller technology); (iii) certain systems of
the Company's major suppliers and material service providers (insofar as such
systems relate to the Company's business activities with such parties); and (iv)
the Company's major distributors (insofar as the Year 2000 issue relates to the
ability of such distributors to distribute the Company's products). As described
below, the Company's Year 2000 program involves (i) an assessment of the Year
2000 problems that may affect the Company, (ii) the development of remedies to
address the problems discovered in the assessment phase, (iii) the testing of
such remedies and (iv) the preparation of contingency plans to deal with worst
case scenarios.
Assessment Phase - As part of the assessment phase of its program, the Company
has attempted to identify substantially all of the major components of the
systems described above. In order to determine the extent that such systems are
vulnerable to the Year 2000 issue, a Y2K three-tier matrix was applied to MMT
systems. Tier-one systems are mission critical and tier-two systems are critical
business operations. Mission-critical (Tier 1) can be defined as extended
downtime (1+ hr.) for 30 or more employees. Downtime for 5-30 employees lasting
from 2 to 24 hours is categorized as critical (Tier 2). The last tier, three, is
for productivity systems that are important to the ongoing improvement of the
business; MMT however, could operate without these systems for a period of time
(days).
Remediation and Testing Phase - Based upon the results of its assessment
efforts, the Company has undertaken remediation and testing activities which are
intended to address potential Year 2000 problems in computer
9
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
software used by the Company in its information technology and non-information
technology systems in an attempt to demonstrate that this software will be made
substantially Year 2000 compliant on a timely basis. In this phase, the Company
first evaluated a program application and, if a potential Year 2000 problem was
identified, it took steps to remediate the problem and individually test the
application to confirm that the remediating changes were effective and did not
adversely affect the functionality of that application.
It was determined that all MMT systems had a completed plan and are Y2K
compliant, as of the date of this filing, with the exception of minor
remediation efforts in Tier 3 that will be completed during December 1999. The
following summarizes the efforts being made:
a. Y2K readiness is complete for all Tier 1 and Tier 2 systems.
b. MMT is a medium-sized company with packaged software purchased
from reliable vendors. The vendor supplies Y2K compliant programs
and all released Y2K upgrades have been applied to the MMT
systems.
c. MMT has no Tier 1 or 2 systems that are proprietary or custom
designed that need to be fixed internally.
d. All Tier 1 and 2 systems are supported by vendor contracts or
through excellent relationships with MMT. All contracts for Tier 1
and 2 systems are through the year 2000.
e. Vendors supplying components or PLCs have submitted documentation
to MMT concerning their Y2K readiness.
f. Programmable Logic Controllers (PLC), Lab and testing equipment
used with machinery that produces MMT product could malfunction
and stop production. All PLCs, Lab and testing equipment is Y2K
ready.
g. Low risk Tier 3 systems have been addressed. Y2K readiness will
be complete prior to year-end for Tier 3.
MMT will still be dependent on some suppliers, such as utility and
telecommunication companies. To address this risk, MMT's current forecast and
orders have been adjusted with our customers' input. MMT believes that all
customer orders will be unaffected during the transition to the Year 2000.
Contingency Plans - The Company developed a contingency plan to handle its most
likely worst case Year 2000 non-compliant scenarios. The sales forecast was then
adjusted to reflect these scenarios.
Costs Related to the Year 2000 Issue - To date, the Company's costs, which have
been expensed as incurred, have amounted to $178,000. The costs and timetable in
which the Company completes the Year 2000 readiness activities are based on
management's best estimates, which are derived using numerous assumptions,
including the continued availability of certain resources, third-party readiness
plans and other factors. The Company can make no guarantees and actual results
could differ from such plans.
Risks Related to the Year 2000 Issue - Although the Company's Year 2000 efforts
have been intended to minimize the adverse effects of the Year 2000 issue on the
Company's business and operations, the actual effects of the issue and the
success or failure of the Company's efforts described above cannot be known
until the year 2000 occurs. Failure by the Company and its major suppliers,
other material service providers and major distributors to address adequately
their respective Year 2000 issues in a timely manner (insofar as such issues
relate to the Company's business) could have a material adverse effect on the
Company's business, results of operations and financial condition.
10
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk
The Company's earnings are affected by fluctuations in the value of the U.S.
dollar, as compared to foreign currencies, as a result of transactions in
foreign markets. At October 31, 1999, the result of a uniform 10% strengthening
or weakening in the value of the dollar relative to the currencies in which the
Company's transactions are denominated would have resulted in an immaterial
increase or decrease in operating income for the three months ended October 31,
1999. This calculation assumes that each exchange rate would change in the same
direction relative to the U.S. dollar. In addition to the direct effects of
changes in exchange rates, which are a changed dollar value of the resulting
sales, changes in exchange rates also affect the volume of sales or the foreign
currency sales price as competitors' services become more or less attractive.
The Company's sensitivity analysis of the effects of changes in foreign currency
exchange rates does not factor in a potential change in sales levels or local
currency prices.
While the Company is exposed to changes in interest rates as a result of its
outstanding debt, the Company does not currently utilize any derivative
financial instruments related to its interest rate exposure. Total short-term
and long-term debt outstanding at October 31, 1999 was $26.5 million, consisting
of $12.2 million in variable rate borrowing and $14.3 million in fixed rate
borrowing. At this level of variable rate borrowing, a hypothetical 10% increase
in interest rates would have decreased pre-tax earnings by approximately $29,000
for the three months ended October 31, 1999. At October 31, 1999, the fair value
of the Company's fixed rate debt outstanding was estimated at $15.0 million. A
hypothetical 10% change in interest rates would not result in a material change
in the fair value of the Company's fixed rate debt.
11
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
Exhibit 10.1 Agreement by and between Survival Technology, Inc. and EM
Industries, Inc., dated as of October 21, 1996
Exhibit 10.2 Waiver and Amendment Agreement dated October 29, 1999
between the Company and Nomura Holding America Inc.
Exhibit 10.3 Seventh Amendment to the Credit Agreement dated October
29, 1999 between the Company and ING (U.S.) Capital Corporation.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended October
31, 1999.
12
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
SIGNATURES
Pursuant to the requirement 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.
MERIDIAN MEDICAL TECHNOLOGIES, INC.
-----------------------------------
Registrant
December 15, 1999 By: /S/ James H. Miller
----------------- ----------------------------------
Date James H. Miller
President and
Chief Executive Officer
(Principal Executive Officer)
December 15, 1999 By: /S/ Dennis P. O'Brien
----------------- ----------------------------------
Date Dennis P. O'Brien
Vice President-Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<PAGE>
EXIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
(10.1) Agreement by and between Survival Technology, Inc. and EM
Industries, Inc., dated as of October 21, 1996
(10.2) Waiver and Amendment Agreement dated October 29, 1999 between
the Company and Nomura Holding America Inc.
(10.3) Seventh Amendment to the Credit Agreement dated October 29,
1999 between the Company and ING (U.S.) Capital Corporation.
(27.0) Financial Data Schedule
14
Exhibit 10.1
Agreement
By and Between
SURVIVAL TECHNOLOGY, INC.
and
EM INDUSTRIES, INC.
Dated as of October 21, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1..................................................................2
ARTICLE 2..................................................................5
ARTICLE 3..................................................................7
ARTICLE 4.................................................................10
ARTICLE 5.................................................................13
ARTICLE 6.................................................................15
ARTICLE 7.................................................................16
ARTICLE 8.................................................................17
ARTICLE 9.................................................................21
ARTICLE 10................................................................22
ARTICLE 11................................................................23
ARTICLE 12................................................................24
ARTICLE 13................................................................24
ARTICLE 14................................................................25
ARTICLE 15................................................................25
ARTICLE 16................................................................26
<PAGE>
AGREEMENT
THIS AGREEMENT, (this "Agreement") made as of the 21st day of
October, 1996 between SURVIVAL TECHNOLOGY, INC. ("STI"), a Delaware corporation
having its principal offices at 2275 Research Boulevard, Rockville, Maryland
20850, and CENTER LABORATORIES ("Center"), a division and acting on behalf of
EM Industries, Inc. ("EM"), a New York corporation, said division having its
principal offices located at 35 Channel Drive, Port Washington, New York 11050.
WITNESSETH:
WHEREAS, STI has the capability to produce and fill the EpiPen, the
EpiPen Jr., the Epi E-Z Pen and the Epi E-Z Pen, Jr. (as herein defined); and
WHEREAS, Center is engaged in the business of manufacturing, selling
and distributing allergenic products worldwide; and
WHEREAS, STI previously has granted Center an exclusive right to
distribute and sell the Products (as herein defined), and in connection
therewith, STI and Center have previously entered into a certain Agreement dated
January 1, 1987, which was modified by several subsequent agreements and
understandings; and
WHEREAS, STI and Center wish to modify and restate in their entirety
their previous agreements and understandings relating to the Products so as to
reflect the terms and conditions contained herein;
NOW, THEREFORE, upon the foregoing premises and in consideration of the
mutual covenants agreed upon herein, the parties agree as follows:
ARTICLE 1
For the purposes of this Agreement, the following terms shall
have the definitions set forth below:
1.1 "Component Factor" shall mean $11.05 plus the CPI Increment.
1.2 "CPI Increment" shall mean the amount determined by multiplying the
Component Factor or Trainer Component Factor, as applicable, for the prior year
by the percentage by which the Consumer Price Index for all Urban Consumers (all
items: U.S. City Average) compiled by the United States Department of Labor for
the month of December immediately preceding the calendar year for which the
calculation is made exceeds the Index for the prior month of December.
<PAGE>
1.3 "Epi E-Z Pen" shall mean automatic injectors filled with the drug
Epinephrine conforming to the specifications set forth in Exhibit A, as the same
may be updated from time to time by STI on not less than 90 days' prior notice
to Center to conform to improvements, redesigns, modifications, replacement or
substitutions.
1.4 "EpiE-Z Pen Jr." shall mean automatic injectors filled with the
drug Epinephrine conforming to the specifications set forth in Exhibit B, as the
same may be updated from time to time by STI on not less than 90 days' prior
notice to Center to conform to improvements, redesigns, modifications,
replacements or substitutions.
1.5 "Epi E-Z Pen Trainer" shall mean automatic injectors not filled
with any drug, not capable of injecting medicament and conforming to the
specifications set forth in Exhibit C, as the same may be updated from time to
time by STI on not less than 90 days' prior notice to Center to conform to
improvements, redesigns, modifications, replacements or substitutions.
1.6 "EpiPen" shall mean automatic injectors filled with the drug
Epinephrine conforming to the specifications set forth in Exhibit D, as the same
may be updated from time to time by STI on not less than 90 days' prior notice
to Center to conform to improvements, redesigns, modifications, replacement or
substitutions.
1.7 "EpiPen Jr." shall mean automatic injectors filled with the drug
Epinephrine conforming to the specifications set forth in Exhibit E, as the same
may be updated from time to time by STI on not less than 90 days' prior notice
to Center to conform to improvements, redesigns, modifications, replacements or
substitutions,
1.8 "EpiPen Trainer" shall mean automatic injectors not filled with any
drug, not capable of injecting medicament and conforming to the specifications
set forth in Exhibit F, as the same may be updated from time to time by STI on
not less than 90 days' prior notice to Center to conform to improvements,
redesigns, modifications, replacements or substitutions.
1.9 "Forecasts" shall mean the forecasts for Products required to be
provided pursuant to Section 3.1.
<PAGE>
1.10 "Insurance Cost" shall mean the amount paid by STI during the
specified period as product liability insurance premiums relating to the
Products, expressed in dollars per unit of Regular Products to be delivered
during such period as forecast by Center pursuant to Section 3.2; provided,
however, that in the event the amount so calculated is less than $.24 per unit,
the Insurance Cost shall be the amount so calculated plus one-half the amount by
which $.24 exceeds such amount.
1.11 "New Auto Injector Technology" shall mean any type of new auto
injector products including DCA auto injectors for the drug Epinephrine, but not
including existing Products.
1.12 "Price" shall be that amount determined in accordance with
Sections 4.1 through 4.3.
1.13 "Products" shall mean collectively the Epi E-Z Pen, the Epi E-Z
Pen Jr., the EpiE-Z Pen Trainer, the EpiPen, the EpiPen Jr. and the EpiPen
Trainer.
1.14 "Regular Products" shall mean collectively the Epi E-Z Pen, the
Epi E-Z Pen Jr., the EpiPen and the EpiPen Jr.
1.15 "Term" shall mean the term of this Agreement as provided in
Article 14.
1.16 "Trainer Component Factor" shall mean $1.33 in the case of the Epi
E-Z Pen Trainer and $1.38 in the case of the EpiPen Trainer plus, in both cases,
the CPI Increment.
1.17 "United States" shall mean the United States of America, its
territories, commonwealths and dependencies.
1.18 "Worldwide" shall mean all countries of the world other than the
United States and Canada.
ARTICLE 2
2.1 STI hereby confirms Center's exclusive right during the Term to
market and sell the Products for delivery and use in the United States, Canada
and Worldwide.
2.2 In the event that during the Term, Center wishes to sell or
distribute the Products in any country Worldwide in which the Products have not
been previously licensed for sale or distribution, Center may do so if it
obtains at its sole cost and expense all governmental licenses and approvals
required to qualify the Products for sale and distribution in such country.
<PAGE>
2.3 In the event that during the Term, STI should develop New Auto
Injector Technology for the emergency treatment of severe allergic reactions or
asthma, STI shall first offer to Center the exclusive right to sell and
distribute such new products. If Center is not interested in selling and
distributing such new products or if, following good faith negotiations, STI and
Center are not able to agree on mutually satisfactory terms for such sale and
distribution, STI shall have the right to offer sale and distribution rights to
other entities or to sell or distribute such products itself and to enter into
appropriate agreements and arrangements with regard thereto, provided that the
terms of such agreements and arrangements shall be no less favorable to STI than
the final terms offered to STI by Center. The rights granted to Center under
this Section 2.3 shall not be applicable to products developed by third parties
and brought to STI including, without limitation, projects involving contract
filling and the manufacture of auto-injectors in connection therewith.
2.4 In the event that during the Term, Center wishes to acquire New
Auto Injector Technology and/or injectable drug compounds for the treatment of
severe allergic reactions or asthma, STI shall have the first right to
manufacture such products and to sell them to Center. If STI is not interested
in manufacturing and selling such new products or if, following good faith
negotiations, STI and Center are not able to agree on mutually satisfactory
terms for such manufacture and sale, Center shall have the right to purchase
such products from other entities or to manufacture such products itself and to
enter into appropriate agreements and arrangements with regard thereto, provided
that the terms of such agreements and arrangements are no less favorable to
Center than the final terms offered to Center by STI.
ARTICLE 3
3.1 Center agrees to purchase from STI and STI agrees to sell, to
Center during the Term all of Center's requirements for the Products. Upon
execution of this Agreement and on each February 1, May 1, August I and November
1 during the Term, Center shall provide a non-binding rolling 36-month forecast
for each Product by country for each calendar quarter in such period
("Forecasts").
3.2 Center shall issue firm purchase orders on a country-by-country
basis specifying the desired quantities of the Products and requested delivery
dates at least (i) 90 days before each requested delivery date in the care of
Epi E-Z Pen Jr. and EpiPen Jr. and (ii) 120 days before each requested delivery
date for all other Products. Orders that exceed 120 percent of those set forth
in the Forecast for a particular month shall be shipped not later than 120 days
(in the case of Epi E-Z Pen Jr. and EpiPen Jr.) or 150 days (in the case of all
other Products) from the receipt of the applicable purchase order.
<PAGE>
3.3 STI shall issue credit for or refurbish, at no charge to Center,
all Products received by Center which do not meet the specifications contained
in Exhibits A through F, as the case may be, as from time to time updated by STI
on not less than 90 days' prior notice to Center to conform to improvements,
redesigns, modifications, replacements or substitutions. Within 30 days
following the return by Center to STI of allegedly defective units of Product,
STI shall conduct an investigation of the alleged defect and shall report to
Center as to the results of such investigation.
3.4 STI shall maintain product liability insurance on the Products for
STI's gross negligence or willful misconduct in the principal amount of not less
than one million dollars ($1,000,000); provided, however, that on not less than
six months' prior written notice from Center, STI shall obtain a like amount of
product liability insurance on the Products that is not restricted to STI's
gross negligence or willful misconduct; and provided further, that in the event
that STI is unable to procure such coverage, then Center's sole remedy shall be
to terminate this Agreement and neither party shall have any further liability
to the other except as provided in Section 10.8.
3.5 STI represents and warrants to Center that all Products delivered
to Center hereunder shall meet the specifications contained in Exhibits A
through F hereof, as the case may be, as from time to time updated by STI on not
less than 90 days' prior notice to Center to conform to improvements, redesigns,
modifications or substitutions, and shall meet all requirements of applicable
United States state and federal law.
3.6 Center hereby represents and warrants that all applicable
regulatory filings have been and will continue to be made and all necessary
approvals obtained to permit Center to sell and distribute the Products in those
countries where the Products are sold or distributed. In the event that
regulatory agencies of any country where the Products are or are to be sold or
distributed require testing of Products prior to sale, the approval of STI shall
be required before Center shall agree to any testing protocols or procedures.
Such protocols shall be established in accordance with Exhibit I hereto. All
costs of such filings and testing shall be borne by Center.
3.7 STI covenants and agrees that it shall use reasonable efforts to
respond promptly to Product complaints received from Center.
ARTICLE 4
4.1 The Price for each of the Regular Products ordered for delivery
during 1996 shall be as set forth on Exhibit G hereto. The Price for each of the
Regular Products ordered for delivery during 1997 and each subsequent calendar
year during the Term shall be the sum of (1) the Component Factor for such year,
(2) the Insurance Cost and (3) such adjustments as are set forth on Exhibit G.
The Price shall be subject to further adjustment from time-to-time as provided
in this Article 4 and in Article 6.
<PAGE>
4.2 At each renewal of the product liability insurance policy referred
to in Section 3.4, STI shall calculate the Insurance Cost for the period covered
by such payment. In the event that the Insurance Cost for such period is greater
than or less than the Insurance Cost for the immediately preceding period, the
Price shall be increased or decreased, respectively, by the amount of such
difference. It is agreed for purposes of this Agreement that the Insurance Cost
is $.16 per unit for 1996.
4.3 In the event that the form, content or manner of the packaging of
the Products is changed during the Term from that utilized at the date hereof,
STI shall determine the difference in unit costs that will result from such
change, taking into account items of material, labor and overhead, and the Price
shall be increased by the amount so determined if the Unit cost would be greater
or decreased by one-half the amount so determined if the unit cost would be
less. This Section 4.3 shall apply to successive changes in packaging during the
Term.
4.4 Except as STI may otherwise consent, orders for units of Epi E-Z
Pen, EpiPen and EpiPen Jr. shall be in integral multiples of 30,000 units and
orders for units of Epi E-Z Pen Jr. shall be in integral multiplies of 15,000
units, except that all orders for less than 30,000 units of Epi E-Z Pen Jr.
shall be subject to a surcharge as outlined on Exhibit G. Shipment of Regular
Products for more than 110 percent of previously agreed-upon unit amounts per
order shall require the consent of Center.
4.5 The price for each Epi E-Z Pen Trainer and EpiPen Trainer ordered
for delivery during l996 shall be $1.33 in the case of the Epi E-Z Pen Trainer
and $1.38 in the case of the EpiPen Trainer. During 1997 and each subsequent
calendar year during the Term, the price for each Epi E-Z Pen Trainer and EpiPen
Trainer shall be the Trainer Component Factor determined for such year. Each
order for Epi E-Z Pen Trainers and EpiPen Trainers shall be for at least 25,000
units. Shipment of Epi E-Z Pen Trainer and EpiPen Trainer Products for more than
110 percent of previously agreed-upon unit amounts per order shall require the
consent of Center.
4.6 STI shall ship the Products at Center's expense in accordance with
Center's instructions, F.O.B. STI's plant. For purposes of this Agreement,
delivery of Products shall be deemed to have occurred upon delivery to a common
carrier at STI's plant. Payment to STI shall be net 30 days after date of
shipment. Center shall pay interest on all past due balances at a rate of one
percent per month.
4.7 All calculations required pursuant to this Article 4 shall be
performed by STI, shall be to the nearest penny and shall be subject to review
by Center. In the absence of manifest error, such calculations shall be
conclusive and binding for all purposes of this Agreement.
4.8 The parties agree to examine the cost and feasibility of providing
insurance coverage for Center under STI's insurance policies.
<PAGE>
ARTICLE 5
5.1 Center agrees to order not less than 929,652 units of Regular
Products for delivery during 1996. Thereafter during the Term, Center shall
order for delivery and receipt during each calendar year not less than the
number of units of Regular Products determined as follows: (i) in 1997, 55
percent of the total number of units of Regular Products ordered for delivery
and receipt during the two immediately preceding calendar years; (ii) in 1998,
54 percent of the total number of units of Regular Products ordered for delivery
and receipt during the two immediately preceding calendar years; (iii) in 1999,
53 percent of the total number of units of Regular Products ordered for delivery
and receipt during the two immediately preceding calendar years; and (iv) in
2000 and thereafter, 52.5 percent of the total number of units of Regular
Products ordered for delivery and receipt during the two immediately preceding
calendar years.
5.2 In the event that Center does not order for delivery during any
calendar year the minimum quantities determined pursuant to Section 5.1, STI may
terminate Center's exclusive right to distribute and sell the Products as
provided in Section 2.1, provided that STI notifies Center in writing of its
intention to do so within 30 days following the close of the applicable period.
STI may terminate this Agreement in the event that Center does not order for
delivery during any calendar year 50 percent of the minimum quantities
determined pursuant to Section 5.1, provided that STI notifies center in writing
of its intention to do so within 30 days following the close of the applicable
period. STI's failure to so notify Center within such periods shall be deemed a
waiver of its right to do so for such years, but shall not be deemed a waiver of
its right to terminate this Agreement or exclusive territories, as applicable,
for Center's failure to order the minimum quantities during any subsequent
years.
5.3 In the event that the exclusive right to distribute and sell the
Products is terminated pursuant to Section 5.2 (and this Agreement has not
otherwise been terminated), STI shall permit Center to distribute and sell the
Products to Center on a non-exclusive basis at such prices as STI shall
determine consistent with prices charged by STI for comparable quantities of
products in comparable markets.
5.4 In the event of any termination of this Agreement (whether pursuant
to Section 5.2 or otherwise), (a) Center shall take delivery of and pay for all
undelivered finished goods manufactured pursuant to firm purchase orders
previously provided from Center; and (b) to the extent not duplicative with the
preceding clause (a), Center shall pay to STI an amount equal to the sum of (i)
STI's cost, taking into account items of material, labor and overhead
theretofore incurred, purchased or ordered by STI pursuant to any firm purchase
orders provided prior to such date, and (ii) the Insurance Cost then in effect
multiplied by the excess of the number of units forecast for delivery during the
period based on firm purchase orders with respect to which such Insurance cost
was calculated over the number of units delivered by STI during such period,
such product to be reduced by the amount of any rebate of insurance premiums
included the insurance Cost received by STI as a result of termination of this
Agreement.
ARTICLE 6
All Products ordered by or for Center shall be identified on the label,
package container and all product literature as the product of STI. These
materials shall also bear the Center mark or logo. Any label to be affixed to
the Products or to any package containing the Products which differs from the
label in use on the date hereof is subject to STI's prior approval, which
approval shall not be unreasonably withheld. The printing and affixing of such
labels to the Products shall be done at STI's expense; provided, however, that
Center shall bear the incremental expense of preparing and printing any
labelling and secondary packaging required for sales of Product in any country
other than the United States.
<PAGE>
ARTICLE 7
7.1 In the event of infringement by any third party of any patents
relating to the Products, STI may, in its discretion and at it own expense, take
steps to prevent such infringement, including the bringing of an appropriate
legal action, and shall retain for itself all recoveries therefrom. If STI
refuses to bring a legal action within 90 days after notice from Center of an
infringement, Center may bring a legal action at its cost and expense and retain
for itself all recoveries therefrom.
7.2 STI shall, at its expense, defend any suit instituted against
Center and indemnify Center against any award of damages made against Center by
a final judgment of a court of last resort based on a claim that the Products,
or any of them, constitute an infringement or any patent or trademark other than
the Center mark or logo (as to which Center shall defend any suit instituted
against STI and indemnify STI against any such award).
ARTICLE 8
8.1 STI shall not be liable for, and Center assumes responsibility for,
all personal injury and property damage resulting from the handling, possession,
or use of the Products or the Epinephrine contained therein following delivery
thereof to Center. In no event shall STI be liable for special, incidental or
consequential damages, whether Center's claim is in contract, negligence, strict
liability or otherwise. Center shall hold harmless defend and indemnify STI, its
officers, directors, agents and employees from and against any and all damages,
claims, liabilities, demands, losses or expenses, including reasonable
attorneys' fees, arising from or allegedly arising from the Products or the
Epinephrine contained therein or any use thereof; provided that Center's
agreement to hold harmless, defend and indemnify STI shall not be applicable to,
and STI shall indemnify, hold harmless and defend Center from, any damage,
claim, liability, demand, loss or expense, including reasonable attorneys' fees,
which arises from or allegedly arises from the gross negligence or willful
misconduct of STI in formulating, labeling, packaging or holding the Products or
the Epinephrine contained therein or in otherwise performing its services
hereunder.
8.2 (a) STI shall defend, indemnify and hold harmless Center, its
officers, directors, agents and employees from any damages (other than damages
for lost profits), expenses and costs (including reasonable attorneys' fees)
arising out of actions and proceedings brought by any United States federal,
state or local governmental authority or any agency or instrumentality thereof
against Center, its officers, directors, agents, and employees or against the
Products by reason of any claim or finding by an said public authority that the
Products were defective at the time of shipment.
(b) STI shall defend, indemnify and hold harmless Center, its officers,
directors, agents and employees from any damages (other than damages for lost
profits), expenses and costs (including reasonable attorneys' fees) arising out
of actions and proceedings brought by any foreign governmental authority or any
agency or instrumentality thereof against Center, its officers, directors,
agents, and employees or against the Products by reason of any claim or finding
by an said public authority that the Products were defective at the time of
shipment as a result of STI's gross negligence or willful misconduct.
8.3 (a) Center shall defend, indemnify and hold harmless STI, its
officers, directors, agents and employees, from any damages (other than damages
for lost profits), expenses and costs arising out of actions and proceedings
brought by any United States federal, state or local governmental authority or
any agency or instrumentality thereof against STI, its officers, directors,
agents and employees or against the Products by reason of any claims or findings
by any said public authority relating to the Products, other than a claim or
finding that there existed a defect in said Products at the time of shipment.
(b) Center shall defend, indemnify and hold harmless STI, its officers,
directors, agents and employees, from any damages (other than damages for lost
profits), expenses and costs arising out of actions and proceedings brought by
any foreign governmental authority or any agency or instrumentality thereof
against STI, its officers, directors, agents and employees or against the
Products by reason of any claims or findings by any said public authority
relating to the Products, other than a claim or finding that there existed a
defect in said Products at the time of shipment as a result of STI's gross
negligence or willful misconduct.
<PAGE>
8.4 In any case under this Agreement where one party has indemnified
the other against any claim or legal action, indemnification shall be
conditioned on compliance with the procedure outlined below. Provided that
prompt notice is given of any claim or suit for which indemnification might be
claimed, the indemnifying party promptly will defend, contest, or otherwise
protect against any such claim or suit at its own cost and expense. The
indemnified party may, but will not be obligated to, participate at its own
expense in a defense thereof by counsel of its own choosing, but the
indemnifying party shall be entitled to control the defense unless the
indemnified party has relieved the indemnifying party from liability with
respect to the particular matter. In the event the indemnifying party fails to
defend, contest, or otherwise protect against any such claim or suit in a timely
manner, the indemnified party may, but will not be obligated to, defend,
contest, or otherwise protect against the same, and make any compromise or
settlement thereof and recover the entire costs thereof from the indemnifying
party, including reasonable attorneys' fees, disbursements and all amounts paid
as a result of such claim or suit or the compromise or settlement thereof;
provided, however, that if the indemnifying party undertakes the defense of such
matter, the indemnified party shall not be entitled to recover from the
indemnifying party for its costs incurred in the defense thereof other than the
reasonable costs of investigation undertaken by the indemnified party and
reasonable costs of providing assistance. The indemnified party shall cooperate
and provide such assistance as the indemnifying party may reasonably request in
connection with the defense of the matter subject to indemnification.
ARTICLE 9
Neither party to this Agreement shall disclose to any third party or
commercially use any confidential concepts, information and knowledge concerning
the business and products of the other party which it may come to know in
dealing with the other party pursuant to the terms of this Agreement, provided
that such obligation shall not apply to concepts, information and knowledge:
1) which were already known at the time of receipt from the other
party;
2) which are subsequently acquired from sources under no obligation of
secrecy to the other party; and
3) which are at the time of receipt from the other party or thereafter
become part of the public domain through no fault of the party receiving such
information.
ARTICLE 10
10.1 In the event Center shall be in arrears in payments pursuant to
this Agreement for a period of 60 days after the due date thereof, STI shall
have the right to terminate this Agreement upon giving Center 60 days' written
notice, such termination to be effective at the end of such 60-day period
unless Center shall have paid the arrearages due within such time.
<PAGE>
10.2 In the event STI is unable to supply all or any part of Center's
orders within six months from the date such orders would otherwise be due to be
delivered to Center by virtue of any governmental action or final injunctive
decree brought or issued for any reason, Center may terminate this Agreement.
10.3 In the event STI permanently discontinues its business of
producing the Products for any reason, voluntary or involuntary, STI may
terminate this Agreement without liability to Center by giving not less than six
months prior written notice to Center. STI agrees that in the event it delivers
such notice, it will, upon Center's request delivered within 30 days thereafter,
use its best efforts to assist Center in establishing an alternative source for
the Product on terms mutually agreeable to STI and Center.
10.4 Either party shall have the right to terminate this Agreement if
the other materially breaches any of the material provisions of this Agreement,
provided that the terminating party gives the other party written notice of such
termination and a 30-day period from the receipt of said notice to cure said
breach. For purposes of this Section 10.4, Section 3.7 shall not be considered a
material provision.
10.5 Any election to terminate the Agreement pursuant to the provisions
of this Article shall affect neither party's available remedies at law or in
equity or as otherwise provided herein.
10.6 Under no circumstances shall termination of this Agreement under
this Article 10 or otherwise relieve the parties of their respective obligations
to make any payments due under this Agreement. The provisions of Section 5.4 and
Articles 7, 8, 9, 11 and 16 shall survive any such termination of this
Agreement.
ARTICLE 11
The rights and obligations of the parties under this Agreement shall be
construed under, and governed by the substantive laws, but not the rules
relating to the choice of law, of the State of New York. Any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be settled by arbitration, in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered may be entered in
any court having jurisdiction thereof.
ARTICLE 12
This Agreement shall not be assignable by EM or Center without the
prior written consent of STI, except (a) by Center to the parent of EM or to a
wholly owned subsidiary of EM or of such parent; or (b) by Center to another
corporation in connection with the sale to such corporation of substantially all
of the assets of EM as a going concern or in connection with a merger or
consolidation of Center into or with such corporation, provided that upon any
such sale of assets, merger or consolidation, the assignee or successor
corporation shall, as a condition to such transaction, expressly assume in
writing the obligations of Center hereunder.
<PAGE>
ARTICLE 13
This Agreement is subject to force majeure and failure to perform any
part hereof shall not subject any party to any liability to the other or be a
cause for termination of this Agreement if such failure is caused by a strike
(whether or not the demands of employees involved are reasonable and within the
party's power to concede), accident, act of God or the public enemy, weather
conditions, default by supplier either in late delivery or delivery of defective
goods, or other circumstances of like or different character which are
reasonably beyond the control of the party failing to perform.
ARTICLE 14
Unless previously terminated pursuant to Section 3.4, Section 5.2 or
Article 10, this Agreement shall be for an initial term ending December 31,
2010. Thereafter, this Agreement shall renew automatically for successive
two-year terms unless either party shall have provided a notice of termination
not less than one year in advance of the original expiration date or of the
expiration date of any renewal term.
ARTICLE 15
STI and Center hereby undertake to exchange and to keep the other
currently informed of all market information pertaining to the Products which
may be developed or available to the other.
ARTICLE 16
16.1 This Agreement may be executed in any two counterparts, which are
in all respects similar and each of which shall be deemed to be complete in
itself so that any one may be introduced in evidence or used for any other
purpose without the production of the other counterpart.
16.2 Any and all notices hereunder shall be in writing and sufficient
if delivered personally or sent by registered or certified mail, postage
prepaid, or by overnight express service, addressed to the parties hereto as
follows:
If to STI:
Survival Technology, Inc.
2275 Research Boulevard
Rockville, Maryland 20850
Attention: President
If to Center:
Center Laboratories
35 Channel Drive
Port Washington, New York 11050
Attention: President
16.3 This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior arrangements
or understandings with respect thereto, written or oral, other than the
agreements between the parties relating to the EpiPen trademark and those
agreements attached hereto as Exhibit H. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and thereto and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto and their respective successors and assigns, any rights,
remedies, obligations or liabilities.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: SURVIVAL TECHNOLOGY, INC.
______________________________ By /S/ Mark Ruby
ATTEST: CENTER LABORATORIES, A
DIVISION AND ON BEHALF OF EM
INDUSTRIES, INC.
______________________________ By /s/ Alan Pernick
<PAGE>
LIST OF EXHIBITS
Exhibit A EPI E-Z Pen Product Specifications
Exhibit B EPI E-Z Pen Jr. Product Specifications
Exhibit C EPI E-Z Pen Trainer Product Specifications
Exhibit D EPI Pen Product Specifications
Exhibit E EPI Pen Jr. Product Specifications
Exhibit F EPI PenTrainer Product Specifications
Exhibit G Pricing Schedule
Exhibit H Letters of Agreement
Exhibit I Testing Protocol
<PAGE>
EXHIBIT A
EPI E-Z PEN PRODUCT SPECIFICATIONS
<PAGE>
Exhibit A
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN AUTO-INJECTOR
- --------------------------------------------------------------------------------
EpiEZPen Epinephrine Injection
1:1,000; O.3 mL/dose
- --------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MM-STD-105D Level 11, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITCAL DEFECTS LIMITS - AQL 0.04
- ----
Definition - Could, through us, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL 0.65
- ---- -----
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient
prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionally; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
Page 1 of 5
<PAGE>
Exhibit A
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS - AQL 1.0
- ---- -----
1. Visual (unmagnified) particulate contamination in solution (using,
white/black background).
2. Other (must meet definition of "Major").
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Extended needle length less than 0.30"or greater than 0.75".
2. Gross injection of foreign material.
3. Slow dispensing time (greater than 10 seconds).
4. Delivered volume is less than 0.15 rnL or greater than 0.50 mL.*
5. Leakage.
6. Injector self-activates during arming.
7. Missing component renders the unit non-functional.
8. Fails functionality test (unable to remove safety cap or expel contents).
9. Other (must meet definition of "Critical").
* Regardless of MIL-STD
TEST - MAJOR DEFECTS LlMITS - AQL 0.65
-----
1. Delivered volume not within specification (0.23 - 0.37 mL).
2. Extended needle length not within limits (0.55 - 0.65").
3. Nose cone loose or not properly seated.
4. Slow dispensing time; greater than 2 but less than 10 seconds.
5. Other (must meet definition of "Major").
6. Activation force (less than) 2 lbs. or (greater than) 8 lbs.
7. Gross hook or burr. Reversed needles or missing needle point.
Page 2 of 5
<PAGE>
Exhibit A
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS AQL 2.5
- ---- ------
1. Difficult to arm
2. Other (must meet definition of "Minor")
TEST: FINAL PRODUCT INSPECTION I (LABELED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Incorrect missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector label.
2. Incorrect product component/label (product mix-up).
3. Wrong, color of safe pincap or nose cone.
4. Injector label oriented in opposite direction.
5. Non-coated plunger/barb.
6. Missing component, renders the unit non-functional. 7. Other (must meet
definition of: "Critical").
TEST - MAJOR DEFECTS LIMITS AQL 0.65
- ---- -----
1. Nose cone loose or not properly seated.
2. Smearable, removable label markings (including imprinting). 3. Poor label
adhesion.
4. Cap is not secure on tube.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL 2.5
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber >1 mm (2) (1.0 TAPPI).
4. Incorrect orientation of injectors inside product tube
5. Other (must meet definition of "Minor").
Page 3 of 5
<PAGE>
Exhibit A
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN AUTO-INJECTOR
TEST: FINAL PRODUCT INSPECTION II (FINAL PACKAGE)
TEST - CRITICAL DEFECTS (Blister Pack) LIMITS - AQL 0.04
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on reply card.
2. Incorrect product component (product mix-up).
3. Patient insert physician outsert, or business reply card missing
4. Missing component renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (12 Pack Tray) LIMITS - AQL 0.04
- ---- -----
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on 12 pack tray.
2. Incorrect 12 pack tray. 3. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (Shipper) LIMITS - AQL 0.04
------
1. Incorrect missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
3. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS (Blister Tray) LIMITS AQL 0.65
- ---- ------
1. Smearable, removable lid stock marking.
2. Lidstock print reversed.
3. Defective tray.
4. Incomplete seal of blister tray.
5. Other (must meet definition of "Major").
Page 4 of 5
<PAGE>
Exhibit A
June,1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN AUTO-INJECTOR
TEST - MINOR, DEFECTS (Blister Tray) LIMITS AQL 2.5
------
1. Incorrect orientation of injector/product tube in blister tray.
2. Poor Workmanship.
3. Other (must meet definition of "Minor").
TEST - MINOR DEFECTS (12 Pack Tray) LIMITS - AQL 2.5
- ---- ------
1. Incorrect orientation of blister tray in 12 pack tray.
2. Other (must meet definition "Minor").
TEST - MINOR DEFECTS (Shipper) LIMITS - AQL 2.5
- ---- ------
1. Incorrect orientation of 12 pack tray in shipper (Product name visible,
facing same direction).
2. Other (must meet definition of "Minor").
Page 5 of 5
<PAGE>
FP-S-A FINISHED PRODUCT SPECIFICATION
- --------------------------------------------------------------------------------
Title: EpiE-Zpen
Epinephrine Injection, 1:1000
0.3 mL / Dose
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEST METHOD SPECIFICATION
<S> <C> <C>
- --------------------------------------------------------------------------------
Epinephrine Assay RDL - 173 0.05 - 1.15 mg/mL
- --------------------------------------------------------------------------------
pH current USP 3.0-4.5
- --------------------------------------------------------------------------------
Identification current USP Positive
- --------------------------------------------------------------------------------
Total Acidity current USP Passes Test
- --------------------------------------------------------------------------------
Sodium Metabisulfite RDL - 156 1.50 - 1.84 mg/mL
- --------------------------------------------------------------------------------
Particulate Matter RDL - 169 NMT 6000 (greater than or equal to) 10 u
NMT 600 (greater than or equal to) 25 u
- --------------------------------------------------------------------------------
Color and Clarity current USP Conforms
- --------------------------------------------------------------------------------
Sterility DP-MS 406.0 Passes Test
- --------------------------------------------------------------------------------
Bacterial Endotoxin Content DP-MS 503.0 NMT 291.5 EU/mL
- --------------------------------------------------------------------------------
Activation Force DP-QC 394.1 2 - 8 lbs.
(0.9 - 3.6 kg)
- --------------------------------------------------------------------------------
Volume Dispensed DP-QC 394.1 0.23 - 0.37 mL
- --------------------------------------------------------------------------------
Dispensing Time DP-QC 394.1 NMT 2 seconds
- --------------------------------------------------------------------------------
Exposed Needle Length DP-QC 331.0 0.55 - 0.65"
(1.40 - 1.65 cm)
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B
EPI E-Z PEN JR. PRODUCT SPECIFICATIONS
<PAGE>
Exhibit B
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN. JR AUTO-INJECTOR
- --------------------------------------------------------------------------------
Epi EZPen Jr. Epinephrine Injection
1:2,000; 0.3 mL/dose
- --------------------------------------------------------------------------------
POST - 100% INSPECTION: Sampled per MIL-STD-105D Level II,
Single Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UINIT)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in class (jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing, or sheath penetrated by needle.
4. Wrong or missing component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL 0.65
- ---- ------
DEFINITION Could, through use, cause extreme discomfort to the user/patient. The
product will function as intended, but may result in customer dissatisfaction.
The defect may or may not be obvious to the user/patient prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in class (does not jeopardize functionality or sterility).
3. Other (must meet definition of "Major").
Page 1 or 5
<PAGE>
Exhibit B
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZ.PEN. JR AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS - AQL 1.0
------
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet definition of "Major").
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Extended needle length less than 0.30" or greater than 0.65".
2. Gross injection of foreign material.
3. Slow dispensing time (greater than 10 seconds).
4. Delivered volume is less than 0.15 rnL or greater than 0.50 mL.*
5. Leakage.
6. Injector self-activates during arming.
7. Missing component renders the unit non-functional.
8. Fails functionality test (unable to remove safety cap) or expel contents).
9. Other (must meet definition of "Critical").
* Regardless of MIL-STD
TEST MAJOR DEFECTS LIMITS - AQL 0.65
------
1. Delivered volume not within specification (0.23 - 0.37 mL).
2. Extended needle length- not within limits (0.45 - 0.55").
3. Nose cone loose or not properly seated.
4. Slow dispensing time; greater 2 but less than 10 seconds.
5. Other (must meet definition of "Major").
6. Activation force not (less than) 2 lbs. or (greater than) 8 lbs.
7. Gross hook or burr. Reversed needles or missing, needle point
Page 2 of 5
<PAGE>
Exhibit B
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN. JR AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL 2.5
- ---- ------
1. Difficult to arm.
2. Other (must meet definition of "Minor").
TEST: FINAL PRODUCT INSPECTION I (LABELED AUTOINJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong nose cone.
4. Injector label oriented in opposite direction.
5. Non-coapted plunger/barb.
6. Missing component, renders the unit nonfunctional.
7. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS AQL 0.65
------
1. Nose cone loose or not properly seated.
2. Smearable, removable label markings (including imprinting,). 3. Poor label
adhesion.
4. Cap is not secure on tube.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS AQL 2.5
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber > 1mm2 (1.0 TAPPI).
4. Incorrect orientation of injectors inside product tube.
5. Other (must meet definition of "Minor").
Page 3 of 5
<PAGE>
Exhibit B
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN. JR AUTO-INJECTOR
TEST: FINAL PRODUCT INSPECTION II (FINAL PACKAGE)
TEST - CRITICAL DEFECTS (Blister Pack) LIMITS - AQL 0.04
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on reply card.
2. Incorrect product component (product mix-up).
3. Patient insert, physician insert, or business reply card missing.
4. Missing component, renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - CRITICAL- DEFECTS (12 Pack Tray) LIMITS -: AQL 0.04
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on 12 pack tray.
2. Incorrect 12 pack tray.
3. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS (Shipper) LIMITS - AQL 0.04
------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector supper.
2. Incorrect shipper.
3. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS (Blister Tray) LIMITS - AQL 0.65
- ---- ------
1. Smearable, removable lid stock marking.
2. Lidstock print reversed.
3. Defective tray.
4. Incomplete seal of blister tray.
5. Other (must meet definition of "Major").
TEST - MINOR DEFECTS (Blister Tray) LIMITS AQL 2.5
------
1. Incorrect orientation of injector/product, tube in blister tray.
2. Poor workmanship.
3. Other (must meet definition of "Minor")
Page 4 of 5
<PAGE>
Exhibit B
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN. JR AUTO-INJECTOR
TEST - MINOR DEFECTS (12 Pack Tray) LIMITS AQL 2.5
- ---- ------
1. Incorrect orientation of blister tray in 12 pack tray.
2. Other (must meet definition of "Minor").
TEST - MINOR DEFECTS (Shipper) IMITS - AQL 2.5
1. Incorrect orientation of 12 pack tray in shipper (Product name visible,
facing, same direction).
2. Other (must meet definition of "Minor").
Page 5 of 5
<PAGE>
FP-S-A FINISHED PRODUCT SPECIFICATION
- --------------------------------------------------------------------------------
Title: EpiE-Zpen Jr.
Epinephrine Injection, 1:2000
0.3 mL / Dose
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEST METHOD SPECIFICATION
<S> <C> <C>
- --------------------------------------------------------------------------------
Epinephrine Assay RDL - 173 0.525 - 0.575 mg/mL
- --------------------------------------------------------------------------------
pH current USP 3.0-4.5
- --------------------------------------------------------------------------------
Identification current USP Positive
- --------------------------------------------------------------------------------
Total Acidity current USP Passes Test
- --------------------------------------------------------------------------------
Sodium Metabisulfite RDL - 156 1.50 - 1.84 mg/mL
- --------------------------------------------------------------------------------
Particulate Matter RDL - 169 NMT 6000 (greater than or equal to) 10 u
NMT 600 (greater than or equal to) 25 u
- --------------------------------------------------------------------------------
Color and Clarity current USP Conforms
- --------------------------------------------------------------------------------
Sterility DP-MS 406.0 Passes Test
- --------------------------------------------------------------------------------
Bacterial Endotoxin Content DP-MS 503.0 NMT 146 EU/mL
- --------------------------------------------------------------------------------
Activation Force DP-QC 394.1 2 - 8 lbs.
(0.9 - 3.6 kg)
- --------------------------------------------------------------------------------
Volume Dispensed DP-QC 394.1 0.23 - 0.37 mL
- --------------------------------------------------------------------------------
Dispensing Time DP-QC 394.1 NMT 2 seconds
- --------------------------------------------------------------------------------
Exposed Needle Length DP-QC 331.0 0.45 - 0.55"
(1.14 - 1.40 cm)
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
EPI E-Z PEN TRAINER PRODUCT SPECIFICATIONS
<PAGE>
Exhibit C
June, 1996
STI PRODUCT SPECIFICATIONS
EPI EZPEN TRAINER
LIMITS
1. Cap cannot be removed unless the clip is aligned with one of the black
dots.
2. Unit is capable of being activated with prod extension.
3. Push button does not fall out when inverted.
4. Durability: Rub label with finger using moderate pressure. Text should not
become smeared or illegible.
5. Label has sufficient overlap, but does not hide text.
<PAGE>
EXHIBIT D
EPI PEN PRODUCT SPECIFICATIONS
<PAGE>
Exhibit D
June, 1996
STI PRODUCT SPECIFICATIONS
EPIPEN AUTO-INJECTOR
- --------------------------------------------------------------------------------
Epipen Epinephrine Injection
1:1,000; 0.3 mL/dose
- --------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling, Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (Jeopardizes functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing, or sheath penetrated by needle.
4. Wrong, or missing component - renders the unit non-functional.
5. Other (must meet definition of Critical").
TEST - MAJOR DEFECTS LIMITS - AQL 0.65
- ---- ------
DEFINITION Could, through use, cause extreme discomfort to the user/patient.
The product will function as intended, but may result in customer
dissatisfaction. The defect may or may not be obvious to the user/patient prior
to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in class (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
TEST - MAJOR DEFECTS LIMITS - AQL 1.0
- ---- ------
1. Visual (unmagnified) particulate matter in solution (using white/black
background).
2. Other (must meet the definition of "major").
Page 1 of 4
<PAGE>
Exhibit D
June, 1996
STI PRODUCT SPECIFICATIONS
EPIPEN AUTO-INJECTOR
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTO-INJECTOR)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Extended needle length less than 0.30" or greater than 0.75".
2. Gross injection of foreign material.
3. Short outer tube separates from long outer tube on activation.
4. Slow dispensing time (greater than 10 seconds).
5. Delivered volume is less than 0.15 mL or greater than 0.50 mL.*
6. Leakage (not obvious prior to use).
7. Injector self-activates during arming.
8. Missing component renders the unit non-functional.
9. Fails functionality test (unable to arm injector or expel contents).
10. Other (must meet definition of "Critical").
* Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS AQL 0.65
- ---- ------
1. Delivered volume not within specification (0.23 - 0.37 mL).
2. Activation force (less than) 2 lbs. or (greater than) 8 lbs
3. Extended needle length not within limits (0.55 - 0.65").
4. Gross hook, burr or no point on needle.
5. Nose cone loose or not properly seated.
6. Slow dispensing time; greater than 2 but less than 10 seconds.
7. Other (must meet definition of "Major").
Page 2 of 4
<PAGE>
Exhibit D
June.1996
STI PRODUCT SPECIFICATIONS
EPIPEN AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL 2.5
------
Definition - Defect will not present hazard or be injurious to user/patient.
Aesthetic defect is viewed by the customer as less than desired quality and is
clearly evident to the user/patient prior to use. Significantly impairs further
processing or assembly of the batch and results in significant cost increase.
1. Difficult to arm.
2. Other (must meet definition of "minor").
TEST: FINAL PRODUCT INSPECTION (FINISHED PRODUCT)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong nose cone.
4. Injector label oriented in opposite direction.
5. Patient and/or physician insert missing, in carton.
6. Non-coated spacer/plunger. (Spacer to be fully threaded to plunger.)
7. Missing, component, renders the unit non-functional.
8. Other (must meet definition of "'Critical").
TEST - CRITICAL DEFECTS LIMITS AQL 0.04(tray)
- ---- ------
1. Incorrect product name, potency/strength, volume/contents, lot number or
expiration date on injector tray, missing or illegible lot number.
2. Incorrect tray.
TEST - CRITICAL DEFECTS LIMIT AQL 0.04(shipper)
- ---- -----
1. Incorrect product name, potency/strength, volume/contents, lot
number or expiration date on injector shipper, missing or illegible
lot number.
2. Incorrect shipper.
Page 3 or 4
<PAGE>
Exhibit D
June, 1996
STI PRODUCT SPECIFICATTONS
EPIPEN AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS AQL 0.65
- ---- ------
1. Incorrect text other than product label.
2. Nose cone loose or not properly seated.
3. Smearable, removable label marking (including imprinting).
4. Poor label adhesion.
5. Plug cap is not secure on tube. (Cap is able to be removed when tube is
placed upside down and shaken.)
6. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL 2.5
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber > 1mm2 (1.0 TAPPI).
4. Incorrect orientation of injectors inside tubes, (should be tip down).
5. Other (must meet definition of "minor").
TEST - MINOR DEFECTS LIMITS - AQL2.5(innertray)
1. Incorrect packaging of inner tray (cartons facing, same direction).
2. Shrinkwrap allows cartons to be removed (aesthetically incorrect or does
not provide a proper seal).
TEST - MINOR DEFECTS LIMITS - AQL 2-5(shipper)
- ---- ------
1. Incorrect orientation of inner trays in shipper. (Print will be visible
from the front of shipper.)
2. Other (must meet definition of "Minor").
Page 4 of 4
<PAGE>
FP-S-X FINISHED PRODUCT SPECIFICATION
- --------------------------------------------------------------------------------
Title: EpiPen
Epinephrine Injection, 1:1000
0.3 mL / Dose
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEST METHOD SPECIFICATION
<S> <C> <C>
- --------------------------------------------------------------------------------
Epinephrine Assay RDL - 173 1.05 - 1.15 mg/mL
- --------------------------------------------------------------------------------
pH current USP 3.0-4.5
- --------------------------------------------------------------------------------
Identification current USP Positive
- --------------------------------------------------------------------------------
Total Acidity current USP Passes Test
- --------------------------------------------------------------------------------
Sodium Metabisulfite RDL - 156 1.50 - 1.84 mg/mL
- --------------------------------------------------------------------------------
Particulate Matter RDL - 169 NMT 6000 (greater than or equal to) 10 u
NMT 600 (greater than or equal to) 25 u
- --------------------------------------------------------------------------------
Color and Clarity current USP Conforms
- --------------------------------------------------------------------------------
Sterility DP-MS 406.0 Passes Test
- --------------------------------------------------------------------------------
Bacterial Endotoxin Content DP-MS 503.0 NMT 291.5 EU/mL
- --------------------------------------------------------------------------------
Activation Force DP-QC 394.1 2 - 8 lbs.
(0.9 - 3.6 kg)
- --------------------------------------------------------------------------------
Volume Dispensed DP-QC 394.1 0.23 - 0.37 mL
- --------------------------------------------------------------------------------
Dispensing Time DP-QC 394.1 NMT 2 seconds
- --------------------------------------------------------------------------------
Exposed Needle Length DP-QC 331.0 0.55 - 0.65"
(1.40 - 1.65 cm)
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT E
EPI PEN JR. PRODUCT SPECIFICATIONS
<PAGE>
Epipen(R) Test Specifications
Page 2
(Microbiological Testing continued)
Should the international regulatory requirement specify sampling from the
distributed batch to perform additional sterility testing, autoinjector samples
will be sent to STI for disassembly. Basic unit samples will then be sent to a
STI approved testing laboratory for USP sterility testing as outlined above.
Testing for bacterial endotoxin by the distributor must be conducted per USP
requirements, utilizing the gel-clot or turbidimetric LAL test. STI will provide
the distributor with test requirements for proper sample dilution and minimum
lysate sensitivity.
Physical Testing. Autoinjector funcationlity testing may only be performed
utilizing STI approved testing procedures and test equipment. Sampling and
testing of assembled autoinjectors is performed by STI on every bactch of
distributed product. Should the distributor/regulatory agency require additional
functional testing, equipment must be purchased from STI to conduct these tests.
Operating procedures for proper performance of these tests will be provided by
STI.
<PAGE>
Exhibit E
June, 1996
STT PRODUCT SPECIFICATIONS
EPIPEN. JR AUTO-INJECTOR
- --------------------------------------------------------------------------------
Epipen Jr. Epinephrine Injection
1:2,000; 0.3 mL/dose
- --------------------------------------------------------------------------------
POST 100% INSPECTION: Sampled per MIL-STD-105D Level II, Single
Sampling - Normal Inspection
TEST: VISUAL AUDIT (BASIC UNIT)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
Definition - Could, through use, present clear hazard to the user/patient. The
product will not function as intended by delivering, the specified dose, and
therefore, causes misdiagnosis or subjects the user to significant risk. The
fact that the product will not function is not clearly obvious prior to use.
1. Crack in glass (jeopardizes, functionality or sterility).
2. Any visual indication of contamination/degradation of solution.
3. Hole or split in sheath, sheath missing, or sheath penetrated by needle.
4. Wrong, or missing, component - renders the unit non-functional.
5. Other (must meet definition of "Critical").
TEST - MAJOR DEFECTS LIMITS - AQL 0.65
- ----- ------
Definition Could through use, cause extreme discomfort to the user/patient. The
product will function as intended, but may result in customer dissatisfaction.
The defect may or may not be obvious to the user/patient prior to use.
1. Leakage (obvious prior to use).
2. Loose hub (jeopardizes functionality; precludes use).
3. Chip in glass (does not jeopardize functionality or sterility).
4. Other (must meet definition of "Major").
TEST - MAJOR DEFECTS LIMITS - AQL - 1.0
- ---- ------
1. Visual (unmagnified) particulate contamination in solution (using
white/black background).
2. Other (must meet the definition of "major").
Page 1 of 4
<PAGE>
Exhibit E
June, 1996
STI PRODUCT SPECIFICATIONS
EPIPEN. JR AUTO-INJECTOR
TEST: FUNCTIONALITY TESTING (ASSEMBLED AUTO-INJECTOR)
TEST - CRITLCAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Extended needle length less than 0.30" or greater than 75".
2. Gross injection of foreign material.
3. Short outer tube separates from long outer tube on activation.
4. Slow dispensing time (greater than 10 seconds).
5. Delivered volume is less than 0.15 mL or greater than 0.50 mL.*
6. Leakage (not obvious prior to use).
7. Injector self-activates during arming.
8. Missing, component renders the unit non-functional.
9. Fails functionality test (unable to arm injector or expel contents).
10. Other (must meet definition of "Critical").
* Regardless of MIL-STD
TEST - MAJOR DEFECTS LIMITS - AQL 0.65
- ----- ------
1. Delivered volume not within specification (0.23 - 0.37 mL).
2. Activation force (less than) 2lbs. or (greater than) 8 lbs.
3. Extended needle length not within limits (0.45 - 0.55").
4. Gross hook, burr or no point on needle.
5. Nose cone loose or not properly seated.
6. Slow dispensing time; greater than 2 but less than 10 seconds.
7. Other (must meet definition of "Major").
Page 2 of 4
<PAGE>
Exhibit E
June, 1996
STI PRODUCT SPECIFICATIONS
EPIPEN. JR AUTO-INJECTOR
TEST - MINOR DEFECTS LIMITS - AQL 2.5
- ---- ------
Definition - Defect will not present hazard or be injurious to user/patient.
Aesthetic defect is viewed by the customer as less than desired quality and is
clearly evident to the user/patient prior to use. Significantly impairs further
processing or assembly of the batch and results in significant cost increase.
1. Difficult to arm.
2. Other (must meet the definition of "Minor").
TEST: FINAL PRODUCT INSPECTION (FINISHED PRODUCT)
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector carton.
2. Incorrect product component/label (product mix-up).
3. Wrong or nose cone.
4. Injector label oriented in opposite direction.
5. Patient and/or physician insert missing in carton.
6. Non-coapted spacer/plunger. (Spacer to be fully threaded to plunger.)
7. Missing component, renders the unit non-functional.
8. Missing hub adapter.
9. Other (must meet definition of "Critical").
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04(tray)
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector tray.
2. Incorrect tray.
TEST - CRITICAL DEFECTS LIMITS - AQL 0.04(shipper)
- ---- ------
1. Incorrect, missing, or illegible product name, potency/strength,
volume/contents, lot number or expiration date on injector shipper.
2. Incorrect shipper.
Page 3 of 4
<PAGE>
Exhibit E
June, 1996
STI PRODUCT SPECIFICATTONS
EPIPEN. JR AUTO-INJECTOR
TEST - MAJOR DEFECTS LIMITS AQL 0.65
- ---- ------
1. Incorrect text other than product label.
2. Nose cone loose or not properly seated.
3. Smearable, removable label marking (including imprinting).
4. Poor label adhesion.
5. Plug cap is not secure on tube. (Cap is able to be removed when tube is
placed upside down and shaken.)
6. Cracked or not fully seated hub adapter.
7. Other (must meet definition of "Major").
TEST - MINOR DEFECTS LIMITS - AQL 2.5
- ---- ------
1. Label not on straight.
2. Poor workmanship.
3. Particle or fiber > 1mm2 (1.0 TAPPI).
4. Incorrect orientation of injectors inside tubes, (should be tip down).
5. Other (must meet definition of "minor").
TEST - MINOR DEFECTS LIMITS - AQL2.5(innertray)
1. Incorrect packaging of inner tray (cartons facing, same direction).
2. Shrinkwrap allows cartons to be removed (aesthetically incorrect or does
not provide a proper seal).
TEST - MINOR DEFECTS LIMITS - AQL 2-5(shipper)
- ---- ------
1. Incorrect orientation of inner trays in shipper. (Print will be visible
from the front of shipper.)
2. Other (must meet definition of "Minor").
<PAGE>
FP-R-X FINISHED PRODUCT SPECIFICATION
- --------------------------------------------------------------------------------
Title: EpiPen Jr.
Epinephrine Injection, 1:2000
0.3 mL / Dose
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TEST METHOD SPECIFICATION
<S> <C> <C>
- --------------------------------------------------------------------------------
Epinephrine Assay RDL - 173 0.525 - 0.575 mg/mL
- --------------------------------------------------------------------------------
pH current USP 3.0-4.5
- --------------------------------------------------------------------------------
Identification current USP Positive
- --------------------------------------------------------------------------------
Total Acidity current USP Passes Test
- --------------------------------------------------------------------------------
Sodium Metabisulfite RDL - 156 1.50 - 1.84 mg/mL
- --------------------------------------------------------------------------------
Particulate Matter RDL - 169 NMT 6000 (greater than or equal to) 10 u
NMT 600 (greater than or equal to) 25 u
- --------------------------------------------------------------------------------
Color and Clarity current USP Conforms
- --------------------------------------------------------------------------------
Sterility DP-MS 406.0 Passes Test
- --------------------------------------------------------------------------------
Bacterial Endotoxin Content DP-MS 503.0 NMT 146 EU/mL
- --------------------------------------------------------------------------------
Activation Force DP-QC 394.1 2 - 8 lbs.
(0.9 - 3.6 kg)
- --------------------------------------------------------------------------------
Volume Dispensed DP-QC 394.1 0.23 - 0.37 mL
- --------------------------------------------------------------------------------
Dispensing Time DP-QC 394.1 NMT 2 seconds
- --------------------------------------------------------------------------------
Exposed Needle Length DP-QC 331.0 0.45 - 0.55"
(1.14 - 1.40 cm)
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT F
EPI PEN TRAINER PRODUCT SPECIFICATIONS
<PAGE>
Exhibit F
June, 1996
STI PRODUCT SPECIFICATIONS
EPIPEN CLICK TRAINER
LIMITS
1. Assembly will successfully activate and recock.
2. Assembly simulates activation with audible click.
3. The front end or tip of the assembly will be black, the safe pin will be
gray. The safe pin will be intact.
4. The assembly will include the proper label, with correct and legible
printing.
5. Units will be completely and properly manufactured, without damage to the
assembly.
6. The label will be unaffected and shall remain entirely adherent when rubbed
with moderate pressure.
<PAGE>
EXHIBIT G
PRICING SCHEDULE
<PAGE>
EXHIBIT G
PRICING SCHEDULE
- --------------------------------------------------------------------------------
CALENDAR YEAR 1996 PRICING
- --------------------------------------------------------------------------------
2
U.S. LABELLING (per unit) NON-U.S. LABELLING (per unit)
- --------------------------------------------------------------------------------
BATCH SIZES 30,000 15,000 30,000 15,000 7,500
- --------------------------------------------------------------------------------
EpiPen $11.21 N/A $11.63 $12.30 N/A
- --------------------------------------------------------------------------------
EpiPen Jr. $11.21 N/A $11.87 $12.57 $13.26
- --------------------------------------------------------------------------------
Epi EZ Pen $11.585/1 N/A TBD TBD TBD
- --------------------------------------------------------------------------------
Epi EZ Pen Jr. $11.585/1 $12.555 TBD TBD TBD
- --------------------------------------------------------------------------------
1/ Reflects $0.375 per unit premium over the current EpiPen/EpiPen Jr. price
which will be applied to the first 1,000,00 Epi EZ Pen and Epi EZ Pen Jr.
auto-injectors delivered to Center, subject to paragraph 2 below.
2/ As provided in Article 6 of the Agreement.
ADDITIONAL PRICING PRINCIPLES
1. The price per unit for Products sold for SmithKline Beecham plc ("SK
Sales") shall be $8.00 per unit for the one year period after the
commitment to launch in the United States (provided this occurs in 1996).
The price of SK Sales in years thereafter shall be 71.36 percent of the
applicable price for sales to Center. SK Sales shall not be considered
sales for purposes of the calculation of minimum sales of Regular Products
provided in Section 5.1 of the Agreement.
2. In the event that Center shall have entered into an agreement providing for
the services of a co-marketer, at the end of each year in which sales to
Center shall have exceeded the applicable minimums set forth in Section 5.1
(excluding SK sales in each case), Center shall be entitled to a rebate of
18 percent of the amount of all sales (excluding SK Sales) in excess of
such applicable minimums. In the event that through the date of such
payment, STI shall have not received an aggregate of $375,000 from the
$0.375 per unit premium on Epi E-Z Pen Jr. Products noted in footnote 1
above, STI may reduce such payment up to the difference between $375,000
and the aggregate amount of premiums received and the number of additional
delivered Products on which such premium may be charged may be reduced
accordingly.
3. As provided in that January 11, 19996 letter agreement between STI and
Center appearing in Exhibit H to the Agreement, Center shall receive a
credit of $0.30 per unit on shipments of Epi E-Z Pen and Epi E-Z Pen, Jr.,
after September 1, 1996 up to an aggregate of $375,000.
<PAGE>
EXHIBIT H
LETTERS OF AGREEMENT
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
October 25, 1994
Mr. Alan Pernick, President
Center Laboratories Inc.
35 Channel Drive
Port Washington, New York 11050
Dear Alan:
Thank you for the help in moving the Packaging and labeling along for the Epi EZ
Pen. I anxiously await the launch of the new generation EpiPen(TM) Product. With
an eye to the future, I am proposing the following development program for
Epinephrine in the 1ml, DCA Auto-Injector with retractable Sharps System. Phase
I will be scheduled to begin immediately after the execution of this letter
agreement.
PHASE 1: Feasibility $89,842
The objective of this phase is to evaluate the feasibility to improve the
stability of Epinephrine solution in dental cartridges via changes in
formulation, filing process, and/or drug container closure system. The following
activities are planned:
1. Formulation Evaluation: The studies include evaluation of Epinephrine
coverage and effect of pH on solution stability.
2. Processing Parameter Evaluation: The objective of this evaluation is to
protect the product from oxygen via manufacturing process modification with
inert environment utilizing barrier technology. In addition, secondary
vacuum packaging will be explored.
3. Container Closure Evaluation: Since we are focused on 1ml dental cartridge
for the new generation EpiPen(TM) lines, we will evaluate a potentially
better rubber closure than the current PH701 rubber. We will evaluate both
West 4416/50 and 4405 rubber formulations.
All these screening formulation will be placed on short-term (three month)
accelerated stability trials. The results will be compared with the current
EpiPen(TM) product stability before a final formulation and process is selected.
An isolator equipped with oxygen monitoring system will be required to complete
these studies and will be acquired at STI's expense.
2275 Research Boulevard
Rockville, Maryland 20850
301-926-1800
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
Alan Pernick
Page Two
PHASE - II: SCALE-UP FOR SUBMISSION PHASE $178,937 for each product
(EpiPen(TM) Senior; and
Epi:Pen(TM) Junior)
After a feasible Epinephrine formulation and filling process is identified, we
will move forward to the scale-up phase. During this phase, three formal
stability batches will be required for each strength (total of six batches).
These batches will be filled at STI's St. Louis manufacturing facility using
production equipment. The batch size for these stability batches must be at
least 10% of the projected commercial batch size.
We will manufacture these stability batches under inert environment using
Schubert filling equipment that is enclosed in an isolator. The assumption
underlying the above cost proposal is that STI will assure that all validation
required to support this production scale-up be performed at STI's expense.
Center will be responsible for the actual cost of the six stability/submission
batches (three for EpiPen(TM) Junior and three for EpiPen(TM) Senior) and
related stability testing. The recommended batch size is 8,000 units.
The total cost for both products (EpiPen(TM) Senior and Junior) for Phases I and
II amounts to $447,716. There are no costs associated with the development of
the new DCA device. The terms of this proposal require Center to pay STI a
non-refundable down payment equal to 50% of the proposal cost upon initiation of
each phase with the remaining balance to be paid upon completion of said phase.
Please be advised that an additional phase, Process Validation, will be required
before introducing the products to market.
The timeline for Phase I will be 3-5 months including time required for
accelerated stability. Phase II would begin within two months after a suitable
formulation and filling process is identified. Submission of an application to
the FDA will occur 15 months after completion of stability batch manufacture
assuming that we file within 12 months real time stability data.
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
Alan Pernick
Page Three
Please be assured that this project will receive preferred customer status due
to the importance that it represents to both Center and STI. Epi-Pen(TM) is
viewed by STI as its "franchise" product. Upon agreement to the terms and
conditions outlined in this proposal, please sign below and return to my
attention. Again, many thanks for your courteous help.
Sincerely,
Frank J. Massino
Executive Director
Commercial Development
APPROVED November 18, 1994.
BY: ____________________________
Alan Pernick, President
bcc: J. Church K. Austin
C. D'Erasmo T. Handel
P. Gallagher T. Lee
J. Miller
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
March 31, 1995
Mr. Chris Lo Sardo Ref. No. FJM95017
Center Laboratories
35 Channel Drive
Port Washington, New York 11050
Dear Chris:
As discussed, I am confirming STI's proposal to achieve an extended shelf-life
on the current EpiPen(TM) Sr. and EpiPen(TM) Jr. product. The goal will be to
increase their respective shelf life from 27 and 20 months to 36 months each.
STI strongly believes this can be accomplished due to its improved filling
process whereby the bubble is virtually eliminated, thus reducing the amount of
degradation caused by oxygen.
The stability study to be completed will consist of three batches each for the
Sr. and Jr. product. Each batch placed on stability will contain sufficient
units to conform to the ICH stability guidelines for a shelf life of 36 months.
This project will require the utilization of a Chemist, Research Scientist,
Research Technician, Research Assistant, a Microbiologist and Chemical
Supervisor all closely managed by the R&D Director. A complete protocol can be
supplied by R&D if needed. This work is scheduled to begin the week of April 10,
1995.
An extended shelf-life for both the current EpiPen(TM) Jr. will be most
beneficial in the marketplace and help with production planning, particularly
for international requirements. This extended shelf-life will also apply to
EpiE-Z Pen.
The pricing for this work totals $99,000. STI terms require 50% down upon
execution of this document, an additional 25% upon completion of filling the
stability units 12.5% at the 30 month test point and the final 12.5% at the 36
month test point and the submission of the final report.
In addition, pursuant to our discussions for each three months short of the
extended shelf-life goal of 36 months, STI will rebate Center Laboratories
$3,000 not to exceed a total rebate of $24,000 for both products. (For example,
if a shelf-life of only 30 months for both products is achieved, STI will rebate
Center Laboratories $12,000)
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
Mr. Chris Lo Sardo Ref-No-:FJM95017
March 31, 1995
It is important that we begin this project immediately as real time is the note
limiting factor. Please sign below and return one copy to my attention. Thank
you for your cooperation.
Respectfully,
Frank J. Massino
Executive Director
Commercial Development
- ------------------------ ----------------
Chris Lo Sardo Dated
cc:
K. Austin A. Pernick, Center Laboratories
J. Church
T. Lee
J. Miller
G. Wickes
J. Wilmot
2275 Research Boulevard
Rockville, Maryland 20850
301-926-1800
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
January 11, 1996
Mr. Alan Pernick
Center Laboratories
35 Channel Drive
Port Washington, New York 11050
Dear Alan:
This letter will serve to document our discussions regarding the EpiE-Zpen cost
reduction program.
- - Center Laboratories ("Center") has agreed to advance $375,000 in the form
of a non-interest bearing loan to Survival Technology, Inc., (STI) to
reduce the cost of manufacturing the EpiE-Zpen auto-injector.
- - The proceeds will used for the following purposes:
- High Speed Filling Equipment (Change parts for new COMAS cartridge
filling machine)
- Automation of the final packaging operations
- New mold for EpiE-ZPen training device
These additions will require six (6) months for installation and validation from
the date monies are advanced to STI.
The loan of $375,000 will be repaid to Center through a $0.30/unit credit on all
deliveries of EpiE-Zpen after the capital improvements are in service and
validated. Repayment of this loan will commence with EpiE-Zpen shipments
delivered after September 1, 1996.
2275 Research Boulevard
Rockville, Maryland 20850
301-926-1800
Fax: 301-926-6185
<PAGE>
STI SURVIVAL
TECHNOLOGY
INC.
Alan Pernick January 11, 1996
Center Laboratories Page Two of Two
If STI is unable to deliver the new EpiE-Zpen for any reason or
the EpiE-Zpen proves unmarketable despite Center Laboratories'
best efforts, the $0.30/unit credit to repay the $375,000 loan
will be made against deliveries of EpiPen on a monthly basis
not to exceed $10,000 per month.
If this accurately reflects our discussions, please acknowledge your agreement
by signing below.
Very truly yours,
James H. Miller
President and CEO
ACKNOWLEDGED AND AGREED
By: ___________________
Title: President
Date: 1/21/96
<PAGE>
EXHIBIT I
TESTING PROTOCOL
<PAGE>
Exhibit I
TESTING OF EPIPEN PRODUCTS BY INTERNATIONAL DISTRIBUTORS
To maintain consistency in the testing of EpiPen(TM) and EpiEZ Pen products by
our international distributors, the following guidelines must be applied
regarding sample preparation, test methodology and appropriate test limits.
Inclusion of these requirements in a contract format is the appropriate vehicle
for clarification.
o ANALYTICAL TESTING. A list of tests required by the international
distributor/regulatory agency must be supplied to STI(R) for official
notification. STI will then supply the distributor with STI approved
departmental procedures for conducting the tests. Revisions to the methods,
when applicable, will be forwarded to the distributor to maintain testing
consistency with STI. Only STI approved analytical methods may be used to
test the final product.
FDA approved shelf life specifications will be provided to the distributor
for verification of product potency. Product release specifications are
only applicable when the final product is released for sale by STI. After
that date, shelf life specifications are to be used by the distributor to
verify product potency.
o MICROBIOLOGICAL TESTING. USP sterility testing is performed by STI for
product release and is therefore deemed the official result. Due to aseptic
technique sensitivity in performing the sterility test and issues
associated with product handling in an autoinjector configuration, further
sterility testing by the distributor is not recommended.
In the event of an international regulatory requirement for additional
sterility testing, basic Unit samples representing the beginning, middle and
end of the batch production run will be sent to the distributor for sterility
testing. STI approved methods for conducting the USP sterility test will be
provided to the distributor and must be followed. USP sterility Testing of
STI products may only be performed utilizing barrier technology or the
Millipore Steritest System.
Exhibit 10.2
WAIVER AND AMENDMENT AGREEMENT
This WAIVER AND AMENDMENT AGREEMENT is made and entered into as of
October 29, 1999, by and between MERIDIAN MEDICAL TECHNOLOGIES, INC., a Delaware
corporation (the "Company") and NOMURA HOLDING AMERICA INC., a Delaware
corporation (together with its successors assigns and transferees, the
"Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser have entered into that certain
Note and Warrant Purchase Agreement dated as of April 30. 1998, as amended by
the Waiver and Amendment dated as of October 15, 1998 and the Waiver and
Amendment Agreement dated as of June 14,1999 (as amended, the "Purchase
Agreement"): capitalized terms used herein but not defined herein shall have the
meanings assigned thereto in the Purchase Agreement;
WHEREAS, the Company and the Purchaser have agreed to further amend the
Purchase Agreement on the terms and conditions set forth herein;
NOW, THEREFORE, the Company and the Purchaser agree as follows:
SECTION 1. Waiver. On the Amendment Effective Date (as defined below),
the Purchaser shall be deemed to have waived any violations of the Company's
Financial Covenants set forth in Section 10.16 of the Purchase Agreement
occurring on or before July 31, 1999. Nothing herein shall be deemed to waive
any violation of such covenants that arose or came into existence after the
Amendment Effective Date.
SECTION 2. Amendment of the Purchase Agreement
(a) Amendment to Section 1.1. Section 1.1 of the Purchase
Agreement is hereby amended by replacing the definition of "EBITDA with the
following:
"EBITDA" means, for any period, an amount equal to Net
Income plus (to the extent deducted in determining Net Income)
interest expense, provisions for income taxes, depreciation,
amortization of intangible assets and the write-off of in-process
research and development expense, in each case for the Company and
its Subsidiaries on a consolidated basis-, provided, that (a) any
calculation of EBITDA that takes into account the fourth quarter of
the Company's 1997 Fiscal Year shall exclude from such calculation
the $1,539,400 pre-tax charge incurred during the fourth quarter of
the Company's 1997 Fiscal Year, which charge is related to the
voluntary product exchange program instituted during such period,
(b) any calculation of EBITDA shall exclude any extraordinary item
associated with the extinguishment of Indebtedness as a result of
any refinancing of all or any part of the Indebtedness evidenced by
the Estate Subordinated Note or the Junior Subordinated Note or the
obligations under the Senior Loan Documents, (c) any calculation of
EBITDA that takes into account the third quarter of the Company's
1998 Fiscal Year shall exclude from such calculation the $2,244,000
pre-tax charge incurred during such third quarter of the Company's
1998 Fiscal Year, which charge is related to the EpiPen(R) product
<PAGE>
recall announced in May 1998, (d) any calculation of EBITDA that
takes into account the fourth quarter of the Company's 1998 Fiscal
Year shall exclude from such calculation the $500,000 pre-tax
charge incurred during such fourth quarter of the Company's 1998
Fiscal Year. which charge is related to the revision of the
estimated costs of the EpiPen(R) product recall, (e) any
calculation of EBITDA that takes into account the fourth quarter of
the Company's 1998 Fiscal Year shall exclude from such calculation
the $166,000 pre-tax charge incurred during such fourth quarter of
the Cornpany's 1998 Fiscal Year, which charge is related to the
amendment to the warrants amending the exercise price thereunder
from $11.988 to $7.50 per share of Common Stock that may be
purchased under the Warrants; and provided further, that (w) EBITDA
for the 12-month period ending on October 31, 1999 shall be
calculated by multiplying the EBITDA for the fiscal quarter ending
on that date, calculated using the above general definition, by
four, (x) EBITDA for the 12-month period ending on January 31, 2000
shall be calculated by adding the EBITDA for the two fiscal
quarters ending on October 31, 1999 and January 31, 2000,
calculated using the above general definition, and multiplying this
sum by two, (y) EBITDA for the 12-month period ending on April 30,
2000 shall be calculated by adding the EBITDA for the three fiscal
quarters ending on October 31, 1999, January 31, 2000 and April 30,
2000, calculated using the above general definition, and
multiplying this sum by four thirds, and (z)EBITDA for any 12-month
period ending after April 30, 2000 shall be calculated using the
above general definition.
(b) Amendment to Section 10.1. Section 10.1 of the Purchase
Agreement is hereby amended by deleting clause (d) and replacing it with
"RESERVED".
(c) Amendment to Section 10.11. The table in Section 10.11 of
the Purchase Agreement is hereby amended by deleting the entry of $6,600,000 in
the column titled "Permitted Amount" listed opposite the entry of 2000 in the
column titled "Fiscal Year Ended" and replacing it with $4.600,000.
(d) Amendment to Section 10.16. Section 10.16 of the Purchase
Agreement is hereby amended by deleting Section 10.16 in its entirety and
replacing it with the following:
Section 10.16. Financial Covenants. (a) Minimum Net Worth.
The Company shall not permit its net worth determined in accordance
with GAAP as of the last day of any fiscal quarter, (i) commencing
with the fiscal quarter ending on October 31, 1999 and continuing
thereafter through and including January 31, 2000 to be less than
$10,000,000, (ii) for the fiscal quarter ending on April 30, 2000
to be less than S10,500,000, (iii) for the fiscal quarter ending on
July 31, 2000 to be less than 11,000.000, and (iv) commencing with
the fiscal quarter ending on October 31, 2000 and continuing
thereafter, to be less than (A) 1l,000,000 plus (B) 50% of Net
Income (but not loss) of the Company for each Fiscal quarter of the
Company ending after July 31, 2000 through and including the last
day of the fiscal quarter in which this covenant is being tested;
provided, however, that any calculation of net worth and Net Income
(and loss) shall exclude the after-tax effect of any extraordinary
item associated with the extinguishment of indebtedness as a result
of any partial refinancing of the Senior Indebtedness and shall
also exclude any 'increase in net worth resulting from the issuance
of the Warrants.
<PAGE>
(b) Total Debt Leverage Ratio. The Company shall not permit
its Total Debt Leverage Ratio with respect to the 12-month period ending on the
last day of any fiscal quarter of the Company to be greater than the ratio set
forth opposite such fiscal quarter:
Fiscal Quarter Ended Ratio
-------------------- -----
October 31, 1999 4.25 1.00
January 31, 2000 4.25 1.00
April 30, 2000 4.00 1.00
July 31,2000 and the last day
of any subsequent fiscal
quarter of the Company 3.50 1.00
(c) Total Debt Service Ratio. The Company will not permit its
Total Debt Service Ratio with respect to the 12-montn period ending on the last
day of any fiscal quarter of the Company to be less than the ratio set forth
below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
--------------------- -----
October 31,. 1999 1.50 1.00
January 31, 2000 1.50 1.00
April 30, 2000 1.50 1.00
July 31, 2000 1.75 1.00
October 31, 2000 and the last
day of any subsequent fiscal
quarter of the Company 2.25 .1.00
(d) Interest Coverage Ratio. The Company will not permit its
Interest Coverage Ratio with respect to the 12-month period ending on the last
day of any fiscal quarter to be less than the ratio set forth opposite such
fiscal quarter.
Fiscal Quarter Ending Ratio
--------------------- -----
October 31, 1999 1.95 1.00
January 31, 2000 1.95 1.00
April 30, 2000 2.20 :1.00
July 31, 2000 2.40: 1.00
October 31, 2000 and the last
day of any subsequent fiscal
quarter of the Company 2.75 :1.00
<PAGE>
(e) EBITDA. The Company will not permit EBITDA for the
12-month period ending on the last day of any fiscal quarter of the Company to
be less than the amount set forth opposite such date:
Fiscal Quarter Ended Amount
-------------------- ------
October 31, 1999 $6,400,000
January 31, 2000 $6,250,000
April 30, 2000 $6,500,000
July 31, 2000 $7,500,000
October 31, 2000 and the last
day of any subsequent fiscal
quarter of the Company $10,000,000
<PAGE>
SECTION 3. Amendment of Warrants, The Company and the Purchaser hereby
agree to amend the Warrants so that the exercise price thereof shall be the
lesser of (i) $4.6625 per share and (ii) the lowest five consecutive trading day
average of the Company's common share price (based an last sales prices) during
the period commencing on (and including) June 14, 1999 to (but excluding) July
31, 2000 (subject to adjustment as provided therein). Such amendment may take
the form of a replacement warrant certificate (the "Replacement Warrant").
Concurrently with or promptly after receipt of the Replacement Warrant, the
Purchaser shall deliver the current warrant certificate to the Company for
cancellation.
SECTION 4. Representations and Warranties.
(a) The Company hereby represents and warrants to the
Purchaser that (I) this Waiver and Amendment Agreement and the
Replacement Warrant have been duly authorized by all necessary
corporate action, (ii) this Waiver and Amendment Agreement has been,
and the Replacement Warrant will be, duly executed and delivered by the
Company and (iii) this Waiver and Amendment Agreement is, and the
Replacement Warrant when issued, executed and delivered as contemplated
herein will be the legal, valid and binding obligations of the Company.
in each case enforceable against the Company in accordance with their
respective terms, except, in each of the foregoing cases, as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium. or other laws relative to affecting the
enforcement of creditors' rights generally in effect from time to time
and by general principles of equity.
(b) The Company hereby represents and warrants to the
Purchaser that, other than the occurrence which is being waived under
Section I above, as of the date hereof no Default or Event of Default
has occurred and is continuing.
SECTION 5. Continuing Effectiveness of Purchase Agreement. Except as
expressly provided herein, no other provision of the Purchase Agreement is
amended hereby. The Purchase Agreement, as amended hereby, is and shall continue
In full force and effect in accordance with the provisions thereof, and this
Waiver and Amendment Agreement shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Purchaser under the Purchase Agreement. This Waiver and Amendment Agreement
shall be effective only in the specific instances and for the purpose for which
it is given and shall be limited precisely as written and shall not constitute a
waiver of any other provision of the Purchase Agreement or a waiver of the
Purchase Agreement for any other purpose or for any other period.
SECTION 6. Cost and Expenses. The Company agrees to pay all
out-of-pocket expenses of the Purchaser for the negotiation, preparation,
execution and delivery of this Waiver and Amendment Agreement (including fees
and expenses of Stroock & Stroock & Lavan LLP, counsel to the Purchaser).
SECTION 7. Effectiveness. This Waiver and Amendment Agreement shall
become effective on the date (the "Amendment Effective Date") when each of the
following conditions have been satisfied:
(a) a copy of this Waiver and Amendment Agreement shall have
been duly executed by each of the Company and the Purchaser and
delivered to the Purchaser; and
<PAGE>
(b) delivery to the Purchaser of the Replacement Warrant, duly
executed by the Company, against delivery of the current warrant
certificate.
SECTION 8. Headings. The various headings of this Waiver and Amendment
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Waiver and Amendment Agreement or any provision hereof.
SECTION 9. Counterparts. This Waiver and Amendment Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which shall together constitute one and the same Instrument.
SECTION 10. References. From and after the Amendment Effective Date,
the term "this Agreement" and the expressions "hereunder" and "herein", and
words of similar import when used in or with respect to the Purchase Agreement
shall mean the Purchase Agreement as amended by this Waiver and Amendment
Agreement.
SECTION 11. Governing Law. THIS WAIVER AND AMENDMENT AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Waiver and Amendment Agreernent to be executed by their duly authorized officers
as of the date first written above.
MERIDIAN MEDICAL TECHNOLOGIES, INC.
By: /S/ James H. Miller
-----------------------------------------
Its President and Chief Executive Officer
NOMURA HOLDING AMERICA, INC.
By: /S/ Joseph R. Schmuckler
-----------------------------------------
Its: Attorney-in-fact
Joseph R. Schmuckler
Executive Managing Director
Exhibit 10.3
SEVENTH AMENDMENT TO CREDIT AGRE'EMENT
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
October 29, 1999, among MERIDIAN MEDICAL TECHNOLOGIES, INC. (as successor by
merger to Brunswick Biomedical Corporation) a Delaware corporation (the
"Borrower"), and ING (U.S.) CAPITAL, LLC, a Delaware limited liability company
(formerly known as ING (U.S.) Capital Corporation ("ING"). consisting the sole
Lender under the Credit Agreement referenced below (together with its successors
and assigns, the "Lenders", and ING in its capacity as Agent for the Lenders.
WITNESSETH:
RECITALS:
A. The Borrower, the Lenders and the Agent have entered into a certain Credit
Agreement dared as of April 15, 1996 (the "Credit Agreement"), capitalized terms
used herein and not otherwise defined shall have the meaning ascribed to such
terms in the Credit Agreement.
B. The Borrower has requested an amendment to the Credit Agreement to reflect an
extension in the nine period during which the Revolving Credit Commitment is
$8,500.000 and to reflect changes in the financial covenants, and the Lenders
have agreed to so amend the Credit Agreement on the terms and conditions set
forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 - Amendment to Section 1.1 of the Credit Agreement is hereby
amended by replacing the definition of EBITDA in its entirety with the
following:
"EBITDA" means, for any period, an amount equal to Net Income plus (to the
extent deducted in determining Net Income) interest expense, provisions for
income taxes, depreciation, amortization of intangible assets and the right-off
of in-process research and development expense, in each case for the Borrower
and its Subsidiaries on a consolidated basis; provided, that (a) any calculation
of EBITDA that takes into account the fourth quarter of the Borrower's 1997
Fiscal Year shall exclude from such calculation the $1,539,400 pre-tax charge
incurred during the fourth quarter of the Borrower's 1997 Fiscal Year, which
charge is related to the voluntary producer exchange program instituted during
such period, (b) any calculation of EBITDA shall exclude any extraordinary item
associated with the extinquishment of Indebtedness as a result of any
refinancing of all or any part of the Indebtedness evidenced by the Estate
Subordinated Note or the Junior Subordinated Note or the Obligations, (c) any
calculation of EBITDA that takes into account the third quarter of the
Borrower's 1998 Fiscal Year shall exclude from such calculation the $2,244,000
pre-tax charge incurred during such third quarter of the Borrowers' 1998 Fiscal
Year, which charge is related to the EpiPen(R) product recall announced in May
1998, (d) any calculation of EBITDA that takes into account the fourth quarter
of the Borrower's 1998 Fiscal Year shall exclude from such calculation the
$500,000 pre tax charge incurred during such fourth quarter of the Borrower's
1998 Fiscal Year, which charge is related to the revision of the estimated costs
of the EpiPen(R) product recall, and (e) my calculation of EBITDA that takes
into account the fourth quarter of all Borrower's 1998 Fiscal Year shall exclude
from such calculations the $166,000 pre tax charge incurred during such fourth
quarter of the Borrower's 1998 Fiscal Year, which charge is related to the
amendment to the Senior Subordinated Note Warrants amending the exercise price
thereunder from $11.988 to $7.50 per share of Common Stock that may be purchased
under the Senior Subordinated Note Warrants' provided, further, that
notwithstanding anything contained herein to the contrary, calculation of EBITDA
for my period ending prior to July 31, 2000 shall be made by annualizing all
items relating to income or expense for the period consisting of the full Fiscal
Quarter(s) elapsed from July 31, 1999 to the end of such period (such
annualizing to be calculated by multiplying such items of income and expense by
a fraction the numerator of which is 4 and the denominator of which is the
actual number of Fiscal Quarters in such period).
<PAGE>
SECTION 2. Amendment to Section 1.1 of the Credit Agreement is hereby
amended by replacing the definition of "Revolving Loan Commitment Amount" in its
entirety with the following:
"Revolving Loan Commitment Amount" means (I) for the period commencing November
6, 19998 and ending October 31, 2000, $8,500,000 and (ii) for the period
commencing November 1, 2000 and ending on the Revolving Loan Commitment
Termination Date, $6,500.00.
SECTION 3. Amendment to Section 6.2.4. Section 6.2.4 of the credit
Agreement is hereby amended by replacing said Section in its entirety with the
following:
SECTION 6.2.4 Financial Condition. From and after the Merger
Consummation Date, the Borrower hereby covenants and agrees as set forth below:
(A) Senior Debt Leverage Ratio. The Borrower will not permit its Senior
Debt Leverage Ratio with respect to the twelve-month period ending on the last
day of any Fiscal Quarter to be greater than the ratio set forth opposite such
Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of
the Merger Consummation Date, such ratio to be calculated as provided in clause
(g) of this Section 6.2.4.
Fiscal Quarter Ending: Ratio
--------------------- -----
October 31, 1996 3.5:1.0
January 31, 1997 3.5:1.0
April 30, 1997 3.5:1.0
July 31, 1997 3.5:1.0
October 31, 1997 2.0:1.0
January 31, 1998 2.2:1.0
April 30, 1998 2.1:1.0
July 31, 1998 1.9:1.0
October 31, 1998 1.8:1.0
January 31, 1999 1.8:1.0
April 30, 1999 1.6:1.0
July 31, 1999 1.6:1.0
October 31, 1999 1.75:1.0
January 31, 2000 1.75:1.0
April 30, 2000 1.5:1.0
July 31, 2000 1.25:1.0
October 31, 2000 and 1.4:1.0
thereafter
<PAGE>
(b) Total Debt Leverage Ratio. The Borrower will not permit its Total
Debt Leverage Ratio with respect to the twelve-month period ending on the last
day at any Fiscal Quarter to be greater than the ratio set forth opposite such
Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of
the Merger Consummation Date, to be calculated as provided in clause (g) of this
Section 6.2.4):
Fiscal Quarter Ending: Ratio
---------------------- -----
October 31, 1997 3.0:1.0
January 31, 1998 3.2:1.0
April 30, 1998 3.2:1.0
July 31, 1998 3.0:1.0
October 31, 1998 3.0:1.0
January 31, 1999 2.9:1.0
April 30, 1999 2.8:1.0
July 31, 1999 2.5:1.0
October 31, 1999 3.75:1.0
January 31, 2000 3.75:1.0
April 30, 2000 3.5:1.0
July 31, 2000 3.0:1.0
October 31, 12000 and 2.2:1.0
Thereafter
Senior Debt Service Ratio. The Borrower will not permit its Senior Debt Service
Ratio with respect to the twelve-month period ending on the last day of any
Fiscal Quarter to be less than the ratio set forth below opposite such Fiscal
Quarter (for each Fiscal Quarter ending prior to the first anniversary of the
Merger Consummation Date, such ratio to be calculated as provided in clause (g)
of this Section 6.2.4.
Fiscal Quarter Ending Ratio
--------------------- -----
October 31, 1996 2.0:1.0
January 31, 1997 2.0:1.0
April 30, 1997 2.0:1.0
July 31, 1997 2.0:1.0
October 31, 1997 3.7:1.0
January 31, 1998 3.0:1.0
April 30, 1998 2.4:1.0
July 31, 1998 2.3:1.0
October 31, 1998 2.3:1.0
January 31, 1999 2.3:1.0
April 30, 1999 2.4:1.0
July 31, 1999 2.5:1.0
October 31, 1999 1.75:1.0
January 31, 2000 1.75:1.0
April 30, 2000 1.75:1.0
July 31, 2000 2.0:1.0
October 31, 2000 and 2.7:1.0
Thereafter
(c) Interest Coverage Ratio. The Borrower will not permit its Interest
Coverage Ratio with respect to the twelve-month period ending on the last day of
any Fiscal Quarter to be less than the ratio set forth below opposite such
Fiscal Quarter (for each Fiscal Quarter ending prior to the first anniversary of
the Merger Consummation Date, such ratio to be calculated as provided in clause
(g) of this Section 6.2.4.:
Fiscal Quarter Ending: Ratio
---------------------- -----
October 31, 1997 2.5:1.0
January 31, 1998 2.6:1.0
April 30, 1998 2.7:1.0
July 31, 1998 2.8:1.0
October 31, 1998 2.9:1.0
January 31, 1999 3.0:1.0
April 30, 1999 3.1:1.0
July 31, 1999 3.2:1.0
October 31, 1999 2.25:1.0
January 31, 2000 2.25:1.0
April 30, 2000 2.5:1.0
July 31, 2000 2.75:1.0
October 31, 2000 and 3.5:1.0
Thereafter
<PAGE>
(c) Net Worth. The Borrower will not permit its net worth determined In
accordance with GAAP as of the last day of my Fiscal Quarter, (1) commencing
with the Fiscal Quarter ending on July 31, 1997 and continuing thereafter and
including July 31, 1998 to be less than $12,250,000 (2) commencing with the
Fiscal Quarter ending on October 31, 1998 and continuing thereafter through and
including July 31, 1999, to be less than (A) $12,250,000 plus (B) 80% of Net
Income (but not loss) for each Fiscal Quarter ending after July 31, 1997 through
and including the last day of the Fiscal Quarter in which this covenant is being
tested, (3) commencing with the Fiscal Quarter ending on July 31, 1999 and
continuing thereafter through and including October 31, 1999 to be less than
$11,500,000, (4) commencing with the Fiscal Quarter ending on October 31, 1999
and continuing thereafter through and including January 31, 2000 to be less than
$11,850,000, (5) commencing with the Fiscal Quarter ending on January 31, 2000
and continuing thereafter through and including April 30, 2000 to be less than
$12,250,000, (6) commencing with the Fiscal Quarter ending on April 30, 2000 and
continuing thereafter through and including July 31, 2000 to be less than
$13,000,000 and (7) commencing with the Fiscal Quarter ending on July 31, 2000
and continuing thereafter to be less than (A) $13,000,000 plus (B) 80% of Net
Income (but not loss) for each Fiscal Quarter ending after July 31, 2000 through
and including the last day of the Fiscal Quarter in which this covenant is being
tested: provided, however, that any calculation of net worth and Net Income (and
loss) shall exclude the after-tax effect of any extraordinary item associated
with the extinquishment of Indebtedness as a result of any partial refinancing
of the Obligations.
(f) EBITDA. The Borrower will not permit EBITDA for the twelve-month
period ending on the last day of any Fiscal Quarter to be less than the amount
set forth opposite such Fiscal Quarter (for each Fiscal Quarter ending prior to
the first anniversary of the Merger Consummation Date, such amount to be
calculated as provided in clause (g) of this Section 6.2.4):
Fiscal Quarter Ending Amount
--------------------- ------
October 31, 1996 $5,000,000
January 31, 1997 $5,000,000
April 30, 1997 $5,000,000
July 31, 1997 $5,000,000
October 31, 1997 $7,600,000
January 31, 1998 $7,200,000
April 30, 1998 $7,300,000
July 31, 1998 $7,400,000
October 31, 1998 $7,600,000
January 31, 1999 $8,000,000
April 30, 1999 $8,500,000
July 31, 1999 $9,500,000
October 31, 1999 $7,000,000
January 31, 2000 $6,900,000
April 30, 2000 $7,250,000
July 31, 2000 $8,350,000
October 31, 2000 and $10,000,000
Thereafter
(g) Calculations for Stub Periods. Notwithstanding anything contained
herein to the contrary, calculation of all items relating to income or expense
(including, without limitation, EBITDA and Interest Expense) for any period
ending prior to the first anniversary of the Merger Consummation Date shall be
made by annualizing all items relating to income or expense for the period
consisting of the full Fiscal Quarter(s) elapsed from the Merger Consummation
Date to the end of such period and by using the actual scheduled repayments of
indebtedness occurring during such period.
SECTION 4. Amendment to Section 6.2.5. Section 6.2.5 of the Credit
Agreement is hereby amended by replacing said Section in its entirety with the
following:
<PAGE>
SECTION 5.2.5 Capital Expenditures. The Borrower will not, and will not permit
any Subsidiary to make or commit to make any Consolidated Capital Expenditures,
except the Borrower and its Subsidiaries may make Consolidated Capital
Expenditures during any fiscal year provided (x) no Default or Event of Default
has occurred and is continuing and (y) the aggregate amount of Consolidated
Capital Expenditures made during such fiscal year (including the amount of
Capital Lease Liabilities incurred during such Fiscal Year that in accordance to
GAAP is attributable to principal) does not exceed the amount set forth below
opposite such fiscal year,
Fiscal Year Amount
----------- ------
1998 $3,800,000
1999 $5,000,000
2000 and each Fiscal $3,000,000
Year thereafter
provided further, however, that expenditures from insurance proceeds received
upon the occurrence of a loss which are made to replace or repair damaged or
destroyed assets will not be included in the foregoing calculation.
SECTION 5. Continuing Effectiveness of Credit Agreement. The Credit
Agreement and each of the other Loan Documents shall remain in full force and
effect in accordance with their respective terms, except as expressly amended or
modified by this Amendment.
SECTION 6. Cost and Expenses. The Borrower agrees to pay all
out-of-pocket expenses of the Agent for the negotiation, preparation, execution
and delivery of this Amendment (including fees and expenses of counsel to the
Agent).
SECTION 7. Effectiveness: This Amendment shall become effective upon
the prior or concurrent receipt by the Agent of each of the following:
(a) a copy of this Amendment, duly executed by each of the Borrower
and the Agent:
(b) payment by the Borrower of all outstanding fees and expenses of
King & Spalding, counsel to the Agent, in the amount of
$17,998.34, reimbursable by the Borrower pursuant to Section 9.3
of the Credit Agreement, and acknowledgement of receipt of such
payment by King & Spalding.
SECTION 8 Headings. The various headings of this Amendment are inserted
for convenience only and shall not affect the meaning or interpretation of this
Amendment or any provision hereof.
SECTION 9. Counterparts. This Amendment may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together that one and the same agreement. This
Amendment shall become effective when counterparts hereof executed on behalf of
the Borrower and each Lender (or notice thereof satisfactory to the Agent) shall
have been reserved by the Agent and notice thereof shall have been given by the
Agent to the Borrower and each Lender.
SECTION 10. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
<PAGE>
SECTION 11. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not assign or
transfer its rights to obligations hereunder or under the Credit Agreement
except in accordance with the terms of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MERIDIAN MEDICAL TECHNOLOGIES, INC.
By: /S/ James H. Miller
-----------------------
James H. Miller
President
(CORPORATE SEAL)
ING (U.S. CAPITAL LLC, in its capacity
As agent and Lender
By: /S/ Darren J. Wells
-----------------------
Darren J. Wells
Director
(SIGNATURE PAGE TO SEVENTH AMENDMENT TO CREDIT AGREEMENT)
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<NAME> Meridian Medical Technologies, Inc.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-1-1999
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
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<RECEIVABLES> 10,168
<ALLOWANCES> (544)
<INVENTORY> 8,122
<CURRENT-ASSETS> 21,439
<PP&E> 21,835
<DEPRECIATION> (5,996)
<TOTAL-ASSETS> 48,611
<CURRENT-LIABILITIES> 16,520
<BONDS> 17,393
0
0
<COMMON> 299
<OTHER-SE> 11,819
<TOTAL-LIABILITY-AND-EQUITY> 48,611
<SALES> 11,755
<TOTAL-REVENUES> 40,730
<CGS> (7,067)
<TOTAL-COSTS> (7,067)
<OTHER-EXPENSES> (3,206)
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<INTEREST-EXPENSE> (843)
<INCOME-PRETAX> 581
<INCOME-TAX> (227)
<INCOME-CONTINUING> 354
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<NET-INCOME> 354
<EPS-BASIC> 0.12
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