Exhibit 10.1
LEASE AND OPERATION AGREEMENT
SIGNED IN TEL-AVIV ON JULY 20TH, 2000
B E T W E E N
OMRIX BIOPHARMACEUTICALS LTD.
whose offices are located at Building 14, Kiribati Weitzman, Nes Zion,
(hereinafter "OMRIX")
ON THE ONE PART
AND
MAGEN XXXXX XXXX in Israel
a statutory, not - for - profit organization, existing under the Laws of the
State of Israel, whose headquarters are located at 00 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxx (hereinafter "MDA")
OF THE SECOND PART
WHEREAS With the help and the donations of the friends and of the donors of
MDA in the United States of America as well as others around the
world, MDA has built and erected a blood fractionation plant belonging
to MDA within the perimeter of the Tel Hashomer hospital
(hereinafter: "THE PLANT"), occupying part of the Building belonging
to MDA, for the purpose of achieving such goals and purposes as
mentioned hereinafter; and
WHEREAS Said goals and purposes are, primarily, the establishment of a blood
fractionation plant in order to enable the manufacture from plasma
collected in Israel and the supply therefrom of the Licensed Products
(as defined herein below) to the population of Israel in times of
peace as well as in times of crisis and/or war; and
WHEREAS In light of the aforesaid, OMRIX declares that it understands the
importance to MDA and to the state of Israel of supplying the Israeli
population with the Licensed Products manufactured from plasma
collected in Israel, and states and confirms that it bases its plans
and calculations, among others, on selling to the Israeli market the
Licensed Products manufactured from plasma collected in Israel.; and
WHEREAS MDA and OCTAPHARMA A.G. entered, on September 2, 1990, into a
know-how, License and Manufacturing Contract (hereinafter "THE
CONTRACT"); and
PORTIONS OF THIS EXHIBIT MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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WHEREAS On September 5, 1995, OCTAPHARMA A.G.. assigned its rights and
duties under the Contract to OMRIX, except some duties and obligations
towards MDA in respect of which OCTAPHARMA A.G. remains liable and
obligated as specified in the abovementioned assignment document; and
WHEREAS On February 27, 1996, MDA and OMRIX executed an Addendum to the
Contract ("THE ADDENDUM"); and
WHEREAS The parties hereto wished to drastically amend the modus operandi
and as a result thereof also the relations between the parties, so
that OMRIX shall lease from MDA, the Plant and the Premises (as
hereinafter defined) and operate the Plant on its own, paying MDA a
Rent and Lease Fee as provided herein; and
WHEREAS Consequently the parties signed on April 17, 1997 an agreement
which was subject to the approval of the MDA's executive committee
("THE 1997 AGREEMENT"); and
WHEREAS Ever since, the parties acted in accordance with the provisions of
the 1997 Agreement as if it had been approved by MDA's executive
committee; and
WHEREAS The parties wish to amend certain provisions of the 1997
Agreement, among others, in order to further improve the level of
cooperation between the parties; and
WHEREAS The parties wish to enter into an agreement pertaining to the
purchase by OMRIX, during the Term of this Agreement, of plasma from
MDA; and
WHEREAS Both parties hereby declare that they have the full right and
authority to enter into this Agreement; and
WHEREAS It is agreed that unless otherwise specifically indicated herein,
and except for some duties and obligations towards MDA in respect of
which OCTAPHARMA A.G. remains liable and obligated as specified in the
aforementioned assignment documents, the 1997 Agreement replaced,
substituted and came instead of the Contract and the Addendum; and
WHEREAS The parties wish that this Agreement ("AGREEMENT") will replace,
substitute, and come instead of the 1997 Agreement.
NOW THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:
1. THE PREAMBLE, SCHEDULES AND DEFINITIONS
1.1 The preamble to this Agreement and the Schedules attached thereto form an
integral part thereof and are as binding upon the parties as the
Agreement itself.
1.2 The capitalized terms listed below shall have the meaning assigned to
them, unless the context requires otherwise.
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LICENSED PRODUCTS (or PRODUCTS)- shall mean Licensed Products as defined
in the Contract, with the exclusion of the words "Factor IX and such
other products" from the definition therein.
THE PLANT - as described in the first recital of this Agreement.
THE PREMISES - The part of the Building hereby leased to OMRIX as marked
in yellow on the plan of the Building attached hereto as SCHEDULE "A".
THE BUILDING - The MDA Blood Services Center Building within the
perimeter of the Tel Hashomer Hospital.
SUPPLIES - Electricity, water, fuel, salt and other supplies, should they
be agreed upon from time to time.
SYSTEMS - The central systems located in the Building and serving the
Building and the Plant, being at present as detailed in SCHEDULE C1
attached hereto.
EQUIPMENT - The machinery, equipment and instrumentation belonging to MDA
and used for the Plant as detailed in Schedule C3 attached hereto.
BIOLOGICAL GLUE - The Glue product produced and/or marketed by OMRIX
under the trademark/trade name "Quixil" or under any other trademark
and/or trade name.
FACILITY ENGINEER - The person appointed or to be appointed by the
parties hereto, acting as supervisor over all maintenance in the
Building, including the Plant - as referred to in Sub Section 2.7A
MAINTENANCE BODY - As defined in Section 2.7
EFFECTIVE DATE - January 1st, 1997.
ARBITRATOR - A single ruling arbitrator who shall be appointed by both
parties. In case agreement cannot be reached as to the identity of the
Arbitrator within 30 days as from the date on which a party hereto
requests to refer a matter to arbitration, the issue shall be referred to
the head of the Israeli Bar Association, who will appoint the Arbitrator.
FDA APPROVAL - Registration by the United States Food and Drug
Administration of the Biological Glue and permit to market the Biological
Glue in the United States.
TERM - Period of this agreement as referred to in Section 4
2. THE LEASE OF THE PREMISES
2.1 OMRIX hereby leases from MDA and MDA hereby lets to OMRIX, for
the Term of this Agreement, the Premises in which the Plant is
located.
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2.2 It is hereby understood that OMRIX may, in the future, require
additional space in the Building. In such an event MDA will make
its best efforts to accommodate OMRIX's requirements for
additional space and the parties will negotiate in good faith a
mutually agreeable arrangement for such space including the
payment of rent therefore. Since the Effective Date, the parties
have agreed that MDA shall lease to OMRIX additional space
("ADDITIONAL SPACE") as marked in yellow lines on SCHEDULE A. The
additional rent in consideration of the Additional Space has been
agreed to be $15 US per sq.m per month, and since OMRIX has
undertaken to finance some construction work for MDA at a cost of
$104,000 OMRIX shall be entitled to set off the additional rent
against that amount. Said Additional Space shall be deemed for all
intents and purposes to be part of the Premises, except with
regard to the Rent and Lease Fee; the aforementioned fee with
respect to the Additional Space and/or any future additional
space, shall be paid, subject to the offset provisions referred to
above, in addition to the Rent and Lease Fee, as set forth in
section 7 hereunder.
2.3 In addition to the Premises, MDA hereby grants OMRIX, for the
duration of the Agreement, the non-exclusive passage rights in
respect of other parts of the Building, as may be reasonably
required by OMRIX, such as the warehouse entrance, the entrance
to the Building, etc.
2.4 Whereas the Premises and the Plant obtain their Supplies from the
Systems, and it is the intention of the parties that all the
Systems will continue, in the future, to supply both the Blood
Bank Services and the offices of MDA on the one hand, and the
Premises and Plant on the other hand, MDA hereby undertakes to
provide for the professionally sufficient and adequate, continuous
and uninterrupted supply of all the above Supplies to OMRIX during
the duration of this Agreement.
It was recognized that on the Effective Date, the mechanical state
of the Plant and the Systems were deficient in terms of cooling
capacity, specifically regarding the repair of the second chiller
and the installation of a third chiller. The cost of the above
units and the installation thereof, as well as the cost of
rectifying the above deficiencies were borne by MDA. At MDA's
request, OMRIX financed the above costs and has offset same,
against amounts that were due to MDA from OMRIX.
Both parties hereby confirm that MDA authorized OMRIX to purchase
a third chiller, which was installed at the Premises/Plant. OMRIX
financed the acquisition of the third chiller, the specifications
and the price of which were already agreed upon by the parties,
and has debited MDA for the amount paid by OMRIX for the above
chiller. For the avoidance of any doubt it is hereby agreed and
declared that the third chiller is not part of the Systems, and
serves the Plant only.
As the entrance to the Warehouse did not meet GMP standards and
was modified to do so, the parties agreed about the installation
of a door at the back entrance to the Premises, to be operated by
means of remote control, and about the division of the costs
thereof between them.
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2.5 MDA hereby acknowledges and confirms that any interruption of
supply to OMRIX of any of the Supplies and/or prevention of access
to the Premises and any other deed or misdeed of MDA or anybody on
its behalf which might lead to the disruption of the operational
activities of the Plant - which is designed and intended to
operate 364 days a year, may cause OMRIX severe damages for which
MDA shall be fully liable.
In view of the above MDA hereby states and undertakes that under
no circumstances will it disconnect or allow anybody else to
disconnect or discontinue any of the Systems or the Supplies nor
let any such System remain, for any period of time, out of order
and/or inoperable, unless such interruption is absolutely required
for the repair and maintenance and as far as such interruption
could be foreseeable in advance, upon coordination with OMRIX.
2.6 Without derogating from the generality of the above, MDA hereby
undertakes to maintain, at all times, in good operating order and
in compliance with FDA and EC GMP requirements all the Systems
which will serve both MDA and OMRIX and will take whatever
steps necessary - including replacement of defective or aging
units, in order to ensure the uninterrupted supply of the
Supplies. OMRIX declares that at the time of the signing of this
Agreement, the maintenance is in compliance with EC GMP
requirements. OMRIX further declares that it is not aware of any
aspect of the maintenance, which is not in compliance with the FDA
GMP requirements, except some items regarding which OMRIX has
informed the Facility Engineer
It is hereby agreed by the Parties that OMRIX shall share with MDA
the costs of the Supplies and the costs of the operating and
maintenance of the Systems. The division of the said costs between
MDA and OMRIX shall be calculated in a manner as described below.
MDA and OMRIX, respectively, will invoice each other monthly for
the applicable charges with regard to said costs, paid by the
invoicing party. The other Party will pay such invoiced costs
within 30 days of the date of invoice, or offset same against
amounts currently due to such invoicing party, provided that the
invoicing party will provide the other Party with adequate proof
of the payment of said underlying supplies and maintenance
invoices.
During the initial period starting from the Effective Date until
December 31, 1997, the parties bore the cost of the Supplies and
the operating cost of the Systems as follows: OMRIX ***% and MDA
***%. The same ratio shall prevail with respect to the cost of the
Supplies, until either party requests the comparison and the
re-examination of the consumption of the Supplies as set forth
hereunder, against the consumption during calendar year 1995. Such
consumption shall be quantified in terms of units used rather than
monetary terms. It is agreed that, assuming MDA will not introduce
new activities or significantly increased levels of consumption in
its part of the Building, all the growth in consumption of the
Supplies (in units - as opposed to price) shall be attributed to
OMRIX. In view of the results of the above comparison, the parties
shall make the necessary retroactive adjustments in respect of the
calendar
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year which had been the subject of the comparison. Thereafter,
such allocation percentage will be used for all future years
unless either party significantly changes its level of activity.
It is hereby clarified that the aforementioned comparison shall be
made separately with regard to each of the Supplies.
Without derogating from the aforesaid, each Party shall have the
right to demand on an annual basis during any given year of the
Term, that a new comparison of units be made and that a new
allocation percentage be determined, if a Significant Change has
occurred.
A Significant Change shall be defined as a five percent (5%) or
greater variation in unit consumption as compared to the previous
applicable year in which the percentage had been established (such
previous year shall be referred to as the "BASE YEAR"). Each
Supply out of the following - fuel, water/sewage & electricity
shall be separately examined and shall be separately subject to a
new determination of the allocation percentage. All comparisons
shall be made on a calendar year basis and if a Significant Change
has occurred such change shall be retroactively adjusted for such
one calendar year only. Any new allocation percentage so changed
shall continue to be applied prospectively until the next such
change with regard to the same Supply. The first comparison for
the determination of a Significant Change of the allocation
percentages with regard to each of the aforesaid Supplies shall
use 1995 as the initial Base Year, Thereafter, subsequent
comparisons shall be made against units consumed in the year in
which the applicable ratio was last changed (i.e. the new Base
Year with regard to same Supply).
Since the parties have already reached an agreement with regard to
the accounting up until December 31st, 1997 - the first review of
the allocation percentages shall compare usage during the first
year thereafter in which either party requests a new comparison,
against 1995 usage. AN example is presented below for
clarification, which assumes that all increases have been caused
by OMRIX:
FUEL Electricity Water/
Liters KW/H Sewage
------ ----------- M(Delta)3
-------
(1) 1998 Units 500,000 5,500,000 53,000
(2) 1995 Units 32,000 2,200,000 19,000
------- --------- -------
(3) Difference (1) - (2) 468,000 3,300,000 34,000
======= ========= ======
(4) % Change vs. Base Year
Units (3)/(2) 1463% 150% 179%
======= ========= ======
Allocation Change Yes Yes Yes
(5) Calculation of New
Allocation Percentage
to OMRIX = (3)/(1) 94% 60% 64%
======= ========= ======
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The percentages in (5) above will be used to re -allocate 1998
amounts and will be prospectively used in 1999 pending future
comparisons. Again in the interest of clarity an example of a 1999
comparison is illustrated below (again all increases are assumed
to be caused by OMRIX):
Fuel Electricity Water/
Liters KW/H Sewage
------ ----------- M(Delta)3
---------
(1) 1999 Units 600,000 5,600,000 54,000
(2) 1998 Units 500,000 5,500,000 53,000
------- --------- -------
(3) Difference( 1) - (2) 100,000 100,000 1,000
======= ========= ======
(4) %Change vs. Base Year
units (3)/(2) 20% 1.8% 1.88%
======= ========= ======
Allocation Change Yes No No
(5) Calculation of New
Allocation % to OMRIX 95% N/A N/A
In years subsequent to the initial review, if all of the increases
are attributed solely to OMRIX, the new allocation percentage
shall be determined as follows: (current year units minus 1995
units) divided by current year units.
In Fuel it is (600,000 - 32,000) / 600,000 = 95%
In the next year's comparison 1998 is still the Base year for
Electricity & Water/Sewage but 1999 becomes the Base year for
Fuel.
The cost of maintenance and repair of the Systems, as well as the
cost of the Maintenance Body and of the Facility Engineer, shall
be divided between the parties, so that ***% of all such costs
shall be borne by OMRIX, and ***% shall be borne by MDA.
Provided, however, that if it appears that due to excessive use of
the Systems or any of them by OMRIX, there has been a substantial
increase in the cost of spare parts required for the maintenance
of such System(s), in an amount exceeding $ 25,000 per annum, MDA
shall have the right to demand that the question of the division
of the cost of maintenance of such System(s) shall be reexamined
by the parties and that following
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such I reexamination, if such claim is found justified, a new
division of such costs shall be made.
2.7 OMRIX undertakes to exercise reasonable care and to maintain the
Premises in a proper way, fixing and repairing any damages to the
Premises other than those caused by defective and/or
unprofessionally made or installed parts of the Premises or of any
installations therein. In addition, OMRIX shall replace and repair
any damages caused by reasonable wear and tear which must be
replaced/repaired in order to enable the continued operation of
the Plant.
Without derogating from the respective liability of each party to
bear the cost of and the responsibility for maintenance and other
works as stipulated above, it is hereby agreed, that the parties
shall hire, for all maintenance which is the responsibility of
MDA, as well as for all maintenance, fixing and repairing works,
which are the responsibility of OMRIX under this sub- section 2.7
and sub-section 3.2 hereinbelow as well as all relevant schedules,
the services of one person or one entity only (hereinafter "the
Maintenance BODY"). The parties hereby acknowledge, that currently
the Maintenance Body is the Teus Group.
In the event any one of the parties hereto chooses to
dismiss/terminate the employment and/or relations with the Teus
Group (or any subsequent Maintenance Body) or any employee
thereof, the party demanding the dismissal/termination shall be
obligated to submit to the other party a detailed written letter
stating the reasons which are the basis for the requested
dismissal/termination, and in such case - the other party's
consent to such dismissal may not be unreasonably withheld.
Upon THE dismissal/termination as aforesaid, the hiring of a
substitute Maintenance Body and/or of a substitute employee of the
Teus Group or of any subsequent Maintenance Body (the dismissal of
whom was required by one of the parties) shall require the mutual
consent of both parties.
Without derogating from the above, in the event OMRIX believes
that it is not able to assure or ascertain satisfactory
maintenance of the Plant while observing the above mentioned
mechanism of hiring/firing, OMRIX shall have the right to employ
at its own cost and responsibility additional maintenance
person/people who shall engage in the maintenance only of the
Equipment, as well as the systems which only serve the
Plant/Premises, provided however that such maintenance
person/people shall be subject to the prior written approval of
the Facility Engineer as to the professional capacity of the
candidate, which approval shall not be unreasonably withheld. Such
additional maintenance person/people shall be entitled to work
within the maintenance workshop and all other work areas, which
are normally used by the Maintenance Body, located in the
Building.
For the avoidance of doubt it is hereby clarified that all of the
aforementioned maintenance people, whether jointly hired or hired
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separately by OMRIX - shall be subject to the professional
supervision of the Facility Engineer.
2.7A The parties shall appoint, for the purpose of supervision over all
maintenance works in the Building, including the Plant, the
services of one person only (hereinafter: "the Facility
Engineer"), and shall bear all costs pertaining to the employment
of the Facility Engineer as stipulated above, i.e. - OMRIX shall
bear ***% of all such costs and MDA shall bear ***% of all such
costs.
The Facility Engineer's responsibility shall be to ensure that the
Plant, and all of the Systems and the Equipment contained therein
are being maintained and upheld by the parties, by the Maintenance
Body, and by the Facility Engineer himself in strict compliance
with GMP requirements, The Facility Engineer, subject to executing
a confidentiality agreement with OMRIX and with MDA separately,
shall have the right to enter any part of the Building, including
the Plant, in order to carry out his duties. Subject to the
execution by the Facility Engineer of a confidentiality agreement
satisfactory to OMRIX, both parties hereby undertake not to deny
the Facility Engineer such access to any part of the Building.
After execution of a Confidentiality Agreement satisfactory to
OMRIX, the Facility Engineer shall be entitled to demand from each
of the parties relevant documents and/or plans necessary in order
to perform his duties, and the parties hereby undertake to comply
with all such reasonable demands presented by the Facility
Engineer.
The parties hereby agree, that Engineer Xxxx Xxxxxxxxx, is
currently the Facility Engineer.
Should Engineer Xxxxxxxxx refuse to act as the Facility Engineer
and/or is unable to do so for any reason whatsoever, then in such
case the parties shall mutually appoint an alternative Facility
Engineer.
Each of the parties shall be entitled to request that the Facility
Engineer be replaced. Any such request shall be accompanied by a
detailed statement detailing the reasons for such request. If the
other party does not agree to such request, the matter shall be
referred to an Arbitrator. Any new Facility Engineer shall also
be appointed mutually by both parties.
2.7B For the avoidance of doubt, it is hereby clarified that the terms
"the Systems" and "the Supplies" indicating common systems and
supplies, shall not include devices and/or equipment and/or the
supplies generated therefrom, which are designated solely and
which are used exclusively by and for one party only, even if same
are not, wholly or partially located inside those parts of the
Building actually held or occupied by such party. The systems
which, at the present time, are designated for the sole use and
responsibility of OMRIX are itemized in SCHEDULE C2 attached
hereto.
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The aforesaid in this sub-section shall mean for all purposes of
this agreement, inter alia, that said systems and/or supplies
designated solely for the benefit and use of one party only, shall
be deemed to be part of the equipment held by such party, and
therefore the cost of the maintenance with regard to such systems,
and/or the cost of such supplies, as the case may be, must be
borne by such party.
In case it is realized at any time that any System is actually
used normally and continuously by one party, while the other
party's use of such System is negligible, then the parties shall
meet and if mutually agreed, it shall be deemed, for all intents
and purposes, that such System is used solely by the party mostly
using it.
2.8 OMRIX's employees, sub-contractors, customers and visitors etc.,
shall have at all times, free access to the Plant and the
Building, and free access to and use of those common areas of the
Building to which such people may reasonably need access to and/or
use of. Any persons visiting the Building at the invitation of
OMRIX will be accompanied by or supervised by an OMRIX employee or
Maintenance Body employee while outside the Premises. MDA shall
use its best efforts to obtain for OMRIX's employees the same
approvals that it obtained for MDA's employees in order to enable
them a free-of-charge entrance to the perimeter of the Tel
Hashomer Hospital.
2.9 MDA shall allow the commercial vehicles loading and unloading
goods and products to and from the Plant, to load and unload
freely at the part of the Building designated for that purpose. As
far as parking of the vehicles of OMRIX's employees is concerned,
MDA will secure the same rights for OMRIX's employees as for MDA's
employees.
2.10 OMRIX's employees shall not be entitled to enter the Blood Bank
without prior coordination provided, however, that OMRIX'S
employees and guests will have at all times free access to their
rooms and offices, some of which are located in the Blood Services
part of the Building.
During the regular working hours OMRIX's employees and visitors
shall enter the Plant through the main door of the Building, or at
their discretion, through the back door. The access to the Plant
at any time not within the regular working hours shall be through
the back door only.
OMRIX's employees will have, at any time, free access to the
mechanical areas of the Building for the purpose of monitoring the
Supplies and the Systems. However, except in cases of urgency,
emergency or strike, OMRIX's employees shall not be entitled to
engage in the maintenance of the Systems or interfere with the
Supplies. Whenever OMRIX`s employees shall engage in the
maintenance of the Systems, as provided above, it shall be at
OMRIX's responsibility.
OMRIX's employees shall have the access to any and all mechanical
areas in the Building for the purpose of monitoring and/or
maintaining systems and supplies and for monitoring and/or
maintaining any Equipment, which are designated solely for or used
for the most part by
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the Plant.
2.11 The parties have executed an Acceptance Protocol describing the
situation of the Plant, the Premises and the Systems, indicating
the defects, which were known at that point of time. The above
Acceptance Protocol shall be attached to this Agreement as
SCHEDULE "B1". It has been agreed that in order to rectify the
defects specified in Schedule B1 OMRIX's capital expenditures of
$*** will be invoiced to MDA. Upon repayment or offset of the
above amount, OMRIX shall have no further claim against MDA for
the above defects and/or for any other defects that may be found.
2.12 Notwithstanding section 2.11, other items were noted as defects of
the Plant, Premises, and the Systems at the same time as the above
and are detailed in SCHEDULE B2. It has been agreed that the items
detailed therein will be treated as Discretionary Investments made
by OMRIX according to Section 15 herein below, to the extent OMRIX
has already or shall in fact repair such defects.
2.13 It is hereby agreed that OMRIX shall be entitled to carry out from
time to time construction changes, modifications and/or expansions
of the Plant within the Premises, subject to observing the
procedure outlined below.
Once OMRIX decides to carry out construction changes and/or
modification(s) in the Premises, it will submit to MDA for its
approval the plans of any such changes or modifications. MDA shall
not unreasonably object to any such works provided the plans
submitted for its approval are accompanied by a statement of a
construction engineer that such modifications/changes shall not
adversely affect the Building or any part thereof. Any such
changes or modifications shall be carried out by OMRIX at its own
cost and responsibility.
The aforementioned plans which shall be submitted by OMRIX, shall
be submitted in stages as follows:
The first stage shall be the basic and/or conceptual design of the
required construction changes (and/or modifications) accompanied
by a time schedule, which shall be submitted for MDA's approval
prior to the commencement of construction (hereinafter: "THE BASIC
DESIGN"). MDA will respond to the Basic Design within 14 days.
Failing to do so will be deemed to be an approval of the Basic
Design. In the event that MDA responds within said 14-day period
with specific adverse issues, such issues will be resolved by
OMRIX prior to the commencement of the construction
changes/modifications. This process of resolution will be carried
out as quickly and efficiently as reasonably possible by both
parties.
When available, OMRIX shall submit a detailed design to MDA
(hereinafter: "THE DETAILED DESIGN");
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Should OMRIX desire to deviate from the Detailed Design during
construction/modification, OMRIX shall submit all plans relating
to the required deviation for MDA's approval;
Not later than 45 days after completion of
construction/modification, OMRIX shall submit to MDA "as made"
plans and drawings with regard to the construction/modification,
which had been undertaken.
OMRIX shall indemnify MDA for any damages resulting from such
construction changes. MDA agrees to maintain all plans and
documents submitted to it by OMRIX as aforesaid as confidential
information. Should MDA choose to use the services of an external
engineering consultant in order to review OMRIX's
construction/modification, then such consultant, who must be
acceptable to OMRIX, shall be obligated to sign a confidentiality
agreement with OMRIX as drafted by OMRIX's attorney.
2.14 It is hereby agreed that OMRIX shall not be entitled to register a
Long Term Lease ( ??? with the Land Registrar in respect of
this Agreement.
2.15 In utilizing access to and use of any part of the Building as
permitted in sub-sections 2.3,2.7,2.8 and 2.10. OMRIX and its
personnel shall observe all safety, security, and secrecy rules
and regulations published by MDA from time to time and applicable
to MDA'S employees in the Building. Such rules and regulations,
which shall be prepared jointly by both parties hereto, shall be
attached to this Agreement as of their publishing (and/or
addition/modification),as Schedule C4(the "RULES").
2.16 Should OMRIX wish to place or install items of equipment outside
the Premises, whether necessitating structural changes in the
Building or not necessitating such changes, it shall be entitled
to do so upon the receipt of a prior written consent of MDA which
shall not be unreasonably withheld. Once such a consent is
granted, all the above provisions shall apply mutatis mutandis to
such equipment and the installation thereof.
2.17 Upon expiration or termination of this agreement for any reason
before JANUARY 1st, 2007, OMRIX undertakes, if so required by MDA,
to leave the plant in a good working condition, and capable of
manufacturing all the Licensed Products. If the expiration or
termination of this agreement occurs after January 1st, 2007,
OMRIX shall hand over the plant to MDA in a good working
condition. If however at such a point of time the plant will not
be capable of manufacturing all the Licensed Products, and MDA
wishes that Licensed Products or a Licensed Product should be
manufactured at the plant, then OMRIX should participate in the
cost of reinstating such missing manufacturing line in the maximum
amount being 50% of the Grant to which OMRIX might be entitled
according to the provisions of section 16.3.
3. LEASE OF THE EQUIPMENT
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3.1 MDA hereby leases to OMRIX and OMRIX hereby leases from MDA, for
the Term of the Agreement the machinery, equipment and
instrumentation installed in the Plant and belonging to MDA,
detailed in Schedule "C3"attached hereto (the "EQUIPMENT").
3.2 OMRIX undertakes to exercise reasonable care while operating the
Equipment and to maintain it in a proper and professional way in
accordance with the manufacturers manuals and instructions and
shall repair the Equipment, including replacement of parts, as
may be necessary in order to ensure that the Equipment is in good
operating condition at all times.
3.3 OMRIX shall be entitled to remove and/or replace any item of
Equipment as well as to add, replace or change any item of
equipment or system installed in the Building by OMRIX, after
giving ten days notice to the Facility Engineer about its
intention to do so.
3.4 Any item of Equipment which shall be removed BY OMRIX from the
Plant shall be stored and maintained by OMRIX for possible future
use. Alternatively, OMRIX will return such items of equipment to
MDA.
3.5 The aforesaid in sub-sections 3.3 and 3.4 shall apply mutatis
mutandis to other items of equipment or systems owned partially or
in their entirety by MDA.
3.6 Should any removal or replacement of an item mentioned in
sub-section 3.3 not involve any risk to other items of
Equipment/equipment in the Plant and/or to the Systems, OMRIX
shall have the right to remove or replace same at its own
discretion and at its own responsibility. However, should such
removal or replacement pose an adverse effect on other items
and/or systems as aforesaid, OMRIX shall not be entitled to carry
such removal or replacement without the prior written approval of
MDA which shall not be unreasonably withheld. MDA shall reply to
OMRIX's request within 14 days.
4. THE TERM OF THE AGREEMENT
The effective date of this Agreement is January 1, 1997 ("THE EFFECTIVE
DATE") and unless terminated at an earlier date by OMRIX, in accordance
with the provisions of Section 5 below, it will remain in force for a
period of 18 years, i.e. until December 31,2014 (hereinafter: "THE TERM")
5. EARLY TERMINATION
5.1 OMRIX shall be entitled to terminate this Agreement on December
31, 2001, by giving MDA a written notice not less than twelve
(12) months before the above date.
5.2 OMRIX shall be entitled to terminate this Agreement on December
31, 2006, by giving MDA a written notice not less than eighteen
(18) months
- 14 -
before the above date.
5.3 At the end of the Term, i.e. December 31, 2014, OMRIX shall have
the right of first refusal to extend the Term of this Agreement
for a period of an additional 8 years, on terms equal to the terms
offered to MDA in good faith by a third party.
6. (DELETED)
7. THE RENT AND LEASE FEE
7.1 In return for the lease of the Premises and the Equipment as an
operational Plasma Fractioning Plant at its current condition and
in return for the fulfillment of all the other undertakings of MDA
as provided for herein, OMRIX shall pay MDA a yearly Rent and
Lease Fee in the amount of NIS equivalent to US$ 1,000,000 (one
million United States Dollars). The above amount represents Rent
for the Premises in the amount of US$ 300,000 (Three hundred
thousand United States Dollars) and a Lease Fee for the Equipment
in the amount of US$ 700,000 (Seven hundred thousand United States
Dollars).
7.2 The above Rent and Lease Fee shall be adjusted, once every two (2)
years, in accordance with the increase/decrease of the Consumer
Price Index in the U.S.A. ("CPI") during the Term of this
Agreement. The adjustments will be made in January of every second
year starting as of January 1999, by which time the Rent and Lease
Fee payable during calendar years 1999 and 2000 shall be
established, by modifying the Rent and Lease Fee indicated in
sub-Section 7.1 above in accordance with the change (if any), of
the CPI between January 1997 and December 1998. The same procedure
shall be observed every second year thereafter.
7.3 The Rent and Lease Fee shall be paid by OMRIX to MDA each year
in three (3) installments in the middle of each trimester i.e. on
February 28, June 30 and October 31, of each calendar year.
Notwithstanding the provisions of this Section 7.3 above, it is
declared that, pursuant to an agreement between the parties, the
Rent and Lease fee for the first two years of the lease, i.e.
calendar years 1997 and 1998, was and/or will be paid as follows:
7.3.1 During each of those two (2) calendar years, OMRIX paid
MDA Rent in the amount of US$ 120,000 (one hundred and
twenty thousand United States Dollars) per annum and Lease
Fee in the amount of US$ 480,000 (four hundred and eighty
thousand United States Dollars) per annum.
7.3.2 The parties have agreed as to the deferral of payment by
OMRIX of the difference between the Rent and Lease Fee in
the amount of US$ one million per annum and between the
amount of US$ 600,000 per annum (which was paid by OMRIX
during calendar
- 15 -
years 1997/8, as aforesaid in subsection 7.3.1). The total
amount of the deferred payments with regard to said 2
years, shall be US $800,000 (hereinafter: "THE DEFERRED
RENT AND LEASE FEE.")
The Deferred Rent and Lease Fee shall be paid to MDA by
OMRIX by December 31st, 2001.
However, Should OMRIX decide not to exercise its right of
early termination as set forth in section 5.1 above, OMRIX
shall pay the Deferred Rent and Lease Fee in payments of
$160,000, during each of the years 2002, 2003, 2004, 2005,
2006 (Hereinafter: "THE ANNUAL ADDITIONAL AMOUNT"). The
Annual Additional Amount shall be paid by OMRIX to MDA
during each of the above 5 years together with the second
trimesteral payment due from OMRIX to MDA, as provided for
in this sub-section 7.3 above.
7.4
7.4.1 Without derogating from any of the aforesaid in this
section 7, and subject to receipt by OMRIX of the FDA
Approval for the marketing of the Biological Glue in the
USA, OMRIX hereby undertakes to pay MDA an additional
amount of $*** (***U.S dollars) annually, with regard to
the period commencing as of receipt of the FDA Approval,
and ending on December 31st, 2006, or upon the termination
of this Agreement, including early termination in
accordance with section 5.1 above (hereinafter: "THE ANNUAL
BONUS"). The total additional amounts to be paid by OMRIX
as Annual Bonuses shall not exceed the amount of US$***
(***U.S. dollars) (hereinafter "THE TOTAL BONUS").
OMRIX undertakes to make its best efforts to obtain the
FDA Approval as soon as possible. MDA shall refrain from
unreasonably raising any obstacles or taking any action
that may delay such process and, at the request of OMRIX,
will extend any assistance reasonably possible in order to
assist OMRIX in such effort.
It is agreed that the entitlement of MDA to the Total Bonus
or any part thereof, as the case may be, will commence only
upon receipt of the FDA Approval by OMRIX; (hereinafter;
"MDA'S ENTITLEMENT"). Actual payment by OMRIX shall start
upon commencement of production of the Biological Glue at
the Plant for sale in USA. Receipt by OMRIX of the FDA
Approval with regard to the Plant, shall be deemed
commencement of production by OMRIX, whether or not OMRIX
actually commences production at such time (hereinafter:
"THE PAYMENT COMMENCEMENT DATE").
7.4.2 It is further agreed that the payments of Annual Bonus
stipulated in section 7.4.1 shall be postponed for any
period during which OMRIX cannot or is not permitted to
manufacture the Biological Glue due to Acts of God and
Force Majeure including, without
- 16 -
limitation, legal action taken by third parties and/or by
any authority and until such obstacle is removed.
7.4.3 OMRIX hereby undertakes to inform MDA in writing no later
than 30 days of receipt of the FDA Approval.
In case OMRIX exercises its option of early termination as
set forth in section 5.1, and at such time OMRIX has not
yet received FDA approval with regard to the Plant - OMRIX
shall pay MDA the proportionate part of the Total Bonus,
for the period commencing upon receipt of FDA Approval and
ending on December 31st, 2001 - upon commencement of
production of the Biological Glue by OMRIX anywhere in the
world. OMRIX has indicated that the situation described
above is an impossibility.
For the avoidance of doubt - should OMRIX receive the FDA
Approval during the course of any calendar year - OMRIX
shall pay MDA the proportionate part of the Annual Bonus
with regard to same year, in accordance with the time
remaining from the date of receipt of the FDA Approval and
until the end of the same year.
7.4.4 Payment of The Annual Bonus or any part thereof owed by
OMRIX to MDA shall be made by OMRIX to MDA in 3 equal
installments each year, concurrently with payment by OMRIX
of the Rent and Lease Fee, as provided for in sub-section
7.3 above.
7.5 For the avoidance of doubt, unless specifically stated to the
contrary, all the amounts stated in this Agreement are stated net
of VAT. Should MDA provide OMRIX with a Tax Invoice, or with any
other document which shall be acceptable to the Director of VAT
and will entitle OMRIX to offset the VAT paid by it, OMRIX shall
pay MDA, the applicable VAT.
7.6 As of January 1st, 2007 and until the end of the Term, unless
OMRIX exercises its right of early termination, as per sections
5.1 or 5.2 above, OMRIX shall continue paying MDA the Rent and
Lease Fee of US $1 million per annum as per sections 7.1, 7.2, as
well as an additional amount per each calendar year, which shall
be the higher of the following:
(1) $500,000; or
(2) A commission at the rate of 2% (two percent) which shall be
calculated from that part of annual Net Sales (as
hereinbelow defined) of OMRIX's products manufactured at
the Plant, which is in excess of $10,000,000 per annum (ten
million US dollars) ("THE COMMISSION").
- 17 -
The total amounts payable to MDA as of the year 2007 as aforesaid,
shall be referred to as: "THE INCREASED RENT AND LEASE FEE").
The amount of the Rent and Lease Fee plus the amount of $500,000
U.S out of the Increased Rent and Lease Fee shall be paid in three
equal installments each year, as indicated in section 7.3 above.
Should MDA be entitled to additional payment with regard to any
specific year above said amounts (due to the Commission payable to
MDA with regard to same year), then such additional payment shall
be made within 30 days from the submission of the applicable
Annual Sales Report by OMRIX.
7.7 Unless OMRIX exercises its right of early termination as per
section 5.1 or 5.2 - OMRIX shall submit to MDA, once a year,
within 90 days of the end of each calendar year, as of the year
2007, a detailed report stating OMRIX's total net sales turnover
of all products manufactured by OMRIX at the Plant, and the
Commission due to MDA with regard thereto. All such annual reports
shall be certified by OMRIX's Certified Public Accountants ("THE
ANNUAL SALES REPORTS").
In each Annual Sales Report, OMRIX shall state the net sales of
the products manufactured at the Plant and sold "at arm's length"
by OMRIX or by any subsidiary/mother company/affiliated company of
OMRIX ("THE OMRIX GROUP"). "Net Sales" shall mean sales to the
first buyers not constituting part of the OMRIX Group, less any
discounts, rejects, returns, refunds, replacements, and any direct
taxes such as VAT, sales tax, etc. It is hereby agreed and
clarified that in the event OMRIX shall appoint a major
corporation as its distributor in certain parts of the world, and
such corporation shall acquire shares in OMRIX, such corporation
shall not be deemed part of the OMRIX Group.
MDA shall have the right, in order to verify the accuracy and
truthfulness of such Annual Sales Reports, to request an external
audit of the Annual Sales Reports submitted by OMRIX, which shall
be carried out at MDA's cost, by a firm of Israeli Certified
Public Accountants of MDA's choice, provided such accountants
shall be required to execute a confidentiality agreement with
OMRIX. Said accountants shall maintain in strict confidence, and
shall neither use for their own purposes nor disclose to any third
party including MDA, any information gathered by them in the
course of such external audit. The external auditors shall report
to MDA, with a copy to OMRIX, their findings as to the accuracy
and truthfulness of OMRIX's Annual Sales Reports.
In case any dispute arises between the parties following such
external audit, the matter will be referred by the parties to a
mutually appointed Israeli firm of Certified Public Accountants,
who will act as a ruling authority and whose findings shall be
binding upon the parties and shall not be subject to appeal.
8. MANUFACTURING IN THE PLANT AND SPECIAL TERMS REGARDING THE ISRAELI MARKET
- 18 -
8.1 Subject to the provisions of sections 8.2, 8.3 hereunder OMRIX
shall be free to manufacture in the Plant the Licensed Products,
the Biological Glue and any other products OMRIX may wish, in any
quantities OMRIX may determine, provided any such manufacture is
in compliance with the prevailing laws and regulations and
provided that priority shall be given to the manufacture from
plasma supplied by MDA of the Licensed Products required for
local use in Israel and ordered from OMRIX.
8.2 With regard to manufacturing and/or marketing of the Licensed
Products for THE Israeli market, the following conditions and
rules shall apply:
8.2.1 While manufacturing the Licensed Products for the Israeli
market, OMRIX shall use as a first priority, plasma
collected from donors in Israel, and purchased from MDA in
accordance with the provisions of section 10 below. Should
OMRIX decide to manufacture additional quantities of
Licensed Products for the Israeli market from imported
plasma and/or plasma derivatives, it will be free to do so
provided that same imported plasma and/or plasma
derivatives, including their source, are approved by the
Israeli Ministry of Health.
8.2.2 OMRIX shall sell the Licensed Products in the Israeli
market at fair and competitive prices, and shall make its
best endeavors in good faith to meet the demands of the
Israeli marker as may be from time to time, of the Licensed
Products manufactured by OMRIX from plasma collected from
donors in Israel; Provided however, that if competitors
offer competitive products at prices which OMRIX cannot
match without obtaining a reasonable gross margin, then in
such case, OMRIX shall inform MDA about it and the parties
shall evaluate the situation together.
8.2.3 In view of the fact that MDA attaches the utmost importance
to quoting prices as low as possible for the Licensed
Products to the Israeli Defense Forces ("IDF"), it is
hereby agreed that OMRIX shall present to the Head of the
MDA Blood Services, in advance, the price quotations it
intends to quote in any tender, bid or request for price
quotations for the IDF.
OMRlX shall offer and/or bid and/or participate in any
tender with regard to the Licensed Products, as well as any
other products produced by it in the Plant from time to
time, to the IDF and/or any other Israeli security force,
only after receiving the prior written approval of MDA.
Such approval shall not be unreasonably withheld.
OMRIX shall make its best endeavors in good faith, to
ensure that any such offer. presented for the approval of
MDA, shall be at the lowest possible prices, reasonable
under the circumstances.
- 19 -
MDA shall consider, at its own discretion, whether to
subsidize or to cause the State of Israel to subsidize the
products sold to the IDF or to any other security force.
8.2.4 It is agreed that subject to the availability of plasma
supplied by MDA and provided that the demand for Licensed
Products shall not exceed the manufacturing capability of
OMRIX, OMRIX shall maintain an inventory of the Licensed
Products equivalent to one month of sales by OMRIX of such
Licensed Products in Israel.
8.3 OMRIX shall submit to MDA quarterly reports, no later than 14 days
prior to the designated date of the convening of each meeting of
the Tripartite Committee to be established under sub-section 12.1
hereinbelow (hereinafter: "THE REPORTS").
The Reports shall be brought before the Tripartite Committee, and
shall be discussed within the framework of its quarterly meetings,
as provided for in section 12 hereinbelow.
Each report shall describe in detail, inter alia, the following
matters: The estimate of the Israeli market for each of the
following products : Albumin, Factor VIII and IVGG, as well as
OMRIX's sales forecast in the Israeli market for the forthcoming
period for each of said products;
The expected share of OMRIX in the entire Israeli market;
The actual production in the Plant and the sales in units of the
Licensed Products in Israel during the period of the Report;
In cases whereby it shall be apparent from the Report that OMRIX
has substantially failed to meet the forecasts for the period to
which such Report relates, the Report shall specify also the
average prices for which OMRIX sold the various Licensed Products
to the various sectors of customers in the Israeli market during
the period of such Report;
If the sales in Israel did not meet OMRIX's forecast - what were
the reasons for the difference between the forecast and actual
sales, in OMRIX's opinion;
The division of the sales in Israel among the IDF and other
Israeli Security forces on the one hand, and the rest of the
Israeli market on the other hand.
8.4 For the avoidance of any doubt it is hereby declared and agreed
that OMRIX shall not pay MDA any royalties nor any other payments
in respect of the products manufactured by OMRIX in the Plant and
the only amounts payable to MDA by OMRIX will be the Rent and
Lease Fee as well as the Total Bonus or any part thereof, as
relevant, as well as the Increased Rent and Lease Fee, including
the Commissions (if applicable), as well AS partial reimbursement
for the cost of the Supplies and the participation in the cost of
the operation and the maintenance of the Systems and the
participation in the cost of the employment of the Facility
Engineer, as provided for in sections 2.6, 2.7, 2.7.A above and
- 20 -
8.5 below, as well as payments for plasma purchased by OMRIX, as
provided for in section 10 hereunder.
Should any third party such as, for example, Minhal Mekarke'ei
Israel, raise any financial demands against OMRIX or MDA as a
result of the Lease of the Premises and/or the operation of the
Plant by OMRIX, MDA shall settle any such demand and shall hold
OMRIX harmless from any such claim or demand.
8.5 The aforesaid in this section 8 shall not affect the obligation of
OMRIX to purchase from MDA plasma and to pay for such plasma as
per section 10 below.
8.6 OMRIX shall bear all the direct as well as indirect costs involved
in the operation of the plant, including the salaries of its
employees, cost of raw materials as well as the applicable part of
the cost of maintenance, electricity, water, telephone, and
municipal taxes.
9. EMPLOYEES - DELETED
10. PURCHASE OF PLASMA
10.1 OMRIX undertakes to purchase from MDA, during the Term of this
Agreement, all the plasma MDA will have from time to time which
meets the specifications as set forth in section 10.2 below, up to
a total quantity of 32,000 liters per annum, out of which not more
than 25% will be Liquid Plasma. Subject to availability and unless
otherwise requested by OMRIX, MDA shall supply the Plasma to OMRIX
in a more or less steady pace throughout each calendar year, i.e.
approximately one twelfth of the annual quantity each month. For
the avoidance of doubt it is hereby stated and agreed that the
above quantity specifically refers to plasma derived from whole
blood donations collected in Israel by MDA. OMRIX shall not be
obliged to purchase from MDA any other type of plasma.
10.2 OMRIX shall purchase from MDA only the plasma which shall be
extracted from whole blood collected by MDA in Israel, in the
regular course of business, from donors, provided such plasma
complies with all specifications set forth in SCHEDULE "D"
attached hereto, as maybe amended from time to time by any
authorized agency of the European Community.
10.3 Subject to availability of suitable plasma FROM MDA (i.e. - plasma
which meets the criteria indicated in section 10.2 above and the
specifications set forth in Schedule D), OMRIX shall not purchase,
for the manufacture of the Licensed Products for the Israeli
market, plasma from sources in Israel other than MDA.
10.4 The parties shall execute the Standard Contract required by the
European Community Authorities pertaining to the Quality and
Safety of Plasma of
- 21 -
Human Origin in the form attached hereto AS SCHEDULE "E". In the
future, the parties will execute any such additional/new standard
Agreements pertaining to the Quality of Plasma as may be required,
from time to time, by the authorities of the EC and the
authorities in the USA, if and to the extent MDA gets FDA
approval for plasma from whole blood or for plasma collected by
plasmapheresis.
10.5 Without derogating from any of the aforesaid in this section 10,
the Parties hereby agree, that MDA shall not be obligated to
provide OMRIX with plasma with a concentration of Factor 8
exceeding 0.7 International Units per I ML, unless such
specification becomes a requirement of the US and/or EU authority.
10.6 MDA currently does not perform NAT testing on the plasma which it
supplies to OMRIX with regard to the Hepatitis C Virus ("HCV").
Should the authorities of any country to which OMRIX shall sell
the products manufactured in the Plant from plasma supplied to
OMRIX by MDA, require that the plasma pool used in the production
of such Products be NAT tested for HCV, OMRIX shall inform MDA
in writing of such requirement. In order to meet such
requirements, OMRIX shall perform NAT testing of the plasma pool
supplied to OMRIX by MDA. Should ANY such pool be found to be
positive for HCV, MDA shall be entitled to retest said pool in an
attempt to invalidate the positive results. Failing such
invalidation, MDA shall credit OMRIX for the price of the plasma
pool. OMRIX will provide MDA with a copy of the Bleeding List of
such plasma pool. The same procedures will apply for any future
plasma pool testing requirements by an EU authority for which MDA
does not test the plasma units it supplies to OMRIX.
10.7 As of the year 2007 (unless OMRIX exercises its right of early
termination as per sections 5.1 or 5.2), the following shall apply
to purchase of plasma by OMRIX:. In the year 2007, OMRIX
undertakes to purchase from MDA 33,00 liters of plasma. This
quantity shall be increased by 1,000 liters each year so that in
the course of the year 2014 OMRIX undertakes to purchase from MDA
40,000 liters of plasma. The above quantities of plasma shall
include not more than 25% of Liquid Plasma.
10.8 Should OMRIX decide at any point of time, to manufacture all three
Licensed Products for the Israeli market from quantities of plasma
exceeding the minimum quantities indicated in this section 10
above, OMRIX shall purchase any additional quantities of plasma it
may require for such additional quantities of Licensed Products
from MDA, subject to the availability of such additional
quantities from MDA. If MDA shall not be able to supply such
additional quantities of PLASMA, OMRIX shall be free to
manufacture such additional quantities of the Licensed Products
for the Israeli market from plasma purchased by OMRIX from foreign
sources.
OMRIX shall have the right of first refusal to purchase from MDA
any quantities of plasma that MDA will be in position to supply in
access of the minimum quantities indicated in section 10 above.
- 22 -
11. PRICE OF PLASMA
11.1 OMRIX shall pay MDA for the PLASMA supplied by MDA to OMRIX in
accordance with Section 10 above, the price in US Dollars paid on
average in the U.S. for equivalent plasma of the same
specifications, quality and conditions. Such price of the plasma
shall be established, for the purpose of the accounting between
the parties hereto, twice a year, in accordance with the average
prices paid in the U.S. during the preceding six (6) month period
in respect of any relevant category (specifications) of plasma
purchased by OMRIX from MDA. Such average price shall be
determined, twice a year, by the Marketing Research Bureau Inc.,
of Orange City, Connecticut, U.S.A.
It is hereby agreed, that due to the fact that the plasma used in
Israel is not required by the Israeli Ministry of Health to
undergo the test known as P24 Antigen test (hereinafter: THE
TEST"), while the U.S. price of plasma as should be determined by
the Marketing Research Bureau Inc. of Orange City, Connecticut,
USA, relates to plasma which does undergo the Test, OMRIX shall be
entitled to deduct the estimated total cost of the Test from the
equivalent U.S. reference price of each liter, insofar as the U.S.
price for the plasma includes the cost of the Test.
The price of the Test shall be established twice a year,
simultaneously and in a way similar to the establishment of the
price of the plasma itself, as provided hereinabove. If the price
of the Test cannot be establish the price shall be deemed to be
U.S. *** per liter of plasma.
Notwithstanding the foregoing in this section 11.1, and due to the
fact that it is not possible to derive Factor VIII from Liquid
Plasma ("LP") - it is hereby agreed that the price which shall be
paid by OMRIX for LP shall be 2/3 (two thirds) of the full price
(including the Test) established with regard to FFP (fresh frozen
plasma) as aforesaid (as such shall be from time to time), from
which 2/3 of the price of the Test (as shall be established from
time to time) shall be deducted ("PRICE OF LP").
For example: if the full price established with regard to FFP
shall be $ *** per liter, and the price of the Test shall be $***,
then the Price of LP shall be: (*** 2/3) - (*** *2/3)=***$.
It is further agreed, that the aforesaid specific arrangement with
regard to the Price of LP, shall only apply to LP purchased by
OMRIX later than January 1ST, 1999.
11.2 OMRIX shall pay for the plasma supplied by MDA no later than 180
(one hundred and eighty) days after the Date of Supply of the
plasma to OMRIX.
"THE DATE OF Supply" shall mean the 15th day of each calendar
month during which any such supplies were MADE.
- 23 -
11.3 The invoiced quantity of plasma for which OMRIX shall be obligated
to pay MDA, shall be based upon the net weight of the plasma
determined subsequent to the receipt of the bags of plasma by
OMRIX, prior to the emptying of the bags into OMRIX's pool, less
the weight of the bags of plasma, as described in SCHEDULE "F"
attached hereto.
11.4 MDA hereby waives all claims it may have, pertaining to accrued
interest, which remains outstanding and unpaid by OMRIX, with
regard to all plasma supplied to OMRIX until the date of execution
of this Agreement. OMRIX hereby waives all claims it may have,
pertaining to amounts, which OMRIX believes it has been
overcharged by MDA, with regard to plasma supplied to OMRIX until
December 31st, 1998.
12. COMMITTEES
12.1 The parties shall form a Tripartite Committee whose members shall
be one representative of each IMDAC, MDA and OMRIX and which
shall be headed by the Director General of MDA.
The Tripartite Committee shall observe the adherence to the
policies and the objectives established by the friends of MDA and
the Donors who made possible the erection of the Building and the
Plant, AS provided for in the preamble to this Agreement, as well
as in sections 8.1,8.2, and 10 above, i.e. that:
(i) Priority is being given by OMRIX to the manufacture, from plasma
collected in Israel and donated by donors, for local use in
Israel, of the Licensed Products, and that OMRIX is making its
best endeavors in good faith to sell in Israel the Licensed
Products manufactured by it at fair and competitive prices, as
provided for in section 8.2.3 above.
(ii) That the Licensed Products designated for the Israeli market are
manufactured, as far as possible, from plasma supplied by MDA, as
provided for in section 8.2.1 above, subject to the provisions of
section 10 herein.
(iii) That OMRIX is not offering and/or bidding and/or quoting to the
IDF prices for the Licensed Products without obtaining the prior
WRITTEN approval of MDA for such offer and/or for such prices, as
indicated in section 8.2.3.
(iv) That OMRIX is purchasing the plasma from MDA in accordance with
the terms provided for in section 10 above.
(v) That the objectives of this Agreement are carried out by both
parties.
12.2 In addition to the Tripartite Committee, the parties hereto shall
establish a Coordinating Committee, which shall comprise of the
Manager of MDA Blood Services and a representative of OMRIX. The
role of the Coordinating Committee shall be to resolve all the
accounting disputes
- 24 -
and points of friction between the parties resulting from the fact
that the parties share the Building and the Systems.
12.3 In addition to the two abovementioned committees, the parties
hereto shall establish a Steering Committee, whose members shall
be the Director General of MDA and the Chairman of OMRIX. The
Steering Committee shall decide and resolve all the issues,
questions and disputes which were attended to by the Tripartite
Committee and/or the Coordinating Committee and which the above
committees were unable to resolve. In addition, the Steering
Committee will attend to any issue arising from this Agreement and
shall supervise the implementation of the decisions made by the
Tripartite Committee.
12.4 The committees shall meet as frequently as required, but it is
expected to be not less than once every quarter, i.e. - four times
per annum. Each member of any of the Committees may call for a
meeting of such Committee by giving due notice.
13. INSURANCE
13.1 OMRIX shall insure itself in the framework of an appropriate
Product Liability Insurance Policy providing coverage of DM.
10,000,000.- per annum and DM. 3,000,000.- per case. OMRIX shall
name MDA as co-insured in the above Policy. The Policy shall
provide for the re-establishment of the full annual amount of
coverage in the event of payment for an Insurance Event pursuant
to any claim against OMRIX and/or MDA.
13.2 Subject to anything stipulated to the contrary in this agreement,
MDA shall continue insuring the Building, the Premises and the
Equipment for their full reasonable value and shall name OMRIX in
the Insurance Policy as a co-insured. OMRIX shall be entitled to
add a Rider to the above Policy insuring OMRIX against loss of
profits and/or business interruption. OMRIX shall bear the costs
of such Rider. In the event any new equipment shall be added to
the Plant by OMRIX in the framework of Discretionary Investments
including the CEP as specified in Section 15 below, any such
additional equipment shall be insured by OMRIX and the cost of
such insurance shall be borne by both parties pro rata to their
title/ownership rights in such equipment.
13.3 OMRIX shall at all times insure itself against any and all
liabilities it may have as an Employer. OMRIX shall further insure
itself at all times against any liabilities it may have toward any
third party whatsoever, in connection with its being a Lessee
and/or an operator of the Plant.
13.4 The parties hereto shall jointly bear, in equal parts between
them, the cost of insurance of the Systems.
14. COMPULSORY INVESTMENTS IN THE PLANT
14.1 If, as a result of new law, regulations, directives, requirements
or instructions by the competent authorities, investments will
have to be
- 25 -
made in the Premises / Plant in order to preserve its license
and/or the right to market its Products in the various markets
("COMPULSORY INVESTMENTS") such Compulsory Investments shall be
borne by MDA and/or OMRIX as provided below.
14.1.1 In the event OMRIX shall be able to increase the prices of
its Products because of the Compulsory Investment(s), such
Compulsory Investment(s) shall be borne in full by OMRIX.
Subject to section 14.5.3 hereunder, any such
equipment/investment shall be sold by OMRIX to MDA upon the
termination of this Agreement for its net dollar book value
on such date.
14.1.2 In the event OMRIX shall not be able to increase the prices
of its Products as a result of the Compulsory
Investment(s), such Compulsory Investment(s) shall be borne
by OMRIX and MDA in equal parts between them or at any
other ratio as may be agreed upon by the Steering
Committee. While deciding about the split of the Compulsory
Investment(s) between the parties, the Steering Committee
shall take into account, among others, the following
considerations:
(i) the time at which such Compulsory Investment(s) is
required, i.e.- the nearer the date of such
investment to the expiration of the Agreement, the
larger the part of MDA and vice versa.
(ii) if the Compulsory Investment(s) is the result of new
requirements of the Health Authorities in a certain
country of minor importance, MDA's share in such
investment(s) shall be smaller than if the
requirements are made by the EC or US Authorities.
14.1.3 Notwithstanding the aforesaid in sections 14.1.1 and
14.1.2, it is hereby agreed that MDA shall bear 100% of the
costs of any Compulsory Investment that will have to be
made as a result of a demand by a competent Israeli
Authority(s) due to the fact that the Plant is located in
proximity to the MDA Blood Services and/or is located
within the perimeter of the Tel Hashomer Hospital and/or
the fact that the Plant is located in proximity to an urban
area.
14.2 Should any Compulsory Investment(s) be required as provided for in
Section 14.1.2 and/or 14.1.3 above, OMRIX shall finance such
Compulsory Investment(s), and shall off-set MDA's part of any
such Compulsory Investment(s) against the Rent and Lease Fee
and/or the Increased Rent and Lease Fee and/or the Annual Bonus
and/or Commission due to MDA, subject to the provisions set
forth in section 14.5 hereunder.
14.2A In the event OMRIX carries out the Compulsory Investment in stead
of MDA, prior, during and after any such Compulsory Investment,
OMRIX
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shall submit to MDA plans, time schedules, price lists and the
like AND the terms of Section 15A.4 shall apply mutatis mutandis.
14.3 In the event that the required Compulsory Investment(s) will be of
a substantial magnitude and/or during the second part of the Term
(i.e. - after January 1st, 2006), OMRIX shall be entitled to
refuse to finance and/or to bear the cost of its part of any such
Compulsory Investment(s).
Should OMRIX refuse to finance and/or bear the cost of any part of
the Compulsory Investment(s) in the events described in this
section 14.3, MDA shall be entitled to finance and bear the full
cost of any such Compulsory Investment(s).
Refusal of MDA to finance and/or bear the cost of such Compulsory
Investment(s), shall entitle OMRIX to bring this Agreement to an
end.
MDA shall be entitled to refuse to participate in any Compulsory
Investment of a substantial magnitude and/or if such Compulsory
Investment is required during the second part of the Term, even
whereby OMRIX is prepared to finance the entire Compulsory
Investment (including MDA's share), upon the occurrence of the
following cumulative conditions:
(1) The requirement for such Compulsory Investment was not
issued by an Israeli Competent Authority; and
(2) MDA'S part in such Compulsory Investment exceeds the
Determined Amount as hereinbelow defined.
"THE DETERMINED AMOUNT" shall mean - in a given time, and with
respect to a certain investment - the accumulated balance of US
$1.2 Million per year (being the Rent and Lease Fee together with
the average estimated indexation to the CPI during the Term of
this Agreement), per each year until December 31st 2014, as well
as an additional amount of US $0.5 Million in respect of each year
as from January 1st 2007 until December 31st 2011, as well as the
Commissions which had been accumulated until such time as the
reserve fund referred to in section 14.5.3 hereunder, after
deducting therefrom the amount of $1 Million US per annum until
31st December 2006, and deducting the amount of $1.25 Million US
per annum as from January 1st 2007 until 31st December 2014.
Notwithstanding the aforesaid in this definition hereinabove, the
"Determined Amount" in respect of Compulsory Investments made
prior to December 31st", 2006 shall be calculated only until
December 31st 2006 unless it is made after July 1st 2005 and OMRIX
did not exercise until then its right of Termination under Section
5.2
In case MDA refuses to participate in any Compulsory Investment
due to the occurrence of the above conditions, OMRIX shall have
the right to terminate the Agreement or to carry out the
Compulsory Investment, and
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then it shall be entitled to offset MDA's part of the Compulsory
Investment against the Rent and Lease Fee and/or the Annual Bonus
and/or the Increased Rent and Lease Fee and/or Commission due to
MDA, provided however, that the right of OMRIX hereunder to setoff
shall be in respect of amounts exceeding each calendar year until
31st December 2006 1$ Million US and thereafter $1.25 Million US
until 31st December 2014. The aforesaid shall also be subject to
the provisions of section 14.5 hereunder.
14.4 Should MDA invest on its own the amounts required as Compulsory
Investment(s) (without the participation of OMRIX) the Rent and
Lease Fee shall be increased, as from that date onwards, at the
rate representing the percentage of such amount invested by MDA
("THE NEW INVESTMENT") in relation to the total initial investment
in the Plant - which is estimated, for this purpose, to be
US$15,000,000(fifteen million United States Dollars) ("THE INITIAL
INVESTMENT"). The Initial Investment shall be adjusted in
accordance with the change in the Consumer Price Index in the
U.S.A. between the Effective Date and the date of the relevant
accounting between the parties.
For the sake of clarity and exemplification: If, after a few
years, the Initial Investment adjusted to the CPI in the U.S.A. is
equivalent to US$16,000,000.-(sixteen million United States
Dollars), and the New Investment will be US$320,000.-,the Rent and
Lease Fee (as it shall be at such time, in accordance with the
terms of this Agreement) shall be increased, as from that date
onwards, by two (2%) percent.
14.5 Without derogating from all of the provisions set forth in this
section 14 (pertaining to the parties' respective shares in any
Compulsory Investment, their respective rights not to participate
in Compulsory Investments under certain circumstances, etc.), it
is agreed that the following shall apply to actual payment by MDA
(by way of set off by OMRIX), of MDA's share in the Compulsory
Investments:
14.5.1 Until December 31st, 2006 - OMRIX shall finance, on its
own, all required Compulsory Investments, including MDA's
share (if any), in such Compulsory Investments. OMRIX shall
be entitled to offset such part of MDA'S share in such
Compulsory Investments (against the Rent and Lease Fee
payable to MDA), provided that annul payments, which MDA
shall actually receive as Rent and Lease Fee and/or Annual
Bonus, shall not be less than the amount of $1 Million US
(net) in the course of any year during said period.
Without derogating from the above, during said period,
OMRIX shall only be entitled to offset any part of MDA'S
share in such Compulsory Investments, if and to the extent
that the balance due to MDA after the set off of MDA's
participation in the CEP as hereinafter defined, in a
certain calendar year is not less than $ 1 Million US.
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14.5.2 If OMRIX exercises its right of early termination as per
section 5.2 of this Agreement, and therefore this Agreement
comes to an end on December 31st, 2006, then:
Upon termination of the Agreement as aforesaid, AS part of
the final accounting between the parties, MDA shall pay
OMRIX any outstanding part of MDA's share in the
Compulsory Investments which had been made until such time,
and which had not been set-off during the course of the
Agreement, in accordance with the terms of subsection
14.5.1 above.
14.5.2A Upon Termination of the Agreement as aforesaid in section
14.5.2, OMRIX to leave in the Plant also its part in the
Compulsory Investments made until the date of termination.
Immediately thereafter, the parties hereto shall start bona
fidea negotiations as to the price and the terms of payment
in respect of such investment. If such an agreement is not
reached regarding the price and/or the terms of payment,
the dispute will be referred to an arbitrator, who will be
an expert in the field of blood fractionation.
14.5.3 If OMRIX shall not exercise its right of early termination
as per section 5.2 of this Agreement, then as of the year
2007, OMRIX shall be entitled to offset MDA's part in any
compulsory Investments (including any outstanding part, if
any, remaining from the period until December 31st, 2006),
only against any income payable to MDA (as Increased Rent
and Lease Fee and/or Commissions) over the amount of $ 1.25
Million US per annum.
As of the year 2007 - any amounts out of MDA'S income (from
Increased Rent and Lease Fee and/or Commissions), over the
amount of $ 1.25 Million per annum, which shall remain
following any offsets made by OMRIX (in accordance with the
aforesaid in this subsection 14.5.3) - shall be designated
by MDA for its future participation in any Compulsory
Investments (if any), and shall be presented as a special
reserve in MDA's financial reports. Should there be any
Compulsory Investments in subsequent years, in which MDA
shall be required to participate in accordance with the
terms of this section 14, then MDA shall use any such
designated amounts in order to pay its share in such
Compulsory Investments.
At the end of the Term of this Agreement, i.e. December
31st 2014, MDA shall not be required to pay OMRIX any
outstanding part of MDA's share in the Compulsory
Investments which had been made until such time, which had
not been set-off during the course of the Agreement, in
accordance with the aforesaid terms. The aforesaid shall be
subject to section 14.6 hereunder.
14.5.4 For the avoidance of doubt, the right of OMRIX to set off
against amounts payable to MDA, in accordance with this
section 14 (except after the termination of this
agreement), shall be limited to
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amounts due to MDA as Rent and Lease Fee and/or Increased
Rent and Lease Fee and/or Commissions and/or the Annual
Bonus only, and shall not apply to any other payments due
to MDA pursuant to the terms of this Agreement.
14.5.5 Upon termination of the Agreement as aforesaid in Section
14.5.3, namely, if OMRIX does not exercise its option under
section 5.2, OMRIX shall leave free of charge OMRIX's part
in the Compulsory Investments in the plant.
14.6
14.6.1 Notwithstanding any of the aforesaid in this section 14,
MDA shall solely bear the cost of any Compulsory Investment
which shall be a result of a demand made subsequent to
January 1st, 2012, by competent authorities of Israel
and/or the US and/or the EU.
14.6.2 MDA's obligation as aforesaid in this section 14.6 shall
not exceed the total amount of US $4.5 million with regard
to the entire period as of January 1st, 2012 and until the
end of the Term.
14.6.3 Any Compulsory Investments referred to in this section
14.6, shall be financed by OMRIX, and OMRIX shall be
entitled to offset same against any amounts due to MDA from
OMRIX as Increased Rent and Lease Fee and/or Commissions.
The terms of section 14.5.3 above shall not apply to the
Compulsory Investments referred to in this section 14.6.
For the avoidance of doubt, this section 14.6 shall not
derogate from any of the terms of this section 14
(including those of section 14.5.3 above), regarding any
Compulsory Investments which do not fall under the
conditions elaborated in sections 14.6.1, 14.6.2 above.
15. DISCRETIONARY INVESTMENTS IN THE PLANT
Should OMRIX decide to install in the Plant new items of equipment and/or
make any other investments in the Plant which shall not be essential in
order to preserve the operational licenses of the Plant and/or its
ability to export the Products made therein to the various markets
("DISCRETIONARY INVESTMENTS"), OMRIX shall bear all the costs of any such
Discretionary Investments.
Upon the termination of the Agreement and unless otherwise agreed upon by
the parties, OMRIX shall, at its option, remove from the Plant, or sell
to MDA at net dollar book value at the effective date of termination, any
such new equipment being installed in the framework of Discretionary
Investments. In the event OMRIX shall be willing to sell said equipment
to MDA as aforesaid, it will offer MDA to purchase same as provided for
above.
MDA will inform OMRIX within 30 (thirty) days whether it chooses to
purchase all of the above equipment or not.
The aforesaid in this section 15 shall refer only to items of equipment,
instrumentation and/or machinery, which can be easily dismantled and
removed from the Plant. In case OMRIX makes any Discretionary
Investments, pertaining to any items of equipment, instrumentation,
machinery, Systems and/or
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upgrading of Systems, which have become an integral and/or inseparable
part of the Plant, MDA shall purchase same at a price which shall be
negotiated in good faith by the parties; Should the parties fail to reach
agreement as to the price of such items, the dispute shall be referred to
an Arbitrator, who will be an expert in the field of blood fractionation.
In order to determine the price of such items, said Arbitrator shall be
presented with the following assumptions:
(l) The duty of OMRIX to return the Plant to MDA properly maintained
and in a fully operational condition, as set forth in section 16
hereunder;
(2) The value to MDA of the Systems and/or items installed and/or
built and/or improved in the framework of this section 15, as a
going concern.
MDA shall be released from its obligation to purchase the integral or
inseparable parts of the Systems in the event MDA (or any third party)
shall not operate the Plant as a fractionation Plant in the course of a
period of 5 years after OMRIX shall vacate the Plant and the premises.
In the event MDA shall notify OMRIX, prior to the expiration of the
agreement as aforesaid, about its intentions not to operate the Plant as
a fractionation Plant, OMRIX shall be entitled to remove from the Plant,
free of charge, in coordination with MDA, any such item or part of the
Systems.
The aforesaid in this section 15 shall not derogate from the terms set
forth in section 15A hereunder.
15A. THE CAPACITY EXPANSION PROGRAM
15A.1. Within the framework of Discretionary Investments, as set forth in
section 15 above, OMRIX hereby declares that it intends to expand
the capacity of the Plant, thereby enabling the Plant to process a
quantity of approximately 100,000 liters of plasma per annum,
consequently increasing the manufacturing capability of the
Licensed Products as well as that of the Biological Glue and/or
any other products ("THE CAPACITY EXPANSION PROGRAM" or the
"CEP"). OMRIX hereby further represents, that the CEP shall not
require any additional exterior construction works and/or
enlarging the area of the Plant in any way.
15A.2 OMRIX estimates that the investment required in order to implement
the CEP shall be in excess of $5,000,000 US.
Based on the aforesaid representations, and subject to the terms
set forth hereunder, MDA hereby agrees to the implementation of
the CEP, and MDA further agrees to participate in the investments
necessary with regard to said implementation.
15A.3 It is acknowledged that OMRIX has already begun implementation of
the first stage of the CEP, the cost of which is estimated by
OMRIX to be US$ 1.5 million, and has carried out the works set
forth in SCHEDULE "G" attached hereto.
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15A.4 Prior to the implementation of any investment other than the one
referred to in sub-Section 15A.3 above, including the ordering of
equipment and/or materials and/or carrying out any works within
the CEP, OMRIX shall submit to MDA a time schedule as well as a
list of any further plans and/or equipment ("THE SCHEDULE" and
"THE LIST", respectively) required for the implementation of the
CEP. MDA shall provide OMRIX with its comments pertaining to the
Schedule and/or the List, within 14 days of their submission by
OMRIX. In case of Failure by MDA to provide such comments within
said period, the Schedule and/or the List (as the case may be)
shall be deemed approved. Not later than 120 days after completion
of the CEP, OMRIX shall provide MDA with "as made" plans of the
CEP.
Should MDA provide OMRIX with comments as aforesaid, OMRIX shall
give said comments its due consideration, but shall not be
required to adopt any recommendations included therein provided,
however, that if MDA raises issues pertaining to the adverse
affect which any such works may have with regard to the Plant
and/or the Systems and/or the Building - the parties shall refer
such comments for review by the Consultant Engineer. In the event
the remarks and/or recommendations or instructions of the
Consultant Engineer shall not be acceptable to either party, and
the parties will not be able to sort out such differences in an
amicable way, such dispute shall be referred to the legal counsels
of the parties, whose decision shall be final and binding upon the
parties.
During the works required for the implementation of the CEP, OMRIX
shall submit to MDA once every 90 days, a progress report,
detailing the works undertaken during the period of the report and
the equipment installed during such period.
15A.5 MDA's share in the investment required within the CEP, shall be
deducted by OMRIX from the Annual Bonus to which MDA may be
entitled pursuant to section 7.4 of this Agreement. For the
avoidance of doubt, it is hereby agreed that MDA shall have no
obligation to participate in the investments in the framework of
the CEP in any given year in respect of which MDA shall not be
entitled to the Annual Bonus.
15A.6. Subject to the aforesaid in section 15A.5, MDA shall bear 50% of
the investments required within the implementation of the CEP up
to investments totaling US$ 4,000,000. It is agreed, however,
that MDA's participation shall in no case exceed the total amount
of $2,000,000 US. MDA's participation in the CEP investments shall
be made only by and shall be limited to means of set off only
against the Annual Bonuses to which MDA shall become entitled.
15A.6.1 In the event that MDA shall not become entitled to the Annual
Bonus or in the event the Total Bonus to which MDA shall be
entitled, falls short of US$ 2 million (except in the event of a
breach by MDA which has caused the delay of the FDA Approval), MDA
shall be deemed to have fully fulfilled its payment obligations in
respect of investment in the CEP, by allowing OMRIX to offset the
Annual Bonuses against MDA's share in the CEP investment,
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15A6.2 Should OMRIX exercise its right of early termination as stipulated
in section 5.2 above, then in such case the investments made by
MDA within the CEP shall be MDA's property only. All investments
made by OMRIX within the CEP, shall be considered as Discretionary
Investments to which, in addition to the provisions of section 15
above, the following shall apply:
(1) In the event that MDA did not invest any amount on account
of its share in the implementation of the CEP, by way of
offset or otherwise, the entire investments made by OMRIX
for the implementation of the CEP shall be deemed
Discretionary Investments.
(2) In the event that by January 1st, 2007, MDA invested on
account of its share in the implementation of the CEP, 25%
or more of the total cost of the implementation of the CEP
- MDA shall have the option to acquire OMRIX's share in the
CEP, in accordance with the provisions of section 15 above,
i.e. - applying the price determination mechanisms
described therein with regard to equipment which can be
easily dismantled/removed from the Plant, as well as those
with regard to equipment which has become an
integral/inseparable part of the Plant.
(3) In the event that by January 1st, 2007, MDA invested on
account of its share in the implementation of the CEP, less
than 25% of the total cost of the implementation of the
CEP - OMRIX shall have the option either to purchase MDA's
share in the CEP or to offer MDA to purchase OMRIX's share
in the CEP, in accordance with the provisions of section 15
above, i.e. - applying the price determination mechanisms
described therein with regard to equipment which can be
easily dismantled/removed from the Plant, as well as those
with regard to equipment which has become an
integral/inseparable part of the Plant. In case neither
party shall be prepared to purchase the other party's share
in the CEP, all of the items of equipment, installation
etc. shall be removed from the Plant and sold to the
highest bidder, and the proceeds thereof shall be divided
between the parties according to the relative share of
their actual investments in the CEP.
15A.7 In the event that OMRIX does not exercise its rights of early
termination as per sections 5.1 and 5.2 above, and therefore
continues leasing and operating the Plant until the end of the
Term - all items of equipment etc. acquired and/or installed
and/or built within the framework of the CEP shall become the
property of MDA without any further payment on the part of MDA by
the end of the Term.
15A.8 The terms of this section 15.4 shall apply in addition to the
terms of section 15 above, provided that in any case of
contradiction between the terms of this section 15A and the terms
of section 15 - the terms of this section 15A shall prevail.
16. STATE OF THE PLANT AT THE END OF THE AGREEMENT
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16.1 Upon the expiration or termination of the Agreement OMRIX shall
return the Plant to MDA, properly maintained and in a good
operational condition, subject to reasonable wear and tear.
16.2 OMRIX shall leave in the Plant the Equipment, as well as any other
items of equipment, systems etc., which were installed by OMRIX
during the course of the Agreement, and which were acquired by MDA
and/or became the property of MDA in accordance with the
provisions of this Agreement. For the avoidance of doubt, the
obligation of OMRIX under subsection 16.1 above, shall apply also
in the event that OMRIX is entitled under the terms of this
Agreement to remove items of equipment owned by it due to the CEP,
Compulsory Investments and/or Discretionary Investments.
16.3 In the event MDA shall not be required, under the circumstances,
to spent the entire amount of US $4.5 million as provided for in
sections 14.6.1 and 14.6.2, MDA shall pay OMRIX, upon the
expiration of this agreement on January 1st 2015, a Grant
amounting to the part of the unused budget of US$4.5 million as
provided for in sections 14.6.1 and 14.6.2, provided however that
such a Grant shall not exceed the amount of $2 million.
The right of OMRIX to the Grant is conditioned upon its
fulfillment of its obligations in the course of termination or
expiration of this agreement and the smooth handing over of the
Plant with the 'Know How' related thereto, including the training
of the MDA personnel provided for in section 18.1.
17. LICENSE AND KNOW-HOW TRANSFER
17.1 In case OMRIX does not exercise its rights pursuant to sections
5.1 and 5.2 of this Agreement, then as of the end of the Term, MDA
shall have a royalty free, non transferable license to
manufacture, in the Plant, all of the Licensed Products, based on
the OCTAPHARMA Know How, as well as any New Products, and to
market and sell same in Israel, for The Israel market. Such
License granted to MDA shall not be limited in time.
17.2 In case OMRIX exercises its right pursuant to section 5.2 of this
Agreement, then as of December 31st, 2006, MDA shall have a
royalty free, non transferable license to manufacture, in the
Plant, all of the Licensed Products, based on OCTAPHARMA Know How
and to market and sell same in Israel, for the Israeli market.
Additionally, MDA shall have a nontransferable license to
manufacture, market and sell in Israel, for the Israel market, all
of the New Products (including the Biological Glue) all the rights
to which are owned by OMRIX, against payment of royalties to
OMRIX, as follows:
With regard to Factor VIII, IVIG, XXXX - royalties at the rate of
*** of net sales to an unaffiliated party;
With regard to Biological Glue - royalties at the rate of *** of
net sales to an unaffiliated party:
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With regard to Aibumin - royalties at the rate of *** of net sales
to an unaffiliated party.
It is understood that no right is being granted by OMRIX in this
Agreement that permits MDA to contract manufacture products for
other parties using OMRIX know-how or New Products technologies.
MDA shall pay OMRIX the royalties on a quarterly basis, within 45
days as of the end of each calendar quarter in respect of which
the royalties are being paid. Within 180 days as of the end of
each calendar quarter, MDA shall submit to OMRIX an annual sales
report detailing the sales of each of the products in respect of
which royalties are payable. Such annual sales reports shall be
certified by MDA's external auditors. OMRIX shall have the right
to appoint its own CPA who shall check the accuracy of such annual
sales reports.
Said Licenses granted to MDA shall not be limited in time.
It is hereby clarified, that OMRIX does not grant MDA any right or
authorization to manufacture the above products while using OMRIX
know how or New Product technologies, for the manufacture of the
products as a subcontractor for a third party.
MDA shall be entitled to the licenses as set forth in this section
17.2, also in any case of premature termination of this Agreement
by OMRIX, at any time after December 31st, 2006, for any reason
which is not under the control of MDA. In such event, the above
licenses shall come into effect as of the date of such
termination.
In this section - "LICENSED PRODUCTS BASED ON OCTAPHARMA KNOW HOW"
shall include any improvement thereon made by OCTAPHARMA until the
date of assignment (i.e. September 5, 1995), and any improvement
thereon made by OMRIX thereafter, which does not amount to a New
Product.
"NEW PRODUCT" - shall mean a product based on OMRIX know how which
may be registered either as a new patent or as a new
pharmaceutical product with the Registrar of Medical Preparations
in the Israeli Ministry of Health, provided such new registration
is not in respect of a product which has the same formulation and
is produced while using the same manufacturing technology as the
currently registered Licensed Products based on OCTAPHARMA Know
How.
17.3 Upon the expiration or termination of this Agreement, provided
such termination or expiration is after December 31st 2006, and
should MDA so desire, OMRIX shall favorably consider granting MDA
a License to manufacture and sell to end users in the Israel
market only, any additional products that were manufactured by
OMRIX at the Plant and in respect of which OMRIX will have the
full rights to License MDA. The parties shall negotiate in good
faith the terms of any such possible License.
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17.4 Upon the expiration or termination of this Agreement, provided
such termination or expiration is not before November 30, 2010,
and should MDA so desire, OMRIX shall favorably consider granting
MDA a License to manufacture any product(s) that were manufactured
by OMRIX at the Plant in respect of which OMRIX will be entitled
and free to license MDA for sale in country(ies) in which OMRIX
doesn't market same or where OMRIX did not enter into exclusive
marketing / distribution agreements. The parties shall negotiate
in good faith the terms of any such possible License.
17.5 Without derogating from the aforesaid in sections 17.1 - 17.4,
upon expiration of this Agreement (whether on December 31st 2006
or December 31st 2014) or upon its termination for any reason
other than its material breach by MDA, which was not rectified by
MDA in spite of a 30 day written demand by OMRIX to do so, MDA
shall be fully entitled to continue operating the Plant, and
producing the Licensed Products therein, and to obtain all
manufacturing licenses from OMRIX for the Licensed Products as
provided for in sub-section 17.1 above, by itself and/or through
its subsidiaries.
In order to enable MDA to take over the production at the Plant
as aforesaid, and in order to ensure such transfer, the following
shall apply:
17.5.1 Within 30 days from the date of this Agreement, OMRIX shall
present to MDA's Director of Blood Services ("THE
DIRECTOR"), a full and updated set of documents, in hard
copy or in electronic form, pertaining to the production in
the Plant of the Licensed Products ("THE DOCUMENTATION").
The Director shall be permitted to appoint an expert on its
behalf in order to examine the Documentation so as to
assure that the manufacturing of the Licensed Products can
be completed when relying on the Know-How contained in
the Documentation, provided that no copies of the
Documentation shall be made by MDA, whether by electronic
media, photocopy etc.
The aforementioned expert shall be required to execute a
confidentiality agreement satisfactory to OMRIX, prior to
reviewing the Documentation. OMRIX shall have the right to
object to the appointment of any expert who, in the
reasonable opinion of OMRIX, may potentially disclose its
secrets or in any other way endanger the interests of
OMRIX.
If OMRIX shall give MDA an affidavit signed by Mr. Xxxxxx
Xxxx accompanying the Documentation, stating that the
documents contained in the Documentation which relate to
the production of the Licensed Products are the full
manufacturing file of the Licensed Products, then in such
case the Director shall not refer the matter to examination
by an expert as aforesaid.
17.5.2 The Documentation shall be such, that will cover all
aspects involved with the production of each of the
Licensed Products,
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including, without limitation, the necessary diagrams - if
and to the extent available, quantities, safety
precautions, complete manufacturing files and all of the
Standard Operating Procedures (Hereinafter: "S.O.P.'S")
with regard to all production procedures at the Plant, of
the Licensed Products.
In addition to the Documentation, it is hereby agreed that
upon termination of this Agreement, OMRIX shall hand over
to MDA all documents in the possession of OMRIX which
relate to the operation of the Plant and the manufacturing
in the Plant of the Licensed Products including, without
limitation, all the results of quality control tests as
well as all repair and maintenance reports etc., whether
documented on paper and/or on computer discs and/or on
microfilm and/or using any method of recording.
Additionally at such time that MDA shall have the right to
manufacture the Biological Glue in accordance with the
terms of this Agreement, such documentation shall also
include information relating to the Biological Glue.
MDA agrees to maintain and store all such Documentation
received by it upon termination as aforesaid, in accordance
with applicable pharmaceutical regulations, and shall make
such documentation available to OMRIX upon OMRIX's written
request.
17.5.3 Following the review of the Documentation by The Director
or as otherwise provided for in section 17.5.1, the
Documentation shall be deposited in escrow with a Trust
Company of one of the major Israeli banks, at MDA's
discretion (Hereinafter: "THE TRUST COMPANY").
17.5.4 Once every year, OMRIX shall submit to the Director or as
otherwise provided for in section 17.5.1., a set of updated
documents of whichever of the documents contained in the
Documentation which have been updated in the previous year
(Hereinafter: "THE ANNUAL UPDATING DOCUMENTS").
Following the review of the Annual Updating Documents by
the Director and/or as otherwise provided for in section
17.5.1 above, OMRIX shall deposit the Annual Updating
Documents with the Trust Company.
17.5.5 Together with the Documentation, OMRIX shall deposit with
the Trust Company a letter in respect of each of its
employees working in the Plant, in the form attached hereto
as SCHEDULE "H", stating that upon the expiration of this
Agreement or the termination thereof for any reason, other
than reasons caused by MDA, OMRIX waives all of its rights
arising from such employees' employment agreement, with
regard to secrecy clauses and/or non competition clauses,
only as far as MDA is concerned, and only insofar as the
production of the Licensed Products and the Biological Glue
are concerned, in accordance
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with the licenses granted to MDA pursuant to the terms of
this section 17.
Such letters shall further provide, that OMRIX has no
objection whatsoever, that the employees shall be employed
at the Plant by MDA, as of the termination of the
Agreement.
OMRIX hereby undertakes, that should it hire and employ,
during the Term, new employees at the Plant, whether
instead or in addition to its current employees, it shall
deposit with the Trust Company a letter as aforesaid, with
regard to any such new employee at the Plant, immediately
upon hiring such employee.
17.5.6 Along with the Documentation and the aforesaid letters,
OMRIX shall submit with the Trust Company an irrevocable
letter of instructions, in the form attached to this
agreement as SCHEDULE "I", instructing the Trust Company as
to the circumstances upon which it shall, be required to
transfer the Documentation, along with all Annual Updating
Documents and the letters, to MDA.
17.5.7 In addition to the aforesaid, OMRIX hereby undertakes to
take all necessary actions and sign all necessary
documents, required for enabling MDA to realize its rights
hereunder upon termination of this Agreement.
A list of such documents is attached hereto as SCHEDULE
"J".
18. TRAINING OF MDA'S EMPLOYEES
18.1 Without derogating from the provisions of section 17 above, it is
hereby agreed that during the last year of operation of the Plant
by OMRIX, as might be required under the circumstances, OMRIX
shall train, at MDA's cost, and for a period to be agreed between
the parties, a few of MDA'S key personnel in the operation of the
Plant, in order to allow MDA to continue operating the Plant
immediately after the vacation thereof by OMRIX.
It is hereby clarified that such MDA's employees shall only be
trained to manufacture the Licensed Products as well as the
Biological Glue (subject to the provisions of sub-Section 17.2
above) and they shall be required to execute a Confidentiality
Agreement in favor of OMRIX in a form to OMRIX's satisfaction in
respect of the technology, formulae etc., pertaining to other
Products manufactured by OMRIX in the Plant.
Should the parties reach an agreement as to the manufacture by MDA
of any additional Products at the Plant upon the termination of
this Agreement, OMRIX shall train MDA's employees to also
manufacture any such additional Products.
18.2 In addition to the aforesaid and in case of early termination of
this agreement as a result of a breach of this agreement by OMRIX,
OMRIX, hereby undertakes an obligation to train, at MDA's cost, a
suitable
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substitute plant manager on behalf of MDA, whose identity shall
be chosen by MDA (Hereinafter: "THE SUBSTITUTE MANAGER").
The training of the Substitute Manager shall commence, if
possible, at least three months before the date of termination (in
case of an unexpected termination for any reason whatsoever).
The Substitute Manager shall be trained by OMRIX intensively, for
a period of no less than three consecutive months, covering all
aspects related with the management and operation of the Plant.
OMRIX undertakes to employ in the training of the Substitute
Manager the General Manager of the Plant and the Scientific Person
in charge of production and/or QC.
19. REPAYMENT BY MDA OF THE ADVANCE
DELETED
20. ACQUISITION OF GOODS IN PROCESS
DELETED
21. ACCOUNTING BETWEEN THE PARTIES
The parties have accounted between them in the framework of an
agreement dated April 12th, 1998, a copy of which is attached hereto as
SCHEDULE "K".
22. NAME OF MDA ON THE PACKAGES
To the extent it will be legally and politically possible and as long as
it will not adversely affect the marketing efforts of OMRIX and/or its
relations with various third parties worldwide, OMRIX shall endeavor to
indicate MDA as the owner of the Plant on the packages of the Products
manufactured by OMRIX at the Plant.
23. OMRIX SIGNS
OMRIX shall be entitled to place, in co-ordination with the management of
the Tel Hashomer Hospital, its directional signs at the various
intersections within the Tel Hashomer perimeter.
OMRIX shall not be entitled to put its signs on the outer side of the
Building, but will be entitled to do so, in coordination with MDA inside
the Building, including at the entrance to the Plant.
24. INSPECTION OF THE PLANT AND THE PREMISES
24.1 MDA's Manager of Blood Services shall be entitled to reasonably
visit the Plant during working hours for the sole purpose of
verifying the compliance of OMRIX with the provisions of this
Agreement, after giving OMRIX 2 hours notice ahead of time of
his/hers intention to do
- 39 -
so. It is agreed, however, that OMRIX will be entitled to deny
access during periods of secret R&D or manufacturing processes.
The Manager of MDA`s Blood Services shall be allowed access to the
Plant only subject to exercising a Confidentiality Agreement
satisfactory to OMRIX. Two (2) other representatives of MDA shall
be also entitled to visit the Plant during working hours in order
to verify the compliance of OMRIX with the provisions of this
Agreement, after giving OMRIX 48 hours notice ahead of time of
their intention to do so provided, however, that such visits shall
not be more frequent than four (4) times in each calendar year,
and provided such representatives shall also be required to
execute a confidentiality agreement satisfactory to OMRIX in favor
of OMRIX prior to visiting the Plant.
24.2 OMRIX hereby declares, that it shall allow delegations of MDA's
friends and/or donors to visit the Plant, provided that such
visits shall be coordinated in advance with OMRIX's authorized
representatives, and provided that such delegations shall not
include visitors who may represent and/or have commercial contacts
with OMRIX's competitors, whereby such visitors are involved with
the manufacture and/or sale and/or engineering of blood derived
products.
25. EXCHANGE RATE
Any amount indicated or referred to in this Agreement and quoted in US
Dollars shall be payable in NIS according to the representative exchange
rate of the US Dollars to the NIS on actual date of payment.
26. SECURITIES
In order to assure the fulfillment by OMRIX of its obligations pursuant
to this agreement, OMRIX shall provide MDA the following securities:
26.1 OMRIX shall provide MDA within thirty (30) days as of the
execution of this agreement with an autonomous unconditional Bank
Guarantee satisfactory to MDA, in the amount in NIS equivalent to
US DOLLARS 250,000 linked to the exchange rate of the US Dollar,
in order to secure the payment by OMRIX of the amounts that shall
be due to MDA from time to time for the supply of plasma and/or as
Rent and Lease Fee. Such Bank Guarantee shall be in force for
consecutive 12 month periods until a date being 6 (six) months
after the evacuation of the Plant by OMRIX. Each such extension
of the Bank Guarantee will be made by OMRIX not later than 4
(four) months before the relevant expiration date of any such Bank
Guarantee.
The above guarantee shall be deposited in trust with MDA's
attorney - Advocate AMI OSNAT, who shall be entitled to hand over
the Bank Guarantee to MDA upon the following conditions:
(i). He gives OMRIX a fifteen (15) days written notice about his
intention to do so; and
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(ii) He attaches a Sworn Affidavit by MDA'S Director General or
Treasurer specifying the amounts due to MDA from OMRIX which were
not paid on time in spite of a written demand to do so.
26.2 The parent Company of OMRIX, OMRIX BIOPHARMCEUTICALS S.A. of
000 Xxxxxxx xx Xxxxxxxx X- 0000 Xxxxx Xx. Xxxxxx, Xxxxxxx (Fax:
000000000000), hereby guarantees the undertakings of OMRIX as
stipulated in Section 16, and shall place its signature at the
bottom of this agreement in order to give effect to said
guarantee.
26.3 In addition to the aforesaid in this section 26, OMRIX shall
provide MDA with a first degree floating charge over all of
OMRIX's inventory of uncompleted products (including the Licensed
Products and the Biological Glue), as well as all of OMRIX's
inventory of raw materials, including plasma. In order to give
effect to said floating charge, the parties shall sign, upon the
execution of this agreement, a debenture in the form attached
hereto as SCHEDULE "L"; The parties shall sign any additional
documents required in order to give effect to said floating
charge, and shall take any actions necessary in order to register
the floating charge with the Israeli Registrar of Companies.
Said floating charge shall secure, inter alia, OMRIX's
obligations to pay the Deferred Rent and Lease Fee as per section
7.3.2 of this Agreement, as well as any outstanding liability
pertaining to the supply of plasma to OMRIX by MDA, as well as any
future payments due from OMRIX to MDA which are not settled by
OMRIX in a timely manner.
27. RESPONSIBILITY AND LIABILITY
27.1 In its capacity as the owner of the Building, including the
adjacent areas and surfaces as well as the Plant, MDA shall be
fully responsible and liable for any damage caused at and/or by
and/or to the Building and/or the Systems, all of which are
maintained by MDA or anybody on its behalf.
27.2 In its capacity as the Lessee of the Premises and the Plant
(excluding external walls), OMRIX shall be fully responsible and
liable for any damage caused at and/or by and/or to the premises
or the Plant including the Equipment installed therein, all of
which are maintained by OMRlX or anybody on its behalf, with the
exception of any damage caused due to structural deficiency or
mistakes and/or poor workmanship of MDA's contractors in the
process of the erection of the Premises or the Plant.
27.3 MDA shall be fully responsible and liable for any damage caused by
any of its employees, sub-contractors or any third party acting on
its behalf.
27.4 OMRIX shall be fully responsible and liable for any damage caused
by any of its employees, sub-contractors or any third party acting
on its behalf in the Premises.
- 41 -
27.5 OMRIX shall be fully responsible and liable for any damage caused
by any of the Products manufactured by OMRIX. MDA shall be fully
responsible and liable for any damage caused by the Plasma
supplied by it to OMRIX.
27.6 In the event legal proceedings shall be initiated by any third
party ("Third Party") against one of the parties hereto (the
"Defendant"), for deeds or misdeeds which are the liability of the
other party hereto (the "Liable Party"), the Defendant shall
immediately inform the Liable Party of any such proceedings and
will allow the Attorneys of the Insurance Company of the Liable
Party to participate in the defense in such proceedings or, at the
discretion of the Defendant, to take over the entire defense in
such proceedings. The Liable party shall, within 15 (fifteen) days
of the request by the Defendant to do so, fully indemnify the
Defendant for any expense, damage or payment incurred by the
Defendant as a result of the deeds or misdeeds of the Liable
Party.
28. LAW AND JURISDICTION
This Agreement shall be governed by the Laws of the State of Israel. With
the exception of the matters specifically referred herein to arbitration,
the competent Courts in Tel Aviv / Jaffa shall have the sole jurisdiction
in any matters arising hereunder.
29. ACTS OF GOD AND FORCE MAJEURE
Neither party shall be liable for any failure or delay in the performance
of its obligations under this Agreement whereby such failure or delay is
caused by an act of God, Force Majeure, riot or civil commotion, strike,
lockout or other labor disturbances, fire, act and/or any other order of
government, flood, war, peril of sea, or any other cause or peril whether
of the same and/or of another nature beyond reasonable control.
30. COMMERCIAL TRANSACTION
MDA states and confirms the transaction contemplated in this Agreement is
made by it as a transaction of a purely commercial nature and not in
the framework of MIA's statuary activities.
31. ASSIGNMENT OF RIGHTS
31.1 MDA confirms that it has been informed by OMRIX that OMRIX may
wish to introduce certain changes in this Agreement, as provided
below, in order to enjoy certain benefits to which it might be
entitled by law. Toward this end OMRIX may wish to split the Lease
and Rent hereof between OMRIX and an additional company being an
affiliate of OMRIX so that the duties and the rights of OMRIX, as
per this Agreement, shall be split between OMRIX and such other
affiliate company of OMRIX. MDA shall not object to such
amendment of the
- 42 -
Agreement provided it shall guarantee the performance of any
undertakings of such affiliate company towards MDA.
31.2 Subject to the provisions of section 31.1 above; any other
assignment by OMRIX of its rights or duties, shall require the
prior written consent of MDA, which shall not be unreasonably
withheld.
31.3 OMRIX shall give MDA 14 days prior written notice about any
contemplated transaction as a result of which Xx. Xxxx'x
shareholdings in OMRIX Biopharmaceuticals S.A. and/or his voting
rights and/or his rights to appoint directors shall drop below 20%
and/or whereby the shareholdings/voting rights in OMRIX
Biopharmaceuticals S.A. of any other single shareholder (and/or
group of shareholders who are parties to any shareholders/voting
agreements), whether directly or indirectly, will become larger
than those of Xx. Xxxx.
32. MISCELLANEOUS
With regard to any works which shall be carried out by OMRIX in the Plant
and/or the Premises and/or outside thereof, in accordance with the
terms of this agreement, whether as Discretionary Investments and/or
Compulsory Investments and/or otherwise (e.g. as stipulated in section
2.13 above), MDA shall be entitled to employ and consult an engineer on
its behalf, who shall be authorized to supervise all such works and
approve the execution of any such works (as set forth in this agreement).
It is acknowledged that such engineer, at the time of the execution of
this agreement, is Xx. Xxxxx who will be required to execute a
confidentiality agreement satisfactory to OMRIX. Any future appointment
of such an engineer will be made by mutual agreement of the Parties.
33. NOTICES
The addresses of the parties for the purposes of this Agreement, subject
to any change of address, notice of which was given by one party to the
other, are as first hereinabove written and any notice hereunder shall be
deemed properly served when delivered by personal delivery and if posted
- five (5) days after the notice, properly addressed as above and duly
stamped is posted by registered mail from a Post Office in Israel.
34. WAIVERS
The waiver by either party of any breach or alleged breach of any
provision hereunder shall not be construed to be a waiver of any
concurrent, prior or succeeding breach of same provision or any other
provision herein.
35. AMENDMENTS IN WRITING
Any amendment of this Agreement must be in writing and signed by all the
parties hereto.
- 43 -
36. APPROVAL OF THE AGREEMENT
This Agreement was duly approved by the Board of Directors of OMRIX and
any other competent organ of OMRIX on the one hand, and by the Executive
Committee and any other competent organ of MDA on the other hand, and
upon, execution thereof it shall be fully binding upon the parties
hereto.
IS WITNESS WHEREOF, THIS AGREEMENT IS HEREBY SIGNED BY THE PARTIES HERETO AS OF
THE DAY AND YEAR FIRST ABOVE WRITTEN.
(OMRIX Biopharmaceuticals Stamp)
/s/ Xxxxxx Xxxx /s/ Xxxxxx Xxxxxxxx
-------------------------------------------------------
OMRIX BIOPHARMACEUTICALS LTD.
by Mr. Xxxxxx Xxxx - Chairman of the Board
and by Xx. Xxxxxx Xxxxxxxx - General Manager
(Stamp)
/s/ Yohanan Gur /s/ Avi Zohar
-------------------------------------------------------
MAGEN XXXXX XXXX
By Xx. Xxxxxxx Gur - Chairman of the Executive Committee
and by Mr. Avi Zohar - Director General
We, the undersigned, OMRIX BIOPHARMACEUTICALS S.A., of 000, Xxxxxxx xx
Xxxxxxxx X-0000 Xxxxx-Xx-Xxxxxx, Xxxxxxx, being the parent company of OMRIX
BIOPHARMACEUTICALS Ltd. ("OMRIX"), do hereby guarantee the full performance by
OMRIX of OMRIX's obligations pursuant to section 16 of the above Agreement. Our
undertaking as aforesaid shall be jointly and severally with that of OMRIX.
/s/ Xxxxxx Xxxx /s/ Xxxxxx Xxxxxxxx
-------------------------------------------------------
OMRIX BIOPHARMACEUTICALS S.A.
by Xxxxxx Xxxx - Chairman of the Board
