["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.12
MODIFICATION AGREEMENT
----------------------
This Modification Agreement (this "Agreement") dated as of December 22,
1997, between V.I. Technologies, Inc. (formerly known as Melville Biologics,
Inc.), a Delaware corporation ("VITEX") and Bayer Corporation (formerly known as
Miles, Inc.), an Indiana corporation ("Bayer").
WITNESSETH:
WHEREAS, VITEX and Bayer are parties to the First Amended and Restated
Agreement for Custom Processing dated January 24, 1996 (the "Agreement for
Custom Processing"), and to the Other Agreements, as defined in Section 17 of
the Agreement for Custom Processing, relative to processing and fractionation by
VITEX of plasma supplied by Bayer and related matters; and
WHEREAS, VITEX operates its fractionation business on property (the
"Property") located at 000 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx, owned by the Suffolk
County Industrial Development Agency ("SCIDA") and leased by SCIDA to VITEX
under the Lease Agreement (the "XXX Lease") dated as of February 15, 1995; and
WHEREAS, VITEX has leased a portion of the Property to Bayer under a Lease
Agreement (the "Lease Agreement"), and Bayer has sub-leased the same portion
back to VITEX under the Sublease Agreement (the "Sublease"), both dated as of
February 7, 1995; and
WHEREAS, pursuant to the Credit Agreement, dated as of December 22, 1997
(the "Chase Credit Agreement"), being entered into between VITEX and The Chase
Manhattan Bank (formerly known as Chemical Bank) ("Chase"), Chase has agreed to
make a Term Loan (as defined in the Chase Credit Agreement) (the "Chase Term
Loan") in the principal amount of $10,750,000 to VITEX subject to the terms and
conditions set forth therein, and VITEX shall deliver to Chase certain documents
thereunder;
WHEREAS, the Term Note documenting a loan previously provided by PNC Bank,
N.A. ("PNC") to VITEX, referred to in said Section 17, is being paid from the
proceeds of the Chase Term Loan, and the related Letter Agreement between VITEX
and PNC dated February 7, 1995 is being terminated;
WHEREAS, (i) the Guaranty Agreement of Bayer in favor of PNC, dated
February 7, 1995, relative to said Term Note of PNC Bank, is being terminated;
(ii) the reimbursement obligations of VITEX relative to the Guaranty Agreement
under the Reimbursement and Security Agreement dated February 7, 1995 (the
"Reimbursement Agreement"), are being terminated and (iii) the Mortgage,
Security Agreement and Fixture Filing
dated as of February 15, 1995 from VITEX and SCIDA to Bayer (the "1995
Mortgage"), and associated filings, securing said reimbursement obligation, is
being amended;
WHEREAS, VITEX and Bayer are entering into a Security Agreement, dated the
date hereof amending and restating the Reimbursement Agreement, the Security
Agreement and an amendment to the 1995 Mortgage pursuant to the Amendment to
Mortgage, Security Agreement and Fixture Filing being entered into concurrently
herewith (as so amended, the "Bayer Mortgage"), to secure obligations of VITEX
under the Agreement for Custom Processing, as amended by this Agreement;
WHEREAS, the term loan previously provided to VITEX by Chemical Bank is
being paid and replaced by the Chase Term Loan and the related Credit Agreement
between VITEX and Chemical Bank dated as of June 21, 1996 is being terminated;
WHEREAS, the Letter of Credit of Silicon Valley Bank, N.A. ("Silicon") in
favor of Chemical Bank provided by the Ampersand Limited Partners, as defined in
the Reimbursement Agreement dated as of June 21, 1996, between Silicon and said
Ampersand Limited Partners, is being canceled, along with such Reimbursement
Agreement;
WHEREAS, the Intercreditor Agreement dated as of June 21, 1996 (the "1996
Intercreditor Agreement"), among VITEX, Bayer and said Ampersand Limited
Partners is being terminated;
WHEREAS, as conditions precedent to making loans to VITEX under the Chase
Credit Agreement, Chase has required such payoffs and such terminations, and
that VITEX, Bayer and Chase enter into the Intercreditor Agreement dated the
date hereof (the "Intercreditor Agreement");
WHEREAS, to reflect the foregoing changes and to effect certain other
modifications to the agreements or documents referred to below, the parties wish
to enter into this Modification Agreement.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound, the parties hereby agree as follows:
1. The 1995 Mortgage shall be amended by the Amendment to Mortgage,
Security Agreement and Fixture Filing among VITEX, SCIDA and Bayer, dated as of
the date hereof, (b) the Reimbursement Agreement shall be amended and restated
as set forth in the Security Agreement and (c) the 1996 Intercreditor Agreement
shall be terminated by provisions of the Ampersand Termination, Discharge and
Release,
2
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
said Amendment to Mortgage, Security Agreement and Fixture Filing and the VITEX
Intercreditor Termination, Discharge and Release, all as of the date of this
Agreement.
2. Bayer consents to the Chase Credit Agreement, the Chase Term Loan and
the transaction contemplated by the Chase Credit Agreement, including, pursuant
to the Intercreditor Agreement, a first mortgage to Chase on the Property (the
"Chase Mortgage"), provided for therein. The Bayer Mortgage shall be subordinate
to said first mortgage as provided in the Intercreditor Agreement.
3. The Agreement for Custom Processing is amended as follows:
A. Section 1.2 is revised as follows:
(i) Strike language after "(b)" in the fourth line through the
words "(the "Initial Term")" and add the words "terminate on
December 31, 2001 (the "Initial Term")";
(ii) In the eleventh line "July 1, 1998" is changed to "July 1,
2000";
(iii) In the seventeenth line, both references to "July 1, 1999"
are changed to July 1, 2001" and "July 1, 1998" is changed to
"July 1, 2000".
B. Add at end of Section 1.2 the words "The processing fee be
adjusted as provided in Paragraph 4.3(d) for the years 1998, 1999, 2000 and
2001".
C. The second sentence of Section 3.2 is deleted in its entirety and
replaced with the following:
"During the Initial Term, the First Renewal Period and Second
Renewal Period, if applicable, the Production Plan Rate will be as
follows:
1998 ******* liters per year
1999 ******* liters per year
2000 ******* liters per year
2001 ******* liters per year
3
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
2002 Between ******** liters per
year as agreed by Bayer and VITEX
2003 Between ******** liters per
year as agreed by Bayer and VITEX"
D. Amend the next to last sentence of Section 3.6 to read in its
entirety as follows:
"With the exception of delays covered by the provisions of Section 3.7
or 13, Bayer will charge VITEX for each day's delay in delivery an
amount equal to the dollar value of the work in process (WIP)
inventory subject to such delay multiplied by the prevailing London
Interbank Offered Rate plus 1/8 of one percent and divided by 365."
E. Amend Section 4.1 by adding after the word "during" in line 6 add
the words "2000 and 2001 and during" and amend the third sentence of the
footnote to begin as follows: "In 1998, 1999, 2000 and 2001," and strike the
words "In 1998 and 1999." Also, in Section 4.1, change the yield for Fraction
II+IIIw from ******** grams per liter to ******** grams per liter.
F. The first sentence of Section 4.6 is amended to read as follows:
"The Base Yields will remain fixed through December 31, 2001."
G. Section 4.8 is amended to add the following language to the
beginning of the second sentence "During 1998, 1999, 2000 and 2001" and after
the word "applicable" add the words "period or." The third sentence shall be
amended to add the words "prior to 1998" after the words "Initial Term" and the
words "for 1998, 1999, 2000, 2001 and" before the words "the Renewal Period
Weekly Minimum" and after the words "(during" the words "1998, 1999, 2000, 2001
and."
H. Section 6.4(b) is amended to add the following after the word
"lost" at the end of the next to last sentence: A; provided, however that where
the Catastrophic Loss can be corrected to meet the requirements of this
Agreement set forth in Schedules A through E as applicable, by reprocessing of
the material in accordance with existing licenses, specifications and in
accordance with applicable FDA requirements, VITEX'S liability under this
Section 6.4(b) shall be limited solely to its cost of processing."
I. Section 12.1 is amended to strike clauses a and h, to add at the
end of subparagraph the following: "or if such Right of First Refusal is of no
further force and
4
effect, VITEX sells the facility or such assets as contemplated by Section 16.1
without the purchaser's assuming VITEX's obligations under this Agreement," and
to add a new clause as follows: "n.A default or Event of Default as defined in
the Chase Credit Agreement".
J. Section 12.2(h) is amended to change the parenthetical expression
after "due Bayer by VITEX" in the last sentence to the following: "(arising
under this Agreement)".
K. Section 15.7 is amended to read in its entirety as follows: "15.7
This Agreement, the Lease and the Sublease and the exhibits and schedules to
each such document constitute one single agreement between Bayer and VITEX,
although they have been executed as separate documents for convenience and ease
of reference, and together such documents constitute the complete and entire
agreement between the parties hereto with respect to the transactions
contemplated herein and supersede all previous written or oral negotiation,
commitments, memoranda, understandings, and any prior agreement between Bayer
and VITEX or their parents, subsidiaries, affiliated entities concerning their
subject matter."
L. Section 16.1 is amended to amend the next to last sentence
thereof to eliminate the words "and, if Bayer consents, under the Reimbursement
Agreement" and add the word "and" after the word "Lease." The following sentence
shall be added at the end of Section 16.1. "On and after the consummation of an
IPO, (i) Bayer's option or right of first refusal to purchase the facility or
any or all of the assets necessary for the Processing and Fractionation
Operations shall expire and be of no further force or effect and (ii) any sale
by VITEX, after such consummation of an IPO, of all or any of such assets (not
including any such sale/leaseback or lease/leaseback arrangement) shall be made
only on condition that the purchaser thereof shall assume VITEX'S obligations
under this Agreement."
M. Amend Section 17.1 to add after "1996" the following: "and as
amended by the Modification Agreement dated as of December 22, 1997", and to
strike clauses (a), (b), (c) and (l). Clause (d) shall be amended to change the
reference therein and throughout the Agreement from said Reimbursement Agreement
to the Security Agreement between VITEX and Bayer dated as of December 22, 1997.
Clause (e) shall be amended to change the reference therein and throughout the
Agreement from said Mortgage as amended by the Amendment to Mortgage, Security
Agreement and Fixture Filing among VITEX, SCIDA and Bayer, dated December 22,
1997. Clauses (f) and (h) are amended to change the references therein and
throughout the Agreement to said Lease and Sublease as amended by said
Modification Agreement. Clause (k) shall be amended to change the reference
therein and throughout the Agreement from said Facility Lease to said Facility
Lease as amended by the Facility Lease Modification Agreement between SCIDA and
VITEX, dated December 22, 1997. Clause (m) shall be added to incorporate by
reference the Equipment Lease Agreement between SCIDA and VITEX, dated as of May
1, 1996, as modified by the Equipment Lease Modification Agreement,
5
dated December 22, 1997. Clause (n) shall be added to incorporate by reference
the Security Agreement granted by SCIDA and VITEX to Bayer, dated as of May 1,
1996, as modified by the Security Modification Agreement, dated December 22,
1997. Clause (o) shall be added to incorporate by reference the Intercreditor
Agreement among Bayer, VITEX and The Chase Manhattan Bank, dated December 22,
1997.
N. Section 15.4 is amended by changing the telephone numbers and
facsimile numbers for Bayer to "Phone number: (000) 000-0000" and "Facsimile
Number: (000) 000-0000"; and by changing the address for notice to Vitex to the
following:
To VITEX: V.I. Technologies, Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
6
O. For purposes of this Agreement, the term "IPO" shall mean the
consummation of the first underwritten public offering for the account of VITEX
of its common stock pursuant to a registration statement declared effective
under the federal Securities Act of 1933, as amended, with aggregate gross
proceeds (before underwriter discounts and commissions) to VITEX of not less
than $25,000,000.
4. The Agreement For Custom Processing shall be further modified in that
all references therein to the PNC Loan and Guaranty shall be deleted; all
references to "Melville," AMBI" and "Melville Biologics, Inc." shall be changed
to "VITEX" or "V.I. Technologies, Inc." respectively; all references to "Miles"
and "Miles, Inc." shall be changed to "Bayer" and "Bayer Corporation,"
respectively; all references to the "Reimbursement Agreement" shall be changed
to the "Security Agreement"; but shall otherwise remain in full force and
effect, subject to changes provided for in this Agreement.
5. The Lease and Sublease shall be modified in that all references
therein shall be modified and amended as follows:
A. References to "Melville Biologics, Inc." shall be deemed to
refer to "VITEX"; to "Miles, Inc." shall be deemed to refer to "Bayer"; to the
"Miles Takeover" shall be deemed to refer to the "Bayer Takeover."
B. References to the Processing Agreement shall be deemed to refer
to the Custom Processing Agreement.
C. The term of the Lease and of the Sublease shall be extended to
be co-extensive with the Custom Processing Agreement.
D. All references therein to the guaranty by Lessee to PNC Bank,
N.A. shall be deleted; to the Reimbursement Agreement shall be deleted and
replaced with a reference to the Security Agreement; to the Mortgage will be
deleted and replaced with a reference to the Bayer Mortgage; to the Loan
Documents shall be amended to delete the Reimbursement Agreement, Mortgage and
guaranty and to include the Security Agreement and the Bayer Mortgage; and to
the Sublease will be amended to refer to the Sublease as modified pursuant to
this Agreement.
7
E. In Lease paragraph 16 a new Section (c) shall be added as
follows:
(c) so long as the Chase Mortgage shall be in effect, the
provisions of the Chase Mortgage and the Intercreditor Agreement among Lessor
and Lessee and the Chase Manhattan Bank shall govern the relationship between
this Lease and the Chase Mortgage, notwithstanding any other provision of this
paragraph 16.
6. Miscellaneous.
-------------
6.2 Successors and Assigns. This Agreement is being entered into for
----------------------
the benefit of, and shall be binding upon, the parties and their respective
successors and assigns.
6.2 Notices; Amendments, etc.
-------------------------
(a) Any notices hereunder shall be in writing and shall be sufficiently
given if personally delivered, telecopied or mailed by first class, registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the address of the relevant party at the address set forth under its signature
below, or to such other address or addresses as the party to whom such notice is
directed may have designated by like notice in writing to the other parties
hereto. A notice shall be deemed to have been given when personally delivered
or, if telecopied, upon receipt or, if mailed, on the earlier of (i) three (3)
days after the date on which it is deposited in the mail, or (ii) the date on
which it is received.
(b) This Agreement may be amended and the terms hereof may be waived only
with the written consent of Bayer and VITEX.
6.3. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
6.4 Severability. Any provision to this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6.5 Effective Time; Entire Agreement; Governing Law. This Agreement
-----------------------------------------------
shall become effective upon disbursement of the Chase Term Loan by Chase,
payment, termination and cancellation of the PNC Term Loan, Chemical Term Loan
and Silicon Letter of Credit, and related agreements, and entering into the
Security Agreement, Bayer Mortgage and Intercreditor
8
Agreement as referred to in the recitals to this Agreement. This Agreement
embodies the entire agreement and understanding of the parties hereto regarding
the subject matter hereof. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK: HOWEVER, THE
FOREGOING SHALL NOT AFFECT THAT THE GOVERNING LAW OF THE CUSTOM PROCESSING
AGREEMENT IS THAT OF THE STATE OF CONNECTICUT.
9
IN WITNESS WHEREOF, the parties have executed this Modification Agreement
as of the date first set forth above.
V.I. TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President, CFO
BAYER CORPORATION
By: /s/ Xxxx Xxxx
-------------------------
Name: Xxxx Xxxx
Title: Vice President
10