["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
EXHIBIT 10.11
FIRST AMENDED AND RESTATED
AGREEMENT FOR CUSTOM PROCESSING
THIS FIRST AMENDED AND RESTATED AGREEMENT, entered into as of this 24th
day of January, 1996, between Bayer Corporation, formerly known as Miles, Inc.
("Bayer"), with offices at 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxxxxx 00000, and
Melville Biologics, Inc. ("Melville"), a Delaware Corporation with offices at
000 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000.
R E C I T A L S:
Bayer (then known and referred to as Miles) and Melville entered into
that certain Agreement for Custom Processing, dated February 7, 1995 ("Original
Agreement"), and now desire to amend and restate such Original Agreement in its
entirety (effective retroactively as of February 7, 1995) as follows:
Bayer desires to procure, and Melville desires to provide, for a period
of at least four (4) years, the processing and fractionation of ******** liters
of Bayer Input Per year into Intermediates and Albumin [Human] Bulk.
The Original Agreement became effective on February 7, 1995 and this
Agreement, commencing on the date set forth above, will be effective
retroactively as of February 7, 1995, and processing and fractionation hereunder
are expected to start as soon as possible in 1995, after the successful
completion of the fractionation facility renovation, qualification, validation,
processing of Conformance Lots and submission of appropriate documentation to
the FDA.
As the timely availability of the fractionation capacity is critical to
the success of this Agreement, a joint Bayer/Melville regulatory, engineering,
production and Quality Assurance task force will review the proposed Melville
facility changes and regulatory requirements necessary to be made and satisfied
in order to commence fractionation for Bayer and will agree to a regulatory
strategy to meet the fastest practicable timeline for the commencement of
routine fractionation at Melville. Both parties met and reviewed their
preliminary strategy with the FDA on September 29, 1994, and received input from
the FDA suggesting that the current timeline for the commencement of routine
fractionation in 1995 is reasonable. If the impact of future FDA action is such
that the Start-Up Period cannot begin by January 1, 1996, then Bayer, at its
option, may negotiate with Melville to amend this Agreement appropriately. In no
event will a delay in the beginning of the Start-Up Period beyond July 1, 1996
be acceptable to Bayer.
Under separate agreements, executed concurrently with the execution of
the Original Agreement, Melville has obtained a $10,000,000 credit facility from
PNC Bank, N.A., and Bayer has executed a Guarantee Agreement in favor of PNC
Bank, N.A. (the documents relating thereto, including without limitation the
Reimbursement Agreement and the Mortgage referred to below, are hereinafter
identified as the "Loan Documents").
Page 2
Bayer and Melville have entered into a Reimbursement and Security
Agreement of even date with the Original Agreement (the "Reimbursement
Agreement") pursuant to which Melville has agreed to reimburse Bayer for any
amount paid or incurred by Bayer under its guaranty, which obligations are
secured by security interests granted in the Reimbursement Agreement and by a
mortgage of even date with the Original Agreement (the "Mortgage").
Melville has leased to Bayer the building, land, certain equipment and
fixtures located at 000 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (other than the
area thereof to be used for MBI General Operations, as defined in the
Reimbursement Agreement) under a Lease Agreement of even date with the Original
Agreement (the "Lease"), and Bayer has subleased such leased premises to
Melville under a Sublease Agreement of even date with the Original Agreement
(the "Sublease"), which Sublease terminates in the event of a Bayer Takeover (as
defined in Section 12.2 hereof).
NOW, THEREFORE, it is hereby agreed as follows:
SECTION 1
GENERAL TERMS
1.1 Definitions
A. "Accepted Material" means Bayer Input duly received and accepted by
Melville as being in accordance with the requirements of this Agreement.
B. "Albumin [Human] Bulk" is a liquid sterile bulk form of albumin produced
by Melville utilizing Melville's Ultra filtration (UF) process from the
Bayer Input. Albumin [Human] Bulk shall meet the release specifications
to be developed by Bayer and Melville and incorporated herein as
Schedule E.
C. "Base Yields" means the yields, expressed as yields of recoverable paste
of Intermediates and of recoverable grams of protein of Albumin [Human]
Bulk, each per liter processed, as specified as to such products in the
table set forth in Section 4.1.
D. "cGMP's" or "current Good Manufacturing Practices" means the FDA's
regulations and related guidance covering the methods, facilities and
controls used in manufacturing, processing, packing and storing drugs,
as applicable to Intermediates and Albumin [Human] Bulk.
E. "Conformance Lots" means production lots of Intermediates of Albumin
[Human] Bulk produced prior to the Start-Up Period for the purpose of
establishing that their manufacture is in conformance with release
specifications provided by Bayer and agreed to by Melville.
Page 3
Conformance Lots will be provided to Bayer for further manufacture into
finished product, and, as appropriate, to the FDA.
F. "Cryoprecipitate" means the resultant centrifugate derived at Step 1 of
Melville's FDA licensed fractionation process by cold precipitation of
the Bayer Plasma (Bayer Input) and released in conformance with the
Bayer' Cryoprecipitate specifications incorporated herein as Schedule A.
G. "FDA" means the United States Food and Drug Administration, and
particularly includes its Center for Biologics Evaluation and Research,
which has comprehensive regulatory authority over the production and
marketing of the plasma-derived products which are the subject of this
Agreement.
H. "Fraction II + III" and "Fraction II + IIIw" mean the pastes rich in IgG
(Immune Globulins) derived from either Melville's existing FDA licensed
fractionation process or future processes to be submitted by Melville to
the FDA with specific changes as requested by Bayer and released in
conformance with Bayer's Fraction II + III and Fraction II + IIIw paste
specifications incorporated herein as Schedules B-1 and B-2.
I. "Fraction IV-1" and "Fraction IV-4" mean the pastes from either
Melville's existing FDA licensed fractionation process or future
processes to be submitted by Melville to the FDA with specific changes
as requested by Bayer and released in conformance with Bayer's Fraction
IV-1 paste specification incorporated herein as Schedule X.
X. "Fraction V" means the paste rich in Albumin derived from Melville's
existing FDA licensed fractionation process and released in conformance
with Bayer's Fraction V paste specification incorporated herein as
Schedule D-1.
K. "Intermediates" means the Fraction II + III Paste, Fraction II + IIIw
Paste, Fraction IV-1 Paste, Fraction IV-4 Paste, Fraction V Paste,
Purified Fraction V Paste and Cryoprecipitate processed by Melville from
the Bayer Input. Intermediates shall meet the release specifications
provided by Bayer and set forth in Schedules A through E.
L. "Bayer Input" means plasma supplied by Bayer to Melville that has been
produced, tested, packaged, labeled, stored and shipped in accordance
with Bayer requirements and FDA regulations (21 CFR xx.xx. 640.60 et
seq), and all other applicable guidelines, directives and bulletins,
including industry standards.
M. "Project" means the engineering, construction, implementation and
validation activities associated with the project identified in Exhibit
A and which exhibit will be supplemented and modified as formal
engineering phases are completed.
Page 4
N. "Purified Fraction V" means "Albumin Paste" derived by precipitating
Fraction V as specified in Melville's FDA-licensed fractionation process
and released in conformance with Bayer's Purified Fraction V
specification incorporated herein as Schedule D-2.
O. "SOP's" means Melville's standard operating procedures for processing
and fractionation operations hereunder, as approved by Bayer and as the
same may be amended from time-to-time with the approval of Bayer.
P. "Start-Up Period" means the ninety (90) day period commencing with the
first day of routine processing of Intermediates, after Melville's
successful completion of processing of Conformance Lots.
Q. "Year" means for purposes of scheduling and determination of Processing
Fees, a period of twelve (12) consecutive months. The first such year
will begin with the first day of the Start-Up Period, which must be no
later than July 1, 1996, and, for subsequent years, upon the anniversary
of such day.
1.2 Term
The term during which Bayer shall supply Bayer Input to Melville, and Melville
shall conduct processing and fractionation operations hereunder (the "Term"),
shall (a) commence on (i) the date on which the Start-Up Period has been
initiated, or (ii) July 1, 1996, whichever is earlier, and (b) terminate on (i)
if the Start-Up Period has been initiated before December 31, 1995, on December
31, 1999, or (ii) if the Start-Up Period has been initiated after December 31,
1995, on the fourth anniversary of the date of commencement of the Start-Up
Period, or June 30, 2000, whichever is earlier (the "Initial Term"); provided,
however, that the Term shall be automatically extended for one (1) additional
year (the "First Renewal Period") upon the same terms and conditions (except for
the processing fee which shall be adjusted for inflation as provided in
Paragraph 4.3(d) of this Agreement), unless Bayer gives Melville written notice
of cancellation of the First Renewal Period, such notice to be given no later
than July 1, 1998. In addition, if the Term is extended to include the First
Renewal Period, the Term shall be extended beyond the First Renewal Period for
up to one (1) additional year (the "Second Renewal Period") upon the same terms
and conditions (except for the processing fee which shall be adjusted for
inflation as provided in Paragraph 4.3(d) of this Agreement), unless Bayer gives
Melville written notice that the Term will not be extended, such notice to be
given no later than July 1, 1999. With respect to the July 1, 1998, and July 1,
1999, notification dates provided for in this Section 1.2, Bayer will use its
best efforts to provide as much additional advance notice as possible.
SECTION 2
EVALUATION PERIOD AND START UP PERIOD
2.1 FDA Approval of Bayer Use of Intermediates and Albumin [Human] Bulk
Page 5
Bayer acknowledges that the start-up and shipment of Intermediates and Albumin
[Human] Bulk to Bayer from Melville's facility in Melville, New York in
interstate commerce may require both entities to obtain appropriate FDA
approvals; and if so, Intermediates and Albumin [Human] Bulk produced for Bayer
prior to the receipt of such FDA approvals will be shipped to Bayer or, if Bayer
so directs, will be quarantined by Melville at Bayer's expense until such time
as such FDA approvals are obtained. Furthermore, Bayer will pay Melville for
Intermediates and Albumin [Human] Bulk, so quarantined, as if released and
tendered for shipment to Bayer in accordance with Section 6.3 of this Agreement.
2.2 Project Management
Bayer shall make available to Melville a project engineer to assist Melville
management in the successful completion of the Project. The project engineer
shall devote up to one-third of his/her full-time regular hours in providing
advice and assistance, including review and analysis of the site for required
structural and equipment modifications necessary to accommodate the activities
of Melville in fulfillment of its processing and fractionation activities
hereunder. When reasonably required, Bayer shall extend the services of the
project engineer through the procurement and installation periods. All routine
direct costs of the project engineer shall be absorbed by Bayer.
2.3 Technical Assistance
In order to assist Melville management, if reasonably requested by Melville in
writing, Bayer will provide technical expertise to help achieve and maintain
targeted product yields and improve overall operating efficiencies. In addition,
Bayer will provide training at its Clayton, North Carolina fractionation plant
for Melville production and other appropriate personnel, to expedite their
training in Bayer's current fractionation procedures and policies. All personnel
and travel costs for such personnel shall be absorbed by Melville.
Bayer may, at its option, install Bayer's production and other appropriate
personnel at the Melville site to represent Bayer's interests and support the
fractionation operation. These individuals will be Bayer's employees and Bayer
will pay all their salary and expenses.
2.4 Bayer has disclosed to Melville (subject to the confidentiality
provisions of Section 10) Bayer's currently licensed process for producing (a)
Fraction II + IIIw and (b) Purified Fraction X. Xxxxxxxx shall incorporate the
details in an appropriate submission to the FDA as an optional production
procedure to be used for the supplying of Intermediates to Bayer. Melville and
Bayer, through their respective regulatory and Quality Assurance
representatives, shall closely cooperate in formulating the proposed procedure
and expediting the requisite submissions and approvals.
SECTION 3
CUSTOM FRACTIONATION
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 6
3.1 Once fractionation facility renovation, validation and qualification
have been completed, Bayer will supply to Melville sufficient Bayer Input for
the processing of Conformance Lots to meet both Melville's and Bayer's
regulatory requirements. Bayer will pay Melville the Base Processing Fee for the
Bayer Input processed as Conformance Lots, as payment for Melville's performance
hereunder and in satisfaction of Bayer's rental obligations under the Lease.
3.2 Once processing of Conformance Lots has been completed, during the Term
Bayer shall deliver to Melville sufficient Bayer Input to permit processing at a
rate of one lot (consisting of five production batches), approximating ********
liters, per week for ******** aggregating approximately ******** liters per year
("the Production Plan Rate"). During the First Renewal Period and the Second
Renewal Period, if applicable, the Production Plan Rate may be established by
Bayer, in its sole discretion, at any quantity between ******** and ********
liters per year. In the event Bayer elects to reduce the Production Plan Rate
below ******** liters per year during either the First or Second Renewal
Periods; (a) the weekly Bayer Input shall be adjusted proportionally, and (b)
Bayer shall notify Melville of its intention to so reduce the Production Plan
Rate at least six months prior to the beginning of the affected Renewal Period.
Melville shall process the Bayer Input into the following products, as directed
by Bayer: Cryoprecipitate, Fraction II + III or Fraction II + IIIw, Fraction IV-
1, Fraction IV-4, and Fraction V or Purified Fraction V or Albumin [Human] Bulk,
all in accordance with Melville's then-current FDA approved product licenses,
and all other applicable regulations, guidelines and current directives.
3.3 Except as expressly provided in Sections 2.1 and 2.4, Melville does not
contemplate making any further material changes to its filings with the FDA as
to its product licenses, processes or facility with respect to the processing of
Intermediates or Albumin [Human] Bulk using Bayer Input. Melville shall notify
Bayer prior to instituting any process changes or license amendments with
respect to the processing of Bayer Input into Intermediates or Albumin [Human]
Bulk.
3.4 During the Term, Bayer and Melville shall hold quarterly meetings to
review the performance of their respective obligations under this Agreement.
3.5 Melville shall complete and tender for delivery the Intermediates and
Albumin [Human] Bulk produced from each lot within the following time frames:
Intermediates ****************
Albumin [Human] Bulk ****************
3.6 Any unforeseen development arising in processing which may cause a delay
in delivery, including without limitation any proceedings relating to revocation
or suspension of Melville's FDA licenses, will be promptly communicated to
Bayer, and Bayer shall consult with Melville toward a resolution of the problem
acceptable to both parties, including, without limitation, the extension of
delivery times for the lots in question. With the exception of delays covered by
the
Page 7
provisions of Sections 3.7 or 13, Bayer will charge Melville for each day's
delay in delivery an amount equal to the dollar value of the work-in-process
(WIP) inventory subject to such delay multiplied by the then current prime or
base rate, as announced by Citibank, N.A., plus 2% and divided by 365. Such
charge will be deducted from amounts otherwise due to Melville from Bayer.
3.7 Melville shall endeavor to give Bayer advance notice as to when
shortages of inventories of Bayer Input threaten to curtail production below the
weekly level of capacity utilization provided for by the Production Plan Rate
defined in Section 3.2, or as the Production Plan Rate may be subsequently
modified by mutual agreement.
3.8 Bayer shall ship the Bayer Input, packaged and documented in accordance
with the shipment procedures specified in Schedule F and otherwise in
conformance with applicable FDA requirements for plasma.
3.9 Following receipt of each shipment of Bayer Input, Melville shall
inspect, or otherwise ascertain, its conformity with the requirements of the FDA
and of the relevant Melville SOP's. Prior to release for processing hereunder,
each unit of Bayer Input shall have been visually examined and verified against
accompanying documentation (i.e., "100% inspected"). Melville shall have the
right to reject any units which do not meet its SOP's or FDA standards or which
are otherwise damaged, possibly contaminated, improperly packaged, labeled or
stored, which are the subject of a lookback, or which are not properly
documented. Melville must notify Bayer by facsimile of any such rejected units
within 24 hours of inspection. All rejected units are to be destroyed when
notified by Bayer or, if notification is not promptly received, may be held at
the expense and risk of Bayer for a period of 30 days, after which Melville may
dispose of them in accordance with its SOP's. Melville will provide to Bayer
documentation of any destruction of such units.
3.10 In the event (a) Bayer notifies Melville of any non-conformity or
unsuitability of any unit of Bayer Input after the same has been accepted and
pooled, or (b) Melville notifies Bayer of any non-conformity or unsuitability of
a pool upon Melville's testing in accordance with the characteristics and
specifications set forth in Schedules A through E, and the pool is thereby
deemed unsuitable, then Bayer shall remain liable to Melville for the processing
fees (liters of Bayer Input accepted and pooled multiplied by the Base
Processing Fee then in effect) for such lot. Melville shall cooperate with Bayer
in any reasonable efforts requested by Bayer to correct any deficiency
attributable to such Bayer Input. If appropriate, and if requested by Bayer, any
retesting, reprocessing, or additional processing and testing of the unsuitable
pool shall be done by Melville at the sole cost and expense of Bayer.
3.11 Melville will be responsible for the storage and handling of Bayer Input
as specified by Bayer, for pool testing as specified by Bayer and for the
release testing of Intermediates and Albumin [Human] Bulk in accordance with
Bayer's and Melville's release specifications schedule.
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 8
SECTION 4
BASE PROCESSING FEE/BASE YIELDS
4.1 Bayer shall pay Melville, as payment for the fractionation of the Bayer
Input and in satisfaction of Bayer's rental obligation under the Lease, a Base
Processing Fee equivalent to ******** per liter of plasma placed into process in
1995 and 1996, ******** per liter of plasma placed into process in 1997,
******** per liter of plasma placed into process in 1998, and ******** per liter
of plasma placed into process in 1999 and ******** per liter of plasma placed
into process during the two Renewal Periods, if applicable, subject to
adjustment, offset and recoupment as provided below in this Section 4 and in
Section 12.2:
BASE BASE YIELD
----------
PROCESSING Paste
MATERIAL FEE* Weight (g/L) Protein
-------- ---- ------------ -------
Cryoprecipitate $******
Recovered Plasma ****** ******
Source Plasma ****** ******
IgG $******
Fraction II + III ******
or
Fraction II + IIIw ******
Fraction IV-1 $****** ****** ******
Albumin $******
Fraction V ******
or
Purified Fraction V ******
or
Albumin [Human] Bulk ______ ****** ******
SUM: $******
Per Liter of Plasma Processed in 1995 and 1996. In 1997, the Sum of the
product-specific Base Processing Fees shall be $****** and each of the
product-specific Base Processing Fees shall be the 1996 Fee multiplied
by ******. In 1998 and 1999 and each of the two Renewal Periods (if
applicable), the Sum of the product-specific Base Processing Fees shall
be $****** and each of the product-specific Base Processing Fees shall
be equal to the 1996 Fee multiplied by ******.
Page 9
Processing fees and rental payments will be assessed by Melville and adjusted,
offset or recouped by Bayer, when necessary, in accordance with Sections 4.3 and
12.2. Adjustments in the processing fees and rental payments pursuant to Section
4.3 will be based on yields per liter of plasma (Bayer Input) processed ((i) for
Intermediates, in accordance with paste weights in grams per liter; and (ii) for
Albumin [Human] Bulk, in accordance with total protein content in grants per
liter) and will be calculated based upon the relative dollar value, paste weight
and protein content assigned to each material in the foregoing table. Bayer will
also determine the quantity of the relevant, recoverable protein derived from
the Intermediate pastes; if different than indicated above, Bayer and Melville
personnel will work to improve the yield of the relevant protein.
The yields of recoverable protein as determined by Bayer may be audited by
Melville, and when requested Bayer shall provide Melville with samples of
dissolved pastes for confirmatory assay. Base Yields will be reviewed after any
significant process changes are made and mutually agreed-to adjustments in Base
Yields will be made as appropriate and as negotiated in good faith. The Base
Yields specified above are for the Initial Term, except during the production of
Conformance Lots and during the Start-Up Period which shall be subject to the
provisions in Sections 3.1 and 4.3 respectively.
Bayer represents that the Base Yields listed above are the average yields
achieved for the preceding 12 months, on a product-by-product basis, at Xxxxx'x
Xxxxxxx facility, such average yields taking into account losses incurred for
any reason, including without limitation, losses due to contamination, re-work
and spillage. Melville personnel shall have the right to audit Xxxxxxx yields
throughout the Term. If actual Xxxxxxx average yields for the preceding 12
months are lower than indicated above, when processing Bayer plasma of
comparable quality and, where applicable, using comparable purification methods,
the Base Yield shall be lowered to reflect such average actual Xxxxxxx yield, on
a product-by-product basis.
4.2 Melville and Bayer acknowledge (i) that the Base Processing Fee is based
upon the Base Yields referenced above; (ii) that optimum yields of Intermediates
from the Fraction II + IIIw and Fraction IV-1 in-process will not be obtained
during the Start-Up Period; and (iii) that adjustments to the process procedures
may result in additional improvements which cannot be forecast with any
precision at this time. Melville covenants and agrees that it will make all
reasonable efforts and otherwise cooperate with Bayer to maintain and, to the
extent possible, increase yields, maintain product purity and institute Quality
Control and Quality Assurance testing and analysis procedures in order to
facilitate Bayer utilization of Intermediates and Albumin [Human] Bulk in its
production process.
4.3 (a) During the Start-Up Period, Melville shall be paid the full Base
Processing Fees for Intermediates and Albumin [Human] Bulk if the yields
achieved are at least 85% of the Base Yields. If actual yields achieved fall
below 85% of the Base Yields during the Start-Up Period, the payments to
Melville will be reduced by that percentage represented by a fraction, of which
the numerator is 85% minus the percentage yield actually achieved and the
denominator is 85%. Bayer shall promptly notify Melville of such reduced yields
and payments. Melville shall also be
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 10
paid more than the amount called for by the Base Yields, in accordance with the
formula set forth in Section 4.3(c), if the actual yields achieved exceed 100%
of the Base Yields.
(b) Following the Start-Up Period, if in any quarter Melville shall fail
to achieve the Base Yields set forth above for the Intermediates or Albumin
[Human] Bulk delivered under the Agreement, including by reason of losses due to
production problems, then, after notice thereof from Bayer with appropriate
supporting details, Melville shall make a lump sum payment to Bayer by an amount
equal to the quarterly total processing fees charged for each such product
multiplied by a percentage amount equal to 100% less the percentage of the Base
Yields actually achieved.
(c) Following the Start-Up Period, if in any quarter Melville shall
exceed the Base Yields set forth above for the Intermediates or Albumin [Human]
Bulk delivered under the Agreement, then Melville shall invoice Bayer for a lump
sum payment to Melville equal to the quarterly total processing fees charged for
each such product multiplied by a percentage amount equal to the percentage of
Base Yields actually achieved less 100%.
(d) For any annual period beginning on January 1, 1999 and for any
annual period under either the First or Second Renewal Periods beginning on any
subsequent January 1, the Base Processing Fees calculated in accordance with
Section 4.1 shall be adjusted, effective as of January 1 of the applicable
calendar year, by that percentage represented by a fraction the numerator of
which is the CPI (as defined below) on January 1 (or the first business day
thereafter) of the applicable year and the denominator of which is the CPI on
January 1, 1997 (or the first business day thereafter). For purposes of this
Agreement, "CPI" shall mean the Consumer Price Index (U.S. City Average) as
compiled by the Bureau of Labor Statistics, United States Department of Labor,
which became effective in January 1978. If the United States Department of Labor
ceases to compile and publish the CPI, the Parties will mutually agree upon a
comparable Index.
4.4 During the Start-Up Period, Bayer and Melville shall evaluate the data
as to actual yields and will jointly pursue efforts to isolate and identify
procedural modifications to improve and enhance average yields of Intermediates
and Albumin [Human] Bulk per liter of Bayer Input.
4.5 Bayer shall consult with Melville quarterly during the Term and
cooperate and collaborate in efforts to refine procedures and improve yields and
quality during the Term.
4.6 The Base Yields will remain fixed for the Initial Term. Processing Fees
will be reviewed annually and adjustments, if any, will be made through mutual
agreement.
4.7 Should any Bayer Input be rightfully rejected as unsuitable for
production by Melville prior to the checking of individual units, due to obvious
unacceptable shipping conditions, Bayer shall expedite the delivery of an
equivalent amount of Bayer Input as a replacement.
4.8 Bayer shall provide Melville with a minimum of ******** liters of plasma,
suitable for timely processing, in each of ******** during the Initial Term
beginning with
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 11
the Start-Up Period, as required by the Production Plan Rate specified in
Section 3.2, including modification thereof by mutual written agreement. During
the First and Second Renewal Periods (if applicable), Bayer will provide
Melville with a minimum quantity of Plasma in each of the ******** consistent
with the Production Plan Rate established for the applicable Renewal Period
pursuant to Section 3.2 of this Agreement (the "Renewal Period Weekly Minimum").
Subject to the provisions of Section 13 and provided there has not been an Event
of Default under Section 12.1 and a termination under Section 12.2(a)(i) or a
suspension under Section 12.2(a)(ii), if Bayer fails to provide Bayer Input at
the Production Plan Rate, Bayer shall pay to Melville an amount equal to either
******** (during the Initial Term) or the Renewal Period Weekly Minimum (during
either the First or Second Renewal Period), less the number of liters so
delivered in a given week and on hand in inventory at the beginning of such
week, multiplied by the Base Processing Fee then in effect. Unless otherwise
mutually agreed, Melville shall reconcile and invoice Bayer on a monthly basis
for the actual amount owed, if any, based on the formulation set forth in this
section. Such payment shall be made within 30 days of Melville's invoice
therefor.
SECTION 5
PAYMENT TERMS AND INVOICE PROCEDURES
5.1 Melville shall invoice Bayer for all lots processed at the time of
notice provided in Section 6.3. All Melville invoices may be verified by Bayer
by the reports provided for in Section 8.2.
5.2 All invoices for charges or credits incurred under this Agreement are to
be submitted to Bayer and to Melville at the following addresses:
Bayer Inc. Melville Biologics, Inc.
Attention: Xx. Xxxxxx Xxxxx Attention: Controller
Accounts Payable 000 Xxxxxx Xxxx
P. O. Box 507 Melville, New York 11747
Xxxxxxx, Xxxxx Xxxxxxxx 00000
5.3 All invoices, whether from Bayer to Melville or from Melville to Bayer,
shall be due and payable net 30 days from the invoice date, with interest
payable thereafter, at the then current prime or base rate, as announced by
Citibank, N.A.. plus 2%.
5.4 In the event that Bayer makes any payment by recoupment or offset, Bayer
will so notify Melville and include with its payment a statement indicating the
amount of, and reason for, any such recoupment or offset.
5.5 In the event that amounts due from Melville to Bayer at any time under
this Agreement or otherwise exceed amounts due from Bayer to Melville, Bayer
will, in conformance with the provisions of this Section 5, xxxx Xxxxxxxx for
the amount of such excess.
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 12
SECTION 6
DELIVERY/RISK OF LOSS
6.1 All Intermediates and Albumin [Human] Bulk shall be delivered by
Melville, FOB its loading dock, Melville, New York.
6.2 Melville shall notify Bayer monthly of all Intermediates and Albumin
[Human] Bulk processed from Bayer Input, such notice to include the release
status.
6.3 Upon completion of processing, including required release testing,
Melville shall provide notice to Bayer by mail or by facsimile of all lots of
Intermediates and Albumin [Human] Bulk available for delivery. Bayer shall
arrange for the pick up and shipping of all such tendered Intermediates and
Albumin [Human] Bulk not later than 30 days for Intermediates and seven days for
Albumin [Human] Bulk after the giving of such notice. In the event the
arrangements are not timely made or for any other delay in acceptance by Bayer
not otherwise attributable to Xxxxxxxx, Xxxxxxxx shall store the delivered
Intermediates and Albumin [Human] Bulk upon commercially reasonable terms and
conditions to be agreed to by the parties. If storage is unavailable to Bayer at
the Melville facility, Bayer shall make its own arrangements for storage of the
material at alternate FDA approved locations and for transportation thereto.
6.4 (a) The parties agree that Bayer shall bear the risk of loss to the
Bayer Input until the shipment is received in acceptable condition in accordance
with Melville's SOP's from the common carrier at the Melville receiving dock.
The risk of loss to the Bayer Input or the Intermediates or Albumin [Human] Bulk
derived therefrom due to casualty, spoilage, loss, theft, fire, damage or
destruction shall be borne by Melville after the shipment of Bayer Input is
delivered to Melville by the common carrier and until delivery is tendered to
Bayer and until the Intermediates and Albumin [Human] Bulk are placed in the
care, custody and control of a common carrier under contract to Bayer for
transporting to Bayer's facility in Clayton, North Carolina, or a storage
location arranged for by Bayer. Bayer shall bear the risk of loss to the
Intermediates and Albumin [Human] Bulk thereafter.
(b) Except as otherwise provided in Section 3.10, in the event of the
loss of a plasma pool which is nonrecoverable by re-work and which results in
the loss of all Intermediates and Albumin [Human] Bulk in process or to be
processed from the Bayer Input from such lost pool ("a Catastrophic Loss"),
Melville shall compensate Bayer for the damages attributable to the Catastrophic
Loss as follows: (i) if the plasma pool loss is attributable to Melville's
negligence, Melville shall compensate Bayer at the rate of ******** per liter,
for the liters of Bayer Input so lost; or (ii) if the plasma pool is lost for
any other reason, Melville shall compensate Bayer at the then-current value of
the plasma, for the liters of Bayer Input so lost. Bayer Input involved in a
Catastrophic Loss shall not be used in the calculation of Base Yield.
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 13
6.5 Melville represents and agrees that it maintains a policy of insurance
with coverage for casualty, spoilage, loss, theft, fire, damage or destruction
to personal property of others in its care, custody and control with limits of
at least ******** per loss occurrence and per year and a deductible of not
more than ********; that the policy will show Bayer as an additional insured on
such policy of insurance; that such insurance will not be reduced (except by
payment of loss), cancelled or terminated during the Term; and that the insurer
will agree to give Bayer at least 15 days' notice prior to the cancellation,
reduction (except by payment of loss) or termination of such polices of
insurance.
6.6 Each party represents and agrees that it maintains a policy of insurance
for liability coverage for injury or death to persons with limits of at least
******** per loss occurrence and a deductible of not more than ********; that
the policy will show the other party as a loss/payee on such policy; that such
insurance will not be reduced (except by payment of loss), cancelled or
terminated during the Term; and that the insurer will agree to give the other
party at least 15 days' notice prior to the cancellation, reduction (except by
payment of loss) or termination of such policies of insurance.
SECTION 7
DISPOSITION OF RESIDUAL FRACTIONS AND PRECIPITATE
7.1 The Bayer Input and all residuals of the Bayer Input shall remain the
property of Bayer and Bayer shall retain title to all such property. Melville
shall not use, transfer or dispose of the Bayer Input in any fashion except as
contemplated by this Agreement or upon the express written consent of Bayer.
Bayer Input will at all times be traceable and identifiable (by labels, signs or
other appropriate means as required by law). Furthermore, upon request, Melville
will execute Financing Statements or Continuation Statements to be filed by
Bayer relating to the Bayer Input.
7.2 After processing Intermediates and Albumin [Human] Bulk, Melville shall
dispose of any such residuals in accordance with Bayer's approved SOP's unless
directed otherwise by Bayer. If so directed, Melville shall hold all residuals
for the account of and at the expense and risk of Bayer.
7.3 Anything in the foregoing to the contrary notwithstanding, Melville
shall have the right to prepare samples solely for the purpose of (i)
ascertaining conformance with agreed-upon release specifications, (ii)
ascertaining yields of Intermediates and Albumin [Human] Bulk and (iii)
ascertaining product characteristics for any other purpose set forth in this
Agreement from all material processed by it in accordance with its SOP's and
release procedures and to retain such samples. In addition, Melville shall
prepare and furnish samples to Bayer in accordance with the provisions of
Schedules A through E.
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 14
SECTION 8
RECORDS AND REPORTS
8.1 Melville shall maintain accuracy records of Bayer Input received,
accepted, processed, in storage, and delivered by Melville, laboratory testing
reports, assays, correspondence and other documents concerning lot releases as
provided in Melville SOP's. Such records shall be available for examination by
duly authorized representatives of Bayer upon request. Duly authorized
representatives of Bayer shall, during Melville's normal business hours, have
the right to conduct at Bayer's expense physical inventories to confirm accuracy
of records. Any such inventory may be conducted only after forty-eight (48)
hours' prior written notice to Melville.
8.2 Melville shall furnish Bayer, on forms specified by Bayer, with monthly
reports as to the Bayer Input in raw material inventory, in-process and
delivered.
SECTION 9
WAREHOUSING
9.1 All Intermediates and Albumin [Human] Bulk shall be stored by Melville
under conditions conforming to FDA and Bayer requirements. All Intermediates
shall be stored at ******** or colder, in a freezer with a validated
temperature monitoring system pending pickup by Bayer. Albumin [Human] Bulk
containers shall be stored at ********.
SECTION 10
CONFIDENTIALITY
10.1 All Melville Confidential Information disclosed to Bayer by Melville or
any parent, subsidiary or affiliated organization of Melville during the Term is
disclosed in reliance on Bayer's agreement hereby to treat all such information
in the strictest confidence. Bayer shall refrain from using, communicating or
disclosing Melville Confidential Information to any person or entity without the
prior written consent of Melville, except as provided herein or as required by
law or regulation. "Melville Confidential Information" shall include all
proprietary or trade secret information pertaining to Intermediates and Albumin
[Human] Bulk and the business or property of Melville, its Parents, subsidiaries
or affiliated entities that is not in the public domain (unless in the public
domain due to a breach by Bayer of its obligations hereunder).
Bayer shall designate the persons who shall receive any of the information to be
disclosed to it by Melville or its parents, subsidiaries or affiliates pursuant
to this Agreement and, prior to disclosure to such persons, such persons shall
execute similar confidentiality agreements with Melville, and such persons will
be entitled to use the Melville Confidential Information in connection with the
transaction contemplated by this Agreement, including during the period of any
Bayer Takeover.
Page 15
Bayer shall keep the Melville Confidential Information secret and confidential
from all persons not so designated.
10.2 Bayer acknowledges that in the event of a breach by it or any person
designated by it of any obligation under or pursuant to Section 10.1, the injury
to Melville would not be reparable in damages and that Melville shall be
entitled to all relief in equity, including injunctive relief.
10.3 All Bayer Confidential Information disclosed to Melville by Bayer or any
parent, subsidiary or affiliated organization of Bayer during the Term is
disclosed in reliance upon Melville's agreement hereby to treat all such
information in the strictest confidence. Melville shall refrain from using,
communicating or disclosing Bayer's Confidential Information to any person or
entity without the prior written consent of Bayer, except as provided herein or
as required by law or regulation. "Bayer Confidential information" shall include
all proprietary or trade secret information pertaining to Intermediates and
Albumin [Human] Bulk and the business or property of Bayer, its parents,
subsidiaries or affiliated entities that is not in the public domain (unless in
the public domain due to a breach by Melville of its obligations hereunder).
Melville shall designate the persons who shall receive any of the information to
be disclosed to it by Bayer or its parents, subsidiaries or affiliates pursuant
to this Agreement and, prior to disclosure to such persons, such persons shall
execute similar confidentiality agreements with Bayer, and such persons will be
entitled to use the Bayer Confidential Information to perform Melville's
obligations under this Agreement. Melville shall keep the Bayer Confidential
Information secret and confidential from all persons not so designated.
10.4 Melville acknowledges that in the event of a breach by it or any person
designated by it of any obligation under or pursuant to Section 10.3, the injury
to Bayer would not be reparable in damages and that Bayer shall be entitled to
all relief in equity, including injunctive relief.
10.5 Both parties represent and acknowledge that these confidentiality
provisions do not contemplate or implicitly or explicitly authorize any
disclosures or agreement that would be prohibited under the antitrust laws of
the United States or of any state.
10.6 The obligations of confidentiality and non-use set forth in this Section
10 shall continue in effect for two years following the expiration of the Term,
including any extensions or renewals thereof.
SECTION 11
WARRANTIES
11.1 Melville warrants (a) that all Bayer Input accepted for processing
pursuant to this Agreement shall be stored and handled in compliance with
applicable FDA regulations, and (b) that all Intermediates and Albumin [Human]
Bulk processed therefrom (i) shall conform to the
Page 16
specifications set forth in Schedules A through E as may be revised by mutual
agreement, and (ii) shall be processed, stored, tested, packaged, labeled and
shipped in compliance with CGMP'S and all other applicable FDA regulations,
including standards, practices, procedures and directives, requirements and
specifications stated or referred to therein. This Warranty shall not apply to
any defect or other unfitness attributable in whole or in part to the Bayer
Input.
11.2 Bayer warrants that all plasma supplied hereunder shall be collected,
tested, labelled, stored and handled by Bayer in compliance with CGMP'S and all
other applicable FDA regulations, including standards and methods, practices,
procedures and directives, requirements and specifications stated or referred to
herein.
SECTION 12
DEFAULT; TERMINATION
12.1 The occurrence of any of the following events constitutes an Event of
Default under this Agreement:
x. Xxxxxxxx fails to commence the Start-Up Period on or before July
1, 1996.
x. Xxxxxxxx materially fails to perform its obligations to process
Bayer Input in accordance with this Agreement and fails to
commence a cure of said failure within 30 days and to complete
such cure within 90 days following notice thereof.
x. Xxxxxxxx materially fails to conform to a continued program for
protection of Bayer Input once in Melville's possession and fails
to commence a cure of said failure within 30 days and to complete
such cure within 90 days following notice thereof.
x. Xxxxxxxx fails to maintain the insurance coverage referenced in
Section 6.5 and fails to cure said failure within 10 days.
x. Xxxxxxxx sells the fractionation facility without giving Bayer
the Right of First Refusal provided for in Section 16.
x. Xxxxxxxx materially breaches any of its other material
obligations imposed by this Agreement and fails to cure said
material breach within 90 days following notice thereof.
x. Xxxxxxxx'x establishment and/or product licenses under which the
Intermediates and Albumin [Human] Bulk are processed are revoked
or suspended by the FDA or state authorities because of material
compliance failures by Melville, and (i) Melville elects not to
appeal such revocation or suspension, or (ii) Melville fails to
cure said license revocation or suspension within 90 days;
provided, however, that
Page 17
Melville shall not be in default hereunder so long as Melville
has commenced the process of reinstating such license(s) within
such 90-day period and is diligently pursuing the same to
completion (a "Compliance Default").
x. Xxxxxxxx shall default in its obligations under the Loan
Documents (excluding therefrom the Reimbursement Agreement and
the Mortgage), and such default shall continue after all
applicable notice and cure1568Xperiods.
i. An Event of Default as defined in the Mortgage.
j. A default as defined in the Reimbursement Agreement.
k. Any representation or warranty of Melville contained in this
Agreement shall be materially false.
x. Xxxxxxxx shall fail to perform its material obligations under the
Lease or Sublease and the same shall remain uncured 30 days after
receipt by Melville of notice thereof; provided, however, if such
matter cannot reasonably be cured within 30 days, Melville shall
not be in default hereunder so long as Melville has commenced a
cure within such 30-day period and is diligently pursuing the
same to completion.
x. Xxxxxxxx files or has filed against it any petition for relief
under any Chapter of the United States Bankruptcy Code or any
other or similar state or federal insolvency law, or a receiver,
custodian, trustee or assignee for the benefit of creditors is
appointed for Melville or any part of Melville's assets;
provided, however, a petition filed against Melville shall only
become a default if it continues unstayed and in effect for a
period of 60 days.
12.2 (a) If an Event of Default has occurred and is continuing, then Bayer
may, at its option, either (i) terminate the Term; or (ii) suspend its
obligations hereunder, including suspension of payments for fractionation,
during such continuation, or (iii) notify Melville that Bayer will take over
operation of the processing of Bayer Input at Melville's fractionation facility,
using any combination of Bayer's and Melville's personnel as is appropriate
("Bayer Takeover") for the balance of the Term, including any renewals or
extensions thereof.
(b) In the event of a Bayer Takeover as a result of a Compliance
Default, Melville shall, at Melville's expense, use its reasonable efforts to
appeal such revocation or suspension and/or to correct the problems giving rise
to the Compliance Default and insofar as possible, and subject to FDA approval,
to permit Bayer to continue to process Bayer Input at Melville's fractionation
facility.
Page 18
(c) Nothing contained in this Section 12 shall preclude Bayer from
utilizing any remedy for an Event of Default by Melville, whether specified in
this Agreement or any other agreement or now or hereafter existing at law or in
equity.
(d) Effective upon a Bayer Takeover, Melville will permit Bayer to
conduct Processing and Fractionation Operations, as defined in the Reimbursement
Agreement, under (i) subject to FDA approval, all licenses and permits now held
by, or hereafter issued to, Melville and necessary or appropriate to process
Bayer Input at Melville's fractionation facility, (ii) all such contracts as
Bayer may specify relating to the processing of Bayer Input at Melville's
fractionation facility, and (iii) all patents and patent applications and the
inventions and improvements therein disclosed, all trade secrets, business
secrets, know-how, show-how and other information and any and all tangible
embodiments thereof and any other intellectual property rights of Melville used
in the processing of Bayer Input at Melville's fractionation facility. Bayer
will have no obligation to assume any pre-existing liability of Melville, and,
if Bayer does assume any such liability, Bayer will be entitled to reimbursement
(including by way of offset or recoupment from amounts otherwise owed by Bayer
to Melville) for any direct or indirect expense paid or incurred by Bayer in
connection with such assumed liability.
(e) To the extent that Melville's compliance with Section 12.2(d) would
constitute a breach of any such contract, license or permit, unless the consent,
waiver or approval of another party thereto has been obtained, this Agreement
shall not constitute any such assignment or agreement to assign unless and until
such consent, waiver or approval is obtained. Melville agrees to continue to use
its reasonable efforts to obtain all such consents as have not been obtained
prior to the date of a Bayer Takeover and further agrees to cooperate with Bayer
after the date of a Bayer Takeover in any reasonable arrangement (such as
subcontracting, sublicensing or subleasing) designed to provide for Bayer, on
terms no less favorable than Melville is entitled to, the benefits under the
applicable contract, license or permit of any and all rights of Melville
thereunder.
(f) In the event of a Bayer Takeover, Melville hereby offers to sell to
Bayer any supplies, inventory, raw materials or other items not included as
Demised Premises under the Lease and used solely in the Processing and
Fractionation Operations, at Melville's cost for any such item. Bayer will have
no obligation to purchase any such item, and nothing contained in this Section
12.2(f) shall be construed to limit or restrict Bayer's rights as a secured
party under any Loan Document with respect to any such item.
(g) In the event of a Bayer Takeover, Melville, at the reasonable
request of Bayer, agrees to execute and deliver such instruments, documents and
other writings and in general to cooperate in taking such actions as may be
necessary or desirable to confirm, carry out and effectuate fully the intent and
purposes of this Section 12.2.
(h) In the event of a Bayer Takeover, during the Bayer Takeover and
after commencement of processing by Bayer of Bayer Input, Bayer shall continue
to be responsible for payment to
Page 19
Melville for processing of Intermediates and Albumin [Human] Bulk at the Base
Processing Fees and at the Production Plan Rate volumes (provided, however,
that, notwithstanding anything to the contrary in Section 4.8, Bayer shall only
be required to pay for the volumes actually processed if such volumes are less
than the Production Plan Rate volumes, so long as Bayer is using its best
efforts to utilize the available fractionation capacity fully to meet the
Production Plan Rate volumes), and consistent with all other terms and
conditions as set forth in this Agreement, but Bayer shall first deduct
therefrom and pay all expenses of employees, vendors and suppliers and other
reasonable direct and indirect expenses related to the processing operations for
Bayer Input, including without limitation, any reasonable expenses Bayer may
incur in performing Melville's obligations under the Lease. All payments net of
all expenses, and after recoupment of all other amounts due Bayer by Melville
(whether arising under this Agreement or otherwise), shall be paid to Melville
or as Melville shall direct.
12.3 In the event of a Bayer Takeover, Bayer shall:
(a) Subject to reimbursement under Section 12.2(h), arrange for, pay as
and when due and payable, all charges for, and use its best efforts to ensure,
the uninterrupted provision of heating, ventilation, air conditioning,
refrigeration, fuel, gas, electricity, water (including water for injection),
sewerage, telephone, rubbish removal, security services, and any and all other
utility services to the Common Areas and to Lessor's Retained Areas, as defined
in the Lease.
(b) Subject to reimbursement under Section 12.2(h), make and pay for all
maintenance and repairs necessary to conduct the Processing and Fractionation
Operations;
(c) Indemnify and hold Melville harmless from and against any and all
claims, demands, liabilities and expenses, including reasonable attorneys' fees,
related to any negligence or willful misconduct in Bayer's conduct of the
Processing and Fractionation Operations.
(d) Comply in all material respects with all laws relating to the (i)
Processing and Fractionation Operations and (ii) the use of Melville's facility
and with all terms of Melville's FDA establishment and product licenses
12.4 If Bayer elects a Bayer Takeover pursuant to Section 12.2 and commences
implementation of a Bayer Takeover, such Bayer Takeover will terminate at the
expiration of the Term.
12.5 If Bayer materially breaches any of its representations, warranties,
obligations or responsibilities hereunder, Melville, at its option, may
terminate the Term by giving Bayer 90 days' prior written notice of termination;
provided, however, that if Bayer cures such breach within 90 days after receipt
of such written notice, the Term shall remain in effect. If Bayer fails to cure
such breach and Melville terminates the Term, Bayer shall pay to Melville as
liquidated damages in respect of future processing fees hereunder and future
rentals under the Lease, and not as a penalty, the balance of the payments that
would be otherwise due if the Term had not been so terminated and processing
operations had continued, based on the Base Processing Fee then in
Page 20
effect and the Production Plan Rate. Such payments will be made on the first day
of each month through the month during which the Term would have expired absent
any early termination thereof.
SECTION 13
FORCE MAJEURE;
FAILURE OF PRESUPPOSED CONDITIONS
13.1 In the event that (i) (A) Melville's establishment and/or product
licenses under which the Intermediates and Albumin [Human] Bulk are processed
shall be revoked or suspended by the FDA for reasons other than a Compliance
Default as defined in Section 12. 1(g) or should state authorities take action
to close the Melville fractionation facility or terminate its operation for such
reasons, and (B) the parties are unable to cause reinstatement of such
establishment and/or product licenses or the issuance of new establishment
and/or product licenses or to cause state authorities to permit reopening of
Melville's fractionation facility within a reasonable period of time, or (ii)
all or a portion of Melville's facility at 000 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx,
is taken by any government or public authority under the power of eminent domain
or conveyed in lieu thereof, or is damaged such that in Melville's reasonable
judgement it is impracticable to resume the processing of Bayer Input at such
facility, the Term shall automatically terminate, without penalty to any party,
and neither Melville nor Bayer shall be further liable to the other under this
Agreement except for obligations and liabilities incurred prior to such
termination and except as set forth in Sections 10 and 14. All Bayer Input shall
to the extent possible be returned to Bayer in accordance with its written
instructions to Melville.
13.2 If either party shall be delayed, interrupted or prevented from the
performance of any obligations under this Agreement (other than for the payment
of monies otherwise accrued or owing) by reason of any act of God, fire, flood,
war (declared or undeclared), disaster, strike, labor difficulty or any other
cause beyond the control of such party, then that party shall not be liable to
the other for the failure in performance. The affected party shall notify the
other immediately upon the occurrence of the condition causing the inability to
perform or rendering performance impracticable, and shall similarly provide
immediate notice to the other party upon the termination of the condition.
SECTION 14
INDEMNIFICATION
14.1 Bayer shall indemnify and hold harmless Melville and its parent,
subsidiaries and affiliated entities and the officers, directors, employees and
shareholders thereof, from any and all liability to any third parties and
reasonable attorney fees, costs and expenses they may incur as a result of (i)
any defects, impurity, nonconformity to specifications, or noncompliance with
any applicable regulations, including CGMP'S, in the Bayer Input; (ii) improper
handling by Bayer of the
Page 21
Intermediates and Albumin [Human] Bulk; (iii) negligence or willful misconduct
by Bayer or any of its officers, employees or agents; (iv) defects in product
design or product specification; or (v) advertising, promotion, marketing or
sale by or for Bayer of products manufactured from Intermediates or Albumin
[Human] Bulk.
14.2 Melville shall indemnify and hold harmless Bayer, its parent,
subsidiaries and affiliated entities and the officers, directors, employees and
shareholders thereof, from any and all liability to any third parties and
reasonable attorney fees, costs and expenses they may incur as a result of (i)
any defects, impurity, nonconformity to specifications, or noncompliance with
any applicable regulations, including CGMP'S, in the Intermediates or Albumin
[Human] Bulk caused by Melville; (ii) improper handling of the Bayer Input,
Intermediates and Albumin [Human] Bulk by Melville; or (iii) negligence or
willful misconduct by Melville or any of its officers, employees or agents.
SECTION 15
GENERAL TERMS AND CONDITIONS
15.1 All waivers by any party must be explicitly in writing. A failure of
either party to enforce any breach or default shall not be construed as a waiver
of such breach or default, and a waiver of any single breach or default shall
not constitute a waiver of any subsequent breaches or defaults.
15.2 In the event that one or more portions of this Agreement shall be deemed
invalid or unenforceable by a court of competent jurisdiction, the remainder of
this Agreement may be enforced in accordance with its terms and such invalidity
or unenforceability shall not impair the enforceability of any other sections of
this Agreement.
15.3 Neither Melville nor Bayer shall assign any of its rights under this
Agreement, nor delegate any of its obligations to any other person or entity
except with the prior written consent of the other party, which consent shall
not be unreasonably withheld. However, (a) Bayer shall have the right to assign
its rights and obligations to a successor in interest should Bayer's parent
company decide to change the name of its subsidiary in the United States or
assign the assets of the subsidiary to a newly-formed subsidiary company; and
(b) Melville shall have the right to assign its rights and obligations to a
party (or parties) assuming ownership or control of fifty percent (50%) or more
of Melville's common stock; provided, however, that Melville shall have given
Bayer notice in advance of any such transaction.
15.4 Any notice, request, instruction or other document to be given hereunder
by either of the parties hereto shall be in writing and delivered personally, or
sent by certified mail, facsimile transmission or other provable means, to the
following addresses or such other address for the purposes of notification as
one party may, by written notice, give to the other. It shall be deemed complete
upon receipt.
Page 22
To Melville: Melville Biologics, Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Phone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
To Bayer: Bayer Corporation
Pharmaceutical Division
Biological Products
000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxxxxx 00000
Attention: Law Department
Phone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
15.5 This Agreement shall be construed and enforced in accordance with the
laws of the State of Connecticut.
15.6 The parties shall attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between executives.
Except for matters governed by Section 15.10 with respect to which Bayer may
seek specific performance or other equitable remedies at any time, if the matter
has not been resolved within 60 days of a party's request for negotiation,
either party may initiate a resolution of the dispute in accordance with the
rules of the American Arbitration Association ("AAA"). AAA costs shall be split
evenly between the parties. Each party shall bear its own costs for attorneys,
experts, witnesses and other related fees.
15.7 This Agreement, the Lease, the Sublease and the Loan Documents and the
exhibits and schedules to each such document (including without limitation the
Reimbursement Agreement and the Mortgage) constitute one single agreement
between Bayer and Melville, although they have been executed as separate
documents for convenience and ease of reference, and together such documents
constitute the complete and entire agreement between the parties hereto with
respect to the transactions contemplated herein and supersede all previous
written or oral negotiations, commitments, memoranda, understandings and any
prior agreement between Bayer and Melville or their parents, subsidiaries or
affiliated entities concerning their subject matter.
15.8 Bayer agrees and acknowledges for the benefit of Melville and of the
sole stockholder of Melville, the New York Blood Center, Inc., a New York
Corporation ("NYBC"), that NYBC shall not be obligated for or liable in respect
of any of the obligations or liabilities of Melville under, or for any breach by
Melville of, this Agreement, the Lease, the Sublease and the Loan Documents and
the exhibits and schedules to each such document (including without limitation
the Reimbursement Agreement and the Mortgage). Bayer agrees and acknowledges for
the benefit
Page 23
of Melville and of NYBC that NYBC has not in any way induced Bayer to enter into
this Agreement.
15.9 This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
15.10 Melville agrees that the subject matter of Sections 12.2 and 16.1 is
unique, that damages would not be a sufficient remedy to Bayer for a breach by
Melville of Section 12.2 or 16.1 and that Bayer will have the right to seek
specific performance or other equitable relief in enforcing Melville's
obligations under Section 12.2 or 16.1.
SECTION 16
OPTION TO PURCHASE / FIRST RIGHT OF REFUSAL
16.1 During the term of this Agreement, should Melville receive a valid
viable offer from a third party for purchase of Melville's facility or for the
purchase of all or any portion of Melville's assets necessary for the Processing
and Fractionation Operations (and not including a sale/leaseback or
lease/leaseback arrangement for the purpose of obtaining financing or favorable
tax benefits, including without limitation a conveyance to an Industrial
Development Authority or other similar governmental or quasi-governmental
authority), Melville shall so inform Bayer in writing, stating the name of the
third party and the terms on which the third party proposes to purchase the
facility or such assets. Bayer shall have 60 days from receipt of Melville's
written notice to purchase the facility at the price and on the other terms
tendered by such third party; provided, however, that in the event that the
third party proposes to purchase the facility or such assets other than for cash
(either at closing or on a deferred basis), Bayer will have the right to
purchase the facility or such assets for cash in an amount equal to the fair
market value of such non-cash payment as determined in good faith by Bayer and
Melville, payable at the same time as payment other than for cash is proposed by
the third party; and, provided, further that such 60-day period shall be
extended in the event of any dispute between Bayer and Melville relating to this
right of first refusal, for a period of 20 days following resolution of such
dispute. Bayer shall have the right in such circumstance to examine, and
Melville shall have the obligation to furnish to Bayer, (i) documentation
sufficient to establish the credibility and amount of such third party offer and
(ii) such materials relating to Melville and its operations and financial
condition as Bayer may reasonably request. If Bayer does not exercise the option
granted to it pursuant to this Section 16.1, Melville will have the right to
sell the facility or such assets to the third party identified in the notice to
Bayer at the price and on the terms specified in such notice; provided, that
such third party shall expressly assume Melville's obligations under this
agreement, the Lease, the Sublease and, if Bayer consents, under the
Reimbursement Agreement. Nothing contained in this Section 16.1 shall be
construed to limit or restrict Bayer's rights as a secured party under the
Reimbursement Agreement, the Mortgage or any other Loan Document.
Page 24
SECTION 17
OTHER AMENDMENTS AND RATIFICATION
17.1. Bayer and Melville hereby stipulate and agree that the references to
"Custom Processing Agreement," "Agreement for Custom Processing" or "Processing
Agreement" in each of the following Agreements or documents to which one or both
of them are a party (collectively, the "Other Agreements") are hereby amended to
mean this Amended and Restated Agreement for Custom Processing, dated as of
__________ ___, 1996, and all references to "Miles Inc" or "Miles" in any of the
Other Agreements are hereby amended to mean "Bayer Corporation" or "Bayer":
(a) Letter Agreement for $10,000,000 Term Loan, by and between PNC Bank,
N.A. and Melville Biologics, Inc., dated February 7. 1995
(b) Term Note for $10,000,000 from Melville Biologics, Inc. in favor of PNC
Bank, N.A.
(c) Guaranty Agreement of Miles Inc. in favor of PNC Bank, N.A., dated
February 7, 1995.
(d) Reimbursement and Security Agreement, by and between Miles Inc. and
Melville Biologics, Inc., dated February 7, 1995.
(e) Mortgage, Security Agreement and Fixture Filing, from Suffolk County
Industrial Development Agency and Melville Biologies, Inc. to Miles
Inc., dated as of February 15, 1995 (as recorded in the Suffolk County,
New York, Clerk's Office in Liber 18919, Page 642).
(f) Lease Agreement, from Melville Biologics, Inc. to Miles Inc., dated
February 7, 1995.
(g) Memorandum of Lease (as recorded in Suffolk County, New York, Clerk's
Office in Liber 11714, Page 396).
(h) Sublease Agreement, from Miles Inc. to Melville Biologics, Inc., dated
February 7, 1995.
(i) Memorandum of Sublease (as recorded in Suffolk County, New York, Clerk's
Office in Liber 11714, Page 397.
(j) Financing Statements filed by Miles Inc. against Melville Biologics,
Inc.
(k) Facility Lease Agreement, by and between Suffolk County Industrial
Development Agency and Melville Biologics, Inc., dated as of February
15, 1995.
Page 25
(l) Letter Agreement, between Miles, Inc. and Melville Biologics, Inc.,
dated February 6, 1995 (regarding approval of future advances under the
PNC Bank Term Loan).
Except as amended above, each of the parties hereby ratifies and confirms that
all of the Other Agreements are and remain in full force and effect in
accordance with their respective terms. The parties further agree to execute and
deliver to the other party or file any and all other instruments, documents or
statements, including but not limited to financing statements, amendments to
mortgages, amended or supplemental memoranda of leases or any other item,
reasonably requested or deemed necessary by the other party to fully document
and perfect the amendments reflected in this Agreement or otherwise preserve or
protect the parties' rights or obligations.
IN WITNESS WHEREOF, this Agreement has been executed the day and year
first above written.
MELVILLE BIOLOGICS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------
Its: President and CEO
--------------------------------
BAYER CORPORATION
PHARMACEUTICAL DIVISION
BIOLOGICAL PRODUCTS
By: /s/ Xxxx Xxxx
----------------------------------------
Its: Vice President, Commercial Development
---------------------------------------
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 26
Schedule A Cryo Release Specifications
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["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 27
Schedule B-1 Fraction II + III Paste Release Specifications
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["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 28
Schedule B-2 Fraction II + IIIw Paste Release Specifications
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["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 29
Schedule C Fraction IV-1 Paste Release Specifications
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Page 30
Schedule D-1 Fraction V Paste Release Specifications
(To be provided at a future date, if necessary)
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 31
Schedule D-2 Purified Fraction V Paste Release Specifications
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Page 32
Schedule E Albumin [Human] Bulk Release Specifications
(To be provided at a future date, if necessary)
["****" indicates material omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.]
Page 33
Schedule F Miles Input - Shipment Procedures
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