-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OtyRLHdBKPzFAFtlcs2yKm3n9aaS20869sZtnKNOvphMbOH899cjJmABmIuezZcA h/dP3lHFCdUZqh4QxCoRhQ== 0001095811-01-001787.txt : 20010328 0001095811-01-001787.hdr.sgml : 20010328 ACCESSION NUMBER: 0001095811-01-001787 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVIRON CENTRAL INDEX KEY: 0000949173 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 770309686 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-20815 FILM NUMBER: 1580590 BUSINESS ADDRESS: STREET 1: 297 N BERNARDO AVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 6509196500 MAIL ADDRESS: STREET 1: 297 NORTH BERNARDO AVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 10-K405 1 f69956e10-k405.txt FORM 10-K405 FISCAL YEAR ENDED DECEMBER 31, 2000 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K ---------------- (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD TO . COMMISSION FILE NUMBER: 0-20815 AVIRON (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 77-0309686 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 297 NORTH BERNARDO AVENUE, MOUNTAIN VIEW, CALIFORNIA 94043 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE) (650) 919-6500 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT COMMON STOCK, $.001 PAR VALUE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Based on the closing sale price of $29.81 on March 22, 2001, the aggregate market value of the voting stock held by non-affiliates of the Registrant was $896,144,225. On March 22, 2001, there were outstanding 30,570,518 shares of the Registrant's Common Stock. DOCUMENTS INCORPORATED BY REFERENCE (TO THE EXTENT INDICATED HEREIN) Part III -- Portions of the Registrant's Definitive Proxy Statement for the Registrant's Annual Meeting of Stockholders to be held June 14, 2001, which will be filed with the Securities and Exchange Commission, are incorporated by reference to the extent stated here. ================================================================================ 2 TABLE OF CONTENTS
PAGE ---- PART I........................................................................................................ 3 Item 1. Business........................................................................................... 3 Item 2. Properties......................................................................................... 30 Item 3. Legal Proceedings.................................................................................. 31 Item 4. Submission of Matters to a Vote of Security Holders................................................ 31 PART II....................................................................................................... 32 Item 5. Market for the Registrant's Common Stock and Related Stock Matters................................. 32 Item 6. Selected Consolidated Financial Data............................................................... 33 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk......................................... 38 Item 8. Financial Statements and Supplementary Data........................................................ 40 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............... 40 PART III...................................................................................................... 41 Item 10. Directors and Executive Officers of the Registrant................................................. 41 Item 11. Executive Compensation............................................................................. 42 Item 12. Security Ownership of Certain Beneficial Owners and Management..................................... 42 Item 13. Certain Relationships and Related Transactions..................................................... 42 PART IV....................................................................................................... 43 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................... 43 SIGNATURES.................................................................................................... 44 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.................................................................... F-1
2 3 PART I. Some of the statements in the sections entitled "Business," "Business Risks," "Management's Discussions and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-K constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our or our industry's results, levels of activity or achievements to be materially different from any future results, levels of activity or achievements expressed or implied by such forward-looking statements. Such factors include, among others, those listed under "Business Risk" and elsewhere in this Form 10-K. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "intend," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue," or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, and levels of activity, performance or achievements. Except as may be required by law, we undertake no obligation to publicly update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. ITEM 1. BUSINESS OVERVIEW We are a biopharmaceutical company focused on the prevention of disease through innovative vaccine technology. We currently are focusing our product development and commercialization efforts on our lead product candidate, FLUMIST(TM), an investigational live virus vaccine delivered as a nasal mist for the prevention of influenza. Our goal is to become a leader in the discovery, development, manufacture and marketing of innovative vaccines which are safe, effective and suitable for widespread use. Our vaccine development programs are based on techniques for producing attenuated (weakened) live virus vaccines and on our proprietary genetic engineering technologies. Live virus vaccines, including those for smallpox, polio, measles, mumps, rubella and chicken pox, have had a long record of preventing disease. BACKGROUND PREVENTION TECHNOLOGY IN THE ERA OF MANAGED CARE AND COST CONTAINMENT Health care decision makers in the United States, such as managed care organizations, clinical practice committees and government health authorities, are becoming more interested in disease prevention that can be more cost-effective than treating a disease once it is present. Vaccines are a well-recognized method for preventing disease. In determining whether to use a vaccine approved as safe and effective by the U.S. Food and Drug Administration, or FDA, decision makers consider whether it is cost-effective and whether it has been recommended by the Advisory Committee on Immunization Practices, or ACIP, and by medical specialty societies, such as the American Academy of Family Physicians, or AAFP, and the Redbook Committee of the American Academy of Pediatrics, or AAP. THE IMMUNE SYSTEM AND VACCINES The body's own immune system provides protection against infection. Infections occur when a disease-causing virus or bacterium invades the body and begins to multiply. The human immune system responds in different ways to contain and eliminate this threat. The process begins when specialized cells recognize foreign molecules on the surface of an invading virus or bacterium, called antigens. Immune responses to contain and eliminate the infection include: - Systemic immunity: Antigens stimulate the immune system to produce specific molecules, or antibodies, which neutralize the virus or bacterium. These antibodies circulate throughout the body. - Cell-mediated response: An effective immune response typically also leads to the creation of specific types of white blood cells, a cell-mediated response, that deactivate the virus or bacterium or destroy infected cells, limiting the spread of the virus or bacterium. 3 4 - Mucosal immunity: In addition to circulating antibodies and the cell-mediated response, antibodies are also produced in the body's mucous membranes, such as those that line the nose and throat. Mucosal immunity is particularly important in protecting against viruses or bacteria that enter the body through the nose and throat. When a vaccine activates the immune system against a specific virus or bacterium, the body remembers that response. This memory primes the immune system to respond if the specific virus or bacterium is encountered again. This memory may be achieved through vaccination with one of several techniques, including introduction of a weakened live virus or bacterium, an antigen fragment, also called a subunit, or with an inactivated, or killed, virus or bacterium. Current challenges for vaccine innovation include providing effective protection against the major infectious diseases for which no vaccines are currently available and improving current vaccines to achieve higher efficacy or greater ease of administration. In the case of influenza viruses, since the circulating strains change frequently, the body may not produce an adequate immune response to an inactivated influenza vaccine if it has not been exposed to the specific influenza strain circulating. Aviron's lead product candidate, FluMist, was developed to be delivered conveniently via a nasal mist -- where influenza viruses enter the body. Unlike the flu shot, it is designed to induce systemic and mucosal immunity, similar to natural infection. TYPES OF VACCINES Inactivated and Subunit Virus Vaccines Inactivated virus vaccines are produced by killing a virus using chemicals or by making pieces of viruses using molecular or biochemical techniques. Some vaccines, such as the hepatitis A vaccine, are based on the whole, inactivated virus. Other vaccines are the result of various degrees of purification that concentrate surface proteins of the virus, called subunits, most responsible for producing immunity. Inactivated and subunit vaccines offer the advantage of little or no risk of infection from the vaccine itself, assuming the virus has been adequately inactivated. Good manufacturing techniques also minimize the possibility of contamination with other viruses or fragments of DNA which could combine with a person's genes. The main disadvantage of inactivated and subunit vaccines for many viruses has been a lack of success in triggering enough of an immune response to provide protection against the naturally occurring, or wild-type, virus. Successfully creating a subunit vaccine requires knowledge of which specific antigens are responsible for providing protection. Subunit and inactivated vaccines can produce antibodies in the bloodstream, but usually are less able to produce antibodies in the mucous membranes where many wild-type viruses enter the body. Live Virus Vaccines Live virus vaccines expose the immune system to a weakened form of the virus that can trigger a lasting immune response to the wild-type virus without causing illness. All of the live virus vaccines in use today are strains initially derived from natural infections of humans. The weakening of existing live viruses, the basis of vaccines for polio, measles, mumps, rubella and chicken pox, is accomplished by multiplying these viruses repeatedly in cells. As a result of this process, these viruses gradually change in a way that decreases the ability of the virus to cause disease in humans. The vaccine candidate strain is then tested in animal models, if available, or directly in human participants to see if it has been sufficiently weakened without losing its ability to trigger an immune response. Following testing of safety and the ability to trigger an immune response in a limited number of human participants, large-scale trials are used to demonstrate that the vaccine works in preventing naturally acquired infections. When a person experiences a natural infection, the body activates an immune response to that specific infection. The principal advantage of live virus vaccines is their ability to activate protective mechanisms of the immune system similar to those activated by a natural infection. This process results in a balanced immune response activating all parts of the immune system, including antibodies at the site of the infection as well as circulating antibodies and cell-mediated immunity. As a result, live viruses are often considered to be more effective than other types of vaccines in providing immunity to natural variations in the wild-type viruses that cause disease. Live virus vaccines may also be easier to administer through their natural route of infection, such as the nose or mouth. However, a weakened live virus vaccine could cause disease resembling a wild-type virus infection in people with an immune system that is not working properly, e.g., because of a pre-existing disease, HIV infection or drug treatment for cancer or organ transplantation. 4 5 Although beneficial and widely used, there are four primary theoretical risks with live virus vaccines. First, live virus strains can change as they multiply in human hosts, and it is theoretically possible that a basic virus in a live virus vaccine could change back to the wild-type, or a more virulent, virus. This potential is a small, but recognized, problem for some of the current live virus vaccines, including polio. Second, a weakened virus of a live virus vaccine may exchange genetic information with wild-type strains after the vaccine has been given to a person, with the resulting new strain having the potential to cause disease similar to, or worse than, the wild-type strain. This is a highly unlikely theoretical risk. Third, if the live virus vaccine is a DNA virus or a retrovirus, the genome (genetic material) of the virus could combine with the DNA of the person receiving the vaccine and cause cancer or other problems in the future. This is a theoretical and highly unlikely risk. Fourth, there is the possibility that, in some circumstances, the live virus strain could transmit to and potentially cause disease similar to, or worse than, the wild-type strain in susceptible people or animals. The live virus vaccines in widespread use rarely have been associated with significant adverse events. However, the safety of any vaccine can only finally be determined after widespread use and careful monitoring. BUSINESS STRATEGY Our objective is to discover, develop, manufacture and market innovative vaccines that are safe, effective, and suitable for widespread use. The key elements of our business strategy are to: Apply Our Own Vaccine Design Technologies to a Range of Viruses. We believe that our genetic engineering technologies may be used to create weakened live virus vaccines for a wide range of viruses, including other airborne viruses related to influenza and chronic virus infections such as herpes simplex virus and cytomegalovirus. Acquire Promising Products and Technologies. We intend to continue to evaluate opportunities to in-license or otherwise acquire rights to promising products and technologies and to add programs that complement our core technologies and capabilities. For example, we obtained exclusive rights to the cold-adapted influenza vaccine technology that was used to develop FluMist from the University of Michigan and the National Institutes of Health, or NIH, and to our parainfluenza virus type 3 vaccine from the NIH. Select Programs and Market Vaccines Based on Unmet Medical Need. In setting our internal product development priorities, we evaluate the potential of each vaccine to protect health in large patient populations or where there exists significant disease burden, particularly where there is no existing means of prevention. We also consider the benefits of implementing widespread vaccine programs, the potential cost savings and the quality of life benefits based on protection provided by the vaccine. Establish Collaborative Arrangements to Help Product Development Efforts. We intend to continue to enter into collaborative arrangements to gain access to specific technologies and skills that may speed up product development and provide additional funding for our research and development and commercialization efforts. We have entered into collaborations for the development and marketing of FluMist with Wyeth Lederle Vaccines, or Wyeth, a division of American Home Products, or AHP, and CSL Limited. We also have an agreement with SmithKline Beecham for the development of a vaccine against Epstein-Barr virus, or EBV, a leading cause of infectious mononucleosis. Establish Commercialization Capabilities. We have established worldwide marketing collaborations for FluMist and will co-promote the vaccine in the United States with our own dedicated sales force. We will also develop the systems and infrastructure necessary to support the manufacturing and commercialization of our products. OUR TECHNOLOGY Our vaccine programs are based on innovative delivery, classical techniques for producing weakened live virus vaccines and our own genetic engineering technologies. COLD-ADAPTED INFLUENZA TECHNOLOGY We are applying our expertise in the biology of influenza to develop a live virus vaccine discovered using classical cold-adaptation techniques. The cold-adapted influenza vaccine technology, developed by Dr. H. F. Maassab at the University of Michigan, created weakened influenza strains by growing the virus in progressively colder conditions until the strains had lost the ability to grow well at human body temperature. We have obtained worldwide exclusive rights to this cold-adapted influenza vaccine technology. 5 6 The cold-adapted influenza vaccine technology includes these master donor strains for influenza, as well as techniques useful for updating the vaccine each year according to recommendations of the FDA. Updated strains are made by combining the master donor strains with current strains to obtain viruses with the weakened properties of the cold-adapted master donor strain and the antigenic properties of the current wild-type strain, so that the vaccine will be safe and will also trigger an immune response against the current influenza virus. After cells are infected with two different strains of virus, the resulting eight RNA genes of influenza mix at random in the cells. We select two genes for the antigens of the current wild-type strain and the six remaining genes from the cold-adapted master donor strain to combine into the vaccine. This process is called reassortment. We have received the technology for updating the cold-adapted master strains from the University of Michigan and have extended this approach with our own techniques. PROPRIETARY VACCINE DESIGN Since Aviron's founding, our core vaccine discovery strategy has been to apply genetic engineering techniques to create weakened live virus vaccine candidates for illnesses. We believe that our vaccine design approach is more flexible and systematic than traditional methods of live vaccine discovery and can be applied to many illnesses and, potentially, to the creation of viruses that can be used in gene therapy and the treatment of cancer. We also believe that our vaccine design approach allows for the design of vaccines that are more genetically stable than classically derived vaccines. Three ways of implementing this approach are: - Adding antigenic information from the vaccine virus. Our creation of a weakened live virus vaccine for cytomegalovirus, or CMV, begins with a vaccine candidate thought to be too weak to trigger the necessary immune response. We discovered genes for certain antigen structures present in wild-type CMV viruses. These genes are now being engineered into the vaccine to create a vaccine with a potentially better immune response. We have identified several vaccine candidates using this approach. We believe this technique of adding antigen structures may eventually allow us to create combination vaccines against more than one virus in a single vaccine. The National Institute of Allergies and Infectious Diseases, or NIAID, an institute of the NIH, began a Phase 1 clinical trial of our initial vaccine candidates for CMV in the second quarter of 2000. - Deleting or modifying specific parts of a virus, which cause illness, called virulence proteins. Virulence proteins are parts of a virus that contribute to disease, but are not required for the virus to stimulate a strong immune response. We have a program based on this strategy to create a live attenuated vaccine against the herpes simplex virus type 2, or HSV-2, that causes genital herpes. One of our founders, Dr. Bernard Roizman, discovered a particular protein important in the ability of HSV-2 to grow in nerve cells. - Changing the genetic information used by the virus in its own multiplication. Our scientists are working to create weakened live virus vaccine candidates for respiratory syncytial virus, or RSV. Until recently, it was impossible to genetically engineer influenza vaccine strains. Dr. Peter Palese, another one of our founders, discovered how to create genetically engineered influenza viruses using reverse genetics and assigned the technology to us. 6 7 VACCINE PRODUCTS UNDER DEVELOPMENT The following table summarizes our most advanced potential products under research and development:
PROGRAM VACCINE TYPE STATUS COMMERCIAL RIGHTS - ------- ------------ ------ ----------------- INFLUENZA FROZEN FLUMIST Biologics License Application Aviron/CSL/Wyeth under review Children Cold-adapted live virus Pivotal Phase 3 clinical trial completed, Adults Cold-adapted live virus Challenge efficacy study completed, Phase 3 safety and effectiveness trial completed Elderly and High-risk Adults Cold-adapted live virus Phase 3 clinical trial (co-administered with completed Inactivated vaccine) LIQUID FLUMIST Cold-adapted live virus Three Phase 3 trials in Aviron/CSL/Wyeth progress, Phase 2 bridging study completed PARAINFLUENZA VIRUS TYPE 3 Bovine live virus Phase 2 clinical trial Aviron completed EPSTEIN-BARR VIRUS Recombinant subunit glycoprotein Phase 2 clinical trial in Aviron/SmithKline progress Beecham CYTOMEGALOVIRUS Genetically engineered live virus Phase 1 clinical trial in Aviron progress HERPES SIMPLEX VIRUS TYPE 2 Genetically engineered live virus Preclinical Aviron RESPIRATORY SYNCYTIAL VIRUS Genetically engineered live virus Preclinical Aviron
"Pivotal Phase 3 clinical trial completed" means we have completed a multi-center, double-blind, placebo-controlled clinical trial for safety and efficacy. "Challenge efficacy study completed" means we have completed a multi-center, double-blind, placebo-controlled clinical trial for safety, immunogenicity (immune response) and effectiveness. "Phase 3 safety and effectiveness trial completed" means we have completed a multi-center, double-blind, placebo-controlled clinical trial in healthy working adults for effectiveness endpoints such as days of clinical illness, absence from work and medication use. "Phase 3 clinical trial completed" means that clinical trials have been completed, and the data are either being analyzed or the data remain blinded while the analytical plan is under review. "Three Phase 3 trials in progress" means that Wyeth is currently conducting three Phase 3 trials. Primary endpoints in the studies are protection against culture-confirmed influenza or immunogenicity by age. "Phase 2 bridging study completed" means a clinical trial has been completed, and the data are either being analyzed or the data remain blinded while the analytical plan is under review. "Phase 2 clinical trial completed" means we have completed a double-blind, placebo-controlled clinical trial for safety and immunogenicity in infants. "Phase 2 clinical trial in progress" means a Phase 2 clinical trial in healthy adults is being conducted by SmithKline Beecham under a license agreement with Aviron. "Phase 1 clinical trial in progress" means that a Phase 1 clinical trial is being conducted in healthy adults who already have the antibodies to the virus in their blood. "Preclinical" includes assessment of specific vaccine candidates for growth properties in cell culture and for attenuation or immunogenicity in animal models. 7 8 INFLUENZA Influenza is a widespread and potentially devastating disease. The Centers for Disease Control and Prevention, or CDC, estimates that each year approximately 10 to 20 percent of the U.S. population develops influenza, more than 110,000 persons are hospitalized from influenza-related complications and approximately 20,000 people die from influenza complications. Influenza symptoms usually last for approximately one week, resulting in an average of approximately three days of lost work or missed school. In addition, the Health Care Financing Administration estimates that the cost of influenza in the United States was $12.0 billion in 1992. Children are a major factor in spreading influenza to others, including those at high risk of developing serious complications from the disease. According to the CDC, more than 80 percent of influenza-related deaths occur in people over the age of 64. Children under age five and women in the last three months of pregnancy are also at higher risk for serious complications. Several times during the 1900s, influenza caused serious disease in a much larger percentage of the population, called a pandemic. Major pandemics occur when the influenza virus undergoes "antigenic shift," which happens when one influenza strain is replaced by a strain that the population has not experienced before and against which antibodies have not been developed. The variability of the influenza virus requires that the influenza vaccine be changed each year to match the most common current strains. The CDC and the World Health Organization maintain a global network that monitors the occurrence of annual outbreaks. Based on these data, the FDA selects the influenza strains to be included in the following season's influenza vaccine in the United States. The World Health Organization and various national authorities undertake a similar process in Europe. Influenza vaccines contain three strains of influenza virus. Typically, one or two of the strains in these vaccines are updated each year. According to the CDC, when the strains selected for the vaccine match those circulating in the community, current injectable vaccines are 70 to 90 percent effective in preventing illness, pneumonia, hospitalization and death due to complications from influenza in healthy adults under age 65, and are considerably less effective in the elderly. The ACIP has recently identified the main target groups for the current influenza vaccine as those at increased risk for influenza-related complications, including persons age 50 and over, residents of long-term care facilities, adults and children with chronic lung or heart disease, with chronic metabolic diseases such as diabetes, or with immunosuppression, children and teenagers receiving long-term aspirin therapy and, therefore, at risk of developing Reye syndrome and pregnant women. The next level of priority for vaccination identified by the ACIP includes people that may transmit influenza to high-risk persons, including health care workers and family members of such persons. Furthermore, the ACIP recommends the influenza vaccine for any person who wishes to reduce the chance of becoming ill with influenza. The FDA estimated that approximately 75 million influenza vaccine doses were manufactured for use in the United States for the 2000-2001 influenza season. According to the CDC, 65 percent of the 35 million Americans over the age of 64 received the influenza vaccine during 1997, up from less than 25 percent a few years earlier. We believe that a lower percentage of high-risk individuals under age 65 are vaccinated and that a significant number of influenza vaccine doses used in the United States are being given to healthy adults under age 65, many of whom participate in workplace vaccination programs. Experts suggest that very few of the 75 million children in the United States under age 19 receive the influenza vaccine, even those at high risk for complications. AVIRON'S COLD-ADAPTED INFLUENZA VACCINE Our lead product candidate, FluMist, is based on the live cold-adapted influenza vaccine technology developed by Dr. H. F. Maassab, licensed from the University of Michigan and subject to a Cooperative Research and Development Agreement, or CRADA, with the NIH. FluMist is an investigational live virus vaccine delivered as a nasal mist for the prevention of influenza. We are developing FluMist for use every year in healthy children and healthy adults. FluMist has undergone, and is currently undergoing, extensive clinical trials, many of which are coordinated with NIH-sponsored investigators. In clinical trials of the cold-adapted influenza vaccine performed prior to Aviron involvement, more than 8,000 participants received the cold-adapted influenza vaccine. FluMist has been tested in an additional 24,000 children and adults since Aviron involvement. FluMist has been shown to provide a high protection rate against influenza in Phase 3 clinical trials in healthy children and healthy adults. FluMist has been generally well tolerated in clinical trials. FluMist recipients were more likely than placebo recipients to report side effects, such as sore throat, runny nose and low-grade fever. The side effects were transitory in nature. The immune response triggered by FluMist differs from that triggered by the flu shot, which is an inactivated vaccine. FluMist triggers an immune response similar to the natural immune response to wild-type influenza, while the response to the flu shot is more narrowly focused. In addition, FluMist is delivered in the nose, which is the natural point of entry for airborne infections such as the influenza virus. Because FluMist is delivered as a nasal mist, we believe that it provides a more convenient and comfortable way to 8 9 vaccinate individuals, including children, each year. Children are an important target population because much of the illness occurs in young children, and they are also at high-risk for complications related to influenza. Children are also an important factor in the spread of influenza throughout the population. Influenza is also associated with middle ear infections, a leading cause of doctor visits and antibiotic use. Healthy adults are also an important market segment for FluMist. In a Phase 3 effectiveness trial conducted at 13 sites nationwide in healthy working adults, reductions in days of illness, antibiotic use, health resource use and missed work due to illness were observed. We believe that many adults who regularly receive the flu shot will often select FluMist if given the choice and that people who have avoided flu shots in the past may receive a vaccination if FluMist is available. We believe that vaccination programs based on FluMist also may increase the convenience of vaccination compared to the flu shot. We intend to seek recommendations from the ACIP and other medical advisory bodies for use of FluMist in appropriate populations. INFLUENZA CLINICAL TRIALS The Biologics License Application, or BLA, for frozen FluMist was submitted to the FDA on October 31, 2000 and is under review. Data from 16 completed clinical trials were included in the BLA. These trials involved more than 10,000 children and adults to whom over 13,000 doses of FluMist were administered. The Safety Update Report, or SUR, for FluMist that was submitted recently to the FDA presented data from over 21,000 doses of FluMist that were administered to more than 15,000 participants in trials covered by this report. In addition, we have recently completed trials in which more than 1,200 children or adults received FluMist, and we are engaged in ongoing clinical trials involving more than 14,000 children, approximately 8,000 of whom have received FluMist. Thus, across all trials, completed or ongoing, approximately 24,000 participants have received at least one dose of FluMist. 9 10 FLUMIST CLINICAL TRIALS
TRIAL PURPOSE OF TRIAL NUMBER OF SUBJECTS YEAR OF TRIAL ----- ---------------- ------------------ ------------- FROZEN FLUMIST HEALTHY CHILDREN AV002/AV002-2 Phase 1 and 2 Dose Escalation Safety and Immunogenicity 356 1995 -- 1996 AV006 Phase 3 Field Pediatric Protective Efficacy 1,602 (1st year) 1996 -- 1997 1,358 (2nd year) 1997 -- 1998 AV007 Phase 3 Manufacturing Consistency 500 1997 AR001 Phase 3 Safety 65 1997 -- 1998 AV011 Phase 3 H1N1 Challenge 222 1998 AV012 Phase 3 Field Community Intervention 4,298 (1st year) 1998 -- 1999 5,252 (2nd year) 1999 -- 2000 5,137 (3rd year)(a) 2000 -- 2001 AV014 Phase 3 Manufacturing "Bridge" Safety and 225 1998 -- 1999 Immunogenicity AV015 Phase 3 Third Year Revaccination 949(b) 1998 -- 1999 AV017 Phase 3 Fourth Year Revaccination 1,245(c) 1999 -- 2000 D145-P500 Phase 3 Evaluation of Transmission 197 1999 -- 2000 AV018 Phase 3 Concurrent Use with MMR II (R) and Varivax(R) 81 currently enrolled 2000 -- 2001 AV019 Phase 3 Safety 9,732(a) 2000 -- 2001 DMID #99-020 Phase 2 Immune Response in Adenoids and Tonsils 3 currently enrolled 2000 -- 2001 "HIGH-RISK" CHILDREN AV010 Phase 3 Safety in Children with Asthma 48 1997 DMID #99-012 Phase 2 Safety in Children with HIV 49 1999 -- 2000 HEALTHY ADULTS AV001 Phase 1 Safety and Immunogenicity, delivery method 239 1995 AV003 Phase 3 Wild-type Challenge 103 1995 -- 1996 AV004 Phase 2 Safety 20 1995 -- 1996 AV005 Phase 2 Safety 32 1996 -- 1997 AR001 Phase 3 Safety 375 1997 -- 1998 AV009 Phase 3 Effectiveness 4,561 1997 -- 1998 "HIGH-RISK" ADULTS DMID #98-005 Phase 2 Safety in Adults with HIV 111 1998 AR001 Phase 3 Safety 9 1997 -- 1998 AV008 Phase 3 Safety of Co-administration with Flu Shot 200 1997 -- 1998 Veterans Phase 3 Field Safety and Efficacy of 2,215 1998 -- 1999 Administration Co-Administration with Flu Shot in Participants CSP #448 with Chronic Obstructive Pulmonary Disease LIQUID FLUMIST HEALTHY CHILDREN D153-P500 Phase 2 Bridging Study 1,395(a) 2000 D153-P501 Phase 3 Pan-Asian Efficacy 3,175(a) 2000 -- 2001 D153-P502 Phase 3 Pan-European Day Care Efficacy 1,677(a) 2000 -- 2001 D153-P503 Phase 3 European Safety and Immunogenicity 517(a) 2000 -- 2001 "BRIDGE" FROZEN / LIQUID FLUMIST HEALTHY ADULTS, HIGH-RISK ADULTS, AND CHILDREN AL002 Phase 1 Safety and Immunogenicity 524 1998 -- 1999
- -------------- (a) Enrollment is complete. However, the number is preliminary and may change slightly as final data are compiled. (b) The total of 949 includes 650 revaccinees and 299 participants receiving FluMist for the first time. (c) The total of 1245 includes 870 revaccinees, 305 initial vaccinees and 70 placebo recipients. 10 11 PHASE 3 CLINICAL TRIALS IN HEALTHY CHILDREN Based on trials by others which showed that a modest immune response in young children to one or two of the strains after a single dose could be boosted significantly by a second dose approximately two months later, we initiated a two-year pivotal Phase 3 clinical trial to evaluate one- and two-dose regimens in children. We enrolled 1,602 children at 10 clinical sites in the pivotal Phase 3 clinical trial, of whom 1,314 were vaccinated with a second dose 46 to 74 days after their first vaccination. The primary endpoint of the study was defined as the protection of children from laboratory-confirmed influenza during the influenza season. Our clinical trial data suggest that a repeat or booster dose may be beneficial for young children who do not have previous exposure to influenza or influenza vaccines. Two doses of the flu shot vaccine are recommended for young children receiving an influenza vaccine for the first time. The influenza epidemic in the 1996 -- 1997 influenza season was widespread enough in the general population to allow the data from this study to be unblinded following a single year of enrolling participants. Aviron and the NIAID announced that, based on an initial analysis of the first year of the Phase 3 trial, FluMist demonstrated a 93 percent protection rate against culture-confirmed influenza in those children receiving one or two doses in this study. Only one percent of children receiving FluMist experienced culture-confirmed influenza, compared to 18 percent of those receiving the placebo. In a subgroup analysis of those children who received a single dose, the efficacy was 89 percent. These results were statistically significant. The clinical investigators presented the initial findings of this trial at a scientific conference in the fall of 1997 and, in May 1998, data from the first year of this Phase 3 clinical trial of FluMist were published in The New England Journal of Medicine. In the study, results show that only 14 of the 1,070 children vaccinated with FluMist experienced laboratory-confirmed influenza, while 95 of the 532 placebo recipients experienced laboratory-confirmed influenza. Of the children who received FluMist, only one child developed an influenza-associated ear infection, while 20 of the placebo recipients developed influenza-associated ear infections. Throughout the entire influenza season, 1,070 children vaccinated with FluMist experienced 30 percent fewer ear infections with fever than children who received placebo and demonstrated a 35 percent reduction in related antibiotic use for ear infections with fever. The children who participated in the first year of this study were invited back to participate for a second year of the study during 1997 -- 1998 and were either vaccinated with a single dose of FluMist or a placebo spray. In September 1998, the results of the second year of this study were presented at the Interscience Conference on Antimicrobial Agents and Chemotherapy and were subsequently published in the Journal of Pediatrics in February 2000. In this study year, FluMist provided 100 percent protection against laboratory-confirmed influenza strains included in the 1997 -- 1998 flu vaccine. In addition, the vaccine provided 86 percent protection against A/Sydney, an unexpected influenza strain which was not included in any vaccine but was the predominant strain of influenza circulating during the 1997 -- 1998 influenza season. Overall, FluMist provided 87 percent protection against all laboratory-confirmed influenza. Among the 1,358 participants, there were five cases of influenza due to influenza strains included in the vaccine and 66 cases caused by A/Sydney. Only two percent of children vaccinated with FluMist, 15 out of 917, experienced laboratory-confirmed influenza, all of which was attributable to the A/Sydney strain, while 13 percent of the placebo recipients, 56 out of 441, experienced laboratory-confirmed influenza. The difference between these two influenza attack rates is used to calculate the overall protection rate of 87 percent. The incidence of pneumonia and other lower respiratory diseases was also reduced in those children vaccinated with FluMist, compared to placebo. Eight children in the placebo group developed influenza-related wheezing, bronchitis or pneumonia, all of which were due to the A/Sydney strain. No children who received FluMist experienced lower respiratory complications. Among the 15 of the 917 children receiving FluMist who did contract influenza from the variant strain, the illness appeared to be milder than in the control group, based on frequency of complications and duration of fever. The NIH and Aviron began a large-scale clinical trial in August 1998 to assess the impact of community-wide influenza immunization. The three-year trial, taking place in Temple, Texas, is funded by a $3.0 million grant from the NIH awarded to the Baylor College of Medicine. In the first year of the trial, approximately 4,300 children enrolled and in the second year the enrollment increased to more than 5,200. The trial will evaluate the impact of vaccinating preschool and school-age children with FluMist on the spread of influenza into the community as measured by the number of doctor visits for flu-related illness. During the 2000 -- 2001 influenza season, the third year of this trial, more than 5,100 participants have been enrolled. In October 2000, Kaiser Permanente initiated a large-scale clinical trial of FluMist. During the 2000 -- 2001 influenza season, more than 9,700 participants, age one to 17 years, have been enrolled. The study will evaluate a variety of endpoints to compare the rates of different medically attended events in the group receiving FluMist versus the group receiving placebo. 11 12 PHASE 3 ADULT CHALLENGE TRIAL FluMist was also tested in a 1995 -- 1996 challenge efficacy study at two Vaccine Treatment Evaluation Units involving 92 healthy young adults. Subjects either received FluMist, the flu shot or placebo. There were no serious adverse events attributable to FluMist, and there were no statistically significant differences in the occurrence of any potential reactions assessed in the study between vaccine and placebo. Following vaccination, wild-type influenza virus was given through the nose. Seven percent of those vaccinated with FluMist and 13 percent of those vaccinated with the flu shot became ill with laboratory-documented influenza, compared to 45 percent of those who received placebo. This translates to an 85 percent protection rate for FluMist and a 71 percent protection rate for the flu shot compared to placebo, both of which were statistically significant. The difference between 85 percent protection for FluMist and 71 percent protection for the flu shot was not statistically significant given the small number of people involved in the study. Of the FluMist recipients, only 10 percent experienced moderate or severe symptoms following administration of the wild-type influenza virus, a statistically significant reduction compared to 39 percent of placebo recipients. The rate of moderate or severe symptoms observed following administration of the wild-type influenza virus to those who had received the flu shot was 22 percent which was not statistically significant compared to placebo. While the rate of illness seen in the placebo group was consistent with previous influenza challenge efficacy trials by others, the rate of fever or systemic illness was lower than in previous trials. These data were published in Vaccine in December 1999. PHASE 3 CLINICAL TRIAL IN HEALTHY ADULTS On December 5, 1998, preliminary results reported from a Phase 3 trial in 4,561 healthy working adults showed that those receiving FluMist experienced statistically significant reductions in illness-associated missed work days and health care provider visits, as well as prescription and over-the-counter medication use associated with illness. The study was conducted to assess the impact of immunization on the frequency of influenza-like illness, utilization of health care services and absenteeism from work. We intend to use these data to support a label claim for the use of FluMist in healthy adults. These data will also be used to support analysis of the cost-savings potential of immunization programs based on FluMist. Data from this trial were presented at the first International Symposium on Influenza and Other Respiratory Viruses and published in the Journal of the American Medical Association in 1999. During the peak outbreak periods, those receiving FluMist compared to those who received the placebo spray missed 28 percent fewer days of work due to upper respiratory illness with fever and had 41 percent fewer days of health care provider visits. Participants also experienced a 45 percent reduction in days of prescription antibiotic use and 28 percent fewer days of over-the-counter medicine use. Study results show FluMist recipients had reductions in the occurrence of illness by multiple definitions measured in the study including severe influenza-like illness, 17 percent less, and upper respiratory tract illness with fever, 22 percent less. The number of days of illness was also reduced in FluMist recipients by 23 to 27 percent, depending on the specific illness definitions. The prospectively determined primary endpoint was occurrence of illness using the broadest definition, which was reduced in FluMist recipients by 10 percent, a trend that did not reach statistical significance. The trial was a double-blind, placebo-controlled study conducted in 13 clinical sites nationwide during the 1997 -- 1998 influenza season. Most study subjects self-administered FluMist under the supervision of investigators at their worksite or nearby clinic. Study participants reported their symptoms and health events monthly. Because laboratory tests were not performed to diagnose influenza, several pre-specified illness definitions were used to identify health events that could have been due to influenza virus infection. These included a very broad definition of influenza-like illness, which did not necessarily include respiratory tract symptoms, as well as more severe influenza-like illness and upper respiratory illness with fever. PHASE 3 CLINICAL TRIALS IN HIGH-RISK ADULTS We have completed a clinical trial for safety in 200 elderly high-risk adults for the use of FluMist in co-administration with the currently available injectable vaccine. Many of the participants in this trial self-administered FluMist. This trial was not designed to generate efficacy data on use of FluMist in high-risk adults. 12 13 Early in the fourth quarter of 1998, the Cooperative Studies program of the Department of Veterans Affairs Office of Research and Development, or VA, began a one-year trial to evaluate the potential additional benefit of co-administration of FluMist with the flu shot, compared to the flu shot alone, in high-risk patients with chronic obstructive pulmonary disease. This study has been completed with more than 2,200 volunteers enrolled at 20 participating VA Medical Centers in the United States. The VA is analyzing the efficacy results, and we expect that those efficacy data will be available later this year. Serious adverse events have been analyzed and submitted to the FDA in our recent SUR. Incident rates of serious adverse events were similar in both arms of the study, those receiving FluMist and those receiving the placebo. CLINICAL TRIALS FOR MANUFACTURING CONSISTENCY In February 1998, we reported positive results from a manufacturing consistency lot trial of vaccine manufactured, blended and filled into sprayers at our contract manufacturer. We conducted a randomized, double-blind, placebo-controlled trial in 500 children, designed to evaluate the safety and immunogenicity (immune response) of three manufacturing lots of FluMist. The children were vaccinated between April and September 1997. Analysis of patient diary cards and antibody responses following two doses of FluMist showed consistent safety and immunogenicity for the different lots according to pre-defined endpoints. Evidence that different lots of vaccine can be manufactured at a consistent quality level is generally required by the FDA prior to approval of such products for commercial sale. We have completed a bridging study designed to evaluate clinical equivalence of vaccine blended and filled at our Pennsylvania facility, compared to vaccine blended and filled at our contract manufacturer that was representative of vaccine used in earlier clinical trials. This 225-person trial was completed in Australia in collaboration with CSL Limited. The study's primary endpoint was to show that the lot of FluMist blended and filled at our Pennsylvania facility had similar immunogenicity for all three 1997-98 influenza strains to the lot of vaccine blended and filled at our contract manufacturer. The secondary endpoint was to show that the two lots of vaccine had similar safety and tolerability profiles. The trial was conducted from December 1998 through March 1999. Participants were children, age 12 to 42 months, randomized to receive vaccine blended and filled at one of the two manufacturing sites. The study met the primary endpoints for immunogenicity and safety, and the data from this trial are included in our BLA. We cannot be certain that the FDA will find these data sufficient to demonstrate consistency of manufacture. LIQUID FLUMIST CLINICAL TRIALS The current formulation of FluMist requires freezer storage throughout distribution. Because many international markets do not have distribution channels well suited to the sale of frozen vaccines, we are developing a second generation refrigerator stable, or liquid, formulation of FluMist, in conjunction with Wyeth. In March 2000, Wyeth initiated a randomized, single-blind Phase 2 clinical trial of liquid FluMist in more than 1,300 children in the southern hemisphere. This trial is intended to demonstrate clinical equivalence between frozen and liquid FluMist. During the fourth quarter of 2000, Wyeth initiated three Phase 3 clinical trials with liquid FluMist: - A Pan-Asian efficacy trial enrolled more than 3,000 participants from 12 to 36 months of age. The primary endpoint is protection against culture-confirmed influenza. - A Pan-European pediatric day care efficacy trial enrolled more than 1,500 children in day care from 6 to 36 months of age. The primary endpoint is protection against culture-confirmed influenza. - A safety and immunogenicity study enrolled more than 500 participants from 6 to 17 years of age in Europe. The primary endpoint is the level of immune response by age. FLUMIST BLA We submitted a BLA for FluMist on October 31, 2000, and it is currently under review by the FDA. Following review of the BLA, the FDA will advise us in writing as to what action has been taken and request additional information if needed. Prior to approval for marketing by the FDA, we expect the FDA will inspect each of our manufacturing facilities and convene a meeting of the Vaccines and Related Biological Products Advisory Committee to evaluate the data submitted in our BLA. 13 14 OTHER PRODUCTS IN DEVELOPMENT PARAINFLUENZA VIRUS TYPE 3, OR PIV-3 We are currently developing a vaccine for the treatment of PIV-3, a common childhood respiratory virus that is a cause of croup, cough, fever and pneumonia. Every year, primarily during the spring and summer months, PIV-3 infects infants, children and adults. In the United States, at least 60 percent of children are infected by the time they reach two years of age and 80 percent by four years of age. Children are also a major factor in introducing PIV-3 infection into the family setting. PIV-3 frequently recurs and children typically experience two to three infections of decreasing severity. Unlike influenza, PIV-3 undergoes only a very minor degree of variation in the surface proteins from year to year; therefore, a PIV-3 vaccine will not require annual updates. Both circulating and nasal antibodies against PIV-3 play a role in protection against PIV-3 disease. It is thought that protection of the lower respiratory tract from PIV-3 replication and disease requires high circulating levels, whereas resistance to infection and protection against disease in the upper respiratory tract requires mucosal antibodies in the nose. There is currently no vaccine available to protect against PIV-3 infection, and no drug for treatment of PIV-3 disease. Aviron's Live Parainfluenza Virus Type 3 Vaccine. Our live intranasal vaccine program for PIV-3 utilizes bovine PIV-3, or bPIV-3, vaccine technology licensed from the NIH. Use of bPIV-3 as a vaccine to protect humans against human PIV-3 strains is based on the successful strategy first used for smallpox vaccination, in which an animal virus is used as a vaccine to protect humans from the related human virus. It is thought that the attenuation of bPIV-3 seen in primates is due to mutations sustained throughout its genome (genetic material) during its long evolutionary adaptation to the bovine host. Our bPIV-3 vaccine potentially could be used as a vector for vaccines against other viruses, such as PIV-1, PIV-2 and RSV. Clinical Results. Prior to our in-licensing of the bPIV-3 vaccine, it had been tested in Phase 1 clinical trials in 18 adults and 78 children and infants, primarily as a single dose regimen. In all age groups, the bPIV-3 vaccine appeared satisfactorily attenuated, safe and genetically stable. We conducted a Phase 2 double-blind, placebo-controlled, randomized trial in 192 infants to evaluate two different dosages of bPIV-3. Children were vaccinated at 2, 4, 6, and 12 to 15 months of age. Preliminary data were presented at scientific meetings in December 1998 and May 1999. Following three primary doses, approximately 80 percent of children showed evidence of immunization by either seroconversion (i.e., developed at least a four-fold increase in antibody titer) or shedding of vaccine virus. The trial met our pre-determined objectives for safety and immunogenicity. EPSTEIN-BARR VIRUS, OR EBV The Epstein-Barr virus is a herpesvirus that is a leading cause of infectious mononucleosis, or mono, and infects most people at some point in their lifetime. Infection at a young age may cause mild symptoms, but the debilitating syndrome of mono is most common when infection first occurs in adolescence or young adulthood. Sore throat and swollen neck glands are followed by a period of fatigue and lethargy which can last for weeks or even months. Many high school and college students become infected with EBV each year in the United States, of which half or more may develop mono. The disease usually runs its course without significant medical intervention; however, the long duration of mono can be a serious problem for high school and college students as well as workers. No vaccine is currently available for EBV. Mono affects an estimated 250,000 young adults in the United States and Europe annually. Studies of the U.S. population indicate that approximately 90 percent of adults have been infected with EBV. We developed a subunit vaccine for EBV based on the single surface antigen responsible for most of the neutralizing antibodies stimulated by EBV infection. Quantities of this antigen have been expressed, purified and evaluated in a rabbit model, where preliminary results indicate that the antigen causes an immune response when combined with an adjuvant. Adjuvants are substances included in vaccines to further stimulate the immune system. In 1995, we entered into a worldwide collaboration with SmithKline Beecham, or SBB, a division of GlaxoSmithKline, excluding Korea, whereby SBB will fund the development of the EBV vaccine in exchange for marketing rights. In August 1999, we announced that SBB completed a Phase 1 clinical trial in Europe of the subunit vaccine in healthy adults to evaluate safety and immunogenicity. The study showed that the vaccine tested with two different adjuvants (immune response stimulators) was safe and well tolerated. Although the study was not designed to evaluate the efficacy of the vaccine, laboratory tests showed evidence of immune response in vaccine recipients. In November 2000, SBB completed enrollment of a Phase 2 clinical trial in Europe of the subunit vaccine in healthy adults to evaluate safety and immunogenicity. 14 15 CYTOMEGALOVIRUS, OR CMV We currently are developing a vaccine for CMV, another member of the herpesvirus group. Most people become infected with CMV at some time in their lives. These infections are typically asymptomatic or result in mild illness with sore throat, headache, fatigue and swollen glands. CMV also can cause an infectious mononucleosis syndrome clinically indistinguishable from that associated with EBV infection. More serious CMV disease is associated with a weakened immune system, as is often found in AIDS, cancer and transplant patients, which may be due to reactivation of CMV acquired earlier in life or due to a new infection. Importantly, if a woman is first exposed to this virus during pregnancy, the resulting infection can cause serious abnormalities in the child. Approximately 40,000 infants in the United States are infected each year, resulting in varying levels of brain damage, physical handicaps or deafness in 7,500 to 10,000 of these infants. Congenital CMV syndrome results in significant expenditures for neonatal and postnatal care and potentially lifelong custodial care. No vaccine currently is available for CMV. In January 1999, the Institute of Medicine, a part of the National Academy of Sciences, issued a report in which CMV was identified as a level 1 (most favorable) priority for development as a vaccine, based on the public health benefit associated with CMV prevention. Antibodies from persons with high levels of immunity are available in the form of hyperimmune globulins for certain high-risk patients, but use of these products can be costly and of limited efficacy. These products are not used to prevent congenital infection of newborn infants. We believe that widespread vaccination of children/adolescents with a safe and effective CMV vaccine is justified for the same reason that children in the United States are vaccinated against rubella: to protect unborn children from birth defects caused by congenital infection by reducing the risk that mothers can acquire CMV during pregnancy. A weakened live virus vaccine candidate for CMV, known as the Towne strain, has been tested by third parties in several hundred people. This strain was reported to be well tolerated, but did not provide sufficient protection in mothers of children in day care who were at risk for CMV infection or in transplant recipients at risk of acquiring CMV from the donor organs. Our scientists have discovered key differences between the Towne strain and the naturally occurring CMV virus. Based on this knowledge, we have used our rational vaccine design approach to create new recombinant CMV vaccine candidates in an attempt to achieve the appropriate balance between attenuation and potential protection. In June 2000, the NIAID initiated the first clinical trial with four of our CMV vaccine candidates. HERPES SIMPLEX VIRUS TYPE 2, OR HSV-2 An estimated 40 to 60 million persons in the United States currently are infected with HSV-2, the cause of genital herpes. Only one-third of those infected experience symptoms, but a significant portion of new infections are caused by transmission from people who do not have any symptoms. Genital herpes is an incurable disease, often manifesting its presence several times a year with painful sores in the genital area. It is estimated that there are more than 500,000 new cases of genital herpes annually in the United States and that the disease is responsible for more than 600,000 physician visits per year. Genital herpes also can be acquired by newborn babies as they pass through the birth canal of infected mothers. Neonatal herpes simplex infection can result in serious damage to the brain and many other organs. Each year in the United States, approximately 1,500 infants are infected, and these infants have almost a 50 percent risk of death or severe, permanent neurological damage. In addition, efforts to prevent neonatal herpes contribute significantly to the cost of the disease. For example, women with a history of genital herpes are often advised to undergo a Caesarean section when prenatal examinations suggest a herpes virus recurrence near the time of delivery. HSV-2 infection also can lead to serious and fatal complications in adults with poor immune systems due to AIDS or as a consequence of drug therapy for organ transplants. The most widely used drug therapy for HSV-2 disease is acyclovir, which has been shown to reduce the severity and duration of herpetic lesions, although most patients treated still experience symptoms for several days. When taken several times a day as a preventative for HSV-2, acyclovir also has been shown to reduce the frequency of recurrences. Several additional therapeutics are available or in the late stages of clinical trials, and several preventative vaccines are in clinical trials; however, no vaccine currently is available to prevent genital herpes. We have used our rational vaccine design approach to create live attenuated vaccine candidates intended to prevent HSV-2 disease in uninfected children and young adults. Two of our founders, Dr. Bernard Roizman and Dr. Richard Whitley, in collaboration with Pasteur Merieux Serums et Vaccins, developed a prototype live herpes vaccine based on an oral herpes virus, or HSV-1. After extensive preclinical testing, the virus was tested in humans; however, the immune response following vaccination was deemed insufficient. This insufficiency most likely resulted because too many genes had been deleted, thus rendering the virus over- 15 16 attenuated. We have licensed technology, along with patents covering strategies for more specific deletions, from ARCH Development Corporation, or ARCH. We have used this technology to create proprietary live vaccine candidates using an HSV-2 backbone, which we have evaluated in preclinical models. Several candidates have shown attenuation in various rodent models, as well as efficacy in protecting guinea pigs and primates from challenge with a lethal dose of wild-type HSV-2. We are developing additional vaccine candidates and intend to use the results of further animal studies to select one or more candidates for evaluation in clinical trials. In July 1996, we licensed a portion of our patent rights covering or related to the use of HSV-2 for treatment of cancer and for gene therapy, but excluding use for vaccines, to NeuroVir Therapeutics Inc., or NeuroVir, formerly NeuroVir Research, Inc. In exchange, we received shares of capital stock and warrants to purchase shares of capital stock representing a minority interest in the outstanding equity securities of NeuroVir on a fully diluted basis. We are under no obligation to fund development of this technology by NeuroVir. RESPIRATORY SYNCYTIAL VIRUS, OR RSV RSV is the major cause of lower respiratory tract illness in the very young and is responsible for more than 90,000 hospitalizations and 4,500 deaths a year in the United States. RSV also is one of the causes of the common cold. Infection is manifested as cough and fever and, in some cases, pneumonia. While RSV infection can occur at any time of year, epidemics generally occur in the winter. Most cases are in children under age four, with the peak of severe illness under six months of age, particularly in infants with pre-existing heart and lung disease. The leading product used for the prevention of RSV is a humanized monoclonal antibody against RSV delivered by injection. There is no vaccine currently available for RSV. One company is testing a cold-adapted weakened live virus vaccine for RSV in infants. Available drug therapy is reserved for the most serious cases as it has significant side effects. We are developing a genetically engineered weakened live virus vaccine for RSV using proprietary reverse genetics technology. Our objective is to use this technology to create a number of live virus vaccine candidates that can be tested in animal models before selecting a candidate for testing in humans. However, no assurance can be given that we will be successful in identifying a vaccine candidate. LIVE VIRUSES AS VECTORS We believe that our virus engineering technology may be used to create strains that carry "foreign" genes able to deliver genetic or antigenic information to specific tissues in the host. For example, it is possible to engineer antigens from other viruses into influenza, as has already been demonstrated for small antigenic regions from agents such as HIV and malaria. RSV and PIV-3 are two other important causes of childhood infections that may be targeted by using the influenza virus as a vector to deliver antigens. BPIV-3 represents an alternative live viral vector to use to immunize against RSV or PIV-1 and 2. FLUMIST PRODUCTION AND MANUFACTURING MANUFACTURING PROCESS Master Virus Seed Preparation. After the FDA selects the influenza strains to be included in the vaccine, we create the respective master virus seeds for use in large-scale production. These contain the hemagglutinin, or HA, and neuraminidase, or NA, genes of the expected epidemic strain and six genes which hold the cold-adapted, weakened properties of the master donor strain. Two processes are available for us to make the master virus seeds: classical reassortment and reverse genetics. In the classical reassortment process, which we included in our BLA submission, laboratory virus cells are infected with both the expected strain in circulation and our cold-adapted master donor strain, resulting in random genetic reassortments between the two strains. The specific reassortment desired is then isolated. This process takes approximately four to eight weeks. The master virus seeds for each of the vaccine strains are then transferred to our U.K. facility. Individual master seed vials are used to produce the master working seed banks for each of the three vaccine strains. This production involves the infection, incubation and harvesting of virus from pathogen-free hens' eggs. The eggs used in each stage of our manufacturing process are supplied by a third party that maintains flocks certified to be free of specific pathogenic agents. Bulk Production. The master working virus seeds for each of the vaccine strains are then used to produce large-scale quantities of bulk vaccine strains. This production, which occurs in our U.K. facility, involves the infection, incubation and harvesting from hens' eggs. The diluent for the product, normal allantoic fluid, or NAF, is harvested from hens' eggs and used in the final formulation of FluMist. 16 17 Trivalent Formulation Production. The bulk vaccine strains and NAF are frozen in our U.K. facility and transferred to our facility in Pennsylvania where they are blended into the trivalent formulation, filled into nasal spray devices, packaged, labeled and shipped. MANUFACTURING FACILITIES AND CONTRACTS Since 1998, we have been producing supplies for all frozen FluMist clinical trials through preparation of master virus seeds at our California facility, production of bulk monovalents and diluent at the U.K. facility and the blending and filling into the trivalent formulation at our Pennsylvania facility. Our existing manufacturing facilities are not yet licensed for the manufacture of FluMist and have not yet manufactured FluMist at a sustained commercial scale. We have begun the initial stages of commercial scale manufacturing of FluMist for sale during the 2001 -- 2002 influenza season, pending receipt of marketing approval from the FDA. In October 2000, we restructured the agreement previously in place with Evans Vaccines for bulk production in the Speke, U.K. facility. The new agreement, which runs through June 2006, transferred responsibility for bulk production and transferred approximately 100 Evans employees to Aviron UK Ltd., our wholly-owned U.K. subsidiary. We have also agreed to acquire the remaining 24 years of a 25-year lease from Celltech Group Plc of approximately eight acres of land in Speke, U.K. We intend to utilize an existing 45,000 square foot structure on the property to build a new FluMist manufacturing facility. In 1998, Aviron opened a 34,000 square foot manufacturing suite in Philadelphia, Pennsylvania, in which we blend and fill doses of FluMist. This suite is adjacent to the facility of the company with which we contract for the labeling and packaging of FluMist. This site is referred to as Aviron PA. If regulatory approval is received, this Aviron PA facility is expected to be used for blending, filling, labeling, packaging and storage of commercial lots of FluMist. Our original arrangement with Packaging Coordinators, Inc., or PCI, a division of Cardinal Health, Inc., provided for the labeling and packaging of FluMist for commercial sale until October 2004. In August 2000, we entered into amended agreements with PCI extending the term of our original agreement until December 2004, with options to extend for up to two additional terms of three years. The production of FluMist is subject to the availability of a large number of specific pathogen-free eggs, for which there is currently a limited number of suppliers. In June 1999, we entered into a non-exclusive agreement with Specific Pathogen-Free Avian Supply, a division of Charles River Laboratories, for the purchase of pathogen-free hens' eggs through December 2001. This agreement may be renewed by mutual agreement of the parties for an additional term of three years. In August 1998, we entered into a worldwide supply agreement under which Becton Dickinson and Company, or Becton Dickinson, to will supply us with its AccuSpray(TM) non-invasive nasal spray delivery system for the administration of FluMist, for which we retain exclusivity through the 2001 -- 2002 influenza season. This agreement provides for an initial term of five years with automatic annual renewal until terminated. In addition, we depend on the existing submission by Becton Dickinson of a Device Master File application, or DMF. We referenced the DMF as part of the BLA submission for FluMist. Our current frozen formulation of FluMist is being designed to meet an acceptable level of stability for the U.S. market. In addition to its current frozen formulation, we are exploring alternative formulations and presentations for FluMist that may enable improved distribution and longer shelf life. We believe that a liquid formulation of FluMist will be required to address markets outside the United States and Canada. Aviron and Wyeth are jointly producing clinical trial material for the liquid formulation of FluMist at our facilities in California and Pennsylvania and in Wyeth's facilities in Pennsylvania. As part of our agreement with Wyeth, both companies have the right to manufacture the liquid formulation. MARKETING AND SALES The current purchasers of vaccines are principally physicians, large HMOs and state and federal government agencies. We intend to market FluMist to HMOs, large employers, government health care agencies, physicians and pharmacies either directly or through our partner Wyeth. Clinical trials of FluMist have been conducted to provide information regarding its use in three market segments: healthy children, healthy adults and adults at high risk of influenza complications due to age or to the presence of chronic medical conditions such as heart or lung disease or diabetes. Currently we are seeking indications for use of FluMist for the prevention of influenza in healthy children and healthy adults. 17 18 CHILDREN There are approximately 70 million children age 18 and under in the United States. Influenza among children causes significant impact on families, especially when a parent has to stay home from work to care for a sick child. The current injectable vaccine is rarely used in healthy children, although children have the highest attack rate of influenza and play a major role in the spread of an influenza epidemic. The current injectable influenza vaccine is occasionally used in children at high-risk of influenza complications due to conditions such as asthma and congenital heart disease, but public health authorities are concerned that coverage rates are below optimal. Our objective is to develop a new market for influenza prevention in healthy children by offering an innovative vaccine to prevent influenza. Because FluMist is delivered as a nasal mist, we believe it would provide an attractive way to immunize children on an annual basis. In addition, FluMist can have an impact in reducing middle ear infections and associated antibiotic use, which increases its value in this population. We believe that pediatricians will recognize the potential advantages of FluMist for children. ADULTS A significant number of the current injectable influenza vaccine doses in the United States are being administered to healthy adults, either via workplace immunization programs or in programs offered through clinics, pharmacies or other retail outlets. There are approximately 100 million adults in the United States between 19 and 49 years of age who the CDC or the ACIP does not classify as being at high risk for influenza complications, but who still could be susceptible to influenza. In addition, there are approximately 42 million persons age 50 to 64 who the ACIP and the AAFP consider at high risk for influenza. Our objective is to expand the current market for influenza prevention by offering a unique alternative for individuals who value flu prevention. We believe that immunization programs using FluMist may also increase the convenience of vaccination compared to the current influenza injection. COLLABORATIVE AGREEMENTS Our strategy for the development, clinical trials, manufacturing and commercialization of some of our products includes maintaining and entering into various collaborations with corporate partners, licensors, licensees and others. To date we have entered into the following collaborative agreements: FLUMIST AGREEMENTS Wyeth Lederle Vaccines We signed a worldwide collaboration agreement with Wyeth in January 1999 for the marketing, promotion, sales, distribution and development of FluMist, which became effective in March 1999. Under this agreement, we granted Wyeth exclusive worldwide rights to market FluMist, excluding Korea, Australia, New Zealand and some South Pacific countries. We and Wyeth will co-promote FluMist in the United States, while Wyeth will have the exclusive right to market the product outside the United States. Wyeth will hold the marketing rights for an initial term of seven years from the first commercial sale of FluMist in the United States and an initial term of eight years from the first commercial sale of FluMist outside the United States, with an option to extend its rights both in the United States and internationally to up to 11 years. Extending both U.S. and international rights for the full 11 years would trigger payments to us by Wyeth in excess of $140.0 million. We and Wyeth also will collaborate on the regulatory, clinical and marketing programs for FluMist. In March 1999, we received a cash payment of $15.0 million from Wyeth under the collaboration agreement. On January 2, 2001, we received an additional $15.5 million upon acceptance by the FDA for filing of our BLA on December 28, 2000, and we will receive an additional $20.0 million upon FDA marketing approval for FluMist. We also can earn an additional $20.0 million in milestone payments for advisory body recommendations and expanded label claims. In addition, we are entitled to receive a $10.0 million payment for the submission of a license application in Europe, a $27.5 million payment for the approval of a liquid formulation of FluMist and up to $50.0 million upon licensure in international regions. Compensation for achieving additional development, supply and regulatory milestones is included in the agreement terms and may total up to $67.5 million. Wyeth committed to provide up to $40.0 million in financing to us, $20.0 million of which has been provided to date. The remaining $20.0 million is available upon FDA marketing approval for FluMist. The total potential value for the license fees, milestones, financing support and term extension options that we could receive exceeds $400.0 million. In addition, to support 18 19 inventory buildup for 2001, Wyeth paid us $10.0 million in January 2001 as an advance against future amounts that Wyeth will owe us under our agreement. Wyeth will distribute FluMist and record all product sales. In addition to the payments mentioned above, we anticipate that we will receive approximately 40 percent of FluMist revenues from Wyeth in the form of product transfer payments and royalties. These payments are higher in the United States than internationally. We will incur expenses to supply and co-promote FluMist. Wyeth will share in the clinical development expenses for FluMist. In addition, Wyeth has agreed to spend up to $100.0 million for advertising and promotion of FluMist over the first three years of commercialization in the United States. CSL Limited In June 1998, we and CSL Limited , or CSL, of Victoria, Australia jointly announced that we will collaborate on the development, sale and distribution of FluMist in Australia, New Zealand and some countries in the South Pacific. We and CSL will jointly carry out additional clinical trials in Australia for FluMist. Under the agreement, CSL will sponsor the marketing application with the Therapeutic Goods Administration, Australia's equivalent to the FDA. CSL will have exclusive rights to sell and distribute FluMist in these countries, and we will share profits from these sales. We also will benefit from expansion of CSL's current flu vaccine in pediatric and healthy adult market segments following the approval to market FluMist in the territory. In addition, CSL has agreed, under an option agreement, to grant warrants to us to purchase CSL common stock upon CSL's attainment of certain milestones. National Institute of Allergy and Infectious Diseases -- Cold-Adapted Influenza Vaccine Following a competitive application process, we entered into a five-year Collaborative Research and Development Agreement in March 1995 with the NIAID of the NIH to conduct clinical trials of our cold-adapted influenza vaccine. Wyeth-Ayerst licensed certain rights to the vaccine from the NIH in 1991 and was developing it for sale in collaboration with the NIH until relinquishing its rights in 1993. We have obtained from the NIH and the University of Michigan exclusive rights to trial results and data from the work at the Vaccine Treatment Evaluation Units, or VTEUs, and Wyeth-Ayerst. The NIH has agreed to support the trials by enrolling subjects in its network of VTEUs. In addition, we acquired exclusive commercial rights to data generated from all previous clinical trials conducted by the NIH and Wyeth-Ayerst using the vaccine. In June 2000, we extended the Collaborative Research and Development Agreement through June 2003. In September 2000, we were awarded a $2.7 million Challenge Grant from the NIAID to develop a vaccine to protect against possible pandemic influenza virus strains. We also will commit $2.7 million over the three-year duration of the grant. Challenge Grants are milestone-driven awards, meaning we must achieve pre-determined product goals during the development process in order to receive the funds. Under the grant, we will develop vaccine candidates against potential pandemic strains of influenza. The vaccine candidates will utilize the intranasal delivery technology currently used for FluMist. University of Michigan In February 1995, we entered into a materials transfer and intellectual property agreement with the University of Michigan. Pursuant to the agreement, the University of Michigan granted us exclusive worldwide rights to certain intellectual property and technology relating to the cold-adapted influenza vaccine and proprietary master donor strains of influenza viruses useful in the production of vaccines against influenza and potentially for gene therapy and other uses. Specifically, we obtained the exclusive right to develop, manufacture, use, market and sell products incorporating any such intellectual property or using the master strains worldwide. In consideration for the rights granted to us, we: - made an initial cash payment to the university; - agreed to pay a royalty to the university on net sales of products subject to the license; - entered into a sponsored research agreement with the university for a period of at least two years; and - issued to the university 1,323,734 shares of Series B Preferred Stock, which automatically converted into 264,746 shares of our common stock at the time of our initial public offering. The original agreement had also provided that, in the event that we receive approval to commercially market a product based on the university's technology, we would issue a warrant to the university to purchase shares of our common stock at a price of $10.00 19 20 per share, for a number of shares to be based on 1.25 percent of the common stock outstanding on the date of the first commercial sale of the product incorporating the university's technology. In February 2000, we amended our agreement with the University of Michigan to accelerate the issuance of a warrant to the university. As a result of this amendment, we granted the university a fully-vested, non-forfeitable warrant to purchase 340,000 shares of our common stock at an exercise price of $10.00 per share. Upon the date of the first commercial sale of FluMist, if we have more than 27.2 million shares outstanding, we will issue an additional warrant allowing the university to purchase 1.25 percent of the excess shares on the same terms. Pursuant to the agreement, we are required to grant to the university an irrevocable, royalty-free license for research purposes, or for transfer to a subsequent licensee should the agreement be terminated, to (1) all improvements developed by us, our affiliates or sublicensees, whether or not patentable, relating to delivery mechanisms and processes for administration and manufacturing of products, as well as packaging, storage and preservation processes for the master strains and (2) all new technical information acquired by us, our affiliates or sublicensees relating to the master strains and products. The agreement terminates upon the later of (1) the last to expire of the university's patents licensed to Aviron or (2) 20 years from the date of first commercial sale of a product incorporating the university's technology. We have the right to terminate for any reason upon 12 months notice to the university. OTHER COLLABORATIVE AGREEMENTS National Institute of Allergy and Infectious Diseases -- Cytomegalovirus, or CMV In June 2000, we entered into a clinical trial agreement with the NIAID of the NIH which allows the NIAID to conduct clinical trials at various locations with our CMV vaccine candidates. National Institute of Allergy and Infectious Diseases -- Parainfluenza Virus Type 3,or PIV-3 In May 1996, we obtained exclusive rights from the NIAID of the NIH to certain biological materials and clinical trial data for our PIV-3 program. The NIH granted us exclusive rights in specific strains of bovine parainfluenza virus to develop, test, manufacture, use and sell products for vaccination against human parainfluenza virus and other human and animal diseases. In addition, we obtained from the NIAID the right to incorporate by reference an existing IND and certain data relating to the licensed materials. The NIH retained rights to the licensed materials on behalf of the United States government to conduct research and to grant research licenses to third parties under certain circumstances. In return for the rights granted by NIH, we will make payments to NIH on the achievement of specified milestones and will make certain royalty payments to NIH. Unless otherwise terminated, the agreement will terminate on cessation of commercial sales of licensed products by our sublicensee or us. We have the unilateral right to terminate the agreement in any country upon providing 60 days notice to NIH. SmithKline Beecham Biologicals S.A. In October 1995, we signed an agreement with SmithKline Beecham Biologicals S.A., or SBB, a division GlaxoSmithKline, to collaborate on our Epstein-Barr virus, or EBV, vaccine technology. Under the terms of our agreement, we granted SBB an exclusive license to produce, use and sell inactivated EBV vaccines incorporating our technology for prophylactic and therapeutic uses on a worldwide basis, except in Korea. In addition, SBB obtained a right of first refusal to an exclusive, worldwide license, excluding Korea, under any intellectual property rights relating to any live EBV vaccine technology developed or controlled by us during the term of this agreement. We have retained the right to co-distribute a monovalent formulation of the EBV vaccine in the United States and to have SBB supply vaccine. SBB agreed to fund research and development at Aviron related to the EBV vaccine, in specified minimum amounts, during the first two years of this agreement. SBB made an initial up-front payment to us and agreed to make additional payments upon the achievement of certain product development milestones; the first such milestone payment was made in 1997. The initiation of a Phase 2 clinical trial in October 2000 triggered a $1.5 million milestone payment to us. Under an agreement between us and ARCH, ARCH receives 25 percent of this and all future milestone payments and royalties that we receive from SBB. We also are entitled to royalties from SBB based on net sales of the vaccine. Unless otherwise terminated, the agreement will expire on a country-by-country basis 20 21 upon the expiration or invalidation of the last remaining patent covered by the agreement or 10 years from the date of first commercial sale of the vaccine, whichever is later. SBB may terminate the agreement with respect to any country at any time. Sang-A Pharm. Co., Ltd. In May 1995, we entered into a Development and License Agreement with Sang-A Pharm. Co., Ltd., or Sang-A. We granted to Sang-A exclusive clinical development, manufacturing and marketing rights in Korea for specified products developed by Aviron, including vaccines for influenza, cold-adapted and recombinant, EBV, CMV, HSV-2 and RSV. In January 1997, Sang-A declared bankruptcy and continues to operate while in receivership. In November 2000, we terminated the portion of the contract relating to FluMist. We are unable to predict what further long-term effect the bankruptcy may have on Sang-A and on our remaining agreement with Sang-A. The Mount Sinai School of Medicine In February 1993, we entered into a technology transfer agreement with The Mount Sinai School of Medicine, or Mount Sinai. Under this agreement, Mount Sinai assigned to us all of its right, title and interest in and to certain patents and patent applications, as well as all associated know-how and other technical information relating to recombinant negative-strand RNA virus expression systems and vaccines, attenuated influenza viruses and certain other technology. Mount Sinai also granted to us (1) an option to acquire any improvements to the inventions disclosed in the assigned patents and patent applications thereafter developed by Mount Sinai and (2) a right of first negotiation for a license or assignment to additional related technology. In consideration for these rights, we issued to Mount Sinai 35,000 shares of our common stock. We also issued to Mount Sinai four warrants to purchase up to a total of 45,000 shares of our common stock, each exercisable for a term of five years commencing upon the occurrence of milestone events. ARCH Development Corporation In July 1992, we entered into a license agreement with ARCH Development Corporation, or ARCH, pursuant to which we obtained an exclusive, worldwide commercialization license, with the right to sublicense, to patent rights and related intellectual property and materials pertaining to the herpes simplex viruses, EBV and various recombinant methods and materials. In return for the rights granted to us under this agreement, we will make payments to ARCH upon the achievement of certain milestones in the development of products covered by the license and will pay royalties to ARCH on net sales of such products. ARCH also granted us rights to improvements and additional related technology. The term of this agreement extends until the expiration of the last-to-expire patent rights covered under the license. ARCH had asserted an interpretation of the financial terms of this agreement, relating to the license by us of its EBV technology to SBB and to our sublicense of certain HSV technology to NeuroVir, both of which would have required us to pay ARCH a portion of any future or past payments, including sublicense fees and milestone payments that we received under the SBB and NeuroVir agreements. On May 8, 2000, we executed a Settlement Agreement and Release with ARCH whereby, among other provisions, we made a settlement payment to ARCH in the form of a cash payment of $312,500 and a warrant to purchase 14,077 shares of our common stock. We also agreed to pay ARCH 25 percent of future milestone and royalty payments received from SBB and 50 percent of future royalty payments and all milestone payments received from NeuroVir. In addition, the settlement agreement provides for the termination of our option rights to obtain future improvements and later developments from ARCH. A separate agreement with NeuroVir sets the amount of the royalty to be paid pursuant to the NeuroVir license agreement. The settlement agreement also provides for ARCH to receive one-half of our ownership interest in Series A preferred shares of NeuroVir stock and one-half of our ownership interest in a warrant to acquire shares of NeuroVir common stock, which was issued to us as part of the original NeuroVir license agreement. EMPLOYEES As of December 31, 2000, we had 462 employees. 21 22 BUSINESS RISKS You should carefully consider the risks described below before making a decision to invest in our company. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. RISKS RELATED TO FLUMIST The most significant risks we currently face are those related to the development and commercialization of FluMist. All of our potential near-term revenues are dependent on the commercialization of FluMist. Because of the seasonality of influenza, FluMist must be available for sale in the third or fourth quarter of the year for us to achieve revenues for that season. Delay in availability of FluMist in the initial year of commercialization or in subsequent years could cause us to lose revenues for an entire influenza season and require us to raise additional capital to cover the costs of additional research and development, manufacturing and ongoing fixed costs. In addition, we may incur significant losses as a result of our decision to begin manufacturing FluMist at commercial scale for use in the 2001 -- 2002 influenza season before receipt of marketing approval from the FDA. IF THE FDA FINDS THAT OUR BLA FOR FLUMIST DOES NOT SUPPORT APPROVAL FOR MARKETING, COMMERCIALIZATION OF FLUMIST MAY BE DELAYED BY ONE OR MORE INFLUENZA SEASONS. On December 28, 2000, the FDA accepted our BLA for FluMist for filing. If the FDA finds that the validation, clinical or other required data in our BLA is insufficient, the FDA could require corrective action or additional data, which could delay or prevent approval. In November 1999, we announced that we would not submit a BLA for FluMist in 1999 due to inconsistent test results observed during the manufacturing process validation exercises. We concluded after investigation that the inconsistencies were only associated with certain assays, or tests, and not associated with FluMist or the manufacturing process. Although we believe we have addressed these issues to ensure consistent assay performance at commercial scale, the FDA may find our BLA for FluMist does not support approval for marketing for other reasons. We are initially seeking FDA approval for use of FluMist in healthy children and healthy adults. The FDA may not find our clinical data adequate to support use in any particular group and may exclude any segment of the population. The FDA may request additional clinical data to support the safety or efficacy of FluMist in some or all of those population segments. We may be required to commence and complete additional clinical trials to generate additional data to support product approval for one or more of our target populations, which may lead to substantial delay in FluMist approval or prevent it from being approved for any of those population segments. Moreover, although FluMist has been generally well tolerated in clinical trials to date, we are continuing to conduct clinical trials and cannot exclude the possibility that the clinical profile of the product will change in the future. IF THE FDA DETERMINES THAT OUR MANUFACTURING FACILITIES ARE NOT ADEQUATE, EITHER BEFORE OR AFTER RECEIPT OF FDA MARKETING APPROVAL, WE MAY LOSE THE ABILITY TO MANUFACTURE AND SELL FLUMIST FOR ONE OR MORE INFLUENZA SEASONS. As part of the BLA approval process and on an ongoing basis thereafter, the FDA is likely to inspect each of the facilities involved in manufacturing FluMist. The FDA may find deficiencies in the facilities or processes that may delay or prevent FluMist marketing approval. Even if the FDA approves FluMist for marketing, the FDA could find deficiencies during future inspections, and we may lose the ability to manufacture and sell FluMist for one or more influenza seasons. Several key stages of the FluMist manufacturing process take place in a facility located in the U.K. This facility was formerly owned by Celltech Medeva, or Medeva, the international marketing arm of Celltech Group Plc, but has since been acquired by Evans Vaccines Ltd., or Evans, a division of PowderJect Pharmaceuticals Plc. In October 2000, we leased from Evans the section of the facility where the manufacture of FluMist takes place so that we can have direct control over the FluMist manufacturing operations. In November 1999, Medeva notified us that it received a warning letter from the FDA regarding the entire facility. Some of the comments in the letter referred to the general utility systems in the facility, such as water and clean steam, which are shared by us and are used to prepare supplies used in the manufacture of FluMist. We have been assured by Evans that it has taken or is taking the necessary steps to bring its systems and facility into compliance, and it is working with the FDA to fulfill that objective. We believe that Evans has taken the necessary steps to bring the relevant general utility systems into compliance. However, we have also begun to implement plans to minimize our dependence on these utilities. Those plans, some of which will require FDA approval, involve the use of supplies which will reduce our reliance on the shared utility systems at Evans. 22 23 IF WE ARE UNABLE TO PERFORM THE COMPLEX ANNUAL UPDATE OF THE FLUMIST FORMULATION FOR NEW INFLUENZA STRAINS IN A TIMELY MANNER, OUR SALES FOR THAT YEAR WILL BE LIMITED OR WE MAY HAVE NO SALES AT ALL. Early each year, the FDA determines which influenza strains will be included in the upcoming season's vaccines. After the FDA selects the strains, we will have approximately six months to include the selected strains and manufacture FluMist for use in the upcoming influenza season. Major factors that may delay availability of FluMist each year are: - the FDA may delay its selection of strains for a given influenza season; - we may experience difficulty or delay in the technically demanding process we follow each year to update the formulation of FluMist; - the FDA could require as a release test a brief clinical trial designed to confirm the safety and/or activity (immune response) of the vaccine including the new strains selected for that particular year; and - as with other vaccine manufacturers, the FDA will conduct tests on each lot of vaccine to enter the market. If for some reason these tests are delayed, it could have a material adverse effect on supplies of FluMist to the market. IF WE HAVE DIFFICULTIES WITH OUR MANUFACTURING PROCESS, WE MAY NOT HAVE SUFFICIENT QUANTITIES OF VACCINE TO ASSURE AVAILABILITY. We may not have sufficient quantities of vaccine in time to assure availability for the season due to problems with updated strains or performance of suppliers. Following inoculation with our updated influenza strains, bulk vaccine is harvested from special hens' eggs. We are currently dependent on a single supplier for an adequate and timely supply of eggs. We may have difficulty with the blending, filling and packaging of FluMist. The bulk vaccine for three strains of influenza must be diluted and blended together prior to filling the nasal spray device. We depend upon a single supplier for our nasal spray device. We also depend upon our packaging contractor for packaging of the vaccine. The FluMist manufacturing process is labor intensive and must be conducted under strict controls and tight timelines. The vaccine is subject to strict quality control testing during all phases of production and prior to release. Any quality control testing failures could lead to a reduction in the available supply of FluMist. WE DO NOT HAVE EXPERIENCE IN MANUFACTURING FLUMIST AT A SUSTAINED COMMERCIAL SCALE AND MAY ENCOUNTER UNANTICIPATED DIFFICULTIES IN ITS MANUFACTURE. As anticipated with any business scale-up, our costs associated with the manufacture of FluMist at a sustained commercial scale initially will be high. We may not be able to manufacture FluMist as planned and benefit as anticipated from economies of scale. Prior to our October 2000 lease of the U.K. facility, we had arrangements with an experienced vaccine manufacturer to produce FluMist on a contract basis. Although we leased the U.K. manufacturing facility in order to have direct control over the FluMist manufacturing and regulatory approval process, and although we hired the approximately 100 Evans employees who have been responsible for FluMist manufacturing, we have not manufactured FluMist, or any product, at a sustained commercial scale. IT IS TIME-CONSUMING AND EXPENSIVE TO INCREASE MANUFACTURING CAPACITY, WHICH MAY LEAD TO UNEVEN REVENUE GROWTH. We initially may be capacity-constrained in our supply of vaccine. It is time-consuming and expensive to increase manufacturing capacity. In order to secure future production capacity, we may extend and expand existing arrangements, collaborate with other third parties or establish additional manufacturing facilities. Using an alternative supplier or building a new facility would require a substantial amount of funds and additional clinical trials and testing. We cannot be sure that an additional source of supply will be established on a timely basis, or at all. If we are unable to increase our manufacturing capacity, any annual revenue growth may be uneven. THE SUCCESS OF FLUMIST IS HIGHLY DEPENDENT ON OUR PARTNER, WYETH LEDERLE VACCINES, OR WYETH, FOR MARKETING, PROMOTION, SALES AND DISTRIBUTION ACTIVITIES. We have entered into an exclusive agreement with Wyeth to co-promote, sell and distribute FluMist in the United States. We believe that for FluMist to be widely adopted, the efforts of an experienced pharmaceutical sales force are needed. If Wyeth fails to 23 24 devote appropriate resources to promote, sell and distribute FluMist, sales of FluMist could be reduced. Distribution of FluMist will be challenging for several reasons. First, influenza vaccine is a seasonal product with a shipping period between August and January. Second, FluMist is a frozen product and must remain frozen under recommended storage conditions prior to use. Although Wyeth has a distribution system that supports frozen vaccines, if it does not manage these distribution challenges, our revenues could be reduced. Furthermore, if we do not achieve timely licensure for the sale of frozen FluMist in the United States, Wyeth has the option to terminate our agreement. Wyeth currently participates in the development of a liquid formula of FluMist, which will be important if FluMist is to be accepted outside of the United States. Wyeth will also participate in the manufacturing, promotion, sales and distribution of the liquid formulation. If Wyeth does not devote sufficient resources to the development and commercialization of this formulation, its commercial availability will be delayed. The aggregate amount of license fees, milestone payments and financing support due from Wyeth to us under this agreement could exceed $400.0 million, $50.5 million of which we have received to date. If Wyeth breaches or terminates its agreement with us or otherwise fails to conduct its FluMist-related activities in a timely manner or if there is a dispute about its obligations, we may lose some or all of the remaining payments and may need to seek another partner. Additionally, the manufacturing and sale of FluMist could be delayed, reduced or become substantially more expensive for us to achieve. IF MEDICAL ADVISORY BODIES, DOCTORS AND OTHER HEALTH CARE PROVIDERS DO NOT RECOMMEND FLUMIST, ITS MARKET OPPORTUNITY WILL BE LIMITED. We believe recommendations from advisory bodies such as the ACIP of the CDC and the American Academy of Pediatrics will be important to encourage doctors and other health care providers to recommend FluMist. If these bodies do not recommend FluMist, the product's market opportunity will be limited. We will also need to educate doctors and other health care advisors of the safety and clinical efficacy of FluMist and its potential advantages over other influenza vaccines. WHETHER OR NOT DOCTORS, OTHER HEALTH CARE PROVIDERS OR MEDICAL ADVISORY BODIES RECOMMEND FLUMIST, IF THE MARKET DOES NOT ACCEPT FLUMIST, OUR SALES WILL BE REDUCED. FluMist acceptance may be limited by a number of factors, including: - perceived clinical benefit of competing influenza vaccines, including the flu shot, and other influenza-related products; - unfavorable publicity concerning other vaccines; - pricing of FluMist; - difficulties in establishing consumer access to FluMist; - reimbursement policies of government and third-party payors; - side effects, such as the runny nose, sore throat or fever seen in some clinical trial participants; and - the requirement of frozen storage capacity by those distributing and administering the vaccine. WE FACE COMPETITION FROM COMPANIES WITH SUBSTANTIAL FINANCIAL, TECHNICAL AND MARKETING RESOURCES WHICH COULD SERIOUSLY LIMIT OUR FUTURE REVENUES FROM FLUMIST. FluMist will be competing against the flu shot, which is sold by established pharmaceutical companies, including Wyeth, Evans and Aventis-Pasteur, Inc. 24 25 We also operate in a rapidly evolving field. Other companies are working to improve the clinical profile of flu shots. In addition, we are aware of efforts to develop non-injectable influenza vaccines that would be more directly competitive with FluMist. For example: - a nasally administered inactivated vaccine is being developed by Biovector Therapeutics, S.A. and Biochem Pharma, Inc. which has been licensed to SmithKline Beecham Biologicals, S.A.; - a nasally administered inactivated vaccine has been developed by Swiss Serum Berna and licensed for sale in Switzerland; and - a nasally administered live influenza vaccine has been developed and used in Russia. In 1999, the FDA approved two new products for the treatment of influenza: zanamivir and oseltamivir. Zanamivir is marketed as Relenza and sold by Glaxo Wellcome Plc, and oseltamivir is marketed as Tamiflu and sold by Roche Holdings AG, or Roche. These products inhibit the ability of the influenza virus to replicate. Both zanamivir, delivered via an inhaled powder, and oseltamivir, a pill, were approved for influenza treatment. When administered within two days of contracting influenza, zanamivir and oseltamivir may reduce the duration of influenza by approximately one day. Clinical data also has shown that taking zanamivir or oseltamivir twice daily for a period of time during the influenza season can have a preventative effect. Recently, Roche received approval to market and sell oseltamivir for the prevention of influenza in individuals 13 years and over. THE FLUMIST MASTER DONOR STRAINS ARE NOT PROTECTED BY PATENTS AND IF THE STRAINS ARE DUPLICATED, THIRD PARTIES MAY BE ABLE TO DEVELOP, MARKET AND SELL A COMPETING VACCINE. We have no issued patents covering the FluMist master donor strains. Our rights to the master donor strains are substantially based on (1) an exclusive worldwide license of materials and intellectual property from the University of Michigan, which owns the master donor strains from which our vaccine is derived and (2) an exclusive license of know-how and clinical trial data from the National Institutes of Health, or NIH. Neither the University of Michigan nor the NIH has been issued any patents covering the master donor strains. A third party may gain access by some means to the University of Michigan master donor strains and attempt to reproduce FluMist or develop another live virus influenza vaccine that might be comparable to FluMist in terms of safety and effectiveness. WE MAY INCUR SIGNIFICANT LOSSES AS THE RESULT OF OUR DECISION TO MANUFACTURE FLUMIST FOR COMMERCIAL USE BEFORE RECEIVING LICENSURE. The manufacturing of FluMist is a complex process, containing multiple steps over a period of many months. Therefore, in anticipation of licensure in time to participate in the 2001 -- 2002 influenza season, we already have begun manufacturing FluMist for commercial use. The costs associated with our decision to manufacture will increase at an increasing rate as the year progresses. However, there is no guaranty that FluMist will be licensed for sale during any portion of the 2001 -- 2002 influenza season, if at all. If the product is not approved for marketing in time to allow a launch during the 2001 -- 2002 influenza season, we will not receive any revenue from FluMist sales during the same influenza season. Furthermore, because one or more viral strains used in all influenza vaccines may change annually, we may not be able to utilize, during a subsequent influenza season, any components of FluMist that we are currently manufacturing. WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE. FAILURE TO RAISE ADDITIONAL CAPITAL COULD DELAY DEVELOPMENT OF FURTHER IMPROVEMENTS OF FLUMIST AND OF OUR OTHER POTENTIAL PRODUCTS. Our operations to date have consumed substantial and increasing amounts of cash. As of December 31, 2000, we have an accumulated deficit of approximately $273.4 million. The negative cash flow from operations is expected to continue and to accelerate for at least the next year. The commercialization of FluMist requires substantial funds for manufacturing, continued clinical trial efforts and other commercialization activities. During 2000, our research and development expenses were $80.5 million and our general, administrative and marketing expenses were $13.8 million. Our research and development expenses for the two preceding years ended December 31, 1998 and 1999 were approximately $46.6 million and $68.2 million, respectively. We expect to continue to incur significant operating expenses. We also expect to spend a substantial amount to develop a liquid formulation of FluMist, as well as other changes in the product. In addition, we expect to continue funding the research, preclinical testing and clinical trials necessary to develop our early-stage products. As of December 31, 2000, we have raised $446.1 million, net of underwriters discounts and expenses, since inception through financing activities, such as sales of equity, convertible debt securities, and other debt financing, which includes $183.1 million raised 25 26 from debt and equity financing during 2000. During the first quarter of 2001, we raised $392.2 million from the sale of equity and debt, net of underwriters discounts and estimated expenses. Our current revenues are comprised primarily of amounts earned as milestone payments and expense reimbursements under our FluMist collaboration agreement with Wyeth, and other revenues from other contracts and research grants, as was the case in 2000, during which revenues were $32.2 million. Our future revenues will depend largely on the success of these collaboration arrangements, contracts and research grants. With respect to our collaboration agreement with Wyeth, our rights to receive milestone payments are all "event-driven." These payments are earned only upon our successful completion of specific activities. We cannot be certain whether these milestone payments will be realized. Under our agreement with Wyeth, we received a milestone payment in the amount of $15.5 million, which became due upon the acceptance by the FDA for filing of our BLA on December 28, 2000. Another milestone payment of $20.0 million is due upon obtaining FDA marketing approval for FluMist. The timing of receipt of this payment will depend on the progress of the regulatory review of the BLA. Additional milestone payments related to the application submission and approval of FluMist for marketing in international markets, for expansions in labeling claims, for policy recommendations and for the liquid formulation are dependent upon future governmental approvals or recommendations by medical advisory bodies, and we will not receive these payments until these activities are successfully completed at some time after 2001. Additionally, due to the seasonal nature of FluMist, cash will not be generated from product sales until late each year or early the following year. Accordingly, a significant amount of working capital will be required each year to provide for the payment of expenditures associated with the manufacturing of inventory and other operating and capital needs in advance of any product sales. Currently, we expect our existing cash, cash equivalents, short term investments and proceeds generated from our collaborative arrangements and financing commitments will enable us to maintain our current and planned operations at least through 2002. Our future capital requirements will depend upon many factors, including: - the ability to successfully complete activities necessary to earn milestones under our collaborative agreements and the timing of receipt of these milestones; - the time and costs involved in obtaining regulatory approvals; - the ability to successfully launch FluMist in the United States; - continued development of our technology and vaccine programs; - the size and complexity of these programs; - our ability to establish and maintain collaborative arrangements; - progress with preclinical testing and clinical trials; - the cost involved in preparing, filing, prosecuting, maintaining and enforcing patent claims; - the cost of constructing additional manufacturing and product development facilities; and - product commercialization activities. If adequate funds are not available, whether through additional funding or our current capital sources, such as our collaboration arrangements, the commercialization of FluMist and the development of a liquid formulation of FluMist may be delayed, and we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs for our other products. We may also be required to obtain funds through collaborative agreements with others that may require us to relinquish rights to certain of our technologies, product candidates or products we would otherwise seek to develop or commercialize ourselves. If additional funds are raised by issuing equity or convertible securities, the percentage ownership in Aviron held by existing stockholders will be reduced. 26 27 IF WE ARE UNABLE TO ATTRACT, RETAIN AND MAINTAIN GOOD RELATIONS WITH QUALIFIED PERSONNEL IN EACH OF OUR THREE LOCATIONS, OUR ABILITY TO COMMERCIALIZE FLUMIST AND DEVELOP A LIQUID FORMULATION OF FLUMIST MAY BE DELAYED. Attracting and retaining significant additional qualified personnel will be critical to our success. To pursue the development and commercialization of FluMist, we will be required to hire additional qualified personnel at appropriate locations, especially those with expertise in development, commercial-scale manufacturing and quality functions. Expansion in these areas is also expected to require the addition of management personnel and the development of additional expertise by existing management personnel. We face competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies. Also, some Aviron employees are members of labor unions. Labor actions by these unions and/or these employees could require us to cease or curtail operations at affected locations. SOME OF OUR CRITICAL MANUFACTURING FACILITIES FOR FLUMIST ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES, AND THE OCCURRENCE OF AN EARTHQUAKE, OR OTHER CATASTROPHIC DISASTER, COULD CAUSE DAMAGE TO OUR FACILITIES AND EQUIPMENT, WHICH COULD REQUIRE US TO CEASE OR CURTAIL OPERATIONS. The first of three steps in the FluMist manufacturing process takes place at our facility in Mountain View, California. This manufacturing facility is located in a known earthquake fault zone. The second step in the FluMist manufacturing process takes place at our facility in the U.K. and the third step in the process takes place at our facility in Philadelphia, Pennsylvania. Should an earthquake or other type of disaster, including fire, flood, power loss, communication failure or similar event, disable any of these facilities, there are no readily available alternative facilities which meet the current good manufacturing practice standards required by the FDA. Therefore, should any of these facilities be disabled, the ability to manufacture and sell FluMist could be lost for one or more influenza seasons. FAILURE TO INTEGRATE EFFECTIVELY THE ACTIVITIES OF OUR NEW U.K. OPERATIONS WITH OUR EXISTING OPERATIONS IN PENNSYLVANIA AND CALIFORNIA COULD SIGNIFICANTLY HINDER OUR ABILITY TO EFFECTIVELY DEVELOP, MANUFACTURE AND COMMERCIALIZE FLUMIST AND ULTIMATELY GENERATE REVENUE. In October 2000, we restructured the agreement previously in place with Evans for bulk manufacture of FluMist in the Speke, U.K. facility. The new agreement, which runs through June 2006, transferred responsibility for bulk manufacture of FluMist and approximately 100 Evans employees to Aviron UK Limited, our wholly-owned U.K. subsidiary. The coordination of operations at our three sites is critical to manufacturing FluMist. Our management must expend significant effort in order to integrate the people, processes, technology and activities of this new site into our existing operations. However, our management, as a team, has limited experience in coordinating the operations of a substantial foreign subsidiary with domestic operations. If our California, Pennsylvania and U.K. locations do not integrate effectively, the development, manufacture and commercialization of FluMist could be negatively impacted. OTHER RISKS RELATED TO OUR COMPANY SAFETY OF VACCINES CAN ONLY BE DETERMINED AFTER WIDESPREAD USE IN THE POPULATION OVER A PERIOD OF YEARS. A vaccine could be licensed by the FDA and still be associated with adverse events which reduce or eliminate revenue. For example, in 1998 the FDA approved the use of a vaccine to prevent infant diarrhea, but the product was subsequently withdrawn from the market due to a possible link between a serious bowel disorder and the vaccine. This adverse event occurred at a frequency that was not detectable in a typical clinical development program. In addition, there are a number of theoretical risks related to live virus vaccines, including changing back to the naturally occurring, or wild-type virus, and re-combining to form a new strain which may cause disease. In addition, a live virus vaccine retains the potential to spread from a vaccinated individual to an unvaccinated individual. Also, because of the way it works, a weakened live virus could make an individual more susceptible to secondary infection. In addition, a weakened live virus could cause disease resembling a wild-type virus infection in people with an immune system that is not working properly, e.g., because of a pre-existing disease, HIV infection or drug treatment for cancer or organ transplantation. The potential for serious adverse events after introduction to the market is an issue for all vaccines, including FluMist. 27 28 OTHER THAN FLUMIST, OUR PRODUCT CANDIDATES ARE AT EARLY STAGES OF DEVELOPMENT, AND IF WE ARE UNABLE TO DEVELOP AND COMMERCIALIZE THESE PRODUCTS SUCCESSFULLY, WE WILL NOT GENERATE REVENUES FROM THESE PRODUCTS. To date, none of our product candidates has been commercialized. Other than FluMist, all of our product candidates are in early stages of development. We face the risk of failure normally found in developing biotechnology products based on new technologies. Successfully developing, manufacturing, introducing and marketing our early-stage product candidates will require several years and substantial additional capital. Currently, we do not have facilities to manufacture these vaccine product candidates for use in late-stage clinical trials. Moreover, we must demonstrate safety and efficacy and gain regulatory approval for these products. In addition, several companies are developing products that would compete with our early-stage products. WE MAY NOT RECEIVE PATENT PROTECTION FOR OUR POTENTIAL PRODUCTS AND MANUFACTURING PROCESSES. Our success depends to a significant degree upon our ability to develop proprietary products. We seek to protect our technology and potential products, when possible, with patents and trade secrets. Since patent applications in the United States are maintained in secrecy for at least 18 months after filing and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we were the first to make the inventions covered by each of our pending patent applications or that we were the first to file patent applications for these inventions. The patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions. Therefore, the breadth of claims allowed in biotechnology and pharmaceutical patents, or their enforceability, cannot be predicted. We cannot be sure that any of our owned or licensed patents or patent applications will issue or, if issued, will not be invalidated or circumvented, or that the rights granted by them will provide any protection or competitive advantages to us. We own or have exclusive licenses to various issued patents and pending patent applications both in the United States Patent and Trademark Office and in several foreign patent offices. We attempt, when possible, to obtain exclusive patent protection covering each potential product we are developing. There can be no assurance that each product we are developing will be protected by or protectable by issued patents in any or all countries in which we intend to market the product if approved for sale by regulatory authorities. We have no issued patents covering the FluMist master donor strains. Our rights to the master donor strains are substantially based on (1) an exclusive worldwide license of materials and intellectual property from the University of Michigan, which owns the master donor strains from which our vaccine is derived and (2) an exclusive license of know-how and clinical trial data from the NIH. We have no issued patents covering the bovine parainfluenza strain we are developing. Our rights to the bovine parainfluenza strain are substantially based on an exclusive, worldwide Biological Materials License of materials, clinical data and research information from the United States Public Health Service. We do have issued patents and/or pending patent applications in the United States and abroad which we believe will provide patent protection for our cytomegalovirus, herpes simplex virus, respiratory syncytial virus, or RSV, and recombinant parainfluenza virus type-3, or PIV-3, program technologies. The European Patent Office has informed us of its intention to deny claims relating to methods and compositions of recombinant non-segmented negative-strand RNA viruses contained in one of our granted European patents. Although this decision will not affect our FluMist cold-adapted influenza product, it may affect the European patent protection afforded our other vaccine candidates, including recombinant RSV and recombinant PIV-3. OUR PRODUCTS COULD INFRINGE ON INTELLECTUAL PROPERTY RIGHTS OF OTHERS, CAUSING COSTLY LITIGATION AND THE LOSS OF SIGNIFICANT RIGHTS. Our success will also depend upon us not infringing patents issued to others. A number of pharmaceutical companies, biotechnology companies, universities and research institutions have filed patent applications or received patents in the areas of our research and development programs. Some of these patent applications or patents may limit the scope of claims issuing from our patent applications, prevent certain claims from being issued or conflict in certain respects with claims made under our applications. OUR BUSINESS EXPOSES US TO PRODUCT LIABILITY CLAIMS, AND THE DEFENSE OR LOSS OF ANY SUCH CLAIM COULD BE COSTLY. Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of vaccines. We have obtained clinical trial liability insurance for our clinical trials. We also intend to seek product liability insurance in the future for products approved for marketing. However, we cannot be sure that we will be able to acquire or maintain insurance at a reasonable cost or in sufficient amounts to protect us from liability risks. A successful product liability claim or a series of claims brought against us could seriously harm our business. We intend to seek inclusion of some of our products in the United States National Vaccine Injury Compensation Program, a no-fault compensation program for claims against vaccine manufacturers, which 28 29 administers a trust funded by excise taxes on sales of a number of recommended childhood vaccines. We cannot be sure that this government program will continue or that our proposed vaccines will be included in the program. WE USE HAZARDOUS MATERIALS IN OUR BUSINESS, AND AN ACCIDENT COULD BE COSTLY. Our business activities involve the controlled use of hazardous materials, chemicals, various radioactive substances and viruses. Although we believe that our safety procedures for handling and disposing of these materials comply with state and federal regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result, and any such liability would seriously harm our business. In addition, we may incur substantial costs to comply with environmental regulations if we develop manufacturing capacity. OUR STOCK PRICE CONTINUES TO EXPERIENCE LARGE SHORT-TERM FLUCTUATIONS AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT. The market price of our common stock has fluctuated significantly to date. These price fluctuations have been rapid and severe. The market price of the common stock may fluctuate significantly in response to the following factors, most of which are beyond our control: - variations in our quarterly operating results; - changes in securities analysts' estimates of our financial performance; - changes in market valuations of similar companies; - announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; - additions or departures of key personnel; - future sales of notes and common stock; - announcements by us or our competitors of technological innovations of new therapeutic products, clinical trial results, and developments in patent or other proprietary rights; - announcements regarding government regulations, public concern as to the safety of drugs developed by us or others or changes in reimbursement policies; and - fluctuations in stock market price and volume, which are particularly common among securities of biopharmaceutical companies. WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR EXPECTED STOCK PRICE VOLATILITY. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biopharmaceutical companies have experienced greater than average stock price volatility in recent years and, as a result, have been subject to, on average, a greater number of securities class action claims than companies in other industries. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and divert management's attention and resources, and could seriously harm our business. WE HAVE IMPLEMENTED PROVISIONS IN OUR CHARTER DOCUMENTS THAT MAY ULTIMATELY DELAY, DISCOURAGE OR PREVENT A CHANGE IN MANAGEMENT OR CONTROL OF AVIRON. Provisions of our amended and restated certificate of incorporation and bylaws could make it more difficult for our stockholders to replace or remove our directors, or to effect any corporate action. These provisions include those which: - establish a classified board of directors requiring that members of only one of the three classes of directors be elected at one time; 29 30 - prohibit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; - prohibit holders of less than ten percent of our outstanding capital stock from calling special meetings of stockholders; - prohibit stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; and - establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings. Some of the above provisions may also have possible anti-takeover effects, which may make an acquisition of Aviron by a third party more difficult, even if such an acquisition could be beneficial to our stockholders. Additionally, our share purchase rights plan, commonly referred to as a "poison pill," and the terms of our stock option plans, may discourage or delay a change in control of Aviron. ITEM 2. PROPERTIES We lease approximately 52,800 square feet of office and laboratory space in Mountain View, California. We have leased this space through October 2005 and have two options to extend the lease for successive five-year periods. In addition, we are leasing approximately 41,000 square feet of space in Philadelphia pursuant to our agreement with PCI. We have leased this space through December 2004, with options to extend for up to two additional terms of three years. In February 1999, we entered into a lease agreement for approximately 69,000 square feet of office, laboratory and manufacturing space in Santa Clara, California. We have leased this facility through January 2019, with an option to renew for seven years. In July 1999, we obtained an additional 20,000 square feet of laboratory and office space in a building near our current Mountain View facility under a sublease arrangement through June 2001. In October 1999, we leased an additional 52,000 square feet of space in buildings adjacent to our current Mountain View facility that is covered by the same lease terms as that facility. This facility is being subleased to another party through April 2001. We expect that, after taking possession of this space at the end of the sublease, we will be able to meet our facility needs for office and lab space through 2001. In December 1999, we entered into a five-year lease for an additional 22,500 square feet of office space in Santa Clara, which has been subleased under an arrangement that expired in February 2001. In October 2000, we entered into subleases expiring in June 2006 of the FluMist manufacturing areas in Speke, U.K. and agreed to acquire the remaining 24 years of a 25-year lease of approximately eight acres of land adjacent to the existing site. We intend to utilize an existing 45,000 square foot structure on the property to build a new FluMist manufacturing facility. We expect that we may need to obtain additional space for manufacturing, research and development activities and offices in the future. 30 31 ITEM 3. LEGAL PROCEEDINGS On June 30, 1999, the European Patent Office held oral proceedings in an Opposition filed by American Cyanamid against our granted European Patent No. 0490972 relating to methods and compositions of recombinant negative-strand RNA viruses. At the oral proceedings, the Opposition Division of the European Patent Office informed us of its intent to issue a written opinion that upholds claims limited to recombinant influenza and denies claims generically encompassing negative-strand RNA viruses. This decision will not affect our FluMist cold-adapted influenza product. We intend to appeal the decision insofar as it relates to the denied claims; the appeal will request the Technical Board of Appeals to reverse the decision with respect to the denial of the claims encompassing recombinant negative-strand RNA viruses. There can be no assurance that we will be successful in obtaining claims as originally granted as a result of the appeal. If we do not succeed in the appeal of the claims which encompass negative-strand RNA viruses, in particular non-segmented RNA viruses, it could negatively impact our ability to exclude others from commercializing an RSV or PIV-3 vaccine based on genetically engineered candidates in Europe. On July 8, 1999, a lawsuit entitled Joany Chou v. The University of Chicago, ARCH Development Corp., Bernard Roizman and Aviron was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, or Court, by an individual formerly associated with the University of Chicago. On September 30, 1999, this individual filed an amended complaint against the same defendants. This amended complaint appeared to purport to assert claims of inventorship relating to United States Patent Nos. 5,328,688, 5,795,713 and 5,922,328, their foreign counterparts, and potentially other patents and applications, unjust enrichment, fraud, conversion, breach of fiduciary duty, breach of contract and breach of implied contract. The amended complaint seeks, among other things, money damages, an order correcting the inventorship and ownership of the patents referenced above, disgorgement, a constructive trust, possible injunctive and equitable relief, punitive damages, attorneys' fees, costs and interest. All of the claims appear to relate to patents and patent applications for HSV, and none appear to relate to Aviron's cold-adapted influenza product or technology or any other pipeline products in research or development. On February 18, 2000, the Court granted Aviron's motion to dismiss, thereby dismissing all pending claims made by the plaintiff against Aviron. On April 19, 2000, the plaintiff appealed the Court's ruling. We cannot be sure that we will prevail in the defense of this lawsuit in the event that the plaintiff is able to replead her claims against Aviron, or her appeal is successful in reinstating her claims, or in bringing new claims against Aviron. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the Aviron's security holders during the fourth quarter of the fiscal year ended December 31, 2000. 31 32 PART II. ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCK MATTERS Our common stock is quoted on the Nasdaq National Market under the symbol "AVIR." We commenced quotation on the Nasdaq National Market on November 5, 1996. The following table presents the high and low per share sales prices of our common stock as quoted in the Nasdaq National Market for each period indicated.
COMMON STOCK PRICE ------------------ HIGH LOW ------ ------ YEAR ENDED DECEMBER 31, 1999 First Quarter............................ $26.75 $17.50 Second Quarter........................... 28.75 17.13 Third Quarter............................ 34.06 21.00 Fourth Quarter........................... 28.75 14.81 YEAR ENDED DECEMBER 31, 2000 First Quarter............................ $54.38 $15.00 Second Quarter........................... 35.00 21.00 Third Quarter............................ 59.00 27.56 Fourth Quarter........................... 70.61 46.00
As of March 22, 2001, there were 317 record holders of our common stock. We have never paid any cash dividends on our common stock and do not expect to pay cash dividends for the foreseeable future. RECENT SALES OF UNREGISTERED SECURITIES On October 12, 2000, we sold and issued to Biotech Invest, S.A. 450,000 shares of our common stock, for the total aggregate price of $21.6 million, or $48.00 per share, in a private placement. We agreed to register the shares for resale in approximately six months from the issuance date. No underwriter or placement agent was involved in the transaction. The sale of the shares was made in reliance on Section 4(2) of the Securities Act of 1933, as amended. On October 11, 2000, we granted Evans Vaccines Limited, a division of PowderJect Pharmaceuticals Plc, or Evans Vaccines, warrants to purchase a total of 63,162 shares of our common stock at an exercise price of $47.50 per share. These warrants expire annually at the rate of 10,527 shares per year on October 10, 2001 through 2006. This grant was made as part of the restructuring of our contract manufacturing agreement with Evans Vaccines. No underwriter or placement agent was involved in the transaction. The issuance of warrants was made in reliance on Section 4(2) of the Securities Act of 1933, as amended. 32 33 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following consolidated statement of operations and consolidated balance sheet data are derived from our audited consolidated financial statements. Our audited consolidated financial statements at December 31, 1999 and 2000 and for each of the three years in the period ended December 31, 2000, are included elsewhere in this Form 10-K. You should read our selected consolidated financial data set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes thereto contained elsewhere in this Form 10-K.
YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 1996 1997 1998 1999 2000 -------- -------- -------- -------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Total revenues(2) ................................... $ 1,625 $ 1,477 $ 745 $ 22,232 $ 32,242 Operating expenses: Research and development .......................... 14,997 24,254 46,583 68,212 80,521 Acquisition of in-process research and development ................................ -- -- -- -- 10,904 General, administrative and marketing ............. 4,595 5,978 10,085 13,159 13,849 -------- -------- -------- -------- --------- Total operating expenses .................. 19,592 30,232 56,668 81,371 105,274 -------- -------- -------- -------- --------- Loss from operations ................................ (17,967) (28,755) (55,923) (59,139) (73,032) Interest income, net of interest expense ............ 466 2,253 1,121 (2,731) (4,479) -------- -------- -------- -------- --------- Net loss, before cumulative effect of change in accounting principle .............................. (17,501) (26,502) (54,802) (61,870) (77,511) Cumulative effect of change in accounting principle(2) ...................................... -- -- -- -- (12,750) -------- -------- -------- -------- --------- Net loss, after cumulative effect of change in accounting principle .............................. $(17,501) $(26,502) $(54,802) $(61,870) $ (90,261) ======== ======== ======== ======== ========= Basic and diluted net loss per share: Net loss, before cumulative effect of change in accounting principle .................. $ (7.27) $ (1.94) $ (3.49) $ (3.90) $ (3.74) Cumulative effect of change in accounting principle(2) .................................... -- -- -- -- $ (0.62) -------- -------- -------- -------- --------- Net loss, after cumulative effect of change in accounting principle .................. $ (7.27) $ (1.94) $ (3.49) $ (3.90) $ (4.36) ======== ======== ======== ======== ========= Shares used in computing basic and diluted net loss per share(1) ..................... 2,406 13,684 15,724 15,848 20,715 ======== ======== ======== ======== ========= PRO FORMA AMOUNTS, assuming the accounting change is applied retroactively: Net Loss ......................................... $(17,501) $(26,502) $(54,802) $(74,620) $ (77,511) ======== ======== ======== ======== ========= Basic and Diluted net loss per share ............. $ (7.27) $ (1.94) $ (3.49) $ (4.71) $ (3.74) ======== ======== ======== ======== =========
AS OF DECEMBER 31, --------------------------------------------------------------- 1996 1997 1998 1999 2000 -------- -------- --------- --------- --------- (IN THOUSANDS) CONSOLIDATED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments ....................................... $ 17,872 $ 62,524 $ 88,856 $ 52,316 $ 132,313 Working capital ..................................... 16,411 54,580 79,369 42,215 136,195 Total assets ........................................ 21,592 85,325 120,985 91,694 248,739 Long-term obligations, excluding current portions .......................................... -- -- 100,000 112,666 89,947 Accumulated deficit ................................. (39,935) (66,411) (121,254) (183,279) (273,401) Total stockholders' equity (deficit) ................ 17,947 75,742 8,966 (39,619) 120,586
- ---------- (1) See note 1 of Notes to Consolidated Financial Statements for an explanation of the methods used to determine the number of shares used to compute per share amounts. (2) See note 1 of Notes to Consolidated Financial Statements for an explanation of the change in accounting principle for revenue recognition. 33 34 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Some of the statements in the sections entitled "Business," "Business Risks," "Management's Discussions and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-K constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our or our industry's results, levels of activity or achievements to be materially different from any future results, levels of activity or achievements expressed or implied by such forward-looking statements. Such factors include, among others, those listed under "Business Risk" and elsewhere in this Form 10-K. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "intend," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue," or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, and levels of activity, performance or achievements. Except as may be required by law, we undertake no obligation to publicly update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. GENERAL Since our inception in April 1992, we have devoted substantially all of our resources to our research and development programs. To date, we have not generated any revenues from the sale of products and do not expect to generate any revenues from the sale of products until the third quarter of 2001 at the earliest. We have incurred cumulative net losses of approximately $273.4 million as of December 31, 2000. We expect to incur substantial operating losses through 2001 and may incur losses after 2001. FLUMIST We submitted a BLA for FluMist our investigational cold-adapted influenza vaccine on October 31, 2000 and it is currently under review by the FDA. Following review of the BLA, the FDA will advise us in writing as to what action has been taken and request additional information if needed. Prior to approval for marketing by the FDA, we expect the FDA will inspect each of our manufacturing facilities and convene a meeting of the Vaccines and Related Biological Products Advisory Committee to evaluate the data submitted in our BLA. During October 2000, we restructured our agreement with Evans in order to gain direct control over FluMist manufacturing operations. We obtained responsibility for bulk manufacture of FluMist in Evans' Speke, U.K. facility, hired approximately 100 Evans employees who had been working on FluMist, and entered into subleases through June 2006 for the FluMist manufacturing areas on the existing site. In connection with the restructuring of our manufacturing agreement, we made an initial payment of $15.0 million and will make additional annual payments of $3.9 million over each of the next five years. As further consideration for the amendment to the agreement, we agreed to make payments totaling $19.0 million, which will be paid over the term of the agreement based on net sales of FluMist. We also gave Evans warrants to purchase 63,162 shares of our common stock at an exercise price of $47.50 per share, which we valued at $1.2 million. We have valued the aggregate consideration, including the net present value of the annual payments, at approximately $50.2 million, which we recorded as an intangible asset and will amortize over the remaining term of the Evans agreement, which extends through June 2006. We have also recorded $34.0 million of obligations to Evans consisting of the net present value of the annual payments of $3.9 million and the $19.0 million obligation. The $19.0 million obligation has not been discounted because the timing of the related payment is not fixed, but rather is based on net sales of FluMist. In addition, we agreed to make payments during the term of the agreement of $225,000 per year for the use of the Aviron unit in the Evans manufacturing plant, payments up to an aggregate of $3.0 million for attaining specific milestones, and payments for other support services based on the costs of these services incurred. We will expense rent and other support services as the costs are incurred and expense milestones as they become due. In February 2000, we amended our agreement with the University of Michigan to accelerate the issuance of a warrant to the university. As a result of this amendment, we granted the university a fully-vested non-forfeitable warrant to purchase 340,000 shares 34 35 of our common stock at an exercise price of $10.00 per share. Also, as a result of this amendment, we recorded a one-time charge of approximately $10.9 million in the first quarter of 2000 representing the fair value of the warrant. Upon the date of the first commercial sale of FluMist, if we have more than 27.2 million shares outstanding, we will issue an additional warrant allowing the university to purchase 1.25 percent of the excess shares on the same terms. If we issue such a warrant, its value will be capitalized and amortized to expense over the expected life of FluMist. During 2000, in order to motivate our employees and align their interests with our stockholders, we granted options for the purchase of a total of approximately 1.7 million shares of common stock at exercise prices ranging from $24.00 to $51.50, the vesting for which is linked to performance goals for FluMist. Of this amount, options for approximately 1.5 million shares remained outstanding at December 31, 2000. Options for approximately 380,000 shares became exercisable upon the acceptance for review by the FDA of our BLA submission on December 28, 2000. Options for approximately 647,000 shares will become exercisable at the earlier of the approval of FluMist for marketing in the United States, or five years from the date of grant. Options for approximately 493,000 shares will become exercisable when FluMist is approved for marketing in the United States, but only if this event occurs in 2001; otherwise these options will be canceled. If the 493,000 options become exercisable in 2001, we will incur compensation expense on the date that they become exercisable in an amount equal to the difference between the exercise price of the options and the then current fair market value of our common stock. RECENT ACCOUNTING PRONOUNCEMENTS Aviron implemented Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, or SAB 101, in the fourth quarter of 2000. SAB 101 includes new guidelines from the Securities and Exchange Commission, or SEC, regarding revenue recognition of non-refundable up-front license fees, such as the $15.0 million up-front payment Aviron received from Wyeth in 1999. In accordance with SAB 101, this $15.0 million up-front license fee, which was previously recognized as revenue in full in the first quarter of 1999, has been deferred and is now being recognized as revenue over the development period of FluMist, including a liquid formulation of the vaccine. As a result, we recorded a charge for the cumulative effect of the change of $12.8 million as of January 1, 2000, adjusted previously reported contract revenues for the first three quarters of 2000 to reflect revenue of $750,000 per quarter and also recognized $750,000 of revenue in the fourth quarter of 2000. Fiscal 1999 results will not be restated. In June 1998, the Financial Accounting Standards Board issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, which is required to be adopted in the first quarter of 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires companies to recognize all derivatives as either assets or liabilities on the balance sheet and measure these instruments at fair value. Management does not anticipate that the adoption of SFAS 133 will have a significant adverse effect on the results of our operations or our financial position. BUSINESS OUTLOOK We anticipate an increase in operating expense in 2001 due primarily to an increase in the size of our operations in the U.K. and expenses we expect to incur as we make preparations for a potential commercial launch of FluMist in the U.S. for the 2001 -- 2002 influenza season. Assuming that we continue these preparations, we expect to record operating expenses (including cash and non-cash) between $130 and $145 million in 2001, although the actual amount may be higher depending on the amount of finished product ultimately manufactured for the 2001-2002 influenza season. This amount includes amortization expense associated with the restructuring of our contract manufacturing agreement with Evans. The portion of 2001 operating expenses that is depreciation and amortization is expected to be approximately $17 million, compared to $8.1 million for 2000. Our outlook for operating expenses in 2001 also does not include a one-time non-cash charge associated with the vesting of employee stock options in the event of a 2001 approval by the FDA for marketing of FluMist. For a discussion of the terms of the options, see "--General." 35 36 As part of preparing for a potential FluMist commercial launch for the 2001 - -- 2002 influenza season, we have begun the initial stages of commercial-scale manufacturing of FluMist. We intend to record the majority of our manufacturing spending as research and development expense, rather than capitalize into inventory, until FluMist is approved for marketing by the FDA. Thus, a significant portion of anticipated 2001 operating expense will include manufacturing activities. If we receive marketing approval for FluMist, initial reported cost of goods sold may be lower than in future periods when manufacturing expenses will be charged to cost of goods sold. To support inventory buildup for 2001, Wyeth paid us $10.0 million in January 2001 as an advance against future amounts that Wyeth will owe us under our agreement. We expect capital expenditures to increase substantially as we commence building additional manufacturing facilities and commercialization systems and facilities. During 2001, we forecast that capital expenditures will be between $30 and $40 million. RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2000 AND 1999 Revenues. We earned $32.2 million in revenues for the year ended December 31, 2000, compared to $22.2 million for the year ended December 31, 1999. The 2000 revenues are comprised primarily of amounts earned from Wyeth under the FluMist collaboration agreement, which included a $15.5 million milestone due from Wyeth on the acceptance of our BLA for filing with the FDA, $11.7 million in expense reimbursement from Wyeth for clinical and commercialization expenses, and revenues from other contracts and research grants. The 1999 revenues included a $15.0 million non-refundable license fee from Wyeth, $6.0 million in expense reimbursements from Wyeth for clinical and commercialization expenses and revenues from other contracts and research grants. We implemented SAB 101 in the fourth quarter of 2000. SAB 101 includes new guidelines from the SEC regarding revenue recognition of non-refundable up-front license fees, such as the $15.0 million up-front payment Aviron received from Wyeth in 1999. In accordance with SAB 101, this $15.0 million up-front license fee, which was previously recognized as revenue in full in the first quarter of 1999, has been deferred and is now being recognized as revenue over the five year estimated development period of FluMist. As a result, we recorded a charge for the cumulative effect of the change of $12.8 million as of January 1, 2000, and recognized $3.0 million of this amount during 2000. Results for the year ended December 31, 1999 are not restated. Operating Expenses. Research and development costs totaled $80.5 million for the year ended December 31, 2000, as compared with $68.2 million for the year ended December 31, 1999. The increase in research and development costs was due primarily to increases in development activities, clinical trials and commercial scale-up expenses associated with FluMist. In addition, we recognized a one-time, non-cash charge for the acquisition of in-process research and development in the amount of $10.9 million due to the amendment of our agreement with the University of Michigan to accelerate the issuance of a warrant to the university. General, administrative and marketing costs increased to $13.8 million for the year ended December 31, 2000, as compared to $13.2 million for the year ended December 31, 1999. The increase was due to growth in infrastructure and other costs to support preparations for a potential commercial launch of FluMist in 2001. Net Interest Income (Expense). Net interest expense increased to $4.5 million for the year ended December 31, 2000, as compared to $2.7 million for the year ended December 31, 1999. Interest expense for the year ended December 31, 2000 was $11.0 million, as compared to $6.4 million for the year ended December 31, 1999. The increase in interest expense is due to additional interest costs associated with approximately $15.4 million of debt financing, which was obtained in December 1999, and a one-time non-cash interest charge of approximately $2.7 million related to exchanges of approximately $51.7 million aggregate principal amount of our 5-3/4% convertible subordinated notes for approximately 1.7 million shares of our common stock in a number of privately negotiated transactions. Interest income increased to $6.5 million for the year ended December 31, 2000, as compared to $3.6 million for the year ended December 31, 1999, due to the increase in the average balances of cash, cash equivalents and investments as funds were received from debt and equity financings during late 1999 and 2000 and higher average yields on invested funds. YEARS ENDED DECEMBER 31, 1999 AND 1998 Revenues. We earned $22.2 million in revenues for the year ended December 31, 1999, compared to $0.7 million for the year ended December 31, 1998. The 1999 revenues are comprised primarily of amounts earned from Wyeth under the FluMist collaboration agreement, which included a non-refundable initial payment in the amount of $15.0 million, $6.0 million in expense 36 37 reimbursement from Wyeth for clinical and commercialization expenses and revenues from other contracts and research grants. The 1998 revenues were from a grant payment from the NIH for research on our cytomegalovirus, or CMV, vaccine and from payments received for services rendered to other biotechnology companies. Operating Expenses. Research and development expenses increased to $68.2 million in the year ended December 31, 1999, from $46.6 million for the year ended December 31, 1998. The increase was due primarily to an increase in development activities, depreciation, documentation, validation and other expenses associated with the commercial scale-up of the manufacturing facilities associated with FluMist. General, administrative and marketing expenses increased to $13.2 million in the year ended December 31, 1999, from $10.1 million for the year ended December 31, 1998. This increase was due to additional staffing, legal and other infrastructure costs necessary to support the development of FluMist and other products. Net Interest Income (Expense). Net interest decreased to a net expense of $2.7 million for the year ended December 31, 1999, as compared to net interest income of $1.1 million for the year ended December 31, 1998. The decrease in net interest is due to a combination of increased interest expense associated with the issuance of our convertible subordinated notes on March 30, 1998 and decreased interest income associated with a reduction in the average balances of cash, cash equivalents and investments as funds have been used to meet operating expenses and capital requirements. LIQUIDITY AND CAPITAL RESOURCES We had cash, cash equivalents and short and long-term investments at December 31, 2000 of approximately $136.8 million. In order to preserve principal and maintain liquidity, our funds are invested primarily in United States Treasury and agency obligations, highly rated corporate obligations and other liquid investments. Through December 31, 2000, we raised approximately $446.1 million from sales of equity, convertible debt securities and debt financing, net of underwriters discounts and estimated expenses, which includes $183.1 million raised during 2000. On February 7, 2001, we completed a public offering of 4,000,000 shares of our common stock at $50.00 per share and a concurrent public offering of $200.0 million of 5-1/4 percent convertible subordinated notes due 2008, or the 2008 Notes. The 2008 Notes are convertible into common stock at any time after the original issuance through maturity, unless previously redeemed or repurchased, at a conversion price of $62.50 per share. The sale of the securities under the concurrent common stock and debt offerings resulted in net proceeds to the company of approximately $382.0 million, after the deduction of commissions and offering costs. Since December 31, 2000, we have also generated $8.0 million through the sale of 161,060 shares of stock for $49.67 per share, $2.2 million through debt financing, $15.5 million in payment of an outstanding receivable balance from Wyeth and $10.0 million as an advance from Wyeth to support inventory build-up for 2001. Cash used in operations was $49.5 million, $58.4 million and $73.2 million for the years ended December 31, 1998, 1999 and 2000, respectively. Net cash used in operating activities between 1998 and 1999 increased primarily due to the increased net loss. The increase in cash used in operating activities between 1999 and 2000 was primarily due to the fact that the $15.5 million milestone in connection with the acceptance of our BLA for review by the FDA was earned on December 28, 2000, but was not collected until early in January 2001. As indicated in "Business Outlook" above, we anticipate that the amount of cash used in operating activities will increase in 2001 over that used in 2000 due to the scale-up of our operating expenditures in connection with the preparations for the potential commercialization of FluMist. Our near-term revenues will depend largely on the success of our products, collaboration arrangements, contracts and research grants. With respect to our collaboration agreement with Wyeth, our rights to receive milestone payments are "event-driven." These payments are earned only upon our successful completion of specific activities. We cannot be certain as to when, and if, these milestone payments will be realized. Under the agreement, we earned a milestone payment in the amount of $15.5 million upon acceptance for review by the FDA of our BLA on December 28, 2000. Another milestone payment of $20.0 million is due upon obtaining FDA marketing approval for FluMist. The timing of receipt of this payment will depend on the outcome of the regulatory review of the BLA. Additional milestone payments related to the submission and approval of FluMist for marketing in international markets, for expansions in labeling claims, for meeting supply targets and for future formulations are dependent upon future governmental approvals or recommendations by medical advisory bodies and will not be received until these activities are successfully completed. 37 38 Our revised agreements with Evans required the payment of $15.0 million on inception in October 2000 and will require the payment of $3.9 million annually through September 15, 2005. These agreements will also require additional payments totaling $19.0 million between now and June 30, 2006, with the timing of payment based on the sales of FluMist. Cash expended for capital additions was approximately $14.0 million, $11.9 million, and $7.9 million for the years ended December 31, 1998, 1999 and 2000, respectively. Capital expenditures decreased in 2000 primarily due to a decrease in the level of expenditures for our facilities and equipment at our Santa Clara and U.K. facilities, which is partially offset by increases in expenditures for our Pennsylvania and Mountain View facilities. Capital expenditures are likely to increase substantially in the future in connection with building manufacturing capacity and commercialization systems additions. Principal payments under lease arrangements and long-term debt were $445,000, $411,000, and $3.0 million for the years ended December 31, 1998, 1999 and 2000, respectively. During 2000 and early 2001, we exchanged approximately $85.2 million aggregate principal amount of our 5-3/4% convertible notes due in 2005, or the 2005 Notes, for approximately 2.8 million shares of our common stock in a number of privately negotiated transactions. Exchanges in the aggregate amounts of $51.7 million of principal for approximately 1.7 million shares occurred during 2000, with the remainder occurring early in 2001. Additional non-cash expense related to the exchanges was approximately $2.7 million in 2000, with an additional $1.6 million to be recorded in 2001. The $2.0 million of unamortized debt issue costs related to the 5-3/4% convertible notes exchanged have been charged to additional paid-in capital, $1.2 million of which was recorded in 2000. As of January 31, 2001, approximately $14.8 million aggregate principal amount of the 2005 Notes remained outstanding. We anticipate that our existing cash, cash equivalents and short-term investments, and proceeds from existing collaborations and recent financings will enable us to maintain our current and planned operations through at least 2002. We anticipate using our cash resources for commercialization activities related to FluMist and capital expenditures related to FluMist manufacturing. However, our future cash requirements will depend on numerous factors, including the factors set forth under "Business Risks -- Risks Related to FluMist." Additionally, if FluMist is approved for marketing, due to its seasonal nature, cash will not be generated from product sales until later in each calendar year or early in the following calendar year. A significant amount of working capital will be required each year to provide for the payment of expenditures associated with the manufacturing of inventory and other operating and capital needs in advance of any product sales. There can be no assurance that, should we require outside funding through additional debt or equity financing, such funds would be available on favorable terms, if at all. If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development programs or obtain funds through collaborative agreements with others that may require us to relinquish rights to our technologies, product candidates or products we would otherwise seek to develop or commercialize ourselves. INCOME TAXES As of December 31, 2000, we had federal and state net operating loss carryforwards of approximately $262.0 million and $12.9 million, respectively. We also had federal and California research and other tax credit carryforwards of approximately $4.9 million, and $2.5 million, respectively. The federal net operating loss and credit carryforwards will expire at various dates beginning in the year 2007 through 2020, if not utilized. The state of California net operating loss carryforwards will expire at various dates beginning in 2003 through 2005, if not utilized. Utilization of the net operating losses and credits may be subject to a substantial annual limitation due to the "ownership change" provisions of the Internal Revenue Code of 1986. See Note 12 of Notes to Consolidated Financial Statements for additional information on income taxes. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk, including changes to interest rates and foreign currency exchange rates. Interest Rates. Our investment and interest income is sensitive to changes in the general level of interest rates, primarily U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on our cash equivalents and investments. To mitigate the impact of fluctuations in U.S. interest rates, we place our funds in investments that meet high credit standards, as specified in our investment policy guidelines; the policy also limits the amount of credit exposure to any one issue, issuer, or type of investment and does not permit derivative financial instruments in its investment portfolio. In addition, the average maturity of our portfolio is less than one year. As result, we do not expect any material loss with respect to our investment portfolio. 38 39 The following table provides information about our financial instruments that are sensitive to changes in interest rates. For investment securities, the table presents cash flows and related weighted-average interest rates by expected maturity dates. Dollar amounts are in millions.
Fair Value at December 31, 2001 2002 2003 2004 2005 Thereafter Total 2000 ------ ------ ---- ---- ---- ---------- ------ --------------- ASSETS Cash and Cash Equivalents ............. $ 64.7 -- -- -- -- -- $ 64.7 $ 64.7 Weighted average interest rate ........ 6.75% -- -- -- -- -- Investments ........................... $ 67.7 $ 4.5 -- -- -- -- $ 72.2 $ 72.2 Weighted average interest rate ........ 6.79% 7.04% -- -- -- --
Foreign Currency Exchange Rates. We pay for the costs of manufacturing and development activities, equipment and facilities modifications at our facility located in the U.K. in British Pounds Sterling. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the U.K. We are exposed to changes in exchange rates in the U.K. When the U.S. dollar strengthens against the British Pounds Sterling, the U.S. dollar value of British Pounds Sterling-based expenses decreases; when the U.S. dollar weakens, the U.S. dollar value of British Pounds Sterling-based expenses increases. Accordingly, changes in exchange rates, and in particular a weakening of the U.S. dollar, may adversely affect our financial position as expressed in U.S. dollars. We currently do not hedge our obligations in British Pounds Sterling. 39 40 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements Our financial statements and notes thereto appear on pages F-1 through F-21 in this Form 10-K. Selected Quarterly Financial Data (unaudited)
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 2000 ------------------------------------------- -------------------------------------------- FIRST (1) SECOND(1) THIRD(1) FIRST SECOND THIRD FOURTH (RESTATED) (RESTATED) (RESTATED) FOURTH -------- -------- -------- -------- ---------- ---------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Total revenues .......................... $ 15,531 $ 2,944 $ 1,363 $ 2,394 $ 3,407 $ 3,128 $ 3,619 $ 22,089 Net loss, before cumulative effect of change in accounting principle ............................. (1,519) (15,120) (22,618) (22,613) (29,025) (18,125) (18,786) (11,574) Cumulative effect of change in accounting principle .................. -- -- -- -- (12,750) -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- Net loss, after cumulative effect of change in accounting principle ..... $ (1,519) $(15,120) $(22,618) $(22,613) $(41,775) $(18,125) $(18,786) $(11,574) ======== ======== ======== ======== ======== ======== ======== ======== Basic and diluted net loss per share: Net loss, before cumulative effect of change in accounting principle ........................... $ (0.10) $ (0.96) $ (1.43) $ (1.40) $ (1.70) $ (0.86) $ (0.87) $ (0.50) Cumulative effect of change in accounting principle ................ -- -- -- -- (0.74) -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- Net loss, after cumulative effect of change in accounting principle ... $ (0.10) $ (0.96) $ (1.43) $ (1.40) $ (2.44) $ (0.86) $ (0.87) $ (0.50) ======== ======== ======== ======== ======== ======== ======== ======== Shares used in computing basic and diluted net loss per share ............ 15,703 15,749 15,814 16,126 17,095 21,039 21,625 23,100 ======== ======== ======== ======== ======== ======== ======== ========
(1) Total revenues, net loss and net loss per share have been restated as compared to our previously reported results, as a result of the adoption of SAB 101, effective January 1, 2000. The impact of the restatement was as follows:
YEAR ENDED DECEMBER 31, 2000 -------------------------------- FIRST SECOND THIRD -------- ------ ----- (IN THOUSANDS, EXCEPT PER SHARE DATA) Increase in total revenue .................. $ 750 $ 750 $ 750 ======== ====== ===== Decrease (increase) in net loss ............ $(12,000) $ 750 $ 750 ======== ====== ===== Decrease (increase) in net loss per share .. $ (0.70) $ 0.04 $0.03 ======== ====== =====
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 40 41 PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding directors required by this item will be contained in our definitive Proxy Statement with respect to our Annual Meeting of Stockholders to be held on June 14, 2001, under the captions "Election of Directors -- Nominees," and "Security Ownership of Certain Beneficial Owners and Management -- Compliance with the Reporting Requirement of Section 16(a)," and is incorporated by reference. EXECUTIVE OFFICERS The names of our executive officers as of March 22, 2001 and information about them is presented below.
NAME AGE POSITION ---- --- -------- EXECUTIVE OFFICERS C. Boyd Clarke................. 52 Chief Executive Officer, President and Chairman Edward J. Arcuri, Ph.D......... 50 Senior Vice President, Operations Charlene A. Friedman........... 43 Vice President, General Counsel and Secretary Harry B. Greenberg, M.D........ 56 Senior Vice President, Research and Development and Chief Scientific Officer Fred Kurland................... 51 Senior Vice President and Chief Financial Officer Carol A. Olson................. 43 Senior Vice President, Commercial Development Rayasam S. Prasad.............. 48 Senior Vice President, Technical Affairs
C. Boyd Clarke has been our President and Chief Executive Officer since December 1999. He has been a director since December 1999 and our Chairman since January 2001. From 1998 until joining us, Mr. Clarke was Chief Executive Officer and President of U.S. Bioscience, Inc., a biotechnology company. Mr. Clarke served as President and Chief Operating Officer of U.S. Bioscience from 1996 to 1998. From 1977 to 1996, Mr. Clarke held a number of positions at Merck & Co., Inc., including being the first president of Pasteur-Merieux MSD, and most recently as Vice President of Merck Vaccines. Mr. Clarke has a B.S. in Biochemistry and an M.A. in History from the University of Calgary. Edward J. Arcuri, Ph.D., has been our Senior Vice President, Operations since May 2000. He joined Aviron as Vice President, Manufacturing in July 1999. Dr. Arcuri joined us from North American Vaccine, Inc., or NAVA, where he served as Vice President, Manufacturing Operations and Process Development from January 1995 to July 1999. Prior to joining NAVA, Dr. Arcuri served as Senior Director, Biological Manufacturing at Merck & Co., Inc. from 1991 to 1994. Dr. Arcuri holds a B.S. degree in Biology from the State University of New York at Albany and a masters degree and Ph.D. in Biology from Rensselaer Polytechnic Institute. Charlene A. Friedman has been our Vice President, General Counsel and Secretary since April 2000. From 1999 until joining us, Ms. Friedman was a consultant to Inamed Corporation, a medical device company. From 1996 to 1999, Ms. Friedman held various positions at Collagen Aesthetics, Inc., a biotechnology company, most recently as Vice President, Legal and Regulatory Affairs, General Counsel and Assistant Secretary. From 1995 to 1996, Ms. Friedman was an attorney with Lillick & Charles in San Francisco, California. From 1993 to 1995, she practiced law in Boston, Massachusetts at Warner & Stackpole. She is a member of the Massachusetts and California bars. Ms. Friedman holds a B.A. in Ancient Greek and Latin from Tufts University and a J.D. from Northeastern University. Harry B. Greenberg, M.D., has been our Senior Vice President, Research and Development and Chief Scientific Officer since November 2000. Dr. Greenberg joined us from the Stanford University School of Medicine, where he spent 17 years as a faculty member. He was most recently the Senior Associate Dean for Research and the Joseph D. Grant Endowed Professor of Medicine. He also was serving as Associate Chief of Staff for Research at the Veterans Administration Palo Alto Health Care System. Dr. Greenberg served as chair of the Vaccines and Related Biological Products Advisory Committee of the U.S. Food and Drug Administration from February 1999 until beginning his position with Aviron. Dr. Greenberg holds a B.A. in History with honors from Dartmouth College and an M.D. from Columbia College of Physicians and Surgeons. 41 42 Fred Kurland has been our Senior Vice President and Chief Financial Officer since January 1998. Prior to joining us, Mr. Kurland was Vice President and Chief Financial Officer of Protein Design Labs, Inc., a biotechnology company, from 1996 to 1998. From 1995 to 1996, Mr. Kurland was Vice President and Chief Financial Officer at Applied Immune Sciences, a biotechnology company, and from 1981 to 1995, he held a number of positions at Syntex Corporation, a pharmaceutical company, most recently as Vice President and Controller. Mr. Kurland, a Certified Public Accountant, holds a B.S. in Business and Economics from Lehigh University, and an M.B.A. and a J.D. from the University of Chicago. Carol A. Olson has been our Senior Vice President, Commercial Development since May 1998. Prior to joining us, Ms. Olson was the founder and managing director of the Churchill Madison Group, a management consulting firm focused on building new businesses in the medical, life sciences and high technology industries. From 1984 to 1993, Ms. Olson worked for the Hewlett Packard Company. Ms. Olson holds a B.A. in Economics with honors from Yale University and an M.B.A. from Stanford University. Rayasam S. Prasad has been our Senior Vice President, Technical Affairs since January 2001 and prior to that had been our Vice President, Technical Affairs since September 1999. Mr. Prasad joined Aviron from Chiron Vaccines, the global vaccines business unit of Chiron Corporation, a biotechnology company, where he served as Head of Regulatory, Quality and Drug Safety. Mr. Prasad also served as Director of Quality Assurance for Therapeutics and Vaccines at Chiron. He was with Chiron from October 1994 to September 1999. Prior to joining Chiron, Mr. Prasad held positions in quality assurance and biological manufacturing operations at Genentech, Inc. from 1986 to 1994, and Burroughs Wellcome Co. from 1981 to 1986. Mr. Prasad holds a B.S. in Pharmacy from ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be contained in our definitive Proxy Statement with respect to our Annual Meeting of Stockholders, to be held on June 14, 2001, under the caption "Executive Compensation," and is incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item will be contained in our definitive Proxy Statement with respect to our Annual Meeting of Stockholders to be held on June 14, 2001, under the caption "Security Ownership of Certain Beneficial Owners and Management," and is incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item will be contained in our definitive Proxy Statement with respect to our Annual Meeting of Stockholders, to be held on June 14, 2001, under the caption "Certain Transactions," and is incorporated by reference. 42 43 PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS The Financial Statements required by this item are submitted in a separate section beginning on page xx of this report.
PAGE ---- Report of Ernst & Young LLP, Independent Auditors....................................... F-2 Consolidated Balance Sheets at December 31, 1999 and 2000............................... F-3 Consolidated Statements of Operations for each of the three years in the period ended December 31, 2000............................................................... F-4 Consolidated Statement of Stockholders' Equity (Deficit) for the three years in the period ended December 31, 2000.................................................... F-5 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2000............................................................... F-6 Notes to Consolidated Financial Statements.............................................. F-7
(2) INDEX TO FINANCIAL STATEMENTS SCHEDULES All schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or in the notes thereto. (3) EXHIBITS See Exhibit Index. (b) REPORTS ON FORM 8-K The following Forms 8-K were filed during the last quarter of the period covered by this report: (1) On October 19, 2000, we filed a Current Report on Form 8-K, reporting the following: (i) Our United Kingdom subsidiary had agreed to acquire from Celltech Group Plc the remainder of a 25-year lease on approximately eight acres of land in Speke, U.K. and had restructured our contract manufacturing agreement with Evans Vaccines Ltd., or Evans, and other related agreements, providing for the restructuring of services provided by Evans to Aviron for the manufacturing of FluMist, and (ii) We had agreed to issue and sell to Biotech Invest, S.A. four hundred fifty thousand (450,000) shares of our common stock for the total aggregate price of $21.6 million, or $48.00 per share. The sale of the shares occurred on October 12, 2000. We also agreed to register these shares for resale in approximately six months from the date of issuance. (2) On November 2, 2000, we filed a Current Report on Form 8-K, reporting that on October 31, 2000, we submitted to the Food and Drug Administration a Biologics License Application for FluMist. 43 44 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on March 27, 2001. AVIRON By: /s/ C. BOYD CLARKE ------------------------------------ C. Boyd Clarke Chairman, President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints C. Boyd Clarke and Fred Kurland, or either of them, his attorney-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report, and to file the same, with exhibits thereto and other documents in connections therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates stated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ C. BOYD CLARKE Chairman, President, and Chief Executive Officer March 27, 2001 - ---------------------------------------------------- (Principal Executive Officer) C. Boyd Clarke /s/ FRED KURLAND Senior Vice President and March 27, 2001 - ---------------------------------------------------- Chief Financial Officer Fred Kurland (Principal Financial and Accounting Officer) /s/ R. GORDON DOUGLAS, M.D. Director March 27, 2001 - ---------------------------------------------------- R. Gordon Douglas, Jr., M.D. /s/ DENNIS M. FENTON, PH.D. Director March 27, 2001 - ---------------------------------------------------- Dennis M. Fenton, Ph.D. /s/ WAYNE T. HOCKMEYER, PH.D. Director March 27, 2001 - ---------------------------------------------------- Wayne T. Hockmeyer, Ph.D. /s/ PAUL H. KLINGENSTEIN Director March 27, 2001 - ---------------------------------------------------- Paul H. Klingenstein /s/ ALAN C. MENDELSON Director March 27, 2001 - ---------------------------------------------------- Alan C. Mendelson /s/ J. LEIGHTON READ, M.D. Director March 27, 2001 - ---------------------------------------------------- J. Leighton Read, M.D. /s/ BERNARD ROIZMAN, SC.D. Director March 27, 2001 - ---------------------------------------------------- Bernard Roizman, Sc.D.
44 45 AVIRON INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Report of Ernst & Young LLP, Independent Auditors....................................................................... F-2 Consolidated Balance Sheets at December 31, 1999 and 2000............................................................... F-3 Consolidated Statements of Operations for each of the three years in the period ended December 31, 2000................. F-4 Consolidated Statement of Stockholders' Equity (Deficit) for the three years in the period ended December 31, 2000...... F-5 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2000................. F-6 Notes to Consolidated Financial Statements.............................................................................. F-7
46 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Stockholders Aviron We have audited the accompanying consolidated balance sheets of Aviron as of December 31, 1999 and 2000, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Aviron at December 31, 1999 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States. As discussed in Note 1 to the consolidated financial statements, in 2000 Aviron changed its method of accounting for revenue recognition. /s/ ERNST & YOUNG LLP Palo Alto, California January 25, 2001 F-2 47 AVIRON CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS DECEMBER 31, ----------------------- 1999 2000 --------- --------- CURRENT ASSETS: Cash and cash equivalents ........................................................... $ 28,081 $ 64,662 Short-term investments .............................................................. 24,235 67,651 Accounts receivable ................................................................. 3,241 23,288 Inventory ........................................................................... 2,082 4,264 Prepaid expenses and other current assets ........................................... 1,009 2,691 --------- --------- Total current assets ......................................................... 58,648 162,556 Long-term investments................................................................... -- 4,506 Property and equipment, net ............................................................ 25,635 27,707 Intangible assets, net ................................................................. -- 48,046 Deposits and other assets .............................................................. 7,411 5,924 --------- --------- TOTAL ASSETS ........................................................................... $ 91,694 $ 248,739 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable .................................................................... $ 3,038 $ 5,106 Accrued compensation ................................................................ 1,739 4,978 Accrued clinical trial costs ........................................................ 846 1,974 Accrued interest .................................................................... 1,438 695 Accrued expenses and other liabilities .............................................. 6,591 7,654 Current portion of capital lease obligations ........................................ 101 9 Current portion of long-term obligations ............................................ 2,680 5,945 --------- --------- Total current liabilities .................................................... 16,433 26,361 Deferred rent .......................................................................... 2,214 2,095 Deferred revenue ....................................................................... -- 9,750 Capital lease obligations, less current portion ........................................ 9 -- Long-term obligations, less current portion ............................................ 112,657 89,947 Commitments and contingencies .......................................................... STOCKHOLDERS' EQUITY (DEFICIT): Preferred stock, $0.001 par value; 5,000,000 shares authorized; issuable in series; none outstanding at December 31, 1999 and 2000 .................................... -- -- Common stock, $0.001 par value; 30,000,000 shares authorized as of December 31, 1999 and 100,000,000 shares authorized as of December 31, 2000; 16,669,018 and 25,181,051 shares outstanding at December 31, 1999 and 2000, respectively ............................................................ 17 25 Additional paid-in capital .......................................................... 143,822 394,012 Notes receivable from stockholders .................................................. (83) (50) Deferred compensation ............................................................... (96) -- Accumulated deficit ................................................................. (183,279) (273,401) --------- --------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ................................................... (39,619) 120,586 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ................................... $ 91,694 $ 248,739 ========= =========
See accompanying notes. F-3 48 AVIRON CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, ---------------------------------- 1998 1999 2000 -------- -------- --------- REVENUES: Contract revenue and grants ................................... $ 745 $ 22,232 $ 32,242 -------- -------- --------- OPERATING EXPENSES: Research and development ...................................... 46,583 68,212 80,521 Acquisition of in-process research and development ............ -- -- 10,904 General, administrative and marketing ......................... 10,085 13,159 13,849 -------- -------- --------- TOTAL OPERATING EXPENSES ......................................... 56,668 81,371 105,274 -------- -------- --------- LOSS FROM OPERATIONS ............................................. (55,923) (59,139) (73,032) OTHER INCOME (EXPENSE): Interest income ............................................... 6,003 3,633 6,541 Interest expense .............................................. (4,882) (6,364) (11,020) -------- -------- --------- TOTAL OTHER INCOME (EXPENSE), net ................................ 1,121 (2,731) (4,479) -------- -------- --------- NET LOSS, before cumulative effect of change in accounting principle (Note 1) .................................. (54,802) (61,870) (77,511) Cumulative effect of change in accounting principle .............. -- -- (12,750) -------- -------- --------- NET LOSS, after cumulative effect of change in accounting principle ........................................... $(54,802) $(61,870) $ (90,261) ======== ======== ========= BASIC AND DILUTED NET LOSS PER SHARE: Loss before cumulative effect of change in accounting principle ....................................... $ (3.49) $ (3.90) $ (3.74) Cumulative effect of change in accounting principle ........... -- -- $ (0.62) -------- -------- --------- Loss after cumulative effect of change in accounting principle ....................................... $ (3.49) $ (3.90) $ (4.36) ======== ======== ========= SHARES USED IN CALCULATION OF BASIC AND DILUTED NET LOSS PER SHARE ................................. 15,724 15,848 20,715 ======== ======== ========= PRO FORMA AMOUNTS, assuming the accounting change is applied retroactively: Net Loss ...................................................... $(54,802) $(74,620) $ (77,511) ======== ======== ========= Basic and Diluted net loss per share .......................... $ (3.49) $ (4.71) $ (3.74) ======== ======== =========
See accompanying notes. F-4 49 AVIRON CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT SHARE DATA)
NOTES ADDITIONAL RECEIVABLE COMMON PAID-IN FROM DEFERRED STOCK CAPITAL STOCKHOLDERS COMPENSATION ------- ---------- ------------ ------------ BALANCE AT DECEMBER 31, 1997 .................................. $16 $ 142,840 $(115) $(588) Issuance of 181,578 shares of common stock upon exercise of stock options, warrants and purchase of shares through employee stock purchase plan, net of repurchase ............. -- 1,019 -- -- Deferred compensation recorded relating to grant of certain stock options ...................................... -- 14 -- (14) Amortization of deferred compensation ......................... -- -- -- 365 Repurchase of 540,711 shares of common stock .................. -- (13,349) -- -- Payment of notes receivable ................................... -- -- 32 -- Change in net unrealized loss on available-for-sale investments ................................................. -- -- -- -- Net loss ...................................................... -- -- -- -- --- --------- ----- ----- BALANCE AT DECEMBER 31, 1998 .................................. 16 130,524 (83) (237) Issuance of 708,180 shares of common stock in private placements, net of offering costs of $73 ................... 1 11,259 -- -- Issuance of 237,495 shares of common stock upon exercise of stock options and warrants and purchase of shares through employee stock purchase plan ....................... -- 1,691 -- -- Stock compensation for options granted to consultants ......... -- 348 -- -- Amortization of deferred compensation ......................... -- -- -- 141 Change in net unrealized loss on available-for-sale investments ................................................. -- -- -- -- Net loss ...................................................... -- -- -- -- --- --------- ----- ----- BALANCE AT DECEMBER 31, 1999 .................................. 17 143,822 (83) (96) Issuance of 4,146,549 shares of common stock in private placements, net of offering costs of $254 .................. 4 130,009 -- -- Issuance of 2,200,000 shares of common stock in follow-on public offering, net of offering costs of $3,272 ........... 2 46,226 -- -- Issuance of 442,811 shares of common stock upon exercise of stock options and warrants, and purchase of shares through employee stock purchase plan ....................... -- 7,434 -- -- Issuance of warrants in connection with in-process research and development, legal settlement, acquisition of domain name and intangible assets ................................. -- 12,766 -- -- Exchange of convertible notes due 2005 into 1,722,673 shares of common stock ..................................... 2 53,628 -- -- Stock compensation for options granted to consultants ......... -- 127 -- -- Amortization of deferred compensation ......................... -- -- -- 96 Payment of note receivable .................................... -- -- 33 -- Change in net unrealized gain on available-for-sale investments ................................................. -- -- -- -- Net loss ...................................................... -- -- -- -- --- --------- ----- ----- BALANCE AT DECEMBER 31, 2000 .................................. $25 $ 394,012 $ (50) $ -- === ========= ===== =====
TOTAL ACCUMULATED STOCKHOLDERS' DEFICIT EQUITY (DEFICIT) ------------ ---------------- BALANCE AT DECEMBER 31, 1997 .................................. $ (66,411) $ 75,742 Issuance of 181,578 shares of common stock upon exercise of stock options, warrants and purchase of shares through employee stock purchase plan, net of repurchase ............. -- 1,019 Deferred compensation recorded relating to grant of certain stock options ...................................... -- -- Amortization of deferred compensation ......................... -- 365 Repurchase of 540,711 shares of common stock .................. -- (13,349) Payment of notes receivable ................................... -- 32 Change in net unrealized loss on available-for-sale investments ................................................. (41) (41) Net loss ...................................................... (54,802) (54,802) --------- --------- BALANCE AT DECEMBER 31, 1998 .................................. (121,254) 8,966 Issuance of 708,180 shares of common stock in private placements, net of offering costs of $73 ................... -- 11,260 Issuance of 237,495 shares of common stock upon exercise of stock options and warrants and purchase of shares through employee stock purchase plan ....................... -- 1,691 Stock compensation for options granted to consultants ......... -- 348 Amortization of deferred compensation ......................... -- 141 Change in net unrealized loss on available-for-sale investments ................................................. (155) (155) Net loss ...................................................... (61,870) (61,870) --------- --------- BALANCE AT DECEMBER 31, 1999 .................................. (183,279) (39,619) Issuance of 4,146,549 shares of common stock in private placements, net of offering costs of $254 .................. -- 130,013 Issuance of 2,200,000 shares of common stock in follow-on public offering, net of offering costs of $3,272 ........... -- 46,228 Issuance of 442,811 shares of common stock upon exercise of stock options and warrants, and purchase of shares through employee stock purchase plan ....................... -- 7,434 Issuance of warrants in connection with in-process research and development, legal settlement, acquisition of domain name and intangible assets ................................. -- 12,766 Exchange of convertible notes due 2005 into 1,722,673 shares of common stock ..................................... -- 53,630 Stock compensation for options granted to consultants ......... -- 127 Amortization of deferred compensation ......................... -- 96 Payment of note receivable .................................... -- 33 Change in net unrealized gain on available-for-sale investments ................................................. 139 139 Net loss ...................................................... (90,261) (90,261) --------- --------- BALANCE AT DECEMBER 31, 2000 .................................. $(273,401) $ 120,586 ========= =========
See accompanying notes F-5 50 AVIRON CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, ------------------------------------ 1998 1999 2000 --------- -------- --------- Cash flows from operating activities: Net loss ......................................................... $ (54,802) $(61,870) $ (90,261) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization .................................. 3,807 5,511 9,102 Issuance of warrant for acquisition of in-process research and Development ...................................... -- -- 10,904 Cumulative effect of change in accounting principle ............ -- -- 12,750 Charge on exchange of convertible debt into common stock ....................................................... -- -- 2,662 Stock compensation for options granted to consultants .......... -- 348 127 Changes in assets and liabilities: Accounts receivable .......................................... 29 (3,241) (20,047) Inventory .................................................... -- (2,082) (2,182) Prepaid expenses and other current assets .................... (302) 294 (1,582) Deposits and other assets .................................... (1,179) (1,678) 735 Accounts payable ............................................. (844) 246 2,068 Accrued expenses and other liabilities ....................... 3,757 3,024 5,589 Deferred revenue ............................................. -- -- (3,000) Deferred rent ................................................ -- 1,098 (119) --------- -------- --------- Net cash used in operating activities ........................... (49,534) (58,350) (73,254) Cash flows from investing activities: Cash expended for intangible assets ............................ -- -- (15,350) Purchases of investments ....................................... (105,990) (43,980) (516,765) Maturities of investments ...................................... 99,127 86,284 468,982 Loan to officer ................................................ -- -- (500) Expenditures for property and equipment ........................ (13,958) (11,914) (7,949) --------- -------- --------- Net cash provided by (used in) investing activities .............. (20,821) 30,390 (71,582) Cash flow from financing activities: Principal payments on capital lease obligations ................ (445) (411) (101) Principal payments on debt obligation .......................... -- -- (2,878) Proceeds from issuance of: Convertible subordinated debt ................................ 96,055 -- -- Notes payable ................................................ -- 15,337 740 Common stock, net ............................................ 1,019 12,951 183,660 Repurchase of common stock ..................................... (13,349) -- (4) --------- -------- --------- Net cash provided by financing activities ........................ 83,280 27,877 181,417 --------- -------- --------- Net increase (decrease) in cash and cash equivalents ............. 12,925 (83) 36,581 Cash and cash equivalents, at beginning of year .................. 15,239 28,164 28,081 --------- -------- --------- Cash and cash equivalents, at end of year ........................ $ 28,164 $ 28,081 $ 64,662 ========= ======== ========= Supplemental schedule of non-cash financing and Investing activities: Warrant issued in connection with: Intangible and other assets .............................. $ -- $ -- $ 1,550 Legal settlement ......................................... $ -- $ -- $ 313 Exchange of convertible notes due 2005 into common stock ........................................................ $ -- $ -- $ 53,630 Acquisition of intangible assets, net of cash paid and warrants issued .......................................... $ -- $ -- $ 34,353 Supplemental disclosures of cash flow information: Cash paid for interest ......................................... $ 2,999 $ 6,364 $ 7,600
See accompanying notes. F-6 51 AVIRON NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business We were incorporated in the State of California in April 1992 and were reincorporated in the State of Delaware in November 1996. The consolidated financial statements include the accounts of Aviron and our wholly-owned subsidiary, Aviron UK Limited. All significant intercompany accounts and transactions have been eliminated. We are a biopharmaceutical company focused on the prevention of disease through innovative vaccine technology. We have one operating segment and are currently concentrating our product development and commercialization efforts on our lead product candidate, FluMist, an investigational live virus vaccine delivered as a nasal mist for the prevention of influenza. On December 28, 2000, the United States Food and Drug Administration, or FDA, accepted for review our Biologics License Application, or BLA, for FluMist to prevent influenza in healthy children and healthy adults. We anticipate working on a number of other long-term development projects which involve experimental and unproven technology. The projects may require many years and substantial expenditures to complete and may ultimately be unsuccessful. Therefore, we will need to obtain additional funds from outside sources to continue our research and development activities, fund operating expenses, pursue regulatory approvals and build production, sales and marketing capabilities, as necessary. Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Concentration of Credit Risk Cash, cash equivalents and investments are financial instruments that potentially subject us to concentrations of credit risk. We primarily invest in money market funds, U.S. government obligations, notes of U.S. corporations, certificates of deposit, commercial paper and foreign government securities. By policy, we limit the amount of credit exposure to any one entity or financial institution and to any one type of investment other than securities issued by the U.S. government. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. Cash equivalents include approximately $26.7 million and $38.8 million in money market funds at December 31, 1999 and 2000, respectively. Investments Our entire investment portfolio is currently classified as available-for-sale and is carried at fair value based on quoted market prices with the unrealized gains and losses included in stockholders' equity. The amortized cost of debt securities classified as available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains or losses and declines in value judged to be other-than-temporary, if any, are included in other income. The cost of securities sold is based on the specific identification method. We have not experienced any significant realized gains or losses on our investments. Accounts Receivable Accounts receivable is comprised principally of amounts receivable from Wyeth in connection with reimbursement of certain expenses associated with the development and commercialization of FluMist, our live cold-adapted virus vaccine. (See Note 3.) F-7 52 Inventory Inventory is comprised principally of sprayer components that will be used in the manufacture of commercial batches of FluMist for sale. Inventory is stated at the lower of cost (FIFO) or market value. Intangible Assets Intangible assets are comprised principally of the costs related to the restructuring of our manufacturing agreement for the manufacturing operation in the United Kingdom, which are being amortized on a straight-line basis over the life of the amended contract manufacturing agreement of approximately 6 years (See Note 4.) Accumulated amortization on intangible assets as of December 31, 2000 was $2.2 million. Property and Equipment Property and equipment is stated at cost. Depreciation, which commences once assets are placed in service, is provided on a straight-line basis over the estimated useful lives of the respective assets, which range from three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of their useful lives or the term of the leases, which range from 18 months to 20 years. Revenue Recognition Research payments under collaborative arrangements and grants are recognized as revenue based on research expenses incurred as provided for under the terms of the arrangements. We previously recognized non-refundable up-front license fees as revenue when received and when all of our significant contractual obligations relating to the fees had been met. Effective January 1, 2000, we changed our method of accounting for non-refundable up-front license fees to recognize such fees over the research and development period of the agreement. We believe the change in accounting principle is preferable based on guidance provided in SEC Staff Accounting Bulletin No. 101 -- Revenue Recognition in Financial Statements. The $12.8 million cumulative effect of the change in accounting principle, calculated as of January 1, 2000, was reported as a charge in the year ended December 31, 2000. The cumulative effect was initially recorded as deferred revenue and is being recognized as revenue over the five-year estimated research and development period of the agreement. During the year ended December 31, 2000, the impact of the change in accounting was to increase net loss by $9.8 million, or $0.47 per share, comprised of the $12.8 million cumulative effect of the change as described above ($0.62 per share), net of $3.0 million of the related deferred revenue which was recognized as revenue during 2000 ($0.15 per share). The remainder of the related deferred revenue will be recognized in revenue approximately as follows: $3.0 million per year in 2001 through 2003, inclusive, and $750,000 in 2004. The pro forma amounts presented in the income statement were calculated assuming the accounting change was made retroactive to prior periods. Incentive milestone payments received during the research and development phase of collaborative arrangements are recognized as revenue upon achievement of the incentive milestone events, which represent the culmination of the earnings process because we have no future performance obligations related to the payment. Incentive milestone payments are triggered either by the results of our research efforts or by events external to Aviron, such as regulatory approval to market a product or the achievement of specified sales levels by a marketing partner. Contract revenue for services provided by our animal research facility is recognized when services are provided pursuant to the contract. Amounts received in advance are recorded as deferred revenue until the related revenue is recognized. Stock Compensation We account for stock options granted to employees using the intrinsic-value method and thus recognize no compensation expense for options granted with exercise prices equal to the fair value of our common stock on the date of the grant. F-8 53 Net Loss per Share We compute net loss per share in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share, or SFAS 128. SFAS 128 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share, if more dilutive, for all periods presented. In accordance with SFAS 128, basic net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share has not been presented separately as, given our net loss position, the result would be anti-dilutive. Had we been in a net income position, diluted earnings per share would have been presented separately and would have included the shares used in the computation of basic net loss per share as well as the effect of an additional 3,159,451, 3,485,233 and 2,995,448 shares for the years ended December 31, 1998, 1999 and 2000, respectively, related to the exercise of outstanding options and warrants and the conversion of the convertible subordinated notes into common stock, which shares are not included above. The number of additional shares has been determined using the treasury stock method for options and warrants and the as if converted method for convertible debt. Reporting Comprehensive Income (Loss) Statement of Financial Accounting Standard No. 130, Reporting Comprehensive Income, or SFAS 130, establishes rules for reporting and display of comprehensive income (loss) and its components. SFAS 130 requires unrealized gains or losses on our available-for-sale investments, which are reported in the stockholders' equity, to be included in the comprehensive income (loss). As such items have not been material, separate presentation has not been included in the Statement of Stockholders' Equity. However, the amounts of the change in net unrealized gain (loss) in available-for-sale investments for the years ended December 31, 1998, 1999 and 2000 approximate ($41,000), ($155,000) and 139,000, respectively. New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, which is required to be adopted in the first quarter of 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires companies to recognize all derivatives as either assets or liabilities on the balance sheet and measure these instruments at fair value. Management does not anticipate that the adoption of SFAS 133 will have a significant adverse effect on the results of our operations or our financial position. 2. LICENSE AGREEMENTS ARCH Development Corporation In July 1992, we entered into a license agreement with ARCH Development Corporation, or ARCH, pursuant to which we obtained an exclusive, worldwide commercialization license, with the right to sublicense, to patent rights and related intellectual property and materials pertaining to the herpes simplex viruses, EBV and various recombinant methods and materials. In return for the rights granted to us under this agreement, we will make payments to ARCH upon the achievement of certain milestones in the development of products covered by the license and will pay royalties to ARCH on net sales of such products. The term of this agreement extends until the expiration of the last-to-expire patent rights covered under the license. ARCH had asserted an interpretation of the financial terms of this agreement, relating to the license by us of its EBV technology to SmithKline Beecham Biologicals S.A., or SBB, a division of GlaxoSmithKline, and to our sublicense of certain HSV technology to NeuroVir Therapeutics, Inc., or NeuroVir, formerly known as NeuroVir Research, Inc., both of which would have required us to pay ARCH a portion of any future or past payments, including sublicense fees and milestone payments that we received under the SBB and NeuroVir agreements. On May 8, 2000, we entered into a settlement agreement with or ARCH pursuant to which we transferred to ARCH one-half of our ownership interest in Series A preferred shares of NeuroVir, transferred one-half of our ownership interest in a warrant to acquire shares of common stock of NeuroVir at a price of $5.00 Canadian per share that expires on the earlier of May 31, 2003 or the closing of an initial offering of NeuroVir, paid cash of $312,500 and issued a warrant to purchase 14,077 shares of our common stock at an F-9 54 exercise price of $23.00 per share that expires on June 23, 2005. The value of the warrant of our common stock at the date of issuance was determined to be $312,500 using the Black-Scholes option valuation model. The total cost of the settlement was valued at $625,000, which was recognized as an expense in the year ended December 31, 1999 since the settlement was judged to be probable and estimable at that time. In addition, as part of this settlement, we agreed to pay ARCH 25% of milestones earned under our agreement with SBB. During November 2000, we received a milestone of $1.5 million from SBB of which $375,000 was paid to ARCH. The Mount Sinai School of Medicine In 1993, we entered into a technology transfer agreement with The Mount Sinai School of Medicine of the City University of New York, or Mount Sinai, to acquire certain patent rights and technical information in exchange for warrants to purchase common stock. Warrants for the exercise of 26,079 shares at an exercise price of $10 per share remain outstanding at December 31, 2000. These warrants expire in November 2001, if unexercised. University of Michigan In February 1995, we signed a license agreement with the University of Michigan which gives us a worldwide license to the University of Michigan's inventions and discoveries related to a cold-adapted influenza vaccine, including the ability to develop, use, sublicense, manufacture and sell products and processes claimed in the patent rights. Under the arrangement, we paid the University of Michigan and expensed a $100,000 fee and issued shares of Series B preferred stock (which converted into 264,746 shares of common stock upon the closing of our initial public offering), resulting in a charge to research and development expense of approximately $1,588,000. Upon commercialization of the vaccine product, the license agreement provides that we will pay royalties based on net revenues and will issue a warrant to purchase 1.25% of our then total outstanding common stock at an exercise price equal to $10.00 per share. The warrant will be exercisable for five years after its issuance date. On February 16, 2000, we amended our agreement with the University of Michigan to accelerate the issuance of a warrant to the university. As a result of this amendment, we granted the University of Michigan a warrant to purchase 340,000 shares of Aviron common stock at an exercise price of $10.00 per share. The warrant was valued using the Black-Scholes option valuation model and, as the related technology is under development, we recorded a one-time non-cash charge of approximately $10.9 million in the first quarter of 2000. Upon the date of the first commercial sale of FluMist, if we have more than 27.2 million shares of common stock then outstanding, we will issue additional warrants allowing the University of Michigan to purchase 1.25 percent of the excess shares on the same terms. Should we be required to issue additional warrants upon the date of the first commercial sale of FluMist, the warrants would be valued at that time using the Black-Scholes option valuation model, capitalized as a developed technology asset and amortized to expense over the estimated useful life of the FluMist product. NeuroVir Therapeutics, Inc. In July 1996, we licensed certain of our patent rights covering or relating to the use of HSV-2 for treatment of cancer and for gene therapy, but excluding use in vaccines, to NeuroVir, or NeuroVir, formerly NeuroVir Research, Inc. in exchange, we received 114,584 shares of common stock, 802,083 shares of preferred stock and a warrant to purchase 250,000 shares of common stock. This warrant may be exercised at $5.00 (Canadian dollars, or Cdn.) and expires on the earlier of (1) May 31, 2003, or (2) the closing date of the public offering of NeuroVir's common stock with net proceeds of at least an aggregate of $10.0 million (Cdn.) and an issue price of at least $3.50 (Cdn.) per share. As part of our settlement with ARCH, see discussion above, we agreed to transfer to ARCH one-half of our ownership interest in the preferred stock and the warrant to acquire common stock of NeuroVir. Our investment has a carrying value of zero, and we are under no obligation to provide any funding to NeuroVir. As no market exists for NeuroVir's capital stock, it is not practicable to determine the fair value of shares held by us. 3. COLLABORATION AGREEMENTS Wyeth Lederle Vaccines On January 12, 1999, we announced a worldwide collaboration for the marketing of FluMist with Wyeth Lederle Vaccines, or Wyeth, a business unit of Wyeth-Ayerst Laboratories, the pharmaceutical division of American Home Products Corporation, or AHP. This agreement became effective in March 1999. F-10 55 Under the agreement, we granted Wyeth exclusive worldwide rights to market FluMist. Wyeth and Aviron will co-promote FluMist in the United States, while Wyeth has the exclusive right to market the product outside the United States. In each case, Wyeth holds the marketing rights for up to eleven years. The collaboration excludes Korea, Australia, New Zealand and certain South Pacific countries. The companies will collaborate on the regulatory, clinical and marketing programs for the product. As consideration under the agreement, we received a non-refundable cash payment of $15.0 million for the license that was recognized as revenue during the quarter ended March 31, 1999. In connection with the adoption of SAB 101, we changed our method of accounting for this license fee as of January 1, 2000. (See Note 1-Revenue Recognition.) During the period from March 15 through December 31, 1999, we recorded $6.0 million of revenue in expense reimbursements from Wyeth for a portion of our clinical development and commercialization costs. During 2000, we recorded $30.2 million of revenue under our agreement with Wyeth which is comprised of a $15.5 million milestone related to the acceptance for review by the FDA of our BLA for FluMist on December 28, 2000, the recognition of $3.0 million of revenue under SAB 101, which was included in the cumulative effect adjustment made as of January 1, 2001, and $11.7 million of revenue in expense reimbursements from Wyeth for a portion of our clinical development and commercialization costs. In addition, we will receive $20.0 million upon FDA marketing approval for FluMist, and we can also earn an additional $20.0 million in milestone payments for advisory body recommendations and expanded label claims. In addition, we are entitled to receive a $10.0 million payment for submission of a license application in Europe, a $27.5 million payment for the approval of a liquid formulation of FluMist, and up to $50.0 million upon licensure in international regions. Compensation for achieving supply targets, FDA-approved expansions into additional population groups and other improvements to the product is included in the agreement terms and may total up to $67.5 million. The granting of certain rights under the license would trigger additional payments in excess of $140.0 million to us. Consideration for the license also includes a commitment to provide us with up to $40.0 million in financing. As of December 31, 2000, AHP had purchased shares of our common stock valued at $20.0 million. The availability of the remaining $20.0 million is contingent upon regulatory approval of the product. The potential value for the license fees, milestones and financing support that we could receive under the collaboration exceeds $400.0 million. Wyeth will distribute FluMist and record all product sales. In addition to the payments mentioned above, if FluMist is approved for marketing, we anticipate that we will earn approximately 40 percent of FluMist product revenues from Wyeth in the form of product transfer payments and royalties. These payments are higher in the United States than internationally. We will incur expenses to supply and co-promote the product. Wyeth will share in the clinical development and commercialization expenses for FluMist. In addition, if Aviron meets joint supply forecasts, Wyeth has agreed to spend $100.0 million for advertising and promotion of FluMist over the first three years of commercialization in the United States. In January 2001, Wyeth paid us $10 million as an advance against future amounts that Wyeth will owe us under our agreement with them to support inventory buildup for 2001. CSL Limited In June 1998, we and CSL Limited, or CSL, of Victoria, Australia jointly announced that we will collaborate on the development, sale and distribution of FluMist in Australia, New Zealand and some countries in the South Pacific. We and CSL will jointly carry out additional clinical trials in Australia for FluMist. Under the agreement, CSL will sponsor the marketing application with the Therapeutic Goods Administration, Australia's equivalent to the FDA. CSL will have exclusive rights to sell and distribute FluMist in these countries, and we will share profits from these sales. We also will benefit from expansion of CSL's current flu vaccine in pediatric and healthy adult market segments following the approval to market FluMist in the territory. In addition, CSL has agreed, under an option agreement, to grant warrants to us to purchase CSL common stock upon CSL's attainment of certain milestones. 4. MANUFACTURING AGREEMENT On July 2, 1999, we extended our collaboration with Celltech Medeva, or Medeva, the international marketing arm of Celltech Group Plc, or Celltech, covering the manufacture of key components of FluMist through December 2005. We paid Medeva $1.0 million as an up-front fee upon execution of the agreement and accrued an additional $1.0 million of such fees as of December 31, 1999. Under the terms of this agreement, we were required to make specified payments to Medeva for reaching certain technological, regulatory and employment milestones, supplying the vaccine components of FluMist, and providing the use of facilities with minimum amounts stipulated for each contract year. These minimum payments include all of the milestone, supply, and facility use payments described above. We recorded expense associated with the Medeva contracts during 1998, 1999, and 2000 in the amounts of $6.6 million, $7.0 million and $5.9 million, respectively. F-11 56 During October 2000, Celltech sold its vaccines business, which included our existing FluMist contract manufacturing agreement, to PowderJect Pharmaceuticals Plc, or PowderJect. Also in October 2000, we restructured our contract manufacturing agreement with Evans Vaccines Limited, or Evans, a division of PowderJect. Under the new agreement, which expires in June 2006, responsibility for bulk manufacture of FluMist in the Speke, U.K. facility transferred to Aviron and Evans employees working on FluMist became our employees. We also entered into subleases of the FluMist manufacturing areas on the existing site. As consideration for the restructuring of our agreement, we made an initial payment of $15.0 million and will make additional annual payments of $3.9 million over each of the next five years to Evans. As further consideration for the amendment to the agreement, we agreed to make payments totaling $19.0 million, which will be paid over the term of the agreement based on net sales of FluMist. Evans also received warrants to purchase 63,162 shares of our common stock at an exercise price of $47.50 per share. The warrants, which expire annually at the rate of 10,527 shares per year on October 10, 2001 through 2006, were valued at approximately $1.2 million. We have valued the aggregate consideration, including the net present value of the annual payments, at approximately $50.2 million, which we recorded as an intangible asset and will amortize over the approximate 6-year term of the agreement with Evans. We have also recorded $34.0 million of obligations to Evans consisting of the net present value of the annual payments of $3.9 million and the $19.0 million obligation. The $19.0 million obligation has not been discounted because the timing of the related payments is not fixed, but is based on net sales of FluMist. In addition, we agreed to make payments during the term of the agreement of $225,000 per year for the use of the Aviron unit in the Evans manufacturing plant, payments up to an aggregate total of $3.0 million for the attainment by Evans of specific milestones and payments for other support services based on the costs of these services incurred. Rent and other support services will be expensed as the costs are incurred, and milestones will be expensed as they become due. In October 2000, we agreed to acquire a 25-year lease from Celltech on approximately eight acres of land in Speke, U.K. We intend to utilize an existing 45,000 square foot structure on the property to build a new FluMist manufacturing facility. Under the terms of the Celltech agreement, we will pay Celltech Pound Sterling1.5 million (British Pounds Sterling) and will assume the obligations for the remaining 24 years of the 25-year land lease. The minimum annual lease payments are Pound Sterling333,000 (British Pounds Sterling) per year during the term of the lease. 5. DEVELOPMENT AGREEMENTS SmithKline Beecham Biologicals S.A. In October 1995, we signed an agreement with SBB defining collaboration on our EBV vaccine technology. Under the terms of this agreement, we granted SBB an exclusive license to produce, use and sell non-live EBV vaccines incorporating our technology for prophylactic and therapeutic uses on a worldwide basis, except in Korea. We retained U.S. co-marketing rights to a monovalent EBV vaccine formulation, which will be supplied by SBB. We are entitled to royalties from SBB based on net sales of the non-live EBV vaccine. No assurance can be given, however, that we will receive any future payments from SBB or that SBB will not terminate this agreement. We recorded revenue under this agreement during 1997 of $1,477,000. No revenue was recorded under this agreement in 1998 or 1999. In October 2000, we announced that SBB has initiated a Phase 2 clinical trial of our investigational vaccine against Epstein-Barr virus. The initiation of this trial triggered the payment of a milestone by SBB to us in the amount $1.5 million, which was received in November 2000. Under our agreement with ARCH (see Note 2), $375,000 of these funds was forwarded to ARCH. The net amount of this milestone was recognized as revenue during the fourth quarter of 2000. Sang-A Pharm. Co., Ltd. In May 1995, we entered into a Development and License Agreement with Sang-A Pharm. Co., Ltd., or Sang-A. We granted to Sang-A certain exclusive clinical development, manufacturing and marketing rights in Korea for specified products developed by us, including vaccines for influenza, cold-adapted and recombinant, EBV, CMV, HSV-2 and RSV on meeting certain conditions. However, we are under no obligation to develop any product. Sang-A also will make payments to us upon Sang-A's meeting certain regulatory milestones for each product in Korea and will pay a royalty to us on net sales of such products in South and North Korea. No assurance can be given, however, that we will receive any future payments from Sang-A or that Sang-A will not terminate our agreement with us. In January 1997, Sang-A declared bankruptcy and continues to operate in receivership. In November 2000, we F-12 57 terminated the portion of the contract relating to FluMist. We are unable to predict what further long-term effect, if any, the bankruptcy will have on Sang-A and on our remaining agreement with Sang-A. 6. INVESTMENTS Investments consist of the following (in thousands):
GROSS GROSS UNREALIZED UNREALIZED MARKET COST GAINS LOSSES VALUE ------- ---------- ---------- ------- As of December 31, 1999: Corporate commercial paper .............. $ 4,386 $ 25 $ -- $ 4,411 U.S. corporate notes .................... 9,251 -- (139) 9,112 U.S. corporate bonds .................... 9,385 3 (40) 9,348 U.S. government agency obligations ...... 1,004 -- (13) 991 Municipal bonds ......................... 1,810 -- (9) 1,801 ------- ----- ----- ------- $25,836 $ 28 $(201) $25,663 ======= ===== ===== ======= As of December 31, 2000: Corporate commercial paper .............. 72,894 26 (65) 72,855 U.S. corporate bonds .................... 23,189 45 (52) 23,182 U.S. government agency obligations ...... 2,000 12 -- 2,012 ------- ----- ----- ------- $98,083 $ 83 $(117) $98,049 ======= ===== ===== =======
Included in the above table are U.S. corporate bonds and commercial paper and U.S. government agency obligations with fair values of $1,428,000 and $25,892,000 at December 31, 1999 and 2000, respectively, which have been classified as cash equivalents in the accompanying balance sheet. All securities had maturities of one year or less except for securities with a market value of $4,506,000 at December 31, 2000, which had maturities no greater than two years. 7. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands):
DECEMBER 31, ------------------ 1999 2000 ------- -------- Manufacturing equipment................................. $ 5,978 $ 6,551 Laboratory equipment.................................... 5,992 7,780 Computer equipment...................................... 3,113 4,219 Office equipment........................................ 1,070 1,202 Leasehold improvements.................................. 18,930 19,856 Construction in progress................................ 280 3,704 ------- -------- 35,363 43,312 Less accumulated depreciation and amortization.......... (9,728) (15,605) ------- -------- $25,635 $ 27,707 ======= ========
Construction in progress is principally comprised of deposits to initiate the construction of equipment and for work completed on construction projects. Depreciation expense on property, plant and equipment for the years ended December 31, 1998, 1999 and 2000 amounted to $3.0 million, $4.8 million, and $5.9 million, respectively. As of December 31, 2000, total assets in the amount of $6.2 million with accumulated depreciation of $2.8 million had been pledged as collateral under the terms of a credit facility, with an additional $2.2 million of assets having been pledged in early 2001. (See Note 10.) F-13 58 8. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consisted of the following (in thousands):
DECEMBER 31, ----------------- 1999 2000 ------- ------- Accrued manufacturing............................ $ 3,394 $ 4,394 Accrued legal expenses........................... 965 502 Accrued testing services......................... 775 340 Accrued expense other............................ 1,457 2,418 ------- ------- Total.................................. $ 6,591 $ 7,654 ======= =======
9. LEASE ARRANGEMENTS We lease certain office, equipment, warehouse, laboratory and manufacturing facilities under capital and operating lease agreements. Several leases include options for renewal or purchase and contain clauses for payment of operating costs, including real estate taxes, utilities, insurance and maintenance. The lease that governs our Mountain View, California facilities, which house our administrative offices and a portion of our laboratory facilities, extends until 2005 and provides the option for renewal for two additional five-year periods. Our Santa Clara, California facility, which contains additional office and laboratory space, is leased for an initial term that expires in 2019 and provides an option to extend for one additional term of seven years. We have also leased additional office space in a second facility in Santa Clara under a lease that expires in 2004 with an option to extend for one additional term of 5 years. Lease terms for our manufacturing facilities in the U.K. and Pennsylvania are described in Note 4. We also sublease a portion of our leased facilities. Rent expense for all operating leases charged against earnings for the years ended December 31, 1998, 1999 and 2000 was approximately $3.8 million, $6.0 million and $6.5 million, respectively, which is net of sublease income in the amount of approximately $58,000, $885,000 and $1.9 million for the respective years. At December 31, 2000, our aggregate commitments under such arrangements, net of sublease income, are as follows (in thousands):
CAPITAL LEASE OPERATING OBLIGATIONS LEASE ----------- --------- Years ending December 31, 2001..................................... $ 10 $ 5,552 2002..................................... -- 5,787 2003..................................... -- 5,860 2004..................................... -- 5,885 2005..................................... -- 3,671 Thereafter............................... -- 28,084 ---- ------- 10 $54,839 ======= Less amounts representing interest......... (1) ---- 9 Less current portion....................... 9 ---- $ -- ====
In October 1997, we entered into a 7-year operating lease agreement for a facility in Pennsylvania to be used in the manufacturing, packaging and storage of our products. The facility is owned by a contract manufacturer who will provide services to us. The lease includes an option allowing us to extend the lease beyond the initial term. The agreement requires us to pay certain operating costs including a portion of utilities and insurance. The agreement provided for the deferral of 40 percent of the base monthly rental for a 2-year period, which allowed us to defer the payment of an aggregate rental amount of approximately $1.1 million. One-half of this amount was repaid in January 2000, and the remainder is to be repaid in the first quarter of 2001. We are required to deposit and maintain the deferred amount in an escrow account. The agreement also requires the lessor to provide a $1.0 million improvement allowance for construction and improvements to the facility. We will repay $500,000 of the improvement allowance to the lessor through an additional charge per unit of production. The $500,000 is presently deposited in an escrow account. These amounts have been accounted for as deferred rent in the accompanying balance sheet. As of December 31, 1999 and 2000, deferred rent related to this facility amounted to approximately $1.6 million and $1.1 million, respectively. F-14 59 In February 1999, we entered into a 20-year lease in Santa Clara, which provides for a stipulated rate of increase in the lease payment. Under Financial Accounting Standard Board Technical Bulletin No. 85-3, Accounting for Operating Leases with Scheduled Rent Increases, we are accounting for the full lease payments under this lease on a straight-line basis with the differential between the current lease payment and the straight-line rent expense being accounted for as deferred rent in the accompanying balance sheet. As of December 31, 1999 and 2000, deferred rent related to this lease amounted to approximately $570,000 and $1.0 million, respectively. In October 2000, we agreed to lease additional space in the United Kingdom for manufacturing operations. (See Note 4.) Since this lease was not fully executed as of December 31, 2000, the table above does not include annual lease payments of 333,000 British Pounds Sterling for the remaining 24-year term of this lease. 10. LONG-TERM OBLIGATIONS Convertible Debt On March 30, 1998, we sold unsecured convertible subordinated notes in the aggregate principal amount of $100.0 million at an interest rate of 5 3/4% due 2005, or the 2005 Notes. Net proceeds to us, after deducting legal and other expenses, were approximately $96.1 million. The 2005 Notes are convertible into common stock at any time after 90 days following the original issuance through maturity, unless previously redeemed, at a conversion price of $30.904 per share (equivalent to a conversion rate of approximately 32.3583 shares per $1,000 principal amount of 2005 Notes), which is subject to adjustment in certain events. Interest on the 2005 Notes is paid semi-annually on April 1 and October 1. We can redeem the 2005 Notes on or after April 6, 2001. During the fourth quarter of 2000, we exchanged approximately $51.7 million aggregate principal amount of our 2005 Notes for approximately 1.7 million shares of our common stock in a number of privately negotiated transactions. Additional non-cash interest expense related to the exchanges was approximately $2.7 million. The $1.2 million of unamortized debt issue costs related to the 2005 Notes exchanged have been charged to additional paid-in capital. (See Subsequent Events, Note 16.) The principal amount of the 2005 Notes outstanding as of December 31, 1999 and 2000 were $100.0 million and $48.3 million, respectively, and their fair market values based on quoted market prices approximated $70.5 million and $106.8 million, respectively. Credit Facilities During 1999, we entered into two new credit facilities that are secured by various assets and require the maintenance of a minimum balance of cash and investments in the amount of $20.0 million. On December 29, 1999, $15.4 million was drawn under these credit facilities and $740,000 was drawn in December 2000. An additional loan of approximately $1.2 million was drawn in January 2001. The loans are being repaid over varying terms ranging from 48 to 72 months in monthly payments (which include principal and interest) ranging from 1.9% to 2.6% of the original principal sum of each advance. One of the credit facilities will have a residual payment of 5% of the original principal amount that will be due at the 73rd month. The principal amounts of loans outstanding at December 31, 2000, was approximately $13.2 million, which approximates the fair value of these obligations. These loans bear interest at rates ranging from 11.63% to 13.76% with a weighted-average rate of 12.44%. Principal payments during each of the years from 2001 through 2005 are approximately $3.1 million, $3.5 million, $3.7 million, $1.2 million, and $1.5 million, respectively. Obligations to Evans In conjunction with the restructuring of our agreement with Evans (see Note 4), we recorded $34.0 million of obligations to Evans, consisting of the net present value of a stream of annual payments of $3.9 million in each of the next five years and a total obligation of $19 million, which will be paid over the term of the agreement based on net sales of FluMist. The $19.0 million obligation has not been discounted because the timing of the related payments is not fixed, but is based on net sales of FluMist. No payments had been made against these obligations as of December 31, 2000. F-15 60 11. STOCKHOLDERS' EQUITY Common Stock The number of authorized shares was increased from 30.0 million to 100.0 million shares based on a vote of stockholders at our Annual Meeting on June 1, 2000. Certain shares of common stock issued to members of management in 1996 through exercises of stock options are subject to repurchase by us at $0.50 - $2.50 per share. The repurchase rights lapse over time based on the continued employment of the individuals in accordance with vesting provisions specified by the Board of Directors. At December 31, 1999, there were 10,540 shares remaining subject to our right of repurchase. Our repurchase rights expired as of June 30, 2000. On January 11, 2000, we received a commitment for up to $48.0 million in equity financing from Acqua Wellington North America Equities Fund, Ltd., or Acqua Wellington, in amounts of up to $4.0 million per month, at our discretion, through January 2001. On June 9, 2000, Acqua Wellington increased its equity financing commitment to $8.0 million per month and increased its total commitment from $48.0 million to $84.0 million through February 2001. The commitment is reduced by the monthly allocation whether we draw on the commitment or not. These funds are available at our discretion at a small discount to the market price of our common stock with the market price to be determined based on the volume weighted average market price for the 18 trading days ending two business days prior to sale. During 2000, we sold a total of 2,475,850 of our common stock to Acqua Wellington for total proceeds of $84.0 million, resulting in an average price per share of $33.93. Of this amount, $8.0 million was outside of the Acqua Wellington financing commitment under the agreement. On January 25, 2001, we sold an additional 161,060 shares to Acqua Wellington for total proceeds of $8.0 million, resulting in an average price per share of $49.67. With this purchase, Acqua Wellington has completed their commitment under this agreement. During the year ended December 31, 2000, we sold 309,995 shares of common stock to Ridgeway Investment Ltd. for total proceeds of $6.0 million, or $19.36 per share, we sold 910,704 shares of common stock to American Home Products, for total proceeds of $18.7 million, or an average price of $20.53 per share, and we sold 450,000 shares of common stock in a private transaction to Biotech Invest, S.A., an affiliate of Biotech Target, S.A., at a price of $48.00 per share for aggregate proceeds of $21.6 million. On April 10, 2000, we sold 2,200,000 shares of our common stock in a follow-on public offering at a price of $22.50 per share. Our aggregate net proceeds from the public offering, after expenses and underwriters' discounts and commissions, were approximately $46.2 million. Warrants Outstanding warrants to purchase common stock are as follows at December 31, 2000:
NUMBER OF SHARES EXERCISE PRICE EXPIRATION - ---------------- -------------- ---------------- 26,079.............................. $10.00 November 2001 340,000.............................. $10.00 February 2005 9,398.............................. $53.00 October 2005 63,162.............................. $47.50 October 2001 to October 2006
Employee Stock Purchase Plan We have adopted an Employee Stock Purchase Plan under which employees can purchase shares of our common stock based on a percentage of their compensation but not greater than 15 percent of their earnings. The purchase price per share must be equal to the lower of 85% of the market value at the beginning or end of the applicable offering period. A total of 350,000 shares of common stock are reserved for issuance under the plan. As of December 31, 2000, 165,633 shares had been issued under the Plan. F-16 61 Stock Options On September 15, 1992, the board of directors adopted the 1992 Stock Option Plan, or the 1992 Plan. In March 1996, we amended and restated the 1992 Plan as the 1996 Equity Incentive Plan, or the 1996 Plan. On June 1, 2000, an amendment of the 1996 Plan was approved by the stockholders to increase the total shares of common stock reserved for future issuance under the 1996 Plan to 4,730,000. The 1996 Plan provides for the grant of incentive and nonstatutory stock options to our employees and consultants and became effective in November 1996 upon the closing of the initial public offering. In March 1996, we adopted the 1996 Non-Employee Directors' Stock Option Plan, or the Directors' Plan, under which 200,000 shares of common stock are reserved for issuance pursuant to nonstatutory stock options. The Directors' Plan became effective upon the closing of the initial public offering. On June 1, 2000, an amendment of the Directors' Plan was approved by the stockholders to increase the total shares of common stock reserved for future issuance under the Directors' Plan to 350,000. In September 1999, the board of directors adopted the 1999 Non-Officer Equity Incentive Plan, or the 1999 Plan. Under the 1999 Plan, 1,900,000 shares of common stock were reserved for future issuance. The 1999 Plan provides for the grant of nonstatutory stock options, stock bonuses, rights to purchase restricted stock, and stock appreciation rights to our consultants and employees who are not officers or directors. In July 2000, the board of directors approved an amendment to the 1999 Plan to increase the total shares of common stock reserved for future issuance under the 1999 Plan to 3,200,000. Our plans had 2,334,210 shares available to grant options to employees, consultants and directors at December 31, 2000. Most of the options granted have 10-year terms. The standard vesting schedule provides for vesting of options ratably over 50 months of continued employment. However, during 2000, in order to motivate our employees and align their interests with our stockholders, we granted options for the purchase of a total of approximately 1.7 million shares of common stock at exercise prices ranging from $24.00 to $51.50, the vesting for which is linked to performance goals for FluMist. Of this amount, options for approximately 1.5 million shares remained outstanding at December 31, 2000. Options for approximately 380,000 shares became exercisable upon the acceptance for review by the FDA of our BLA submission on December 28, 2000. Options for approximately 647,000 shares will become exercisable at the earlier of the approval of FluMist for marketing in the United States, or five years from the date of grant. Options for approximately 493,000 will become exercisable when FluMist is approved for marketing in the United States, but only if this event occurs in 2001; otherwise, these options will be canceled. If these options for approximately 493,000 shares become exercisable in 2001, we will incur compensation expense on the date that they become exercisable in an amount equal to the difference between the exercise price of the options and the then current fair market value of our common stock. In addition, we have issued non-qualified stock options outside of the above plans. F-17 62 A summary of our stock option activity, and related information for the years ended December 31, 1998 through 2000 follows:
1998 1999 2000 ---------------------- -------------------- ---------------------- WEIGHTED- WEIGHTED- WEIGHTED- AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE ---------- --------- ---------- -------- ----------- ------- Outstanding -- beginning of year .......... 885,819 $ 8.87 1,714,535 $19.08 3,284,776 $20.51 Granted ................................... 1,068,717 $24.69 2,017,200 $20.55 2,974,654 $31.98 Exercised ................................. (155,553) $ 2.80 (198,577) $ 5.66 (361,716) $17.79 Forfeited ................................. (84,448) $13.25 (248,382) $22.89 (427,345) $23.24 ---------- ---------- ----------- Outstanding -- end of year ................ 1,714,535 $19.08 3,284,776 $20.51 5,470,369 $26.74 ========== ========== =========== Weighted-average fair value of options Granted during year ..................... $ 19.23 $ 16.34 $ 25.93
During 1995, our officers exercised options granted outside the Plan for 168,000 shares by signing promissory notes amounting to $310,000 which bear interest at 5.73% subject to our right of repurchase which lapses over fifty months. As of December 31, 2000, $50,000 of the promissory notes was still outstanding. Our rights to repurchase any shares under these agreements expired in June 2000. We have recognized deferred compensation for certain options granted in 1997 and 1998. Total deferred compensation of approximately $2.1 million has been amortized over the vesting period of such options on an accelerated basis. A portion of these options vested immediately upon grant. Compensation expense related to these options recorded during the year ended December 31, 2000 was approximately $96,000. The options outstanding at December 31, 2000 have been segregated for additional disclosure as follows:
OPTIONS EXERCISABLE OPTIONS OUTSTANDING ---------------------------- ------------------------------------------------------- OPTIONS WEIGHTED- OPTIONS WEIGHTED-AVERAGE WEIGHTED- CURRENTLY AVERAGE OUTSTANDING AT REMAINING AVERAGE EXERCISABLE AT EXERCISE RANGE OF EXERCISE PRICES DEC. 31, 2000 CONTRACTUAL LIFE EXERCISE PRICE DEC. 31, 2000 PRICE - ------------------------ ---------------- ----------------- -------------- -------------- --------- $ 0.25 - $10.00 173,883 5.6 $ 5.54 165,939 $ 5.36 $ 10.01 - $20.00 913,406 8.7 $16.64 210,894 $16.77 $ 20.01 - $30.00 3,021,516 8.5 $24.47 1,054,968 $24.50 $ 30.01 - $40.00 633,945 9.1 $31.96 103,565 $31.38 $ 40.01 - $67.88 727,619 9.7 $49.35 12,396 $44.47
We have elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25, and related interpretations in accounting for our employee stock options because, as discussed below, the alternative fair value accounting provided for under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or SFAS 123, requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, if the exercise price of our employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. Pro forma net loss and net loss per share information is required by SFAS 123, which also requires that the information be determined as if we have accounted for our employee stock options under the fair market value method of that statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option valuation model with the following weighted-average assumptions: risk free interest rates of 4.85% for 1998, 6.65% for 1999, and 5.24% for 2000, respectively; volatility factors of the expected market price of our common stock of 0.80 for 1998, 0.79 for 1999 and 0.82 for 2000; no expected dividends; and a weighted-average expected life of the options of 7.2 years for 1998, 7.9 years for 1999 and 8.3 years for 2000. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our employee stock options and employee stock purchase plans have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can F-18 63 materially affect the fair market value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options and shares issued pursuant to the employee stock purchase plan. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. Our pro forma information follows (in thousands except for net loss per share information):
1998 1999 2000 --------- --------- --------- Pro forma net loss......................... $(64,883) $(72,122) $(128,466) Pro forma net loss per share (basic)....... $ (4.13) $ (4.55) $ (6.20)
Share Purchase Rights In October 1997, our board of directors adopted a Share Purchase Rights Plan. The Share Purchase Rights Plan provides for the distribution of certain rights to acquire shares of our Series A Junior Participating Preferred Stock, par value $0.001, or the "Rights," as a dividend for each share of common stock held of record as of October 23, 1997. The Rights are triggered and become exercisable upon the occurrence of either (i) the date of a public announcement of the acquisition of 20% or more beneficial ownership of our common stock by a person or group, or an "Acquiring Person", or (ii) ten business days (or such later time as may be set by the board of directors) after a public announcement of a tender or exchange offer for 20% or more beneficial ownership of our common stock by an Acquiring Person. If the Rights are triggered, each Right effectively provides its holder the right to purchase shares of common stock at a 50% discount from the market price at that time, upon payment of an exercise price of $150.00 per Right. Reserved Shares As of December 31, 2000, we have reserved shares of common stock for future issuance as follows: Options: Outstanding................................ 5,470,369 Available for grant........................ 2,334,210 Employee Stock Purchase Plan............... 184,367 Warrants................................... 438,639 Conversion of debt......................... 1,564,198 --------- 9,991,783 =========
12. INCOME TAXES As of December 31, 2000, we had federal and state net operating loss carryforwards of approximately $262.0 million and $12.9 million, respectively. We also had federal and California research and other tax credit carryforwards of approximately $4.9 million and $2.5 million, respectively. The federal net operating loss and credit carryforwards will expire at various dates beginning in the year 2007 through 2020, if not utilized. The state of California net operating loss and credit carryforwards will expire at various dates beginning in 2003 through 2005, if not utilized. Utilization of the federal and state net operating loss carryforwards may be subject to a substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses and credits before utilization. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets for financial reporting and the amount used for income tax purposes. Significant components of our deferred tax assets for federal and state income taxes as of December 31 are as follows (in thousands):
1999 2000 -------- --------- Net operating loss carryforwards .................... $ 61,300 $ 89,800 Research tax credits ................................ 6,400 7,400 Capitalized research and development expenses ....... 2,900 7,490 Deferred revenue .................................... 800 3,900 Other -- Net ........................................ 3,800 5,870 -------- --------- Net deferred tax assets ............................. 75,200 114,460 Valuation allowance ................................. (75,200) (114,460) -------- --------- $ -- $ -- ======== =========
F-19 64 Due to our lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $24.6 million and $39.3 million during the years ended December 31, 1999 and 2000, respectively. Approximately $5.5 million of the valuation allowance for deferred tax assets relates to benefits of stock option deductions which, when recognized, will be allocated directly to contributed capital. 13. COMMITMENTS In August 1998, we announced the signing of a worldwide multi-year supply agreement with Becton Dickinson and Company, or Becton Dickinson, in which Becton Dickinson will supply its AccuSpray(TM) non-invasive nasal spray delivery system for administration of FluMist. Under the agreement, we advanced a total of $2,000,000 to Becton Dickinson for facility expansion of plant capacity, which will be recovered against future payments for sprayers supplied under the agreement. As of December 31, 2000, $1,701,000 of the advance has not been recovered and is included in other assets in the accompanying balance sheet. As a result of the execution of the 25-year land lease in Speke, U.K. (discussed in Note 4), we are required to pay Celltech $1.5 million British Pounds Sterling (approximately $2.4 million) for the acquisition of a facility shell on the site. The lease is expected to be signed by the end of the first quarter of 2001. 14. RELATED PARTY TRANSACTIONS In 1995, we made unsecured loans to members of senior management totaling $100,000, which bear interest at 7.75% and which were due in April 2000. In 1997, we made two additional unsecured loans to members of senior management totaling $200,000, which bear interest at 7.75% and are due in February and July 2001, respectively. As of December 31, 2000, the unpaid balance was $50,000. In January 2000, we made a non-interest-bearing loan to C. Boyd Clarke, our Chairman, President and Chief Executive Officer, in the amount of $500,000. The loan, which is secured by real property, is repayable in equal annual installments over a five-year period. 15. LITIGATION On July 8, 1999, a lawsuit entitled Joany Chou v. The University of Chicago, ARCH Development Corp., Bernard Roizman and Aviron, was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, or Court, by an individual formerly associated with the University of Chicago. On September 30, 1999, this individual filed an amended complaint against the same defendants. This amended complaint appeared to assert claims of inventorship relating to the United States Patent Nos. 5,328,688, 5,795,713, 5,922,328, their foreign counterparts, and potentially other patents and applications; unjust enrichment; fraud; conversion; breach of fiduciary duty; breach of contract and breach of implied contract. The amended complaint seeks, among other things, money damages, an order correcting the inventorship and ownership of the patents referenced above, disgorgement, a constructive trust, possible injunctive and equitable relief, punitive damages, attorneys' fees, costs and interest. All of the claims appear to relate to patent and patent applications for HSV, and none appear to relate to our cold-adapted influenza product or technology or any other pipeline products in research or development. On February 18, 2000, the Court granted our motion to dismiss, thereby dismissing all pending claims made by the plaintiff against Aviron. On April 19, 2000, the plaintiff appealed the Court's ruling. We cannot be sure that we will prevail in the defense of this lawsuit in the event that the plaintiff is successful in reinstating her claims or in bringing in new claims against Aviron. 16. SUBSEQUENT EVENTS (UNAUDITED) Since December 31, 2000, we have exchanged approximately $33.5 million aggregate principal amount of our 2005 Notes for approximately 1.1 million shares of our common stock in a number of privately negotiated transactions. Additional non-cash interest expense related to the exchanges was approximately $1.6 million. The $800,000 of unamortized debt issue costs, related to the 2005 Notes exchanged, have been charged to additional paid-in capital. As of February 28, 2001, approximately $14.8 million aggregate principal amount of our 2005 Notes remains outstanding. F-20 65 In February 2001, we completed a public offering of 4,000,000 shares of our common stock at $50.00 per share and $200.0 million of 5 1/4% convertible subordinated notes due 2008, or the 2008 Notes. Aggregate net proceeds from this public offering were approximately $382.0 million, after estimated expenses and underwriters' discounts and commissions. In February 2001, we have taken an additional loan in the amount of approximately $1.0 million against our available credit facility. As of February 28, 2001, no further amounts are available under that agreement. F-21 66 EXHIBIT INDEX
ITEM DESCRIPTION - ---- ----------- 3.1 Bylaws of the Registrant(2). 3.2 Restated Certificate of Incorporation of the Registrant(2). 3.3 Certificate of Amendment of Amended and Restated Certificate of Incorporation(18). 4.1 Reference is made to Exhibits 3.1 and 3.2. 4.2 Specimen Stock Certificate. 4.3 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New York(1). 4.4 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New York(1). 4.5 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New York(1). 4.6 Warrant for Series A Preferred Stock, issued to The Mount Sinai School of Medicine of the City of New York(1). 4.7 Warrant for Series C Preferred Stock, issued to Raymond, James & Associates(1). 4.8 Investors Rights Agreement, dated July 18, 1995, among the Registrant and the investors named therein(1). 4.9 Common Stock Purchase Agreement between the Registrant and Biotech Target, S.A., dated as of March 27, 1997(3). 4.10 Rights Agreement between the Registrant and BankBoston, N.A., dated as of October 8, 1997(5). 4.11 Common Stock Purchase Agreement between the Registrant and American Home Products Corporation, dated as of December 16, 1999(13). 4.12 Common Stock Purchase Agreement between the Registrant and American Home Products Corporation, dated as of December 30, 1999(13). 4.13 Common Stock Purchase Agreement between the Registrant and American Home Products Corporation, dated as of February 3, 2000(13). 4.14 Warrant for Common Stock, issued to University of Michigan(13). 4.15 Common Stock Purchase Agreement between the Registrant and American Home Products Corporation, dated as of April 5, 2000(15). 4.16 Registration Rights Agreement dated October 10, 2000, by and between the Company and Evans Vaccines Limited(27). 4.17 Common Stock Purchase Agreement between the Registrant and Biotech Invest, S.A., dated as of October 10, 2000. 4.18 Warrant for Common Stock, issued to ARCH Development Corporation(17). 4.19 Warrant for Common Stock, issued to The Proctor and Gamble Company(18). 4.20 Warrants for Common Stock, issued to Evans Vaccines Limited(14). 4.21 Indenture entered into between Aviron and Marine Midland Bank, as Trustee, dated March 15, 1998(28).
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ITEM DESCRIPTION - ---- ----------- 4.22 Indenture entered into between Aviron and HSBC Bank USA as Trustee, dated February 7, 2001. 4.23 Officer's Certificate pursuant to Section 2.01 of the Subordinated Indenture, dated February 7, 2001. 4.24 Amendment No. 1 to Common Stock Purchase Agreement, dated as of June 9, 2000, by and between Acqua Wellington North American Equities Fund Ltd. and the Company(16). +10.1 License Agreement between the Registrant and ARCH Development Corporation, dated July 1992(1). +10.2 Technology Transfer Agreement between the Registrant and The Mount Sinai School of Medicine of the City University of New York, dated February 9, 1993(1). +10.3 Materials Transfer and Intellectual Property Agreement between the Registrant and the Regents of the University of Michigan, dated February 24, 1995(1). 10.4 Stock Transfer Agreement between the Registrant and the Regents of the University of Michigan, dated February 24, 1995(1). +10.5 Development and License Agreement between the Registrant and Sang-A Pharm. Co., Ltd., dated May 3, 1995(1). +10.6 Cooperative Research and Development Agreement between the Registrant and the National Institutes of Health, dated May 30, 1995(1). +10.7 Heads of Agreement between the Registrant and SmithKline Beecham Biologicals S.A., dated October 8, 1995(1). 10.8 First Amendment to Facility Reservation Agreement, dated as of August 1, 2000, by and between Aviron and Packaging Coordinators, Inc.(21). *10.9 1996 Equity Incentive Plan, as amended as of June 1, 2000(23). *10.10 1996 Non-Employee Directors' Stock Option Plan, as amended as of June 1, 2000(24). *10.11 1996 Employee Stock Purchase Plan, as amended as of June 4, 1998(4). 10.12 Industrial Lease between the Registrant and the Vanni Business Park General Partnership, dated August 29, 1995(1). +10.13 First Amendment to License Agreement between the Registrant and ARCH Development Corporation dated March 15, 1996(1). +10.14 Biological Materials License Agreement between the Registrant and the National Institutes of Health, dated May 31, 1996(1). ++10.15 Amended and Restated Production Agreement, dated as of August 1, 2000, by and between Aviron and Packaging Coordinators, Inc.(20)(22). +10.16 Production Agreement between the Registrant and Packaging Coordinators, Inc., dated as of October 31, 1997(6). 10.17 Facility Reservation Agreement between the Registrant and Packaging Coordinators, Inc., dated as of October 31, 1997(6). +10.18 Influenza Vaccine Collaboration and License Distributor Agreement between the Registrant and CSL Limited, dated June 19, 1998(7). +10.19 Supply Agreement between the Registrant and Becton Dickinson and Company dated July 1, 1998(8). +10.20 United States License and Co-Promotion Agreement between the Registrant and Wyeth Lederle Vaccines dated January 11, 1999(9). +10.21 International FluMist(TM) License Agreement between the Registrant and Wyeth dated January 11, 1999(9).
68
ITEM DESCRIPTION - ---- ----------- +10.22 FluMist(TM) Supply Agreement between the Registrant and Wyeth Lederle Vaccines dated January 11, 1999(9). +10.23 Credit Agreement between the Registrant and American Home Products Corporation dated January 11, 1999(9). +10.24 Letter Amendment to the Materials Transfer and Intellectual Property Agreement between the Registrant and the Regents of the University of Michigan dated February 24, 1999(10). 10.25 Real Property Lease by and between the Registrant and Spieker Properties, L.P. dated February 5, 1999(11). +10.26 First Amendment to the Influenza Vaccine Collaboration and License and Distribution Agreement by and between the Registrant and CSL Limited, A.C.N. dated June 7, 1999(11). 10.27 Loan and Security Agreement by and between the Registrant and Transamerica Business Credit Corporation dated June 23, 1999(11). 10.28 Master Loan and Security Agreement by and between the Registrant and FINOVA Capital Corporation dated July 23, 1999(12). *10.29 Form of Management Continuity Agreement(19). 10.30 Real Property Lease by and between the Registrant and MELP VII L.P., dated October 12, 1999(13). *10.31 Offer Letter, as amended, by and between the Registrant and C. Boyd Clarke, dated November 24, 1999(13). *10.32 Employment Agreement by and between the Registrant and J. Leighton Read, dated December 6, 1999(13). 10.33 Amendment No. 1 to Stock Transfer Agreement by and between the Registrant and The Regents of the University of Michigan, dated February 16, 2000(13). *10.34 Executive Severance Benefits Agreement by and between the Registrant and Harry Greenberg, dated October 23, 2000. *10.35 1999 Non-Officer Equity Incentive Plan, as amended as of July 26, 2000(25). *10.36 Stock Option Agreement for C. Boyd Clarke outside the 1996 Equity Incentive Plan(26). ++10.38 Agreement for Lease of AVU Premises at Gaskill Road, Speke, dated October 11, 2000. ++10.39 Underlease of AVU Premises at Gaskill Road Speke, dated October 11, 2000. ++10.40 Agreement for Lease of AVU Extension Premises at Gaskill Road Speke, dated October 11, 2000. ++10.41 Underlease of AVU Extension Premises at Gaskill Road Speke, dated October 11, 2000. ++10.42 Agreement for the Sale and Purchase of Leasehold Property know as Plot 6 Boulevard Industry Park, Halewood, Merseyside, dated October 10, 2000. ++10.43 Underlease of Plot 6 Boulevard Industry Park Halewood Merseyside, dated February 17, 2000. ++10.44 Master Agreement by and between Powderject Pharmaceuticals Limited, Evans Vaccines Limited, the Registrant and Aviron UK, dated October 11, 2000. ++10.45 Agreement Relating to the Sharing and Provision of Certain Services, by and between Evans Vaccines Limited and Aviron UK Limited.
69
ITEM DESCRIPTION - ---- ----------- ++10.46 Transfer Agreement by and between Evans Vaccines Limited and Aviron UK Limited, dated October 11, 2000. ++10.47 Amended and Restated Contract Manufacture Agreement by and between Evans Vaccines Limited and the Registrant, dated October 11, 2000. ++10.48 Know How Licence Agreement by and between Evans Vaccines Limited and Aviron UK Limited, dated October 11, 2000. 10.49 FluMist(TM) Supply Agreement Amendment, dated January 1, 2001. ++10.50 Amendment Number One (1) to Cooperative Research and Development Agreement AI-000062, by and between NIAID and Aviron, dated as of August 3, 1999. ++10.51 Amendment Number Two (2) to Cooperative Research and Development Agreement AI-000062, by and between NIAID and Aviron, dated as of June 12, 2000. 21.1 Subsidiaries of Aviron. 23.1 Consent of Ernst & Young LLP, Independent Auditors. 24.1 Power of Attorney. See Signature Page.
- --------------- + Confidential treatment has been granted for portions of this exhibit. ++ Confidential treatment has been requested for portions of this exhibit. * Compensatory Plan or Agreement (1) Incorporated by reference to the correspondingly numbered exhibit to our Registration Statement on Form S-1, File No. 333-05209, filed June 5, 1996, as amended. (2) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended September 30, 1996, filed December 20, 1996. (3) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 0-20815, filed May 15, 1997. (4) Incorporated by reference to the correspondingly numbered exhibit to our Registration Statement on Form S-8, File No. 333-58955, filed on July 13, 1998. (5) Incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K, File No. 0-20815, dated October 8, 1997 and filed October 10, 1997. (6) Incorporated by reference to the correspondingly numbered exhibit to our Registration Statement on Form S-3, File No. 333-41649, filed December 10, 1997. (7) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, File No. 0-20815, filed August 14, 1998. (8) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, File No. 0-20815, filed November 16, 1998. 70 (9) Incorporated by reference to the correspondingly numbered exhibit to our Annual Report on Form 10-K for the year ended on December 31, 1998, File No. 0-20815 filed March 31, 1999. (10) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File No. 0-20815, filed May 13, 1999. (11) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 0-20815, filed August 13, 1999. (12) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 0-20815, filed November 15, 1999. (13) Incorporated by reference to the correspondingly numbered exhibit to our Annual Report on Form 10-K for the year ended December 31, 1999, File No. 0-20815, filed March 8, 2000. (14) Incorporated by reference to Exhibits 4.19 through 4.24 to our Registration Statement on Form S-3, File No. 333-52028, filed December 18, 2000. (15) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended March 31, 2000, filed May 15, 2000. (16) Incorporated by reference to Exhibit 4.1 to our Form 8-K dated June 12, 2000. (17) Incorporated by reference to Exhibit 4.17 to our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended June 30, 2000, filed August 11, 2000. (18) Incorporated by reference to the correspondingly numbered exhibit to our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended September 30, 2000, filed November 14, 2000. (19) Incorporated by reference to Exhibit 10.30 of our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended June 30, 2000, filed August 11, 2000. (20) Incorporated by reference to Exhibit 10.31 of our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended September 30, 2000, filed November 14, 2000. (21) Incorporated by reference to Exhibit 10.32 of our Quarterly Report on Form 10-Q, File No. 0-20815, for the quarter ended September 30, 2000, filed November 14, 2000. (22) Appendix 5 of this exhibit is incorporated by reference to Exhibit 10.17 to our Registration Statement on Form S-3, File No. 333-41649, filed December 5, 1997, as amended. (23) Incorporated by reference to Exhibit 99.1 of our Registration Statement on Form S-8, File No. 333-44350, filed August 23, 2000. (24) Incorporated by reference to Exhibit 99.2 of our Registration Statement on Form S-8, File No. 333-44350, filed August 23, 2000. (25) Incorporated by reference to Exhibit 99.3 of our Registration Statement on Form S-8, File No. 333-44350, filed August 23, 2000. (26) Incorporated by reference to Exhibit 99.4 of our Registration Statement on Form S-8, File No. 333-44350, filed August 23, 2000. 71 (27) Incorporated by reference to Exhibit 4.16 of our Registration Statement on Form S-3/A, File No. 333-45072, filed October 24, 2000. (28) Incorporated by reference to Exhibit 25.2 to our current report on Form 8-K, File No. 0-20815, filed on February 1, 2001. EX-4.2 2 f69956ex4-2.txt EXHIBIT 4.2 1 EXHIBIT 4.2 COMMON STOCK CUSIP 053762 10 0 AVIRON INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA OR NEW YORK, NY SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT IS THE RECORD HOLDER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $0.001 PAR VALUE, OF AVIRON transferable on the books of the Corporation in person or by duly authorized attorney on surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. Witness the signatures of the Corporation's duly authorized officers. DATED: COUNTERSIGNED AND REGISTERED: FLEET NATIONAL BANK /s/ BOYD CLARKE Transfer Agent and Registrar President and Chief Executive Officer /s/ TIMOTHY D. RYAN /s/ CHARLENE FRIEDMAN Vice President, General Counsel AUTHORIZED OFFICER and Secretary AVIRON A statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights as established, from time to time, by the Certificate of Incorporation of the Corporation and by any certificate of determination, the number of shares constituting each class and series, and the designations thereof, may be obtained by the holder hereof upon request and without charge at the principal office of the Corporation. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT -- Custodian ------------------------------- (Cust) (Minor) under Uniform Gifts to Minors Act ---------------------------- (State) UNIF TRF MIN ACT -- Custodian (until age ) ------ ------ (Cust) under Uniform Transfers --------- (Minor) to Minors Act ------------------- (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND ------------------------------------- TRANSFER UNTO PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - ---------------------------------------- - ---------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OR ASSIGNEE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SHARES - -------------------------------------------------------------------------- OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT ATTORNEY - ------------------------------------------------------------------------ TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES. DATED ----------------------------------- X --------------------------------------- X --------------------------------------- NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. Signature(S) Guaranteed BY -------------------------------------- THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. EX-4.17 3 f69956ex4-17.txt EXHIBIT 4.17 1 EXHIBIT 4.17 AVIRON COMMON STOCK PURCHASE AGREEMENT This COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made as of October 10, 2000 (the "Effective Date"), by and between AVIRON, a Delaware corporation (the "Company") and BIOTECH INVEST, S.A., a corporation organized under the laws of Panama (the "Purchaser"). SECTION 1. PURCHASE AND SALE OF COMMON STOCK Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to Purchaser and Purchaser agrees to purchase from the Company four hundred fifty thousand (450,000) shares of the Company's Common Stock, $0.001 par value (the "Shares"), for a purchase price of $48.00 per Share. SECTION 2. CLOSING DATE; DELIVERY 2.1 CLOSING DATE. The closing of the purchase and sale of the Shares hereunder (the "Closing") shall be held at the offices of Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, California, 94306 at 10:00 a.m., on October 12, 2000 or at such other time and place upon which the Company and Purchaser shall agree. The date of the Closing is hereinafter referred to as the "Closing Date." 2.2 DELIVERY. At the Closing, the Company will deliver to Purchaser a certificate, registered in Purchaser's name, representing the number of shares of Common Stock to be purchased by Purchaser. Such delivery shall be against payment of the purchase price therefor by wire transfer to the Company's bank account. SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Purchaser as of the Closing Date as follows: 3.1 ORGANIZATION AND STANDING. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has full power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified as a foreign corporation to do business in each jurisdiction in the United States in which the ownership of its property or the conduct of its business requires such qualification, except where any statutory fines or penalties or any corporate disability imposed for the failure to qualify would not materially or adversely affect the Company, its assets, financial condition or operations. The Company has no subsidiaries. 3.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite corporate power to, and has taken all requisite corporate action to, execute and deliver this Agreement, to sell and issue the Shares and to carry out and perform all of its obligations under this Agreement. This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, 2 reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally, (ii) as limited by equitable principles generally and (iii) as to those provisions of Section 7.2 relating to indemnity or contribution, as may be limited by applicable laws. The execution and delivery of this Agreement does not, and the performance of this Agreement and the compliance with the provisions hereof and the issuance, sale and delivery of the Shares by the Company will not materially conflict with, or result in a material breach or violation of the terms, conditions or provisions of, or constitute a material default under, or result in the creation or imposition of any material lien pursuant to the terms of, the Certificate of Incorporation or Bylaws of the Company or (a) any governmental statute, law, rule applicable to the Company or (b) order, writ, judgment, injunction, decree, determination or award which has been entered against the Company and of which we are aware, the violation of which would materially and adversely affect the Company, its assets, financial condition or operations. 3.3 ISSUANCE AND DELIVERY OF THE SHARES. The Shares, when issued and paid for in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. The issuance and delivery of the Shares is not subject to preemptive, co-sale, right of first refusal or any other similar rights of the stockholders of the Company or any liens or encumbrances, provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 3.4 FULL DISCLOSURE. The Company warrants that the information contained in the following documents filed with the Securities and Exchange Commission (collectively, the "SEC Documents"), as of their respective dates, did not contain any untrue statement of a material fact, and did not omit to state any material fact necessary to make any statement, in light of the circumstances under which such statement was made, not misleading: (a) The Company's Annual Report on Form 10-K for the year ended December 31, 1999, as amended by Form 10-K/A on April 3, 2000 and April 28, 2000. (b) The Company's Definitive Proxy Statement dated May 4, 2000 relating to its 2000 Annual Meeting of Stockholders. (c) The Company's Current Report on Form 8-K, filed June 13, 2000. (d) The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000. (e) The Company's Registration Statement on Form S-3, filed September 16, 1999, as supplemented on November 17, 1999, December 16, 1999, January 13, 2000, February 2, 2000, March 6, 2000, April 12, 2000, May 11, 2000, June 9, 2000, July 10, 2000, August 7, 2000, September 5, 2000 and October 2, 2000. (f) The Company's Registration Statement on Form S-3 filed March 8, 2000, as amended. 2 3 (g) The Company's Registration Statement on Form S-3, filed September 1, 2000. 3.5 LITIGATION. Except as set forth in the SEC Documents, there is no pending or, to the Company's knowledge, threatened action, suit or other proceeding before any court, governmental body or authority, or arbitrator to which the Company is a party or to which its property or assets are subject. 3.6 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement except for (a) compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and securities and blue sky laws in the states and other jurisdictions in which shares of Common Stock are offered and/or sold, which compliance will be effected in accordance with such laws, and (b) the filing of a registration statement and all amendments thereto with the SEC as contemplated by Section 7.1 of this Agreement. 3.7 NO MATERIAL ADVERSE CHANGE. Since June 30, 2000, there have not been any changes in the assets, liabilities, financial condition or operations of the Company from that reflected in the SEC Documents except changes in the ordinary course of business or which have not been, either individually or in the aggregate, materially adverse. SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER Purchaser hereby represents and warrants to the Company, effective as of the Closing Date, as follows: 4.1 AUTHORIZATION. Purchaser represents and warrants to the Company that: (i) Purchaser has all requisite legal and corporate or other power and capacity and has taken all requisite corporate or other action to execute and deliver this Agreement, to purchase the Shares and to carry out and perform all of its obligations under this Agreement; and (ii) this Agreement constitutes the legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors' rights generally and (b) as limited by equitable principles generally. 4.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as defined in Rule 501(a) under the Securities Act of 1933, as amended (the "Securities Act"). Purchaser is aware of the Company's business affairs and financial condition and has had access to and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser has such business and financial experience as is required to give it the capacity to protect its own interests in connection with the purchase of the Shares. 4.3 INVESTMENT INTENT. Purchaser is purchasing the Shares for its own account as principal, for investment purposes only, and not with a view to, or for, resale, distribution or 3 4 fractionalization thereof, in whole or in part, within the meaning of the Securities Act. Purchaser understands that its acquisition of the Shares has not been registered under the Securities Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein. Purchaser has completed or caused to be completed the Purchaser Certificates/Questionnaire attached hereto as Exhibits A-1 through A-3 for use in connection with the sale of Shares and in preparation of the Registration Statement (as defined below), will deliver the such Certificates/Questionnaires to the Company on or prior to the Closing Date, and the responses provided therein shall be true and correct as of the Closing Date. Purchaser has, in connection with its decision to purchase the Shares, relied solely upon the SEC Documents and the representations and warranties of the Company contained herein. 4.4 REGISTRATION OR EXEMPTION REQUIREMENTS. Purchaser further acknowledges and understands that the Shares must be held for investment purposes, and they may not be resold or otherwise transferred except in a transaction registered under the Securities Act or an exemption from such registration is available. Purchaser understands that the certificate(s) evidencing the Shares will be imprinted with a legend that prohibits the transfer of the Shares unless (i) they are registered or such registration is not required, and (ii) if the transfer is pursuant to an exemption from registration other than Rule 144 under the Securities Act ("Rule 144") and, if the Company shall so request in writing, an opinion of counsel satisfactory to the Company is obtained to the effect that the transaction is so exempt and in compliance with applicable state law. 4.5 RESTRICTION ON SHORT SALES. Purchaser represents and warrants to and covenants with the Company that Purchaser has not engaged and will not engage in any short sales of the Company's Common Stock prior to the effectiveness of the Registration Statement, except to the extent that any such short sale is fully covered by shares of Common Stock of the Company other than the Shares. 4.6 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that nothing in this Agreement or any other materials presented to Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice and that no independent legal counsel has reviewed these documents and materials on Purchaser's behalf. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares. SECTION 5. CONDITIONS TO CLOSING OF PURCHASER Purchaser's obligation to purchase the Initial Shares at the Closing is, at the option of Purchaser, subject to the fulfillment or waiver as of the Closing Date of the following conditions: 5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. 4 5 5.2 LEGAL OPINION. The Company shall have delivered a legal opinion from Cooley Godward LLP, counsel to the Company, addressed to Purchaser in the form attached hereto as Exhibit C with respect to the sale of the Shares by the Company hereunder. 5.3 OFFICERS' CERTIFICATE. The Company shall deliver to Purchaser a certificate, dated as of the Closing Date, signed by the President and Chief Financial Officer of the Company, stating that the representations and warranties set forth in Section 3 are true as of and all of the closing conditions set forth in Section 5 have been satisfied on the Closing Date. 5.4 COVENANTS. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects. SECTION 6. CONDITIONS TO CLOSING OF COMPANY The Company's obligation to sell and issue the Shares is, at the option of the Company, subject to the fulfillment or waiver of the following conditions: 6.1 REPRESENTATIONS AND WARRANTIES. The representations made by Purchaser in Section 4 hereof shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of such date. 6.2 COVENANTS. All covenants, agreements and conditions contained in this Agreement to be performed by Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects. SECTION 7. REGISTRATION RIGHTS 7.1 REGISTRATION REQUIREMENTS (a) Except as provided in paragraph (d) below, the Company shall use its best efforts to prepare and file a registration statement on Form S-3 with the SEC under the Securities Act to register the resale of the Shares by Purchaser (the "Registration Statement") on the twentieth (20th) business day after the fifth month anniversary of the date hereof or as soon thereafter as is practicable and to use its best efforts to cause the Registration Statement to be declared effective as soon as practicable. In the event that at any time the filing of such Registration Statement is undertaken or is required to be undertaken the Company fails to qualify for use of Form S-3 for purposes of registering for resale the Shares, the Company shall cause a registration statement on Form S-1 to be filed as soon as practicable thereunder. The Purchaser agrees to furnish promptly to the Company in writing all information reasonably required by the Company to file such Registration Statement. (b) The Company shall pay all Registration Expenses (as defined below) in connection with any registration, qualification or compliance hereunder, and Purchaser shall pay all Selling Expenses (as defined below) and other expenses that are not Registration Expenses relating to the Shares resold by Purchaser. "Registration Expenses" shall mean all expenses, 5 6 except for Selling Expenses, incurred by the Company in complying with the registration provisions herein described, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel and independent public accountants for the Company, blue sky fees, transfer agent fees and expenses and the expense of any special audits incident to or required by any such registration. "Selling Expenses" shall mean selling commissions, underwriting fees and stock transfer taxes applicable to the Shares and, subject to Section 9.10, all fees and disbursements of counsel for Purchaser. (c) In the case of the registration effected by the Company pursuant to these registration provisions, the Company will use its best efforts to: (i) keep such registration effective until the earlier of (A) the second anniversary of the Closing Date, (B) such date as all of the Shares have been resold or (C) such time as all of the Shares held by Purchaser can be sold within a given three-month period without compliance with the registration requirements of the Securities Act pursuant to Rule 144; (ii) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement; (iii) furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as Purchaser from time to time may reasonably request in order to facilitate the public sale or other disposition of all or any of the Shares held by Purchaser; (iv) cause all Shares registered as described herein to be listed on each securities exchange and quoted on each quotation service on which similar securities issued by the Company are then listed or quoted; (v) provide a transfer agent and registrar for all Shares registered pursuant to the Registration Statement and a CUSIP number for all such Shares; (vi) otherwise use its best efforts promptly to comply with all applicable rules and regulations of the SEC; and (vii) file the documents required of the Company and otherwise use its best efforts promptly to obtain, if applicable, and maintain requisite blue sky clearance in (A) all jurisdictions in which any of the Shares are originally sold and (B) all other states specified in writing by Purchaser, provided as to clause (B), however, that the Company shall not be required to qualify to do business or consent to service of process in any state in which it is not now so qualified or has not so consented. The Company shall use its best efforts to qualify for use of Form S-3 under the Securities Act to register the resale of the Shares and to maintain such qualification during the periods described in paragraph (i). (d) The Company may delay the filing of the Registration Statement for up to six months by giving written notice to Purchaser if the Company shall have determined that the Company may be required to disclose any material corporate development which disclosure may have a material effect on the Company. (e) Following the effectiveness of the Registration Statement, the Company may, at any time, but not more than once in any six-month period, suspend the effectiveness of such registration statement for up to 45 days, as appropriate (a "Suspension Period"), by giving notice to Purchaser, if the Company shall have determined that the Company may be required to disclose any material corporate development which disclosure may have a material effect on the Company. The Company agrees to use commercially reasonable efforts to minimize the length of any suspension. The duration of any Suspension Period shall be added to the period of time 6 7 that the Company agrees to keep the Registration Statement effective. Purchaser agrees that, upon receipt of any notice from the Company of a Suspension Period, Purchaser shall forthwith discontinue disposition of shares covered by such Registration Statement or prospectus until Purchaser (i) is advised in writing by the Company that the use of the applicable prospectus may be resumed, (ii) has received copies of a supplemental or amended prospectus, if applicable, and (iii) has received copies of any additional or supplemental filings which are incorporated or deemed to be incorporated by reference in such prospectus. (f) The Company will, as expeditiously as possible, notify Purchaser (i) of the effective date of the Registration Statement and the date when any post-effective amendment the Registration Statement becomes effective; (ii) of any stop order or notification from Securities and Exchange Commission or any other jurisdiction as to the suspension of the effectiveness of the Registration Statement; and (iii) of the end of any suspension hereunder. (g) With a view to making available to Purchaser the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit Purchaser to sell Shares to the public without registration or pursuant to registration, the Company covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) the second anniversary of the Closing Date or (B) such date as all of the Shares shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and maintain registration of its Common Stock under Section 12 of the Exchange Act; and (iii) furnish to Purchaser upon request, as long as Purchaser owns any Shares, (A) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act, (B) a copy of the most recent annual or quarterly report of the Company, and (C) such other information as may be reasonably requested in order to avail Purchaser of any rule or regulation of the SEC that permits the selling of any such Shares without registration. 7.2 INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify Purchaser and hold Purchaser harmless from and against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) to which Purchaser may become subject (under the Securities Act Exchange Act, state securities laws or otherwise) insofar as such losses, claims, damages or liabilities (or actions proceedings or settlements in respect thereof) arise out of, or are based upon, (i) any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, on the effective date thereof or any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, (ii) the omission or the alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any failure by the Company (or its agents) to fulfill any undertaking included in the Registration Statement, and the Company will, as incurred, reimburse Purchaser for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, loss, damage, proceeding or claim; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon (i) an untrue statement (or omission) made in such Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of 7 8 Purchaser specifically for use in preparation of the Registration Statement, (ii) the failure of Purchaser to comply with the covenants and agreements contained in Section 7.1 or 8.3 hereof, or (iii) any untrue statement (or omission) in any Prospectus that is corrected in any subsequent Prospectus that was delivered to Purchaser by the Company prior to the pertinent sale or sales by Purchaser. The Company will reimburse Purchaser for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim notwithstanding the absence of a judicial determination as to the propriety and enforceability of the obligations under this section and the possibility that such payments might later be held to be improper, provided, that (i) to the extent any such payment is ultimately held to be improper, the persons receiving such payments shall promptly refund them and (ii) such persons shall provide to the Company, upon request, reasonable assurances of their ability to effect any refund, when and if due. (b) Purchaser agrees to indemnify and hold harmless the Company from and against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) to which the Company may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon (i) an untrue statement made in such Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of Purchaser specifically for use in preparation of the Registration Statement, provided, however, that Purchaser shall not be liable in any such case for any untrue statement included in any Prospectus which statement has been corrected, in writing, by Purchaser and delivered to the Company before the sale from which such loss occurred, (ii) the failure of Purchaser to comply with the covenants and agreements contained in Section 7.1 or 8.3 hereof, or (iii) any untrue statement in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by Purchaser, provided, further, however, that the liability of Purchaser hereunder shall be limited to the proceeds received by Purchaser from the sale of the Shares covered by such Registration Statement; and provided, further, however, that the obligations of Purchaser hereunder shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action settlement is effected without the consent of Purchaser. Purchaser will reimburse the Company for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim notwithstanding the absence of a judicial determination as to the propriety and enforceability of the obligations under this section and the possibility that such payments might later be held to be improper, provided, that (i) to the extent any such payment is ultimately held to be improper, the persons receiving such payments shall promptly refund them and (ii) such persons shall provide to Purchaser, upon request, reasonable assurances of their ability to effect any refund, when and if due. (c) Promptly after receipt by any indemnified person of a notice of a claim or the commencement of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 7.2, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, and, subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person and the indemnifying person shall have been notified thereof, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall wish, to 8 9 assume and undertake the defense thereof, with counsel reasonably satisfactory to the indemnified person. After notice from the indemnifying person to such indemnified person of the indemnifying person's election to assume and undertake the defense thereof, the indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate in the reasonable judgment of the indemnified person for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person. (d) If the indemnification provided for in this Section 7.2 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions proceedings or settlements in respect thereof) referred to therein, then the indemnifying party shall contribute to the amount paid or payable by such indemnified party as result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Purchaser on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or Purchaser on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and Purchaser agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), Purchaser shall not be required to contribute any amount in excess of the amount by which the amount received by Purchaser (net of Selling Expenses) from the sale of the Shares to which such loss relates exceeds the amount of any damages which Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The obligations of the Company and Purchaser under this Section 7.2 shall be in addition to any liability which the Company and Purchaser may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company or Purchaser within the meaning of the Securities Act. 9 10 SECTION 8. RESTRICTIONS ON TRANSFERABILITY OF SHARES: COMPLIANCE WITH SECURITIES ACT 8.1 RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be transferable in the absence of a registration under the Securities Act or an exemption therefrom or in the absence of compliance with any term of this Agreement. The Company shall be entitled to give stop transfer instructions to its transfer agent with respect to the Shares in order to enforce the foregoing restrictions. 8.2 RESTRICTIVE LEGEND. Each certificate representing Shares shall bear substantially the following legends (in addition to any legends required under applicable securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. ADDITIONALLY, THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SPECIFIED IN THE COMMON STOCK PURCHASE AGREEMENT DATED OCTOBER 10, 2000 BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER, AND NO TRANSFER OF SHARES SHALL BE VALID OR EFFECTIVE ABSENT COMPLIANCE WITH SUCH RESTRICTIONS. ALL SUBSEQUENT HOLDERS OF THIS CERTIFICATE WILL HAVE AGREED TO BE BOUND BY CERTAIN OF THE TERMS OF THE AGREEMENT, INCLUDING SECTIONS 7.1 AND 8.3 OF THE AGREEMENT. COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE REGISTERED HOLDER OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY. Upon the request of Purchaser, the Company shall remove the foregoing legend from the certificates evidencing the Shares and issue to Purchaser new certificates free of any transfer legend if with such request, and at the request of the Company, the Company shall have received an opinion of counsel satisfactory to the Company, to the effect that any transfers by Purchaser of such Shares may be made to the public without compliance with either Section 5 of the Securities Act or Rule 144 thereunder and applicable state securities laws. 8.3 TRANSFER OF SHARES AFTER REGISTRATION. Purchaser hereby covenants with the Company not to make any sale of the Shares except either (i) in accordance with the Registration Statement, in which case Purchaser covenants to comply with the requirement of delivering a current prospectus, or (ii) in accordance with Rule 144, in which case Purchaser covenants to comply with Rule 144. Purchaser further acknowledges and agrees that such Shares are not transferable on the books of the Company unless the certificate submitted to the Company's transfer agent evidencing such Shares is accompanied by a separate certificate executed by an officer of, or other person duly authorized by, the Purchaser in the form attached hereto as Exhibit B. 10 11 8.4 PURCHASER INFORMATION. Purchaser covenants that it will promptly notify the Company in writing of any changes in the information set forth in the Registration Statement regarding Purchaser. SECTION 9. MISCELLANEOUS 9.1 WAIVERS AND AMENDMENTS. The terms of this Agreement may be waived or amended with the written consent of the Company and Purchaser. 9.2 GOVERNING LAW. This Agreement shall be governed in all respects by and construed in accordance with the laws of the State of California without any regard to conflicts of laws principles. 9.3 SURVIVAL. The representations, warranties, covenants and agreements made in this Agreement shall survive any investigation made by the Company or Purchaser and the Closing. With respect to any registration made pursuant to this Agreement, the covenants and agreements set forth in section 7.1 shall continue in effect until all obligations hereunder with respect thereto are fulfilled, and provided that the indemnification and contribution obligations as set forth in Section 7.2 shall survive for the period of the statute of limitations with respect thereto. 9.4 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties to this Agreement. Notwithstanding the foregoing, Purchaser shall not assign this Agreement without the prior written consent of the Company. 9.5 ENTIRE AGREEMENT. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects thereof. 9.6 NOTICES, ETC. All notices and other communications required or permitted under this Agreement shall be effective upon receipt and shall be in writing and may be delivered in person, by telecopy, overnight delivery service or registered or certified United States mail, addressed to the Company or Purchaser, as the case may be, at their respective addresses set forth below: 11 12 If to the Company: Aviron 297 North Bernardo Avenue Mountain View, CA 94043 Attn: C. Boyd Clarke President and Chief Executive Officer Telephone: (650) 919-6500 Facsimile: (650) 919-6612 With a copy to: Cooley Godward LLP Five Palo Alto Square 3000 El Camino Real Palo Alto, CA 94306-2155 Attn: Robert J. Brigham, Esq. Telephone: (650) 843-5000 Facsimile: (650) 849-7400 If to Purchaser: Biotech Invest, S.A. Swiss Bank Tower Panama 1 Republic of Panama With copies to: Bellevue Asset Management AG Grafenauweg 4 CH-6301 Zug SWITZERLAND Attn: Dr. Nora Frey Telephone: 011-41-724-5920 Facsimile: 011-41-724-5958 12 13 and: Bellevue Research, Inc. 1 Cambridge Center, Cambridge, MA 02142 Attn: Dr. Anders Hove Telephone: (617) 679-9888 Facsimile: (617) 679-9887 and: Baker & McKenzie 815 Connecticut Avenue, N.W. Washington, D.C. 20006 Attn: Daniel L. Goelzer, Esq. Telephone: (202) 452-7000 Facsimile: (202) 452-7072 All notices and other communications shall be effective upon the earlier of actual receipt thereof by the person to whom notice is directed or (i) in the case of notices and communications sent by personal delivery or telecopy, one business day after such notice or communication arrives at the applicable address or was successfully sent to the applicable telecopy number, (ii) in the case of notices and communications sent by overnight delivery service, at noon (local time) on the second business day following the day such notice or communication was sent, and (iii) in the case of notices and communications sent by United States mail, seven days after such notice or communication shall have been deposited in the United States mail. Any notice delivered to a party hereunder shall be sent simultaneously, by the same means, to such party's counsel as set forth above. 9.7 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9.8 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 9.9 FURTHER ASSURANCES. Each party to this Agreement shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as the other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 9.10 EXPENSES. The Company agrees to bear the cost of reasonable fees and expenses of one counsel for the Purchaser, in an amount not to exceed $15,000, and reasonable fees and 13 14 expenses of one counsel for the Purchaser in connection with its review of the Registration Statement. 14 15 The foregoing agreement is hereby executed as of the date first above written. AVIRON BIOTECH INVEST, S.A. By: /s/ FRED KURLAND By: ----------------------------------- ------------------------------------- Fred Kurland Dr. Anders Hove Senior Vice President and Chief Authorized Signatory Financial officer By: ------------------------------------- Dr. Nora Frey Authorized Signatory 15 16 EXHIBIT A INSTRUCTION SHEET FOR PURCHASER (to be read in conjunction with the entire Common Stock Purchase Agreement) A. Complete the following items in the Common Stock Purchase Agreement: 1. Provide the information regarding the Purchaser requested on the signature page. The Agreement must be executed by an individual authorized to bind the Purchaser. 2. Exhibit A-1 - Stock Certificate Questionnaire: Provide the information requested by the Stock Certificate Questionnaire; 3. Exhibit A-2 - Registration Statement Questionnaire: Provide the information requested by the Registration Statement Questionnaire. 4. Exhibit A-3 - Purchaser Certificate: Provide the information requested by the Certificate. 5. Return the signed Agreement including the properly completed Exhibit A to: Cooley Godward LLP Five Palo Alto Square 3000 El Camino Real Palo Alto, CA 94306 Attn: Annie O. Loo, Esq. Fax: (650) 849-7400 B. Instructions regarding the transfer of funds for the purchase of Shares will be telecopied to Purchaser by the Company at a later date. C. Upon the resale of the Shares by Purchaser after the Registration Statement covering the Shares is effective, as described in the Purchase Agreement, Purchaser: (i) must deliver a current prospectus, and annual and quarterly reports of the Company to the buyer (prospectuses, and annual and quarterly reports may be obtained from the Company at the Purchaser's request); and (ii) must send a letter in the form of Exhibit B to the Company so that the Shares may be properly transferred. 16 17 EXHIBIT A-1 AVIRON STOCK CERTIFICATE QUESTIONNAIRE Pursuant to Section 4.3 of the Agreement, please provide us with the following information: 1. The exact name that the Shares are to be registered in (this is the name that will appear on the stock certificate(s)). You may use a nominee name if appropriate: -------------------------------------- 2. The relationship between the Purchaser of the Shares and the Registered Holder listed in response to item 1 above: -------------------------------------- 3. The mailing address of the Registered Holder listed in response to item 1 above: -------------------------------------- -------------------------------------- -------------------------------------- -------------------------------------- -------------------------------------- 4. The Tax Identification Number of the Registered Holder listed in response to item 1 above: -------------------------------------- 18 EXHIBIT A-2 AVIRON REGISTRATION STATEMENT QUESTIONNAIRE In connection with the preparation of the Registration Statement, please provide us with the following information regarding the Purchaser. 1. Please state your organization's name exactly as it should appear in the Registration Statement: 2. Have you or your organization had any position, office or other material relationship within the past three years with the Company? Yes No --------- --------- If yes, please indicate the nature of any such relationships below: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 19 EXHIBIT A-3 AVIRON CERTIFICATE FOR CORPORATE, PARTNERSHIP, TRUST, FOUNDATION AND JOINT PURCHASERS If the investor is a corporation, partnership, trust, pension plan, foundation, joint purchaser (other than a married couple) or other entity, an authorized officer, partner, or trustee must complete, date and sign this Certificate. CERTIFICATE The undersigned certifies that the representations and responses below are true and accurate: (a) The investor has been duly formed and is validly existing and has full power and authority to invest in the Company. The person signing on behalf of the undersigned has the authority to execute and deliver the Common Stock Purchase Agreement on behalf of the Purchaser and to take other actions with respect thereto. (b) Indicate the form of entity of the undersigned: Limited Partnership -------- General Partnership -------- Corporation -------- Revocable Trust (identify each grantor and indicate under -------- what circumstances the trust is revocable by the grantor): ------------------------------------------------------------ ------------------------------------------------------------ (Continue on a separate piece of paper, if necessary.) Other Type of Trust (indicate type of trust and, for -------- trusts other than pension trusts, name the grantors and beneficiaries): ------------------------------------------------------------ ------------------------------------------------------------ (Continue on a separate piece of paper, if necessary.) Other form of organization (indicate form of organization): -------- ------------------------------------------------------------ ------------------------------------------------------------ (c) Indicate the date the undersigned entity was formed: ------------------ 20 (d) In order for the Company to offer and sell the Shares in conformance with state and federal securities laws, the following information must be obtained regarding your investor status. Please initial each category applicable to you as an investor in the Company. ____ 1. A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; ____ 2. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; ____ 3. An insurance company as defined in Section 2(13) of the securities Act; ____ 4. An investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; ____ 5. A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; ____ 6. A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; ____ 7. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; ____ 8. A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; ____ 9. An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000; ____ 10. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and 20 21 business matters that such person is capable of evaluating the merits and risks of investing in the Company; ____ 11. An entity in which all of the equity owners qualify under any of the above subparagraphs. If the undersigned belongs to this investor category only, list the equity owners of the undersigned, and the investor category which each such equity owner satisfies: ---------------------------------------------------------------------- (Continue on a separate piece of paper, if necessary.) (e) The state of incorporation or formation of the investor is ___________ and the investor's principal office is located in the state of ________________. Dated: _____________, 20__ - ---------------------------------------- Name of investor - ---------------------------------------- Signature and title of authorized officer, partner or trustee 21 22 EXHIBIT B PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE To: Aviron 297 N. Bernardo Avenue Mountain View, CA 94043 The undersigned, the Purchaser or an officer of, or other person duly authorized by the Purchaser, hereby certifies that BIOTECH INVEST, S.A. was the Purchaser of the shares evidenced by the attached certificate, and as such, proposes to transfer such shares on or about ______ either (check the applicable box): (i) in accordance with the registration statement, file number ___________ in which case the Purchaser certifies that the requirement of delivering a current prospectus has been complied with or will be complied with in connection with such sale, or: (ii) in accordance with Rule 144 under the Securities Act of 1933 ("Rule 144"), in which case the Purchaser certifies that it has complied with or will comply with the requirements of Rule 144. Print or type: Name of Purchaser: Biotech Invest, S.A. Name of Individual representing Purchaser: --------------------------------------------------------- Title of Individual representing Purchaser: --------------------------------------------------------- Signature by: Individual representing Purchaser: ---------------------------------------------------------------------- 23 EXHIBIT C FORM OF OPINION October __, 2000 Biotech Invest, S.A. Swiss Bank Tower Panama 1 Republic of Panama RE: SALE AND PURCHASE OF AVIRON COMMON STOCK Gentlemen: We have acted as counsel for Aviron, a Delaware corporation (the "Company"), in connection with the issuance and sale of 450,000 shares of the Company's Common Stock to Biotech Invest, S.A., a corporation organized under the laws of Panama ("Purchaser"), pursuant to the terms of that certain Common Stock Purchase Agreement, dated October 10, 2000, by and between the Company and Purchaser (the "Agreement"). The shares of the Company's Common Stock issued to Purchaser at the closing (the "Closing") are referred to herein as the "Shares". We are rendering this opinion pursuant to Section 5.2 of the Agreement. Except as otherwise defined herein, capitalized terms used but not defined herein have the respective meanings given to them in the Agreement. In connection with this opinion, we have examined and relied upon the representations and warranties as to factual matters contained in and made pursuant to the Agreement by the parties thereto and originals or copies certified to our satisfaction, of such records, documents, certificates, opinions, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. Where we render an opinion "to the best of our knowledge" or concerning an item "known to us" or our opinion otherwise refers to our knowledge, it is based solely upon (i) an inquiry of attorneys within this firm who perform legal services for the Company, (ii) receipt of a certificate executed by an officer of the Company covering such matters, and (iii) such other investigation, if any, that we specifically set forth herein. In rendering this opinion, we have assumed: the genuineness and authenticity of all signatures on original documents; the authenticity of all documents submitted to us as originals; the conformity to originals of all documents submitted to us as copies; the accuracy, completeness and authenticity of certificates of public officials; and the due authorization, execution and delivery of all documents where authorization, execution and delivery are prerequisites to the effectiveness of such documents (except the due authorization, execution and delivery of the Agreement by the Company). We have also assumed: that all individuals executing and delivering documents had the legal capacity to so execute and deliver; that you have received all documents you were to receive under the Agreement; that the Agreement is an obligation 24 binding upon you; if you are a corporation or other entity, that you have filed any required California franchise or income tax returns and have paid any required California franchise or income taxes; and that there are no extrinsic agreements or understandings among the parties to the Agreement that would modify or interpret the terms of the Agreement or the respective rights or obligations of the parties thereunder. Our opinion is expressed only with respect to the federal laws of the United States of America and the laws of the State of California and the General Corporation Law of the State of Delaware. We express no opinion as to whether the laws of any particular jurisdiction apply, and no opinion to the extent that the laws of any jurisdiction other than those identified above are applicable to the subject matter hereof. We are not rendering any opinion as to compliance with any antifraud law, rule or regulation relating to securities, or to the sale or issuance thereof. With regard to our opinion in paragraph 3 below with respect to the authorization of the Agreement, we have examined and relied solely upon a certificate executed by an officer of the Company, to the effect that the Agreement was duly and validly authorized in accordance with the provisions of the applicable Board of Directors resolutions, and we have undertaken no independent verification with respect thereto. With regard to our opinion in paragraph 4 below, we have examined and relied upon a certificate executed by an officer of the Company, to the effect that the consideration for all outstanding shares of capital stock of the Company was received by the Company in accordance with the provisions of the applicable Board of Directors resolutions and any plan or agreement relating to the issuance of such shares, and we have undertaken no independent verification with respect thereto. On the basis of the foregoing, in reliance thereon and with the foregoing qualifications, we are of the opinion that: 1. The Company has been duly incorporated and is a validly existing corporation in good standing under the laws of the State of Delaware. 2. The Company has the requisite corporate power to own or lease its property and assets and to conduct its business as it is currently being conducted and, to the best of our knowledge, is qualified as a foreign corporation to do business in each jurisdiction in the United States in which the ownership of its property or the conduct of its business requires such qualification and where any statutory fines or penalties or any corporate disability imposed for the failure to qualify would materially or adversely affect the Company, its assets, financial condition or operations. 3. The Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid, legal and binding agreement of the Company enforceable against the Company in accordance with its terms, except as rights to indemnity under Section 7.2 of the Agreement may be limited by applicable laws and except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting creditors' rights, and subject to general equity principles and to limitations on availability of equitable relief, including specific performance. 25 4. The Shares have been duly authorized and, upon issuance and delivery in accordance with the terms of the Agreement, will be validly issued, fully paid and nonassessable. 5. The issuance and sale of the Shares as contemplated by the Agreement does not violate any provision of the Company's Certificate of Incorporation or Bylaws and does not violate or contravene (a) any governmental statute, rule or regulation applicable to the Company or (b) any order, writ, judgment, injunction, decree, determination or award which has been entered against the Company and which is known to us, the violation or contravention of which would materially and adversely affect the Company, its assets, financial condition or operations. 6. All consents, approvals, authorizations, or orders of, and filings, registrations, and qualifications with any regulatory authority or governmental body in the United States required for the issuance and sale of the Shares as contemplated by the Agreement, have been made or obtained. 7. The issuance and sale of the Shares as contemplated by the Agreement is exempt from the registration requirements of the Securities Act of 1933, as amended. This opinion is intended solely for your benefit and is not to be made available to or be relied upon by any other person, firm, or entity without our prior written consent. Very truly yours, COOLEY GODWARD LLP By ------------------------------------------ Robert J. Brigham 26 COMMON STOCK PURCHASE AGREEMENT DATED AS OF OCTOBER 10, 20000 BY AND BETWEEN AVIRON AND BIOTECH TARGET, S.A. 27 TABLE OF CONTENTS
PAGE Section 1. Purchase and Sale of Common Stock............................... 1 Section 2. Closing Date; Delivery.......................................... 1 2.1 Closing Date......................................................... 1 2.2 Delivery............................................................. 1 Section 3. Representations and Warranties of the Company................... 1 3.1 Organization and Standing............................................ 1 3.2 Corporate Power; Authorization....................................... 1 3.3 Issuance and Delivery of the Shares.................................. 2 3.4 Full Disclosure...................................................... 2 3.5 Litigation........................................................... 3 3.6 Governmental Consents................................................ 3 3.7 No Material Adverse Change........................................... 3 3.8 Removal of Legends................................................... 3 Section 4. Representations, Warranties and Covenants of Purchaser.......... 3 4.1 Authorization........................................................ 3 4.2 Investment Experience................................................ 3 4.3 Investment Intent.................................................... 3 4.4 Registration or Exemption Requirements............................... 4 4.5 Restriction on Short Sales........................................... 4 4.6 No Legal, Tax or Investment Advice................................... 4 Section 5. Conditions to Closing of Purchaser.............................. 4 5.1 Representations and Warranties....................................... 4 5.2 Legal Opinion........................................................ 5 5.3 Officers' Certificate................................................ 5 5.4 Covenants............................................................ 5 Section 6. Conditions to Closing of Company................................ 5 6.1 Representations and Warranties....................................... 5 6.2 Covenants............................................................ 5 Section 7. Registration Rights............................................. 5 7.1 Registration Requirements............................................ 5 7.2 Indemnification and Contribution..................................... 7
28 Section 8. Restrictions on Transferability of Shares: Compliance with Securities Act.................................................. 10 8.1 Restrictions on Transferability...................................... 10 8.2 Restrictive Legend................................................... 10 8.3 Transfer of Shares after Registration................................ 10 8.4 Purchaser Information................................................ 11 Section 9. Miscellaneous................................................... 11 9.1 Waivers and Amendments............................................... 11 9.2 Governing Law........................................................ 11 9.3 Survival............................................................. 11 9.4 Successors and Assigns............................................... 11 9.5 Entire Agreement..................................................... 11 9.6 Notices, etc. ....................................................... 11 9.7 Severability of this Agreement....................................... 13 9.8 Counterparts......................................................... 13 9.9 Further Assurances................................................... 13 9.10 Expenses............................................................. 13
2 29 Exhibit A Instruction Sheet for Purchaser Exhibit B Purchaser's Certificate of Subsequent Sale Exhibit C Form of Legal Opinion
EX-4.22 4 f69956ex4-22.txt EXHIBIT 4.22 1 EXHIBIT 4.22 EXECUTION COPY AVIRON INDENTURE DATED AS OF FEBRUARY 7, 2001 HSBC BANK USA TRUSTEE 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE....................................... 1 Section 1.1. Definitions........................................................... 1 Section 1.2. Other Definitions..................................................... 6 Section 1.3. Incorporation by Reference of Trust Indenture Act..................... 7 Section 1.4. Rules of Construction................................................. 7 ARTICLE II. THE SECURITIES.................................................................. 8 Section 2.1. Issuable in Series.................................................... 8 Section 2.2. Establishment of Terms of Series of Securities........................ 8 Section 2.3. Execution and Authentication.......................................... 10 Section 2.4. Registrar and Paying Agent............................................ 11 Section 2.5. Paying Agent to Hold Money in Trust................................... 12 Section 2.6. Securityholder Lists.................................................. 13 Section 2.7. Transfer and Exchange................................................. 13 Section 2.8. Mutilated, Destroyed, Lost and Stolen Securities...................... 13 Section 2.9. Outstanding Securities................................................ 14 Section 2.10. Treasury Securities................................................... 14 Section 2.11. Temporary Securities.................................................. 15 Section 2.12. Cancellation.......................................................... 15 Section 2.13. Defaulted Interest.................................................... 15 Section 2.14. Global Securities..................................................... 15 Section 2.15. CUSIP Numbers......................................................... 17 ARTICLE III. REDEMPTION..................................................................... 17 Section 3.1. Notice to Trustee..................................................... 17 Section 3.2. Selection of Securities to be Redeemed................................ 17 Section 3.3. Notice of Redemption.................................................. 17 Section 3.4. Effect of Notice of Redemption........................................ 18 Section 3.5. Deposit of Redemption Price........................................... 18 Section 3.6. Securities Redeemed in Part........................................... 18 ARTICLE IV. COVENANTS....................................................................... 19 Section 4.1. Payment of Principal and Interest..................................... 19 Section 4.2. SEC Reports........................................................... 19 Section 4.3. Compliance Certificate................................................ 19 Section 4.4. Stay, Extension and Usury Laws........................................ 19 Section 4.5. Corporate Existence................................................... 20 Section 4.6. Taxes................................................................. 20
i 3 ARTICLE V. SUCCESSORS....................................................................... 20 Section 5.1. When Company May Merge, Etc........................................... 20 Section 5.2. Successor Corporation Substituted..................................... 21 ARTICLE VI. DEFAULTS AND REMEDIES........................................................... 21 Section 6.1. Events of Default..................................................... 21 Section 6.2. Acceleration of Maturity; Rescission and Annulment.................... 22 Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee....... 23 Section 6.4. Trustee May File Proofs of Claim...................................... 24 Section 6.5. Trustee May Enforce Claims Without Possession of Securities........... 25 Section 6.6. Application of Money Collected........................................ 25 Section 6.7. Limitation on Suits................................................... 25 Section 6.8. Unconditional Right of Holders to Receive Principal and Interest.............................................................. 26 Section 6.9. Restoration of Rights and Remedies.................................... 26 Section 6.10. Rights and Remedies Cumulative........................................ 27 Section 6.11. Delay or Omission Not Waiver.......................................... 27 Section 6.12. Control by Holders.................................................... 27 Section 6.13. Waiver of Past Defaults............................................... 27 Section 6.14. Undertaking for Costs................................................. 28 ARTICLE VII. TRUSTEE........................................................................ 28 Section 7.1. Duties of Trustee..................................................... 28 Section 7.2. Rights of Trustee..................................................... 29 Section 7.3. Individual Rights of Trustee.......................................... 30 Section 7.4. Trustee's Disclaimer.................................................. 30 Section 7.5. Notice of Defaults.................................................... 30 Section 7.6. Reports by Trustee to Holders......................................... 31 Section 7.7. Compensation and Indemnity............................................ 31 Section 7.8. Replacement of Trustee................................................ 32 Section 7.9. Successor Trustee by Merger, etc...................................... 33 Section 7.10. Eligibility; Disqualification......................................... 33 Section 7.11. Preferential Collection of Claims Against Company..................... 33 ARTICLE VIII. SATISFACTION AND DISCHARGE; DEFEASANCE........................................ 33 Section 8.1. Satisfaction and Discharge of Indenture............................... 33 Section 8.2. Application of Trust Funds; Indemnification........................... 34 Section 8.3. Legal Defeasance of Securities of any Series.......................... 35 Section 8.4. Covenant Defeasance................................................... 37 Section 8.5. Repayment to Company.................................................. 38 Section 8.6. Reinstatement......................................................... 38 ARTICLE IX. AMENDMENTS AND WAIVERS.......................................................... 39 Section 9.1. Without Consent of Holders............................................ 39
ii 4 Section 9.2. With Consent of Holders............................................... 39 Section 9.3. Limitations........................................................... 40 Section 9.4. Compliance with Trust Indenture Act................................... 40 Section 9.5. Revocation and Effect of Consents..................................... 40 Section 9.6. Notation on or Exchange of Securities................................. 41 Section 9.7. Trustee Protected..................................................... 41 ARTICLE X. MISCELLANEOUS.................................................................... 41 Section 10.1. Trust Indenture Act Controls.......................................... 41 Section 10.2. Notices............................................................... 41 Section 10.3. Communication by Holders with Other Holders........................... 42 Section 10.4. Certificate and Opinion as to Conditions Precedent.................... 42 Section 10.5. Statements Required in Certificate or Opinion......................... 43 Section 10.6. Rules by Trustee and Agents........................................... 43 Section 10.7. Legal Holidays........................................................ 43 Section 10.8. No Recourse Against Others............................................ 43 Section 10.9. Counterparts.......................................................... 43 Section 10.10.Governing Laws........................................................ 44 Section 10.11.No Adverse Interpretation of Other Agreements......................... 44 Section 10.12.Successors............................................................ 44 Section 10.13.Severability.......................................................... 44 Section 10.14.Table of Contents, Headings, Etc...................................... 44 Section 10.15.Securities in a Foreign Currency or in ECU............................ 44 Section 10.16.Judgment Currency..................................................... 45 ARTICLE XI. SINKING FUNDS................................................................... 46 Section 11.1. Applicability of Article.............................................. 46 Section 11.2. Satisfaction of Sinking Fund Payments with Securities................. 46 Section 11.3. Redemption of Securities for Sinking Fund............................. 47 ARTICLE XII. SUBORDINATION OF SECURITIES.................................................... 47 Section 12.1. Agreement of Subordination............................................ 47 Section 12.2. Payments to Holders................................................... 47 Section 12.3. Subrogation of Securities............................................. 50 Section 12.4. Authorization to Effect Subordination................................. 51 Section 12.5. Notice to Trustee..................................................... 52 Section 12.6. Trustee's Relation to Senior Indebtedness............................. 53 Section 12.7. No Impairment of Subordination........................................ 53 Section 12.8. Article Applicable to Paying Agents................................... 53 Section 12.9. Senior Indebtedness Entitled to Rely.................................. 53
iii 5 AVIRON Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of February 7, 2001 Section 310(a)(1) .......................................... 7.10 (a)(2) .......................................... 7.10 (a)(3) .......................................... Not Applicable (a)(4) .......................................... Not Applicable (a)(5) .......................................... 7.10 (b) .......................................... 7.10 Section 311(a) .......................................... 7.11 (b) .......................................... 7.11 (c) .......................................... Not Applicable Section 312(a) .......................................... 2.6 (b) .......................................... 10.3 (c) .......................................... 10.3 Section 313(a) .......................................... 7.6 (b)(1) .......................................... 7.6 (b)(2) .......................................... 7.6 (c)(1) .......................................... 7.6 (d) .......................................... 7.6 Section 314(a) .......................................... 4.2, 10.5 (b) .......................................... Not Applicable (c)(1) .......................................... 10.4 (c)(2) .......................................... 10.4 (c)(3) .......................................... Not Applicable (d) .......................................... Not Applicable (e) .......................................... 10.5 (f) .......................................... Not Applicable Section 315(a) .......................................... 7.1 (b) .......................................... 7.5 (c) .......................................... 7.1 (d) .......................................... 7.1 (e) .......................................... 6.14 Section 316(a) .......................................... 2.10 (a)(1)(A) .......................................... 6.12 (a)(1)(B) .......................................... 6.13 (b) .......................................... 6.8 Section 317(a)(1) .......................................... 6.3 (a)(2) .......................................... 6.4 (b) .......................................... 2.5 Section 318(a) .......................................... 10.1
- -------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture. iv 6 Indenture dated as of February 7, 2001 between Aviron, a Delaware corporation ("Company"), and HSBC Bank USA, a New York banking corporation ("Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture. ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1. Definitions. "Additional Amounts" means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified therein and which are owing to such Holders. "Affiliate" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities or by agreement or otherwise. "Agent" means any Registrar, Paying Agent, Service Agent or authenticating agent. "Authorized Newspaper" means a newspaper in an official language of the country of publication customarily published at least once a day for at least five days in each calendar week and of general circulation in the place in connection with which the term is used. If it shall be impractical to make any publication of any notice required hereby in an Authorized Newspaper, any publication or other notice in lieu thereof that is made or given by the Trustee shall constitute a sufficient publication of such notice. "Bearer" means anyone in possession from time to time of a Bearer Security. "Bearer Security" means any Security, including any interest coupon appertaining thereto, that does not provide for the identification of the Holder thereof. "Board of Directors" means the Board of Directors of the Company or any duly authorized committee thereof. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certificate, and delivered to the Trustee. 1 7 "Business Day" means, unless otherwise provided by Board Resolution, Officers' Certificate or supplemental indenture hereto for a particular Series, any day except a Saturday, Sunday or a legal holiday in The City of New York or the City of San Francisco on which banking institutions are authorized or required by law, regulation or executive order to close. "Company" means the party named as such above until a successor replaces it and thereafter means the successor. "Company Order" means a written order signed in the name of the Company by two Officers, one of whom must be the Company's chief executive officer, chief financial officer or principal accounting officer. "Company Request" means a written request signed in the name of the Company by its Chairman of the Board, a President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office is, on the date of this Indenture, located at 140 Broadway, 12th Floor, New York, New York 10005. "Debt" of any person as of any date means, without duplication, all indebtedness of such person in respect of borrowed money, including all interest, fees and expenses owed in respect thereto (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments. "Default" means any event which is, or after notice or passage of time would be, an Event of Default. "Depository" means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities, the person designated as Depository for such Series by the Company, which Depository shall be a clearing agency registered under the Exchange Act; and if at any time there is more than one such person, "Depository" as used with respect to the Securities of any Series shall mean the Depository with respect to the Securities of such Series. "Designated Senior Indebtedness" means any of our senior indebtedness that expressly provides that it is "designated senior indebtedness" for purposes of this Indenture (provided that the instrument, agreement or other document creating or evidencing such Senior Indebtedness may place limitations and conditions on the right of such Senior Indebtedness to exercise the rights of Designated Senior Indebtedness). "Discount Security" means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2. 2 8 "Dollars" means the currency of The United States of America. "ECU" means the European Currency Unit as determined by the Commission of the European Union. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Foreign Currency" means any currency or currency unit issued by a government other than the government of The United States of America. "Foreign Government Obligations" means with respect to Securities of any Series that are denominated in a Foreign Currency, (i) direct obligations of the government that issued or caused to be issued such currency for the payment of which obligations its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by or acting as an agency or instrumentality of such government the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by such government, which, in either case under clauses (i) or (ii), are not callable or redeemable at the option of the issuer thereof. "Global Security" or "Global Securities" means a Security or Securities, as the case may be, in the form established pursuant to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depository for such Series or its nominee, and registered in the name of such Depository or nominee. "Holder" or "Securityholder" means a person in whose name a Security is registered or the holder of a Bearer Security. "indebtedness" means, with respect to any person, and without duplication, (a) all indebtedness, obligations and other liabilities (contingent or otherwise) of such person for borrowed money (including obligations of the Company in respect of overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements, and any loans or advances from banks, whether or not evidenced by notes or similar instruments) or evidenced by bonds, debentures, notes or similar instruments (whether or not the recourse of the lender is to the whole of the assets of such person or to only a portion thereof) (other than any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services), (b) all reimbursement obligations and other liabilities (contingent or otherwise) of such person with respect to letters of credit, bank guarantees or bankers' acceptances, (c) all obligations and liabilities (contingent or otherwise) in respect of leases of such person required, in conformity with generally accepted accounting principles, to be accounted for as capitalized lease obligations on the balance sheet of such person and all obligations and other liabilities (contingent or otherwise) under any lease or related document (including a purchase agreement) in connection with the lease of real property which provides that such person is contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum residual value of the leased property to the lessor and the obligations of such person under such lease or related document to 3 9 purchase or to cause a third party to purchase such leased property, (d) all obligations of such person (contingent or otherwise) with respect to an interest rate or other swap, cap or collar agreement or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement, (e) all direct or indirect guaranties or similar agreements by such person in respect of, and obligations or liabilities (contingent or otherwise) of such person to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of indebtedness, obligations or liabilities of another person of the kind described in clauses (a) through (d), (f) any indebtedness or other obligations described in clauses (a) through (e) secured by any mortgage, pledge, lien or other encumbrance existing on property which is owned or held by such person, regardless of whether the indebtedness or other obligation secured thereby shall have been assumed by such person and (g) any and all refinancings, replacements, deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation or liability of the kind described in clauses (a) through (f). "Indenture" means this Indenture as amended from time to time and shall include the form and terms of particular Series of Securities established as contemplated hereunder. "interest" with respect to any Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Maturity," when used with respect to any Security or installment of principal thereof, means the date on which the principal of such Security or such installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, notice of option to elect repayment or otherwise. "Officer" means the Chairman of the Board, any President, any Vice-President, the Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers, one of whom must be the Company's principal executive officer, principal financial officer or principal accounting officer, which certificate shall contain the statements provided for in Section 10.5. "Opinion of Counsel" means a written opinion of legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company. "person" means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 4 10 "principal" of a Security means the principal of the Security plus, when appropriate, the premium, if any, on, and any Additional Amounts in respect of, the Security. "Representative" means the (a) indenture trustee or other trustee, agent or representative for any Senior Indebtedness or (b) with respect to any Senior Indebtedness that does not have any such trustee, agent or other representative, (i) in the case of such Senior Indebtedness issued pursuant to an agreement providing for voting arrangements as among the holders or owners of such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting with the consent of the required persons necessary to bind such holders or owners of such Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness, the holder or owner of such Senior Indebtedness. "Responsible Officer" means any officer of the Trustee with direct responsibility for the administration of the Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject. "SEC" means the Securities and Exchange Commission. "Securities" means the debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under this Indenture. "Senior Indebtedness" means the principal, premium, if any, interest, including any interest accruing after bankruptcy, and rent or termination payment on or other amounts due on our current or future Indebtedness, whether created, incurred, assumed, guaranteed or in effect guaranteed by us, including any deferrals, renewals, extensions, refundings, amendments, modifications or supplements to the above. However, Senior Indebtedness does not include: (i) Indebtedness that expressly provides that it shall not be senior in right of payment to the Securities or expressly provides that it is on the same basis or junior to the Securities; (ii) our indebtedness to any of our majority-owned subsidiaries; and (iii) the Securities. "Series" or "Series of Securities" means each series of debentures, notes or other debt instruments of the Company created pursuant to Sections 2.1 and 2.2 hereof. "Significant Subsidiary" means (i) any direct or indirect Subsidiary of the Company that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such regulation is in effect on the date hereof, or (ii) any group of direct or indirect Subsidiaries of the Company that, taken together as a group, would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act of 1933, as amended, as such regulation is in effect on the date hereof. "Stated Maturity" when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such 5 11 Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subsidiary" of any specified person means any corporation of which at least a majority of the outstanding stock having by the terms thereof ordinary voting power for the election of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by such person, or by one or more other Subsidiaries, or by such person and one or more other Subsidiaries. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "TIA" means, to the extent required by any such amendment, the Trust Indenture Act as so amended. "Trustee" means the person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each person who is then a Trustee hereunder, and if at any time there is more than one such person, "Trustee" as used with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series. "U.S. Government Obligations" means securities which are (i) direct obligations of The United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of The United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by The United States of America, and which in the case of (i) and (ii) are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation evidenced by such depository receipt. Section 1.2. Other Definitions.
DEFINED IN TERM SECTION ---- ---------- "Bankruptcy Law" 6.1 "Custodian" 6.1 "Event of Default" 6.1 "Journal" 10.15
6 12
DEFINED IN TERM SECTION ---- ---------- "Judgment Currency" 10.16 "Legal Holiday" 10.7 "mandatory sinking fund payment" 11.1 "Market Exchange Rate" 10.15 "New York Banking Day" 10.16 "optional sinking fund payment" 11.1 "Paying Agent" 2.4 "Payment Blockage Notice" 12.2 "Registrar" 2.4 "Required Currency" 10.16 "Service Agent" 2.4 "successor person" 5.1
Section 1.3. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company and any successor obligor upon the Securities. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and not otherwise defined herein are used herein as so defined. Section 1.4. Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; 7 13 (c) references to "generally accepted accounting principles" shall mean generally accepted accounting principles in effect as of the time when and for the period as to which such accounting principles are to be applied; (d) "or" is not exclusive; (e) words in the singular include the plural, and in the plural include the singular; and (f) provisions apply to successive events and transactions. ARTICLE II. THE SECURITIES Section 2.1. Issuable in Series. The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more Series. All Securities of a Series shall be identical except as may be set forth in a Board Resolution, a supplemental indenture or an Officers' Certificate detailing the adoption of the terms thereof pursuant to the authority granted under a Board Resolution. In the case of Securities of a Series to be issued from time to time, the Board Resolution, Officers' Certificate or supplemental indenture may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of the Indenture but all Securities issued hereunder shall be subordinate and junior in right of payment, to the extent and in the manner set forth in Article XII, to all Senior Indebtedness of the Company. Section 2.2. Establishment of Terms of Series of Securities. At or prior to the issuance of any Securities within a Series, the following shall be established (as to the Series generally, in the case of SubSection 2.2.1 and either as to such Securities within the Series or as to the Series generally in the case of SubSections 2.2.2 through 2.2.22) by a Board Resolution, a supplemental indenture or an Officers' Certificate pursuant to authority granted under a Board Resolution: 2.2.1. the title of the Series (which shall distinguish the Securities of that particular Series from the Securities of any other Series); 2.2.2. the price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued; 2.2.3. any limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 9.6); 8 14 2.2.4. the date or dates on which the principal of the Securities of the Series is payable; 2.2.5. the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including, but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date; 2.2.6. the place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, or the method of such payment, if by wire transfer, mail or other means; 2.2.7. if applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities of the Series may be redeemed, in whole or in part, at the option of the Company; 2.2.8. the obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; 2.2.9. the dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the option of the Holders thereof and other detailed terms and provisions of such repurchase obligations; 2.2.10. if other than denominations of $1,000 and any integral multiple thereof, the denominations in which the Securities of the Series shall be issuable; 2.2.11. the forms of the Securities of the Series in bearer or fully registered form (and, if in fully registered form, whether the Securities will be issuable as Global Securities); 2.2.12. if other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2; 2.2.13. the currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, including, but not limited to, the ECU, and if such currency of denomination is a composite currency other than the ECU, the agency or organization, if any, responsible for overseeing such composite currency; 2.2.14. the designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities of the Series will be made; 9 15 2.2.15. if payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to such payments will be determined; 2.2.16. the manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined, if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index; 2.2.17. the provisions, if any, relating to any security provided for the Securities of the Series; 2.2.18. if the holders of Securities of the Series may convert or exchange the Securities into or for securities of the Issuer or of other entities or other property, the period or periods within which, the rate or rates at which and the terms and conditions upon which Securities of the Series may be converted or exchanged, in whole or in part; 2.2.19. any addition to or change in the Events of Default which applies to any Securities of the Series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 6.2; 2.2.20. any addition to or change in the covenants set forth in Articles IV or V which applies to Securities of the Series; 2.2.21. any other terms of the Securities of the Series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 9.1, but which may modify or delete any provision of this Indenture insofar as it applies to such Series); and 2.2.22. any depositories, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities of such Series if other than those appointed herein. All Securities of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture or Officers' Certificate referred to above, and the authorized principal amount of any Series may not be increased to provide for issuances of additional Securities of such Series, unless otherwise provided in such Board Resolution, supplemental indenture or Officers' Certificate. Section 2.3. Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. 10 16 If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid. A Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall at any time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or Officers' Certificate, upon receipt by the Trustee of a Company Order. Such Company Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Company or its duly authorized agent or agents, which oral instructions shall be promptly confirmed in writing. Each Security shall be dated the date of its authentication unless otherwise provided by a Board Resolution, a supplemental indenture hereto or an Officers' Certificate. The aggregate principal amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officers' Certificate delivered pursuant to Section 2.2, except as provided in Section 2.8. Prior to the issuance of Securities of any Series, the Trustee shall have received and (subject to Section 7.2) shall be fully protected in relying on: (a) the Board Resolution, supplemental indenture hereto or Officers' Certificate establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities of that Series or of Securities within that Series, (b) an Officers' Certificate complying with Section 10.4, and (c) an Opinion of Counsel complying with Section 10.4. The Trustee shall have the right to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being advised by counsel, determines that such action may not lawfully be taken; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or vice-presidents shall determine that such action would expose the Trustee to personal liability to Holders of any then outstanding Series of Securities. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate. Section 2.4. Registrar and Paying Agent. The Company shall maintain, with respect to each Series of Securities, at the place or places specified with respect to such Series pursuant to Section 2.2, an office or agency where Securities of such Series may be presented or surrendered for payment ("Paying Agent"), where Securities of such Series may be surrendered for registration of 11 17 transfer or exchange ("Registrar") and where notices and demands to or upon the Company in respect of the Securities of such Series and this Indenture may be served ("Service Agent"). The Registrar shall keep a register with respect to each Series of Securities and to their transfer and exchange. The Company will give prompt written notice to the Trustee of the name and address, and any change in the name or address, of each Registrar, Paying Agent or Service Agent. If at any time the Company shall fail to maintain any such required Registrar, Paying Agent or Service Agent or shall fail to furnish the Trustee with the name and address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more co-registrars, additional paying agents or additional service agents and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain a Registrar, Paying Agent and Service Agent in each place so specified pursuant to Section 2.2 for Securities of any Series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the name or address of any such co-registrar, additional paying agent or additional service agent. The term "Registrar" includes any co-registrar; the term "Paying Agent" includes any additional paying agent; and the term "Service Agent" includes any additional service agent. The Company hereby appoints the Trustee the initial Registrar, Paying Agent and Service Agent for each Series unless another Registrar, Paying Agent or Service Agent, as the case may be, is appointed prior to the time Securities of that Series are first issued. Section 2.5. Paying Agent to Hold Money in Trust. Not later than 10.00 a.m. (New York City time) on each due date, for principal, premium, if any, and interest on any Securities, the Company shall deposit with the Paying Agent money in immediately available funds sufficient to pay such principal, premium, if any, and interest so becoming due. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on the Series of Securities, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Securityholders of any Series of Securities all money held by it as Paying Agent. 12 18 Section 2.6. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders of each Series of Securities and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders of each Series of Securities. Section 2.7. Transfer and Exchange. Where Securities of a Series are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities at the Registrar's request. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Sections 2.11, 3.6 or 9.6). Neither the Company nor the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of Securities of that Series selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities selected, called or being called for redemption in part. Section 2.8. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a protected purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. 13 19 In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that Series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 2.9. Outstanding Securities. The Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest on a Global Security effected by the Trustee in accordance with the provisions hereof and those described in this Section as not outstanding. If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding until the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds on the Maturity of Securities of a Series money sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding and interest on them ceases to accrue. A Security does not cease to be outstanding because the Company or an Affiliate holds the Security. In determining whether the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.2. Section 2.10. Treasury Securities. 14 20 In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction, notice, consent or waiver Securities of a Series owned by the Company or an Affiliate shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver only Securities of a Series that the Trustee knows are so owned shall be so disregarded. Section 2.11. Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a Company Order. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee upon request shall authenticate definitive Securities of the same Series and date of maturity in exchange for temporary Securities. Until so exchanged, temporary securities shall have the same rights under this Indenture as the definitive Securities. Section 2.12. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Securities surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Securities (subject to the record retention requirement of the Exchange Act) in accordance with its customary procedures, unless the Company otherwise directs. The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation. Section 2.13. Defaulted Interest. If the Company defaults in a payment of interest on a Series of Securities, it shall pay the defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted interest, to the persons who are Securityholders of the Series on a subsequent special record date. The Company shall fix the record date and payment date. At least 30 days before the record date, the Company shall mail to the Trustee and to each Securityholder of the Series a notice that states the record date, the payment date and the amount of interest to be paid. The Company may pay defaulted interest in any other lawful manner. Section 2.14. Global Securities. 2.14.1. Terms of Securities. A Board Resolution, a supplemental indenture hereto or an Officers' Certificate shall establish whether the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depository for such Global Security or Securities. 15 21 2.14.2. Transfer and Exchange. Notwithstanding any provisions to the contrary contained in Section 2.7 of the Indenture and in addition thereto, any Global Security shall be exchangeable pursuant to Section 2.7 of the Indenture for Securities registered in the names of Holders other than the Depository for such Security or its nominee only if (i) such Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security or if at any time such Depository ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company fails to appoint a successor Depository within 90 days of such event, (ii) the Company executes and delivers to the Trustee an Officers' Certificate to the effect that such Global Security shall be so exchangeable or (iii) an Event of Default with respect to the Securities represented by such Global Security shall have happened and be continuing. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Securities registered in such names as the Depository shall direct in writing in an aggregate principal amount equal to the principal amount of the Global Security with like tenor and terms. Except as provided in this Section 2.14.2, a Global Security may not be transferred except as a whole by the Depository with respect to such Global Security to a nominee of such Depository, by a nominee of such Depository to such Depository or another nominee of such Depository or by the Depository or any such nominee to a successor Depository or a nominee of such a successor Depository. 2.14.3. Legend. Unless otherwise provided pursuant to Section 2.2, any Global Security issued hereunder shall bear a legend in substantially the following form: "This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of the Depository or a nominee of the Depository. This Security is exchangeable for Securities registered in the name of a person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and may not be transferred except as a whole by the Depository to a nominee of the Depository, by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such a successor Depository." 2.14.4. Acts of Holders. The Depository, as a Holder, may appoint agents and otherwise authorize participants to give or take any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture. 2.14.5. Payments. Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the principal of, premium, if any, and interest, if any, on any Global Security shall be made to the Holder thereof. 2.14.6. Consents, Declaration and Directions. Except as provided in Section 2.14.5, the Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of outstanding Securities of such Series represented by a 16 22 Global Security as shall be specified in a written statement of the Depositary with respect to such Global Security, for purposes of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture. Section 2.15. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in "CUSIP" numbers for any Series of Securities. ARTICLE III. REDEMPTION Section 3.1. Notice to Trustee. The Company may, with respect to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee of the redemption date and the principal amount of Series of Securities to be redeemed. The Company shall give the notice at least 45 days before the redemption date (or such shorter notice as may be acceptable to the Trustee). Section 3.2. Selection of Securities to be Redeemed. Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture or an Officers' Certificate, if less than all the Securities of a Series are to be redeemed, the Trustee shall select the Securities of the Series to be redeemed in any manner that the Trustee deems fair and appropriate. The Trustee shall make the selection from Securities of the Series outstanding not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities of the Series that have denominations larger than $1,000. Securities of the Series and portions of them it selects shall be in amounts of $1,000 or whole multiples of $1,000 or, with respect to Securities of any Series issuable in other denominations pursuant to Section 2.2.10, the minimum principal denomination for each Series and integral multiples thereof. Provisions of this Indenture that apply to Securities of a Series called for redemption also apply to portions of Securities of that Series called for redemption. Section 3.3. Notice of Redemption. 17 23 Unless otherwise indicated for a particular Series by Board Resolution, a supplemental indenture hereto or an Officers' Certificate, at least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder whose Securities are to be redeemed and if any Bearer Securities are outstanding, publish on one occasion a notice in an Authorized Newspaper. The notice shall identify the Securities of the Series to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) the name and address of the Paying Agent; (d) that Securities of the Series called for redemption must be surrendered to the Paying Agent to collect the redemption price; (e) that interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date; and (f) any other information as may be required by the terms of the particular Series or the Securities of a Series being redeemed. At the Company's request made in writing to the Trustee not less than forty-five (45) days prior to the date fixed for redemption, the Trustee shall give the notice of redemption in the Company's name and at its expense. If, however, the Company gives such notice to the Holders, it shall concurrently deliver written notice to the Trustee stating that such notice has been given. Section 3.4. Effect of Notice of Redemption. Once notice of redemption is mailed or published as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date and at the redemption price. A notice of redemption may not be conditional. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price plus accrued interest to the redemption date. Section 3.5. Deposit of Redemption Price. On or before the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest, if any, on all Securities to be redeemed on that date. Section 3.6. Securities Redeemed in Part. 18 24 Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security of the same Series and the same maturity equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE IV. COVENANTS Section 4.1. Payment of Principal and Interest. The Company covenants and agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest, if any, on the Securities of that Series in accordance with the terms of such Securities and this Indenture. Section 4.2. SEC Reports. The Company shall deliver to the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The Company also shall comply with the other provisions of TIA Section 314(a). Section 4.3. Compliance Certificate. The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he may have knowledge). The Company will, so long as any of the Securities are outstanding, deliver to the Trustee, forthwith upon becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.4. Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this 19 25 Indenture or the Securities; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. Section 4.5. Corporate Existence. Subject to Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Significant Subsidiary in accordance with the respective organizational documents of each Significant Subsidiary and the rights (charter and statutory), licenses and franchises of the Company and its Significant Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any Significant Subsidiary, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders. Section 4.6. Taxes. The Company shall, and shall cause each of its Significant Subsidiaries to, pay prior to delinquency all taxes, assessments and governmental levies, except as contested in good faith and by appropriate proceedings. ARTICLE V. SUCCESSORS Section 5.1. When Company May Merge, Etc. The Company shall not consolidate with or merge into, or convey, transfer or lease all or substantially all of its properties and assets to, any person (a "successor person"), and may not permit any person to merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, the Company, unless: (a) the successor person (if any) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes the Company's obligations on the Securities and under this Indenture and (b) immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing. The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental indenture comply with this Indenture. 20 26 Section 5.2. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.1, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor person has been named as the Company herein; provided, however, that the predecessor Company in the case of a sale, lease, conveyance or other disposition shall not be released from the obligation to pay the principal of and interest, if any, on the Securities. ARTICLE VI. DEFAULTS AND REMEDIES Section 6.1. Events of Default. "Event of Default," wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing Board Resolution, supplemental indenture or Officers' Certificate, it is provided that such Series shall not have the benefit of said Event of Default: (a) default in the payment of any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior to the expiration of such period of 30 days); or (b) default in the payment of the principal of any Security of that Series at its Maturity; or (c) default in the deposit of any sinking fund payment, when and as due in respect of any Security of that Series; or (d) default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty that has been included in this Indenture solely for the benefit of Series of Securities other than that Series), which default continues uncured for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) the Company or any of its Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case, 21 27 (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is unable to pay its debts as the same become due; or (f) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries in an involuntary case, (ii) appoints a Custodian of the Company or any of its Significant Subsidiaries or for all or substantially all of its property, or (iii) orders the liquidation of the Company or any of its Significant Subsidiaries, and the order or decree remains unstayed and in effect for 60 days; or (g) any other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental indenture hereto or an Officers' Certificate, in accordance with Section 2.2.19. The term "Bankruptcy Law" means title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Section 6.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred to in Section 6.1(e) or (f)) then in every such case the Trustee or the Holders of not less than 25% in principal amount of the outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities, such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid interest, if any, shall become immediately due and payable. If an Event of Default specified in Section 6.1(e) or (f) shall occur, the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities 22 28 shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. At any time after such a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (i) all overdue interest, if any, on all Securities of that Series, (ii) the principal of any Securities of that Series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities, (iii) to the extent that payment of such interest is lawful, interest upon any overdue principal and overdue interest at the rate or rates prescribed therefor in such Securities, and (iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7; and (b) all Events of Default with respect to Securities of that Series, other than the non-payment of the principal of Securities of that Series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.13. No such rescission shall affect any subsequent Default or impair any right consequent thereon. Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (a) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (b) default is made in the payment of principal of any Security at the Maturity thereof, or 23 29 (c) default is made in the deposit of any sinking fund payment when and as due by the terms of a Security, then, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal or any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 6.4. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and 24 30 (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.5. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 6.6. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: First: To the payment of all amounts due the Trustee under Section 7.7; and Second: To the payment of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and interest, respectively; and Third: To the Company. Section 6.7. Limitation on Suits. 25 31 No Holder of any Security of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that Series; (b) the Holders of not less than 25% in principal amount of the outstanding Securities of that Series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the outstanding Securities of that Series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Section 6.8. Unconditional Right of Holders to Receive Principal and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, if any, on such Security on the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 6.9. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. 26 32 Section 6.10. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 6.12. Control by Holders. The Holders of a majority in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such Series, provided that (a) such direction shall not be in conflict with any rule of law or with this Indenture, (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (c) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. Section 6.13. Waiver of Past Defaults. Subject to Section 6.2, the Holders of not less than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities of such Series waive any past Default hereunder with respect to such Series and its consequences, except a Default in the payment of the principal of or interest on any Security of such Series (provided, however, that the Holders of a majority in principal amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any related payment default that resulted from such 27 33 acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Security on or after the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of redemption, on the redemption date). ARTICLE VII. TRUSTEE Section 7.1. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. (ii) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon Officers' Certificates or Opinions of Counsel furnished to the Trustee and conforming to the requirements of this Indenture; however, in the case of any such Officers' Certificates or Opinions of Counsel which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officers' Certificates and Opinions of Counsel to determine whether or not they conform to the requirements of this Indenture. 28 34 (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) This paragraph does not limit the effect of paragraph (b) of this Section. (ii) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (iii) The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraph (a), (b) and (c) of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to risk its own funds or otherwise incur any financial liability in the performance of any of its duties, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it. (h) The Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections and immunities as are set forth in paragraphs (a), (b) and (c) of this Section with respect to the Trustee. Section 7.2. Rights of Trustee. (a) The Trustee may rely on and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. 29 35 (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. No Depository shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depository. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. (e) The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (g) The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Securities unless either (i) a Responsible Officer shall have actual knowledge of such Default or Event of Default or (ii) written notice of such Default or Event of Default shall have been given to the Trustee by the Company or any Holder. Section 7.3. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee is also subject to Sections 7.10 and 7.11. Section 7.4. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication. Section 7.5. Notice of Defaults. If a Default or Event of Default occurs and is continuing with respect to the Securities of any Series and if it is known to a Responsible Officer of the Trustee, the 30 36 Trustee shall mail to each Securityholder of the Securities of that Series and, if any Bearer Securities are outstanding, publish on one occasion in an Authorized Newspaper, notice of a Default or Event of Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of any Series, the Trustee may withhold the notice if and so long as its corporate trust committee or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders of that Series. Section 7.6. Reports by Trustee to Holders. Within 60 days after May 15 in each year, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear on the register kept by the Registrar and, if any Bearer Securities are outstanding, publish in an Authorized Newspaper at the expense of the Company, a brief report dated as of such May 15, in accordance with, and to the extent required under, TIA Section 313. A copy of each report at the time of its mailing to Securityholders of any Series shall be filed with the SEC and each stock exchange on which the Securities of that Series are listed. The Company shall promptly notify the Trustee when Securities of any Series are listed on any stock exchange. Section 7.7. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee (including the cost of defending itself) against any loss, liability or expense incurred by it except as set forth in the next paragraph in the performance of its duties under this Indenture as Trustee or Agent. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. This indemnification shall apply to officers, directors, employees, shareholders and agents of the Trustee. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee, shareholder or agent of the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities of any Series on all money or property held or 31 37 collected by the Trustee, except that held in trust to pay principal and interest on particular Securities of that Series. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(e) or (f) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section 7.7 shall survive the resignation or removal of the Trustee and the termination of this Indenture. Section 7.8. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign with respect to the Securities of one or more Series by so notifying the Company. The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee with respect to that Series by so notifying the Trustee and the Company. The Company may remove the Trustee with respect to Securities of one or more Series if: (a) the Trustee fails to comply with Section 7.10; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee with respect to the Securities of any one or more Series does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the Securities of the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee with respect to the Securities of any one or more Series fails to comply with Section 7.10, any Securityholder of the applicable Series may petition any 32 38 court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section 7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture. A successor Trustee shall mail a notice of its succession to each Securityholder of each such Series and, if any Bearer Securities are outstanding, publish such notice on one occasion in an Authorized Newspaper. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 hereof shall continue for the benefit of the retiring trustee with respect to expenses and liabilities incurred by it prior to such replacement. Section 7.9. Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall always have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). Section 7.11. Preferential Collection of Claims Against Company. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE VIII. SATISFACTION AND DISCHARGE; DEFEASANCE Section 8.1. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Order cease to be of further effect (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) either 33 39 (i) all Securities theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have been replaced or paid) have been delivered to the Trustee for cancellation; or (ii) all such Securities not theretofore delivered to the Trustee for cancellation (1) have become due and payable, or (2) will become due and payable at their Stated Maturity within one year, or (3) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, or (4) are deemed paid and discharged pursuant to Section 8.3, as applicable; and the Company, in the case of (1), (2) or (3) above, has deposited or caused to be deposited with the Trustee as trust funds in trust an amount sufficient for the purpose of paying and discharging the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable on or prior to the date of such deposit) or to the Stated Maturity or redemption date, as the case may be; (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.7, and, if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.1 8.2 and 8.5 shall survive. Section 8.2. Application of Trust Funds; Indemnification. (a) Subject to the provisions of Section 8.5, all money deposited with the Trustee pursuant to Section 8.1, all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied by it, in 34 40 accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Sections 8.3 or 8.4. (b) The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations or Foreign Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders. (c) The Trustee shall deliver or pay to the Company from time to time upon Company Request any U.S. Government Obligations or Foreign Government Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government Obligations or Foreign Government Obligations or money were deposited or received. This provision shall not authorize the sale by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture. Section 8.3. Legal Defeasance of Securities of any Series. Unless this Section 8.3 is otherwise specified, pursuant to Section 2.2.21, to be inapplicable to Securities of any Series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the outstanding Securities of such Series on the 91st day after the date of the deposit referred to in subparagraph (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, at Company Request, execute proper instruments acknowledging the same), except as to: (a) the rights of Holders of Securities of such Series to receive, from the trust funds described in subparagraph (d) hereof, (i) payment of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Stated Maturity of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture and the Securities of such Series; (b) the provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and 8.5; and (c) the rights, powers, trust and immunities of the Trustee hereunder; 35 41 provided that, the following conditions shall have been satisfied: (d) the Company shall have deposited or caused to be deposited irrevocably with the Trustee as trust funds in trust for the purpose of making the following payments, specifically pledged as security for and dedicated solely to the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars (or such other money or currencies as shall then be legal tender in the United States) and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof, in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment of principal (including mandatory sinking fund or analogous payments) of and interest, if any, on all the Securities of such Series on the dates such installments of interest or principal are due; (e) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound; (f) no Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date; (g) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel to the effect that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred; (h) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Securities of such Series over any other creditors of the company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; 36 42 (i) such deposit shall not result in the trust arising from such deposit constituting an investment company (as defined in the Investment Company Act of 1940, as amended), or such trust shall be qualified under such Act or exempt from regulation thereunder; and (j) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this Section have been complied with. Section 8.4. Covenant Defeasance. Unless this Section 8.4 is otherwise specified pursuant to Section 2.2.21 to be inapplicable to Securities of any Series, on and after the 91st day after the date of the deposit referred to in subparagraph (a) hereof, the Company may omit to comply with any term, provision or condition set forth under Sections 4.2, 4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional covenants contained in a supplemental indenture hereto for a particular Series of Securities or a Board Resolution or an Officers' Certificate delivered pursuant to Section 2.2.21 (and the failure to comply with any such covenants shall not constitute a Default or Event of Default under Section 6.1) and the occurrence of any event described in clause (e) of Section 6.1 shall not constitute a Default or Event of Default hereunder, with respect to the Securities of such Series, provided that the following conditions shall have been satisfied: (a) With reference to this Section 8.4, the Company has deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars (or such other money or currencies as shall then be legal tender in the United States) and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect thereof, in accordance with their terms, will provide (and without reinvestment and assuming no tax liability will be imposed on such Trustee), not later than one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay principal and interest, if any, on and any mandatory sinking fund in respect of the Securities of such Series on the dates such installments of interest or principal are due; (b) Such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound; 37 43 (c) No Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date; (d) the Company shall have delivered to the Trustee an Opinion of Counsel confirming that Holders of the Securities of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (e) the Company shall have delivered to the Trustee an Officers' Certificate stating the deposit was not made by the Company with the intent of preferring the Holders of the Securities of such Series over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and (f) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the defeasance contemplated by this Section have been complied with. Section 8.5. Repayment to Company. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal and interest that remains unclaimed for two years. After that, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. Section 8.6. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Sections 8.1, 8.3 or 8.4, as the case may be, by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.1, 8.3 or 8.4, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 8.1, 8.3 or 8.4, as the case may be; provided, however, that if the Company makes any payment of principal of, premium, if any, or interest on any Securities because of reinstatement of its obligations, the Company shall be subrogated to the rights of the holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 38 44 ARTICLE IX. AMENDMENTS AND WAIVERS Section 9.1. Without Consent of Holders. The Company and the Trustee may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Securityholder: (a) to cure any ambiguity, defect or inconsistency; (b) to comply with Article V; (c) to provide for uncertificated Securities in addition to or in place of certificated Securities; (d) to make any change that does not adversely affect the rights of any Securityholder; (e) to provide for the issuance of and establish the form and terms and conditions of Securities of any Series as permitted by this Indenture; (f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or (g) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. Section 9.2. With Consent of Holders. The Company and the Trustee may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Securityholders of each such Series. Except as provided in Section 6.13, the Holders of at least a majority in principal amount of the outstanding Securities of each Series affected by such waiver by notice to the Trustee (including consents obtained in connection with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision of this Indenture or the Securities with respect to such Series. It shall not be necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental indenture or waiver, but it shall be sufficient if such consent approves the substance thereof. After a 39 45 supplemental indenture or waiver under this Section becomes effective, the Company shall mail to the Holders of Securities affected thereby and, if any Bearer Securities affected thereby are outstanding, publish on one occasion in an Authorized Newspaper, a notice briefly describing the supplemental indenture or waiver. Any failure by the Company to mail or publish such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. Section 9.3. Limitations. Without the consent of each Securityholder affected, an amendment or waiver may not: (a) change the amount of Securities whose Holders must consent to an amendment, supplement or waiver; (b) reduce the rate of or extend the time for payment of interest (including default interest) on any Security; (c) reduce the principal or change the Stated Maturity of any Security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation; (d) reduce the principal amount of Discount Securities payable upon acceleration of the maturity thereof; (e) waive a Default or Event of Default in the payment of the principal of or interest, if any, on any Security (except a rescission of acceleration of the Securities of any Series by the Holders of at least a majority in principal amount of the outstanding Securities of such Series and a waiver of the payment default that resulted from such acceleration); (f) make the principal of or interest, if any, on any Security payable in any currency other than that stated in the Security; (g) make any change in Sections 6.8, 6.13, 9.3 (this sentence), 10.15 or 10.16; (h) waive a redemption payment with respect to any Security or change any of the provisions with respect to the redemption of any Securities; or (i) impair the right to convert the Securities into Common Stock, subject to the terms set forth in the Indenture. Section 9.4. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the TIA as then in effect. 40 46 Section 9.5. Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. Any amendment or waiver once effective shall bind every Securityholder of each Series affected by such amendment or waiver unless it is of the type described in any of clauses (a) through (g) of Section 9.3. In that case, the amendment or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 9.6. Notation on or Exchange of Securities. The Trustee may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated. The Company in exchange for Securities of that Series may issue and the Trustee shall authenticate upon request new Securities of that Series that reflect the amendment or waiver. Section 9.7. Trustee Protected. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee shall sign all supplemental indentures, except that the Trustee need not sign any supplemental indenture that adversely affects its rights, duties or immunities under this Indenture or otherwise. ARTICLE X. MISCELLANEOUS Section 10.1. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the TIA, such required or deemed provision shall control. Section 10.2. Notices. Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person or mailed by first-class mail: 41 47 if to the Company: Aviron 297 North Bernardo Avenue Mountain View, CA 94043 Attention: General Counsel if to the Trustee: HSBC Bank USA 140 Broadway, 12th Floor New York, New York 10005 Attention: Issuer Services The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication to a Securityholder shall be mailed by first-class mail to his address shown on the register kept by the Registrar and, if any Bearer Securities are outstanding, published in an Authorized Newspaper. Failure to mail a notice or communication to a Securityholder of any Series or any defect in it shall not affect its sufficiency with respect to other Securityholders of that or any other Series. If a notice or communication is mailed or published in the manner provided above, within the time prescribed, it is duly given, whether or not the Securityholder receives it. If the Company mails a notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time. Section 10.3. Communication by Holders with Other Holders. Securityholders of any Series may communicate pursuant to TIA Section 312(b) with other Securityholders of that Series or any other Series with respect to their rights under this Indenture or the Securities of that Series or all Series. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 10.4. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and 42 48 (b) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 10.5. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include: (a) a statement that the person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 10.6. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or a meeting of Securityholders of one or more Series. Any Agent may make reasonable rules and set reasonable requirements for its functions. Section 10.7. Legal Holidays. Unless otherwise provided by Board Resolution, Officers' Certificate or supplemental indenture for a particular Series, a "Legal Holiday" is any day that is not a Business Day. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 10.8. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 43 49 Section 10.9. Counterparts. This Indenture may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 10.10. Governing Laws. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. Section 10.11. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 10.12. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 10.13. Severability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 10.14. Table of Contents, Headings, Etc. The Table of Contents, Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 10.15. Securities in a Foreign Currency or in ECU. Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an Officers' Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular action at the time outstanding and, at such time, there are outstanding Securities of any Series which are denominated in a coin or currency other than Dollars (including ECUs), then 44 50 the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate at such time. For purposes of this Section 10.15, "Market Exchange Rate" shall mean the noon Dollar buying rate in New York City for cable transfers of that currency as published by the Federal Reserve Bank of New York; provided, however, in the case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by the Commission of the European Union (or any successor thereto) as published in the Official Journal of the European Union (such publication or any successor publication, the "Journal"). If such Market Exchange Rate is not available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York or, in the case of ECUs, the rate of exchange as published in the Journal, as of the most recent available date, or quotations or, in the case of ECUs, rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question or, in the case of ECUs, in Luxembourg or such other quotations or, in the case of ECUs, rates of exchange as the Trustee, upon consultation with the Company, shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture. All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Company and all Holders. Section 10.16. Judgment Currency. The Company agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any Series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a New York Banking Day, then, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, any recovery pursuant to any judgment (whether or not entered in accordance with subSection (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or 45 51 additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York on which banking institutions are authorized or required by law, regulation or executive order to close. ARTICLE XI. SINKING FUNDS Section 11.1. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of a Series, except as otherwise permitted or required by any form of Security of such Series issued pursuant to this Indenture. The minimum amount of any sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a "mandatory sinking fund payment" and any other amount provided for by the terms of Securities of such Series is herein referred to as an "optional sinking fund payment." If provided for by the terms of Securities of any Series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund payment shall be applied to the redemption of Securities of any Series as provided for by the terms of the Securities of such Series. Section 11.2. Satisfaction of Sinking Fund Payments with Securities. The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of such Securities (1) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than any of such Securities previously called for mandatory sinking fund redemption) and (2) apply as credit Securities of such Series to which such sinking fund payment is applicable and which have been redeemed either at the election of the Company pursuant to the terms of such Series of Securities (except pursuant to any mandatory sinking fund) or through the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities, provided that such Securities have not been previously so credited. Such Securities shall be received by the Trustee, together with an Officers' Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a 46 52 Company Order that such action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall from time to time upon receipt of a Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to the cash payment required to be released to the Company. Section 11.3. Redemption of Securities for Sinking Fund. Not less than 45 days (unless otherwise indicated in the Board Resolution, supplemental indenture hereto or Officers' Certificate in respect of a particular Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated to pay the amount therein specified. Not less than 30 days (unless otherwise indicated in the Board Resolution, Officers' Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.2 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.3. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 3.4, 3.5 and 3.6. ARTICLE XII. SUBORDINATION OF SECURITIES Section 12.1. Agreement of Subordination. The Company covenants and agrees, and each Holder of Securities issued hereunder by his acceptance thereof likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article XII; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees to be bound by such provisions. The payment of the principal of, premium, if any, and interest on all Securities (including, but not limited to, the redemption price with respect to the Securities called for redemption in accordance with Article 3 as provided in the Indenture) issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness, whether outstanding at the date of this Indenture or thereafter incurred. 47 53 No provision of this Article XII shall prevent the occurrence of any default or Event of Default hereunder. Section 12.2. Payments to Holders. No payment shall be made with respect to the principal of, or premium, if any, or interest on the Securities (including, but not limited to, the redemption price with respect to the Securities to be called for redemption in accordance with Article III as provided in the Indenture), except payments and distributions made by the Trustee as permitted by the first or second paragraph of Section 12.5, if: (i) a default in the payment of principal, premium, interest, rent or other obligations due on any Senior Indebtedness occurs and is continuing (or, in the case of Senior Indebtedness for which there is a period of grace, in the event of such a default that continues beyond the period of grace, if any, specified in the instrument or lease evidencing such Senior Indebtedness), unless and until such default shall have been cured or waived or shall have ceased to exist; or (ii) a default, other than a payment default, on a Designated Senior Indebtedness occurs and is continuing that then permits holders of such Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of the default (a "Payment Blockage Notice") from a Representative or the Company. If the Trustee receives any Payment Blockage Notice pursuant to clause (ii) above, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (A) at least 365 days shall have elapsed since the initial effectiveness of the immediately prior Payment Blockage Notice, and (B) all scheduled payments of principal, premium, if any, and interest on the Securities that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice. The Company may and shall resume payments on and distributions in respect of the Securities upon the earlier of: (1) the date upon which the default is cured or waived or ceases to exist, or (2) in the case of a default referred to in clause (ii) above, 179 days pass after notice is received if the maturity of such Designated Senior Indebtedness has not been accelerated, unless this Article XII otherwise prohibits the payment or distribution at the time of such payment or distribution. Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, 48 54 whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in full in cash or other payment satisfactory to the holders of such Senior Indebtedness, or payment thereof in accordance with its terms provided for in cash or other payment satisfactory to the holders of such Senior Indebtedness, before any payment is made on account of the principal of, premium, if any, or interest on the Securities (except payments made pursuant to Article VI from monies deposited with the Trustee pursuant thereto prior to commencement of proceedings for such dissolution, winding-up, liquidation or reorganization); and upon any such dissolution or winding-up or liquidation or reorganization of the Company or bankruptcy, insolvency, receivership or other proceeding, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee would be entitled, except for the provision of this Article XII, shall (except as aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, or as otherwise required by law or a court order) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay all Senior Indebtedness in full, in cash or other payment satisfactory to the holders of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution or provision therefor is made to the Holders of the Securities or to the Trustee. For purposes of this Article XII, the words, "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XII with respect to the Securities to the payment of all Senior Indebtedness which may at the time be outstanding; provided that (i) the Senior Indebtedness is assumed by the new corporation, if any, resulting from any reorganization or readjustment, and (ii) the rights of the holders of Senior Indebtedness (other than leases which are not assumed by the Company or the new corporation, as the case may be) are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article V shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 12.2 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article V. In the event of the acceleration of the Securities because of an Event of Default, no payment or distribution shall be made to the Trustee or any Holder of 49 55 Securities in respect of the principal of, premium, if any, or interest on the Securities (including, but not limited to, the redemption price with respect to the Securities called for redemption in accordance with Article 3 as provided in the Indenture), except payments and distributions made by the Trustee as permitted by the first or second paragraph of Section 12.5, until all Senior Indebtedness has been paid in full in cash or other payment satisfactory to the holders of Senior Indebtedness or such acceleration is rescinded in accordance with the terms of this Indenture. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration at the address set forth in the notice from the Agent (or successor agent) to the Trustee as being the address to which the Trustee should send its notice pursuant to this Section 12.2, unless there are no payment obligations of the Company thereunder and all obligations thereunder to extend credit have been terminated or expired. In the event that, notwithstanding the foregoing provisions, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (including, without limitation, by way of setoff or otherwise), prohibited by the foregoing, shall be received by the Trustee or the Holders of the Securities before all Senior Indebtedness is paid in full in cash or other payment satisfactory to the holders of such Senior Indebtedness, or provision is made for such payment thereof in accordance with its terms in cash or other payment satisfactory to the holders of such Senior Indebtedness, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in cash or other payment satisfactory to the holders of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. Nothing in this Section 12.2 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.7. This Section 12.2 shall be subject to the further provisions of Section 12.5. Section 12.3. Subrogation of Securities. Subject to the payment in full of all Senior Indebtedness, the rights of the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until the principal, premium, if any, and interest on the Securities shall be paid in full; and, for the purposes of such subrogation, no 50 56 payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII, and no payment over pursuant to the provisions of this Article XII, to or for the benefit of the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment by the Company to or on account of the Senior Indebtedness; and no payments or distributions of cash, property or securities to or for the benefit of the Holders of the Securities pursuant to the subrogation provisions of this Article XII, which would otherwise have been paid to the holders of Senior Indebtedness shall be deemed to be a payment by the Company to or for the account of the Securities. It is understood that the provisions of this Article XII are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XII of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee, subject to the provisions of Section 7.1, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon and all other facts pertinent thereto or to this Article XII. Section 12.4. Authorization to Effect Subordination. Each Holder of a Security by the holder's acceptance thereof authorizes and directs the Trustee on the holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article XII and appoints the Trustee to act as the holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any 51 57 proceeding referred to in Section 6.3 hereof at least 30 days before the expiration of the time to file such claim, the holders of any Senior Indebtedness or their representatives are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Securities. Section 12.5. Notice to Trustee. The Company shall give prompt written notice in the form of an Officers' Certificate to a Responsible Officer of the Trustee and to any paying agent of any fact known to the Company which would prohibit the making of any payment of monies to or by the Trustee or any paying agent in respect of the Securities pursuant to the provisions of this Article XII. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions of this Article XII, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office from the Company (in the form of an Officers' Certificate) or a Representative or a holder or holders of Senior Indebtedness or from any trustee thereof; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.1, shall be entitled in all respects to assume that no such facts exist; provided that if on a date not fewer than two Business Days prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of the principal of, or premium, if any, or interest on any Security) the Trustee shall not have received, with respect to such monies, the notice provided for in this Section 12.5, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such prior date. Notwithstanding anything in this Article XII to the contrary, nothing shall prevent any payment by the Trustee to the Holders of monies deposited with it pursuant to Section 8.1, and any such payment shall not be subject to the provisions of Section 12.1 or 12.2. The Trustee, subject to the provisions of Section 7.1, shall be entitled to rely on the delivery to it of a written notice by a Representative or a person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a Representative or a holder of Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article XII, and if such evidence is not furnished the Trustee may 52 58 defer any payment to such person pending judicial determination as to the right of such person to receive such payment. Section 12.6. Trustee's Relation to Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in Section 7.11 or elsewhere in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XII, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and, subject to the provisions of Section 7.1, the Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay over or deliver to Holders of Securities, the Company or any other person money or assets to which any holder of Senior Indebtedness shall be entitled by virtue of this Article XII or otherwise. Section 12.7. No Impairment of Subordination. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Section 12.8. Article Applicable to Paying Agents. If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that the first paragraph of Section 12.5 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. Section 12.9. Senior Indebtedness Entitled to Rely. The holders of Senior Indebtedness (including, without limitation, Designated Senior Indebtedness) shall have the right to rely upon this Article XII, and no amendment or modification of the provisions contained herein shall diminish the rights of such holders unless such holders shall have agreed in writing thereto. 53 59 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. AVIRON By: /s/ C. BOYD CLARKE ------------------------------- Name: C. Boyd Clarke Its: Chief Executive Officer, President and Chairman HSBC BANK USA By: /s/ JAMES M. FOLEY ------------------------------- Name: James M. Foley Its: Assistant Vice President EX-4.23 5 f69956ex4-23.txt EXHIBIT 4.23 1 EXHIBIT 4.23 AVIRON $230,000,000 5 1/4% Convertible Subordinated Notes due 2008 Officers' Certificate Pursuant to Section 2.01 of Indenture The undersigned officers of Aviron, a Delaware corporation (the "Company"), pursuant to authority granted such officers pursuant to resolutions duly adopted at a meeting of the Board of Directors of the Company on November 30, 2000 and resolutions duly adopted at a meeting of the Pricing Committee of the Board of Directors of the Company on February 1, 2001 (collectively, the "Resolutions"), hereby establish a series of Securities under that certain Indenture, dated as of February 7, 2001 (the "Indenture"), between the Company and HSBC Bank USA, as trustee ("Trustee"), which Securities are designated "5 1/4% Convertible Subordinated Notes due 2008," and hereby certify, pursuant to Sections 2.1 and 2.2 of the Indenture, as follows: 1. Form of Note. Attached hereto as Exhibit A is a true and correct copy of a specimen Note (the "Form of Note") representing the Company's 5 1/4% Convertible Subordinated Notes due 2008 (the "Notes"). 2. Terms of the Notes. The terms of the Notes are as follows: (a) The title of the Notes to be issued as a series of Securities (as defined in the Indenture) under the Indenture shall be the "5 1/4% Convertible Subordinated Notes due 2008"; (b) The aggregate principal amount of the Notes that may be authenticated and delivered under the Indenture shall be limited to $230,000,000 (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Article II and Section 9.6 of the Indenture); (c) The Notes shall be issued at a price equal to 100% of the aggregate principal amount thereof; (d) The principal of the Notes shall be payable on February 1, 2008; (e) The Notes shall bear interest at a rate equal to 5 1/4% per annum; interest on the Notes shall accrue from February 7, 2001 or from the most recent date to which interest has been paid or provided for, as the case may be; interest on the Notes shall be payable semi-annually in arrears in cash on February 1 and August 1 of each year until maturity commencing on August 1, 2001; and interest on the Notes shall be payable to holders of record on the January 15 or July 15 immediately preceding the applicable interest payment date; 2 (f) The place or places where the principal of and any interest in the Notes shall be payable shall be as set forth in the Notes, the form of which is attached hereto as Exhibit A; (g) The Notes shall be subject to redemption, in whole or in part, at the option of the Company at any time on or after February 5, 2004, at the redemption prices (expressed in percentages of principal amount) set forth below plus accrued and unpaid interest thereon to, but excluding, the redemption date:
Redemption Period Price ------ ---------- Beginning on February 5, 2004 and ending on January 31, 2005.......... 103.000% Beginning on February 1, 2005 and ending on January 31, 2006.......... 102.250% Beginning on February 1, 2006 and ending on January 31, 2007.......... 101.500% Beginning on February 1, 2007 and ending on January 31, 2008.......... 100.750% February 1, 2008 and thereafter....................................... 100.000%
The Company may not so redeem Securities if the Company has failed to pay any interest on the Securities when due and such failure to pay is continuing. If the redemption date is an interest payment date, interest shall be paid to the record holder of the relevant record date. (h) The Company shall not be obligated to redeem or purchase the Notes pursuant to any sinking fund or at the option of any holder thereof prior to maturity; (i) The Company shall be convertible into shares of Common Stock, par value $.001 per share, of the Company at any time prior to maturity at an initial conversion price of $62.50 per share of Common Stock, subject to adjustment as described below; (j) The Notes shall be issued in denominations of $1,000 and any integral multiple thereof; (k) 100% of the principal amount thereof shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.2 of the Indenture; (l) In addition to the definitions and provisions set forth in the Indenture, the Notes shall include the definitions and provisions set forth in the Form of Note and in Sections 3, 4 and 5 of this Officers' Certificate and, in the case of conflict, the definitions and provisions set forth in this Officers' Certificate shall control; (m) The Trustee for the Notes shall be HSBC Bank USA; (n) The Notes shall be issued initially in the form of a Global Note ("Global Note") in definitive, fully registered form without interest coupons in substantially the form of Exhibit A, which shall be deposited on behalf of the purchasers of the Notes 2 3 represented thereby with the Trustee, at its principal corporate trust office in New York City, as custodian for the Depository, and registered in the name of the Depository or a nominee thereof, duly executed by the Company and authenticated by the Trustee where so provided. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee in accordance with the Depository's procedures and as provided in Section 2.14 of the Indenture. Except as provided in Section 2.14 of the Indenture, owners of beneficial interest in Global Notes shall not be entitled to receive physical delivery of certificated Notes. The Depository for such Global Notes shall be The Depository Trust Company; (o) The Notes shall not be secured by any collateral; (p) The Notes shall not be guaranteed by any person; (q) The Notes shall be general unsecured obligations of the Company and shall, to the extent provided in Article XII of the Indenture, be subordinated in right of payment to the prior payment in full of the Company's senior indebtedness; and (r) The provisions of Section 8.3 and 8.4 of the Indenture shall be applicable to the Notes. 3. Additional Redemption Provisions. In addition to the redemption provisions set forth in Article III of the Indenture, the Notes shall include the following additional provisions: Section 3.7. Conversion Arrangement on Call for Redemption. In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Trustee in trust for the Holders, on or before the date fixed for redemption, an amount not less than the applicable redemption price, together with interest accrued to (but excluding) the date fixed for redemption, of such Securities. Notwithstanding anything to the contrary contained in this Article III, the obligation of the Company to pay the redemption price of such Securities, together with interest accrued to (but excluding) the date fixed for redemption, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, a copy of which will be filed with the Trustee prior to the date fixed for redemption, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article XIII) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the date fixed for redemption (and the right to convert any such Securities shall be extended through such time), subject to payment of the above amount as aforesaid. At the direction of the Company, the Trustee shall hold and dispose of any such amount paid to it in the same manner as it would monies deposited with it by the Company for the redemption of 3 4 Securities. Without the Trustee's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture. Section 3.8. Redemption at Option of Holders. If there shall occur a Fundamental Change at any time prior to maturity of the Securities, then each Holder shall have the right, at such Holder's option, to require the Company to redeem all of such Holder's Securities, or any portion thereof that is an integral multiple of $1,000 principal amount, on the date (the "Repurchase Date") that is thirty (30) days after the date of the Company Notice (as defined below) of such Fundamental Change (or, if such 30th day is not a Business Day, the next succeeding Business Day) at a redemption price equal to 100% of the principal amount thereof, together with accrued interest to (but excluding) the Repurchase Date; provided that if such Repurchase Date is February 1 or August 1, then the interest payable on such date shall be paid to the Holders of record of the Securities on the next preceding January 15 or July 15, respectively. Upon presentation of any Securities redeemed in part only, the Company shall execute and, upon the Company's written direction to the Trustee, the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, new Securities, of authorized denominations, in principal amount equal to the unredeemed portion of the Securities so presented. On or before the tenth day after the occurrence of a Fundamental Change, the Company, or, at its written request (which must be received by the Trustee at least five (5) Business Days prior to the date the Trustee is requested to give notice as described below, unless the Trustee shall agree to a shorter period), the Trustee in the name of and at the expense of the Company, shall mail or cause to be mailed to all Holders of record on the date of the Fundamental Change a notice (the "Company Notice") of the occurrence of such Fundamental Change and of the redemption right at the option of the Holders arising as a result thereof. Such notice shall be mailed in the manner and with the effect set forth in Sections 3.3 and 3.4 hereof (without regard for the time limits set forth therein). If the Company shall give such notice, the Company shall also deliver a copy of the Company Notice to the Trustee at such time as it is mailed to Holders. Each Company Notice shall specify the circumstances constituting the Fundamental Change, the Repurchase Date, the price at which the Company shall be obligated to redeem Securities, that the Holder must exercise the redemption right on or prior to the close of business on the Repurchase Date (the "Fundamental Change Expiration Time"), that the Holder shall have the right to withdraw any Securities surrendered prior to the Fundamental Change Expiration Time, a description of the procedure which a Holder must follow to exercise such redemption right and to withdraw any surrendered Securities, the place or places where the Holder is to surrender such Holder's Securities, and the amount of interest accrued on such Securities to the Repurchase Date. No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders' redemption rights or affect the validity of the proceedings for the repurchase of the Securities pursuant to this Section 3.8. 4 5 For Securities to be so repaid at the option of the Holder, the Company must receive at the office or agency of the Company maintained for that purpose or, at the option of such Holder, the Corporate Trust Office, such Securities with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on the reverse thereof duly completed, together with such Securities duly endorsed for transfer, on or before the Fundamental Change Expiration Time. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Securities for repayment shall be determined by the Company, whose determination shall be final and binding absent manifest error. On or prior to the Repurchase Date, the Company will deposit with the Trustee or with one or more paying agents (or, if the Company is acting as its own paying agent, set aside, segregate and hold in trust) an amount of money sufficient to repay on the Repurchase Date all the Securities to be repaid on such date at the appropriate redemption price, together with accrued interest to (but excluding) the Repurchase Date; provided that if such payment is made on the Repurchase Date it must be received by the Trustee or paying agent, as the case may be, by 10:00 a.m. New York City time, on such date. Payment for Securities surrendered for redemption (and not withdrawn) prior to the Fundamental Change Expiration Time will be made promptly (but in no event more than five (5) Business Days) following the Repurchase Date by mailing checks for the amount payable to the Holders of such Securities entitled thereto as they shall appear on the registry books of the Company. In the case of a reclassification, change, consolidation, merger, combination, sale or conveyance to which Section 13.6 applies, in which the Common Stock of the Company is changed or exchanged as a result into the right to receive stock, securities or other property or assets (including cash), which includes shares of Common Stock of the Company or another person that are, or upon issuance will be, traded on a United States national securities exchange or approved for trading on an established automated over-the-counter trading market in the United States and such shares constitute at the time such change or exchange becomes effective in excess of 50% of the aggregate fair market value of such stock, securities or other property or assets (including cash) (as determined by the Company, which determination shall be conclusive and binding), then the person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture (accompanied by an Opinion of Counsel that such supplemental indenture complies with the Trust Indenture Act as in force at the date of execution of such supplemental indenture) modifying the provisions of this Indenture relating to the right of Holders of the Securities to cause the Company to repurchase the Securities following a Fundamental Change, including without limitation the applicable provisions of this Section 3.8 and the definitions of the Conversion Price, Common Stock and Fundamental Change, as appropriate, as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provisions apply to the common stock and the issuer thereof if different from the Company and Common Stock of the Company (in lieu of the Company and the Common Stock of the Company). The Company will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act to the extent then applicable in connection with the redemption rights of the Holders of Securities in the event of a Fundamental Change. 5 6 4. Conversion Provisions. The Notes shall contain the following provisions regarding conversion: "ARTICLE XIII CONVERSION OF SECURITIES Section 13.1. Right to Convert. Subject to and upon compliance with the provisions of this Indenture, each Holder shall have the right, at its option, at any time following the original issuance of the Securities hereunder through the close of business on the final maturity date of the Securities (except that, with respect to any Securities or portion thereof which shall be called for redemption, such right shall terminate, except as provided in Section 13.2 or Section 3.7, at the close of business on the Business Day next preceding the date fixed for redemption of such Securities or portion thereof unless the Company shall default in payment due upon redemption thereof) to convert the principal amount of any such Securities, or any portion of such principal amount which is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of Common Stock (as such shares shall then be constituted) obtained by dividing the principal amount of the Securities or portion thereof surrendered for conversion by the Conversion Price in effect at such time, by surrender of the Securities so to be converted in whole or in part in the manner provided, together with any required funds, in Section 13.2. Securities in respect of which a holder is exercising its option to require redemption upon a Fundamental Change pursuant to Section 3.8 may be converted only if such holder withdraws its election to exercise in accordance with Section 3.8. A holder of Securities is not entitled to any rights of a holder of Common Stock until such holder has converted his Securities to Common Stock, and only to the extent such Securities are deemed to have been converted to Common Stock under this Article XIII. Section 13.2. Exercise of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment for Interest Dividends. In order to exercise the conversion privilege with respect to any Securities in certificated form, the holder of any such Securities to be converted in whole or in part shall surrender such Securities, duly endorsed, at an office or agency maintained by the Company as set forth in the Securities, accompanied by the funds, if any, required by the penultimate paragraph of this Section 13.2, and shall give written notice of conversion in the form provided on the Securities (or such other notice which is acceptable to the Company) to the office or agency that the holder elects to convert such Securities or the portion thereof specified in said notice. Such notice shall also state the name or names (with address or addresses) in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued, and shall be accompanied by transfer taxes, if required pursuant to Section 13.7. All such Securities surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the registration of such Securities, be duly endorsed by, or be 6 7 accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the holder or his duly authorized attorney. In order to exercise the conversion privilege with respect to any interest in Securities in global form, the Holder must complete the appropriate instruction form for conversion pursuant to the Depository's book-entry conversion program, deliver by book-entry delivery an interest in such Securities in global form, furnish appropriate endorsements and transfer documents if required by the Company or the Trustee or conversion agent, and pay the funds, if any, required by this Section 13.2 and any transfer taxes if required pursuant to Section 13.7. As promptly as practicable after satisfaction of the requirements for conversion set forth above, subject to compliance with any restrictions on transfer if shares issuable on conversion are to be issued in a name other than that of the Holder (as if such transfer were a transfer of the Securities (or portion thereof) so converted), the Company shall issue and shall deliver to such Holder at the office or agency maintained by the Company for such purpose as set forth in the Securities, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such Securities or portion thereof in accordance with the provisions of this Article and a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion, as provided in Section 13.3. In case any Securities of a denomination greater than $1,000 shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of the Securities so surrendered, without charge to him, new Securities in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Securities. Each conversion shall be deemed to have been effected as to any such Securities (or portion thereof) on the date on which the requirements set forth above in this Section 13.2 have been satisfied as to such Securities (or portion thereof), and the person in whose name any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become on said date the holder of record of the shares represented thereby; provided, however, that any such surrender on any date when the stock transfer books of the Company shall be closed shall constitute the person in whose name the certificates are to be issued as the record holder thereof for all purposes on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Securities shall be surrendered. All Securities or portion thereof surrendered for conversion during the period from the close of business on the record date for any interest payment date to the close of business on the Business Day next preceding the following interest payment date shall (unless such Securities or portion thereof being converted shall have been called for redemption on a redemption date which occurs during the period from the close of business on such record date to the close of business on the Business Day next preceding the following interest payment date) be accompanied by payment, in funds acceptable to the Company, of an amount equal to the interest otherwise payable on such interest payment date on the principal amount being converted; provided, however, that no such payment need be made if there shall exist at the time of conversion a default in the payment of interest on the Securities. Except as provided above in 7 8 this Section 13.2, no payment or other adjustment shall be made for interest accrued on any Securities converted or for dividends on any shares issued upon the conversion of such Securities as provided in this Article. Upon the conversion of an interest in Securities in global form, the Trustee (or other conversion agent appointed by the Company), or the Custodian at the direction of the Trustee (or other conversion agent appointed by the Company), shall make a notation on such Securities in global form as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversions of Securities effected through any conversion agent other than the Trustee. Section 13.3. Cash Payments in Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of Securities. If multiple Securities shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share of stock would be issuable upon the conversion of any Securities, the Company shall make an adjustment and payment therefor in cash at the current market price thereof to the holder of Securities. The current market price of a share of Common Stock shall be the Closing Price on the last Business Day immediately preceding the day on which the Securities (or specified portions thereof) are deemed to have been converted. Section 13.4. Conversion Price. The conversion price shall be as specified in the Form of Note (herein called the "Conversion Price") attached as Exhibit A hereto, subject to adjustment as provided in this Article XIII. Section 13.5. Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time by the Company as follows: (a) In case the Company shall hereafter pay a dividend or make a distribution to all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For purposes of this paragraph (a), the number of shares of Common Stock outstanding shall not include shares held in the treasury of the Company. The Company 8 9 will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. If any dividend or distribution of the type described in this Section 13.5(a) is declared but not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (b) In case the Company shall issue rights or warrants to all holders of its outstanding shares of Common Stock entitling them (for a period expiring within forty-five (45) days after the date fixed for determination of stockholders entitled to receive such rights or warrants) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price (as defined below) on the date fixed for determination of stockholders entitled to receive such rights or warrants, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date fixed for determination of stockholders entitled to receive such rights or warrants by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for determination of stockholders entitled to receive such rights and warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price, and the denominator of which shall be the number of shares of Common Stock outstanding on the date fixed for determination of stockholders entitled to receive such rights and warrants plus the total number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall be successively made whenever any such rights and warrants are issued, and shall become effective immediately after the opening of business on the day following the date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. In the event that such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. (c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. 9 10 (d) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of capital stock of the Company (other than any dividends or distributions to which Section 13.5(a) applies) or evidences of its indebtedness or assets (including securities, but excluding any rights or warrants referred to in Section 13.5(b), and excluding any dividend or distribution (x) paid exclusively in cash or (y) referred to in Section 13.5(a)) (any of the foregoing hereinafter in this Section 13.5(d) called the "Distributed Securities"), then, in each such case (unless the Company elects to reserve such Distributed Securities for distribution to the Holders upon the conversion of the Securities so that any such converting Holder will receive upon such conversion, in addition to the shares of Common Stock to which such Holder is entitled, the amount and kind of such Distributed Securities which such Holder would have received if such Holder had converted its Securities into Common Stock immediately prior to the Record Date (as defined in Section 13.5(h)(5) for such distribution of the Distributed Securities)), the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect on the Record Date with respect to such distribution by a fraction, the numerator of which shall be the Current Market Price per share of the Common Stock on such Record Date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive, and described in a resolution of the Board if Directors) on the Record Date of the portion of the Distributed Securities so distributed applicable to one share of Common Stock and the denominator of which shall be the Current Market Price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following such Record Date; provided, however, that in the event the then fair market value (as so determined) of the portion of the Distributed Securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion the amount of Distributed Securities such Holder would have received had such Holder converted all Securities on the Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 13.5(d) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock. Under the provisions of the Company's Share Purchase Rights Plan, dated as of October 8, 1997, between the Company and The First National Bank of Boston (the "Rights Plan"), upon conversion of the Securities into Common Stock to the extent that such Rights Plan is still in effect upon such conversion, the Holders will receive, in addition to the Common Stock, the Rights described therein (whether or not the Rights have separated at the time of conversion), subject to certain exceptions set forth in the Rights Plan. Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (i) are deemed to be transferred with such shares 10 11 of Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 13.5 (and no adjustment to the Conversion Price under this Section 13.5 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Price shall be made under this Section 13.5(d). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights (and a termination or expiration of the existing rights or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Price under this Section 13.5 was made, (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Price shall be readjusted as if such rights and warrants had not been issued. For purposes of this Section 13.5(d) and Sections 13.5(a) and (b), any dividend or distribution to which this Section 13.5(d) is applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock (or both), shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets or shares of capital stock other than such shares of Common Stock or rights or warrants (and any Conversion Price reduction required by this Section 13.5(d) with respect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights or warrants (and any further Conversion Price reduction required by Sections 13.5(a) and (b) with respect to such dividend or distribution shall then be made), except (A) the Record Date of such dividend or distribution shall be substituted as "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution" and "the date fixed for such determination" within the meaning of Sections 13.5(a) and (b) and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 13.5(a). (e) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding (x) any quarterly cash dividend on the Common Stock to the extent the aggregate cash dividend per share of Common Stock in any fiscal quarter does not exceed the greater of (A) the amount per share of Common Stock of the next preceding 11 12 quarterly cash dividend on the Common Stock to the extent that such preceding quarterly dividend did not require any adjustment of the Conversion Price pursuant to this Section 13.5(e) (as adjusted to reflect subdivisions or combinations of the Common Stock), and (B) 3.75% of the arithmetic average of the Closing Price (determined as set forth in Section 13.5(h)) during the ten Trading Days (as defined in Section 13.5(h)) immediately prior to the date of declaration of such dividend, and (y) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary), then, in such case, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such Record Date by a fraction, the numerator of which shall be the Current Market Price of the Common Stock on the record date less the amount of cash so distributed (and not excluded as provided above) applicable to one share of Common Stock and the denominator of which shall be such Current Market Price of the Common Stock, such reduction to be effective immediately prior to the opening of business on the day following the record date; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted all of the Securities on the Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. If any adjustment is required to be made as set forth in this Section 13.5(e) as a result of a distribution that is a quarterly dividend, such adjustment shall be based upon the amount by which such distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant hereto. If an adjustment is required to be made as set forth in this Section 13.5(e) above as a result of a distribution that is not a quarterly dividend, such adjustment shall be based upon the full amount of the distribution. (f) In case a tender or exchange offer made by the Company or any Subsidiary for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors) as of the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it may be amended) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time and the denominator of which shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the 12 13 number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender or exchange offer had not been made. (g) In case of a tender or exchange offer made by a person other than the Company or any Subsidiary for an amount which increases the offeror's ownership of Common Stock to more than twenty-five percent (25%) of the Common Stock outstanding and shall involve the payment by such person of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive, and described in a resolution of the Board of Directors) at the last time (the "Offer Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, and in which, as of the Offer Expiration Time, the Board of Directors is not recommending rejection of the offer, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the Offer Expiration Time by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Offer Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time and the denominator of which shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Offer Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Accepted Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Accepted Purchased Shares) on the Offer Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Offer Expiration Time. In the event that such person is obligated to purchase shares pursuant to any such tender or exchange offer, but such person is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender or exchange offer had not been made. Notwithstanding the foregoing, the adjustment described in this Section 13.5(g) shall not be made if, as of the Offer Expiration Time, the offering documents with respect to such offer disclose a plan or intention to cause the Company to engage in any transaction described in Article V. (h) For purposes of this Section 13.5, the following terms shall have the meaning indicated: 13 14 (1) "Closing Price" with respect to any securities on any day shall mean the closing sale price, regular way, on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the Nasdaq National Market, or, if such security is not listed or admitted to trading on such Nasdaq National Market, on the principal national securities exchange or quotation system on which such security is quoted or listed or admitted to trading, or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose, or a price determined in good faith by the Board of Directors or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive. (2) "Current Market Price" shall, for the purposes of any computation under subsections (b), (d), (e), (f) and (g) above relating to the current market price per share of Common Stock at a specified date, mean the average of the last reported sale prices for the ten (10) consecutive Trading Days (as defined below) preceding the day before the record date (or, if earlier, the ex-dividend date) with respect to any distribution, issuance or other event requiring such computation. (3) "fair market value" shall mean the amount which a willing buyer would pay a willing seller in an arm's length transaction. (4) "Record Date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). (5) "Trading Day" shall mean (x) if the applicable security is quoted on the Nasdaq National Market, a day on which trades may be made thereon or (y) if the applicable security is listed or admitted for trading on the New York Stock Exchange or another national security exchange, a day on which the New York Stock Exchange or another national security exchange is open for business or (z) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. (i) The Company may make such reductions in the Conversion Price, in addition to those required by Sections 13.5 (a), (b), (c), (d), (e), (f) or (g), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. 14 15 To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least twenty (20) days, the reduction is irrevocable during the period and the Board of Directors shall have made a determination that such reduction would be in the best interests of the Company, which determination shall be conclusive. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to holders of record of the Securities a notice of the reduction at least fifteen (15) days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period during which it will be in effect. (j) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in such price; provided, however, that any adjustments which by reason of this Section 13.5(j) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article XIII shall be made by the Company and shall be made to the nearest cent or to the nearest one-hundredth (1/100) of a share, as the case may be. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. To the extent the Securities become convertible into cash, assets, property or securities (other than capital stock of the Company), no adjustment need be made thereafter as to the cash, assets, property or such securities. Interest will not accrue on the cash. (k) Whenever the Conversion Price is adjusted as herein provided, the Company shall promptly file with the Trustee and any conversion agent other than the Trustee an Officers' Certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officers' Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Price and may assume without inquiry that the last Conversion Price of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Price to each Holder of Securities at his last address appearing on the list of Securityholders provided for in Section 2.6 of this Indenture, within twenty (20) days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of any such adjustment. (1) In any case in which this Section 13.5 provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i) issuing to the holder of any Securities converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to Section 13.3. (m) For purposes of this Section 13.5, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall 15 16 include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. Section 13.6. Effect of Reclassification, Consolidation, Merger or Sale. If any of the following events occur, namely (i) any reclassification or change of the outstanding shares of Common Stock (other than a subdivision or combination to which Section 13.5(c) applies), (ii) any consolidation, merger or combination of the Company with another person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, or (iii) any sale or conveyance of all or substantially all of the properties and assets of the Company to any other person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing person, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture) providing that such Securities shall be convertible into the kind and amount of shares of stock, securities or other property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance by a holder of a number of shares of Common Stock issuable upon conversion of such Securities (assuming, for such purposes, a sufficient number of authorized shares of Common Stock available to convert all such Securities) immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance assuming such holder of Common Stock did not exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance (provided that, if the kind or amount of stock, securities or other property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("nonelecting share"), then for the purposes of this Section 13.6 the kind and amount of securities, cash or other property receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article XIII. The above provisions of this Section shall similarly apply to successive reclassifications, changes, consolidations, mergers, combinations, sales and conveyances. If this Section 13.6 applies to any event or occurrence, Section 13.5 shall not apply. Section 13.7. Taxes on Shares Issued. The issue of stock certificates on conversions of Securities shall be made without charge to the converting Holder for any tax in respect of the issue thereof. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of any 16 17 Securities converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. Section 13.8. Reservation of Shares; Shares to be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for the conversion of the Securities from time to time as such Securities are presented for conversion. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Securities, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Price. The Company covenants that all shares of Common Stock which may be issued upon conversion of Securities will upon issue be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof. The Company covenants that if any shares of Common Stock to be provided for the purpose of conversion of Securities hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued upon conversion, the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. The Company further covenants that, if at any time the Common Stock shall be listed on the Nasdaq National Market or any other national securities exchange or automated quotation system, the Company will, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all Common Stock issuable upon conversion of the Securities; provided, however, that if rules of such exchange or automated quotation system permit the Company to defer the listing of such Common Stock until the first conversion of the Securities into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Securities in accordance with the requirements of such exchange or automated quotation system at such time. Section 13.9. Responsibility of Trustee. The Trustee and any other conversion agent shall not at any time be under any duty or responsibility to any holder of Securities to determine the Conversion Price or whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other conversion agent shall not be accountable with respect to the 17 18 validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Securities; and the Trustee and any other conversion agent make no representations with respect thereto. Neither the Trustee nor any conversion agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Securities for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any conversion agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 13.6 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Securities after any event referred to in such Section 13.6 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 8.1, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. Section 13.10. Notice to Holders Prior to Certain Actions. In case: (a) the Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Price pursuant to Section 13.5; or (b) the Company shall authorize the granting to the holders of all or substantially all of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants; or (c) of any reclassification or reorganization of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company or any Significant Subsidiary; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company or any Significant Subsidiary; the Company shall cause to be filed with the Trustee and to be mailed to each holder of Securities at his address appearing on the list of Securityholders provided for in Section 2.6 of this Indenture, as promptly as possible but in any event at least fifteen (15) days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such 18 19 reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up." 5. Additional Definitions. In addition to the definitions set forth in Article I of the Indenture or, where applicable, in lieu thereof, the Notes shall include the following definitions: "Common Stock" means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company. Subject to the provisions of Section 13.6, however, shares issuable on conversion of Securities shall include only shares of the class designated as common stock of the Company at the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Fundamental Change" means the occurrence of any transaction or event in connection with which all or substantially all of the Common Stock shall be exchanged for, converted into, acquired for or constitute solely the right to receive consideration (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) which is not all or substantially all common stock listed (or, upon consummation of or immediately following such transaction or event, will be listed) on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices. "Officers' Certificate" means a certificate signed by two Officers, one of whom must be the Company's principal executive officer, principal financial officer or principal accounting officer, which certificate shall include the statements provided for in Section 10.5. "Responsible Officer" means any officer of the Trustee with direct responsibility for the administration of the Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with a particular subject. 6. Board Resolutions. Attached hereto as Exhibit B are true and correct copies of the Resolutions. The Resolutions have not been amended, modified or rescinded and remain in full 19 20 force and effect, and the Resolutions are the only resolutions adopted by the Company's Board of Directors or any committee thereof relating to the Notes and the transactions related thereto. Each of the undersigned officers further states that he has read the provisions of the Indenture setting forth the conditions precedent to the issuance, authentication and delivery of the Notes and the definitions relating thereto, the Resolutions authorizing the issuance of the Notes and the Form of Notes; that the statements made in this Certificate are based upon the examination of the provisions of such Indenture, the Resolutions and the Form of Notes; that he has, in his opinion, made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not the conditions precedent for the issuance, authentication and delivery of the Notes have been complied with; and that, in his opinion, such conditions have been complied with. [Signature page follows] 20 21 IN WITNESS WHEREOF, said officers have signed this certificate this 7th day of February, 2001. /s/ C. BOYD CLARKE /s/ FRED KURLAND - ------------------------------- ------------------------------- C. Boyd Clarke. Fred Kurland President Senior Vice President and Chief Executive Officer and Chief Financial Officer 22 EXHIBIT A FORM OF NOTE UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR DEPOSITORY (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) OR SUCH SUCCESSOR'S NOMINEE AND LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. AVIRON 5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2008 No. ___ CUSIP NO. 053762AD2 Principal Amount: $______ AVIRON, a Delaware corporation (the "Company"), for value received, hereby promises to pay to CEDE & CO., as nominee of The Depository Trust Company, or registered assigns, the principal sum of _______________ Dollars on February 1, 2008. Interest Payment Dates: February 1 and August 1 Record Dates: January 15 and July 15 Reference is made to the further provisions of this Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place. This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee under the Indenture referred to on the reverse hereof. 23 IN WITNESS WHEREOF, AVIRON has caused this instrument to be signed manually or by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. AVIRON [SEAL] By: --------------------------------- C. Boyd Clarke Chief Executive Officer, President and Chairman Dated: By: --------------------------------- Fred Kurland Senior Vice President and Chief Financial Officer CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. HSBC BANK USA, as Trustee By: --------------------------------- Authorized Signatory 24 (REVERSE OF SECURITY) 5 1/4 % CONVERTIBLE SUBORDINATED NOTES DUE 2008 Capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture referred to below. 1. Interest. AVIRON, a Delaware corporation (the "Company", which term shall include any successor thereto in accordance with the Indenture), promises to pay interest on the principal amount hereof at the rate per annum shown above. Interest on the Securities shall accrue from February 7, 2001 or from the most recent date to which interest has been paid or provided for, as the case may be; interest on the Securities shall be payable semi-annually on February 1 and August 1 of each year until maturity, or, if such day is a Legal Holiday, on the next succeeding day that is not a Legal Holiday (each, an "Interest Payment Date"), commencing on August 1, 2001; and interest on the Securities shall be payable to holders of record on the January 15 or July 15 immediately preceding the applicable Interest Payment Date. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. If the Company defaults in a payment of interest, the Company shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, as provided in Section 2.13 of the Indenture. 2. Method of Payment. The Company will pay interest on the Securities (except defaulted interest) to the persons who are Holders of record in the security register of the Company (the "Security Register") of Securities at the close of business on the January 15 or July 15 (each a "Record Date") next preceding the Interest Payment Date, in each case even if the Securities are cancelled solely by virtue of registration of transfer or registration of exchange after such Record Date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Principal of, premium, if any, and interest on the Securities will be payable, and the Securities may be exchanged or transferred, at the office or agency of the Company in the Borough of Manhattan, the City of New York (which initially will be the Corporate Trust Office of the Trustee); provided that, at the option of the Company, payment of interest may be made by check mailed to the address of each Holder as such address appears in the Security Register; provided, further, that, at the option of each Holder holding an aggregate principal amount of Securities in excess of $2,000,000, payment of interest shall be made to such Holder by wire transfer of immediately available funds or by transfer to an account maintained by such Holder in the United States, provided, however, that payments to the Depository will be made by wire transfer of immediately available funds to the account of the Depository or its nominee. 3. Paying Agent and Registrar. Initially, HSBC Bank USA, a New York banking corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-Registrar without notice to any Holder. The Company or any of its Affiliates may act as Paying Agent, Registrar or co-Registrar. 25 4. Indenture. The Company issued the Securities under an Indenture dated as of February 7, 2001 by and between the Company and the Trustee (the "Base Indenture"), the terms of which have been established in an Officers' Certificate, dated February 7, 2001, pursuant to Sections 2.1 and 2.2 of the Indenture (collectively, the Officers' Certificate with the Base Indenture is referred to herein as the "Indenture"). The Securities are a series designated as the "5 1/4% Convertible Subordinated Notes due 2008" of the Company, limited in aggregate principal amount to $230,000,000. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "TIA"). The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of those terms. Any conflict between the terms of this Security and the Indenture will be governed by the Indenture. The Securities are general unsecured obligations of the Company and shall, to the extent provided in the Indenture, be subordinated in right of payment to the prior payment in full of the Company's senior indebtedness. 5. Optional Redemption. The Company, at its option, may redeem all or any part of the Securities, in whole or in part, at any time on or after February 5, 2004, at the redemption prices (expressed in percentages of principal amount) set forth below plus accrued and unpaid interest thereon to, but excluding, the redemption date:
Redemption Period Price ------ ---------- Beginning on February 5, 2004 and ending on January 31, 2005.......... 103.000% Beginning on February 1, 2005 and ending on January 31, 2006.......... 102.250% Beginning on February 1, 2006 and ending on January 31, 2007.......... 101.500% Beginning on February 1, 2007 and ending on January 31, 2008.......... 100.750% February 1, 2008 and thereafter....................................... 100.000%
The Company may not so redeem the Securities if the Company has failed to pay any interest on the Securities when due and such failure to pay is continuing. If the redemption date is an Interest Payment Date, interest shall be paid to the record Holder on the relevant record date. 6. Redemption at Option of Holders. If a Fundamental Change occurs at anytime prior to maturity, the Securities will be redeemable on the 30th day after notice thereof (the "Repurchase Date") at the option of the Holder at a redemption price equal to 100% of the principal amount thereof, together with accrued interest to (but excluding) the Repurchase Date; provided, however, that, if such Repurchase Date is a February 1 or August 1, the interest payable on such date shall be paid to the holder of record of the Securities on the next preceding Record Date. The Securities will be redeemable in multiples of $1,000 principal amount. The Company shall mail to all Holders a notice of the occurrence of a Fundamental Change and of the redemption right arising as a result thereof on or before the 10th day after the occurrence of such Fundamental Change. For Securities to be so redeemed at the option of the Holder, the Company must receive at the office or agency of the Company maintained for that purpose or as otherwise set forth in the Indenture and in accordance with the terms thereof, such Securities with the form entitled "Option to Elect Repayment Upon a Fundamental Change" on the reverse 2 26 hereof duly completed, together with such Securities, duly endorsed for transfer, on or before the 30th day after the date of such notice of a Fundamental Change. 7. Conversion. Subject to the provisions of the Indenture, each Holder has the right, at its option, at any time after the original issuance of any Securities through the close of business on the final maturity date of the Securities, or, as to all or any portion hereof called for redemption, prior to the close of business on the Business Day immediately preceding the date fixed for redemption (unless the Company shall default in payment due upon redemption thereof), to convert the principal thereof or any portion of such principal which is $1,000 or an integral multiple thereof into that number of shares of the Company's Common Stock (as such shares shall be constituted at the date of conversion) obtained by dividing the principal amount of the Securities or portion thereof to be converted by the Conversion Price of $62.50, as may adjusted from time to time as provided in the Indenture, upon surrender of such Securities, together with a conversion notice as provided in the Indenture (the form entitled "Conversion Notice" on the reverse hereof), to the Company at the office or agency of the Company maintained for that purpose in accordance with the terms of the Indenture, or at the option of such Holder, the Corporate Trust Office, and, unless the shares issuable on conversion are to be issued in the same name as this Note, duly endorsed by, or accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or such Holder's duly authorized attorney. No adjustment in respect of interest on any Securities converted or dividends on any shares issued upon conversion thereof will be made upon any conversion except as set forth in the next sentence. If such Securities (or portion thereof) are surrendered for conversion during the period from the close of business on any Record Date for the payment of interest to the close of business on the Business Day preceding the following Interest Payment Date and either (x) have not been called for redemption on a redemption date that occurs during such period or (y) are not to be redeemed in connection with a Fundamental Change on a Repurchase Date that occurs during such period, such Securities (or portion thereof being converted) must be accompanied by an amount, in New York Clearing House funds or other funds acceptable to the Company, equal to the interest payable on such Interest Payment Date on the principal amount being converted; provided, however, that no such payment shall be required if there shall exist at the time of conversion a default in the payment of interest on the Securities. No fractional shares will be issued upon any conversion, but an adjustment and payment in cash will be made, as provided in the Indenture, in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Securities for conversion. Securities in respect of which a Holder is exercising its right to require redemption upon a Fundamental Change may be converted only if such Holder withdraws its election to exercise such right in accordance with the terms of the Indenture. Any Securities called for redemption, unless surrendered for conversion by the Holders thereof on or before the close of business on the Business Day preceding the date fixed for redemption, may be deemed to be redeemed from such Holders for an amount equal to the applicable redemption price, together with accrued but unpaid interest to (but excluding) the date fixed for redemption, by one or more investment banks or other purchasers who may agree with the Company (i) to purchase such Notes from the Holders thereof and convert them into shares of the Company's Common Stock and (ii) to make payment for such Notes as aforesaid to the Trustee in trust for the Holders. 3 27 8. Sinking Fund. The Securities will not be subject to the operation of any sinking fund. 9. Denominations; Transfer; Exchange. The Securities are in registered form, without coupons, in denominations of $1,000 of principal amount and any integral multiple thereof. A Holder may transfer or exchange Securities in accordance with the Indenture. No service charge will be made for any registration of transfer or exchange of Securities, but the Company may require the payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith, subject to and as permitted by the Indenture. 10. Persons Deemed Owners. The registered Holder of this Security may be treated as the owner of it for all purposes. 11. Repayment to Company. The Trustee and the Paying Agent shall pay to the Company upon the Company's request any money held by them for the payment of principal or interest that remains unclaimed for two years after the date upon which such payment shall have become due. After payment to the Company, Holders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designated another person. 12. Discharge and Defeasance. Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee money and/or U.S. Government Obligations for the payment of principal and interest on the Securities to maturity. 13. Defaults and Remedies. Under the Indenture, Events of Defaults with respect to the Securities of all Series affected include (a) failure to pay the principal of, or premium, if any, on such Securities when due and payable; (b) failure to pay any interest on such Securities when due, continued for 30 days; (c) failure to perform or observe any other covenants or warranties of the Company in the Indenture, including failure to comply with the provisions of the Indenture applicable to consolidation, merger and sale of assets of the Company, continued for 60 days after written notice as set forth in the Indenture; and (d) certain events of bankruptcy, insolvency or reorganization. If an Event of Default with respect to the Securities of any Series (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization) shall occur and be continuing, either the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities of such Series may, by notice, as provided in the Indenture, declare the unpaid principal amount of, and any accrued and unpaid interest on, the Securities to be due and payable immediately. However, at any time after a declaration of acceleration with respect to the Securities has been made and before any judgment or decree for payment of money due has been obtained, the Holders of a majority in principal amount of the outstanding Securities of such Series may, under certain circumstances, rescind and annul such acceleration if all existing Events of Default with respect to such Securities have been cured or waived except nonpayment 4 28 of principal (or such lesser amount) or interest that has become due solely because of the acceleration. Subject to the duty of the Trustee during an Event of Default to act with the required standard of care, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity. Subject to certain provisions, including those requiring security or indemnification of the Trustee, the Holders of a majority in principal amount of the outstanding Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities. 14. Supplements, Amendments and Waivers. Subject to certain exceptions, the Company and the Trustee may amend the Indenture or the Securities with the written consent of the Holders of a majority in principal amount of the then outstanding Securities. The Holders of a majority in principal amount of the then outstanding Securities may also waive compliance in a particular instance by the Company with any provision of the Indenture with respect to the Securities; provided, however, that certain amendments or waivers may not be made without the consent of each Holder of Securities affected as provided in the Indenture. The Company and the Trustee may amend the Indenture or the Securities without notice to or the consent of any Holder of Securities in certain circumstances described in the Indenture. The Holders of a majority in principal amount of the outstanding Securities, by notice to the Trustee, may waive an existing Default or Event of Default and its consequences except a Default or Event of Default in the payment of the principal of, or any interest on, the Securities (provided, however, that the Holders of a majority in principal amount of the outstanding Securities may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). 15. Trustee Dealings with the Company. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 16. No Recourse Against Others. A past, present or future director, officer, employee, stockholder or incorporator, as such, of the Company or any successor corporation shall not have any liability for any obligations of the Company under this Security or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration of issuance of the Securities. 17. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. 5 29 18. Successors and Assigns. All covenants and agreements of the Company in the Indenture and the Securities shall bind its successors and assigns. All agreements of the Trustee in the Indenture shall bind its successors. 19. Authentication. This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication hereon. 20. Abbreviations. Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=Tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. Subordination. The Securities are subordinated to all Senior Indebtedness, which includes almost all indebtedness other than (i) indebtedness that expressly provides that it shall not be senior in right of payment to the Securities or expressly provides that it is on the same basis or junior to the Securities; (ii) indebtedness of the Company to any of its majority-owned subsidiaries; and (iii) the Securities. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid. The Company agrees, and each Holder by accepting a Security consents and agrees, to the subordination provided in the Indenture and authorizes the Trustee to give it effect. 22. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities, and the Trustee may use CUSIP numbers in notices as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice and no reliance may be placed thereon. The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture. Such requests may be addressed to: Aviron 297 North Bernardo Avenue Mountain View, California 94043 Attention: Corporate Secretary 6 30 CONVERSION NOTICE TO: AVIRON The undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion hereof (which is $1,000 or an integral multiple thereof) below designated, into shares of Common Stock of Aviron in accordance with the terms of the Indenture referred to in this Note, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If shares or any portion of this Note not converted are to be issued in the name of a person other than the undersigned, the undersigned will check the appropriate box below and pay all transfer taxes payable with respect thereto. Any amount required to be paid to the undersigned on account of interest accompanies this Note. Dated: ------------------------- - ------------------------------- - ------------------------------- Signature(s) Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a major stock exchange if shares of Common Stock are to be issued, or Notes to be delivered, other than to and in the name of the registered Holder. - ------------------------------- Signature Guarantee Fill in for registration of shares of Common Stock if to be issued, and Notes if to be delivered, other than to and in the name of the registered Holder: (Please print) Principal amount to be converted - ------------------------------------ (if less than all): $_________________ (Name) Social Security or Other Taxpayer - ------------------------------------ Identification Number _________________ (Street Address) - ------------------------------------ (City, State and Zip Code) 31 OPTION TO ELECT REPAYMENT UPON A FUNDAMENTAL CHANGE TO: AVIRON The undersigned registered owner of this Note hereby irrevocably acknowledges receipt of a notice from Aviron (the "Company") as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Note, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Note at the redemption price, together with accrued interest to, but excluding, such date, to the registered Holder hereof. Dated: ------------------------- Signature(s) ------------------- - ------------------------------- NOTICE: The above signatures of the registered Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever. Principal amount to be repaid (if less than all): $_________________________ Social Security or Other Taxpayer Identification Number _________________________ 32 ASSIGNMENT FORM If you, Holder, want to assign this Note, fill in the form below and have your signature guaranteed. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ______________________________________________________________ (Please insert assignee's social security or tax ID number)____________________ _______________________________________________________________________________ _______________________________________________________________________________ (Please print or type assignee's name, address and zip code) the within Note and all rights thereunder, and hereby irrevocably constitute and appoint such person attorney to transfer such Note on the books of the Company, with full power of substitution in the premises. Dated: Your signature: ---------------------- ----------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Note in every particular without alteration or enlargement or any change whatever. Signature guarantee: ------------------------------- EX-10.34 6 f69956ex10-34.txt EXHIBIT 10.34 1 EXHIBIT 10.34 EXECUTIVE SEVERANCE BENEFITS AGREEMENT THIS EXECUTIVE SEVERANCE BENEFITS AGREEMENT (the "Agreement") is entered into effective as of the 23rd day of October 2000, between HARRY GREENBERG, ("Executive") and AVIRON, a Delaware corporation (the "Company"). This Agreement is intended to provide Executive with the severance benefits described herein upon the occurrence of specific events. Certain capitalized terms used in this Agreement are defined in Article 6. The Company and Executive hereby agree as follows: ARTICLE 1 EMPLOYMENT BY THE COMPANY 1.1 Upon execution of the offer letter of even date herewith (the "Offer Letter"), Executive shall be employed as Senior Vice President and Chief Scientific Officer. 1.2 The Company and Executive wish to set forth the severance benefits which Executive shall be entitled to receive in the event Executive's employment with the Company terminates under the circumstances described herein. 1.3 The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive's agreeing to the terms of the Offer Letter with the Company, Executive's employment with the Company, and Executive execution of the general waiver and release described in Section 4.2. 1.4 This Agreement shall remain in full force and effect so long as Executive is employed by the Company; provided, however, that Executive's rights to payments and benefits under Article 2 or Article 3 shall continue until the Company's obligation to provide such payments and benefits is satisfied. ARTICLE 2 SEVERANCE BENEFITS 2.1 TERMINATION EVENTS. If Executive's employment involuntarily terminates for any reason other than for Cause, Executive shall be entitled to receive the following benefits set forth in Sections 2.2, 2.3 and 2.4. 2.2 SALARY CONTINUATION. Executive shall receive Base Salary that has accrued but is unpaid as of the date of a Covered Termination, and, within thirty (30) days following such Covered Termination, Executive shall also receive payments equal to six (6) months of Base Salary. 2 2.3 HEALTH INSURANCE COVERAGE. Provided that Executive makes a timely election to continue coverage under the Company's group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") in connection with Executive's Covered Termination, the Company will pay Executive's COBRA premiums for a maximum period of six (6) months following the date of such Covered Termination (the "COBRA Continuation Period"). In addition, if Executive's spouse and/or dependents were enrolled in the Company's group health plan on the date of the Covered Termination, the Company will pay the COBRA premiums for Executive's dependents during the COBRA Continuation Period, but only to the same extent that such dependents' premiums under such plan were paid by the Company prior to the date of such Covered Termination. No provision of this Agreement will affect the continuation coverage rules under COBRA, except that the Company's payment of any applicable premiums during the COBRA Continuation Period will be credited as payment by Executive for purposes of the Executive's payment required under COBRA. Therefore, the period during which Executive must elect to continue the Company's group health coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made available to Executive, and all other rights and obligations of the Executive under COBRA (except the obligation to pay premiums that the Company pays during the COBRA Continuation Period) will be applied in the same manner that such rules would apply in the absence of this Agreement. At the conclusion of the COBRA Continuation Period, Executive will be responsible for the entire payment of premiums required under COBRA for the remaining duration of eligibility for COBRA, if any. Notwithstanding the foregoing, the Company's obligation to make COBRA payments for Executive as described above shall cease immediately. if Executive becomes eligible for other health insurance benefits at the expense of a new employer. Executive agrees to notify a duly authorized officer of the Company, in writing, Immediately upon acceptance of any employment following his termination which provides Executive with eligibility for health insurance benefits. 2.4 VESTING OF OUTSTANDING OPTIONS. Outstanding, unvested stock options to purchase common stock of the Company granted to Executive prior to the date of the Covered Termination, either pursuant to the terms of the Offer Letter or under the Company's discretionary stock compensation plans shall continue to vest according the vesting schedule(s) in effect immediately prior to the date of the Covered Termination for a period of up to six (6) months. Any stock options that remain unvested six (6) months after the date of the Covered Termination shall terminate. Options vesting through the "continuation" period shall remain exercisable for up to 90 days after its conclusion. 3 ARTICLE 3 CHANGE OF CONTROL 3.1 TERMINATION EVENTS. If Executive's employment terminates under circumstances constituting a Covered Termination upon or within eighteen (18) months following a Change of Control of the ownership of the Company, Executive shall be entitled to receive the following benefits set forth in Sections 3.2, 3.3 and 3.4 and shall not receive any benefits under Article 2. 3.2 SALARY CONTINUATION. Executive shall receive Base Salary that has accrued but is unpaid as of the date of such Covered Termination, and, within thirty (30) days following such Covered Termination, Executive also shall receive a lump sum payment equal to one year of the base salary which Executive was receiving immediately prior to the Change of Control Executive's targeted bonus for the fiscal year in which the Change of Control occurs. 3.3 HEALTH INSURANCE COVERAGE IN THE EVENT OF CHANGE OF CONTROL: Provided that Executive makes a timely election to continue coverage under the Company's group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") in connection with Executive's Covered Termination, the Company will pay Executive's COBRA premiums for a maximum period of one (1) year following the date of such Covered Termination (the "COBRA Continuation Period"). In addition, if Executive's spouse and/or dependents were enrolled in the Company's group health plan on the date of the Covered Termination, the Company will pay the COBRA premiums for Executive's dependents during the COBRA Continuation Period, but only to the same extent that such dependents' premiums under such plan were paid by the Company prior to the date of such Covered Termination. No provision of this Agreement will affect the continuation coverage rules under COBRA, except that the Company's payment of any applicable premiums during the COBRA Continuation Period will be credited as payment by Executive for purposes of the Executive's payment required under COBRA. Therefore, the period during which Executive must elect to continue the Company's group health coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made available to Executive, and all other rights and obligations of the Executive under COBRA (except the obligation to pay premiums that the Company pays during the COBRA Continuation Period) will be applied in the same manner that such rules would apply in the absence of this Agreement. At the conclusion of the COBRA Continuation Period, Executive will be responsible for the entire payment of premiums required under COBRA for the remaining duration of eligibility for COBRA, if any. Notwithstanding the foregoing, the Company's obligation to make COBRA payments for Executive shall cease immediately if Executive becomes eligible for other health insurance benefits at the expense of a new employer. Executive agrees to notify a duly authorized officer of the Company, in writing, immediately upon acceptance of any employment following the Covered Termination which provides Executive with eligibility for health insurance benefits. 4 3.4 ACCELERATION OF VESTING OF OUTSTANDING OPTIONS. In the event of a Covered Termination where the Company has assumed or substituted the Employee's options in connection with the Change of Control, the vesting of outstanding stock options to purchase common stock of the Company granted to Employee prior to the date of termination of employment shall accelerate as of the date of such Covered Termination so that all outstanding options are one hundred percent (100%) vested and immediately exercisable. Such acceleration of vesting of outstanding options also shall apply to any unvested option shares that were acquired by Employee on or before the date of the Covered Termination and that were subject to a repurchase option by the Company as of such date. Where the Company does not assume or substitute the Employee's options in connection with a Change of Control, one hundred percent (100%) of options will vest immediately prior to a Change of Control. 3.5 PARACHUTE PAYMENTS. In the event that the acceleration of the vesting provided for in Section 3.4 and benefits otherwise payable to Executive (i) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, (the "Code"), or any comparable successor provision, and (ii) but for this Section would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provision (the "Excise Tax"), then Executive's benefits hereunder shall be either (i) provided to Executive in full, or (ii) provided to Executive as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and Executive otherwise agree in writing, any determination required under this Section shall be made in writing in good faith by the Accountants. In the event of a reduction of benefits hereunder, benefits payable in cash shall be reduced first. For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section. If, notwithstanding any reduction described in this section, the IRS determines that Executive is liable for the Excise Tax as a result of the receipt of the payment of benefits as described above, then Executive shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that Executive challenges the final IRS determination, a final judicial determination, a portion of the payment equal to the "Repayment Amount." The Repayment Amount with respect to the payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to the Company so that Executive's net after tax proceeds with respect to any payment of benefits (after taking into account the payment of 5 the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in Executive's net after-tax proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, Executive shall pay the Excise Tax. Notwithstanding any other provision of this Section 3.5, if (i) there is a reduction in the payment of benefits as described in this section, (ii) the IRS later determines that Executive is liable for the Excise Tax, the payment of which would result in the maximization of Executive's net after-tax proceeds (calculated as if Executive's benefits had not previously been reduced), and (iii) Executive pays the Excise Tax, then the Company shall pay to Executive those benefits which were reduced pursuant to this Section contemporaneously or as soon as administratively possible after Executive pays the Excise Tax so that Executive's net after-tax proceeds with respect to the payment of benefits is maximized. ARTICLE 4 LIMITATIONS AND CONDITIONS ON BENEFITS 4.1 WITHHOLDING OF TAXES. The Company shall withhold appropriate federal, state, local (and foreign, if applicable) income and employment taxes from any payments hereunder. 4.2 RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon the occurrence of a Covered Termination, and prior to the receipt of any benefits under this Agreement on account of the occurrence of such Covered Termination, Executive shall execute a release (the "Release") in the form incorporated herein and attached hereto as Attachment I. Such Release shall specifically relate to all of Executive's rights and claims in existence at the time of such execution and shall confirm Executive's obligations under the Company's standard form of proprietary information agreement. It is understood that Executive has twenty-one (21) days to consider whether to execute such Release, and Executive may revoke such Release within seven (7) business days after execution. In the event Executive does not execute such Release within the twenty-one (2l)-day period, or if Executive revokes such Release within the subsequent seven (7) business day period, no benefits shall be payable under this Agreement and this Agreement shall be null and void. Notwithstanding the foregoing, in addition to or in lieu of the release contained in Attachment I, Executive may be required to execute and deliver an effective release in such other form as the Company may, in its sole discretion, determine to be necessary or appropriate in order to comply with the requirements of the laws of any jurisdiction applicable to Executive in order to make a general release of claims effective and enforceable. ARTICLE 5 OTHER RIGHTS AND BENEFITS 5.1 NONEXCLUSIVITY. Except as otherwise expressly provided herein, nothing in the Agreement shall prevent or limit Executive's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such 6 rights as Executive may have under other agreements with the Company. Except as otherwise expressly provided herein, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company at or subsequent to the date of a Covered Termination shall be payable in accordance with such plan, policy, practice or program. 5.2 NON-DUPLICATION OF BENEFITS. Notwithstanding any other provision of the Agreement to the contrary, any benefits payable to Executive under this Agreement shall be in lieu of any severance benefits payable by the Company to such individual under any other arrangement covering the individual, unless expressly otherwise agreed to by the Company in writing. ARTICLE 6 DEFINITIONS For purposes of the Agreement, the following terms are defined as follows: 6.1 "ACCOUNTANTS" means the independent public accountants of the Company. 6.2 DEFINITION OF BASE SALARY: Base Salary means the Executive's base salary (exclusive of bonuses and other forms of supplemental compensation) at the rate in effect during the last regularly scheduled payroll period immediately preceding the date of Executive's Covered Termination or prior to the Change of Control, unless a different time period for establishing Base Salary is expressly set forth in this Agreement. 6.3 "CAUSE" Executive's dismissal or discharge for fraud, misappropriation, embezzlement or intentional misconduct on the part of Executive which resulted in material loss, damage or injury to the Company, 6.4 "CHANGE OF CONTROL" means a (i) dissolution or liquidation of the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company; (iii) a merger or consolidation in which the Company is not the surviving corporation and in which beneficial ownership of securities of the Company representing at least forty percent (40%) of the combined voting power entitled to vote in the election of the members of the Board of Directors has changed; (iv) a reverse merger in which the Company is the surviving corporation but the shares of the Company's Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, and in which beneficial ownership of securities of the Company representing at least forty percent (40%) of the combined voting power entitled to vote in the election of the member of the Board of Directors has changed, (v) an acquisition by any entity (other than (A) a controlled affiliate of the Company, (B) any employee benefit plan, or related trust, sponsored or maintained by the Company or subsidiary of the Company or other entity controlled by the Company, or (C) any company owned directly or indirectly by stockholders of the Company in substantially the same proportions as their ownership of Common Stock interest of the Company, immediately prior to the occurrence with respect to which the evaluation of the Change in Control is being made) of the beneficial ownership, directly or indirectly, of securities of the 7 Company representing at least forty percent (40%) of the combined voting power of the Company's then outstanding securities; or (vi) in the event that the individuals who, as of the date of adoption of the Plan, are members of the Company's Board of Directors (the "Incumbent Board"), cease for any reason to constitute at least forty percent (40%) of the Board of Directors. (If the election, or nomination for election by the Company's stockholders, of any new Director is approved by a vote of at least forty percent (40%) of the Incumbent Board, such new Director shall be considered to be a member of the Incumbent Board in the future.) 6.5 "CODE" means the Internal Revenue Code of 1986, as amended. 6.6 "COVERED TERMINATION" means involuntary termination by the Company of Executive's employment with the Company for any reason other than death, disability or for Cause or upon or within eighteen (18) months following a Change of Control of the ownership of the Company, Executive voluntarily terminates employment after any of the following are, undertaken without Executive's express written consent: (a) the assignment to Executive of any duties or responsibilities which result in a material diminution or adverse change of Executive's position, status or circumstances of employment; (b) a reduction by the Company in Executive's Base Salary; (c) any failure by the Company to continue in effect any benefit plan or arrangement, including incentive plans or plans to receive securities of the Company, in which Executive is participating (hereinafter referred to as "Benefit Plans"), or the taking of any action by the Company which would adversely affect Executive's participation in or reduce Executive's benefits under any Benefit Plans or deprive Executive of any fringe benefit then enjoyed by Executive; provided, however, a Covered Termination shall not exist under this subSection 6.6(c) if the Company offers a range of benefit plans and programs which, taken as a whole, are comparable to the Benefit Plans provided to Executive as of the date of this Agreement, as determined in good faith by the Company; (d) a relocation of Executive or the Company's principal business offices to a location more than twenty-five (25) miles from Mountain View, California, at which Executive has performed duties, except for required travel by Executive on the Company's business to an extent substantially consistent with Executive's business travel obligations as of the date of this Agreement; (e) any material breach by the Company of any provision of this Agreement which is not cured by the Company within twenty (20) days of delivery of written notice from Executive of such breach; or (f) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company. 8 ARTICLE 7 GENERAL PROVISIONS 7.1 EMPLOYMENT STATUS. This Agreement, the Offer Letter, nor any Attachment or exhibit to the Offer Letter do not constitute a contract of employment or impose on Executive any obligation to remain as an employee, or impose on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee, or (iii) to change the Company's policies regarding termination of employment; or (iv) to be unable to terminate Executive's employment with the Company at any time, with or without notice, for any reason or no reason. 7.2 NOTICES. Any notices provided hereunder must be in writing and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including delivery by facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at Executive's address as listed in the Company's payroll records. Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at the address as listed in the Company's payroll records. 7.3 SEVERABILITY. If a legal authority of competent jurisdiction determines that any term or provision of this Agreement is invalid or unenforceable, in whole or in part, then the remaining terms and provisions hereof shall be unimpaired. Such legal authority will have the authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision that most accurately embodies the parties' intention with respect to the invalid or unenforceable term or provision. 7.4 WAIVER. If either party should waive any breach of any provisions of this Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement. 7.5 COMPLETE AGREEMENT. This Agreement, including Attachment I, and any other written agreements referred to in this Agreement, constitutes the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter. It is entered into without reliance on any promise or representation other than those expressly contained herein. 7.6 AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive. The written consent of the Company to a change or termination of this Agreement must be signed by an executive officer of the Company after such change or termination has been approved by the Company's Board of Directors. 7.7 COUNTERPARTS. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement. 9 7.8 HEADINGS. The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning hereof. 7.9 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably. 7.10 ATTORNEYS' FEES. If either party hereto brings any action to enforce his or its rights hereunder, the prevailing party in any such action shall be entitled to recover his or its reasonable attorneys' fees and costs incurred in connection with such action. 7.11 CHOICE OF LAW. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without regard to such state's conflict of laws rules. 7.12 NON-PUBLICATION. The parties mutually agree not to disclose publicly the terms of this Agreement except to the extent that disclosure is mandated by applicable law or to respective personal advisors. 7.13 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the text of this Agreement and any summary, description or other information regarding this Agreement, the text of this Agreement shall control. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year written above. AVIRON HARRY GREENBERG By: /s/ C. Boyd Clarke /s/ Harry Greenberg ----------------------------- ----------------------------- Name: C. Boyd Clarke Title: CEO and President EX-10.38 7 f69956ex10-38.txt EXHIBIT 10.38 1 EXHIBIT 10.38 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Dated October 11, 2000 - -------------------------------------------------------------------------------- (1) EVANS VACCINES LIMITED (2) AVIRON UK LIMITED (3) AVIRON - -------------------------------------------------------------------------------- AGREEMENT FOR LEASE OF AVU PREMISES AT GASKILL ROAD, SPEKE - -------------------------------------------------------------------------------- CMS Cameron McKenna Mitre House 160 Aldersgate Street London EClA 4DD T +44(0)20 7367 3000 F +44(0)20 7367 2000 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE 1. DEFINITIONS.............................................................................1 2. GENERAL PROVISIONS......................................................................2 3. STANDARD CONDITIONS.....................................................................2 4. CONDITION PRECEDENT.....................................................................3 5. TITLE...................................................................................3 6. MATTERS SUBJECT TO WHICH THE PREMISES WE LET............................................3 7. THE LEASE...............................................................................3 8. POSSESSION..............................................................................4 9. ALIENATION..............................................................................4 10. ACKNOWLEDGMENT AND INTEREST.............................................................4 11. TERMINATION.............................................................................4 12. INDEMNITY...............................................................................6 13. [***]...................................................................................6 14. SURETY..................................................................................6 15. DISPUTES................................................................................7 16. JURISDICTION............................................................................7 17. THIRD PARTY RIGHTS......................................................................7
i 3 THIS AGREEMENT is made 2000 BETWEEN: (1) EVANS VACCINES LIMITED (registered number 3970089) having its registered office at 216 Bath Road, Slough, Berkshire SL1 4EN (the "LANDLORD") and (2) AVIRON UK LIMITED (registered number 3854275) having its registered office at Carmelite, 50 Victoria Embankment, London EC4Y 0DX (the "TENANT") and (3) AVIRON (registered in Delaware) having its registered office at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America (the "SURETY") IT IS AGREED as follows: 1. DEFINITIONS 1.1 In this agreement unless the context otherwise requires the following expressions have the following meanings: "COMPETENT AUTHORITY": any local authority or any other body exercising powers under statute or by Royal Charter or any utility service or supply company "COMPLIANCE DATE": the date on which the Condition Precedent are wholly fulfilled "CONDITION PRECEDENT": (a) the grant of the Exclusion Order "CUT-OFF DATE": 30 April 2001 ([***]) "EXCLUSION ORDER": an order of a competent court under the provisions of section 38(4) of the Landlord and Tenant Act 1954 (as amended by section 5 of the Law of Property Act 1969) authorizing the Landlord and the Tenant to agree that the provisions of sections 24-28 of that Act win be excluded in relation to the tenancy to be created by the Lease "LANDLORD'S SOLICITORS": [***] "LEASE": an underlease in the form of the draft annexed hereto subject to such amendments as the Landlord may require and the Tenant may approve (such approval not to be unreasonably withheld or delayed) "PREMISES": that part of the building known as AVU Unit, Gaskill Road and more particularly described in the Lease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 4 "REGISTERED TITLE": the tides numbered MS134921, MS253780 and MS5387854 at HM Land Registry "RENT COMMENCEMENT DATE": the date of completion of the Lease "STANDARD CONDITIONS": the Standard Conditions of Sale (Third Edition) "TENANT'S SOLICITORS": [***] "VAT": Value Added Tax and any tax or duty of a similar nature substituted for or in addition to it 1.2 The definitions in the Standard Conditions also apply in this agreement 2. GENERAL PROVISIONS 2.1 In this agreement unless the context otherwise requires references to clauses and schedules are to clauses of and schedules to this agreement 2.2 The headings to clauses and other parts of this agreement do not affect its construction 2.3 This agreement contains the whole agreement between the parties relating to the matters herein mentioned and supersedes previous agreements between them (if any) relating thereto 2.4 This agreement may only be varied in writing signed by or on behalf of the parties 2.5 The Tenant acknowledges that it has not entered into this agreement in reliance upon representations made by or on behalf of the Landlord other than in respect of such reliance as may be placed upon the Landlord's Solicitors' written replies to the Tenant's Solicitors' preliminary enquiries 2.6 Nothing in this agreement is to be read or construed as excluding any liability or remedy resulting from fraudulent misrepresentation 2.7 All money payable by the Tenant under this agreement will be paid by direct credit transfer for the credit of the Landlord's Solicitors' clients' account at [***] or for the credit of any other bank account specified in writing by the Landlord's Solicitors 3. STANDARD CONDITIONS This agreement incorporates the Standard Conditions as varied by the schedule and so far as they apply to a letting and are not varied by or inconsistent with the other provisions of this agreement (which will prevail in case of conflict) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 5 4. CONDITION PRECEDENT 4.1 The grant of the Lease is conditional on the Condition Precedent being wholly fulfilled 4.2 The parties will apply for and use all reasonable endeavours to procure that the Condition Precedent is wholly fulfilled 5. TITLE 5.1 Title to the Premises will not be deduced but the Tenant will nevertheless be deemed to take the Lease with full knowledge of the terms and contents of and of any matter referred to in or deriving from the Registered Title and will raise no requisition on them 6. MATTERS SUBJECT TO WHICH THE PREMISES WE LET 6.1 The Premises are let subject to and as the case may be with the benefit of the matters contained or referred to in the Lease 6.2 The Premises are also let subject to: 6.2.1 all matters registrable by any Competent Authority pursuant to statute 6.2.2 all requirements notices orders or proposals (whether or not subject to confirmation) of any Competent Authority 6.2.3 all matters disclosed or reasonably to be expected to be disclosed by [***] or as the result of [***] and whether made in person by writing or orally by or for the Tenant or [***] 6.2.4 all notices served by [***] 7. THE LEASE 7.1 The Landlord will grant or procure the grant of and the Tenant will accept the Lease within [***] from and including the Compliance Date 7.2 The Lease will be for a term of approximately 5 years from and including the date of actual completion of the Lease and expiring on 30th June 2006 7.3 The initial annual rent first reserved by the Lease will from and including the Rent Commencement Date be [***] 7.4 The Tenant will on the date for completion of the Lease in accordance with clause 7.1 pay to the Landlord: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 6 7.4.1 any proportion of the rent first reserved by and then payable under the Lease for the period from and including the Rent Commencement Date 7.4.2 any other rents reserved by or money payable and then due under the Lease calculated from and including the Rent Commencement Date 8. POSSESSION 8.1 Until the date for completion of the Lease the Tenant may remain upon the Premises subject to the Tenant 8.1.1 paying to the Landlord from and including the Rent Commencement Date rent at the rate first reserved by the Lease 8.1.2 observing and performing the obligations on its part to be contained in the Lease 8.2 To the extent that the Tenant his exclusive possession of the Premises at any time prior to actual completion of the Lease the Tenant will hold the Premises as [***] of the Landlord 8.3 If this agreement is determined then upon such determination the Tenant will [***] vacate the Premises (first making good all damage occasioned by its occupation and if and to the extent required by the Landlord reinstating the Premises to the reasonable satisfaction of the Landlord) 9. ALIENATION The benefit of this agreement is [***] and the [***] will not [***] its interest under this agreement or any part thereof or otherwise [***] such interest or any part thereof and the Tenant named herein will [***] the Lease 10. ACKNOWLEDGMENT AND INTEREST The Tenant acknowledges and agrees that without prejudice to any other right remedy or power of the Landlord if any sums have become due from the Tenant to the Landlord under this agreement but remain unpaid for a period exceeding [***] the Tenant will pay [***] to the Landlord [***] at [***] rate ([***] any judgment) from the date when they become due until payment thereof calculated on a daily basis and [***] 11. TERMINATION 11.1 If: 11.1.1 there is any breach of the obligations of the Tenant and/or the Surety under this agreement which (if capable of remedy) is not remedied by the [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 7 Tenant and/or the Surety within such reasonable period as the Landlord stipulates or 11.1.2 the Tenant and/or the Surety (being a body corporate) is unable to pay its debts (as defined in section 123 of the Insolvency Act 1986) or has a winding-up petition or petition for an administration order presented against it or passes a winding up resolution (other than in connection with a members' voluntary winding up for the purposes of an amalgamation or reconstruction which has the prior written approval of the Landlord) or calls a meeting of its creditors to consider a resolution that it be wound up voluntarily or resolves to present its own winding-up petition or is wound up (whether in England or elsewhere) or the directors or shareholders of the Tenant or the Surety resolve to present a petition for an administration order in respect of the Tenant or the Surety (as the case may be) or an administrative receiver or a receiver or a receiver and manager is appointed in respect of the property or any part thereof of the Tenant or the Surety or 11.1.3 the Tenant and/or the Surety (being a body corporate) calls or a nominee calls on its behalf a meeting of its creditors or any of them or makes an application to the court under section 425 of the Companies Act 1985 or submits to its creditors or any of them a proposal pursuant to Part I of the Insolvency Act 1986 or enters into any arrangement scheme compromise moratorium or composition with its creditors or any of them (whether pursuant to Part I of the Insolvency Act 1986 or otherwise) or 11.1.4 the Tenant and/or the Surety (being an individual) makes an application to the court for an interim order under Part VIII of the Insolvency Act 1986 or convenes a meeting of his creditors or any of them or enters into any arrangement scheme compromise moratorium or composition with his creditors or any of them (whether pursuant to Part VIII of the Insolvency Act 1986 or otherwise) or has a bankruptcy petition presented against him or is adjudged bankrupt (whether in England or elsewhere) THEN and in any such case the Landlord may by notice in writing to the Tenant at any time thereafter terminate this agreement (without prejudice to any right or remedy of any party in respect of any antecedent breach of this agreement and without prejudice to any continuing obligations of the Surety under this agreement) 11.2 If the Condition Precedent is not fulfilled prior to the Cut-Off Date the Landlord may determine this agreement by giving to the Tenant notice to that effect whereupon the Tenant will forthwith return all title and other documents furnished to it and remove any notice caution or land charge entry registered in respect of this agreement but such determination will be without prejudice to any [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 8 tight or remedy of either party in respect of any antecedent breach of this agreement 12. INDEMNITY The Tenant will indemnify the Landlord and any superior lessor against all actions proceedings claims demands losses costs expenses damages and liability (including any liability for any injury to any person or damage to any land or other property) arising directly or indirectly from any breach of any obligation of the Tenant under this agreement or any act or omission of the Tenant or [***] 13. [***] 13.1 All sums payable under the terms of this agreement are [***] in respect thereof howsoever arising and the Tenant will pay to the Landlord all [***] for which the Landlord or the Superior Lessor is liable to [***] in relation to any supply made or deemed to be made for [***] purposes pursuant to this agreement 13.2 The Tenant does not intend or expect the Premises to be occupied by it or a person that is connected with the Tenant as determined in accordance with section [***] other than wholly or mainly for eligible purposes (within the meaning of paragraph [***]) 13.3 The Tenant represents warrants and undertakes to and with the Landlord that the statement in clause 13.2 is at the date of this agreement and will be at the date of completion of the Lease true and correct in all respects 14. SURETY 14.1 In consideration of the Landlord entering into this agreement at the request of the Surety the Surety will procure the observance and performance of all the obligations of the Tenant under this agreement and in the case of any default the Surety will observe and perform such obligations as if the Surety instead of the Tenant were liable therefor as a principal obligor and not merely as a surety and the Surety agrees with the Landlord as a primary obligation to keep the Landlord indemnified on demand against all losses damages costs and expenses incurred by the Landlord as a result of any failure by the Tenant to observe and perform such obligations or as a result of any obligation of the Tenant under this agreement being or becoming unenforceable 14.2 If this agreement is disclaimed by or on behalf of the Tenant or is terminated in relation to the Tenant pursuant to clause 11.1 the Surety will (if so required by the Landlord by written notice within three months after such disclaimer or after the date of the Landlord's notice of termination under clause 11.1 (as the case may be)) enter into a new agreement with the Landlord containing the same conditions and provisions as this agreement (except this clause 14) and the new agreement [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 9 will take effect from the date of the disclaimer or such notice of termination and in such case the Surety will [***] pay the Landlord's [***] in connection with such agreement 14.3 The insolvency of the Tenant will not affect the ability of the Surety under this agreement and any money received or recovered by the Landlord from the Surety may be placed in a separate or suspense account by the Landlord without any obligation on the Landlord to apply it in or towards the discharge of the Tenant's obligations under this agreement so as to preserve the Landlord's tights to prove in any insolvency of the Tenant in respect of the whole of the Tenant's indebtedness to the Landlord under this agreement 14.4 The obligations of the Surety under this agreement are in addition to any other right or remedy of the Landlord and will not be discharged diminished or in any way affected by: 14.4.1 any time or indulgence granted by the Landlord to the Tenant or any neglect or forbearance of the Landlord in enforcing the obligations of the Tenant under this agreement 14.4.2 any variation of this agreement or other act omission matter or thing (other than a release by deed given by the Landlord) by which but for this provision the obligations of the Surety under this agreement would have been so discharged diminished or affected 15. DISPUTES Any dispute arising under this Agreement is to be resolved by means of the dispute resolution procedure set out in the Shared Services Agreement dated on or about the date of this Agreement and made between the Landlord and the Tenant. 16. JURISDICTION 16.1 This agreement will in all respects be governed by and construed in accordance with English law and the parties irrevocably submit to the exclusive jurisdiction of the English courts 16.2 The address for service upon the Surety in England and Wales is [***] 17. THIRD PARTY RIGHTS 17.1 Nothing in this agreement is intended to confer on any person any tight to enforce any term of this agreement which that person would not have had but for the [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 10 IN WITNESS whereof this agreement has been duly executed as a deed (but not delivered until) the day and year first before written [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 11 SCHEDULE STANDARD CONDITIONS 1. Throughout the conditions references to property being sold are to be construed as references to the Premises 2. Conditions 1.4 2.2 3.4 4.2 4.3.2 4.5.2 4.5.5 5 6.3.2 6.5 6.7 6.8.2(b) 8.2.4 8.3 and 9 do not apply 3. Condition 1.1.1(f) is deleted and wherever the word "contract" appears in the Standard Conditions (save where followed by the word "rate") it is replaced by the word "agreement" 4. In condition 1.1.1(g) the "contract rate" is [***] per annum above the base rate from time to time of Lloyds TSB Bank Plc 5. In condition 1.3.5 "5.00 pm" is substituted for "4.00 pm" and the words "before 5.00 pm" are added after the words "treated as having been received" 6. In condition 1.3.6 "5.00 pm" is substituted for "4.00 pm" and the words "(d) by fax: if sent before 5.00 pm on a working day the day of dispatch but otherwise on the first working day after dispatch" are added at the end 7. In condition 3.1.2 the words "(f) overriding interests (as defined in Section 70(l) of the Land Registration Act 1925)" are added at the end 8. In condition 4.1 the words "4.1.5 If the buyer persists in any valid requisition with which the seller is unable or unwilling on reasonable grounds to deal satisfactorily and does not withdraw it within five working days of being requited so to do the seller may by notice to the buyer and notwithstanding any intermediate negotiation or litigation rescind the agreement, are added at the end 9. In conditions 6.1.2 and 6.1.3 "12 noon" is substituted for "2.00 pm" 10. In condition 7.1.1 the words "or in the negotiations leading to it" and "or was" are deleted [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 12 EXECUTED AS A DEED by EVANS ) VACCINES LIMITED in the presence of ) Director /s/ ALAN JARVIS Director/Secretary /s/ C.S.W. SWINGLAND [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 13 EXECUTED AS A DEED by ) AVIRON UK LIMITED in the presence of ) Director /s/ RAY PRASAD Secretary/Director /s/ FRED KURLAND EXECUTED AS A DEED by ) AVIRON in the presence of ) Director /s/ FRED KURLAND Secretary/Director /s/ RAY PRASAD [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 EX-10.39 8 f69956ex10-39.txt EXHIBIT 10.39 1 EXHIBIT 10.39 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DATED 11 OCTOBER, 2000 (1) EVANS VACCINES LIMITED (2) AVIRON UK LIMITED (3) AVIRON ---------------------------------- UNDERLEASE OF AVU PREMISES AT GASKILL ROAD SPEKE ---------------------------------- CMS CAMERON MCKENNA MITRE HOUSE 160 ALDERSGATE STREET LONDON EC1A 4DD T + 44(0)20 7367 3000 F + 44(0)20 7367 2000 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE ---- 1. Definitions and interpretation........................................ 1 2. Demise and reddendum.................................................. 6 3. Tenant's covenants.................................................... 6 4. Landlord's covenants.................................................. 7 5. Provisos.............................................................. 7 6. New tenancy........................................................... 7 7. Surety covenants...................................................... 7 8. Tenant's break clause................................................. 7 9. Landlord's break clause............................................... 8 10. Exclusion of sections 24 - 28 of the 1954 Act......................... 8 Schedule 1 Part 1 Rights granted................................................. 1 Part 2 Rights excepted and reserved................................... 1 Schedule 2 Tenant's covenants 1. Pay Rents and interest................................................ 1 2. Pay taxes outgoings and for utility services.......................... 1 3. Repair................................................................ 1 4. Permit entry.......................................................... 2 5. Comply with notices to repair......................................... 2 6. Defects............................................................... 2 7. Yielding up........................................................... 2 8. Refuse and deleterious substances..................................... 3 9. Overloading and damage................................................ 3 10. Fire precautions...................................................... 3 11. Prohibited user and nuisance.......................................... 3 12. Permitted User........................................................ 4 13. Alterations........................................................... 4 14. Signs and advertisements.............................................. 4 15. Easements............................................................. 4 16. Alienation............................................................ 5 17. Information about the Premises........................................ 5 18. Landlord's costs...................................................... 5 19. Statutory requirements................................................ 5 20. Planning.............................................................. 6 21. Notices............................................................... 6 22. Indemnity............................................................. 6
i 3 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 23. Notice boards......................................................... 6 24. Incumbrances.......................................................... 6 25. Key holders........................................................... 7 26. The Common Pans and regulations....................................... 7 27. Value Added Tax....................................................... 7 28. Superior Lease........................................................ 7 Schedule 3 Landlord's covenants 1. Quiet enjoyment....................................................... 1 2. Provision of services................................................. 1 3. Superior Lease........................................................ 1 Schedule 4 Provisos 1. Re-entry.............................................................. 1 2. Exclusions............................................................ 1 3. Acceptance of rents................................................... 2 4. [***] invoices........................................................ 2 5. Notices............................................................... 2 6. Landlord's right to redevelop......................................... 2 7. Third party rights.................................................... 2 8. Common Parts.......................................................... 3 9. Disputes.............................................................. 3 10. Jurisdiction.......................................................... 3 Schedule 5 Insurance 1. Landlord to insure.................................................... 1 2. Insurance Rent........................................................ 1 3. Destruction of the Premises........................................... 2 4. Reinstatement prevented and determination............................. 2 5. Determination during List three years................................. 3 6. Further payments by the Tenant........................................ 3 7. Abatement of Rent..................................................... 3 8. Benefit of other insurances........................................... 3 9. Insurance becoming void............................................... 3 10. Notice by Tenant...................................................... 4 11. Insurance in the Landlord's office.................................... 4 Schedule 6 The documents (if any) containing incumbrances to which the Premises are subject............................................... 1
ii 4 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Schedule 7 Part 1 Covenants by Surety............................................ 1 Schedule 8 Services and the Service Charge Part 1 1. Definitions........................................................... 1 2. Provision of the Services............................................. 1 3. Statement of Annual Expenditure....................................... 2 4. Payment of the Service Charge......................................... 2 5. Continuation.......................................................... 3 Part 2 The Services.......................................................... 3 Schedule 9 Landlord's fixtures and fittings................................... 1 Appendix I....................................................................
iii 5 THIS UNDERLEASE dated October 11, 2000 PARTICULARS Landlord EVANS VACCINES LIMITED having its registered office at 216 Bath Road, Slough, Berkshire SL1 4EN (company registration number 3970089) Tenant AVIRON UK LIMITED having its registered office at Carmelite, 50 Victoria Embankment, London EC4Y 0DX (company registration number 3854275) Surety AVIRON having its registered office at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America Building The land and the building known as land at Speke Boulevard and Gaskill Road, Speke comprised in the Superior Lease Premises The parts of the Building known as the AVU Premises at Gaskill Road Speke shown for the purpose of identification only hatched black on the Plan attached hereto Term a term from and including ___________ 200 and expiring on 30th June 2006 Initial Rent [***] per annum Initial Service Charge ______________________ pounds (Pound Sterling__________) per annum Rent Commencement Date the date hereof Service Charge The date hereof Commencement Date Permitted User [***] WITNESSES AS FOLLOWS.- 1. DEFINITIONS AND INTERPRETATION In this Underlease unless the context otherwise requires:- 1.1 the words defined in this sub-clause and in the particulars have the following meanings:- [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 6 "1954 ACT": the Landlord and Tenant Act 1954 "1995 ACT": the Landlord and Tenant (Covenants) Act 1995 "AVU EXTENSION DATE": the date upon which the Lease of the premises adjoining the Premises is granted pursuant to the agreement dated 11th October 2000 and made between the Landlord the Tenant and the Surety "COMMON MEDIA": all Service Media serving the Premises and other parts of the Building "COMMON PARTS": the changing and toilet facilities roads paths landscaped areas entrance halls reception areas lifts fire escapes staircases passages and landings of the Building and any other areas or amenities the use or enjoyment of which is common to some or all of the tenants or occupiers of the Building "GROUP COMPANY": a company which is a member of the same group as the Tenant within the meaning of section 42 of the 1954 Act "HEATING SYSTEMS": the pipes ducting boilers and other apparatus plant machinery and installations for the provision in the Building of hot water central heating and where and to the extent applicable mechanical ventilation comfort cooling (including heating and cooling) and air conditioning "INSURANCE RENT": the sums payable by the Tenant under paragraph 2 of schedule 5 "INSURED RISKS": insurable risks of loss or damage by fire lightning earthquake explosion aircraft (other than hostile aircraft) and other aerial devices or articles dropped from them riot and civil commotion malicious damage storm bursting or overflowing of water tanks apparatus or pipes flood impact by road vehicles escape of noxious substance or thing and such other or alternative insurable risks as may from time to time be required by the Landlord (subject to such exclusions excesses and limitations as may be imposed by the policy and subject to the exclusion of such risks as may not be insurable on reasonable terms) "INSURERS": such reputable insurance company or underwriters as the Landlord may from time to time nominate "INTEREST RATE": [***] per centum per annum above the base lending rate from time to time of Lloyds TSB Bank Plc or another bank nominated from time to time by the Landlord) or (if base lending rates cease to be published) such other comparable rate of interest as the Landlord (acting reasonably) specifies "INTERMEDIATE PRODUCT": the product so defined in the Shared Services Agreement [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 7 "IP LICENCE": means the know-how and technology licence agreement to be entered into between the Landlord and the Tenant dated on or about the date of this Agreement "LANDLORD'S EXPENSES": [***] and other [***] and [***] and costs [***] fees and [***] charges incurred by the Landlord "LETTABLE PREMISES": accommodation within the Building (which accommodation includes such parts of the Building as correspond with those included in the Premises by virtue of clause 1.10) from time to time let to a tenant or tenants or occupied or intended for separate or exclusive occupation by a tenant or tenants "PLAN A": the plan marked "Plan A" attached to this deed "PLAN B": the plan marked "Plan B" attached to this deed "PLANNING ACTS": the Town and Country Planning Act 1990 the Planning (Listed Buildings and Conservation Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 the Planning (Consequential Provisions) Act 1990 and the Planning and Compensation Act 1991 and all other statutes regulating the development design use and control of property "QUARTER DAYS": [***] and [***] in each year "RENTS": means the Yearly Rent the Insurance Rent the Service Charge and the other sums reserved by or payable by the Tenant under this Underlease "RESTATED AGREEMENT": means the deed to be entered into by the Surety and the Landlord amending and restating the terms of an amended and restated agreement dated 7 June 1999 between the Landlord (as assignee of Medeva Pharma Limited) (1) and the Surety (2) dated on or about the date of this Agreement "RETAINED PREMISES": the Building excluding the Premises "SERVICE CHARGE": the meaning given to such expression in part 1 of schedule 8 "SERVICE MEDIA": all sewers drains pipes gullies gutters ducts mains channels wires cables conduits flues and any other conducting media "SHARED SERVICES AGREEMENT": an agreement dated on or about the date of this Underlease and made between Evans Vaccines Limited (1) and Aviron UK Limited (2) "SUPERIOR LEASE": a lease dated 1st April 1948 made between The Lord Mayor Aldermen and Citizens of the City of Liverpool (1) and Evans Medical Supplies Limited (2) and a lease dated 20th February 1952 and made between The Lord Mayor Aldermen and Citizens of the City of Liverpool (1) and the Board of Trade (2) and any documents which are supplemental to or collateral with or entered into pursuant to such leases [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 8 "SUPERIOR LESSOR": includes the person from time to time entitled to the reversion immediately or mediately expectant on the determination of the term granted by the Superior Lease "TRANSACTION AGREEMENTS": means the IP Licence, the Transfer Agreement, the Restated Agreement and the Warrants "TRANSFER AGREEMENT": means the agreement to be entered into between the Landlord and the Tenant providing for the transfer of certain employees of the Landlord to the Tenant dated on or about the date of this Agreement "THIS UNDERLEASE": this deed as varied from time to time and any document which is supplemental to or collateral with or entered into pursuant to this deed "VALUE ADDED TAX": value added tax and any tax or duty of a similar nature substituted for or in addition to it "WARRANTS": means the warrant instrument(s) dated on or about the date of this Agreement entered into by the Surety (1) and the Landlord (2) granting the Landlord the right to subscribe for certain shares in the capital of the Surety "YEARLY RENT": (i) from and including the date hereof until but not including the AVU Extension Date: the Initial Rent; (ii) from and including the AVU Extension Date until but not including _______ being the fifth anniversary of this Lease: the sum of [***] (iii) from the said fifth anniversary of this Lease until 30 June 2006: One Peppercorn 1.2 any covenant given by more than one person will be joint and several 1.3 any reference to statute (whether generally or specifically) includes all derivative instruments orders regulations and other matters all directives regulations and mandatory requirements of the European Union and in each case any re-enactment or modification of them from time to time (except in the case of any reference to the Town and Country Planning (Use Classes) Order 1987) 1.4 every obligation of the Tenant not to do an act or thing includes an obligation not to allow it to be done 1.5 where there is an obligation to obtain the consent or approval of the Landlord under this Underlease such consent or approval must be in writing and such obligation includes where necessary an obligation to obtain the consent or approval in writing of the Superior Lessor and/or any chargee from time to time [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 9 1.6 where the Landlord has a right to enter the Premises such right will also be exercisable by the Landlord's agents any chargee or superior landlord from time to time and all persons authorised by them with or without workmen and equipment 1.7 the Landlord includes the person from time to time entitled to the reversion immediately expectant on the determination of the Term 1.8 the Tenant includes its successors in title and in the case of an individual includes his personal representatives 1.9 the Surety includes any surety of the Tenant's obligations under this Underlease and in the case of an individual includes the Surety's personal representatives 1.10 the Premises include all and each and every part of them and all additions alterations and improvements to them and shall also include the following:- 1.10.1 the plaster and decorative finishes applied to the interior of the external walls of the Building and to any structural or load-bearing walls and columns within the Premises but no other part of any such walls and columns 1.10.2 the whole of any non-structural or non-load-bearing walls and columns within the Premises 1.10.3 the inner half severed medially of any non-structural or non-load-bearing walls dividing the Premises from other parts of the Building 1.10.4 the screed and finish of the floors and all parts of the raised cavity flooring within the Premises and the vinyl covering laid on the floors 1.10.5 the plaster and decorative finishes applied to the ceilings of the Premises 1.10.6 the doors door furniture and door frames of or within the Premises 1.10.7 the windows and window frames of or within the Premises but not any windows window frames or any forms of glazing which are in or comprise part of the external walls of the Building 1.10.8 all Service Media (other than the Heating Systems) vested in the Landlord which exclusively serve the Premises up to the point where they connect to those of statutory undertakers or to those which are Common Media 1.10.9 all landlord's fixtures fittings and chattels which are in or upon the Premises (other than the Heating Systems) 1.10.10 all sanitary and hot and cold water apparatus within the Premises (other than the Heating Systems) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 10 1.11 words denoting persons include firms companies and corporations and vice versa 1.12 the singular includes the plural and vice versa and one gender includes any other 1.13 any reference to the Landlord's surveyor includes any surveyor employed by the Landlord or by any company associated with the Landlord 1.14 references to clauses paragraphs and schedules are to clauses and paragraphs of and schedules to this deed 1.15 the headings to clauses paragraphs and schedules do not affect the construction of this Underlease 1.16 the words "INCLUDE" "INCLUDES" and "INCLUDING" are deemed to be followed by the words "WITHOUT LIMITATION" 1.17 references to any act or omission of the Tenant are deemed to extend to any act or omission of any sub-tenant or licensee of the Tenant or any sub-tenant or any person at the Premises or the Building with the consent of the Tenant any sub-tenant or any licensee 2. DEMISE AND REDDENDUM The Landlord demises the Premises to the Tenant together with (in common with all other persons from time to time entitled to them) the rights mentioned in part 1 of schedule 1 except and reserving to the Landlord and all other persons from time to time entitled to them the rights mentioned in part 2 of schedule 1 to hold for the Term subject to the provisions contained or referred to in any documents specified in schedule 6 and any easements rights and privileges enjoyed by any other land or person which affect the Premises yielding and paying for them:- 2.1 the Yearly Rent by [***] on the anniversary of this Lease and proportionately for any period less than a year the first payment to be made on [***] and 2.2 [***] the Insurance Rent and 2.3 the Service Charge and 2.4 [***] any [***] from time to time payable by the Tenant under this Underlease and 2.5 [***] all costs charges and expenses which the Landlord may from time to time incur in relation to or as a result of any [***] of the Tenant under this Underlease and 2.6 [***] all other money payable or repayable by the Tenant to the Landlord under this Underlease 3. TENANT'S COVENANTS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 11 The Tenant covenants with the Landlord to observe and perform the obligations of the Tenant contained in schedule 2 (Tenant's covenants) schedule 5 (Insurance) and schedule 8 (Services and the Service Charge) or otherwise arising under this Underlease 4. LANDLORD'S COVENANTS The Landlord covenants with the Tenant to observe and perform the obligations of the Landlord contained in schedule 3 (Landlord's covenants) schedule 5 (Insurance) and schedule 8 (Services and the Service Charge) or otherwise arising under this Underlease 5. PROVISOS Provided always and it is agreed and declared as set out in schedule 4 (Provisos) 6. NEW TENANCY This Underlease is a new tenancy for the purposes of section 1 of the 1995 Act 7. SURETY COVENANTS The Surety covenants with the Landlord in the terms set out in part 1 of schedule 7 (Covenants by Surety) 8. TENANT'S BREAK CLAUSE 8.1 In this clause the "TERMINATION DATE" is the date specified by the Tenant pursuant to sub-clause 8.2. 8.2 Subject to the pre-conditions in clause 8.3 being satisfied on the Termination Date the Tenant may determine the Term on the Termination date by giving the Landlord not less than [***] written notice specifying the Termination Date following which the Term will the determine on the Termination Date but without prejudice to any claim by a party in respect of any antecedent breach of any obligation of any other party under this Underlease. 8.3 The pre-conditions are: 8.3.1 all Rents due up to and including the Termination Date have been paid in full and the Tenant has complied with its obligations in this Underlease in all material respects and 8.3.2 vacant possession of the whole of the Premises is given to the Landlord and 8.3.3 this Underlease is delivered to the Landlord 8.4 The Landlord may waive any of the pre-conditions in clause 8.3 at any time before the Termination Date by written notice to the tenant. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 12 8.5 If the Tenant does not exercise its rights under this clause and a new tenancy is granted by virtue of any right which the Tenant may have at the relevant time the Landlord (without acknowledging that any such rights exist or will exist) and the Tenant agree that the new tenancy will not contain provisions [***] unless the Landlord and the Tenant expressly so agree at the time such new tenancy is granted. 8.6 If the Tenant exercises its rights under this clause then all amounts payable from time to time by the Tenant or the Surety (as the case may be) to the Landlord or to any other member of the group of companies of which the Landlord is a member pursuant to each of the Transaction Agreements shall continue to be due and payable in accordance with the provisions of such Transaction Agreements 9. LANDLORD'S BREAK CLAUSE The Landlord may determine the Term at any time if the Tenant shall have ceased to occupy the premises or ceased to use the Premises for the Permitted Use for a period exceeding [***] by giving the Tenant not less than [***] written notice following which the Term will then determine but without prejudice to any claim by a party in respect of my antecedent breach of any obligation of any other party under this Underlease 10. EXCLUSION OF SECTIONS 24 - 28 OF THE 1954 ACT Having been authorised by an order of the ____________ Court under section 38(4) of the 1954 Act (as amended) dated ______________ Claim Number (__________) the parties agree that sections 24 to 28 of the 1954 Act shall not apply to the tenancy created by this deed IN WITNESS of which this deed has been duly executed (but not delivered until) the day and year first above written [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 13 SCHEDULE 1 PART 1 RIGHTS GRANTED 1. A right of way [***] over the Common Parts and such parts of the Building as are designated by the Landlord from time to time to enable [***] access and egress at [***] times to and from the Premises 2. A right to use all Common Media and to use (subject to paragraph 26 of schedule 2) the Common Parts for the purposes [***] to them 3. A right to enter (at all reasonable times and after giving reasonable written notice) such other parts of the Building as may reasonably be necessary for the purpose of carrying out [***] to any Service Media forming part of the Premises the Tenant doing as little damage as possible and making good all damage occasioned thereby to the satisfaction of the Landlord and complying with the reasonable requirements of and causing the minimum of inconvenience to the occupiers of such other parts of the Building 4. A right of support and shelter for the Premises from other parts of the Building PART 2 RIGHTS EXCEPTED AND RESERVED 1. A right to [***] the Premises to [***] of the Premises to determine whether [***] and to [***] to remedy any [***] 2. A right to [***] the Premises at [***] (except [***]) for the purpose of complying with any of the covenants on the part of the landlord or the conditions contained in or preventing a forfeiture of the Superior Lease (notwithstanding that the obligation to comply with such covenants and conditions is imposed on the Tenant by this Underlease) 3. A right to [***] the Premises (the persons exercising such right doing as little damage and causing as little inconvenience as possible and making good any damage caused to the Premises by the exercise of such right) for the following purposes:- 3.1 to [***] any [***] in which the Landlord may from time to time have [***] notwithstanding any [***] of the use and enjoyment of the Premises by the Tenant 3.2 to [***] on the external walls and the roof of any building forming part of the Premises 3.3 at [***] to [***] any [***] and to [***] to any [***] within but not [***] the Premises 3.4 for [***] in this Underlease or for [***] the Landlord's interest in the Building or in [***] in which the Landlord may from time to time have [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 1-1 14 4. A right to the free and uninterrupted [***] of [***] from and to [***] and [***] through and along all Service Media from time to time within the Premises but which [***] the Premises 5. All rights of [***] now subsisting or which might (but for this exception) be acquired [***] 6. A right to [***] any [***] and [***] of the Landlord in such manner as the Landlord may think fit provided in the case of [***] that [***] the Premises are available at all times 7. A right of [***] the Premises for [***] the Building 8. A right to [***] the Premises in an emergency in accordance with any regulation or requirement of the fire officer or any other competent authority and to [***] fire escapes (if any) crossing or forming part of the Premises [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 1-2 15 SCHEDULE 2 TENANT'S COVENANTS 1. PAY RENTS AND INTEREST 1.1 To pay the Rents without deduction counterclaim or set off (whether in each case legal or equitable) at the stated times in cleared funds (and if the Landlord so requires by banker's standing order direct debit or automated credit) 1.2 Without prejudice to any other right remedy or power of the Landlord if the Yearly Rent is not paid on the due dates or if any other Rents are due but unpaid for a period exceeding [***] to pay [***] to the Landlord interest on them at the Interest Rate (before and after any judgement) from the date when they became due until payment of them calculated on a daily basis and [***] 2. PAY TAXES OUTGOINGS AND FOR UTILITY SERVICES 2.1 To pay all rates taxes charges and other sums or outgoings of any kind payable (whether or not of a capital or non-recurring nature) which now are or may at any time be charged or assessed on the Premises or on the owner or occupier of them (excluding any payable by the Landlord in respect of the receipt of Rents or occasioned by any dealing with the reversion to this Underlease) and in the absence of any direct assessment to pay to the Landlord [***] of them (to be determined by [***]) 2.2 If the Landlord loses rating relief because it has been allowed to the Tenant or another party to make good such loss to the Landlord 2.3 To pay the suppliers for and indemnify the Landlord against all charges for [***] and [***] to the Premises and to pay all [***] 3. REPAIR To keep the Premises in such state of [***] as they [***] and when necessary to [***] to the reasonable satisfaction of the Landlord (damage by any Insured Risk excepted save to the extent that the insurance money is irrecoverable by reason of the act or default of the Tenant) and these obligations include the following:- 3.1 whenever necessary during the Term and in any event in the last six months of the Term (howsoever determined) to [***] as appropriate all parts of the Premises which are usually [***] and with [***] as the Landlord may require 3.2 to keep the Premises [***] and to use only [***] first approved in writing by the Landlord (such approval not to be unreasonably withheld) and to [***] 3.3 to cause all [***] (if any) forming part of the Premises to be regularly maintained and when necessary repaired or replaced by qualified persons who are and at intervals which [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-1 16 are in each case approved by the manufacturers of them and by the Insurers and in all cases to the reasonable satisfaction of the Landlord 3.4 to replace [***] at the Premises when necessary with others of the same or similar quality as those at the Premises at the date of this deed and to replace them in the last six months of the Term in colours approved by the Landlord 3.5 to carry out all works of repair and cleaning of the Premises in accordance with any relevant manufacturer's or installer's maintenance manuals 3.6 to carry out all works of repair decoration and maintenance and other treatment of the Premises in a proper and workmanlike manner in accordance with good practice current at the time and with good quality suitable and sufficient materials and to the reasonable satisfaction of the Landlord 4. PERMIT [***] 4.1 To permit the Landlord [***] (except [***]) to [***] the Premises to [***] 5. COMPLY WITH NOTICES TO REPAIR 5.1 To commence all works for which the Tenant is liable under this Underlease [***] after service of a written notice by the Landlord requiring such works and to complete such works [***] 5.2 If the Tenant does not commence such works within [***] of service of such notice (or [***]) or does not complete them within [***] (having regard to the obligation of the Tenant to complete them [***]) the Landlord may (without prejudice to the right of re-entry contained in this Underlease) [***] the cost of which (including all Landlord's Expenses in connection with them) is to be repaid by the Tenant and be recoverable by the Landlord as a debt on demand 6. DEFECTS To give immediate written notice to the Landlord of any defects in the Premises which may give rise to a liability or duty on the Landlord under common law or statute 7. YIELDING UP 7.1 Immediately prior to the expiration or sooner determination of the Term:- 7.1.1 to replace any landlord's fixtures and fittings which are missing broken damaged or destroyed with others of equivalent quality and value 7.1.2 to remove every sign writing or notice which the Landlord requires to be removed and (unless and to the extent that the Landlord agrees otherwise) to remove all tenant's fixtures and fittings furniture and effects from the Premises Sch 2-2 17 making good to the satisfaction of the Landlord all damage caused by such removal 7.1.3 to the extent required by the Landlord to reinstate and restore the Premises to the same state and condition as they were in prior to the carrying out of any works to the Premises 7.1.4 to hand over to the Landlord any health and safety files relating to the Premises 7.2 At the expiration or sooner determination of the Term quietly to yield up to the Landlord the Premises in such repair and condition as complies with the Tenant's obligations under this Underlease 8. REFUSE AND DELETERIOUS SUBSTANCES 8.1 Not to [***] on the Premises or the Common Parts and not to [***] on the Premises or the Common Parts other than [***] and to ensure that [***] on the Premises are [***] 8.2 Not to permit [***] which is or might become [***] or which might in any way [***] or [***] the Building any Service Media [***] to be [***] the Premises and if the Tenant becomes aware of any such [***] the Premises to give immediate written notice of it to the Landlord and to [***] it in compliance with the requirements of the Landlord or any competent authority 9. OVERLOADING AND DAMAGE Not to [***] the Premises nor [***] any Service Media or the Retained Premises 10. FIRE PRECAUTIONS To comply with [***] requirements and recommendations from time to time of any competent authority in relation to fire precautions and means of escape affecting the Premises and to keep sufficient fire fighting and extinguishing apparatus and fire alarm and smoke detection apparatus in and about the Premises open to inspection and properly maintained and not to obstruct the access to or means of working them nor any means of escape from the Premises 11. PROHIBITED USER AND [***] 11.1 Not to use the Premises for any [***] purpose nor for [***] purposes nor for [***] 11.2 Not to hold on the Premises any [***] nor any [***] 11.3 Not to do anything on the Premises or on any part of the Common Parts or any land over which any right granted by this Underlease is exercised which [***] to the Landlord or [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-3 18 11.4 Not to use the Premises as a [***] where [***] 11.5 Not to permit the Premises to be occupied or used by [***] 12. PERMITTED USER Not to use the Premises otherwise than for the Permitted User and in accordance with [***] 13. ALTERATIONS 13.1 [***] 13.2 Not without the prior written consent of the Landlord (such consent not to be unreasonably withheld) to [***] to the Premises except that no such consent will be required for the Tenant to [***] which does not adversely affect any [***] 13.3 Not to [***] any Service Media 13.4 To supply to the Landlord all [***] necessary to [***] any [***] whether or not requiring the consent of the Landlord and to [***] only in accordance with such [***] in a good and workmanlike manner and to the satisfaction of the Landlord 13.5 After commencing [***] (whether or not they require the consent of the Landlord) to complete them within [***] and in any event before the expiration or sooner determination of the Term 13.6 To pay to the Landlord [***] the cost of any [***] necessitated by any works of alteration carried out by the Tenant 13.7 If the Tenant fails to observe the covenants contained in this paragraph the Landlord may [***] and make good all damage caused by such [***] and the cost of such work (including Landlord's Expenses) is to be repaid by the Tenant and be recoverable by the Landlord as a debt on demand 14. SIGNS AND ADVERTISEMENTS [***] any form of sign advertising or notification material which is visible from [***] without the prior written consent of the Landlord 15. EASEMENTS 15.1 Not to obstruct any [***] or [***] from time to time enjoyed by the Premises 15.2 To give immediate written notice to the Landlord of any encroachment on or circumstance which might result in the acquisition of any easement or other right over the Premises and to [***] or [***] as the Landlord may reasonably require to [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-4 19 16. ALIENATION 16.1 Not to:- 16.1.1 [***] 16.2 Nothing contained in this paragraph will prevent the Tenant from [***] if the following conditions are fulfilled:- 16.2.1 Prior written notice is given to the Landlord of the [***] 16.2.2 No [***] is created between the Tenant and [***] 16.2.3 The right of [***] will determine upon either the Tenant or [***] and immediate written notice is to be given to the Landlord upon such [***] 17. INFORMATION ABOUT THE PREMISES 17.1 From time to time [***] to furnish the Landlord with full particulars of all interests in the Premises 17.2 To disclose such information as the Landlord may from time to time require in relation to any application or request made or particulars produced to the Landlord 18. LANDLORD'S COSTS To pay to the Landlord on an indemnity basis all costs claims demands and expenses (including but without prejudice to the generality of the foregoing all Landlord's Expenses) incurred by the Landlord in contemplation of or in relation to or as a result of:- 18.1 any notice under sections 146 or 147 of the Law of Property Act 1925 and/or any proceedings pursuant to such notice (even if forfeiture is avoided otherwise than by relief granted by the court) 18.2 the preparation and service of any schedule of dilapidations 18.3 any breach of any obligation of the Tenant under this Underlease 18.4 any application for consent under this Underlease. 19. STATUTORY REQUIREMENTS 19.1 At [***] to comply with statute common law and all relevant codes of practice in relation to the Premises (whether or not such requirements are imposed upon the owner occupier or any other person) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-5 20 19.2 To pay to the Landlord a due proportion (to be determined by [***]) of all Landlord's Expenses in relation to compliance with such requirements or notices where they relate both to the Premises and to other land 20. PLANNING 20.1 To comply in all respects with [***] 20.2 Not to make any application under the Planning Acts without the prior written consent of the Landlord 20.3 To supply the Landlord with a copy of such application and copies of any plans and drawings submitted in connection with it and to keep the Landlord fully informed of the progress of any such application and its result 20.4 Not to initiate any development permitted as a result of any application under the Planning Acts without [***] 20.5 Not to enter into any agreement or obligation or serve any purchase notice under the Planning Acts without [***] 21. NOTICES Within [***] of receipt (or sooner if requisite) to produce to the Landlord full particulars of any notice order permission or proposal in relation to the Premises and at the request of the Landlord to make or join with the Landlord in making such objections or representations in respect of it as the Landlord requires 22. INDEMNITY To indemnify the Landlord against all actions proceedings claims demands losses costs expenses damages and liability (including any liability for any injury to any person or damage to any land or other property") arising directly or indirectly from any breach of any obligation of the Tenant under this Underlease or the state and condition or any use of the Premises or any act or omission of the Tenant 23. NOTICE BOARDS To permit the Landlord to fix and retain on the Premises a notice board (during the last six months of the Term) for the reletting of the Premises and (at any time) for the sale of the Landlord's interest and to permit all persons authorised by the Landlord to view the Premises at reasonable hours upon reasonable notice 24. INCUMBRANCES [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-6 21 To comply with all covenants and other matters relating to the Premises or to any of the rights granted by this Underlease (and in particular those contained or referred to in any documents specified in schedule 6) so far as they are enforceable 25. KEY HOLDERS To ensure that at all times both the Landlord (or its managing agents) and the local police have written notice of the names addresses and home telephone numbers of at least two key holders of the Premises 26. THE COMMON PARTS AND REGULATIONS 26.1 Not to [***] on or in any way to [***] within the curtilage of the Building 26.2 Without prejudice to the foregoing not to use the Common Parts for the [***] (whether temporary or permanent) of [***] or the [***] of any [***] nor to permit [***] to be [***] such spaces 26.3 Not to [***] the Common Parts 26.4 To comply with such rules and regulations as [***] and [***] the Tenant for the [***] of the Building 27. [***] 27.1 To pay all [***] in respect of all [***] made to the Tenant under this Underlease or as the case may be to repay to the Landlord any [***] borne by the Landlord in respect of [***] made to the Landlord (except to the extent in the latter case to which the Landlord [***]) and in every case where under this Underlease the Tenant is obliged to pay an amount of money such amount shall be regarded as being [***] from time to time payable on it 27.2 Not to occupy the Premises and not to permit the Premises to be occupied by [***] as determined in accordance with Section [***] of the Income and Corporation Taxes Act 1988 otherwise than wholly or mainly for eligible purposes (within the meaning of paragraphs [***]) 28. SUPERIOR LEASE 28.1 To observe and perform the obligations of the lessee contained in the Superior Lease insofar as they relate to the Premises except to the extent that the Landlord expressly covenants in this deed to observe and perform them 28.2 Not to do omit suffer or permit any act or thing which would or might cause the Landlord to be in breach of the Superior Lease or which if done omitted suffered or permitted by the Landlord would or might constitute a breach of the obligations of the lessee contained in the Superior Lease or in any lease or leases superior to the Superior Lease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-7 22 SCHEDULE 3 LANDLORD'S COVENANTS 1. QUIET ENJOYMENT That the Tenant paying the Rents and complying with its other obligations under this Underlease may peaceably hold and enjoy the Premises during the Term without any interruption by the Landlord or any person lawfully claiming through under or in trust for it 2. PROVISION OF SERVICES That subject to payment by the Tenant of the Service Charge and to the provisions of schedule 8 the Landlord will use all reasonable endeavours to provide the Services for the period for which such Services are to be provided as set out in Schedule 8 3. SUPERIOR LEASE To pay the rent reserved by the Superior Lease and to perform the obligations of the lessee (insofar as they relate to the Premises) contained in the Superior Lease regarding insurance and at the request of the Tenant and subject to the Tenant providing a suitable indemnity for costs to take all reasonable steps to enforce any obligations of the Superior Lessor to the Landlord [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 3-1 23 SCHEDULE 4 PROVISOS 1. RE-ENTRY Without prejudice to any other right remedy or power of the Landlord it will be lawful for the Landlord or [***] to re-enter the Premises (and upon re-entry the Term will determine but without prejudice to any claim by the Landlord in respect of any antecedent breach of any obligation of the Tenant under this Underlease) if:- 1.1 any Rents remain unpaid for [***] (whether formally demanded or not) or 1.2 there is [***] breach of [***] obligation of the Tenant under this Underlease or 1.3 the Tenant and/or the Surety (if any) (being a body corporate) is [***] (as defined in section [***] of the Insolvency Act 1986) or [***] (other than in connection with [***] which has the prior written approval of the Landlord) or [***] (whether in England or elsewhere) or the directors or shareholders of the Tenant or the Surety [***] in respect of the Tenant or the Surety (as the case may be) or an [***] in respect of the property or any part of it of the Tenant or the Surety or 1.4 the Tenant and/or the Surety (if any) (being a body corporate) [***] or 1.5 the Tenant and/or the Surety (if any) (being an individual) [***] or 1.6 any analogous or equivalent [***] to those referred to in paragraphs 1.3 and/or 1.4 and/or 1.5 of this schedule are [***] in relation to the Tenant and/or the Surety (if any) [***] or 1.7 any [***] is [***] the Premises 2. EXCLUSIONS 2.1 Except where expressly granted by this Underlease the Tenant will not have: 2.1.1 the benefit of any [***] 2.1.2 the benefit of or the right to enforce or to prevent the release or the modification of [***]; or 2.1.3 the benefit of or the right to enforce or to prevent the release or the modification of [***] 2.2 Any rights granted or reserved by this deed in respect of anything which does not exist at the date of this deed will be effective only if it comes into existence before the expiry of the period of [***] from the date of this deed (which is the perpetuity period applicable to this Underlease) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 4-1 24 2.3 The Landlord gives no express or implied warranty that the Permitted User will be or remain a lawful or authorised use under the Planning Acts or otherwise 2.4 So far as the law allows:- 2.4.1 the right of the Tenant (or any undertenant) to compensation on quitting the Premises is excluded 2.4.2 the Tenant releases the Landlord from all the obligations of the Landlord under this Underlease with effect from and including the date on which the Landlord disposes of the reversion 3. ACCEPTANCE OF RENTS If the Landlord has reasonable grounds for believing that the Tenant is in breach of any of its obligations under this Underlease and refrains from demanding or accepting Rents then interest will be payable by the Tenant at the Interest Rate on such Rents for the period during which the Landlord so refrains such interest to be calculated on a daily basis and compounded with rests on the Quarter Days 4. [***] INVOICES The Landlord is not obliged to issue any [***] invoice for any [***] until it has received payment for such [***] (including the [***]) in full 5. NOTICES Any notice under or in relation to this Underlease:- 5.1 will be deemed (whether or not that is actually the case) to be a notice required to be served for the purposes of section 196(5) of the Law of Property Act 1925 and the provisions of section 196 of that Act will extend to any such notice accordingly 5.2 may also be served by facsimile transmission to the party to be served and any such notice shall be deemed to have been served on despatch and in proving such service it shall be sufficient to prove that the sender of the facsimile transmission has his copy and can show it was duly transmitted 6. LANDLORD'S RIGHT TO [***] The Landlord will be free to [***] any land adjoining or [***] the Premises in [***] notwithstanding that such [***] by the Premises PROVIDED THAT reasonably acceptable alternative [***] are provided 7. THIRD PARTY RIGHTS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 4-2 25 Nothing in this Underlease is intended to confer on any person any right to [***] which that person would not have had but for [***] 8. COMMON PARTS The Landlord may from time to time change the location area or arrangements for use by the Tenant of any part of the Common Parts or Service Media so long as there remains available for the benefit of the Premises rights reasonably commensurate with those hereby granted 9. DISPUTES Any dispute arising under this Lease is to be resolved by means of the dispute resolution procedure set out in the Shared Services Agreement dated on or about 11th October 2000 10. JURISDICTION 10.1 This Underlease will in all respects be governed by and construed in accordance with English law and the parties irrevocably submit to the exclusive jurisdiction of the English courts 10.2 The Surety's address in England for service of all notices and proceedings is c/o [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 4-3 26 SCHEDULE 5 INSURANCE 1. LANDLORD TO INSURE 1.1 The Landlord will insure with the Insurers and through such agency as the Landlord may from time to time decide:- 1.1.1 the Building against the Insured Risks for the amount determined from time to time by the Landlord as representing the full cost (including demolition and similar expenses professional fees and expenses the cost of any works required by statute and Value Added Tax where applicable) which would be likely to be incurred in connection with reinstating the Building in accordance with this Underlease at the time when such reinstatement is likely to take place having regard to all relevant factors (including the time at which loss or damage may be sustained any possible delay in the commencement and execution of reinstatement works and any possible increases in building costs) 1.1.2 against loss of the Yearly Rent for such period (being not less than three years) as may reasonably be required by the Landlord from time to time having regard to the likely period required for reinstatement in an amount which takes into account the Landlord's estimate of any potential increases of Rent 1.1.3 against liabilities of the Landlord in respect of property owner's and third party risks in such sum and on such terms as the Landlord reasonably requires 1.2 The Landlord will produce to the Tenant on request (but not more often than once in any period of twelve months) reasonable evidence from the Insurers of the terms and subsistence of any policy or policies of such insurance 1.3 The Tenant will give the Landlord written notice of the estimated reinstatement cost of any fixtures and fittings installed from time to time by the Tenant which may become Landlord's fixtures and fittings 2. INSURANCE RENT The Tenant will pay to the Landlord a yearly sum (and proportionately for any period less than a year) equal to the due proportion attributable to the Premises (which proportion shall be determined from time to time by the Landlord's surveyor whose decision shall be final) of the gross cost to the Landlord of performing its obligations under paragraphs 1.1.1 and 1.1.3 of this schedule and the whole of the gross cost to the Landlord of performing its obligation under paragraph 1.1.2 of this schedule including in each case the cost of any insurance valuations carried out by or on behalf of the Landlord [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 5-1 27 3. DESTRUCTION OF THE PREMISES If the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease are destroyed or damaged by any Insured Risk the Landlord will lay out the net proceeds of such insurance (other than any in respect of loss of the Yearly Rent) and any money paid by the Tenant pursuant to paragraph 6 of this schedule in reinstating the Premises and/or any such Common Parts substantially as they were prior to such destruction or damage or in replacing them with reasonably comparable premises and will make up any deficiency out of its own money subject to:- 3.1 the Landlord obtaining any necessary planning and other permissions consents licences and approvals (which the Landlord will use its reasonable endeavours to obtain but will not be obliged to institute or pursue any appeal) 3.2 the necessary labour and materials being available (which the Landlord shall use its reasonable endeavours to obtain as soon as practicable) and 3.3 the payment by the Tenant to the Landlord of any money payable under paragraph 6 of this schedule 4. REINSTATEMENT PREVENTED AND DETERMINATION If at the date of expiry of all periods from time to time insured for loss of the Yearly Rent all destruction or damage by any Insured Risk to the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease have not been made good and the Premises are still unfit for or incapable of occupation and use the Landlord or the Tenant may by written notice to the other given at any time within six months after such date and whilst the Premises are still unfit for use determine the Term with immediate effect and the Landlord will be entitled to all the insurance money provided that:- 4.1 such determinations will be without prejudice to any claim in respect of any antecedent breach of the obligations under this Underlease and 4.2 any such notice given by the Tenant will only have effect if the Tenant has:- 4.2.1 also at least six months prior to giving the notice informed the Landlord in writing of the Tenant's intention to give it if the Premises are still unfit for use at the relevant time 4.2.2 complied with its obligations under this schedule both at the date of giving and the date of expiry of such notice [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 5-2 28 5. DETERMINATION DURING LAST THREE YEARS If the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease are destroyed or damaged by any Insured Risk during the last three years of the Term so as to render the Premises substantially unfit for or incapable of occupation and use the Landlord may by written notice to the Tenant given at any time within twelve months after such destruction or damage determine the Term with immediate effect and the Landlord will be entitled to all the insurance money provided that such determination will be without prejudice to any claim in respect of any antecedent breach of the obligations under this Underlease 6. FURTHER PAYMENTS BY THE TENANT 6.1 If the payment of any insurance money is refused owing to some act or default of the Tenant the Tenant will pay to the Landlord the amount so refused 6.2 If any excess to which any policy of insurance relating to the Premises is subject becomes applicable the Tenant will pay to the Landlord the amount of such excess 7. ABATEMENT OF RENT If the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease are destroyed or damaged by any Insured Risk so as to render the Premises unfit for or incapable of occupation and use the Yearly Rent or a fair proportion of it according to the nature and extent of the damage sustained will be suspended (save to the extent that the insurance money is irrecoverable owing to some act or default of the Tenant) until the Premises cease to be unfit for or incapable of occupation and use or until the expiration of the period insured for loss of the Yearly Rent (whichever is the earlier) provided that:- 7.1 any dispute as to the extent proportion or period of such suspension will be determined by an arbitrator to be agreed upon by the Landlord and by the Tenant or at the request of either of them to be nominated by or on behalf of the President for the time being of the Royal Institution of Chartered Surveyors in accordance with the Arbitration Act 1996 7.2 the amount of the Yearly Rent which ceases to be payable under this Underlease will not exceed the amount received by the Landlord under any loss of Yearly Rent insurance policy effected by the Landlord in respect of the Premises 8. BENEFIT OF OTHER INSURANCES The Tenant will apply all money which it receives by virtue of any insurance of the Premises in making good the loss or damage in respect of which it has been received 9. INSURANCE BECOMING VOID [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 5-3 29 The Tenant will:- 9.1 not cause any policy of insurance covering the Premises or any other land to become void or voidable or the rate of premium of any such policy to be increased 9.2 comply with all requirements and recommendations from time to time of the Insurers in relation to the Premises 10. NOTICE BY TENANT The Tenant will give immediate written notice to the Landlord of any event which might affect or give rise to a claim under any policy of insurance covering the Premises or any other land of the Landlord 11. INSURANCE IN THE LANDLORD'S OFFICE If at any time the Landlord is an insurance company or a member of a group (within the meaning of section 42 of the 1954 Act) which includes an insurance company it will be entitled to maintain insurance in its own office or in the office of such insurance company and the premiums charged will for the purpose of any obligation of the Tenant under this Underlease to pay or contribute towards the cost of such insurance be deemed to have been paid by the Landlord on the first day of the period of insurance to which the relevant premium relates [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 5-4 30 SCHEDULE 6 THE DOCUMENTS (IF ANY) CONTAINING INCUMBRANCES TO WHICH THE PREMISES ARE SUBJECT The matters contained or referred to in the registers of the Landlord's title number MS134921 and title number MS253780 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 6-1 31 SCHEDULE 7 PART 1 COVENANTS BY SURETY 1. The Surety will procure the punctual payment of the Rents and the observance and performance of all the obligations of the Tenant under this Underlease and in the case of any default the Surety will on demand pay such Rents and observe and perform such obligations as if the Surety instead of the Tenant were liable therefor as a principal obligor and not merely as a surety 2. The Surety agrees with the Landlord as a primary obligation to keep the Landlord indemnified on demand against all actions proceedings claims demands losses costs expenses damages and liability arising directly or indirectly from any failure by the Tenant to pay the Rents and/or observe and perform such obligations or as a result of any obligation of the Tenant under this Underlease being or becoming unenforceable 3. If the liability of the Tenant is disclaimed by or on behalf of the Tenant or this Underlease is forfeited or the Tenant is wound up or ceases to exist the Surety will (if so required by the Landlord by written notice to the Surety within six months after such disclaimer or forfeiture or winding up or cessation of existence) take from the Landlord and execute and deliver to the Landlord a counterpart of a new underlease of the Premises for the residue of the Term unexpired at the date of such disclaimer or forfeiture or winding up or cessation of existence at the same Rents as are reserved from time to time by and subject to the same covenants and provisions as are contained in this Underlease (mutatis mutandis) and the Surety will on demand pay the Landlord's legal costs in connection with such Underlease 4. If the Landlord does not require the Surety to take a new underlease of the Premises pursuant to paragraph 3 of this part of this schedule the Surety will nevertheless on demand pay to the Landlord a sum equal to the Rents that would have been payable but for the disclaimer or forfeiture or winding up or cessation of existence during the period of twelve months from and including the date of the disclaimer or forfeiture or winding up or cessation of existence less any Rents received by the Landlord during such period from reletting the Premises and the Surety will on demand pay the Landlord's legal costs and agents' fees in connection with such reletting 5. The insolvency of the Tenant will not affect the liability of the Surety under this Underlease and any money received or recovered by the Landlord from the Surety may be placed in a separate or suspense account by the Landlord without any obligation on the Landlord to apply it in or towards the discharge of the Tenant's obligations under this Underlease so as to preserve the Landlord's right to prove in any insolvency of the Tenant in respect of the whole of the Tenant's indebtedness to the Landlord under this Underlease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 7-1 32 6. The Surety will at the request of the Landlord execute any document supplemental to or entered into pursuant to this Underlease to acknowledge that the Surety is bound and that the rights of the Landlord are not affected and the obligations of the Surety are not released by such document 7. The obligations of the Surety under this Underlease are in addition to any other right or remedy of the Landlord and will not be discharged diminished or in any way affected by: 8.1 any time or indulgence granted by the Landlord to the Tenant or any neglect or forbearance of the Landlord in obtaining payment of the Rents or enforcing the obligations of the Tenant under this Underlease or 8.2 any refusal by the Landlord to accept Rents tendered at a time when the Landlord was entitled (or would after service of the appropriate statutory notice have been entitled) to re-enter the Premises or 8.3 any surrender by the Tenant of part of the Premises in which event the liability of the Surety will continue in respect of the part of the Premises not so surrendered after making any necessary apportionments under section 140 of the Law of Property Act 1925 or 8.4 any variation of this Underlease or other act omission matter or thing (other than a release by deed given by the Landlord and subject always to the provisions of section 18 of the 1995 Act) by which but for this provision the obligations of the Surety under this Underlease would have been so discharged diminished or affected 9. Any provision of this part of this schedule rendered void or unenforceable by the 1995 Act is to be severed from all remaining provisions which are to be preserved [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 7-2 33 SCHEDULE 8 SERVICES AND THE SERVICE CHARGE PART 1 1. DEFINITIONS In this schedule the following expressions have the following meanings unless the context otherwise requires:- "ANNUAL EXPENDITURE": the aggregate expenditure incurred or to be incurred by the Landlord during a Service Year in or incidental to the provision of or in respect of all or any of the Services after giving credit for any insurance money received by the Landlord under any policy in relation to the Building which the Landlord is obliged to effect under this Underlease "PROVISIONAL SERVICE CHARGE": the amount which in the opinion of the Landlord's surveyor or its managing agents or accountants represents a fair estimate of the Service Charge for the Service Year in question "SERVICES": the services facilities amenities and items of expenditure specified in part 2 of this schedule "SERVICE YEAR": a calendar year commencing on an anniversary of this Least or such other annual period as the Landlord may in its sole discretion decide 2. PROVISION OF THE SERVICES 2.1 The Landlord will not be liable to the Tenant in respect of:- 2.1.1 any failure or interruption in any of the Services by reason of necessary repair maintenance or replacement of any installations or apparatus or their damage or destruction or by reason of mechanical or other defect or breakdown or frost or other inclement conditions or shortage of fuel materials or labour or any other cause beyond the reasonable control of the Landlord but the Landlord will use all reasonable endeavours to restore any such Services as soon as practicable 2.1.2 any act omission or negligence of any person undertaking the Services or any of them on behalf of the Landlord 2.2 The Landlord may withhold add to extend vary or alter the Services or any of them from time to time provided that in so doing the Landlord complies with the principles of good estate management and acts reasonably in all the circumstances 2.3 If at any time during the Term the property comprising the Building is increased or decreased on a permanent basis or the benefit of any of the Services is extended on a like [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 8-1 34 basis to any adjoining or neighbouring property or if some other event occurs a result of which is that the Service Charge is no longer appropriate to the Premises the Service Charge will be varied with effect from the beginning of the Service Year following such event in such a manner as may be determined to be fair and reasonable in the light of the event in question by the Landlord's surveyor whose decision will be final 3. STATEMENT OF ANNUAL EXPENDITURE 3.1 The Landlord will as soon as practicable after the end of each Service Year prepare and submit to the Tenant a statement of the Annual Expenditure for that Service Year containing a fair summary of the expenditure referred to in it and showing the Service Charge for that Service Year and upon such statement being certified by the Landlord's surveyor or its managing agents or accountants it will be conclusive evidence for the purposes of this Underlease of all matters of fact referred to in the statement (except in the case of manifest error) 3.2 The Landlord may include in any such statement such proper provision for expenditure in any subsequent year as the Landlord acting reasonably may from time to time consider appropriate 3.3 Any omission by the Landlord to include in any such statement any sum expended or liability incurred in that Service Year will not preclude the Landlord from including such sum or the amount of such liability in an account for any subsequent year 4. PAYMENT OF THE SERVICE CHARGE 4.1 The Tenant will pay to the Landlord on account of the Service Charge on each Quarter Day: 4.1.1 for the period from and including the Service Charge Commencement Date to the end of the current Service Year one quarter of the Initial Service Charge the first (duly apportioned) payment to be made on the date of this Underlease and 4.1.2 on each subsequent Quarter Day one quarter of the Provisional Service Charge 4.2 If the Service Charge for any Service Year: 4.2.1 exceeds the Initial Service Charge or the Provisional Service Charge payments made on account of the Service Charge (as the case may be) the excess will be paid by the Tenant to the Landlord on demand 4.2.2 is less than such payments on account the overpayment will be allowed by the Landlord to the Tenant as a credit against Rents to become due or (in the Service Year ending on or after the expiry of the Term) will be repaid by the Landlord to the Tenant [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 8-2 35 5. CONTINUATION The provisions of this schedule will continue to apply notwithstanding the expiration or sooner determination of the Term but only for the purposes of calculation and payment of the Service Charge for the period down to such expiration or sooner determination PART 2 THE SERVICES Performing the services described in Appendix I hereto to the extent set out therein [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 8-3 36 SCHEDULE 9 LANDLORD'S FIXTURES AND FITTINGS None [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 9-1 37 APPENDIX I [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Appx I-1 38 SCHEDULE 1 THE SERVICES
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[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 1-1 39 SCHEDULE 2 SERVICES CHARGES
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[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-1 40 - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- ]
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch 2-2 EX-10.40 9 f69956ex10-40.txt EXHIBIT 10.40 1 EXHIBIT 10.40 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DATED OCTOBER 11, 2000 (1) EVANS VACCINES LIMITED (2) AVIRON UK LIMITED (3) AVIRON -------------------------------------------- AGREEMENT FOR LEASE OF AVU EXTENSION PREMISES AT GASKILL ROAD SPEKE -------------------------------------------- CMS CAMERON MCKENNA MITRE HOUSE 160 ALDERSGATE STREET LONDON EC1A 4DD T + 44(0)20 7367 3000 F + 44(0)20 7367 2000 2 THIS AGREEMENT is made October 11, 2000 BETWEEN:- (1) EVANS VACCINES LIMITED (registered number 3970089) having its registered office at 216 Bath Road, Slough, Berkshire SL1 4EN (the "LANDLORD") and (2) AVIRON UK LIMITED (registered number 3854275) having its registered office at Carmelite, 50 Victoria Embankment, London EC4Y ODX (the "TENANT") and (3) AVIRON (registered in Delaware) having its registered office at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America (the "SURETY") IT IS AGREED as follows:- 1. DEFINITIONS 1.1 In this agreement unless the context otherwise requires the following expressions have the following meanings:- "ADVERSE CONDITION": a condition in or requirement of a Planning Agreement or a Planning Permission which the Landlord in its absolute discretion considers to be unacceptable "APPEAL PROCEEDINGS": (a) any and all proceedings (other than Review Proceedings) instituted before the appropriate tribunal body person or forum in pursuance of an appeal in respect of the decision of the Planning Authority or the Secretary of State or relating to or consequent upon any Application including (without limiting the generality of the foregoing) all or any of the following as the case may be:- (i) any appeal to the Secretary of State following a Planning Refusal (ii) any consideration by the Secretary of State of any Application referred to him under section 77 of the Planning Act (b) any application for planning permission pursuant to section 73 of the Planning Act for the development of the Premises without complying with an Adverse Condition (without which the Planning Permission would be a Satisfactory Planning Permission) "APPLICATION": an application to be made by the Landlord for detailed planning permission for the proposed works to the Premises requiring such permission and forming part of the Works and any reference to such application will include any amended substituted or further application made pursuant to this agreement "BUILDING CONTRACTOR": the building contractor to be employed by the Landlord [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 3 "COMPETENT AUTHORITY": any local authority or any other body exercising powers under statute or by Royal Charter or any utility service or supply company "COMPLIANCE DATE": the date on which the Conditions Precedent and the Planning Conditions are wholly fulfilled "CONDITIONS PRECEDENT": (a) the grant of the Exclusion Order (b) the grant of the consent of the Superior Lessor to the carrying out of the Works "CONSTRUCTION PERIOD": the period of 9 months from and including the date upon which the last of the Planning Conditions is satisfied or waived as herein provided PROVIDED THAT if on one or more occasions the carrying out of the Works is delayed due to any circumstances beyond the reasonable control of the Landlord then on each occasion the period will be extended by such further period as is certified by the Consultant as being reasonable "CONSULTANT": the surveyor appointed by the Landlord in connection with the carrying out of the Works "CONSENTS": all permissions licences and approvals under the Planning Acts the building regulations and under any other statute bye-law or regulation of any Competent Authority "DATE OF WORKS COMPLETION": the date which the Consultant certifies as being the date on which practical completion of the Works was achieved for the purposes of this agreement "EXCLUSION ORDER": an order of a competent court under the provisions of section 38(4) of the Landlord and Tenant Act 1954 (as amended by section 5 of the Law of Property Act 1969) authorising the Landlord and the Tenant to agree that the provisions of sections 24-28 of that Act will be excluded in relation to the tenancy to be created by the Lease "LANDLORD'S SOLICITORS": [***] "LEADING COUNSEL": such leading counsel specialising in matters relating to town and country planning as the parties may agree upon or in default of agreement as may be nominated on the application of either party by the President of the Law Society "LEASE": a lease in the form of the draft annexed hereto subject to such amendments as the Landlord may require and the Tenant may approve (such approval not to be unreasonably withheld or delayed) "LICENCE FOR ALTERATIONS": a licence in such form as the Landlord and/or the Superior Lessor may require relating to the Works [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 4 "PLANNING ACT": the Town and Country Planning Act 1990 "PLANNING ACTS": the Town and Country Planning Act 1990 the Planning (Listed Buildings and Conservation Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 the Planning (Consequential Provisions) Act 1990 and the Planning and Compensation Act 1991 "PLANNING AGREEMENT": (a) any planning obligation entered into or proposed to be entered into under section 106 of the Planning Act and/or (b) any agreement concluded or proposed to be concluded between a party to this agreement and (i) the Planning Authority regulating the development and/or the use of the Premises (whether or not under section 106 of the Planning Act) and/or (ii) any other authority relating to the construction maintenance or adoption of or the carrying out of works on or to any road sewer drain or utility supply affecting or serving the Premises (whether or not under section 38 or section 278 of the Highways Act 1980 or section 104 of the Water Industry Act 1991) "PLANNING AUTHORITY": the local planning authority "PLANNING CONDITIONS": FIRST the grant of a Satisfactory Planning Permission prior to the expiry of the Relevant Period and SECONDLY either the expiry of the Review Period prior to the Cut Off Date without the institution of Review Proceedings or (if Review Proceedings be commenced during the Review Period) their final determination prior to the Cut Off Date leaving in place a Satisfactory Planning Permission and THIRDLY the completion of all Planning Agreements (if any) free from any Adverse Condition prior to the expiry of the Relevant Period "PLANNING PERMISSION": a written detailed planning permission for such of the Works as require a Planning permission granted by the Planning Authority or the Secretary of State pursuant to an Application "PLANNING REFUSAL": a written refusal of an Application by the Planning Authority (or a deemed refusal under section 78 of the Planning Act) or a written refusal of Appeal Proceedings or a Planning Permission granted subject to an Adverse Condition "PREMISES": the parts of the Building known as the AVU Extension Premises at Gaskill Road, Speke part of which is shown for identification purposes only hatched black on the [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 5 plan attached hereto and the remaining part of which is comprised of a mezzanine floor which runs part of the length of the area shown hatched on the plan referred to. "REGISTERED TITLE": the titles numbered MS134921, MS253780 and MS387854 at HM Land Registry "RELEVANT PERIOD": a period comprising the aggregate of 7 months months from the date of this agreement and the duration of any direction by the Secretary of State that the Planning Authority should not determine an Application subject to such aggregate period not exceeding 9 months months from the date of this agreement PROVIDED THAT if prior to the expiry of such aggregate period an Application shall have become the subject of Appeal Proceedings or Review Proceedings or a Satisfactory Planning Permission shall have become the subject of Review Proceedings instigated by a third party then such aggregate period will be extended until the date on which such Appeal Proceedings or Review Proceedings shall be finally determined PROVIDED FURTHER THAT in no event will the Relevant Period be extended beyond 30th June 2006. "RETAINED PREMISES": all parts of the Landlord's estate except the Premises "REVIEW PERIOD": (a) in the case of any decision by the Secretary of State on any reference under section 77 of the Planning Act or on any appeal under section 78 of the Planning Act the period of six weeks from the date of his decision letter (b) in any other case the period of three months from the date on which written notice of its decision is issued by the Planning Authority "REVIEW PROCEEDINGS": all or any of the following as the case may be in relation to or consequent upon an Application or a Satisfactory Planning Permission:- (a) any application for judicial review under Order 53 of the rules of the Supreme Court (b) any application pursuant to section 288 of the Planning Act (c) any appeal to a higher court following a judgment of a lower court in respect of any application referred to in paragraphs (a) and (b) of this definition (d) any reconsideration by the Planning Authority or the Secretary of State of any application referred to in paragraphs (a) and (b) of this definition upon remission to it or him "SATISFACTORY PLANNING PERMISSION": a Planning Permission granted pursuant to an Application and which is free from any Adverse Condition [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 6 "SECRETARY OF STATE": the Secretary of State for the Environment Transport and the Regions or other minister or authority from time to time having the powers now conferred upon him by sections 77 78 and 79 of the Planning Act "STANDARD CONDITIONS": the Standard Conditions of Sale (Third Edition) "SUPERIOR LEASE": a lease dated 1st April 1948 and made between (1) The Lord Mayor Aldermen and Citizens of the City of Liverpool (1) and Evans Medical Supplies Limited (2) and a lease dated 20th February 1952 and made between The Lord Mayor Aldermen and Citizens of the City of Liverpool (1) and the Board of Trade (2) and any documents which are supplemental to or collateral with or entered into pursuant to such leases "SUPERIOR LESSOR": the person from time to time entitled to any reversion immediately or mediately expectant on the determination of the term granted by the Superior Lease "TENANT'S SOLICITORS": [***] "VAT": Value Added Tax and any tax or duty of a similar nature substituted for or in addition to it "WORKS": the works to the Premises to be carried out by the Landlord as specified in schedule 2 1.2 The definitions in the Standard Conditions also apply in this agreement 2. GENERAL PROVISIONS 2.1 In this agreement unless the context otherwise requires references to clauses and schedules are to clauses of and schedules to this agreement 2.2 The headings to clauses and other parts of this agreement do not affect its construction 2.3 This agreement contains the whole agreement between the parties relating to the matters herein mentioned and supersedes previous agreements between them (if any) relating thereto 2.4 This agreement may only be varied in writing signed by or on behalf of the parties 2.5 The Tenant acknowledges that it has not entered into this agreement in reliance upon representations made by or on behalf of the Landlord other than in respect of such reliance as may be placed upon the Landlord's Solicitors' written replies to the Tenant's Solicitors' preliminary enquiries 2.6 Nothing in this agreement is to be read or construed as excluding any liability or remedy resulting from fraudulent misrepresentation [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 7 2.7 All money payable by the Tenant under this agreement will be paid by direct credit transfer for the credit of the Landlord's Solicitors' clients' account at [***] or for the credit of any other bank account specified in writing by the Landlord's Solicitors 2.8 any reference to the grant of a Planning Permission or of a Satisfactory Planning Permission or to a Planning Refusal (other than a deemed refusal under section 78 of the Planning Act) will be construed as a reference to the date of the written notice of decision issued by the Planning Authority or by the Secretary of State 2.9 any reference to the final determination of any Appeal Proceedings or Review Proceedings will be construed as a reference to the date by which any appeal (or further appeal) against any determination of those Appeal Proceedings or Review Proceedings can be lodged has expired without any such appeal or further appeal being lodged 2.10 Any reference in this agreement to any enactment (whether generally or specifically) will be construed as a reference to that enactment as amended re-enacted consolidated or applied by or under any other enactment and will include all instruments orders plans regulations permissions and directions made or issued under or deriving validity from such enactment 2.11 Every obligation of the Tenant in this agreement to do specified acts or things will include an obligation to procure that they be done and every obligation of the Tenant in this agreement not to do specified acts or things will include an obligation not to permit or suffer them to be done 2.12 This agreement contains the whole agreement between the parties relating to the matters herein mentioned and supersedes previous agreements between them (if any) relating thereto 2.13 The Landlord may [***] on or for the benefit of the Retained Premises as the [***] from time to time without any [***] by the Tenant and in relation to [***] (but subject to [***]) the Tenant hereby licenses the Landlord to for such periods as are and to such extent as is reasonably necessary in the circumstances 3. STANDARD CONDITIONS This agreement incorporates the Standard Conditions as varied by schedule 1 and so far as they apply to a letting and are not varied by or inconsistent with the other provisions of this agreement (which will prevail in case of conflict) 4. CONDITIONS PRECEDENT [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 8 4.1 The performance by the Landlord of its obligations in relation to the Works and the grant of the Lease are conditional on the Conditions Precedent being wholly fulfilled and the performance by the Landlord of its obligations in relation to the Works is additionally conditional on the Planning Conditions being wholly fulfilled 4.2 4.2.1 The parties will apply for and use all reasonable endeavours but at the cost of [***] to procure that the Conditions Precedent and the Planning Conditions are wholly fulfilled provided that the Landlord will not be obliged to institute court proceedings against the Superior Lessor in respect of any consent needed from the Superior Lessor unless [***] considers such proceedings appropriate and [***] agrees to indemnify [***] against all costs claims proceedings and other expenses resulting or associated directly or indirectly with such proceedings 4.2.2 The Tenant will enter into such Planning Agreements in such form as may be reasonable in the circumstances 4.2.3 In the event of a Planning Refusal the Landlord may (but without obligation to do so and in any event [***], institute and prosecute Appeal Proceedings or Review Proceedings 4.2.4 In the event of an Application or a Satisfactory Planning Permission becoming the subject of Review Proceedings instigated by any party not being the Landlord the Landlord shall have absolute discretion as to its involvement or otherwise in such proceedings 4.2.5 Without prejudice to clause 4.2.1 the Tenant will [***] and [***] as may be reasonably required by the Superior Lessor 4.2.6 If so required by the Landlord and/or the Superior Lessor the Tenant will:- (a) [***] (b) [***] 4.2.7 In consideration of the Landlord (at the request of the Surety) having agreed to grant the Lease to the Tenant the Surety hereby agrees with the Landlord that the Surety will execute the Licence for Alterations or other deed containing such covenants by the Surety in favour of the Superior Lessor as the Superior Lessor may require [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 9 4.2.8 Any obligation undertaken by [***] the Surety to [***] or [***] with the Superior Lessor includes an obligation to ensure that there is no delay in the approval of a draft of such [***] and that the duly executed engrossment thereof is returned unconditionally to the Landlord's Solicitors within five working days from its receipt by [***] 5. THE WORKS 5.1 Subject to proper payment of its costs and other expenses pursuant to clause 13.1 hereof the Landlord will use its reasonable endeavours to obtain any necessary Planning Permission and practically complete the Works within the Construction Period. 5.2 The Landlord and the Tenant will as soon as possible after the date hereof meet to discuss the detail of the Works and an associated project plan. 5.3 Following such meeting the Landlord will as soon as reasonably possible produce to the Tenant for approval a project plan together with plans and specifications showing the detail of the Works (such approval not to be unreasonably withheld or delayed). 5.4 If requested to do so by the Tenant the Landlord will procure that the Tenant is provided with copies of all Applications including all accompanying drawings. 5.5 The Landlord may not make any material variation to the Works without the Tenant's prior written consent (such consent not to be unreasonably withheld or delayed) but otherwise may make such modifications as it may reasonably require. 5.6 The Landlord shall permit the Tenant at all reasonable times to inspect the progress of the Works and shall take proper account of reasonable representations made by or on behalf of the Tenant in relation to the Works. 5.7 The Landlord shall procure that the Tenant is given not less than 10 days notice of the intention of the Consultant to inspect the Works with a view to the issue of a certificate that the Works are practically completed. 5.8 The notice shall state the date and time of such inspection. 5.9 The Tenant's representative shall be permitted to accompany the Consultant on the inspection if he attends at such date and time but not otherwise. 5.10 The Consultant shall take proper account of any representations made by the Tenant's representative during such inspection. 5.11 The Landlord will procure that a copy of the Consultant's certificate that the Works are practically completed (together with any schedule listing any defects) is given to the Tenant of the Tenant's solicitors as soon as is reasonably practicable following its issue. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 10 6. TITLE Title to the Premises will not be deduced but the Tenant will nevertheless be deemed to take the Lease with full knowledge of the terms and contents of and of any matter referred to in or deriving from the Registered Title and will raise no requisition on them 7. MATTERS SUBJECT TO WHICH THE PREMISES ARE LET 7.1 The Premises are let subject to and as the case may be with the benefit of the matters contained or referred to in the Lease 7.2 The Premises are also let subject to: 7.2.1 all matters registrable by any Competent Authority pursuant to statute 7.2.2 all requirements notices orders or proposals (whether or not subject to confirmation) of any Competent Authority 7.2.3 all matters disclosed or reasonably to be expected to be disclosed by [***] or as the result of [***] and whether made in person by writing or orally by or for the Tenant or which a [***] 7.2.4 all notices served by [***] 8. THE LEASE 8.1 The Landlord will grant or procure the grant of and the Tenant will accept the Lease or the later of: 8.1.1 [***] from and including the Date of Works Completion 8.1.2 [***] from and including the Compliance Date 8.2 The Lease will be for a term of approximately 5 years from and including the date of completion and expiring upon 30th June 2006 8.3 The initial annual rent first reserved by the Lease will be [***] which will be payable from and including the Date of Works Completion 8.4 The Tenant will on the date for completion of the Lease in accordance with clause 8.1 pay to the Landlord: 8.4.1 the proportion of the rent first reserved by and then payable under the Lease for the period from and including the Date of Works Completion [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 11 8.4.2 any other rents reserved by or money payable and then due under the Lease calculated from and including the Date of Works Completion 8.5 8.5.1 Engrossments of the Lease and counterpart will be prepared by the Landlord's Solicitors and within three working days of being called upon to do so the Tenant and the Surety will execute the counterpart and return it unconditionally to the Landlord's Solicitors 8.5.2 Without prejudice to any other provision of this agreement the Tenant will indemnify the Landlord against any loss suffered by the Landlord resulting from any failure by the Tenant or the Surety to comply with the provisions of clause 8.6.1 9. POSSESSION 9.1 Vacant possession of the Premises will be given to the Tenant on completion of the Lease 9.2 This agreement is an executory agreement only and will not operate or be deemed to operate as a demise of the Premises 10. ALIENATION The benefit of this agreement is [***] and the [***] will not [***] its interest under this agreement or any part thereof or otherwise dispose of such interest or any part thereof and the Tenant named herein will [***] the Lease 11. ACKNOWLEDGMENT AND INTEREST The Tenant acknowledges and agrees that: 11.1 The obligations of the Landlord contained in this agreement are personal to Evans Vaccines Limited and to any other party giving written notice to the Tenant at any time that such party has personally assumed those obligations 11.2 Without prejudice to any other right remedy or power of the Landlord if any sums have become due from the Tenant to the Landlord under this agreement but remain unpaid for a period exceeding [***] the Tenant will pay [***] to the Landlord [***] at [***] rate ([***] any judgment) from the date when they become due until payment thereof calculated on a daily basis and [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 12 12. TERMINATION If: 12.1 there is any breach of the obligations of the Tenant and/or the Surety under this agreement which (if capable of remedy) is not remedied by the Tenant and/or the Surety within such reasonable period as the Landlord stipulates or 12.2 the Tenant and/or the Surety (being a body corporate) is unable to pay its debts (as defined in section 123 of the Insolvency Act 1986) or has a winding-up petition or petition for an administration order presented against it or passes a winding-up resolution (other than in connection with a members' voluntary winding-up for the purposes of an amalgamation or reconstruction which has the prior written approval of the Landlord) or calls a meeting of its creditors to consider a resolution that it be wound up voluntarily or resolves to present its own winding-up petition or is wound up (whether in England or elsewhere) or the directors or shareholders of the Tenant or the Surety resolve to present a petition for an administration order in respect of the Tenant or the Surety (as the case may be) or an administrative receiver or a receiver or a receiver and manager is appointed in respect of the property or any part thereof of the Tenant or the Surety or 12.3 the Tenant and/or the Surety (being a body corporate) calls or a nominee calls on its behalf a meeting of its creditors or any of them or makes an application to the court under section 425 of the Companies Act 1985 or submits to its creditors or any of them a proposal pursuant to Part I of the Insolvency Act 1986 or enters into any arrangement scheme compromise moratorium or composition with its creditors or any of them (whether pursuant to Part I of the Insolvency Act 1986 or otherwise) or 12.4 the Tenant and/or the Surety (being an individual) makes an application to the court for an interim order under Part VIII of the Insolvency Act 1986 or convenes a meeting of his creditors or any of them or enters into any arrangement scheme compromise moratorium or composition with his creditors or any of them (whether pursuant to Part VIII of the Insolvency Act 1986 or otherwise) or has a bankruptcy petition presented against him or is adjudged bankrupt (whether in England or elsewhere) THEN and in any such case the Landlord may by notice in writing to the Tenant at any time thereafter terminate this agreement (without prejudice to any right or remedy of any party in respect of any antecedent breach of this agreement and without prejudice to any continuing obligations of the Surety under this agreement) 12.5 the Conditions Precedent and Planning Conditions are not satisfied by 30th June 2006 13. COSTS AND INDEMNITY 13.1 The [***] will pay to the [***] forthwith upon demand all proper costs and expenses (including professional fees) of the [***] associated with [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 13 13.2 The Tenant will indemnify the Landlord against all actions proceedings claims demands losses costs expenses damages and liability (including any liability for any injury to any person or damage to any land or other property) arising directly or indirectly from any obligation of the Landlord or any breach of any obligation of the Tenant under this agreement or any act or omission of the Tenant or [***] 14. [***] 14.1 All sums payable under the terms of this agreement are [***] in respect thereof howsoever arising and the Tenant will pay to the Landlord all [***] for which the Landlord is liable to [***] in relation to any supply made or deemed to be made for [***] purposes pursuant to this agreement 14.2 The Tenant does not intend or expect the Premises to be occupied by it or a person that is connected with the Tenant as determined in accordance with section [***] other than wholly or mainly for eligible purposes (within the meaning of paragraph [***]) 14.3 The Tenant represents warrants and undertakes to and with the Landlord that the statement in clause 14.2 is at the date of this agreement and will be at the date of completion of the Lease true and correct in all respects 15. SURETY 15.1 In consideration of the Landlord entering into this agreement at the request of the Surety the Surety will procure the observance and performance of all the obligations of the Tenant under this agreement and in the case of any default the Surety will observe and perform such obligations as if the Surety instead of the Tenant were liable therefor as a principal obligor and not merely as a surety and the Surety agrees with the Landlord as a primary obligation to keep the Landlord indemnified on demand against all losses damages costs and expenses incurred by the Landlord as a result of any failure by the Tenant to observe and perform such obligations or as a result of any obligation of the Tenant under this agreement being or becoming unenforceable 15.2 If this agreement is disclaimed by or on behalf of the Tenant or is terminated in relation to the Tenant pursuant to clause 12 the Surety will (if so required by the Landlord by written notice within three months after such disclaimer or after the date of the Landlord's notice of termination under clause 12 (as the case may be)) enter into a new agreement with the Landlord containing the same conditions and provisions as this agreement (except this clause 15) and the new agreement will take effect from the date of the disclaimer or such notice of termination and in such case the Surety will [***] pay the Landlord's [***] in connection with such agreement 15.3 The insolvency of the Tenant will not affect the liability of the Surety under this agreement and any money received or recovered by the Landlord from the Surety may be placed in a separate or suspense account by the Landlord without any obligation on the Landlord to apply it in or towards the discharge of the Tenant's obligations under this [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 12 14 agreement so as to preserve the Landlord's right to prove in any insolvency of the Tenant in respect of the whole of the Tenant's indebtedness to the Landlord under this agreement 15.4 The obligations of the Surety under this agreement are in addition to any other right or remedy of the Landlord and will not be discharged diminished or in any way affected by:- 15.4.1 any time or indulgence granted by the Landlord to the Tenant or any neglect or forbearance of the Landlord in enforcing the obligations of the Tenant under this agreement 15.4.2 any variation of this agreement or other act omission matter or thing (other than a release by deed given by the Landlord) by which but for this provision the obligations of the Surety under this agreement would have been so discharged diminished or affected 16. DISPUTES Any dispute arising under this Agreement is to be resolved by means of the dispute resolution procedure set out in the Shared Services Agreement dated on or about the date of this Agreement and made between the Landlord and the Tenant. 17. JURISDICTION 17.1 This agreement will in all respects be governed by and construed in accordance with English law and the parties irrevocably submit to the exclusive jurisdiction of the English courts 17.2 The address for service upon the Surety in England and Wales is c/o [***] 18. THIRD PARTY RIGHTS Nothing in this agreement is intended to confer on any person any right to enforce any term of this agreement which that person would not have had but for the [***] IN WITNESS whereof this agreement has been duly executed as a deed (but not delivered until) the day and year first before written [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 13 15 SCHEDULE 1 STANDARD CONDITIONS 1. Throughout the conditions references to property being sold are to be construed as references to the Premises 2. Conditions 1.4 2.2 3.4 4.2 4.3.2 4.5.2 4.5.5 5 6.3.2 6.5 6.7 6.8.2(b) 8.2.4 8.3 and 9 do not apply 3. Condition 1.1.1(f) is deleted and wherever the word "contract" appears in the Standard Conditions (save where followed by the word "rate") it is replaced by the word "agreement" 4. In condition 1.1.1(g) the "contract rate" is [***] per annum above the base rate from time to time of Lloyds TSB Bank Plc 5. In condition 1.3.5 "5.00 pm" is substituted for "4.00 pm" and the words "before 5.00 pm" are added after the words "treated as having been received 6. In condition 1.3.6 "5.00 pm" is substituted for "4.00 pm" and the words "(d) by fax: if sent before 5.00 pm on a working day the day of despatch but otherwise on the first working day after despatch" are added at the end 7. In condition 3.1.2 the words "(f) overriding interests (as defined in Section 70(l) of the Land Registration Act 1925)" are added at the end 8. In condition 4.1 the words "4.1.5 If the buyer persists in any valid requisition with which the seller is unable or unwilling on reasonable grounds to deal satisfactorily and does not withdraw it within five working days of being required so to do the seller may by notice to the buyer and notwithstanding any intermediate negotiation or litigation rescind the agreement" are added at the end 9. In conditions 6.1.2 and 6.1.3 "12 noon" is substituted for "2.00 pm" 10. In condition 7.1.1 the words "or in the negotiations leading to it" and "or was" are deleted [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 1-1 16 SCHEDULE 2 THE WORKS Such works as are necessary to: 1. Create a goods lift and staircase to first floor level within the Premises; and 2. Re-configure corridor and office space at first floor level within the Premises. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 2-1 17 EXECUTED as a Deed by EVANS ) VACCINES LIMITED ) in the presence of:- ) Director /s/ ALAN JARVIS Director/Secretary /s/ C.S.W. SWINGLAND [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 18 EXECUTED as a Deed by AVIRON ) UK LIMITED in the presence of:- ) Director /s/ Ray Prasad Director/Secretary /s/ Fred Kurland EXECUTED as a Deed by AVIRON ) in the presence of:- ) Director /s/ Fred Kurland Director/Secretary /s/ Ray Prasad [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. EX-10.41 10 f69956ex10-41.txt EXHIBIT 10.41 1 EXHIBIT 10.41 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Dated October 11, 2000 - -------------------------------------------------------------------------------- (1) EVANS VACCINE LIMITED (2) AVIRON UK LIMITED (3) AVIRON - -------------------------------------------------------------------------------- UNDERLEASE OF AVU EXTENSION PREMISES AT GASKILL ROAD SPEKE - -------------------------------------------------------------------------------- CMS Cameron McKenna Mitre House 160 Aldersgate Street London EC1A 4DD T +44(0) 20 7367 3000 T +44(0) 20 7367 2000 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE ---- 1. Definitions and interpretation.......................................................2 2. Demise and reddendum.................................................................6 3. Tenant's covenants...................................................................7 4. Landlord's covenants.................................................................7 5. Provisos.............................................................................7 6. New tenancy..........................................................................7 7. Surety covenants.....................................................................7 8. Tenant's break clause................................................................7 9. Landlord's break clause..............................................................8 10. Exclusion of sections 24 - 28 of the 1954 Act........................................8 Schedule I...................................................................................9 Part I Rights granted................................................................9 Part 2 Rights excepted and reserved..................................................9 Schedule 2 Tenant's covenants...............................................................11 1. Pay Rents and interest.......................................................11 2. Pay taxes outgoings and for utility services.................................11 3. Repair.......................................................................11 4. Permit entry.................................................................12 5. Comply with notices to repair................................................12 6. Defects......................................................................12 7. Yielding up..................................................................13 8. Refuse and deleterious substances............................................13 9. Overloading and damage.......................................................13 10. Fire precautions.............................................................13 11. Prohibited user and nuisance.................................................14 12. Permitted User...............................................................14 13. Alterations..................................................................14 14. Signs and advertisements.....................................................15
i 3 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 15. Easements....................................................................15 16. Alienation...................................................................15 17. Information about the Premises...............................................15 18. Landlord's costs.............................................................15 19. Statutory requirements.......................................................16 20. Planning.....................................................................16 21. Notices......................................................................16 22. Indemnity....................................................................17 23. Notice boards................................................................17 24. Incumbrances.................................................................17 25. Key holders..................................................................17 26. The Common Parts and regulations.............................................17 27. Value Added Tax..............................................................17 28. Superior Lease...............................................................18 Schedule 3 Landlord's covenants............................................................19 1. Quiet enjoyment..............................................................19 2. Provision of services........................................................19 3. Superior Lease...............................................................19 Schedule 4 Provisos........................................................................20 1. Re-entry.....................................................................20 2. Exclusions...................................................................20 3. Acceptance of rents..........................................................21 4. [***] invoices...............................................................21 5. Notices......................................................................21 6. Landlord's right to redevelop................................................21 7. Third party rights...........................................................22 8. Common Parts.................................................................22 9. Disputes.....................................................................22 10. Jurisdiction.................................................................22 Schedule 5 Insurance.......................................................................23 1. Landlord to insure...........................................................23
ii 4 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2. Insurance Rent...............................................................23 3. Destruction of the Premises..................................................24 4. Reinstatement prevented and determination....................................24 5. Determination during last three years........................................25 6. Further payments by the Tenant...............................................25 7. Abatement of Rent............................................................25 8. Benefit of other insurances..................................................26 9. Insurance becoming void......................................................26 10. Notice by Tenant.............................................................26 11. Insurance in the Landlord's office...........................................26 Schedule 6 The documents (if any) containing incumbrances to which the Premises are subject.............................................................................27 Schedule 7 Part 1 Covenants by Surety.......................................................28 Schedule 8 Services and the Service Charge.................................................30 Part 1 1. Definitions..................................................................30 2. Provision of the Services....................................................30 3. Statement of Annual Expenditure..............................................31 4. Payment of the Service Charge................................................31 5. Continuation.................................................................32 Part 2 The Services........................................................................32 Schedule 9 Landlord's fixtures and fittings................................................33 Appendix I..................................................................................34 SCHEDULE 1 THE SERVICES....................................................................35 SCHEDULE 2 SERVICES CHARGES................................................................37
iii 5 THIS UNDERLEASE dated 2000 PARTICULARS Landlord EVANS VACCINES LIMITED having its registered office at 216 Bath Road, Slough, Berkshire SL1 4EN (company registration number 3970089) Tenant AVIRON UK LIMITED having its registered office at Carmelite, 50 Victoria Embankment, London EC4Y 0DX (company registration number 3854275) Surety AVIRON having its registered office at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America Building The land and the building known as land at Speke Boulevard and Gaskill Road, Speke comprised in the Superior Lease Premises The parts of the Building known as the AVU Extension Premises at Gaskill Road, Speke part of which is shown for identification purposes only hatched black on the plan annexed hereto and the remaining part of which is comprised of a mezzanine floor which runs part of the length of the area shown hatched on the plan referred to. Term a term from and including ____________ 200[ ] and expiring on 30th June 2006 Initial Rent [***] per annum Initial Service Charge ____________ pounds Pound Sterling per annum Rent Commencement Date The date hereof Service Charge Commencement Date The date hereof Permitted User [***] WITNESSES AS FOLLOWS: - -------- [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 6 1. Definitions and interpretation In this Underlease unless the context otherwise requires: 1.1 the words defined in this sub-clause and in the particulars have the following meanings: "1954 ACT": the Landlord and Tenant Act 1954 "1995 ACT": the Landlord and Tenant (Covenants) Act 1995 "COMMON MEDIA": all Service Media serving the Premises and other parts of the Building "COMMON PARTS": the changing and toilet facilities roads paths landscaped areas entrance halls reception areas lifts fire escapes staircases passages and landings of the Building and any other areas or amenities the use or enjoyment of which is common to some or all of the tenants or occupiers of the Building "GROUP COMPANY": a company which is a member of the same group as the Tenant within the meaning of section 42 of the 1954 Act "HEATING SYSTEMS": the pipes ducting boilers and other apparatus plant machinery and installations for the provision in the Building of hot water central heating and where and to the extent applicable mechanical ventilation comfort cooling (including heating and cooling) and air conditioning "INSURANCE RENT": the sums payable by the Tenant under paragraph 2 of schedule 5 "INSURED RISKS": insurable risks of loss or damage by fire lightning earthquake explosion aircraft (other than hostile aircraft) and other aerial devices or articles dropped from them riot and civil commotion malicious damage storm bursting or overflowing of water tanks apparatus or pipes flood impact by road vehicles escape of noxious substance or thing and such other or alternative insurable risks as may from time to time be requited by the Landlord (subject to such exclusions excesses and limitations as may be imposed by the policy and subject to the exclusion of such risks as may not be insurable on reasonable terms) "INSURERS": such reputable insurance company or underwriters as the Landlord may from time to time nominate "INTEREST RATE": [***] per centum per annum above the base leading rate from time to time of Lloyds TSB Bank Plc or another bank nominated from fame to time by the Landlord) or (if base lending rates cease to, be published) such other comparable rate of interest as the Landlord (acting reasonably) specifies [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 7 "INTERMEDIATE PRODUCT": the product so defined in the Shared Services Agreement "IP LICENSE" means the know-how and technology license agreement to be entered into between the Landlord and the Tenant dated on or about the date of this Agreement "LANDLORD'S EXPENSES": [***] and other [***] and [***] and costs [***] fees and [***] charges incurred by the Landlord "LETTABLE PREMISES": accommodation within the Building (which accommodation includes such parts of the Building as correspond with those included in the Premises by virtue of clause 1.10) from time to time let to a tenant or tenants or occupied or intended for separate or exclusive occupation. by a tenant or tenants "PLAN A": the plan marked "Plan A" attached to this deed "PLAN B": the plan marked "Plan B" attached to this deed "PLANNING ACTS": the Town and Country Planning Act 1990 the Planning (Listed Buildings and Conservation Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 the Planning (Consequential Provisions) Act 1990 and the Planning and Compensation Act 1991 and all other statutes regulating the development design use and control of property "QUARTER DAYS": [***] and [***] in each year "RENTS": means the Yearly Rent the Insurance Rent the Service Charge and the other sums reserved by or payable by the Tenant under this Underlease "RESTATED AGREEMENT" means the deed to be entered into by the Surety and the Landlord amending and restating the terms of an amended and restated agreement dated 7 June 1999 between the Landlord (as assignee of Medeva Pharma Limited) (1) and the Surety (2) dated on or about the date of this Agreement "RETAINED PREMISES": the Building excluding the Premises "SERVICE CHARGE": the meaning given to such expression in part 1 of schedule 8 "SERVICE MEDIA": all sewers drains pipes gullies gutters ducts mains channels wires cables conduits flues and any other conducting media "SHARED SERVICES AGREEMENT": an agreement dated on or about the date of this Underlease and made between Evans Vaccines Limited (1) and Aviron UK Limited (2) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 8 "SUPERIOR LEASE": a lease dated 1st April 1948 made between The Lord Mayor Aldermen and Citizens of the City of Liverpool (1) and Evans Medical Supplies Limited (2) and a lease dated 20th February 1952 and made between The Lord Mayor Aldermen and Citizens of the City of Liverpool (1) and the Board of Trade (2) and any documents which are supplemental to or collateral with or entered into pursuant to such leases "SUPERIOR LESSOR": includes the person from time to time entitled to the reversion immediately or mediately expectant on the determination of the term granted by the Superior Lease "TRANSACTION AGREEMENTS" means the IP License, the Transfer Agreement, the Restated Agreement and the Warrants "TRANSFER AGREEMENT" means the agreement to be entered into between the Landlord and the Tenant providing for the transfer of certain employees of the Landlord to the Tenant dated on or about the date of this Agreement "THIS UNDERLEASE": this deed as varied from time to time and any document which is supplemental to or collateral with or entered into pursuant to this deed "VALUE ADDED TAX": value added tax and any tax or duty of a similar nature substituted for or in addition to it "WARRANTS" means the warrant instrument(s) dated on or about the date of this Agreement entered into by the Surety (1) and the Landlord (2) granting the Landlord the right to subscribe for certain shams in the capital of the Surety "YEARLY RENT": (i) from and including the date hereof until but not including being the fifth anniversary of the date of the Lease of the adjoining premises known as the AVU Premises made between the parties hereto: the Initial Rent; and (ii) from and including such said fifth anniversary until 30 June 2006: One Peppercorn 1.2 any covenant given by more than one person will be joint and several 1.3 any reference to statute (whether generally or specifically) includes all derivative instruments orders regulations and other matters all directives regulations and mandatory requirements of the European Union and in each case any re enactment or modification of them from time to time (except in the case of any reference to the Town and Country Planning (Use Classes) Order 1987) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 9 1.4 every obligation of the Tenant not to do an act or thing includes an obligation not to allow it to be done 1.5 where there is an obligation to obtain the consent or approval of die Landlord under this Underlease such consent or approval must be in writing and such obligation includes where necessary an obligation to obtain the consent or approval in writing of the Superior Lessor and/or any chargee from time to time 1.6 where the Landlord has a right to enter the Premises such right will also be exercisable by the Landlord's agents any chargee or superior landlord from time to time and all persons authorized by them with or without workmen and equipment 1.7 the Landlord includes the person from time to time entitled to the reversion immediately expectant on the determination of the Term 1.8 the Tenant includes its successors in title and in the case of an individual includes his personal representatives 1.9 the Surety includes any surety of the Tenant's obligations under this Underlease and in the case of an individual includes the Surety's personal representatives 1.10 the Premises include all and each and every part of them and all additions, alterations and improvements to them and shall also include the following: 1.10.1 the plaster and decorative finishes applied to the interior of the external walls of the Building and to any structural or load-bearing walls and columns within the Premises but no other part of any such walls and columns 1.10.2 the whole of any non-structural or non-load-bearing walls and columns within the Premises 1.10.3 the inner half severed medially of icy non-structural or non-load-bearing walls dividing the Premises from other parts of the Building 1.10.4 the screed and finish of the floors and all parts of the raised cavity flooring within the Premises and the vinyl covering laid on the floors 1.10.5 the plaster and decorative finishes applied to the ceilings of the Premises 1.10.6 the doors door furniture and door frames of or within the Premises [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 10 1.10.7 the windows and window frames of or within the Premises but not any windows window frames or any forms of glazing which are in or comprise part of the external walls of the Building 1.10.8 all Service Media (other than the Heating Systems) vested in the Landlord which exclusively serve the Premises up to the point where they connect to those of statutory undertakers or to those which arc Common Media 1.10.9 all landlord's fixtures fittings and chattels which are in or upon the Premises (other than the Heating Systems) 1.10.10 all sanitary and hot and cold water apparatus within the Premises (other than the Heating Systems) 1.11 words denoting persons include firms companies and corporations and vice versa 1.12 the singular includes the plural and vice versa and one gender includes any other 1.13 any reference to the Landlord's surveyor includes any surveyor employed by the Landlord or by any company associated with the Landlord 1.14 references to clauses paragraphs and schedules are to clauses and paragraphs of and schedules to this deed 1.15 the headings to clauses paragraphs and schedules do not affect the construction of this Underlease 1.16 the words "INCLUDE" "INCLUDES" and "INCLUDING" are deemed to be followed by the words "WITHOUT LIMITATION" 1.17 references to any act or omission of the Tenant are deemed to extend to any act or omission of my sub-tenant or licensee of the Tenant or any sub-tenant or any person at the Premises or the Building with the consent of the Tenant any sub tenant or any licensee 2. Demise and reddendum The Landlord demises the Premises to the Tenant TOGETHER WITH (in common with all other persons from time to time entitled to them) the rights mentioned in part 1 of schedule 1 EXCEPT AND RESERVING to the Landlord and all other persons from time to time entitled to them the tights mentioned in part 2 of schedule 1 TO HOLD for the Term SUBJECT to the provisions contained or referred to in any documents specified in schedule 6 and any easements rights and privileges enjoyed by any other land or person which affect the Premises YIELDING AND PAYING for them: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 11 2.1 the Yearly Rent by [***] on the anniversary of this Lease and proportionately for any period less thin a year the first payment to be made on [***] and 2.2 [***] the Insurance Rent and 2.3 the Service Charge and 2.4 [***] any [***] from time to time payable by the Tenant under this Underlease and 2.5 [***] all costs charges and expenses which the Landlord may from time to time incur in relation to or as a result of any [***] of the Tenant under this Underlease and 2.6 [***] all other money payable or repayable by the Tenant to the Landlord under this Underlease 3. Tenant's covenants The Tenant COVENANTS with the Landlord to observe and perform the obligations of the Tenant contained in schedule 2 (Tenant's covenants) schedule 5 (Insurance) and schedule 8 (Services and the Service Charge) or otherwise arising under this Underlease 4. Landlord's covenants The Landlord COVENANTS with the Tenant to observe and perform the obligations of the Landlord contained in schedule 3 (Landlord's covenants) schedule 5 (Insurance) and schedule 8 (Services and the Service Charge) or otherwise arising under this Underlease 5. Provisos PROVIDED ALWAYS and it is agreed and declared as set out in schedule 4 (Provisos) 6. New tenancy This Underlease is a new tenancy for the purposes of section 1 of the 1995 Act 7. Surety covenants The Surety COVENANTS with the Landlord in the terms set out in part I of schedule 7 (Covenants by Surety) 8. Tenant's break clause 8.1 In this clause the "Termination Date" is the date specified by the Tenant pursuant to sub-clause 8.2. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 12 8.2 Subject to the pre-conditions in clause 8.3 being satisfied on the Termination Date the Tenant may determine the Term on the Termination date by giving the Landlord not less than [***] written notice specifying the Termination Date following which the Term will the determine on the Termination Date but without prejudice to any claim by a party in respect of any antecedent breach of any obligation of any other party under this Underlease. 8.3 The pre-conditions are: 8.3.1 all Rents due up to and including the Termination Date have been paid in full and the Tenant has complied with its obligations in this Underlease in all material respects and 8.3.2 vacant possession of the whole of the Premises is given to the Landlord and 8.3.3 this Underlease is delivered to the Landlord 8.4 The Landlord may waive any of the pre-conditions in clause 8. 3 at any time before the Termination Date by written notice to the tenant. 8.5 If the Tenant does not exercise its rights under this clause and a new tenancy is granted by virtue of any tight which the Tenant may have at the relevant time the Landlord (without acknowledging that any such rights exist or will exist) and the Tenant agree that the new tenancy will not contain provisions [***] unless the Landlord and the Tenant expressly so agree at the time such new tenancy is granted. 8.6 If the Tenant exercises its rights under this clause then all amounts payable from time to time by the Tenant or the Surety (as the case may be) to the Landlord or to any other member of the group of companies of which the Landlord is a member pursuant to each of the Transaction Agreements shall continue to be due and payable in accordance with the provisions of such Transaction Agreements 9. Landlord's break clause The Landlord may determine the Term at any time if the Tenant shall have ceased to occupy the premises or ceased to use the Premises for the Permitted Use for a period exceeding [***] by giving the Tenant not less than [***] written notice following which the Term will then determine but without prejudice to any claim by a party in respect of any antecedent breach of any obligation of any other party under this Underlease 10. Exclusion of sections 24 - 28 of the 1954 Act Having been authorized by an order of the ________ Court under section 38(4) of the 1954 Act (as amended) dated ________ Claim Number (________) the parties [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 13 agree that sections 24 to 28 of the 1954 Act shall not apply to the tenancy created by this deed IN WITNESS of which this deed has been duly executed (but not delivered until) the day and year first above written [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 14 SCHEDULE I PART I RIGHTS GRANTED 1. A right of way [***] over the Common Parts and such pans of the Budding as are designated by the Landlord from time to time to enable [***] access and egress at [***] times to and from the Premises 2. A right to use all Common Media and to use (subject to paragraph 26 of schedule 2) the Common Parts for the purposes [***] to them 3. A tight to enter (at all reasonable times and after giving reasonable written notice) such other parts of the Building as may reasonably be necessary for the purpose of carrying out [***] to any Service Media forming part of the Premises the Tenant doing as little damage as possible and making good all damage occasioned thereby to the satisfaction of the Landlord and complying with the reasonable requirements of and causing the minimum of inconvenience to the occupiers of such other parts of the Building 4. A right of support and shelter for the Premises from. other parts of the Building PART 2 RIGHTS EXCEPTED AND RESERVED 1. A right to [***] the Premises to [***] of the Premises to determine whether [***] and to [***] to remedy any [***] 2. A right to [***] the Premises at [***] (except [***]) for the purpose of complying with any of the covenants on the part of the Landlord or the conditions contained in or preventing a forfeiture of the Superior Lease (notwithstanding that the obligation to comply with such covenants and conditions is imposed on the Tenant by this Underlease) 3. A right to [***] the Premises (the persons exercising such right doing as little damage and causing as little inconvenience as possible and malting good any damage caused to the Premises by the exercise of such right) for the following purposes 3.1 to [***] any [***] in which the Landlord may from time to time have [***] notwithstanding any [***] of the use and enjoyment of the Premises by the Tenant [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 15 3.2 to [***] on the external walls and the roof of any building forming part of the Premises 3.3 at [***]) to [***] any [***] and to [***] to any [***] within but not [***] the Premises 3.4 for [***] in this Underlease or for [***] the Landlord's interest in the Building or in [***] in which the Landlord may from time to time have [***] 4. A right to the free and uninterrupted [***] of [***] from and to [***] and [***] through and along all Service Media from time to time within the Premises but which [***] the Premises 5. All rights of [***] now subsisting or which might (but for this exception) be acquired [***] 6. A right to [***] any [***] and [***] of the Landlord in such manner as the Landlord may think fit provided in the case of [***] that [***] the Premises are available at all times 7. A right of [***] the Premises for [***] of the Building 8. A right to [***] the Premises in an emergency in accordance with any regulation or requirement of the fire officer or any other competent authority and to [***] fire escapes (if any) crossing or forming part of the Premises [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 16 SCHEDULE 2 TENANT'S COVENANTS 1. PAY RENTS AND INTEREST 1.1 To pay the Rents without deduction counterclaim or set off (whether in each case legal or equitable) at the stated times in cleared funds (and if die Landlord so requires by banker's standing order direct debit or automated credit) 1.2 Without prejudice to any other right remedy or power of the Landlord if the Yearly Rent is not paid on the due dates or if any other Rents are due but unpaid for a period exceeding [***] to pay [***] to the Landlord interest on them at the Interest Rate (before and after any judgement) from the date when they became due until payment of them calculated on a daily basis and [***] 2. PAY TAXES OUTGOINGS AND FOR UTILITY SERVICES 2.1 To pay all rates taxes charges and other sums or outgoings of any kind payable (whether or not of a capital or non-recurring nature) which now are or may at any time be charged or assessed on the Premises or on the owner or occupier of them (excluding any payable by the Landlord in respect of the receipt of Rents or occasioned by any dealing with the reversion to this Underlease) and in the absence of any direct assessment to pay to the Landlord [***] of them (to be determined by [***]) 2.2 If the Landlord loses rating relief because it has been allowed to the Tenant or another party to make good such loss to the Landlord 2.3 To pay die suppliers for and indemnify the Landlord against all charges for [***] and [***] to the Premises and to pay all [***] 3. Repair To keep the Premises in such state of [***] as they [***] AND when necessary to [***] to the reasonable satisfaction of the Landlord (damage by any Insured Risk excepted save to the extent that the insurance money is irrecoverable by reason of the act or default of the Tenant) and these obligations include the following: 3.1 whenever necessary during the Term and in any event in the list six months of the Term (howsoever determined) to [***] as appropriate all parts of the Premises which are usually [***] and with [***] as the Landlord may require [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 12 17 3.2 to keep the Premises [***] and to use only [***] first approved in writing by the Landlord (such approval not to be unreasonably withheld) and to [***] 3.3 to cause all [***] (if any) forming part of the Premises to be regularly maintained and when necessary repaired or replaced by qualified persons who are and at intervals which are in each case approved by the manufacturers of them and by the Insurers and in all cases to the reasonable satisfaction of the Landlord 3.4 to replace [***] at the Premises when necessary with others of the same or similar quality as those at the Premises at the date of this deed and to replace them in the last six months of the Term in colours approved by the Landlord 3.5 to carry out all works of repair and cleaning of the Premises in accordance with any relevant manufacturer's or installer's maintenance manuals 3.6 to carry out all works of repair decoration and maintenance and other treatment of the Premises in a proper and workmanlike manner in accordance with good practice current at the time and with good quality suitable and sufficient materials and to the reasonable satisfaction of the Landlord 4. PERMIT [***] 4.1 To permit the Landlord [***]) to [***] the Premises to [***] 5. COMPLY WITH NOTICES TO REPAIR 5.1 To commence all works for which the Tenant is liable under this Underlease [***] after service of a written notice by the Landlord requiring such works and to complete such works [***] 5.2 If the Tenant does not commence such works within [***] of service of such notice (or [***]) or does not complete, them within [***] (having regard to the obligation of the Tenant to complete them [***]) the Landlord may (without prejudice to the tight of re-entry contained in this Underlease) [***] the cost of which (including all Landlord's Expenses in connection with them) is to be repaid by the Tenant and be recoverable by the Landlord as a debt on demand 6. DEFECTS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 13 18 To give immediate written notice to the Landlord of any defects in the Premises which may give rise to a liability or duty on the Landlord under common law or statute 7. YIELDING UP 7.1 Immediately prior to the expiration or sooner determination of the Term: 7.1.1 to replace any landlords fixtures and fittings which are missing broken damaged or destroyed with others of equivalent quality and value 7.1.2 to remove every sign writing or notice which the Landlord requires to be removed and (unless and to the extent that the Landlord agrees otherwise) to remove all tenant's fixtures and fittings furniture and effects from the Premises making good to the satisfaction of the Landlord all damage caused by such removal 7.1.3 to the extent required by the Landlord to reinstate and restore the Premises to the same state and condition as they were in prior to the carrying out of any works to the Premises 7.1.4 to hand over to the Landlord any health and safety files relating to the Premises 7.2 At the expiration or sooner determination of the Term quietly to yield up to the Landlord the Premises in such repair and condition as complies with the Tenant's obligations under this Underlease 8. REFUSE AND DELETERIOUS SUBSTANCES 8.1 Not to [***] on the Promises or the Common Parts and not to [***] on the Premises or the Common Parts other than [***] and to ensure that [***] on the Premises are [***] 8.2 Not to permit [***] which is or might become [***] or which might in any way [***] or [***] the Building any Service Media [***] to be [***] the Premises and if the Tenant becomes aware of any such [***] the Premises to give immediate written notice of it to the Landlord and to [***] it in compliance with the requirements of the Landlord or any competent authority 9. OVERLOADING AND DAMAGE Not to [***] the Premises nor [***] any Service Media or the Retained Premises [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 14 19 10. FIRE PRECAUTIONS To comply with [***] requirements and recommendations from time to time of any competent authority in relation to fire precautions and means of escape affecting the Premises and to keep sufficient fire fighting and extinguishing apparatus and fire alarm and smoke detection apparatus in and about the Premises open to inspection and properly maintained and not to obstruct the access to or means of working them nor any means of escape from the Premises 11. PROHIBITED USER AND [***] 11.1 Not to use the Premises for any [***] purpose not for [***] purposes nor for [***] 11.2 Not to hold on the Premises any [***] not any [***] 11.3 Not to do anything on the Premises or on any part of the Common Parts or any land over which any right granted by this Underlease is exercised which [***] to the landlord or [***] 11.4 Not to use the Premises as a [***] where [***] 11.5 Not to permit the Premises to be occupied or used by [***] 12. PERMITTED USER Not to use the Premises otherwise than for the Permitted User and in accordance with [***] 13. ALTERATIONS 13.1 [***] 13.2 Not without the prior written consent of the Landlord (such consent not to be unreasonably withheld) to [***] to the Premises except that no such consent will be required for the Tenant to [***] which does not adversely affect any [***] 13.3 Not to [***] any Service Media 13.4 To supply to the Landlord all [***] necessary to [***] any [***] whether or not requiring the consent of the Landlord and to [***] only in accordance with such [***] in a good and workmanlike manner and to the satisfaction of the Landlord [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 15 20 13.5 After commencing [***] (whether or not they require the consent of the Landlord) to complete them within [***] and in any event before the expiration or sooner determination of the Term 13.6 To pay to the Landlord [***] the cost of any [***] necessitated by any works of alteration carried out by the Tenant 13.7 If the Tenant fails to observe the covenants contained in this paragraph the Landlord may [***] and make good all damage caused by such [***] and the cost of such work (including Landlord's Expenses) is to be repaid by the Tenant and be recoverable by the Landlord as a debt on demand 14. SIGNS AND ADVERTISEMENTS [***] any form of sign advertising or notification material which is visible from [***] without the prior written consent of the Landlord 15. EASEMENTS 15.1 Not to obstruct any [***] or [***] from time to time enjoyed by the Premises 15.2 To give immediate written notice to the Landlord of any encroachment on or circumstance which might result in the acquisition of any easement or other tight over the Premises and to [***] or [***] as the Landlord may reasonably require to [***] 16. ALIENATION 16.1 Not to: 16.1.1 [***] 16.2 Nothing contained in this paragraph will prevent the Tenant from [***] if the following conditions are fulfilled: 16.2.1 Prior written notice is given to die Landlord of the [***] 16.2.2 No [***] is created between the Tenant and [***] 16.2.3 The right of [***] will determine upon either the Tenant or [***]) and immediate written notice is to be given to the Landlord upon such [***] 17. INFORMATION ABOUT THE PREMISES [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 16 21 17.1 From time to time [***] to furnish the Landlord with full particulars of all interests in the Premises 17.2 To disclose such information as the Landlord may from time to time requite in relation to any application or request made or particulars produced to the Landlord 18. LANDLORD'S COSTS To pay to the Landlord on an indemnity basis all costs claims demands and expenses (including but without prejudice to the generality of the foregoing all Landlord's Expenses) incurred by the Landlord in contemplation of or in relation to or as a result of: 18.1 any notice under sections 146 or 147 of the Law of Property Act 1925 and/or any proceedings pursuant to such notice (even if forfeiture is avoided otherwise than by relief granted by the court) 18.2 the preparation and service of any schedule of dilapidations 18.3 any breach of any obligation of the Tenant under this Underlease 18.4 any application for consent under this Underlease 19. STATUTORY REQUIREMENTS 19.1 At [***] to comply with statute common law and all relevant codes of practice in relation to the Premises (whether or not such requirements are imposed upon the owner occupier or any other person) 19.2 To pay to the Landlord a due proportion (to be determined by [***]) of all Landlord's Expenses in relation to compliance with such requirements or notices where they relate both to the Premises and to other land 20. PLANNING 20.1 To comply in all respects with the [***] 20.2 Not to make any application under the Planning Acts without the prior written consent of the Landlord 20.3 To supply the Landlord with a copy of such application and copies of any plans and drawings submitted in connection with it and to keep the Landlord fully informed of the progress of any such application and its result [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 17 22 20.4 Not to initiate any development permitted as a result of any application under the Planning Acts without [***] 20.5 Not to enter into any agreement or obligation or serve any purchase notice under the Planning Acts without [***] 21. NOTICES Within [***] of receipt (or sooner if requisite) to produce to the Landlord full particulars of any notice order permission or proposal in relation. to the Premises and at the request of the Landlord to make or join with the Landlord in making such objections or representations in respect of it as the Landlord requires 22. INDEMNITY To indemnify the Landlord against all actions proceedings claims demands losses costs expenses damages and liability (including any liability for any injury to any person or damage to any land or other property) arising directly or indirectly from any breach of any obligation of the Tenant under this Underlease or the state and condition or any use of the Premises or any act or omission of the Tenant 23. NOTICE BOARDS To permit the Landlord to fix and retain on the Premises a notice board (during the last six months of the Term) for the reletting of the Premises and (it any time) for the sale of the Landlord's interest and to permit all persons authorized by the Landlord to view the Premises at reasonable hours upon reasonable notice 24. INCUMBRANCES To comply with all covenants and other matters relating to the Premises or to any of the rights granted by this Underlease (and in particular those contained or referred to in any documents specified in schedule 6) so far as they are enforceable 25. KEY HOLDERS To ensure that at all times both the Landlord (or its managing agents) and the local police have written notice of the names addresses and home telephone numbers of at least two key holders of the Premises 26. THE COMMON PARTS AND REGULATIONS 26.1 Not to [***] on or in any way to [***] within the curtilage of the Building 26.2 Without prejudice to the foregoing not to use the Common Parts for the [***] (whether temporary or permanent) of any materials or goods or the [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 18 23 servicing repair or cleaning of any vehicle nor to permit petrol oil or other deleterious materials to be emptied on such spaces 26.3 Not to [***] the Common Parts 26.4 To comply with such rules and regulations as [***] and [***] the Tenant for the [***] of the Building 27. [***] 27.1 To pay all [***] in respect of all [***] made to the Tenant under this Underlease or as the case may be to repay to the Landlord any [***] borne by the Landlord in respect of [***] made to the Landlord (except to the extent in the latter case to which the Landlord [***]) and in every case where under this Underlease the Tenant is obliged to pay an amount of money such amount shall be regarded as being [***] from time to time payable on it 27.2 Not to occupy the Premises and not to permit the Premises to be occupied by [***] as determined in accordance with Section [***] otherwise than wholly or mainly for eligible purposes (with the meaning of paragraphs [***]) 28. SUPERIOR LEASE 28.1 To observe and perform the obligations of the lessee contained in the Superior Lease insofar as they relate to the Premises except to the extent that the Landlord expressly covenants in this deed to observe and perform them 28.2 Not to do omit suffer or permit any act or thing which would or might cause the Landlord to be in breach of the Superior Lease or which if done omitted suffered or permitted by the Landlord would or might constitute a breach of the obligations of the lessee contained in the Superior Lease or in any lease or leases superior to the Superior Lease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 19 24 SCHEDULE 3 LANDLORD'S COVENANTS 1. QUIET ENJOYMENT That the Tenant paying the Rents and complying with its other obligations under this Underlease may peaceably hold and enjoy the Premises during the Term without any interruption by the Landlord or any person lawfully claiming through under or in trust for it 2. PROVISION OF SERVICES That subject to payment by the Tenant of the Service Charge and to the provisions of schedule 8 the Landlord will use all reasonable endeavors to provide the Services for the period for which such Services are to be provided as set out in Schedule 8 3. SUPERIOR LEASE To pay the rent reserved by the Superior Lease and to perform the obligations of the lessee (insofar as they relate to the Premises) contained in the Superior Lease regarding insurance and at the request of the Tenant and subject to the Tenant providing 2 suitable indemnity for costs to take all reasonable steps to enforce any obligations of the Superior Lessor to the Landlord [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 20 25 SCHEDULE 4 PROVISOS 1. RE-ENTRY Without prejudice to any other tight remedy or power of the Landlord it will be lawful for the Landlord or [***] to re-enter the Premises (and upon re-entry the Term will determine but without prejudice to any claim by the Landlord in respect of any antecedent breach of any obligation of the Tenant under this Underlease) if 1.1 any Rents remain unpaid for [***] (whether formally demanded or not) or 1.2 there is [***] breach of [***] obligation of the Tenant under this Underlease or 1.3 the Tenant and/or the Surety (if any) (being a body corporate) is [***] (as defined in section [***] of the Insolvency Act 1986) or [***] (other than in connection with [***] which has the prior written approval of the Landlord) or [***] (whether in England or elsewhere) or the directors or shareholders of the Tenant or the Surety [***] in respect of the Tenant or the Surety (as the case may be) or an [***] in respect of the property or any part of it of the Tenant or the Surety or 1.4 the Tenant and/or the Surety (if any) (being a body corporate) [***] or 1.5 the Tenant and/or the Surety (if any) (being in individual) [***] or 1.6 any analogous or equivalent [***] to those referred to in paragraphs 1.3 and/or 1.4 and/or 1.5 of this schedule are [***] in relation to the Tenant and/or the Surety (if any) [***] or 1.7 any [***] is [***] the Premises 2. EXCLUSIONS 2.1 Except where expressly granted by this Underlease the Tenant will not have: 2.1.1 the benefit of any [***] 2.1.2 the benefit of or the right to enforce or to prevent the release or the modification of [***] or 2.1.3 the benefit of or the right to enforce or to prevent the release or the modification of [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 21 26 2.2 Any rights granted or reserved by this deed in respect of anything which does not exist at the date of this deed will be effective only if it comes into existence before the expiry of the period of [***] from the date of this deed (which is the perpetuity period applicable to this Underlease) 2.3 The Landlord gives no express or implied warranty that the Permitted User will be or remain a lawful or authorized use under the Planning Acts or otherwise 2.4 So far as the law allows: 2.4.1 the tight of the Tenant (or any undertenant) to compensation on quitting the Premises is excluded 2.4.2 the Tenant releases the Landlord from all the obligations of the Landlord under this Underlease with effect from and including the date on which the Landlord disposes of the reversion 3. ACCEPTANCE OF RENTS If the Landlord has reasonable grounds for believing that the Tenant is in breach of any of its obligations under this Underlease and refrains from demanding or accepting Rents then interest will be payable by the Tenant at the Interest Rate on such Rents for the period during which the Landlord so refrains such interest to be calculated on a daily basis and compounded with rests on the Quarter Days 4. [***] INVOICES The Landlord is not obliged to issue any [***] invoice for any [***] until it has received payment for such [***] (including the [***]) in full 5. NOTICES Any notice under or in relation to this Underlease: 5.1 will be deemed (whether or not that is actually the case) to be a notice required to be served for the purposes of section 196(5) of the Law of Property Act 1925 and the provisions of section 196 of that Act will extend to any such notice accordingly 5.2 may also be served by facsimile transmission to the party to be served and any such notice shall be deemed to have been served on dispatch and in proving such service it shall be sufficient to prove that the sender of the facsimile transmission has his copy and can show it was duly transmitted 6. LANDLORD'S RIGHT TO [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 22 27 The Landlord will be free to [***] any land adjoining or [***] the Premises in [***] notwithstanding that such [***] by the Premises PROVIDED THAT reasonably acceptable alternative [***] are provided 7. THIRD PARTY RIGHTS Nothing in this Underlease is intended to confer on any person any right to [***] which that person would not have had but for [***] 8. COMMON PARTS The Landlord may from time to time change the location area or arrangements for use by the Tenant of any part of the Common Parts or Service Media so long as there remains available for the benefit of the Premises tights reasonably commensurate with those hereby granted 9. DISPUTES Any dispute arising under this Least is to be resolved by means of the dispute resolution procedure set out in the Shared Services Agreement dated on or about 11th October 2000 10. JURISDICTION 10.1 This Underlease will in all respects be governed by and construed in accordance with English law and the parties irrevocably submit to the exclusive Jurisdiction of the English courts 10.2 The Surety's address in England for service of all notices and proceedings is c/o [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 23 28 SCHEDULE 5 INSURANCE 1. LANDLORD TO INSURE 1.1 The Landlord will insure with the Insurers and through such agency as the Landlord may from time to time decide: 1.1.1 the Building against die Insured Risks for the amount determined from time to time by the Landlord as representing the full cost (including demolition and similar expenses professional fees and expenses the cost of any works required by statute and Value Added Tax where applicable) which would be likely to be incurred in connection with reinstating the Building in accordance with this Underlease at the time when such reinstatement is likely to take place having regard to all relevant factors (including the time at which loss or damage may be sustained any possible delay in the commencement and execution of reinstatement works and any possible increases in building costs) 1.1.2 against loss of the Yearly Rent for such period (being not less than three years) as may reasonably be required by the Landlord from time to time having regard to the likely period required for reinstatement in an amount which takes into account the Landlord's estimate of any potential increases of Rent 1.1.3 against liabilities of the Landlord in respect of property owner's and third party risks in such sum and on such terms as the Landlord reasonably requires 1.2 The Landlord will produce to the Tenant on request (but not more often than once in any period of twelve months) reasonable evidence from the Insurers of the terms and subsistence of any policy or policies of such insurance 1.3 The Tenant will give the Landlord written notice of the estimated reinstatement cost of any fixtures and fittings installed from time to time by the Tenant which may become landlord's fixtures and fittings 2. INSURANCE RENT The Tenant will pay to the Landlord a yearly sum (and proportionately for any period less than a year) equal to the due proportion attributable to the Premises (which proportion shall be determined from time to time by the Landlord's surveyor whose decision shall be final) of the gross cost to the Landlord of [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 24 29 performing its obligations under paragraphs 1.1.1 and 1.1.3 of this schedule and the whole of the gross cost to the Landlord of performing its obligation under paragraph 1.1.2 of this schedule including in each case the cost of any insurance valuations carried out by or on behalf of the Landlord 3. DESTRUCTION OF THE PREMISES If the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease are destroyed or damaged by any Insured Risk the Landlord will lay out the net proceeds of such insurance (other than any in respect of loss of the Yearly Rent) and any money paid by the Tenant pursuant to paragraph 6 of this schedule in reinstating the Premises and/or any such Common Parts substantially as they were prior to such destruction or damage or in replacing them with reasonably comparable Premises and will make up any deficiency out of its own money SUBJECT TO: 3.1 the Landlord obtaining any necessary planning and other permissions consents licenses and approvals (which the Landlord will use its reasonable endeavors to obtain but will not be obliged to institute or pursue any appeal) 3.2 the necessary labor and materials being available (which the Landlord shall use its reasonable endeavors to obtain as soon as practicable) and 3.3 the payment by the Tenant to the Landlord of any money payable under paragraph 6 of this schedule 4. REINSTATEMENT PREVENTED AND DETERMINATION If at the date of expiry of all periods from time to time insured for loss of the Yearly Rent all destruction or damage by any Insured Risk to the Premises or any of the Common Pam reasonably required for the use of the Premises in accordance with this Underlease have not been made good and the Premises are still unfit for or incapable of occupation and use the Landlord or the Tenant may by written notice to the other given at any time within six months after such date and whilst the Premises are still unfit for use determine the Term with immediate effect and the Landlord will be entitled to all the insurance money PROVIDED THAT: 4.1 such determination will be without prejudice to any claim in respect of any antecedent breach of the obligations under this Underlease and 4.2 any such notice given by the Tenant will only have effect if the Tenant has: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 25 30 4.2.1 also at least six months prior to giving the notice informed the Landlord in writing of the Tenant's intention to give it if the Premises are still unfit for use at the relevant time 4.2.2 complied with its obligations under this schedule both at the date of giving and the date of expiry of such notice 5. DETERMINATION DURING LAST THREE YEARS If the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease are destroyed or damaged by any Insured Risk during the last three years of the Term so as to render the Premises substantially unfit for or incapable of occupation and use the Landlord my by written notice to the Tenant given at any time within twelve months after such destruction or damage determine the Term with immediate effect and the Landlord will be entitled to all the insurance money PROVIDED THAT such determination will be without prejudice to any claim in respect of any antecedent breach of the obligations under this Underlease 6. FURTHER PAYMENTS BY THE TENANT 6.1 If the payment of any insurance money is refused owing to some act or default of the Tenant the Tenant will pay to the Landlord the amount so refused 6.2 If any excess to which any policy of insurance relating to the Premises is subject becomes applicable the Tenant will pay to the Landlord the amount of such excess 7. ABATEMENT OF RENT If the Premises or any of the Common Parts reasonably required for the use of the Premises in accordance with this Underlease are destroyed or damaged by any Insured Risk so as to render the Premises unfit for or incapable of occupation and use the Yearly Rent or a fait proportion of it according to the nature and extent of the damage sustained will be suspended (save to the extent that the insurance money is irrecoverable owing to some act or default of the Tenant) until the Premises cease to be unfit for or incapable of occupation and use or until the expiration of the period insured for loss of the Yearly Rent (whichever is the earlier) PROVIDED THAT: 7.1 any dispute as to the extent proportion or period of such suspension will be determined by an arbitrator to be Weed upon by the Landlord and by the Tenant or at the request of either of them to be nominated by or on behalf of the President for the time being of the Royal Institution of Chartered Surveyors in accordance with the Arbitration Act 1996 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 26 31 7.2 the amount of the Yearly Rent which ceases to be payable under this Underlease will not exceed the amount received by the Landlord under any loss of Yearly Rent insurance policy effected by the Landlord in respect of the Premises 8. BENEFIT OF OTHER INSURANCES The Tenant Will apply all money which it receives by virtue of any insurance of the Premises in nuking good the loss or damage in respect of which it has been received 9. INSURANCE BECOMING VOID The Tenant will: 9.1 not cause any policy of insurance covering the Premises or any other land to become void or voidable or the rate of premium of any such policy to be increased 9.2 comply with all requirements and recommendations from time to time of the Insurers in relation to the Premises 10. NOTICE BY TENANT The Tenant will give immediate written notice to the Landlord of any event which might affect or give rise to a claim under any policy of insurance covering the Premises or any other land of the Landlord 11. INSURANCE IN THE LANDLORD'S OFFICE If at any time the Landlord is in insurance company or a member of a group (within the meaning of section 42 of the 1954 Act) which includes an insurance company it will be entitled to maintain insurance in its own office or in the office of such insurance company and the premiums charged will for the purpose of any obligation of the Tenant under this Underlease to pay or contribute towards the cost of such insurance be deemed to have been paid by the Landlord on the first day of the period of insurance to which the relevant premium relates [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 27 32 SCHEDULE 6 THE DOCUMENTS (IF ANY) CONTAINING INCUMBRANCES TO WHICH THE PREMISES ARE SUBJECT The matters contained or referred to in the registers of the Landlord's title number MS134921 and title number MS253780 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 28 33 SCHEDULE 7 PART 1 COVENANTS BY SURETY 1. The Surety will procure the punctual payment of the Rents and the observance and performance of all the obligations of the Tenant under this Underlease and in the case of any default the Surety will on demand pay such Rents and observe and perform such obligations as if the Surety instead of the Tenant were liable therefor as a principal obligor and not merely as a surety 2. The Surety agrees with the Landlord as a primary obligation to keep the Landlord indemnified on demand against all actions proceedings claims demands losses costs expenses damages and liability arising directly or indirectly from any failure by the Tenant to pay the Rents and/or observe and perform such obligations or as a result of any obligation of the Tenant under this Underlease being or becoming unenforceable 3. If the liability of the Tenant is disclaimed by or on behalf of the Tenant or this Underlease is forfeited or the Tenant is wound up or ceases to exist the Surety will (if so required by the Landlord by written notice to the Surety within six months after such disclaimer or forfeiture or winding up or cessation of existence) take from the Landlord and execute and deliver to the Landlord a counterpart of a new underlease of the Premises for the residue of the Term unexpired at the date of such disclaimer or forfeiture or winding up or cessation of existence at the same Rents as are reserved from time to time by and subject to the same covenants and provisions as are contained in this Underlease (mutatis mutandis) and the Surety will on demand pay the Landlord's legal costs in connection with such underlease 4. If the Landlord does not require the Surety to take a new underlease of the Premises pursuant to paragraph 3 of this part of this schedule the Surety will nevertheless on demand pay to the Landlord a sum equal to the Rents that would have been payable but for the disclaimer or forfeiture or winding up or cessation of existence during the period of twelve months from and including the date of the disclaimer or forfeiture or winding up or cessation of existence less any Rents received by the Landlord during such period from reletting the Premises and the Surety will on demand pay the Landlord's legal costs and agents' fees in connection with such reletting 5. The insolvency of the Tenant will not affect the liability of the Surety under this Underlease and any money received or recovered by the Landlord from the Surety may be placed in a separate or suspense account by the Landlord without any obligation on the Landlord to apply it in or towards the discharge of the Tenants obligations under this Underlease so as to preserve the Landlord's right to prove [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 29 34 in any insolvency of the Tenant in respect of the whole of the Tenant's indebtedness to the Landlord under this Underlease 6. The Surety will at the request of the Landlord execute any document supplemental to or entered into pursuant to this Underlease to acknowledge that the Surety is bound and that the rights of the Landlord are not affected and the obligations of the Surety are not released by such document 7. The obligations of the Surety under this Underlease are in addition to any other right or remedy of the Landlord and will not be discharged diminished or in any way affected by. 7.1 any time or indulgence granted by the Landlord to the Tenant or any neglect or forbearance of the Landlord in obtaining payment of the Rents or enforcing the obligations of the Tenant under this Underlease or 7.2 any refusal by the Landlord to accept Rents tendered at a time when the Landlord was entitled (or would after service of the appropriate statutory notice have been entitled) to re-enter the Premises or 7.3 any surrender by the Tenant of part of the Premises in which event the liability of the Surety will continue in respect of the part of the Premises not so surrendered after making any necessary apportionments under section 140 of the Law of Property Act 1925 or 7.4 any variation of this Underlease or other act omission matter or thing (other than a release by deed given by the Landlord and subject always to the provisions of section 18 of the 1995 Act) by which but for this provision the obligations of the Surety under this Underlease would have been so discharged diminished or affected 8. Any provision of this part of this schedule rendered void or unenforceable by the 1995 Act is to be severed from all remaining provisions which are to be preserved [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 30 35 SCHEDULE 8 SERVICES AND THE SERVICE CHARGE PART 1 1. DEFINITIONS In this schedule the following expressions have the following meanings unless the context otherwise requires: "ANNUAL EXPENDITURE": the aggregate expenditure incurred or to be incurred by the Landlord during a Service Year in or incidental to the provision of or in respect of all or any of the Services after giving credit for any insurance money received by the Landlord under any policy in relation to the Building which the Landlord is obliged to effect under this Underlease "PROVISIONAL SERVICE CHARGE": the amount which in the opinion of the Landlord's surveyor or its managing agents or accountants represents a fair estimate of the Service Charge for the Service Year in question "SERVICES". the services facilities amenities and items of expenditure specified in part 2 of this schedule "SERVICE YEAR": a calendar year commencing on an anniversary of this Lease or such other annual period as the Landlord may in its sole discretion decide 2. PROVISION OF THE SERVICES 2.1 The Landlord will not be able to the Tenant in respect of: 2.1.1 any failure or interruption in any of the Services by reason of necessary repair maintenance or replacement of any installations or apparatus or their damage or destruction or by reason of mechanical or other defect or breakdown or frost or other inclement conditions or shortage of fuel materials or labor or any other cause beyond the reasonable control of the Landlord but the Landlord will use all reasonable endeavors to restore any such Services as soon as practicable 2.1.2 any act omission or negligence of any person undertaking the Services or any of them on behalf of the Landlord 2.2 The Landlord may withhold add to extend vary or alter the Services or any of them from time to time PROVIDED THAT in so doing the Landlord [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 31 36 complies with the principles of good estate management and acts reasonably in all the circumstances 2.3 If at any time during the Term the property comprising the Building is increased or decreased on a permanent basis or the benefit of any of the Services is extended on a like basis to any adjoining or neighboring property or if some other event occurs a result of which is that the Service Charge is no longer appropriate to the Premises the Service Charge will be varied with effect from the beginning of the Service Year following such event in such a manner as may be determined to be fair and reasonable in the light of the event in question by the Landlord's surveyor whose decision will be final 3. STATEMENT OF ANNUAL EXPENDITURE 3.1 The Landlord will as soon as practicable after the end of each Service Year prepare and submit to the Tenant a statement of the Annual Expenditure for that Service Year containing a fair summary of the expenditure referred to in it and showing the Service Charge for that Service Year and upon such statement being certified by the Landlord's surveyor or its managing agents or accountants it will be conclusive evidence for the purposes of this Underlease of all matters of fact referred to in the statement (except in the case of manifest error) 3.2 The Landlord may include in any such statement such proper provision for expenditure in any subsequent year as the Landlord acting reasonably may from time to time consider appropriate 3.3 Any omission by the Landlord to include in any such statement any sum expended or liability incurred in that Service Year will not preclude the Landlord from including such sum or the amount of such liability in an account for any subsequent year 4. PAYMENT OF THE SERVICE CHARGE 4.1 The Tenant will pay to the Landlord on account of the Service Charge on each Quarter Day 4.1.1 for the period from and including the Service Charge Commencement Date to the end of the current Service Year one quarter of the Initial Service Charge the first (duty apportioned) payment to be made on the date of this Underlease and 4.1.2 on each subsequent Quarter Day one quarter of the Provisional Service Charge [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 32 37 4.2 If the Service Charge for any Service Year: 4.2.1 exceeds the Initial Service Charge or the Provisional Service Charge payments made on account of the Service Charge (as the case may be) the excess will be paid by the Tenant to the Landlord on demand 4.2.2 is less thin such payments on account the overpayment will be allowed by the Landlord to the Tenant as a credit against Rents to become due or (in the Service Year ending on or after the expiry of the Term) will be repaid by the Landlord to the Tenant 5. CONTINUATION The provisions of this schedule will continue to apply notwithstanding the expiration or sooner determination of the Term but only for the purposes of calculation and payment of the Service Charge for the period down to such expiration or sooner determination PART 2 THE SERVICES Performing the services described in Appendix I hereto to the extent set out therein [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 33 38 SCHEDULE 9 LANDLORD'S FIXTURES AND FITTINGS None [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 34 39 APPENDIX I [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 35 40 SCHEDULE 1 THE SERVICES [ - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- 1. *** *** - -------------------------------------------------------------------------------- 2. *** *** - -------------------------------------------------------------------------------- 3. *** *** - -------------------------------------------------------------------------------- 4. *** *** - -------------------------------------------------------------------------------- 5. *** *** - -------------------------------------------------------------------------------- 6. *** *** - -------------------------------------------------------------------------------- 7. *** *** - -------------------------------------------------------------------------------- 8. *** *** - -------------------------------------------------------------------------------- 9. *** *** - -------------------------------------------------------------------------------- 10. *** *** - -------------------------------------------------------------------------------- 11. *** *** - -------------------------------------------------------------------------------- 12. *** *** - -------------------------------------------------------------------------------- 13. *** *** - -------------------------------------------------------------------------------- 14. *** *** - -------------------------------------------------------------------------------- 15. *** *** - -------------------------------------------------------------------------------- 16. *** *** - -------------------------------------------------------------------------------- 17. *** *** - -------------------------------------------------------------------------------- 18. *** *** - -------------------------------------------------------------------------------- 19. *** *** - -------------------------------------------------------------------------------- 20. *** *** - -------------------------------------------------------------------------------- 21. *** *** - -------------------------------------------------------------------------------- 22. *** *** - --------------------------------------------------------------------------------
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 36 41 - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- 23. *** *** - -------------------------------------------------------------------------------- 24. *** *** - -------------------------------------------------------------------------------- 25. *** *** - -------------------------------------------------------------------------------- 26. *** *** - -------------------------------------------------------------------------------- 27. *** *** - -------------------------------------------------------------------------------- 28. *** *** - --------------------------------------------------------------------------------
] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 37 42 SCHEDULE 2 SERVICES CHARGES [ - -------------------------------------------------------------------------------- *** - -------------------------------------------------------------------------------- *** * *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** ----------------------------------------------------------- *** *** ----------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 38 43 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- *** *** *** *** - -------------------------------------------------------------------------------- *** *** *** *** ----------------------------------------------------------------- *** *** ----------------------------------------------------------------- *** *** - -------------------------------------------------------------------------------- *** *** *** *** - -------------------------------------------------------------------------------- *** *** *** *** - -------------------------------------------------------------------------------- *** *** *** *** - -------------------------------------------------------------------------------- *** *** *** *** - -------------------------------------------------------------------------------- *** *** *** - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 39 44 ON ORIGINAL EXECUTED as a deed by EVANS ) VACCINES LIMITED in the presence ) of: Director /s/ ALAN JARVIS Director/Secretary /s/ C.S.W. SWINGLAND [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 40 45 ON COUNTERPART EXECUTED as a deed by AVIRON UK ) LIMITED in the presence of: ) Director /s/ Ray Prasad Director/Secretary /s/ Fred Kurland EXECUTED as a deed by AVIRON ) in the presence of: ) /s/ Charlene Friedman /s/ Fred Kurland [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 41 EX-10.42 11 f69956ex10-42.txt EXHIBIT 10.42 1 EXHIBIT 10.42 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. AGREEMENT DATED 10TH OCTOBER, 2000 MEDEVA PHARMA LIMITED AND AVIRON UK LIMITED FOR THE SALE AND PURCHASE OF LEASEHOLD PROPERTY KNOWN AS PLOT 6 BOULEVARD INDUSTRY PARK, HALEWOOD, MERSEYSIDE 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE ---- 1. INTERPRETATION ....................................................... 1 2. SALE ................................................................. 2 3. SUB-SALES ............................................................ 3 4. TITLE ................................................................ 3 5. COVENANTS, RIGHTS, RENTS AND LEASE OBLIGATIONS ....................... 3 6. VACANT POSSESSION .................................................... 3 7. CONDITIONAL AGREEMENT ................................................ 4 8. [***] AND GRANTS ..................................................... 5 9. TRANSFER ............................................................. 5 10. COMPLETION ........................................................... 5 11. STANDARD CONDITIONS OF SALE .......................................... 6 12. ANNOUNCEMENTS ........................................................ 7 13. [***] ................................................................ 8 14. AGREEMENTS TO BE ASSIGNED ............................................ 8 15. GENERAL .............................................................. 9 16. NOTICES .............................................................. 9 17. GOVERNING LAW AND JURISDICTION ....................................... 10 18. EXCLUSION OF THIRD PARTY RIGHTS ...................................... 10
SCHEDULES 1. Part I The Property 2. Part I The Covenants 3. Agreed form of Transfer 4. Form of Assignment of Agreements 5. The documents assigned i 3 THIS AGREEMENT is made on 10th October, 2000 BETWEEN: (1) MEDEVA PHARMA LIMITED (registered number 209905) whose registered office is at 216 Bath Road, Slough, Berkshire SL1 4EN(the SELLER); and (2) AVIRON UK LIMITED whose registered office is at Carmelite, 50 Victoria Embankment, London EC4Y ODX (the BUYER). IT IS AGREED as follows: 1. INTERPRETATION 1.1 In this agreement: "AGREED FORM OF TRANSFER" means the transfer of the Property in the form attached to Schedule 3; "AGREEMENTS" means the following agreements in respect of the Property: (a) Enhancement Works Agreement dated 7th May, 1999 and made between Intercity JIS Limited (1) Medeva Pharma Limited (2) and Medeva Plc (3); and (b) Agreement for Underlease dated 7th May, 1999 and made between Intercity JIS Limited (1) Medeva Pharma Limited (2) and Medeva Plc (3); "AGREEMENTS GUARANTOR" means Medeva Limited (formerly known as Medeva Plc); "ASSIGNMENT OF AGREEMENTS" means the form of deed of assignment of agreements attached to Schedule 4; "BUYER'S SOLICITORS" means [***]; "BUYER'S WORKS" means the fitting-out works which the Buyer intends to carry out at the Property following completion; "CONSENT" means the consent of the Landlord and any Superior Landlord to the sale of the Property to the Buyer; "CONTRACTOR'S WARRANTY" means the warranty to be given by Sir Robert McAlpine Management Contractors Limited; "COVENANTS AND RIGHTS" means the covenants and rights referred to in Schedule 2; "DEPOSIT" means [***]; "LANDLORD" means the person entitled to the reversion immediately expectant on the determination of the term granted by the Lease; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 4 "LEASE" means the lease under which the Property is held as specified in Schedule 1 and includes every deed varying the Lease and every licence granted under the Lease; "LEASE OBLIGATIONS" means the covenants by the tenant and the conditions contained in the Lease; "PROPERTY" means the property specified in Schedule 1; "RENTS" means the rents (including further or additional rents) reserved by the Lease; "SELLER'S GUARANTOR" means the guarantor of the Seller's obligations under the Lease; "SELLER'S SOLICITORS" means [***]; "SUPERIOR LANDLORD" means a person entitled to the reversion (whether immediate or not) expectant on the determination of the term granted by a Superior Lease; "SUPERIOR LEASE" means a lease which is superior to or concurrent with the Lease; "VAT" means value added tax. 1.2 In this agreement: (a) references to a person include a body corporate and an unincorporated association of persons; (b) references to a natural person include his estate and personal representatives; and (c) subject to clause 15.2 below, references to a party to this agreement include references to the successors or assigns (immediate or otherwise) of that party. 1.3 Any reference, express or implied, to an enactment includes references to: (a) that enactment as amended, extended or applied by or under any other enactment (before or after the signature of this agreement); (b) any enactment which that enactment re-enacts (with or without modification); and (c) any subordinate legislation made (before or after the signature of this agreement) under that enactment, as amended, extended or applied as described in paragraph (a) above or under any enactment referred to in paragraph (b) above. 1.4 Sub-clauses 1.1 to 1.3 above apply unless the contrary intention appears. 1.5 The headings in this agreement do not affect its interpretation. 2. SALE [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 5 2.1 Subject to clause 7 below the Seller agrees to sell and the Buyer agrees to buy the Property at the price of [***]. 2.2 The Buyer agrees to pay the Deposit to [***] on the date hereof; 2.3 The Seller shall transfer the Property will full title guarantee. 2.4 The transfer shall state that it is subject to every matter subject to which the Property is sold by virtue of this agreement. 3. SUB-SALES The Seller shall not be obliged to transfer the Property or any part of it to any person other than the Buyer, or at a price divided between different parts of the Property or in more than one parcel or by more than one transfer. 4. TITLE 4.1 Office copy entries of the Seller's title are not yet available as the Seller's title is in course of first registration. The Seller has applied for registration at H.M. Land Registry and the Buyer shall take the transfer of the Property on the basis of the pending application. 4.2 The Buyer's solicitors having been provided with copies of: (a) the documents referred to in Schedule 5; and (b) the application for first registration submitted by Messrs [***] to H.M. Land Registry and the acknowledgement of that application the Buyer shall accept that evidence as conclusive evidence of the Seller's title to the Property and shall not raise any objection or requisition. The Seller shall not be required to give any better title to the Property than the Seller has received from the Landlord. 5. COVENANTS, RIGHTS, RENTS AND LEASE OBLIGATIONS The Property is sold subject to the Covenants and Rights, the Rents and the Lease Obligations. The Buyer shall [***] in respect of the Covenants and Rights, the Rents or the Lease Obligations. 6. VACANT POSSESSION The Property is sold with vacant possession on completion. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 6 7. CONDITIONAL AGREEMENT 7.1 This agreement is conditional upon: (a) the obtaining of the Consent; (b) the agreement to be made between the Buyer and Evans Vaccines Limited (which agreement the Buyer agrees to use all reasonable endeavours to conclude as soon as reasonably practicable after the date hereof) relating to the transfer of certain employees from Evans Vaccines Limited to the Buyer becoming unconditional in all respects; and (c) the Seller obtaining an unconditional release from the Landlord of any outstanding obligations on the part of the Seller and the Agreements Guarantor under the Agreements. 7.2 The Buyer and the Seller will be jointly responsible for all costs and expenses in relation to the obtaining of the Consent and the Buyer will be responsible for giving notice of assignment of the Lease. 7.3 The Buyer shall: (a) supply promptly to the Seller such information as may be required by the Landlord and any Superior Landlord in connection with the application for the Consent; (b) comply with all requirements which, by the terms of the Lease or any Superior Lease, the Landlord or any Superior Landlord is entitled to impose on a prospective assignee of the Lease as a condition of granting the Consent; (c) if required by the Landlord or by any [***] as a condition of granting the Consent, [***] with the Landlord to pay the Rents and to observe and perform the Lease Obligations and with each [***] to observe and perform the covenants on the part of the tenant (other than the covenant to [***]) and the conditions contained in the relevant [***] Lease; and (d) if required by the Landlord or any [***] as a condition of granting the Consent, provide such [***] of the Rents and observe and perform the Lease Obligations as the Landlord may require (including, without limitation, [***]). 7.4 The Seller shall use all reasonable endeavours to obtain as soon as reasonably practicable a release from the Landlord of any of obligations on the part of the Seller (and those of the Agreements Guarantor) under the Agreements. 7.5 If the conditions set out in sub-clause 7.1 are not satisfied at the end of [***] months commencing on the date of this agreement either party may thereafter rescind this agreement by notice in writing to the other whereupon the Deposit will be returned [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 7 immediately to the Buyer save to the extent that the Buyer is in breach of its obligations hereunder. 7.6 On service of a notice under sub-clause 7.5 neither of the parties shall have any further rights or obligations under this agreement except as mentioned in sub-clause 7.7. 7.7 Clauses 1, 11, 12, 14, 15, 16 and 18 of this agreement shall remain in full force notwithstanding service of notice under sub-clause 7.5. Service of that notice shall not affect either party's right in connection with any breach of this agreement by the other which may have occurred before the notice is served. 7.8 The Buyer may [***] any of the conditions set out in sub-clauses 7.1 (a) and/or (b) by written notice to the Seller at any time. 8. [***] AND GRANTS 8.1 The Seller and the Buyer shall each use reasonable endeavours to obtain as soon as possible after the date of this agreement: (a) the consent of the [***] to the [***] in respect of which the Buyer shall: (i) supply as soon as reasonably possible to the Seller [***] and such other information as the Landlord may require in connection with the application for consent to the [***]; (ii) comply with all reasonable requirements which, by the terms of the Lease, the Landlord is entitled to impose on a prospective tenant of the Property as a condition of granting its consent to the [***]; and (iii) comply with all other reasonable requirements of the Seller and the Landlord in relation to obtaining consent to the [***]; and (b) either: (i) a transfer to the Buyer of the existing Regional Selective Assistance Grant Agreement currently in favour of the Seller; or (ii) a new Regional Selective Assistance Grant in favour of the Buyer for a sum equal to or greater than that currently in favour of the Seller. 9. TRANSFER The transfer to the Buyer shall be in the Agreed Form of Transfer and shall be executed in duplicate. The original and the duplicate shall be stamped and the duplicates denoted against the original by the Buyer's solicitors at the expense of the Buyer. After stamping the Buyer's solicitors shall forthwith return the duplicate to the Seller's solicitors. 10. COMPLETION [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 8 10.1 The sale shall be completed at or before 2.00 pm on the Completion Date at the offices of the Seller's solicitors or as they may require. The Seller shall not be bound to complete otherwise than on a working day and otherwise than between 9.30 am and 5.30 pm. Completion shall not be delayed if registration of the Seller's title has not been completed on the Completion Date. 10.2 In this clause the COMPLETION DATE means the third working day after either: (a) the last of the conditions set out in sub-clauses 7.1 is satisfied; or (b) the receipt by the Seller of a notice from the Buyer under clause 7.8 subject always to the prior satisfaction of the condition contained in clause 7.1 (c). 11. STANDARD CONDITIONS OF SALE 11.1 Subject to the variations mentioned in sub-clause 11.2, the Standard Conditions of Sale (Third Edition) (excluding Conditions 1.1.1(a)(ii), 1.2, 1.3, 1.4, 3.2.2, 3.2.3, 4.2.3, 4.5.2, 4.5.5, 5.1.1, 5.1.2, 5.2.3, 8.1.3 and 8.3) are incorporated in this agreement so far as they: (a) apply to a sale by private treaty; (b) relate to leasehold property; and (c) are not inconsistent with the other clauses of this agreement. 11.2 The Standard Conditions of Sale (Third Edition) shall be varied as follows: (a) add at the end of condition 2.2.1: "or by a direct credit to a bank account nominated by the seller's solicitor. The deposit shall be paid by a method which gives immediately available funds"; (b) in condition 3.1.2(d) replace "except those maintained by H.M. Land Registry or its Land Charges Department or by Companies House" by "except, first, mortgages and, secondly, any entries on the register maintained by H.M. Land Registry not disclosed by office copy entries supplied before the date of the contract by the seller or his solicitors to the buyer or his solicitors"; (c) at the end of condition 3.1.2 add new paragraphs (f) and (g) as follows: "(f) overriding interests as defined in Land Registration Act 1925 Section 70(l) or (where the title to the Property is not registered) matters which would be overriding interests if the title were registered other than (in respect of those parts of the property sold with vacant possession) those referred to in Section 70(l)(g) of that Act; (g) all matters disclosed or reasonably to be expected to be disclosed by searches or as the result of enquiries, formal or informal, and whether [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 9 made in person, by writing or orally by or for the buyer or which a prudent buyer ought to make"; (d) add the following at the end of condition 5.2.2(f): "nor change its use and is to comply with all statutory obligations relating to it"; (e) replace condition 5.2.7 by the following: "The buyer waives the right to raise requisitions or observations"; (f) replace condition 6.7 by the following: "The money due on completion shall be paid by a method which gives immediately available funds. If it is not so paid, completion is to be treated, for the purposes only of conditions 6.3 and 7.3, as taking place on the first working day after the date of payment when the money due on completion is immediately available funds in the hands of the seller"; (g) condition 7.1.1 replace "or in the negotiations leading to it" by "or in the seller's solicitors' written replies to the buyer's solicitors' pre-contract enquiries"; (h) condition 7.3 shall be replaced by the following: "7.3 LATE COMPLETION 7.3.1 If there is default by the buyer in performing his obligations under the contract and completion is delayed, the buyer is to [***] to the seller. 7.3.2 [***] is calculated at the [***] on the [***] less any deposit paid for the period between completion date and actual completion. 7.3.3 Any claim for loss resulting from [***] is to be reduced by any [***] under this contract. 7.3.4 Where completion is delayed, the seller may give notice to the buyer, [***] the date of actual completion, that he intends to [***] from the [***] until completion as well as [***] under condition 7.3.1 12. ANNOUNCEMENTS 12.1 No party shall make, or permit any Associate of his to make any announcement concerning the subject matter of this agreement or any ancillary matter before, on or after completion except as required by law or by the rules of the London Stock Exchange or by any regulatory body or without the written approval of the other parties, such approval not to be unreasonably withheld or delayed. 12.2 For the purpose of this clause, a body corporate or a partnership is an ASSOCIATE of another body corporate or partnership if: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 10 (a) one of them has Control of the other; or (b) the same person or a group of the same (or substantially the same) persons has Control of both of them. 12.3 In this clause, CONTROL means: (a) in relation to a body corporate (Company A), the power of a person to secure (directly or indirectly): (i) by means of the holding of shares in or the possession of voting power in or in relation to Company A or any other body corporate; or (ii) by virtue of any arrangements, including the constitutional documents of Company A or any other body corporate, that the affairs of Company A are conducted in accordance with the wishes of that person; and (b) in relation to a partnership or other unincorporated associations, the right to a share of more than one-half of its net assets or net income. 13. [***] 13.1 If any [***] in respect of any supply made by the Seller under or pursuant to this agreement, the [***] shall pay the amount of that [***] to the [***] by way of [***] on completion against issue of a [***] by the [***]. 13.2 Without limiting sub-clause 13.1 above, each amount stated as payable by the [***] under or pursuant to this agreement is [***] and is to be construed as a reference to that amount plus any [***] in respect of it. 13.3 For the avoidance of doubt, any [***] payable on the Deposit shall be paid by the [***] to the [***] when the Deposit is paid. 14. AGREEMENTS TO BE ASSIGNED 14.1 On actual completion the Seller shall assign to the Buyer (so far as it is able to do so but not further or otherwise) the collateral warranties, guarantees, covenants and other agreements (the "supplemental documents") (if any) detailed in Schedule 4 in the form of the Assignment of Agreements but the Seller shall not thereby be treated as having given any warranty or assurance that the supplemental documents are enforceable. 14.2 As soon as reasonably possible after completion of the Contractor's Warranty the Seller shall assign the Contractor's Warranty to the Buyer (so far as it is able to do so but not further or otherwise) in the form of the Assignment of Agreements (save to the extent that Schedule 2 of the form of Assignment of Agreements is amended to refer to the Contractor's Warranty alone) but the Seller shall not thereby be treated as having given any warranty or assurance that the Contractor's Warranty is enforceable. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 11 15. GENERAL 15.1 Each of the obligations undertaken by any party under this agreement (excluding any obligation fully performed at completion) shall continue in force after completion. 15.2 The rights and obligations of the [***] under this agreement may [***]. 15.3 Where the Buyer is more than one person: (a) those persons shall be jointly and severally responsible in respect of every obligation undertaken by them under this agreement; and (b) the Seller may release or compromise the liability of any of those persons under this agreement or grant any time or other indulgence without affecting the liability of any other of them. 15.4 This agreement may be executed in any number of counterparts, all of which, taken together, shall constitute one and the same agreement, and any party may enter into this agreement by executing a counterpart. 15.5 This agreement and the documents referred to in it contain the whole agreement between the parties relating to the transaction contemplated by this agreement and supersede all previous agreements between the parties relating to this transaction. 15.6 The Buyer acknowledges that in agreeing to enter into this agreement the Buyer has not relied on any representation, warranty, collateral contract or other assurance except those set out in this agreement and the documents referred to in it and the Seller's solicitors' written replies to the Buyer's solicitors' preliminary enquiries. The Buyer waives all rights and remedies which, but for this sub-clause, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance, but nothing in this sub-clause shall limit or exclude any liability for fraud. 15.7 For the avoidance of doubt the Buyer shall not acquire any of the Seller's liabilities under the Agreements pursuant to the terms of this agreement or any ancillary documents. 16. NOTICES 16.1 Any notice or document to be served under this agreement may be delivered or sent by post or facsimile process to the party to be served at its address appearing in this agreement as follows: (a) to the Seller at: 216 Bath Road Slough SL1 4EN Fax No: 0175 355 1244 marked for the attention of the Company Secretary [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 12 and at the Seller's solicitors; (b) to the Buyer at the Buyer's solicitors or at such other address or facsimile number as it may have notified to the other parties in accordance with this clause. Any notice or other document sent by post shall be sent by prepaid first class recorded delivery post (if within the United Kingdom) or by prepaid airmail (if elsewhere). 16.2 Any notice or document shall be deemed to have been served: (a) if delivered, at the time of delivery; or (b) if posted, at 10.00 am on the second working day after it was put into the post, if sent within the United Kingdom, or at 10.00 am (local time at the place of destination) on the fifth working day after it was put into the post, if sent by airmail; or (c) if sent by facsimile process, at the end of two hours after the time of despatch, if despatched before 3.00 pm (local time at the place of destination) on any working day, and in any other case at 10.00 am (local time at the place of destination) on the next working day after the date of despatch. 16.3 In proving service of a notice or document it shall be enough to prove that delivery was made, or that the envelope containing the notice or document was properly addressed and posted as a prepaid first class recorded delivery letter or that the or facsimile message was properly addressed and despatched, as the case may be. 17. GOVERNING LAW AND JURISDICTION 17.1 This agreement is governed by and shall be construed in accordance with English law. 17.2 The Buyer agrees for the exclusive benefit of the Seller that the English courts are to have jurisdiction to settle any disputes which may arise in connection with this agreement and that any proceedings arising in connection with this agreement may be brought in those courts. The Buyer irrevocably appoints the Buyer's solicitor as its agent for service of process. Nothing in this clause limits any right to take proceedings against the Buyer in any other court of competent jurisdiction nor shall the taking of proceedings in one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. 18. EXCLUSION OF THIRD PARTY RIGHTS A person who is not a party to this agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999. AS WITNESS the hands of the parties on the date which appears first on page 1. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 13 SCHEDULE 1 THE PROPERTY All that property known as Plot 6, Boulevard Industry Park, Halewood, Merseyside comprised in a sub-underlease dated 17th February, 2000 made between MEPC Boulevard Limited (1), Medeva Pharma Limited (2) and Medeva plc (3) in the course of first registration at Birkenhead District Land Registry under reference MS429644/DFL/008 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 1-1 14 SCHEDULE 2 THE COVENANTS AND RIGHTS All matters contained or referred to in the Lease. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 2-1 15 SCHEDULE 3 AGREED FORM OF TRANSFER [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 3-1 16 SCHEDULE 4 DATED ____________ 2000 MEDEVA PHARMA LIMITED TO AVIRON UK LIMITED ------------------------------------- DEED OF ASSIGNMENT OF AGREEMENTS RELATING TO AGREEMENTS IN CONNECTION WITH PLOT 6, BOULEVARD INDUSTRY PARK, SPEKE, HALEWOOD, MERSEYSIDE ------------------------------------- [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 17 DEED OF ASSIGNMENT DATED: ________________________ 2000 PARTIES: 1. MEDEVA PHARMA LIMITED (registered number 209905) whose registered office is at 216 Bath Road, Slough, Berkshire SLI 4EN (the "Assignor"); and 2. AVIRON UK LIMITED whose registered office is at Carmelite, 50 Victoria Embankment, London EC4Y ODX (the "Assignee"). 1. RECITAL By a transfer of even date hereto the Assignor completed the sale to the Assignee of the property briefly described in Schedule 1. 2. ASSIGNMENT Pursuant to the sale the Assignor assigns to the Assignee so far as it is lawfully able to do so the benefit (if any) of the document or documents brief particulars of which are contained in Schedule 2. IN WITNESS of which this Assignment has been executed as a deed and has been delivered on the date which appears first above. SCHEDULE 1 THE PROPERTY All that property known as Plot 6, Boulevard Industry Park, Halewood, Speke, Merseyside comprised in a sub-underlease dated 17th February, 2000 made between MEPC Boulevard Limited (1), Medeva Pharma Limited and Medeva plc (3) in the course of first registration at Birkenhead District Land Registry under reference MS429644/DFL/008. SCHEDULE 2 THE DOCUMENTS TO BE ASSIGNED
DATE DOCUMENT PARTIES [1. *** *** *** 2. *** *** *** 3. *** *** ***
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 4-2 18
DATE DOCUMENT PARTIES 4. *** *** *** 5. *** *** *** 6. *** *** *** 7. *** *** *** 8. *** *** *** 9. *** *** *** 10. *** *** ***]
The Common Seal of ) MEDEVA PHARMA ) LIMITED was affixed to this ) Deed in the presence of: ) ----------------------------------------- Director ----------------------------------------- Director/Secretary [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 4-3 19 SCHEDULE 5 THE DOCUMENTS SUPPLIED [***.] [***] [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 5-1 20 Signed by MARK GLYN HARDY ) /s/ S. McGarrity for the Seller in the ) presence of. ) Signed by ) /s/ Fred Kurland for the Buyer in the ) presence of ) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. EX-10.43 12 f69956ex10-43.txt EXHIBIT 10.43 1 EXHIBIT 10.43 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DATED 17 FEBRUARY 2000 MEPC BOULEVARD LIMITED (1) MEDEVA PHARMA LIMITED (2) AND MEDEVA PLC (3) - -------------------------------------------------------------------------------- UNDERLEASE OF PLOT 6 BOULEVARD INDUSTRY PARK HALEWOOD MERSEYSIDE - -------------------------------------------------------------------------------- 2 THIS SUB-UNDERLEASE is made on 17 February 2000 BETWEEN: (1) MEPC BOULEVARD LIMITED (Company Registration Number 3650759) whose registered office is at Nations House 103 Wigmore Street London W1H 9AB ("LANDLORD") (2) MEDEVA PHARMA LIMITED (Company Registration Number 449451057 whose registered office is at Medeva House Regent Park Kingston Leatherhead Surrey KT22 7PQ ("TENANT") (3) MEDEVA PLC (Company Registration Number 2086530) whose registered office is at 10 St James's Street London SWIA 1EF ("GUARANTOR") WHEREAS: 1. PARTICULARS "ESTATE" means Boulevard Industry Park. Halewood Merseyside shown for the purpose of identification only edged green on Plan 1 "EXTERIOR DECORATING YEARS" means every [***] year of the Term "INITIAL RENT" means [***] per annum. "INSURANCE RENT" means: (a) the sums which the Landlord shall from time to time pay whether by way of premiums or by way of reimbursement of third parties for insuring the Premises against the risks set out in clauses 11.2(a) and 11.2(b) (b) all of any increased premiums payable by reason of the act or omission of the Tenant and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 3 (c) all the premium that the Landlord shall from time to time pay (or where such insurance includes other premises a reasonable proportion of such premium to be determined by the Surveyor acting as an expert and not as an arbitrator) for insuring against the loss of Rent and Service Charge in accordance with clause 11.2(c) "INTEREST RATE" means [***] percent per annum above the Base Rate of the Bank of Scotland or some other London or Scottish Clearing Bank nominated in writing from time to time by the [***] "INTERIOR DECORATING YEARS" means every [***] of the Term "PERMITTED USER" means a trade or business within Classes [***] of the Schedule to the Town and Country Planning (Use Classes) Order 1987 "PREMISES" means Unit Number 6 Boulevard Industry Park and the car parking bays and loading area more particularly defined in schedule 1 "RENT COMMENCEMENT DATE" means Date of Practical Completion which the parties agree in 23 December 1999 "REVIEW DATES" means the [***] anniversaries of the Term Commencement Date "SERVICE CHARGE" means the monies payable by the Tenant pursuant to clause 8 "TERM COMMENCEMENT DATE" means 29th September 1999 "TERM" means 25 years from and including the Term Commencement Date 2. DEFINITIONS 2.1 The terms defined in the Particulars and in this clause 2 shall for all purposes of this Sub-Underlease have the meanings specified: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 4 "ACCOUNTANT" means any person or firm appointed by or acting for the Landlord (including an employee of the Landlord or a Group Company) to perform the function of an accountant for any purpose of this Sub-Underlease "ADJOINING PROPERTY" means any neighboring or adjoining land or property in which the Landlord the Superior Lessor or a Group Company has a freehold or leasehold interest or in which during the Term the Landlord (or a Group Company) shall have acquired a freehold or leasehold interest "BASIC SPECIFICATION" means the specification attached hereto as appendix 1 and headed "LEASE BASE SPECIFICATION" "BUILDING" means the buildings erected on part of the Premises "COMMON PARTS" means the pedestrian ways and landscaped areas and any other areas which are from time to time during the Term provided by the Landlord for common use and enjoyment by the tenants and occupiers of the Estate and all persons expressly or by implication authorized by them "CONDUITS" means all existing and future (but only to the extent that they come into existence during the perpetuity period) pipes sewers drains mains conduits gutters watercourses wires cables channels subways flues and all other conducting media including any fixings louvres cowls and other covers "ENACTMENT" means: (a) any Act of Parliament and (b) any European Community or other supra-national legislation having the force of law in the United Kingdom and references (whether specific or general) to any Enactment include any statutory modification or re-enactment of it for the time being in force and any order instrument [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 5 plan regulation permission or directive made or issued under it or under any Enactment replaced by it or deriving validity from it "ESTATE ROADS" means such estate roads and footpaths within the Estate shown on the Plan and such other estate roads and footpaths as the Landlord may from time to time designate "GROUP COMPANY" means a company that is a member of the same group as the Landlord or the Superior Lessor within the meaning of section 42 of the 1954 Act "HEADLEASE" means the underlease under which Landlord holds the Premises dated 17 February 2000 made between Speke Garston Developments Limited (1) ("Superior Lessor") and the Landlord (2) for a term of 150 years less 1 day from 31st March 1998 "INSURED RISK" means any risk against which the Landlord covenants to insure hereunder "INTEREST" means interest during the period from the date on which the payment is due to the date of payment both before and after any judgement at the Interest Rate then prevailing or should the Base Rate referred to in clause 1 cease to exist such other rate of interest as is most closely comparable with the Interest Rate to be agreed between the parties or in default of agreement to be determined by the Accountant acting as an expert and not as an arbitrator "LANDSCAPE CORRIDOR" means that part of the Estate shaded yellow on Plan 1 and such other areas as the Landlord under the Head Lease shall from time to time designate as amenity land within the Estate "NECESSARY CONSENTS" means all permissions consents approvals licenses certificates and permits in legally effectual form as may be necessary lawfully to commence carry out maintain and complete any works [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 6 "OTHER BUILDINGS" means the buildings (excluding the Building) now or at any time during the Term erected on the Estate "PLAN 1 PLAN 2 PLAN 3 PLAN 4 AND PLAN 5" means the plans numbered accordingly and drawings annexed to this Sub-Underlease as appendix 2 "PLANNING ACTS" means the Town and Country Planning Act 1990 the Planning (Listed Buildings and Conservation Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 the Planning (Consequential Provisions) Act 1990 the Environmental Protection Act 1990 the Planning and Compensation Act 1991 and the Environment Act 1995 and all statutes regulations and orders included by virtue of clause 3.14 "RENT" means the Initial Rent as reviewed in accordance with schedule 4 and such term includes neither the Service Charge nor the Insurance Rent but the term "rents" includes the Rent the Service Charge and the Insurance Rent "RETAINED PARTS" means all parts of the Estate and the Other Buildings not let or intended to be let to a tenant including (but without prejudice to the generality of the foregoing): (a) the Common Parts (b) the roads within the Estate until such time as the same shall become maintainable at public expense (c) all Conduits on or serving the Estate except any that are within and solely serve premises let or intended to be let (d) the boundary walls and fences of the Estate "SERVICES" means the services set out in schedule 5 "SOUTH ROAD" means the private road adjoining the Estate and shown coloured brown on Plan 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 7 "SURVEYOR" means any person or firm appointed by or acting for the Landlord (including an employee of the Landlord or a Group Company and including the person or firm appointed by the Landlord to collect the rents and manage the Estate) to perform the function of a surveyor for the purpose of this Sub-Underlease "TENANTS FIT OUT WORK" means works carried out by or at the cost of the Tenant to fit out the Premises as described in the Specification of Tenant's Works attached hereto as appendix 3 "UNIT" means plot of land with or without buildings forming part of the Estate let or intended to be let for separate occupation "VALUE ADDED TAX" means Value Added Tax or such other imposition or levy of a like nature which may extend or replace Value Added Tax "WORKING DAY" means Monday to Friday inclusive except bank holidays or other public holidays in England "1954 ACT" means part II Landlord and Tenant Act 1954 3. INTERPRETATION 3.1 The expressions "LANDLORD" and "TENANT" wherever the context so admits include their respective successors in title 3.2 Where the Landlord the Tenant or the Guarantor for the time being are 2 or more individuals the terms "LANDLORD" "TENANT" and "GUARANTOR" include the plural number and obligations expressed or implied to be made by or with such party are deemed to be made by or with such individuals jointly and severally 3.3 References to the "SUPERIOR LESSOR" shall include its successors in title and shall also include all parties having a reversionary interest in the Premises or any part or parts of it however remote [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 8 3.4 Words importing one gender include all other genders and words importing the singular include the plural and vice versa 3.5 The expression "GUARANTOR" includes not only the party named as third party to this Sub-Underlease (if any) but also any person who enters into covenants with the Landlord pursuant to clauses 5.17(e) 5.17(f) and 5.29 3.6 The expression "ESTATE" where the context so admits includes any additional and adjoining land and buildings in which the Landlord has a freehold or leasehold interest or in which during the Term the Landlord shall have acquired a freehold or leasehold interest and which shall have been so constructed or acquired to form part of the Estate and such expression shall also include any estate which shall be reduced in area 3.7 The expression "TERM" includes any period of holding-over or extension or continuance 3.8 References to the "LAST YEAR OF THE TERM" include the last year of the Term if the same shall determine otherwise than by effluxion of time and references to the "EXPIRATION OF THE TERM" include such sooner determination of the Term 3.9 References to any right exercisable by the Landlord or any right exercisable by the Tenant in common with the Landlord shall be construed as including (where appropriate) the exercise of such right by the Superior Lessor and to all persons authorized by the Landlord and the Superior Lessor (including agents professional advisers tenants contractors workmen and others) and in common with all other persons having a like right 3.10 Any covenant by the Tenant not to do an act or thing shall be deemed to include an obligation not to permit such act or thing to be done and to use all reasonable endeavours to prevent such act or thing being done by a third party [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 9 3.11 References to "CONSENT OF THE LANDLORD" or words to similar effect mean a consent in writing signed by or on behalf of the Landlord and references to "APPROVED" and "AUTHORIZED" or words to similar effect mean (as the case may be) approved or authorized in writing by or on behalf of the Landlord and (where required) the Superior Lessor 3.12 The Term "PARTIES" or "PARTY" shall mean the Landlord and/or the Tenant but except where there is an express indication to the contrary shall exclude the Guarantor 3.13 "DEVELOPMENT" has the meaning given by section 55 Town and Country Planning Act 1990 3.14 Any reference to a specific statute includes any statutory extension or modification or re-enactment of such statute and any regulations or orders made thereunder and any general reference to "STATUTE" or "STATUTES" includes any regulations or orders made thereunder 3.15 The relevant perpetuity period shall be the term of this Sub-Underlease 3.16 The clause headings do not form part of this Sub-Underlease and shall not be taken into account in its construction or interpretation 4. DEMISE 4.1 The Landlord demises to the Tenant the Premises together with the rights specified in schedule 2 but excepting and reserving to the Landlord and the Superior Lessor and all others entitled thereto the rights specified in schedule 3 to hold the Premises to the Tenant for the Term subject to all rights easements privileges restrictions covenants and stipulations of whatever nature affecting the Premises including the matters contained or referred to in the documents specified in schedule 6 yielding and paying to the Landlord: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 10 (a) Rent payable without any deduction by equal [***] payments in advance on the usual [***] in every year, and proportionately for any period of less than a year the first such payment being a proportionate sum in respect of the period from and including the Rent Commencement Date to and including the day before the [***] next thereafter to be paid on the date hereof and (b) by way of further rent [***] upon the Rent and (c) by way of further rent the Fair Proportion (as defined in paragraph 1.1 of schedule 5) of the Service Charge payable on demand in accordance with clause 7 and (d) by way of further rent the Insurance Rent payable on demand in accordance with clause 11 provided that no demand shall be made more than 28 days before the relevant premiums are payable to the insurers (e) any other payments due from the Tenant to the Landlord from time to time during the Term pursuant to the provision of this Sub-Underlease 5. TENANT'S COVENANTS The Tenant covenants with the Landlord 5.1 Rent (a) To pay the rents on the day and in the manner set out in clause 4 and not to exercise or seek to exercise any right or claim to [***] or any right or claim to [***] whatever (b) If so required in writing by the Landlord to make all or some of such payments by Banker's Order to any Bank and account that the Landlord may from time to time nominate [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 11 5.2 Outgoings and [***] To pay and to indemnify the Landlord against: (a) all rates taxes assessments duties charges impositions and outgoings which are now or during the Term shall be charged assessed or imposed upon the Premises or upon the owner or occupier of them but not any tax payable on rental income in the Landlord's hands or in respect of any dealing with any interest in reversion to this Lease (b) [***] in respect of rents or any other payment made by the Tenant under any of the provisions of or in connection with this Sub Underlease or paid by the Landlord on any payment made by the Landlord where the Tenant agrees in this Sub-Underlease to reimburse the Landlord for such payment provided that the Landlord shall deliver a [***] to the Tenant in respect of such payments 5.3 [***] To [***] and to [***] all charges for [***] at or in relation to the Premises (including [***]) where a [***] is provided for the Premises 5.4 Repair To repair and keep in repair and where necessary [***] the Premises (damage caused by [***] excepted other than where the [***] are [***] in consequence of any act or default of the Tenant or anyone at the Premises expressly or by implication with the Tenant's authority) and to [***] the Landlord's [***] in the Premises which may be or become [***] at any time during or at the expiration of the Term 5.5 Clean and tidy and decoration [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 12 (a) To keep any part of the Premises which may not be built upon [***] in good condition and [***] and all landscaped areas within the Premises [***] (including for the avoidance of doubt (but not limited to) those areas shaded purple and brown on Plan 3) (b) To clean [***]of all [***] in the Premises as often as shall be necessary (c) In each of the [***] and in the [***] to [***] of the Building and in each of the [***] and in the [***] to [***] of the Building in both instances in a good and workmanlike manner and with appropriate materials of good quality to the reasonable satisfaction of the Surveyor the [***] of such [***] (if different to those previously existing) to be [***] 5.6 Access of Landlord and notice to repair (a) To permit the Landlord at reasonable times and upon not less than [***] prior notice (except in emergency when no notice shall be required): (i) to enter upon the Premises for the purpose of ascertaining that the covenants and conditions of this Sub-Underlease have been observed and performed (ii) to view the state of repair and condition of the Premises and (iii) to give to the Tenant (or leave upon the Premises) a notice specifying any repairs cleaning maintenance and decoration that the Tenant has failed to execute in breach of the terms hereof and to request the Tenant forthwith to execute the same (b) Forthwith to repair cleanse maintain and decorate the Premises as required by such notice (c) If within [***] of the service of such a notice the Tenant shall not have commenced and be proceeding diligently with the execution of the work [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 13 referred to in the notice or shall fail to complete the work within [***] to permit the Landlord to enter the Premises to execute such work as may be necessary to comply with the notice and to pay to the Landlord the cost of so doing and all expenses incurred by the Landlord (including legal costs and surveyor's fees) within [***] of a written demand 5.7 Yield up At the expiration of the Term to yield up the Premises in repair decorated and in all other respects in accordance with the terms of this Sub-Underlease and to give up all keys of the Premises to the Landlord and to remove all lettering and signs erected by the Tenant in upon or near the Premises forthwith to make good any damage caused by such removal 5.8 [***] and [***] (a) Not to [***] the Building nor [***] or other structures nor [***] nor make any [***] to the Premises or the Building except as expressly permitted under clause 5.8(b) (b) The Tenant may carry out [***] to the Building which [***] of the Building where: (i) the Tenant has submitted [***] to the Landlord [***] and (ii) the Tenant has [***] to the Landlord [***] relating to the [***] as the Landlord may reasonably require including a [***] and (iii) the Tenant has if reasonably so required by the Landlord provided the Landlord with [***] which will allow the Landlord to [***] if the Tenant [***] and within a reasonable time and (iv) the Tenant has obtained the [***] to the [***] and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 12 14 (v) the Tenant has obtained all [***] to the [***] (c) To remove any [***] (but not the Tenant's [***]) made to the Premises at the [***] if so requested by the Landlord and to [***] any part or parts of the Premises which may be [***] by [***] (d) Not to [***] nor except in accordance with clause 5.8(e) make any [***] serving the Premises either exclusively or in conjunction with the Premises (e) To make connection with those [***] that exclusively [***] the Premises only in accordance with the [***] (f) It shall be lawful for the Landlord to enter upon the Premises and [***] any [***] made in non-compliance with the provisions of this clause 5.8 and execute [***] as are necessary to [***] and the [***] thereof (including [***]) shall be [***] 5.9 Planning, Acts (a) To comply with the provisions and requirements of the Planning Acts whether as to the Permitted User or otherwise and to [***] (both during and following the expiration of the Term) and keep the Landlord [***] against all [***] whatsoever including [***] in respect of any contravention (b) At the expense of the [***] to obtain all planning permissions and to serve all such notices as may be required for the carrying out of any operations or user on the Premises which may constitute Development under the Planning Acts provided that no application for planning permission shall be made without the previous consent of the Landlord such approval not to be unreasonably withheld or delayed [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 13 15 (c) Subject only to any statutory direction to the contrary to pay and satisfy any charge or levy that may hereafter be imposed under the Planning Acts in respect of the [***] or the commencement or continuance of [***] (d) Notwithstanding any consent which may be granted by the Landlord under this Sub-Underlease not to [***] to the Premises or any [***] until: (i) all necessary [***] under the Planning Acts have been [***] to the Landlord and (ii) all necessary [***] under the Planning Acts have been [***] to the Landlord and (iii) the Landlord has [***] that every [***] is [***] (such [***] not to be unreasonably withheld or delayed) the Landlord being entitled to [***] its [***] of a [***] on the grounds that any [***] would be (or be likely to be) [***] of the Landlord or of the Superior Lessor in the Premises the Building the Estate or any Adjoining Property whether during or following the expiration of the Term (e) Unless the Landlord shall otherwise direct to [***] before the expiration of the Term: (i) any [***] stipulated to be [***] to the Premises by a date subsequent to such expiration as a condition of any [***] granted the [***] of which has begun before the expiration of the Term and (ii) any [***] begun upon the Premises in respect of which the Landlord [***] for any [***] under the Planning Acts (f) In any case where a planning permission is granted subject to conditions and if the Landlord reasonably so requires to provide [***] for the [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 14 16 such conditions and not to [***] the planning permission until [***] has been provided (g) If reasonably required by the Landlord but at the cost of [***] to [***] any [***] of planning permission or the imposition of any [***] of planning permission or the imposition of any [***] a planning permission relating to the Premises following an application by [***] (h) If the Tenant shall carry out permit or consent to any [***] on the Premises the Tenant will [***] the [***] for any [***] of whatsoever nature (including [***] to give appropriate notices and information) under any legislation for which the [***] shall be [***] as a result of such [***] and shall [***] to the Landlord the [***] which in default of [***] shall be [***] from [***] (i) Without prejudice to the generality of the foregoing and other provisions of this Sub-Underlease to take all necessary steps to ensure that [***] of the Building and all other relevant parts of the Premises do not [***] as may be agreed with or stipulated by any statutory authority from time to time including carrying out [***] and/or [***] to the Building or other parts of the Premises to the satisfaction of each and every statutory authority 5.10 [***] and information (a) If called upon so to do [***] to [***] all [***] as the Landlord may reasonably require in order to satisfy itself that the provisions of clause 5.9 have been complied with (b) If called upon so to do [***] to [***] acting for the Landlord or any person acting as [***] such [***] as may reasonably be requested in writing in relation to any pending or intended [***] or the implementation of the provisions of [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 15 17 5.11 Statutory obligations (a) At the [***] expense to [***] and [***] upon or in respect of the Premises or the use to which the Premises are being put that are required (whether by the lessor lessee or the occupier) in order to comply with the requirements of any statute (already or in the future to be passed) or any government department local authority other public competent authority or court of competent jurisdiction (b) Not to [***] the Premise s [***] the [***] may [***] (c) Without prejudice to the generality of the foregoing to comply in all respects with the [***] and any other [***] or by any [***] applicable to the Premises or in regard to [***] for the time being [***] by the Tenant on the Premises (d) To comply with any [***] imposed on the Premises by any statutory authority whether as a planning condition or otherwise 5.12 [***] Not [***] the Premises for [***] other than [***] 5.13 [***] restrictions (a) Not to do (or permit or suffer to remain upon the Premises) anything which may be or become or cause a nuisance annoyance disturbance inconvenience injury or damage to the Landlord or its tenants or the (b) Not to use the Premises for sale by auction or for any dangerous noxious noisy or offensive trade or business nor for any illegal or immoral act or purpose [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 16 18 (c) Not to sleep or allow any person to sleep on the Premises and not to use the Premises for residential purposes nor keep any animal fish reptile or bird on the Premises save for security or research purposes 5.14 [***] (a) Not without the Landlord's consent (such consent not to be unreasonably withheld or delayed) to [***] (whether in connection with [***] or otherwise) upon any [***] of the Premises (b) Not [***] on the [***] the Building or to or through any [***] of the Building or [***] upon any other part of the Premises any [***] provided that a [***] giving the [***] approved in writing by the Landlord (such consent not to be unreasonably withheld or delayed) shall not be a breach of this clause 5.14(b) (c) It shall be lawful for the Landlord to enter upon the Premises and remove any [***] by the Tenant in non-compliance with the provisions of this clause 5.14 and execute such works as are necessary to restore the Premises to their former state and the [***] thereof (including [***]) shall be [***] 5.15 [***] Not to: (a) [***] of the Building or use the same for the [***] or place any [***] nor (b) have within the Building any [***] or other articles which may [***] the Building 5.16 [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 17 19 (a) Not to [***] any [***] from [***] and [***] the same [***] except from [***] and not to cause nor permit any [***] or [***] to any other user of them (b) Not to permit any [***] belonging to [***] or any persons [***] the Premises expressly or by implication with the authority of [***] to [***] or the [***] thereof and to use all reasonable endeavours to ensure that such persons shall [***] 5.17 Dealings with the Premises In this clause 5.17 "CONSENT" means the consent of [***] in writing which will not be unreasonably withheld or delayed and "PERMITTED PART" means a part of the Premises of at least [***] square feet gross internal area which is capable of [***]: (a) Unless expressly permitted by this clause 5.17 not to [***] (b) The Tenant may [***] enter into a [***] to a bona fide [***] of good standing which is not a [***] (c) The Tenant may [***] the whole of the Premises (d) It is agreed that the Landlord will [***] if it [***] to [***] in any of the following circumstances: (i) where the [***] is a [***] of [***] or a [***] of which [***] or which has the same [***] as [***] where [***] have the meanings given to them by section 736 Companies Act 1985 or (ii) where in the reasonable opinion of the Landlord the [***] is not [***] to [***] it to [***] the covenants of the Tenant in this Sub-Underlease or [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 18 20 (iii) where in the reasonable opinion of the Landlord the [***] would be [***] by the [***] on the assumptions (whether or not a fact) that the Landlord wished to [***] on the day following [***] (iv) where there is a [***] in this Sub-Underlease by the Tenant or (v) where the [***] (vi) where the [***] is not resident in the United Kingdom or the European Community (e) It is also agreed that it would not be unreasonable for the Landlord to require the fulfillment of the following requirements as a condition of the [***]: (i) the [***] is to [***] an [***] on the date of the [***] and (ii) the [***] is if reasonably required by the Landlord to procure a [***] with [***] from one or more [***] who are to [***] to the Landlord the [***] in terms similar to those set out in this Sub-Underlease and (iii) the [***] to the Landlord of [***] and other [***] under this Sub-Underlease prior to the date of the [***] save where there is a bona fide dispute in relation to any such other [***] and (f) The Tenant may [***] all or a Permitted Part of the Premises where [***] of the following conditions are satisfied: (i) the [***] has [***] and (ii) the [***] has covenanted [***] to [***] on the part of [***] contained in this Sub-Underlease so far as they relate to the Premises [***] and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 19 21 (iii) if the Landlord reasonably so requires a [***] acceptable to the Landlord has [***] by [***]. of its above [***] in such terms as the Landlord may reasonably require and (iv) no [***] is taken for the [***] and (v) the rent first [***] the [***] is [***] the rent per square foot [***] for the [***] in the [***] provided that if the rent so reserved is [***] the Rent then payable under this Sub-Underlease the Tenant may not [***] in any [***] (vi) any [***] or other [***] to the [***] are no [***] than is usual at the time in all the circumstances and (vii) the [***] is [***] as [***] and contains the same [***] and where the [***] under it is [***] at the same times and on the same terms as [***] and (viii) there shall at no time be more than [***] of a Permitted Part or more than [***] of the Premises including the Tenant (g) (i) To enforce against any [***] the provisions of the [***] and not waive or vary them and (ii) To operate the [***] provisions contained in any [***] so as to ensure that the [***] at the correct times and in accordance with those provisions (h) Not [***]: (i) to [***] of any [***] or (ii) to accept a [***] of part of the [***] or (iii) to agree any [***] under any [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 20 22 (i) Not to require or permit any [***] by any [***], to be [***] or to be paid more than [***] in advance or to be [***] (j) Any [***] under this clause 5.17 shall (unless it expressly states otherwise) only be [***] if the dealing to which it relates is [***] after the date of the [***] (k) It is agreed that the conditions and stipulations referred to in clauses 5.17(d) and 5.17(e) are not to be taken as an exhaustive list of conditions or stipulations which it would be reasonable for the Landlord to impose in relation to the [***] of any [***] to [***] (l) The Tenant may (after giving written notice to the Landlord containing all relevant information including [***]) [***] the Premises [***] as the Tenant (within the meaning of [***] Landlord and Tenant Act 1954) for so long as [***] shall remain [***]) on condition that the [***] does not create any [***] and that on any [***] the [***] immediately ceases (m) Within [***] after any [***] of the Premises or any [***] (whether or not specifically referred to in this clause 5.17) to give to the Landlord's solicitors notice in duplicate specifying the particulars of the matter in question and at the same time to supply [***] of any [***] it and to [***] those solicitors a [***] or such [***] as shall be reasonable at the time (n) From time to time [***] during the Term to provide the Landlord with [***] the Premises including particulars of [***] in respect of them and copies of any relevant documents and the [***] of the Premises 5.18 [***] costs To [***] all reasonable [***] (including without prejudice to the generality of the foregoing those [***]) incurred by [***] in relation or incidental to: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 21 23 (a) every [***] made by [***] for a [***] required or made necessary by the provisions of this Sub-Underlease whether the same be granted or refused or proffered subject to any qualification or condition or whether the [***] save where such [***] is held by a tribunal or competent jurisdiction to have been [***] (b) the [***] under section [***] Law of Property Act 1925 or incurred by proceedings under section [***] of that Act notwithstanding that [***] (c) the [***] of [***] or other [***] from the [***] and (d) any steps taken in connection with the [***] of a [***] during or after the expiration of the Term 5.19 [***] Property (a) Not to cause the Common Parts or any other land roads or pavements abutting on or nearby the Premises to [***] (b) Not to [***] other than [***] and on a [***] basis [***] any [***] on any part of the land within the Premises 5.20 [***] Not to permit to be [***]: (a) any [***] and to take all reasonable measures to ensure that [***] or (b) any [***] or of a kind calculated to or that does in fact [***] and not to do anything that causes the [***] 5.21 [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 22 24 To keep all [***] (including [***]) upon the Premises [***] and for that purpose to [***] as and when necessary or when recommended by [***] to ensure by directions to [***] and otherwise that such [***] is [***] and to [***] 5.22 [***] To [***] the Landlord [***] and [***] and without prejudice to the generality of the foregoing to [***] all reasonable [***] of the Landlord or the Superior Landlord 5.23 Indemnities To be responsible for and to keep the Landlord fully indemnified against all damage damages losses expenses actions demands proceedings claims and liabilities made against or suffered or incurred by the Landlord arising [***] out of. (a) any [***] of the Tenant or any persons at the Premises expressly or impliedly with the Tenant's authority or (b) any [***] by the Tenant of the covenants conditions or other provisions of this Sub-Underlease 5.24 Re-letting boards To permit the Landlord at any time during the, last [***] of the Term to enter upon (provided that it shall not interfere with the conduct of the Tenant's business) the Premises and affix and retain upon any part of the Premises a notice for re-letting the same and during such period to permit persons [***] at reasonable times of the day to view the Premises 5.25 Rights of [***] (a) Not to [***] any [***] belonging to the Building [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 23 25 (b) Not to permit any new [***] to be made or acquired in against out of or upon the Premises and if any such [***] shall be made or acquired or attempted to be made or acquired to give immediate notice to the Landlord and at the request and cost of the Landlord to adopt such means as may be reasonably required or deemed proper for preventing any such [***] or the [***] 5.26 Interest on Arrears (a) If the Tenant shall fail to pay the rents or any other sum due under this Sub-Underlease (including for the avoidance of doubt rents which the Landlord refrains from demanding or receiving due to a subsisting breach of covenant by the Tenant) the Tenant shall pay the Landlord Interest on the rents or other sum from the date when it was due to the date on which it is paid and such shall be deemed to be rent due to the Landlord (b) Nothing in clause 5.26(a) shall entitle the Tenant to withhold or delay any payments of the rents or any other sum due under this Sub-Underlease after the date upon which it falls due or in any way prejudice affect or derogate from the rights of the Landlord in relating to the said non-payment including (but without prejudice to the generality of the foregoing) under the proviso for re-entry contained in this Sub-Underlease 5.27 Sale of reversion etc To permit the Landlord at any time during the Term to enter upon the Premises and affix and retain upon any part of the Premises a notice for selling the Landlord's reversion or any interest superior to the Term (provided that such notice shall not interfere with the conduct of the Tenant's business) and to permit upon reasonable notice at any time during the Term prospective purchasers of or dealers in or agents instructed in connection with the sale of the Landlord's [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 24 26 reversion or of any interest superior to the Term to [***] without interruption providing the same are [***] 5.28 Defective Premises To give notice to the Landlord of any defect in the Premises which might give rise to an obligation on the Landlord to do or refrain from doing any act or thing in order to comply with the provisions of this Sub-Underlease or the duty of care imposed on the Landlord pursuant to the Defective Premises Act 1972 or otherwise and at all times to [***] which the Landlord may from time to time reasonably require to be [***] the Premises 5.29 New Guarantor Within [***] of the death during the Term of any Guarantor or of such person becoming bankrupt or having a receiving order made against him or being a company passing a resolution to wind up or entering into liquidation or having a receiver appointed to give notice of this to the Landlord and if so required by the Landlord at the expense of [***] to procure some other person acceptable to the Landlord such acceptance not to be unreasonably withheld execute a guarantee in respect of the Tenant's obligations contained in this Sub-Underlease in the form set out in clause 12 5.30 Landlord's rights To permit the Landlord at all times during the Term to exercise without interruption or interference any of the rights granted to it by virtue of the provisions of this Sub-Underlease 5.31 Observe Headlease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 25 27 To perform and observe all the covenants on the part of the lessee contained in the Headlease insofar as this relates to the Premises or the rights granted by this Lease save to the extent that they are expressly assumed by the Landlord in this Lease 5.32 Indemnity for breach of Headlease To indemnify and keep indemnified the Landlord against all damages losses costs expenses actions demands proceedings claims and liabilities made against or suffered or incurred by the Landlord acting [***] out of any breach by the Tenant of the immediately preceding covenant 5.33 Permit access to the Landlord To permit the Landlord to enter upon the Premises at reasonable times and upon reasonable prior written notice (except in emergency when no notice shall be required) for any purpose that [***] is necessary to enable it to comply with the covenants on its part contained in the Headlease notwithstanding that the obligation to comply with such covenants may be imposed on the Tenant by this Lease 5.34 Compliance with [***] In this clause the [***] means the [***]: (a) where the [***] apply to [***] to the Premises in all respects in accordance with the [***] (b) before commencing any [***] to which the [***] apply to make a declaration that the Tenant is the client in respect of those [***] for the purposes of the [***] and to give to the Landlord a copy of that declaration and of the acknowledgement of it from the [***] (or such other authority as may from time to time be appropriate under the [***]) [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 26 28 (c) within [***] after completion of any [***] to which the [***] apply to give to the Landlord all necessary details of those [***] for the [***] required to be maintained under the [***] (d) where the [***] apply to any [***] undertaken by the Tenant or any undertenant to procure in favor of the Landlord a [***] license (which [***]) to [***] any and all documents relating to those [***] contained in the [***] and the [***] contained in them for [***] whatsoever connected with the demised premises or in the Centre (e) at the expiry or sooner determination of the term to give to the Landlord any [***] relating to the Premises maintained by the Tenant or any undertenant pursuant to the [***] 6. LANDLORD'S COVENANTS The Landlord covenants with the Tenant: 6.1 Quiet enjoyment To permit the Tenant to peaceably and quietly hold and enjoy the Premises without unlawful interruption or disturbance from or by the Landlord or any person claiming under or in trust for the Landlord 6.2 Headlease rents To pay the rents reserved by the Headlease and to observe and perform the obligations of the Tenant in the Head Lease [***] 7. LANDLORD'S PROVISION OF SERVICES 7.1 The Landlord covenants with the Tenant to use all reasonable endeavours to carry out or use all reasonable endeavours to procure the carrying out by the Head [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 27 29 Landlord of the Services or such of them as the Landlord acting reasonably and in accordance with the principles of good estate management considers necessary 7.2 In performing its obligations the Landlord shall be entitled in its discretion to employ [***] as the Landlord may from time to time think fit and whose reasonable fees salaries charges and expenses (including [***]) shall form part of the [***] provided that if the Landlord does not employ [***] for such purpose the Landlord may [***] 7.3 The Landlord shall not be responsible for any delay or stoppage in connection with the performance or observance of such obligations or for any omission to perform the same due to any cause or circumstances not within the control of the Landlord but shall use all reasonable endeavours to remedy and make good the same as soon as possible after notification 7.4 If the Landlord does not seek to recover any sum expended or liability incurred by it in connection with the Services in any Accounting Period as defined in clause 9.1 the Landlord may nevertheless recover such sum or liability in any subsequent Accounting Period 8. PAYMENT OF SERVICE CHARGE 8.1 The Tenant covenants with the Landlord to pay the Fair Proportion of the Service Charge at the times in the manner provided in clause 9 without any deduction (whether by legal or equitable set off) 9. TIMES AND MANNER OF PAYMENT OF SERVICE CHARGE 9.1 The Landlord shall make and send to the Tenant notice in writing of the Landlord's reasonable estimate of the expected amount of the Service Charge for any period of [***] ("the Accounting Period") and the Tenant shall pay the Fair Proportion of the estimate of the Service Charge by installments (apportioned on a daily basis) on the days specified in the notice [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 28 30 9.2 The Landlord will as soon as practical after the end of the relevant Accounting Period (and in any event within [***] of the end of the relevant Accounting Period) prepare and send to the Tenant a statement of the Service Charge for the Accounting Period audited by a member of the Institute of Chartered Accountants (which statement shall specify inter alia the actual cost of providing the Services for the Accounting Period (including copy vouchers or other reasonable details and information evidencing the cost to the Landlord of individual services provided)) 9.3 The Landlord's statement referred to in clause 9.2 shall in the absence of [***] be [***] the parties hereto 9.4 In the event of the sums determined to be payable by the Tenant in accordance with clause 9.2 exceed the aggregate of the sums already paid by the Tenant in respect of the Accounting Period the Tenant will pay the balance due for such period within [***] of receipt of [***] to the Landlord and in the event of the aggregate of the sums paid by the Tenant in respect of such Accounting Period exceeding the sums so determined to be payable by the Tenant the excess will be repaid to the Tenant 9.5 If during any Accounting Period it reasonably appears to the Landlord that because of unexpected expenses or liabilities the Landlord's previous estimate of the Service Charge is likely to be exceeded then the Landlord may serve on the Tenant a statement of such expenses and liabilities and the Fair Proportion of them payable by the Tenant and the Tenant shall pay that proportion within [***] of [***] of it and the payment shall be taken into account as part of the sums paid on account of the Service Charge for the relevant Accounting Period for the purpose of clause 9.4 9.6 The Tenant's obligation to pay the Fair Proportion of the Service Charge shall be limited to costs reasonably incurred or reasonably anticipated [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 29 31 10. DISPUTES 10.1 Any dispute as to the Services provided or to be provided or the amount of the Service Charge or the Fair Proportion may be referred by the Tenant at any time prior to the expiry of [***] from receipt of any demand or estimate to [***] with at least [***] such [***] in the absence of agreement between the parties to be nominated by [***] on the Tenant's application Such [***] will act as [***] but shall be entitled to [***] made by either party and shall be instructed to make an order as to [***] Such [***] shall act fairly and impartially His decision shall be [***] 11. INSURANCE 11.1 Subject to the Tenant paying the Insurance Rent and to such insurance being available in the insurance market at the relevant time at [***] and upon [***] the Landlord will insure the Premises: (a) unless such insurance shall be [***] by [***] or by [***] and (b) subject to such excesses exclusions or limitations as the Landlord's insurers may require in such insurance office or with such underwriters and through such agency as the Landlord may from time to time decide in such sums as the Landlord shall from time to time be advised by the Surveyor as being the [***] including [***] and (c) procuring that such insurance shall include a [***] the Tenant and that the Tenant's [***] shall be noted on the relevant insurance policy 11.2 Such insurance shall be against: (a) loss of damage by fire explosion storm lightning tempest flood burst pipes impact and (in peacetime) aircraft articles dropped therefrom riot civil commotion and malicious damage subsidence landslip, and heave and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 30 32 such other risks of insurance which the Landlord may from time to time deem necessary or the Tenant shall request (b) liability of the Landlord arising out of or in connection with any matter involving or relating to the Estate and (c) the loss of Rent and Service Charge payable under this Sub-Underlease from time to time (having regard to any review of rent which may become due under this Sub-Underlease) for [***] or such longer period as the Landlord may from time to time reasonably deem to be necessary for the purposes of planning and carrying out rebuilding or reinstatement 11.3 The Tenant shall pay the Insurance Rent on [***] for the period from and including the commencement of the Term to the day before the next policy renewal date and thereafter the Tenant shall pay the Insurance Rent [***] 11.4 If and whenever during the Term: (a) the Premises or any part of them or access to them are damaged or destroyed by an Insured Risk so that the Premises or any part of them are [***] and (b) the insurance of the Premises has not been [***] by the [***] or [***] the Rent and Service Charge or a fair proportion of the Rent and Service Charge according to the nature and the extent of the damage sustained (the amount of such proportion to be determined by [***]) shall be [***] until the Premises the damaged part or the access shall have been reinstated so that the Premises or the damaged part are [***] 11.5 If and whenever during the Term: (a) the Premises are damaged or destroyed by an Insured Risk and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 31 33 (b) the payment of the insurance moneys is not refused in whole or in part by reason of [***] the Landlord will [***] take such steps as may be requisite and proper to obtain any planning permissions or other permits and consents that may be required under the Planning Acts or other Statute for the time being in force to enable the Landlord to [***] the Premises and will as soon as these have been obtained spend and lay out all moneys received in respect of such insurance (except [***]) in [***] the Premises so damaged or destroyed provided that the Landlord shall not be liable to [***] the Premises if the Landlord is unable (having used all reasonable endeavours) to obtain all planning permissions permits and consents necessary to execute such [***] or if the [***] is prevented for any other reason beyond the control of the Landlord in which event the insurance moneys shall be [***] on the date of the damage or destruction and in the event of any dispute as to such [***] the dispute shall be referred for resolution to [***] by the Landlord and the Tenant or [***] 11.6 The Tenant covenants with the Landlord: (a) to [***] made known to it in writing (b) not to [***] that could cause [***] the Premises to [***] wholly or in part nor (unless the Tenant shall have previously notified the Landlord and have agreed to [***]) anything whereby [***] may become payable (c) to keep the Premises supplied with such fire fighting equipment as the insurers and the fire authority and/or the Landlord may require and to maintain the same to their satisfaction (d) not (except in such quantities as shall from time to time be required for the Tenant's manufacturing activities on the Premises) to [***] the Premises any [***] of a [***] and to comply with the requirements and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 32 34 recommendations of the fire authority as to fire precautions relating to the Premises (e) not to obstruct the access to any fire equipment or the means of escape from the Premises (f) to give notice to the Landlord forthwith upon the happening of any event which might affect any insurance policy relating to the Premises (g) if and whenever during the Term the Premises or any part thereof are damaged or destroyed by an Insured Risk and the insurance money under the policy of insurance is [***] the Tenant or anyone at the Premises expressly or by implication with the Tenant's authority [***] forthwith in every such case to pay to the Landlord [***] the amount of such insurance money [***] in which event the provisions of clauses 11.5 and 11.6 shall apply (h) forthwith to inform the Landlord in writing of any conviction judgement or finding of any court or tribunal relating to the Tenant (or any [***] of the Tenant) of such a nature as to be likely to affect the decision of any insurer or underwriter to grant or to continue insurance of any of the above mentioned risks (i) if at any time the Tenant shall be entitled to the benefit of any insurance on the Premises (which is not effected or maintained in pursuance of any obligation herein contained) to [***] all moneys received by virtue of such insurance [***] in respect of which the same shall have been received and to pay to the Landlord a [***] which the Landlord may be required to pay in connection with any claim made under the policy or policies of insurance effected by the Landlord pursuant to clause 11.2 11.7 The Landlord covenants with the Tenant in relation to the policy of insurance effected by the Landlord pursuant to clause 11.2 to: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 33 35 (a) produce to the Tenant on demand (but no more often than once in any period of 12 months) reasonable evidence of the terms of the policy and the fact that the last premium has been paid (b) notify the Tenant of any material change in the risks covered by the policy from time to time and (c) use reasonable endeavors to procure either insurance in the joint names of the Landlord and the Tenant or failing that written confirmation from the insurers that they have agreed to waive all rights of subrogation against the Tenant 12. GUARANTOR'S COVENANTS The Guarantor covenants with the Landlord: 12.1 If the Tenant shall make any default in payment of the rents or in observing or performing any of the covenants conditions or other terms of this Sub-Underlease the Guarantor will pay the rents and observe or perform the covenants conditions or terms in respect of which the Tenant shall be in default notwithstanding: (a) any time or indulgence granted by the Landlord to the Tenant or any neglect or forbearance of the Landlord in enforcing the payment of rent or the observance or performance of the Tenant's covenants or any refusal by the Landlord to accept Rent tendered by or on behalf of the Tenant at a time when the Landlord was entitled (or would after the service of a notice under section 146 Law of Property Act 1925 have been entitled) to re-enter the Premises (b) that the terms of this Sub-Underlease may have been varied by agreement between the parties providing such variation is not prejudicial to the Guarantor [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 34 36 (c) that the Tenant shall have surrendered part of the Premises in which event the liability of the Guarantor hereunder shall continue in respect of the part of the Premises not so surrendered after making any necessary apportionments under section 140 Law of Property Act 1925 and (d) any other act or thing whereby but for this provision the Guarantor would have been released other than a variation of the terms of this Sub-Underlease agreed between the parties that is prejudicial to the Guarantor (e) any change in the constitution structure or powers of the Guarantor the Tenant or the Landlord (f) any act which is beyond the powers of the Tenant 12.2 If the Tenant (being an individual) shall become bankrupt or (being a company) shall enter into liquidation and the trustee-in-bankruptcy or liquidator shall disclaim this Sub-Underlease the Guarantor will if the Landlord shall by notice within [***] after such disclaimer so require take from the Landlord a lease of the Premises for the residue of the Term which would have remained had there been disclaimer [***] hereunder and subject to the same covenants and conditions as in the Sub-Underlease (and so for this purpose any rent review date or other date or period which under the provisions of this Sub-Underlease is calculated by reference to the Term Commencement Date shall be deemed to be calculated from the Term Commencement Date) with the exception of this clause 12 such new lease to take effect from the date of the said disclaimer and in such case the Guarantor shall [***] and execute and deliver to the Landlord a counterpart thereof 12.3 If this Sub-Underlease shall be disclaimed and for any reason the Landlord does not require the Guarantor to accept a new lease of the Premises in accordance with clause 12.2 the Guarantor shall pay to the Landlord on demand an amount [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 35 37 equal to the difference between any money received by the Landlord for the use or occupation of the Premises and the rents in both cases for the period commencing with the date of such disclaimer and ending on whichever is the earlier of: (a) the date [***] after such disclaimer and (b) the date [***] upon which [***] 12.4 As between the Landlord and the Guarantor the Guarantor shall be deemed to be a principal debtor 12.5 The Guarantor shall not be entitled to [***] by the Landlord in respect of the Tenant's obligations to the Landlord under this Sub-Underlease or to stand in the place of the Landlord in respect of such [***] 12.6 Where the Guarantor is more than one person the release of one or more of them shall not release the others 13. PROVISOS 13.1 Re-entry If at any time during the Term: (a) the rents (or any of them or any part thereof) shall be in arrear and unpaid for [***] after becoming payable (whether formally demanded or not) or (b) there shall be any [***] by the Tenant of [***] this Sub-Underlease or (c) the Tenant suffers any [***] on its goods or (d) a [***] or an [***] is made in respect of the Tenant or [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 36 38 (e) a resolution is passed or an order is made [***] the Tenant other than a member's [***] for the purpose of [***] previously approved by the Landlord or (f) a [***] (including an [***]) is [***] over the whole or any part of the [***] of the Tenant or (g) the Tenant is [***] or is [***] or (being a corporation or company incorporated outside Great Britain) is [***] under the laws of the country or state of its incorporation or (h) the Tenant (being a company) is deemed [***] within the meaning of [***] or (being an individual) appears to be [***] within the meaning of [***] the Landlord may at any time thereafter (and notwithstanding the waiver of any previous right of re-entry) re-enter the Premises or any part thereof in the name of the whole and thereupon the Term shall absolutely cease and determine but without prejudice to any rights or remedies which may then have accrued to the Landlord against the Tenant in respect of any antecedent breach (including the breach in relation to which re-entry is made) or any of the covenants and conditions contained in this Sub-Underlease 13.2 Covenants relating to adjoining land Nothing contained in or implied by this Sub-Underlease shall give the Tenant the [***] or [***] or to [***] of any covenant agreement or condition entered into by [***] in respect of [***] 13.3 Disputes with [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 37 39 If any dispute arises between the Tenant and [***] or [***] as to [***] in connection with [***] or as to [***] the Premises [***] or as to [***] it shall be decided by [***] 13.4 Effect of waiver Each of the Tenant's covenants shall remain in full force both at law and in equity notwithstanding that the Landlord shall have waived or released temporarily any such covenant or waived or released temporarily or permanently revocably or irrevocably a similar covenant or similar covenants affecting any [***] 13.5 Rights [***] etc The operation of section 62 Law of Property Act 1925 shall be excluded from this Sub-Underlease and the only rights granted to the Tenant are those expressly set out in this Sub-Underlease and the Tenant shall not by virtue of this Sub-Underlease be deemed to have acquired or be entitled to and the Tenant shall not during the Term acquire or become entitled by any means whatsoever to [***] any [***] not comprised in this Sub-Underlease 13.6 Exclusion of [***] warranty Nothing in this Sub-Underlease or in any consent granted by the Landlord under this Sub-Underlease shall imply or warrant that the Premises may be [***] herein authorized (or any [***] authorized) under the Planning Acts 13.7 Accidents The Landlord shall not be responsible to the Tenant or to anyone at the Premises expressly or by implication with the Tenant's authority for any accident happening or injury suffered or for any damage to or loss of any chattel sustained in the Premises or the Building 13.8 Representations [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 38 40 The Tenant acknowledges that this Sub-Underlease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the Landlord except any such statement or representation that is made or confirmed in writing by the Landlord's Solicitors or that is expressly set out in this Sub-Underlease 13.9 Licenses etc under hand Whilst the Landlord is a limited company or other corporation all licenses consents approvals and notices required or permitted to be given by the Landlord, shall be sufficiently given if given under the hand of a Director the Secretary or other duly authorized officer of the Landlord 13.10 Tenant's property If after the Tenant has vacated the Premises on the expiry of the Term any property of the Tenant remains in or on the Premises and the Tenant fails to remove it within [***] after [***] the Landlord so to do or if after using its best endeavors; the Landlord is unable to [***] the Tenant within [***] from the first attempt so made by the Landlord: (a) the Landlord may as the agent of the Tenant [***] such property provided that the Tenant will indemnify the Landlord against any liability incurred by it [***] property shall have been [***] by the Landlord in the bona fide mistaken belief (which shall be presumed unless the contrary be proved) that such property [***] (b) if the Landlord having made reasonable efforts is unable to locate the Tenant the Landlord shall be entitled to retain the said [***] absolutely unless the Tenant shall [***] the same within [***] of the date upon which the Tenant vacated the Premises and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 39 41 (c) the Tenant shall indemnify the Landlord against any damage occasioned to the Premises or the Building or [***] and any actions claims proceedings costs expenses and demands made against the Landlord caused by or related to the [***] the Premises 13.11 Compensation Except where any statutory provision prohibits the Tenant's right to compensation being reduced or excluded by agreement the Tenant shall not be entitled to claim from, the Landlord on quitting the Premises any compensation under the 1954 Act 13.12 Service of notices The provisions of section 196 Law of Property Act 1925 as amended by the Recorded Delivery Service Act 1962 shall apply to the giving and service of all notices and documents under or in connection with this Sub-Underlease except that section 196 shall be deemed to be amended as follows: (a) The final words of section 196(4) "and that service be delivered" shall be deleted and there shall be substituted"... and that service shall be deemed to be made on the third "Working Day" meaning any day from Monday to Friday (inclusive) other than Christmas Day Good Friday and any statutory bank holiday" (b) Any notice or document shall also be sufficiently served if sent by telex or by telegraphic facsimile transmission to the party to be served and that service shall be deemed to be made on the day of transmission if transmitted before 4.00 p.m. on a Working Day but otherwise on the next following Working Day 13.13 Qualified Expert (a) A Qualified Expert is a person who: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 40 42 (i) is an associate or fellow of the Royal Institute of Chartered Surveyors (ii) is appointed by the Landlord and the Tenant or in default of agreement [***] at the request of either of them or both of them jointly [***] or any person authorized at the relevant time to act on [***] behalf (iii) is appointed to resolve [***] where this Lease provides for determination in this way and where the parties cannot agree (iv) may be the person who is also [***] (b) In resolving any of these questions the Qualified Expert will act as an expert and not as an arbitrator and [***] (c) In performing his functions hereunder the Qualified Expert shall be required to act fairly and impartially (d) As soon as he is appointed the Qualified Expert must write to the parties to this Lease and allow them [***] in which to submit to him in writing their proposals on how the matter in question should be decided provided that for the avoidance of doubt he shall not be obliged to [***] such proposals if in his professional judgement it is not appropriate to do so (e) The fees of the Qualified Expert for performing any of the functions given to him by this Lease will be paid by [***] except where the Qualified Expert directs otherwise and the Qualified Expert must order [***] to pay all or part of his fees when he decides a matter in the manner (or substantially in the manner) proposed by [***] (f) [***] covenants with [***] to pay the fees of the Qualified Expert except where the Qualified Expert directs otherwise [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 41 43 (g) [***] covenants with [***] to pay the fees of the Qualified Expert when directed by the Qualified Expert to do so (h) If the Qualified Expert or any replacement of his shall delay or become incapable or unwilling to act [***] someone else to act in his place 13.14 In performing their respective functions; hereunder the Surveyor and the Accountant shall be required to act fairly and impartially IN WITNESS whereof this Deed has been duly executed on the date first stated above [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 42 44 SCHEDULE 1 THE PREMISES 1. All that land and buildings known as Unit 6 Boulevard Industry Park Halewood Merseyside shown for the purposes of identification only edged red on Plan 1 and without prejudice to the generality of the foregoing shall include: (a) the Building (b) all additions and improvements to the Premises (c) all the Landlord's [***] of every kind which shall from time to time be in or upon the Premises (whether originally [***] the same or otherwise) except any such [***] by the Tenant or at the Tenant's cost that can be [***] the Premises without [***] the same and (d) any Conduits that exclusively serve the Premises (e) the airspace above the height of the Building and references to "Premises" shall in the absence of any provision to the contrary include any part of the Premises [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 43 45 SCHEDULE 2 RIGHTS GRANTED (1) The following rights in common with the Landlord and all others for the time being authorized by the Landlord or otherwise entitled for the Tenant and any permitted undertenant or permitted occupier of the Premises (and the operation of section 62 Law of Property Act 1925 shall be excluded from this Sub-Underlease): (a) until the same are adopted and maintainable at the public expense a right of way at all times with or without vehicles (so far as [***]) over South Road and over the Estate Roads for the purpose of [***] the Premises [***] (b) the right to connect to and use all Conduits from time to time serving the Premises and running across the Landlord's Adjoining Property provided that the Landlord has the right [***] during the Term to [***] for the Tenant to connect into any Conduits if in the reasonable opinion of the Landlord the Conduits are [***] which would be [***] from the proposed connection by the Tenant and (c) to the extent that such works cannot otherwise reasonably be carried out the right upon reasonable prior written notice to the occupier of any or in relation to the Common Parts notice to the Landlord (except in emergency when no notice need be given) to [***] any part of that Unit or on the Common Parts (but not [***] thereon) with or without [***] for the purposes of: (i) installing inspecting repairing renewing reinstalling cleaning maintaining or connecting to [***] serving or to serve the Premises (ii) inspecting cleaning altering repairing maintaining renewing or rebuilding the Premises [***] the person entering causing as little damage and inconvenience as reasonably practicable and making good at its own expense any damage caused to the Unit or the Common Parts by such entry [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 44 46 SCHEDULE 3 RIGHTS RESERVED 1. The rights for the Landlord: (a) to carry out works to the Common Parts and any other part of the Estate and to [***] in whatever manner may be desired and to [***] whether or not in each case the access of light and air to the Premises from time to time enjoyed by [***] shall be affected in any way save for the rights expressly granted by schedule 2 (b) to connect to and use all Conduits from time to time within or forming part of the Premises including but not limited to those contained in over under or within the area shaded orange on Plan 4 ("Orange Area") (c) upon reasonable prior written notice to the Tenant (except in emergency when no notice need be given) to [***] the Premises (but not save when exercising the rights set out in paragraphs 1(c)(iv) 1(c)(v) and 1(c)(vi) on or into any Buildings on the Premises) with or without tools appliances scaffolding and materials for the purposes of: (i) inspecting repairing maintaining and renewing any landscaped areas within the Premises which form part of the Landscape Corridor (ii) constructing any buildings on any part of the Estate or (iii) inspecting cleaning altering repairing maintaining renewing demolishing or rebuilding any building forming part of the Estate or any part of the Common Parts (iv) inspecting the Premises in conjunction with [***] (v) inspecting the Premises in order to ascertain whether the Tenant's use of the Premises has resulted in [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 45 47 (vi) inspecting repairing maintaining renewing and connecting into the Conduits including but not limited to those within in over or under the Orange Area (vii) exercising the rights reserved by paragraph 1(e) below (viii) any [***] the person [***] causing as little damage as reasonably practicable and making good without delay at its expense any damage caused to the Premises by such [***] (d) to [***] the Premises with [***] subject to the person exercising this right indemnifying the occupiers of the Premises against death or injury to persons and damage to property which may result from that [***] (e) to install construct inspect repair maintain renew and retain [***] and ancillary accommodation works on the Premises in the location noted as reserved for a possible [***] on Plan 5 including the right to [***] of the Premises for such purposes and to retain in such [***] the property plant machinery and equipment of any [***] provided that the person or persons exercising this right shall take all reasonable steps to minimize disruption to the Tenant and shall make good as soon as possible any damage caused to the Premises (f) all rights of light and air support and protection and all other easements quasi-easements rights and benefits [***] by [***] or [***] on the Estate (g) all rights of light and air support and protection enjoyed by the Premises and all other easements quasi-easements rights and benefits [***] by the Premises which would restrict or interfere with [***] for [***] purpose by the Landlord or any other person authorized by the Landlord or otherwise entitled [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 46 48 SCHEDULE 4 RENT REVIEW 1. Definitions and interpretation In this schedule unless the context requires otherwise the following words and expressions where they begin with a capital letter have the following meanings: "[***] RENT" means the rent (after [***] of such length as [***]) at which the Premises [***] at the Relevant Review Date [***] assuming that: 1.1 all Buildings forming part of the Demised Premises have been [***] 1.2 the Premises are [***] or (if permitted by this Sub-Underlease and if it would [***]) [***] with vacant possession [***] on a lease for a term equal to [***] or [***] whichever is [***] commencing on the Relevant Review Date including provisions for [***] and otherwise on the same terms as this (except as to the amount of the Rent) 1.3 the covenants and provisions of the Sub-Underlease on the part of the Tenant have been fully performed and observed 1.4 if the Premises have been destroyed or damaged they have been fully restored 1.5 the Premises are ready to receive the [***] fitting out works 1.6 no work has been carried out to the Premises which has [***] 1.7 every [***] is able to [***] in full but disregarding: 1.8 any effect on rent of the fact that the Tenant any undertenant or any of their respective predecessors in title have been [***] the Premises 1.9 any [***] attached to the Premises by reason of [***] the Tenant any undertenant or any of their predecessors in title [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 47 49 1.10 the taxable status of the Tenant for the purpose of [***] or [***] 1.11 any adverse effect on Rent of any [***] or other [***] on any [***] 1.12 any effect on Rent of the [***] 1.13 any effect on Rent attributable to any [***] the Premises [***] by or at the cost of the Tenant with the consent of the Landlord (where required) not more than [***] previously otherwise than in pursuance of an obligation to the Landlord 1.14 any effect on Rent resulting from the absence of a [***] or other [***] which might otherwise [***] the Premises with vacant possession be granted to a tenant 1.15 any effect on rent of [***] contained in any [***] in respect of the Premises or any part of them other than any [***] by or on behalf of the Landlord "RELEVANT REVIEW DATE" means the review date by reference to which the Rent is being reviewed "RENT REVIEW NOTICE" means a notice in writing prepared by [***] the Rent to be reviewed as from a Review Date "RESTRICTIONS" means restrictions imposed by [***] which operate to impose [***] in relation to [***] or the [***] "REVIEW DATE" means any one of the Review Dates "REVIEW DATES" means the [***] anniversary of the commencement of the Term and [***] anniversary of that date 2. Procedure 2.1 As from the Relevant Review Date the Rent shall be the [***] Rent or the Rent then payable whichever is [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 48 50 2.2 In relation to each review the Landlord may serve on the Tenant [***] a notice in writing [***] the Rent to be reviewed as from the Relevant Review Date 2.3 If the Landlord and the Tenant fail to agree the amount of the [***] Rent within [***] after the service of the Rent Review Notice [***] may apply for determination of the amount of the [***] Rent by [***] and the [***] Rent shall be such amount as shall be determined by [***] 2.4 If [***] the [***] Rent is not agreed or determined by the Relevant Review Date then in respect of the period beginning with [***] and ending on [***] the Rent shall [***] the Relevant Review Date and at the end of such period there shall be due to the Landlord [***] duly apportioned in respect of such period [***] from the Relevant Review Date to the date of actual payment (inclusive of both dates) 2.5 Where the Rent is [***] with effect from a Review Date the Landlord and the Tenant shall at their own cost [***] for annexation to the original and counterpart of this Lease 2.6 If the Tenant has not sent to the Landlord a [***] within [***] of having received it the Landlord may [***] and send [***] to the Tenant together with a [***] and the provisions of paragraph 2.5 above shall be deemed complied with 3. Restrictions 3.1 Where Restrictions are in force at a Review Date the Landlord [***] give notice to the Tenant [***] but not later that [***] after such Review Date [***] that Review Date [***] as the Landlord [***] subsequently by not less than [***] prior notice [***] and in that event the Rent [***] the Review Date that is [***] shall [***] until [***] on review at the [***] or (as the case may be) a [***] Review Date [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 49 51 SCHEDULE 5 SERVICE CHARGE 1. The Fair Proportion of Service Charge 1.1 The "Fair Proportion" shall where the Landlord does not provide or procure the Services but pays the Landlord under the Head Lease to do so [***] per cent but where the Landlord does provide or procure the Services and in the absence of any other factors which the Landlord considers relevant acting reasonably shall mean such proportion of the Service Charge (as defined in clause 1) as shall be calculated by application of the formula [*** ------ ***] when [***] equals the [***] of the Premises 1.2 If the circumstances surrounding the provision of the Services (as defined in paragraph 2 of this schedule 5) properly warrant it the Landlord [***] in writing to determine [***] for the Fair Proportion: (a) [***] to cover the appropriate contribution for Services supplied or available for [***] (b) [***] to cover the appropriate contribution for such services supplied or available for [***] and in which case paragraph I of schedule 6 shall be read as if reference to the Estate were in fact to such [***] 1.3 The Service Charge shall mean the cost to the Landlord of providing or of paying a third party to provide the Services (as defined in paragraph 2 of this schedule 5) in accordance with clause 7 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 50 52 2. Services 2.1 The Services shall mean: (a) Inspection maintenance management repair renewal rebuilding (where not capable of economic repair) reinstatement replacement resurfacing painting lighting cleaning (including the removed of rubbish and litter) and (where required by any Enactment) the alteration and modification of: (i) the Common Parts (including planting tending replanting cultivating watering weeding and so on of any landscaping works within the Common Parts and any specialist treatment which may from time to time be required) (ii) the boundary walls or fences of the Estate (save where a maintenance obligation in respect thereof is performed now or hereafter by and at the cost of some other person) (iii) the Conduits (up to the connection with the relevant public main) not exclusively serving the Premises (save where a maintenance obligation in respect thereof is performed now or hereafter by and at the cost of some other person) (iv) the South Road (b) Planting tending replanting cultivating watering weeding of any landscaping works and any specialist treatment which may from time to time be required within the Landscape Corridor (c) Provision of all necessary full or part-time maintenance cleaning management and supervisory staff and the provision of suitable equipment protection and other clothing uniforms and facilities for such staff during a hours such staff are employed to work and the payment of reasonable and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 51 53 proper wages salaries national insurance general insurance health pension welfare and similar payments (d) The provision and retention of a security service for the Estate and in particular the monitoring of persons attending the Estate by means of such security monitoring equipment as is installed from time to time for the benefit of the Estate generally and the inspection maintenance management repair renewal reinstatement replacement and cleaning of such equipment (e) The provision operation inspection testing service repair maintenance cleaning lighting renewing or replacement of all plant machinery and equipment fixtures and fittings from time to time within the Common Parts and the installations referred to in paragraph 2.1(d) of this schedule (f) The provision maintenance repair and replacement of all estate signs notice boards advertisements receptacles tools appliances and apparatus within the Common Areas (g) Control of traffic on the Estate Roads (including the provision maintenance repair renewal and replacement of all entrance and exit barriers directional signs street bollards roundabouts street lighting road markings and street furniture) (h) Payment of all rates taxes duties charges assessments and outgoings whatsoever in respect of the Estate (save where the obligation to pay the same rests with someone else) (i) The effecting and maintenance of insurance for the Common Parts against loss or damage by fire and such other risks as the Landlord shall from time to time reasonably deem necessary in the interests of good estate management [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 52 54 (j) The carrying out of any works to the Common Parts which shall or may be directed or required by any public local or any other authority and (where reasonable and appropriate) making representations against or otherwise contesting or dealing with every notice regulation or order of any competent local or other authority (k) The provision supply and running of water gas electricity telephone telecommunications and all other services whatsoever required in connection with the management of the Estate (l) Clearing snow from and applying salt and/or grit to such parts of the Estate as the Landlord shall reasonably consider desirable and purchasing and maintaining stocks of salt and grit (m) All such further services as the Landlord may in the interests of good estate management reasonably and properly consider necessary or advisable for the proper maintenance safety and good management of the Estate 2.2 "SERVICES" shall not include any capital expenditure incurred by the Landlord in the initial construction of the Premises or the Estate [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 53 55 SCHEDULE 6 DOCUMENTS CONTAINING MATTERS TO WHICH THE PREMISES ARE SUBJECT 1. Insofar as they relate to or affect the Premises all matters contained or referred to in the registers of Title Nos LA371448 MS387854 and MS401343 2. All matters contained or referred to in the Headlease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 54 56 SCHEDULE 7 AUTHORIZED GUARANTEE AGREEMENT THIS AUTHORIZED GUARANTEE AGREEMENT is dated _________________ 19 and is made BETWEEN: (1) whose registered office is at ("THE LANDLORD") (2) whose registered office is at ("the FORMER TENANT") WITNESSES as follows: 1. Definitions and interpretations 1.1 In this Deed the following expressions shall where the context so admits or requires have the following meanings: "ASSIGNEE" means ____________ whose registered office is at _________ of _________________ "PREMISES" means _______________________________ "RELEVANT COVENANTS" has the same meaning as in section 16 of the 1995 Act "RELEVANT PERIOD" means the period starting on the date when the Sub-Underlease shall be assigned to the Assignee and terminating on the date when the Assignee is released from the relevant covenants by virtue of the Act "SUB-UNDERLEASE" means a Sub-Underlease of the Premises dated __________ ______ 199 made between ________________ (1) and _______________ (2) and (3) "TERM" means the term of __________________ years from and including the ________________ 199 created by the Sub-Underlease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 55 57 "1995 ACT" means the Landlord and Tenant (Covenants) Act 1995 1.2 Words or phrases which are defined in the Sub-Underlease shall unless the context otherwise requires have a similar meaning when used in this Deed and any interpretations referred to in the Sub-Underlease shall also apply to this Deed 1.3 Where the Former Tenant comprises 2 or more persons or corporations their liability shall be joint and several 1.4 Words importing the singular meaning shall where the context so admit include the plural meaning and vice versa 2. Authorized Guarantee Agreement 2.1 This Deed is an Authorized Guarantee Agreement for the purposes of the 1995 Act and the circumstances set out in section 16(3) of the 1995 Act apply 3. The Former Tenant's covenants 3.1 The Former Tenant covenants and undertakes with the Landlord that: (a) The Assignee will during the Relevant Period punctually pay the rent(s) reserved by and comply with all the tenant's covenants being relevant covenants contained in the Sub-Underlease (b) The Former Tenant will pay and make good to the Landlord on demand and will indemnify the Landlord against all losses costs expenses and damages occasioned by or resulting from the Assignee's failure during the Relevant Period to comply with any obligation owed by the Assignee in respect of the relevant covenants (c) If during the Relevant Period the Sub-Underlease is disclaimed and the Landlord within 6 months of such disclaimer by notice in writing to the Former Tenant so requires the Former Tenant will accept and execute a [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 56 58 counterpart of a lease of the Premises for a term equal to the residue of the Term unexpired at the date of the disclaimer at the rent payable immediately prior to such date and subject to conditions and obligations no more onerous than those contained in the Sub-Underlease (and including provisions if applicable for a review of the Rent on the same dates and in the same manner to those contained in the Sub-Underlease) such lease to take effect as from the date of the disclaimer 4. Agreement and Declaration 4.1 The parties hereby agree and declare that: (a) The Former Tenant shall not be released from any liability hereunder nor shall the liability of the Former Tenant be in any way affected by reason of: (i) the fact that the Landlord does not strictly or timeously enforce the relevant covenants against the Assignee (ii) any variation of the terms of the Sub-Underlease in the meantime to the extent permitted by section 18 of the 1995 Act (iii) any compromise or arrangement agreed between the Landlord and the Assignee in the meantime (iv) any consent given under the Sub-Underlease in the meantime (v) when the Former Tenant comprises 2 or more persons) any release by the Landlord of any one or more of the Former Tenants (b) All monies due from the Former Tenant under this Guarantee shall be paid without any deduction whatsoever and without the Former Tenant exercising or seeking to exercise any right or claim to legal or equitable set-off except to the extent (if any) allowed by the Sub-Underlease [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 57 59 (c) The parties hereby agree and declare that the provisions of clause 4 shall only take effect to the extent permitted by section 18 of the Act IN WITNESS whereof this Deed has been duly executed on the date first stated above [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 58 60 Executed and delivered as a deed by ) MEPC BOULEVARD LIMITED ) acting by two duly authorized officers: ) Director Director/Secretary [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 59 61 APPENDIX 1 BASE SPECIFICATION [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 60 62 INTERCITY JIS LTD BOULEVARD INDUSTRY PARK MEDEVA PHARMA LIMITED LEASE BASE SPECIFICATION 08 APRIL 1999 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 61 63 LEASE BASE SPECIFICATION 08 APRIL 1999 BOULEVARD INDUSTRY PARK The buildings will be constructed as a shell capable of accepting specialist fitting out/modification by the occupier or Intercity JIS, an behalf of the occupier. A basic general office will be provided within the shell unit on two floors, the area of which will up to [***] of the total floor area. Toilets, including disabled provision, will be provided, compatible with the relevant minimum standards, the quantity of which shall be related to the number of employees calculated at one person per 75m2 of building area. A small kitchen space will be provided. Modifications to the baseline shell unit which are required. by individual occupiers can be incorporated and will be informed by [***]. The baseline shell building will comprise: 1.00 PRODUCTION/WAREHOUSE/DELIVER/DISPATCH 1.1 FLOORS 1.1.1 Ground floor. flat uniform surface, [***], with [***] 1.2 FRAME 1.2.1 The building primary frame will be steel and will generally provide an internal height of [***] to underside of haunch 1.2.2 The primary roof structure will have a load capacity (UDL) allowance of [***] for the support of [***]. (The structure will not be designed to make any allowances for [***]). 1.3 EXTERNAL WALLS 1.3.1 [***], self-finished, inside and outside. 1.3.2 [***] will be provided. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 62 64 1.3.3 Escape and personnel doors [***]. 1.4 ROOF 1.4.1 Low pitch [***]. 1.4.2 Gutters will be insulated, [***]. 1.4.3 Rainwater downpipes will be [***]. 1.4.4 A [***], will be provided [***]. 1.5 INTERNAL WALLS 1.5.1 Internal compartment walls to subdivide the production/warehouse will be provided (compliant with building regulations) equivalent to [***] of the length of external building perimeter is included. 1.5.2 Walls will generally be left [***]. 1.6 SERVICES/UTILITIES 1.6.1 Incoming services to the Production/Warehouse facility will be terminated at [***] on the building perimeter. The following service loadings will be provided in addition to [***] (items 2.7 & 2.8) [***] The electrical power will be provided at [***] to the building. 1.6.2 General power will be provided to a point within the building for distribution by the tenant. 2.0 OFFICES/WELFARE ACCOMMODATION 2.1 Floors [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 63 65 2.1.1 Ground floor: flat uniform surface, [***] with [***] 2.1.2 Upper floor: flat uniform surface, [***], with [***] 2.1.3 The upper floor slab will be capable of accommodating up to [***] penetrations for services in designated areas. 2.1.4 The floors to office areas will be finished in carpet, toilets will be tile finished, and kitchen, welfare areas generally will be sheet vinyl. 2.1.5 There will be no provision for [***]. 2.2 FRAME 2.2.1 The office area primary frame will be [***] and will provide a potential floor to floor height of approximately [***]. This frame will be [***]. 2.2.2 The frame members supporting the floor will be fire protected to [***] as appropriate. 2.2.3 The office roof structure will have a load capacity (UDL) dead load of [***] for the support of building services and ceilings. 2.3 EXTERNAL WALLS 2.3.1 [***]. Internally the [***]. 2.3.2 Windows will be [***]. 2.3.3 Escape doors will be [***]. 2.3.4 Main visitor/staff entrance door will be [***]. 2.4 ROOF As item 1.40. 2.5 INTERNAL WALLS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 64 66 2.5.1 Office perimeter walls will be a [***]. 2.5.2 Toilet area walls will be as 2.5.1 but with a tile finish. 2.5.3 Kitchen area walls will be as 2.5.1 but with a combination of tile and painted plaster finish. 2.5.4 Internal doors between the warehouse/production area and offices will be [***]. Doors elsewhere will be [***]. 2.6 CEILINGS 2.6.1 Ceilings to office areas will be [***]. 2.6.2 Toilet and kitchen areas will be painted plasterboard suspended ceilings. 2.7 LIGHTING/SMALL POWER/COMMUNICATIONS 2.7.1 Office areas will have [***]. 2.7.2 Toilet and kitchen areas will have modular recessed low energy fittings providing [***]. All other circulatory spaces to be provided with a lighting level of [***]. 2.7.3 Offices will have [***]; on two internal walls. 2.7.4 Kitchen and lobby areas will have switched power outlets for cleaning/domestic appliances. 2.7.5 [***] will be installed to the perimeter of the building to [***] on the ground floor. 2.7.6 Emergency lighting will be provided, in accordance with building control/fire officer requirements. 2.8 HEATING/VENTILATION [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 65 67 2.8.1 General heating to the office, toilet and kitchen areas will be a [***] serviced by a [***]. [***] will have individual thermostatic controls. 2.8.2 Toilets and kitchen areas will be provided with mechanical extract ventilation in compliance with building control requirements. 2.9 FIRE ALARM INSTALLATION 2.9.1 A main fire alarm control/indicator panel will be installed [***]. The [***] will have appropriate fire detection systems. 3.0 DRAINAGE 3.1.1 Surface water drainage will be provided will be provided for roof areas and all external hardstanding areas including drainage channels in front of vehicle loading doors. 3.1.2 Foul drainage will be provided to toilets and kitchen. 4.0 EXTERNAL AREAS 4.1.1 Service yards and goods vehicle areas will be concrete with a brushed finish. These areas will be suitable for vehicles of a [***] load capacity. 4.1.2 Car parking spaces will be tarmacadam with demarcation lines. Car park roadway areas will be suitable for light goods vehicles and car traffic. Parking provision to meet minimum Local Authority standards. 4.1.3 The [***] will be secured with [***]. 5.0 ANCILLARY ITEMS 5.1.1 The balance of the plot area will be grassed. 5.1.2 External lighting, mounted on the building will be provided, to give illumination to the service yard/car park. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 66 68 5.1.3 Lighting protection will be provided to the building. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 67 69 APPENDIX 2 PLANS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 68 70 APPENDIX 3 TENANT'S FIT-OUT [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 69 71 TABLE OF CONTENTS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
PAGE 1. Particulars.............................................................................1 2. Definitions.............................................................................2 3. Interpretation..........................................................................6 4. Demise..................................................................................8 5. Tenant's covenants......................................................................9 5.1 Rent.................................................................................9 5.2 Outgoings and Value Added Tax........................................................9 5.3 Electricity gas and other services consumed.........................................10 5.4 Repair..............................................................................10 5.5 Clean and tidy and decoration.......................................................10 5.6 Access of Landlord and notice to repair.............................................11 5.7 Yield up............................................................................12 5.8 Alterations and additions...........................................................12 5.9 Planning, Acts......................................................................13 5.10 Plans documents and information...................................................15 5.11 Statutory obligations.............................................................15 5.12 User..............................................................................16 5.13 Nuisance etc and residential restrictions.........................................16 5.14 Aerial signs and advertisements...................................................16 5.15 Roof and floor weighting..........................................................17 5.16 Unloading and parking.............................................................17 5.17 Dealings with the Premises........................................................18 5.18 Landlord's costs..................................................................21 5.19 Adjoining Property................................................................22 5.20 Pollution.........................................................................22 5.21 Machinery.........................................................................22 5.22 Regulations.......................................................................22 5.23 Indemnities.......................................................................23 5.24 Re-letting boards.................................................................23 5.25 Rights of light and encroachments.................................................23 5.26 Interest on Arrears...............................................................23 5.27 Sale of reversion etc.............................................................24 5.28 Defective Premises................................................................24 5.29 New Guarantor.....................................................................25 5.30 Landlord's rights.................................................................25 5.31 Observe Headlease.................................................................25
i 72 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5.32 Indemnity for breach of Headlease.................................................25 5.33 Permit access to the Landlord.....................................................25 5.34 Compliance with Construction Regulations..........................................26 6. Landlord's covenants...................................................................27 6.1 Quiet enjoyment.....................................................................27 6.2 Headlease rents.....................................................................27 7. Landlord's provision of services.......................................................27 8. Payment of Service Charge..............................................................28 9. Times and manner of payment of Service Charge..........................................28 10. Disputes...............................................................................29 11. Insurance..............................................................................29 12. Guarantor's covenants..................................................................33 13. Provisos...............................................................................36 13.1 Re-entry..........................................................................36 13.2 Covenants relating to adjoining land..............................................37 13.3 Disputes with adjoining owners....................................................37 13.4 Effect of waiver..................................................................37 13.5 Rights easements etc..............................................................37 13.6 Exclusion of use warranty.........................................................38 13.7 Accidents.........................................................................38 13.8 Representations...................................................................38 13.9 Licenses etc under hand...........................................................38 13.10 Tenant's property.................................................................38 13.11 Compensation......................................................................39 13.12 Service of notices................................................................39 13.13 Qualified Expert..................................................................40 SCHEDULE 1 The Premises........................................................................46 2 Rights granted......................................................................47 3 Rights reserved.....................................................................49 4 Rent Review.........................................................................51 5 Service Charge......................................................................55 6 Documents containing matters to which the Premises are subject......................59 7 Authorized Guarantee Agreement......................................................60
ii EX-10.44 13 f69956ex10-44.txt EXHIBIT 10.44 1 EXHIBIT 10.44 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Dated October 11, 2000 (1) POWDERJECT PHARMACEUTICALS LIMITED (2) EVANS VACCINES LIMITED (3) AVIRON (4) AVIRON UK LIMITED - -------------------------------------------------------------------------------- MASTER AGREEMENT - -------------------------------------------------------------------------------- Latham & Watkins 99 Bishopsgate London EC2M 3XF Tel: +44 (0) 20 77 10 1000 Fax: +44 (0) 20 7374 4460 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS 1. DEFINITIONS AND INTERPRETATION............................................2 2. ENTRY INTO TRANSACTION AGREEMENTS.........................................3 3. GUARANTEE BY AVIRON.......................................................4 4. GUARANTEE BY PJP..........................................................5 5. ANNOUNCEMENTS AND PUBLICITY...............................................7 6. NOTICES...................................................................7 7. VARIATION.................................................................9 8. COSTS.....................................................................9 9. SEVERANCE.................................................................9 10. WAIVERS...................................................................9 11. COUNTERPARTS..............................................................9 12. APPLICABLE LAW AND JURISDICTION...........................................9 13. ASSIGNMENT...............................................................10 14. CONTRACT (RIGHTS OF THIRD PARTIES) ACT 1999..............................10 15. PAYMENTS.................................................................10 16. [***]....................................................................10 17. BOARD RESOLUTIONS........................................................12 18. WAIVER...................................................................12
i 3 THIS AGREEMENT is made the 11th day of October 2000. BETWEEN: (1) POWDERJECT PHARMACEUTICALS PLC (registered in England and Wales under Company Number: 3321428) the registered office of which is at Florey House, Robert Robinson Avenue, Oxford, Oxfordshire OX4 4GA ("PJP"); (2) EVANS VACCINES LIMITED (registered in England and Wales under Company Number: 3970089) the registered office of which is at Florey House, Robert Robinson Avenue, Oxford, Oxfordshire OX4 4GA ("EVANS"); (3) AVIRON (registered in Delaware) the registered office of which is at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America ("AVIRON"); and (4) AVIRON UK LIMITED (registered in England and Wales under Company Number: 3854275) the registered office of which is at Carmelite, 50 Victoria Embankment, London EC4Y ODX ("AVIRON UK"). WHEREAS: (A) Pursuant to an amended and restated contract manufacture agreement dated 7th June 1999 and made between Medeva Pharma Limited ("MEDEVA") and Aviron (the "CMA"), Medeva agreed, inter-alia, to manufacture the Intermediate Product (as defined below) for Aviron. (B) Pursuant to an agreement dated 7th September 2000 Evans, a wholly owned subsidiary of PJP, has acquired from Medeva the business carried on at the premises situated in Gaskill Road, Speke, Liverpool, of the manufacture, assembly and packaging of pharmaceutical products, or components thereof (the "MEDEVA SALE AGREEMENT"). (C) On 28th September 2000, being the date of completion of the Medeva Sale Agreement, the CMA was assigned from Medeva to Evans, in accordance with its terms. (D) The parties have agreed that the following other agreements (the "TRANSACTION AGREEMENTS") be entered into contemporaneously (other than the Warrant Instrument) by them to facilitate the manufacture of the Intermediate Product by Aviron UK: (i) the Property Agreements; (ii) the Shared Services Agreement; (iii) the IP License; (iv) the Quality Agreement; (v) the Transfer Agreement; (vi) the Restated Agreement; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 4 (vii) the Warrant Instruments; and (viii) the Disclosure Letter. (E) PIP and Aviron have agreed to cause their respective wholly owned subsidiary companies, Evans and Aviron UK, to enter into certain agreements and have further agreed to guarantee the obligations of their respective subsidiary companies on the terms of this Agreement. 1. DEFINITIONS AND INTERPRETATION In this Agreement the following words shall have the following meanings: "AGREED FORM" means in relation to any document, such document in the form agreed between PJP and the Aviron and initialled by or on behalf of such persons for the purpose of identification; "AVIRON GUARANTEED AGREEMENTS" means the IP License, the Shared Services Agreement, the Property Agreements, the Transfer Agreement and the Quality Agreement; "AVIRON'S GROUP" means Aviron, its holding company (if any) from time to time and all companies and undertakings which now are or in the future become subsidiaries or subsidiary undertakings of Aviron or of any such holding company; "AVIRON UNIT" means the manufacturing facilities where Aviron's intermediate product is manufactured, including the QA/QC Area, as more particularly described in the relevant Property Agreement; "BUSINESS DAY" means any day that is not a Saturday or a Sunday or a bank or public holiday in England and Wales; "CUSTOMS" means HM Customs & Excise; "DISCLOSURE LETTER" shall have the meaning ascribed to it in the Transfer Agreement; "IP LICENSE" means the know-how and technology license agreement to be entered into between Aviron UK and Evans in the Agreed Form; "PJP GUARANTEED AGREEMENTS" means the IP License, the Shared Services Agreement, the Property Agreements, the Transfer Agreement, the Restated Agreement and the Quality Agreement; "PJP'S GROUP" means PJP, its holding company (if any) from time to time and all companies and undertakings which now are or in the future become subsidiaries or subsidiary undertakings of PJP or of any such holding company; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 5 "PROPERTY AGREEMENTS" means the agreements for sub-lease of the Aviron Unit and the extension to the Aviron Unit and the three licenses to jointly occupy or access certain areas of Evans' premises in Speke, Liverpool to be entered into by the parties each in the Agreed Form; "QA/QC AREA" means the quality assurance, quality control and administrative area of approximately 2,500 square feet as defined in the relevant Property Agreement Unit; "QUALITY AGREEMENT" means the agreement to be entered into between Evans and Aviron UK in the Agreed Form; "RESTATED AGREEMENT" means the deed to be entered into by Aviron and Evans amending and restating the terms of the CMA in the Agreed Form; "SHARED SERVICES AGREEMENT" means the agreement to be entered into between Evans and Aviron UK concerning the provision and sharing of certain services in the Agreed Form; "SPF UNIT" means the area of facilities at Evans Road, Speke, Liverpool where eggs are received, cleaned and processed as described in the relevant Property Agreement; "TRANSFER AGREEMENT" means the agreement to be entered into between Evans and Aviron UK providing for the transfer of certain employees of Evans to Aviron UK in the Agreed Form; "VAT" means value added tax under the Value Added Tax Act 1994 ("VATA"); "WARRANT INSTRUMENTS" means the warrant instruments to be constituted by Aviron pursuant to which Aviron agrees to issue share warrants to Evans as farther consideration under the Restated Agreement. 2. ENTRY INTO TRANSACTION AGREEMENTS 2.1 In consideration of the mutual covenants contained herein: (a) PJP shall cause Evans to enter into each of the Transaction Agreements; (b) Aviron shall cause Aviron UK to enter into each of the Transaction Agreements; and (c) Aviron shall enter into the Restated Agreement and constitute the Warrant Instruments. 2.2 Each of PJP and Aviron acknowledges that until such time as each of the Transaction Agreements (other than the Warrant Instruments) have been duly signed by each of the parties thereto and unconditionally released to the other then none of the parties shall have any rights or obligations with respect thereto and each of PJP and Aviron shall cause Evans and Aviron UK, respectively, and each of Evans and Aviron hereby agrees, to comply with the provisions of this sub-clause and acknowledge that this sub-clause overrides all operative provisions of each of the Transaction Agreements. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 6 3. GUARANTEE BY AVIRON 3.1 Aviron as primary obligor unconditionally and irrevocably: (a) guarantees by way of continuing guarantee to Evans and each member of the PJP Group the payment when due of all amounts payable by Aviron UK and each member of Aviron's Group to Evans and/or any other member of PJP's Group under the Aviron Guaranteed. Agreements; (b) undertakes to ensure that Aviron UK and each member of Aviron's Group will perform when due all its obligations under the Aviron Guaranteed Agreements; (c) agrees to indemnify and keep indemnified Evans and each member of PJP's Group against all losses and damages sustained by it flowing from any non payment or default of any kind by Aviron UK and each member of Aviron's Group under the Aviron Guaranteed Agreements; and (d) agrees that if and each time that Aviron UK or a member of Aviron's Group fails to make any payment to Evans and/or any member of PJP's Group when it is due under the Aviron Guaranteed Agreements, Aviron shall [***] pay that amount to Evans and/or any member of PJP's Group (and the certificate of Evans and/or any member of PJP's Group shall in the absence of manifest error be conclusive evidence of Aviron UK's or member of Aviron's Group's failure to in make the payment). 3.2 Each payment to be made by Aviron under this clause shall be made in the currency in which the relevant amount is payable by Aviron UK or member of Aviron's Group free and clear of all deductions or withholdings of any kind, except for those required by law, and if any deduction or withholding must be made by law, Aviron will pay that additional amount which is necessary to ensure that Evans and/or any member of PJP's Group receives a net amount equal to the full amount which it would have received if the payment had been made without the deduction or withholding. 3.3 Aviron's obligations under this clause shall not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation: (a) any time or indulgence granted to, or composition with, Aviron UK or member of Aviron's Group or any other person; (b) the taking, variation, renewal or release of, or neglect to perfect or enforce the Aviron Guaranteed Agreements or any right, guarantee, remedy or security from or against Aviron UK or member of Aviron's Group or any other person; or [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 7 (c) any unenforceability or invalidity of any obligation of Aviron UK or member of Aviron's Group so that this clause shall be construed as if there were no such unenforceability or invalidity. 3.4 Evans and/or any member of the PJP's Group may appropriate any sum paid by Aviron or any other person or recovered or received on account of the obligations the subject of this clause as Evans and/or any member of the PJP's Group sees fit, whether or not towards those obligations. 3.5 Until all amounts which may be or become payable under the Aviron Guaranteed Agreements or this clause have been irrevocably paid in full, Aviron shall not as a result of this clause or any payment or performance under this clause be subrogated to any right or security of Evans and/or any member of PJP's Group or claim or prove in competition with Evans and/or any member of PJP's Group against Aviron UK or any member of Aviron's Group or any other person or claim any right of contribution, set off or indemnity. 3.6 Aviron will not hold any security from Aviron UK or any member of Aviron's Group in respect of this guarantee and any such security which is held in breach of this provision will be held by Aviron in trust for Evans and/or any member of PJP's Group. 3.7 Aviron will reimburse Evans and/or any member of the PJP's Group for all reasonable legal and other costs (including irrecoverable VAT) incurred by Evans and/or any member of PJP's Group in connection with the enforcement of this guarantee. 3.8 The obligations of Aviron contained in this clause shall constitute and be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever and shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the obligations of Aviron UK or any member of Aviron's Group under the Aviron Guaranteed Agreements and shall continue in full force and effect until final payment in full of all amounts owing by Aviron under this guarantee and total satisfaction of actual and contingent obligations under this clause. 4. GUARANTEE BY PJP 4.1 PJP as primary obligor unconditionally and irrevocably: (a) guarantees by way of continuing guarantee to Aviron UK and to any member of Aviron's Group the payment when due of all amounts payable by Evans and each member of PJP's Group to Aviron UK and/or any member of Aviron's Group under the "PJP Guaranteed Agreements"; (b) undertakes to ensure that Evans and each member of PJP's Group will perform when due all its obligations under the PJP Guaranteed Agreements; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 8 (c) agrees to indemnify and keep indemnified Aviron UK and/or any member of Aviron's Group against all losses and damages sustained by it flowing from any non-payment or default of any kind by Evans and each member of PJP's Group under the PIP Guaranteed Agreements; and (d) agrees that if and each time that Evans or a member of PJP's Group fails to make any payment to Aviron UK or Aviron and/or any member of Aviron's Group when it is due under the PIP Guaranteed Agreements, PJP shall [***] pay that amount to Aviron UK or Aviron and/or any member of Aviron's Group (and the certificate of Aviron UK and/or any member of Aviron's Group shall in the absence of manifest error be conclusive evidence of Evans's or member of PJP's Group's failure to make the payment). 4.2 Each payment to be made by PJP under this clause shall be made in the currency in which the relevant amount is payable by Evans or member of PJP's Group free and clear of all deductions or withholdings of any kind, except for those required by law, and if any deduction or withholding must be made by law, PJP will pay that additional amount which is necessary to ensure that Aviron UK and/or any member of Aviron's Group receives a net amount equal to the full amount which it would have received if the payment had been made without the deduction or withholding. 4.3 PJP's obligations under this clause shall not be affected by any matter or thing which but for this provision might operate to affect or prejudice those obligations, including without limitation: (a) any time or indulgence granted to, or composition with, Evans or member of PJP's Group or any other person; (b) the taking, variation, renewal or release of, or neglect to perfect or enforce the PJP Guaranteed Agreements or any right, guarantee, remedy or security from or against Evans or member of PJP's Group or any other person; or (c) any unenforceability or invalidity of any obligation of Evans or member of PJP's Group so that this. clause shall be construed as if there were no such unenforceability or invalidity. 4.4 Aviron UK or Aviron and/or any member of Aviron's Group may appropriate any sum paid by Evans or any other person or recovered or received on account of the obligations the subject of this clause as Aviron UK and/or any member of Aviron's Group sees fit, whether or not towards those obligations. 4.5 Until all amounts which may be or become payable under the PJP Guaranteed Agreements or this clause have been irrevocably paid in full, PJP shall not as a result of this clause or any payment or performance under this clause be [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 9 subrogated to any right or security of Aviron UK or Aviron and/or any member of Aviron's Group or claim or prove in competition with Aviron UK or Aviron and/or any member of Aviron's Group against Evans or any right of contribution, set-off or indemnity. 4.6 PJP will not hold any security from Evans or any member of PJP's Group in respect of this guarantee and any such security which is held in breach of this provision will be held by PJP in trust for Aviron UK and/or any member of Aviron's Group. 4.7 PJP will reimburse Aviron UK and/or any member of Aviron's Group for all reasonable legal and other costs (including irrecoverable [***]) incurred by Aviron UK and/or any member of Aviron's Group in connection with the enforcement of this guarantee. 4.8 The obligations of PJP contained in this clause shall constitute and be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever and shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the obligations of Evans or any member of PJP's Group under the PJP Guaranteed Agreements and shall continue in full force and effect until final payment in full of all amounts owing by PJP under its guarantee and total satisfaction of actual and contingent obligations under this clause. 5. ANNOUNCEMENTS AND PUBLICITY No announcement or circular or other publicity in connection with the subject matter of this Agreement (other than as permitted by this Agreement) shall be made by or on behalf of PJP and/or Aviron without the approval of the other as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed) save that any announcement, circular or other publicity required to be made or issued by PJP or Aviron pursuant to any legal or regulatory authority may be made or issued by PJP or Aviron without such approval. The parties shall consult together upon the form of any such announcement, circular or other publicity and the other party shall promptly provide such information and comment as the party issuing any such announcement, circular or other publicity may from time to time reasonably request. 6. NOTICES 6.1 Any notice required to be given under this Agreement shall be in writing signed by (or by some person duly authorized by) the person giving it and may be served by leaving it or sending it by facsimile to the address of the relevant party set out in sub-clause 6.2. Any notice so served shall be deemed to have been received: (a) if delivered personally, at the time of delivery; or (b) in the case of a notice sent by facsimile, if the notice was sent during the business hours of the addressee then on the day of transmission, and otherwise on the next following Business Day. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 10 For the purposes of this Clause "business hours" means the hours of 9:00 a.m. to 5:30 p.m. local time in the country of the addressee. 6.2 Any notice required to be given under this Agreement shall be sent: (a) to PJP or Evans at: Florey House, Robert Robinson Avenue, Oxford, Oxfordshire OX4 4GA. Facsimile No: 01865 332601 For the attention of: [***] (b) to Aviron at: 297 North Bernardo Avenue, Mountain View, California 94043, USA. Facsimile No: + 1 (650) 919 2455 For the attention of. [***] (c) to Aviron UK at: 2-F Churchill House, Viscount Centre Gaskill Road, Speke, Liverpool Facsimile No: +44 (0)151486 3 713 For the attention of: [***] or to such other address or facsimile number as is notified in writing from time to time by PJP or Aviron (as the case may be) to the other party to this Agreement. 6.3 Aviron irrevocably agrees that any writ, summons, claim form, order, judgment, or other process issued out of the courts of [***] in connection with any proceedings (a "SERVICE DOCUMENT") may be sufficiently and effectively served on it by the service on [***] at [***], if no [***] to PJP pursuant to sub-clause 6.3(b) or on [***] if one has been appointed and notified to PJP. (a) Any Service Document served pursuant to this clause shall be marked for the attention of: (i) [***] or (ii) such other person as is [***] pursuant to clause 6.3. (b) If the [***] referred to in sub-clause 6.3(a) (or any [***] pursuant to this sub-clause) at any time ceases for any reason (including its dissolution) to act as [***], Aviron shall promptly and irrevocably [***] with an [***] in [***] to be its [***] on the terms of this clause and promptly notify PJP of the [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 11 (c) A copy of any Service Document served on [***] pursuant to this clause shall be sent by post to Accrington at its address for the time being for the service of notices and other communications under this clause 6. 7. VARIATION No variation of this Agreement shall be effective unless made in writing and signed by or on behalf of each of the parties. 8. COSTS Save as specifically set out in this Agreement the parties shall [***] costs and expenses in relation to the preparation, execution and carrying into effect of this Agreement. 9. SEVERANCE If at any time any provision of this Agreement is or becomes invalid or illegal in any respect, such provision shall be deemed to be severed from this Agreement but the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. 10. WAIVERS Save as specifically set out in this Agreement, a failure by any party to exercise and any delay, forbearance or indulgence by any party in exercising any right, power or remedy under this Agreement shall not operate as a waiver of that right, power or remedy or preclude its exercise at any subsequent time or on any subsequent occasion. The single or partial exercise of any right, power or remedy shall not preclude any other or further exercise of that right, power or remedy. No custom or practice of the parties at variance with the terms of this Agreement shall constitute a waiver of the rights of any party under this Agreement. The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers or remedies provided by law. 11. COUNTERPARTS This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, and which together shall constitute one and the same Agreement. Unless otherwise provided in this Agreement, this Agreement shall become effective and be dated (and each counterpart shall be dated) on the date on which this Agreement (or a counterpart of this Agreement) is signed by the last of the parties to execute this Agreement or, as the case may be, a counterpart thereof. 12. APPLICABLE LAW AND JURISDICTION 12.1 This Agreement shall be governed by [***] law and each of the parties submits to the exclusive jurisdiction of the [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 12 12.2 The parties irrevocably consent to any process in a legal action or proceedings in connection with this Agreement being served on it in accordance with the provisions of this Agreement relating to the service of notices. Nothing contained in this Agreement shall affect the right to serve process in any other manner permitted by law. 13. ASSIGNMENT [***] the parties may assign [***] its rights or delegate [***] its obligations under this Agreement (other than [***] as the case may be provided that such assignee [***] and provided further that before such assignee [***] will procure that the benefit of this Agreement is reassigned to [***] subject always to the foregoing provisions of this clause, [***] the prior written consent of [***], except as expressly provided herein. 14. [***] The parties agree that the provisions of the [***] shall not apply to this Agreement. 15. PAYMENTS 15.1 Any payments to be made by Aviron or Aviron UK to Evans or PJP under this Agreement or any of the Transaction Agreements shall be paid into the following bank accounts, or to such bank account notified in writing by Evans or PJP to Aviron UK or Aviron (as the case may be): (a) For amounts payable in US$: Name: Evans Vaccines Limited Bank: [***] Account Number: [***] Sort Code: [***] (b) For amounts payable in (Pound) sterling: Name: Evans Vaccines Limited Bank: [***] Account Number: [***] Sort Code: [***] 15.2 Any payments to be made by Evans or PJP to Aviron or Aviron UK under this Agreement or any of the Transaction Agreements shall be paid to such account as Aviron or Aviron UK (as the case may be) shall notify in writing to Evans or PJP. 16. [***] 16.1 Notwithstanding anything contained in any of the Transaction Agreements, if any of the amounts payable by Aviron UK or Aviron (as the case may be) under this [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 13 Agreement to Evans are expressed to be [***] then [***] shall only be payable [***] if: (a) [***] on such sums or amounts; and (b) a proper [***] invoice is submitted to [***]. 16.2 If [***] under the Transaction Agreements, in accordance with clause 16.1, or, notwithstanding clause 16.1, if (as applicable) no ruling under clause 16.3 or 16.4 has been received to the effect that [***] in respect of any relevant amount by the date on which any [***] under this Agreement or the Transaction Agreements, then it shall be [***] on the date of this Agreement within 14 Business Days of the date of this Agreement and in any other case on the date on which [***]. 16.3 (a) Subject to clause 16.4 the parties consider that the transactions detailed in the Transaction Agreements shall not together constitute a [***] or [***] for [***] purposes, and agree that [***] shall prepare a [***] to this effect. This [***] shall be sent first to [***] or its agents for approval (such approval not to be unreasonably withheld or delayed) and once approved shall be sent to [***]. (b) The parties shall use their reasonable endeavours to ensure that the [***] is obtained on or before the date of this Agreement. If no [***] by the date of this Agreement the parties should use their reasonable endeavours to ensure that within 5 Business Days of the date of this Agreement a letter is sent to [***]. [***] shall send a copy of any ruling to [***] and [***] within 5 Business Days of receipt of it from [***]. (c) If no such [***] has been obtained by the time that [***] and [***] (as the case may be) are due to [***] which include a [***] they may notify [***] that they have [***] on a transfer of assets which has not been treated as [***]. 16.4 (a) The parties take the view that the supplies under the Restated Agreement should be treated as [***] and agree that [***] shall prepare a [***] to this effect. This [***] shall be sent first to [***] or its agents for approval (such approval not to be unreasonably withheld or delayed) and once approved shall be sent to [***]. (b) The parties shall use their reasonable endeavours to ensure that the [***] is obtained on or before the date of this Agreement. If no [***] by the date of this agreement the parties should use their reasonable endeavours to ensure that within 5 Business Days of the date of this Agreement a letter is sent to [***]. [***] shall send a copy of any [***] to [***] and [***] within 5 Business Days of receipt of it from [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 14 (c) If no such [***] has been obtained by the time that [***] is due to [***] which includes a [***] it may notify [***] that it has [***] on a transaction which may be treated as a [***]. 16.5 (a) If [***] that any or all of the [***] which are being treated as [***] under any of the Transaction Agreements constitute a [***] or [***] or a [***]: (i) [***], if it has not submitted a [***] on which it has accounted for the [***] on the date on which such [***], will forthwith issue [***] which has been [***] in which case [***] will on the date of [***] or [***] as applicable the [***] detailed in the applicable [***]; or (ii) [***], if it has submitted a [***] on which the [***] has been accounted for, will make an [***] as appropriate for recovery of the applicable [***] from [***] and will account to [***] or [***] as appropriate on the date of such [***] and will issue at that date [***] which has been [***]. (b) For the avoidance of doubt any failure by [***] to comply with any conditions detailed in the [***] under which a [***] is made (such that [***] do not receive a [***] or only receive a [***] from [***]) will not affect the obligation of [***] to refund to [***] or [***] any [***] and for the purposes of clause 16.5 (a) (ii) it shall be regarded as having [***] on the date on which it would have [***] were it not for such failure. 17. BOARD RESOLUTIONS On the date of this Agreement each of Aviron UK and Aviron shall deliver to PJP and Evans, and Evans and PJP shall deliver to Aviron UK and Aviron copies of the minutes of the meetings of the boards of directors or the committees of the same (as appropriate) of such parties authorizing the execution by the parties of this Agreement and each of the Transaction Agreements to which they are party and appointing the relevant signatory or signatories to execute such agreements on their behalf. 18. WAIVER Aviron hereby [***] all or any right it has or may have had to [***] pursuant to [***] of such agreement (prior to the [***] of such agreement pursuant to the [***]). [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 12 15 IN WITNESS of which the parties have executed this Agreement as a deed and have delivered it upon dating it. SIGNED as a DEED by POWDERJECT PHARMACEUTICALS PLC acting by: /s/ Alan Jarvis Director /s/ Charles Swingland Director/Secretary SIGNED as a DEED by EVANS VACCINES LIMITED acting by: /s/ Alan Jarvis Director /s/ Charles Swingland Director/Secretary SIGNED as a DEED by AVIRON acting by: /s/ C. Boyd Clarke Signature of witness: /s/ Charlene Friedman Name: Charlene Friedman Address: 297 North Bernardo Avenue, Mountain View, California Occupation: Secretary, Aviron SIGNED as a DEED by AVIRON UK LIMITED acting by: Director /s/ Ray Prasad Director/Secretary /s/ Fred Kurland [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 13 EX-10.45 14 f69956ex10-45.txt EXHIBIT 10.45 1 EXHIBIT 10.45 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Dated 11th October 2000 (1) EVANS VACCINES LIMITED (2) AVIRON UK LIMITED --------------------------------------- AGREEMENT RELATING TO THE SHARING AND PROVISION OF CERTAIN SERVICES --------------------------------------- Latham & Watkins 99 Bishopsgate London EC2M 3XF Tel: +44 (0) 20 7710 1000 Fax: +44 (0) 20 7374 4460 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE ---- 1. DEFINITIONS AND INTERPRETATION ....................................... 1 2. OBLIGATIONS OF THE PARTIES ........................................... 6 3. INSPECTIONS .......................................................... 6 4. INTELLECTUAL PROPERTY AND IMPROVEMENTS ............................... 8 5. PAYMENT FOR SERVICES ................................................. 9 6. INDEMNITY ............................................................ 11 7. CONFIDENTIALITY ...................................................... 14 8. LIAISON .............................................................. 15 9. ASSIGNMENT AND CHANGE OF CONTROL ..................................... 15 10. TERM AND TERMINATION ................................................. 16 11. NOTICES .............................................................. 17 12. GENERAL .............................................................. 18 13. PUBLIC DISCLOSURE .................................................... 19 14. ENTIRE AGREEMENT ..................................................... 19 15. FORCE MAJEURE ........................................................ 19 16. DISPUTES ............................................................. 19 17. ASSETS ............................................................... 20 18. [***] ................................................................ 20
i 3 THIS AGREEMENT is made the 11th day of October 2000 BETWEEN: (1) Evans Vaccines Limited (registered in England and Wales under Company Number: 3970089) the registered office of which is at Florey House, Robert Robinson Avenue, Oxford, Oxfordshire OX4 4GA ("Evans"); and (2) Aviron UK Limited (registered in England and Wales under Company Number: 3854275) the registered office of which is at Carmelite, 50 Victoria Embankment, London, EC4Y 0DX ("Aviron UK"). WHEREAS: (A) Pursuant to an Amended and Restated Contract Manufacture Agreement dated 7th June, 1999 (the "CMA") Aviron, a company registered in Delaware, the registered office of which is at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America ("Aviron") the holding company of Aviron UK, appointed Medeva Pharma Limited ("Medeva") to manufacture the Intermediate Product in accordance with the provisions of the CMA. (B) Pursuant to an agreement dated 7th September 2000 Evans acquired from Medeva the business, carried on by Medeva at the premises situated in Gaskill Road and Evans Road, Speke, Liverpool, of the manufacture, assembly and packaging of pharmaceutical products, or components thereof (the "Medeva Sale Agreement"). (C) On 28th September 2000, being the date of completion of the Medeva Sale Agreement, the CMA was assigned from Medeva to Evans, in accordance with its terms. (D) Aviron UK wishes to manufacture the Intermediate Product on behalf of Aviron and, accordingly, the parties have decided to vary the CMA in accordance with the provisions of a deed of variation entered into on today's date. (E) The parties now wish to enter into this Agreement which concerns the sharing and provision of certain services as set out in this Agreement. 1. DEFINITIONS AND INTERPRETATION In this Agreement, the following words shall have the meanings: "AGENCY" means any governmental body responsible for licensing of the Finished Product for commercial sale and the licensing of premises and facilities of the manufacturer; "AGREEMENT" means this agreement and the schedules hereto; "ANNUAL PRODUCTION FORECAST" means the schedule of production prepared by Aviron UK in respect of each Manufacturing Period incorporating, inter alia, details of the Maximum Dose Number and the Minimum Dose Number; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 4 "ASSOCIATED COMPANIES" means in respect of any party, any company which at the relevant time is a subsidiary of that party's ultimate holding company or any subsidiary of such a subsidiary where the term subsidiary shall have the meaning as defined in section 736 of the Companies Act 1985 (as amended); "AVIRON REGULATORY RECORDS" means records generated by Aviron (and previously by Medeva) in connection with the manufacture of the Intermediate Product at the Premises; "AVIRON UNIT" means the manufacturing facilities where the Intermediate Product is manufactured (including the QA/QC Area) as more particularly described in the relevant Property Agreement; "AVIRON RESTRICTED MATERIAL" means (i) Master Donor Strains, Master Virus Seeds, Manufacturer's Working Seeds, Monovalent Virus Harvest and NAF; and (ii) all Technical Information; "BUSINESS" means the business of the contract manufacture of the Intermediate Product as more fully described in the CMA prior to its amendment and restatement pursuant to an agreement made on the date of this Agreement between Evans and Aviron; "BUSINESS DAY" means any day that is not a Saturday, a Sunday or a bank or public holiday in England and Wales; "CAIV PRODUCT" means a live, attenuated, intranasally deliverable cold-adapted influenza vaccine; "CUSTOMS" means HM Customs & Excise; "DOSE NUMBER" means the Maximum Dose Number and/or the Minimum Dose Number; "EVENT OF FORCE MAJEURE" means (i) the occurrence of an event or circumstance wholly beyond the reasonable control of the parties and/or (ii) which could not have been avoided by the party so affected using all reasonable efforts and includes (insofar as beyond such control but without prejudice to the foregoing expression) a war (declared or undeclared), insurrection, civil commotion, military action, or an act of sabotage or material vandalism, a strike, lockout or industrial action, dispute or disturbance of any kind, the application of an import or export law or policy, an act of God and a storm, tempest, fire, flood, earthquake or other natural calamity or occurrence; "FDA" means Food and Drug Administration of the United States of America; "FINISHED PRODUCT" means the Vaccine in its final form packaged for the sale to the consumer; "FLU SEASON" means, in respect of the northern hemisphere, the period of time during a calendar year anticipated to start approximately at the beginning of August and ending [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 5 approximately in January in which it is anticipated that the Vaccine will be used to vaccinate patients; "cGMP" means current FDA Good Manufacturing Practices as set forth in the United States 21 Code of Federal Regulations Parts 210 and 211 as amended from time to time, and the corresponding regulations of PIC and the EU, [***] during the term of this Agreement; "GSA" means the general services area which provides the cleaning services for reusable equipment used in the Aviron Unit; "INTERMEDIATE PRODUCT" means Monovalent Virus Harvest and/or NAF, manufactured according to and conforming with the Specifications which is intended for use in the manufacture of the Vaccine; "IP LICENSE" means the know-how and technology license agreement to be entered into by the parties on the date of this Agreement; "MANUFACTURING PERIOD" means a period of one year starting with [***] and ending [***] of the next calendar year during the term of this Agreement and that the first Manufacturing Period (the "First Manufacturing Period") shall be the period commencing on [***] and ending [***]. "MANUFACTURER'S WORKING VIRUS SEEDS" means the virus reassortants to be produced by Aviron, from time to time, from the Master Virus Seeds and from which the Monovalent Virus Harvest is produced; "MASTER DONOR STRAINS" shall mean the live attenuated influenza strains derived by Dr. Maassab and designated Type A/Ann Arbor/6/60-H2N2 and Type B/Ann Arbor/1/66, exclusively licensed from Michigan to Aviron, and which are used to produce Master Virus Seeds; "MASTER VIRUS SEEDS" means certain reassortants produced by Aviron from the Master Donor Strains; "MAXIMUM DOSE NUMBER" shall be the dose number for the relevant Manufacturing Period as provided by Aviron UK to American Home Products and as notified to Evans in accordance with sub-clause 5.2; "MICHIGAN" means the Regents of the University of Michigan, a constitutional corporation of the State of Michigan with offices located at Wolverine Tower, Room 2071, 3003 South State Street, Ann Arbor, Michigan, 48109 1280, USA; "MILESTONE PAYMENTS" means the annual payments to be made by Aviron UK to Evans pursuant to clauses 3.1.2 to 3.1.6 (inclusive) of the IP License; "MINIMUM DOSE NUMBER" means: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 6 (i) in respect of the First Manufacturing Period, [***] doses; (ii) in respect of the Manufacturing Period beginning [***] and ending on [***], [***] doses; (iii) in respect of the Manufacturing Period beginning on [***] and ending on [***], [***] doses; (iv) in respect of the Manufacturing Period beginning on [***] and ending on [***], [***] doses; (v) in respect of the Manufacturing Period beginning on [***] and ending on [***], [***] doses; and (vi) in respect of the Manufacturing Period beginning on [***] and ending on [***], [***] doses; "MONOVALENT VIRUS HARVEST" means each of the three virus strains to be incorporated in. the Vaccine for a given Flu Season in bulk form; "NAF" means "Normal Allantoic Fluid" used as a diluent in the Vaccine and/or any other materials used as a diluent in the Vaccine; "OTHER SERVICES" means the services described in part B of Schedule 1; "PIC" means the Pharmaceutical Inspection Convention; "PLI" means pre-license inspection or any other pre-approval inspections by an Agency; "PREMISES" means parts of the premises at Gaskill Road and Evans Road, Speke, Liverpool, at which the Business has been conducted by Medeva (and which has been acquired by Evans pursuant to the Medeva Sale Agreement); "PROPERTY AGREEMENTS" means the agreements for sub-lease of the Aviron Unit and the sub-lease of the extension to the Aviron Unit and the three licenses to jointly occupy and access certain areas of the Premises; "QA/QC AREA" means the quality assurance, quality control and administrative area of approximately 2,500 square feet as described in the relevant Property Agreement; "QUALITY AGREEMENT" means the quality agreement, as amended from time to time, entered into between Evans and Aviron UK on the date of this Agreement; "RAW MATERIALS" means the components required by Aviron UK in the manufacture of the Intermediate Product; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 7 "REGULATORY RECORDS" means environmental monitoring and cleaning, quality control and quality assurance and batch records generated by Evans in connection with the manufacture by Aviron UK of the Intermediate Product at the Premises; "RESTRICTED INFORMATION AND MATERIALS" means (i) the Aviron Restricted Material; (ii) all information relating to the Discloser's (as defined below) business; and (iii) all information arising pursuant to this Agreement, and the CMA, disclosed by one party to this Agreement (the "Discloser") to the other (the "Recipient") or to an Agency or any other third party at the request of the other party in connection with this Agreement, excluding any such information which: (a) is or was already known to the Recipient at the time of disclosure by the Discloser as evidenced by the written records of the Recipient; or (b) was at the time of such disclosure or communication by the Discloser or thereafter becomes or became published, accessible to the public or otherwise in the public domain other than through any act or omission of the Recipient; or (c) must be disclosed to government inspectors in the discharge of statutory obligations provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from such government inspectors any assurances as regards confidentiality as may be afforded to such information in the circumstances; or (d) must be disclosed by the Recipient to the relevant Agency in the course of applying for, obtaining or maintaining regulatory approval provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from such Agency any assurances as regards confidentiality as may be afforded to such information in the circumstances; or (e) is hereafter disclosed to the Recipient by a third party, who to the knowledge of the Recipient does not have any obligations of confidentiality to any third party or who has not, to the actual knowledge of the Recipient, derived it directly or indirectly from the Discloser provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from such third party any assurances as regards confidentiality as may be afforded to such information in the circumstances; or is required to be disclosed by law provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from the recipient as regards confidentiality as may be afforded to such information in the circumstances. "SERVICES" means the services described in Schedule 1; "SPECIFICATIONS" means requirements and specifications for the Intermediate Product and its manufacture as provided by Aviron UK to Evans from time to time; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 8 "SPF UNIT" means the area of the facility on Evans Road, Speke, Liverpool where [***] eggs are [***] as described in the relevant Property Agreement; "TECHNICAL INFORMATION" means all registration data, know-how, experience, formulation, manufacturing instructions, standard operating procedures, policies, instructions, standards, methods, test and trial results, manufacturing and formulation processes, hazard assessments, quality control standards, formulae, specifications, storage and data, samples, drawings, designs, description of packaging materials and all other relevant information relating to the Intermediate Product or its design, manufacture, formation, handling, storage, testing and use and/or Master Donor Strains and/or Master Virus Seeds; "TRANSACTION AGREEMENTS" shall have the same meaning ascribed to it as in a Master Agreement dated the date of this Agreement and entered into, inter alia, by the parties to this Agreement; "VACCINE" means Aviron's CAIV Product; "VAT" means value added tax under the Value Added Tax Act 1994 ("VATA"). 2. OBLIGATIONS OF THE PARTIES 2.1 Obligations of Evans In consideration of the payment of the sums referred to in clause 5 of this Agreement, Evans agrees to provide the Services for the time periods set out in Schedule 1 at all such times: (a) in accordance with cGMP (where specifically stated to be so pursuant to Schedule I and/or where such standard is required by an Agency); (b) in accordance with all regulatory or legal requirements ; (c) in a good and workmanlike manner and in a manner consistent with the accepted standards within the industry. 2.2 Obligations of Aviron UK Aviron UK undertakes to Evans that it shall not [***] (either for itself or any other person) or cause the [***] in the [***]. 2.3 In the event that one of the parties considers that the scope, extent or pricing of the Services requires amendment or variation then such party will notify the other and both parties shall endeavour to agree on such amendment or variation, acting always in good faith in accordance with the provisions of clause 16. 3. INSPECTIONS [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 9 3.1 Subject to sub-clause 3.4, Evans will permit, no more than [***] of this Agreement (in addition to any times required pursuant to sub-clause 3.2(b)) and during normal business hours and upon reasonable notice, representatives of Aviron UK and its Associated Companies who have been [***] (such [***] not to be unreasonably withheld or delayed) to have access to the Regulatory Records and to inspect the relevant parts of the Premises occupied and/or owned by Evans or any of its Associated Companies to assess its compliance with cGMP and any current practices of any relevant Agency, solely in respect of Aviron UK's manufacture of the Intermediate Product and/or in relation to the provision of the Services pursuant to this Agreement, and to discuss any related issues with Evans's management personnel (provided always that a representative of Evans is present at ` said inspection). Following such an inspection Aviron UK will provide to Evans [***] within [***] of the inspection. If any issues concerning compliance with cGMP or any practices of any relevant Agency are raised in the audit Evans shall, within [***] provide a [***] to Aviron UK. Evans will permit on reasonable notice and in normal business hours a follow-up access to the relevant parts of the Premises and audit by Aviron UK, if reasonably necessary, to confirm corrective actions that may be agreed by the parties are completed. 3.2 (a) Subject to-sub-clause 3.4, Aviron UK shall, during normal business hours and upon reasonable notice, have the right and Evans will allow representatives of any Agency to inspect the relevant parts of the Premises occupied and/or owned by Evans or any of its Associated Companies (provided always that a representative of Evans is present at said inspection), to inspect the Regulatory Records and to ensure compliance with cGNT and other practices or regulations but only in so far as they relate to the manufacture of the Intermediate Product and/or any other matters required by law. (b) Evans shall, during normal business hours and upon reasonable notice, have the right and Aviron UK will allow the representative of any Agency to inspect the [***] (provided always that a representative of Aviron UK is present at said inspection). Evans shall have the right to have a representative of Evans present at any inspection of the [***] by any Agency at any time. Aviron UK shall give Evans reasonable notice of all such inspections. 3.3 Evans shall inform Aviron UK of any questions or recommendations made by an Agency and shall provide to Aviron UK copies of any written questions or recommendations received from an Agency insofar as they pertain to the manufacture of the Intermediate Product, the Aviron Unit, the GSA or the SPF Unit (including, without limitation, warning letters, 483(b)s, and other written communications). Evans and Aviron UK shall, prior to responding to any Agency, [***] to any written questions and recommendations of the Agency and responses to any verbal questions or recommendations of the Agency or regulatory body that do not require an immediate response subject always to [***] right to have the [***] the contents of any response to a question or recommendation of an agency that pertains to [***] (after [***] any comments of [***] with respect to issues directly related to the [***]), and save where the response to the question or recommendation of the Agency pertains solely to the [***], in which case [***] shall have [***] as to the contents of such response having taken reasonable account of the comments of [***]. Evans shall promptly send to Aviron UK a copy of any reports, [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 10 citations, or warning letters received by Evans in connection with an Agency inspection to the extent such documents relate to or affect [***] and Aviron UK shall promptly send Evans a copy of any reports, citations or warning letters received by Aviron UK in connection with such Agency inspection. 3.4 Each of the parties undertakes to the other that, other than as required by law or regulatory requirements, it shall not communicate with any Agency with the intention of causing such Agency to inspect or otherwise audit the other party or with the intention of causing an Agency to withdraw or otherwise take any steps pertaining to any license or authorization held by the other party. 4. INTELLECTUAL PROPERTY AND IMPROVEMENTS 4.1 Except as expressly provided in this Agreement, each party hereby acknowledges that it shall not acquire any rights in respect of any of the other party's intellectual property. 4.2 Other than as is necessary for the proper performance of this Agreement by the parties, or as is expressly provided in this Agreement, no license, expressed or implied, is granted by this Agreement by either party to the other under any of its intellectual property rights. 4.3 [***] all Regulatory Records shall [***], shall be treated as [***], and shall not be [***] as provided in the Quality Agreement or for the purposes associated with manufacture of the Vaccine and where necessary for disclosing to the relevant Agency and to its licensees and distributors in order to comply with regulatory requirements and to prepare for regulatory filings or PLIs. Aviron UK may [***] of all Regulatory Records, for the purposes of complying with the requirements of the relevant Agency. Aviron UK may [***] the Restricted Information and Materials to [***], having previously made reasonable efforts to obtain an obligation of confidentiality from the said [***] concerning the Restricted Information and Materials. Provided always that: (i) nothing in this sub-clause 4.3 shall limit Aviron UK's right and ability to [***] intellectual property or know how [***] pursuant to and on the terms of any [***] from time to time; and (ii) nothing in this sub-clause 4.3 shall in any way relate to or affect the [***], title to and property in which Evans agrees and acknowledges is exclusively vested in Aviron UK. 4.4 Save as may be required by law or any other regulatory authority, Evans hereby warrants to Aviron UK that: (a) it is not in possession of any materials, records or other information (whether in written form or in digital) which relates to or derives from the [***] and if such [***] comes into its possession it shall immediately transfer or send such materials, records or information to Aviron UK and further undertakes not to keep any copies of the same; (b) it is not in possession of any of the physical materials which comprise the [***]; and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 11 (c) Evans warrants that (i) it has not received any notice and [***] has received any notice that any of the licenses, consents, permits, or approvals necessary for the carrying on of the Business have been suspended, cancelled or revoked; and (ii) is not actually aware of [***] any such licenses, consents, permits, or approvals referred to in paragraph (i) are [***] within a [***] period following the date of this Agreement. 5. PAYMENT FOR SERVICES 5.1 (a) Aviron UK shall pay for the Services at the rates specified for the various Services as set out in Schedule 2. (b) Evans will submit to Aviron UK a [***] invoice (the "Invoice") for all costs and expenses incurred in the performance of the Services within thirty (30) days following the end of each of the following days in any given calendar year ([***] (each a "Quarter Day") in respect of the period ending on (but not including) such Quarter Day and beginning on the immediately preceding Quarter Day. The first such Invoice shall be submitted in respect of the period commencing on the date of this Agreement and ending on (but not including) [***]. (c) Each Invoice shall describe in reasonable detail the Services for which reimbursement is being sought and the price of such Services, including the costs of providing such Services. (d) Evans shall furnish [***] supporting all charges and costs for the Services provided that the furnishing of such documentation shall [***] to the payment obligation of Aviron UK as provided herein. If, upon later examination by Aviron UK, [***] any costs and expenses that have been paid has not been provided by to Aviron UK by Evans after Aviron UK's reasonable request therefor, Evans shall [***] for which [***] has not been furnished. (e) Evans shall keep or cause to be kept [***] records of costs and expenses to be paid for the provision of the Services and shall cause such records to be made available for inspection by the duly authorized representatives of Aviron UK during reasonable business hours [***]. (f) Aviron UK shall promptly pay all Invoices submitted by Evans not later than the date which is [***] following the receipt of the relevant invoice. (g) Aviron UK shall not be obliged to pay for Services which it has already paid for or for which it has been invoiced as a tenant pursuant to any of the Property Agreements. 5.2 Within two weeks of the date of this Agreement Aviron UK shall deliver to Evans the Annual Production Forecast in respect of the First Manufacturing Period. Thereafter on or [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 12 before [***] in each year of this Agreement Aviron UK shall deliver to Evans a copy of the Annual Production Forecast for the forthcoming Manufacturing Period. 5.3 Within [***] of receipt of the Annual Production Forecast, Evans shall submit any queries to Aviron UK in respect of the Maximum Dose Number and the reasons for such disagreement provided always that Evans shall not be entitled to raise a query with regard to the Maximum Dose Number if such number does not exceed [***]. If Evans has provided such a submission, the parties' Designated Person (as defined and identified in clause 8) shall, as soon as reasonably practicable following receipt by Aviron UK of Evans' submission, meet and discuss in good faith the issues raised by Evans with a view to resolving those issues and, in particular, with a view to agreeing the proposed Maximum Dose Number and, in the absence of agreement clause 16 of this Agreement shall apply. 5.4 If Aviron UK reasonably considers that Evans is failing to perform its obligations pursuant to clause 2.1 of this Agreement and such failure is [***] with the result that the [***], Aviron UK shall notify Evans' Designated Person within five (5) Business Days of Aviron UK become aware of such [***] provided always that if Aviron UK shall fail to so notify Evans' Designated Person within such time period then Aviron UK shall be precluded from taking such [***] into account in claiming a [***] as defined in and pursuant to sub-clause [***]. In this event, the Designated Persons shall, as soon as reasonably practicable, meet for discussion in good faith with a view to resolving the issues raised by Aviron UK to enable Evans to rectify such breach within a reasonable time period in relation to such breach. 5.5 In the event that Evans fails to remedy such breach, in accordance with sub-clause 5.4, in the time period reasonably applicable to such breach then Aviron UK shall [***]. 5.6 Aviron UK agrees that it shall, [***] any loss or damage which it may suffer in consequence of any fact, matter, event or circumstance undertaken by or on behalf of Evans in the performance of the Services and shall [***]. 5.7 5.7.1 On the first Business Day which falls on or following [***] in each year, the Designated Persons shall meet to review the operation of this Agreement in the previous Manufacturing Period and in particular, to review the [***] manufactured by Aviron UK in that Manufacturing Period. 5.7.2 If the actual number of doses of the Vaccines so manufactured is less than the Minimum Dose Number for that Manufacturing Period (the "Shortfall"), the Designated Persons shall [***] and, if the Designated Persons agree that [***] to the actions or omissions of Evans in the performance of the Services, Aviron UK shall, subject to sub-clauses 5.8 and 6.6, be entitled to recover (the "Dose Recovery") the [***] of the loss of production (calculated [***]). Subject to clause 5.8, Aviron UK shall be entitled to [***] on the next following due date of payment of such [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 13 5.7.3 If the actual number of doses of the Vaccines so manufactured is greater than or equal to the Minimum Dose Number for that Manufacturing Period but is less than the Maximum Dose Number (the "Shortfall"), the Designated Persons shall [***] and, if the Designated Persons agree that [***] to the actions or omissions of Evans in the performance of the Services, Aviron UK shall, subject to sub-clauses 5.8 and 6.6, be entitled to recover (the "Dose Recovery") the [***] of the loss of production (calculated [***]). Subject to clause 5.8, Aviron UK shall be entitled to [***] on the next following due date of payment of such [***]. 5.8 Evans shall not be required to [***], nor shall Aviron UK be entitled to [***] any amounts in respect of any [***] if. (i) Aviron UK has [***]; (ii) Aviron UK has [***] manufactured by or on behalf of Aviron UK in the relevant Manufacturing Period; or (iii) the parties [***] during the relevant Manufacturing Period, in which case Aviron UK shall [***]. 5.9 If the Designated Persons cannot reach agreement following their discussions as referred to in sub-clause 5.7 then the provisions of clause 16 shall apply. The parties agree that the Designated Persons, in their discussions, and any Expert so appointed in accordance with clause 16 to resolve a disagreement concerning clause 5.7, shall take into account in their discussions or in reaching the Expert's determination: (a) any costs and expenses (including, without limitation, capital expenditure [***] in the steps so taken; and (b) any [***] which the parties cannot agree or has not been determined in accordance with clause 16 is an [***] which has occurred within the relevant Manufacturing Period. 5.10 In the event that the procedures set out in clause 16 are in process and have not been resolved by a date on which a [***] is due and payable, Aviron UK shall be entitled to [***] following the determination of the [***] in accordance with sub-clause 5.9 (the "[***] Amount"). In the Event that the [***] Amount is greater than that determined by the [***] then Aviron UK shall make the appropriate adjusting payment [***] within [***] of the [***] determination. 6. INDEMNITY 6.1 Subject to sub-clauses 6.2, 6.3, 6.4, 6.5 and 6.6, but notwithstanding anything contained in this Agreement, Evans indemnifies and shall keep Aviron UK indemnified against all losses, damages, costs, actions, awards, penalties, fines, proceedings, claims, demands, liabilities and expenses suffered or incurred by Aviron UK to the extent they arise from the acts or omissions of Evans, its Associated Companies or their respective employees or agents. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 14 6.2 Evans shall not be liable under the indemnity provided under clause 6.1 above: (a) to the extent that any failure of the Intermediate Product to comply with the Specifications results from the failure of the Master Donor Strains and/or the eggs supplied by Aviron UK or Aviron UK's suppliers to comply with Specifications; and/or (b) for any factor occurring after the Intermediate Product leaves the Premises or any other premises occupied by Evans or any of its Associated Companies; and/or (c) to the extent that such liability arises as a consequence of any [***] of Aviron UK, its Associated Companies or their respective employees or agents. 6.3 In no event, and notwithstanding anything contained in this Agreement, shall either party be liable in contract, tort (including breach of statutory duty) or otherwise howsoever, and whatever the cause thereof, for any special, indirect or consequential loss (including, without limitation, loss of profit), damage, costs or expenses of any nature whatsoever. 6.4 If Evans makes a payment under the indemnity in sub-clause 6.1 above and Aviron UK or any of its Associated Companies receives a payment otherwise than from Evans in respect of the same loss, claim, demand, damage, cost, charge, expense or liability giving rise to a claim in respect of which that payment was made under the indemnity, Aviron UK or any of its Associated Companies shall, once it has received such payment, forthwith repay to Evans an amount equal to the lesser of such payment and the payment under the indemnity in either such case less the reasonable costs and expenses of obtaining any such payment and irrecoverable [***] (if any) thereon. 6.5 The provisions of this sub-clause shall apply to any claim by a third party against Aviron UK in respect of a matter which has given rise to a claim pursuant to the indemnity given in sub-clause 6.1 above (in each case a "Relevant Claim"). Aviron UK shall [***] give written notice of the Relevant Claim and subject to Aviron UK being fully indemnified against any reasonable costs, liabilities and expenses thereby incurred: 6.5.1 [***]; 6.5.2 [***]; 6.5.3 [***]; 6.5.4 [***]; 6.5.5 [***]; 6.5.6 [***]: (a) [***]; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 12 15 (b) [***]; Provided always that nothing in this sub-clause 6.5 shall require Aviron UK to take any action which is reasonably likely to have a [***] on the [***] of Aviron UK and its Associated Companies. 6.6 Subject always to clause 6.3, other than in respect of claims caused by any [***] of Evans, its Associated Companies and their respective employees or agents, Evans's liability in contract, tort (including breach of statutory duty) or otherwise arising by reason of or in connection with this Agreement or any agreement or indemnity contemplated hereunder shall be limited to [***] in any [***] period. For the avoidance of doubt, only one claim is permitted to be made in respect of any one incident. 6.7 Subject to sub-clauses 6.3, 6.8, 6.9 and 6.10 Aviron UK indemnifies and shall keep Evans indemnified against all losses, damages, costs, actions, awards, penalties, fines, proceedings, claims, demands, liabilities and expenses suffered or incurred by Evans to the extent they arise from the acts or omissions of Aviron UK its Associated Companies, and their respective employees or agents provided always that Aviron UK shall not be liable pursuant to this clause to the extent that the liability arises as a consequence of any [***] of Evans, its Associated Companies or their respective employees or agents. 6.8 If Aviron UK makes a payment under the indemnity in sub-clause 6.7 above and Evans or any of its Associated Companies receives a payment otherwise than from Aviron UK in respect of the same loss, claim, demand, damage, cost, charge, expense or liability giving rise to a claim in respect of which that payment was made under the indemnity, Evans or any of its Associated Companies shall, once it has received such payment, forthwith repay to Aviron UK an amount equal to the lesser of such payment and the payment under the indemnity in either such case less the reasonable costs and expenses of obtaining any such payment and irrecoverable [***] (if any) thereon. 6.9 The provisions of this sub-clause shall apply to any claim by a third party against Evans in respect of a matter which has given rise to a claim pursuant to the indemnity given in sub-clause 6.7 above (in each case a "Relevant Claim"). Evans shall as soon as reasonably practical give written notice of the Relevant Claim and subject to Evans being fully indemnified against any reasonable costs, liabilities and expenses thereby incurred: 6.9.1 keep Aviron UK informed of all material developments relating to the Relevant Claim; 6.9.2 consult (so far as is reasonably practicable in the circumstances) with Aviron UK in relation to the Relevant Claim and afford Aviron UK (so far as it is lawfully able) all reasonable facilities to investigate the same including, without limitation, reasonable access to the personnel and premises of Evans; 6.9.3 take all steps as Aviron UK may require to pursue, litigate, defend, resist or compromise the Relevant Claim, provided such steps are reasonable; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 13 16 6.9.4 preserve all relevant documents in relation to the Relevant Claim and allow access to Aviron UK on reasonable notice to inspect and take copies of all such documents; 6.9.5 not make any admission of liability or fault nor settle or compromise any Relevant Claim without the prior written consent of Aviron UK not to be unreasonably withheld or delayed; 6.9.6 allow Aviron UK to take over the conduct of and/or proceedings in relation to the Relevant Claim provided always that Aviron UK shall: (a) keep Evans fully informed in respect of such Relevant Claim and copy all material documents relating thereto to Evans; (b) make no settlement or compromise of the Relevant Claim or agree any matter in the conduct of the Relevant Claim which is likely to affect the amount thereof, without the prior written approval of Evans (such consent not to be unreasonably withheld or delayed); Provided always that nothing in this sub-clause 6.9 shall require Evans to take any action which is reasonably likely to have a material adverse effect on the business of Evans and its Associated Companies. 6.10 Subject always to clause 6.3, other than in respect of claims caused by any willful misfeasance or willful default of Aviron UK its Associated Companies and their respective employees or agents, Aviron UK's liability in contract, tort (including breach of statutory duty) or otherwise arising by reason of or in connection with this Agreement or any agreement or indemnity contemplated hereunder shall be limited to [***] in any [***] period. For the avoidance of doubt, only one claim is permitted to be made in respect of any one incident. 7. CONFIDENTIALITY 7.1 The Recipient undertakes to keep confidential all Restricted Information and Materials received by it directly or indirectly from the Discloser or obtained by it pursuant to the performance of this Agreement and not to use such Restricted Information and Materials except as provided in this Agreement. The obligations set forth in this Clause 7.1 shall apply [***]. 7.2 The Recipient shall allow access to the Discloser's Restricted Information and Materials exclusively to those of its employees who have reasonable need to see and use it for the purposes of this Agreement and shall inform each of such employees of the confidential nature of the Restricted Information and Materials and of the obligations on the Recipient with respect to such Restricted Information and Materials and shall ensure that each of its employees having access to the Restricted Information and Materials is contractually bound by obligations of confidentiality and shall take such steps as may be necessary to enforce such obligations. 7.3 On the expiry or termination of this Agreement, the Recipient will return to the Discloser all Restricted Information and Materials of the Discloser in its possession and the [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 14 17 Recipient shall, save in respect of the Aviron Restricted Material (other than where the Recipient can demonstrate that copies of the same are required by any Agency), have the option to retain (1) copy, but shall not make any further use of that information save for record keeping purposes or in order to comply with regulatory requirements from time to time. 7.4 In this clause 7 references to the Discloser or Recipient shall be deemed to include any Associated Companies of that party. 8. LIAISON The parties will each identify in writing the person responsible for the day to day operation of this Agreement. The person responsible may be changed from time to time with written notification to the other party. From the date of signature of this Agreement Aviron UK's designated person pursuant to this clause shall be [***] and Evans's shall be [***]. 9. ASSIGNMENT AND CHANGE OF CONTROL 9.1 [***] may assign [***] its rights or delegate [***] its obligations under this Agreement (other than [***] as the case may be provided that such assignee [***] and provided further that before such assignee [***] will procure that the benefit of this Agreement is re assigned to [***] or (upon giving further written notice to [***]) to [***] (subject always to the foregoing provisions of this clause) [***] the prior written consent of [***], except as expressly provided herein. 9.2 This Agreement shall be binding upon and shall inure to the benefit of Evans and Aviron UK and their respective permitted successors and assignees (if any). 9.3 The parties acknowledge and agree that any change of ownership or control of either Evans or Aviron UK shall not affect, either at law, or as between the parties, that party's rights and obligations under this Agreement, to the extent that the party undergoing such change of ownership or control survives such change of ownership or control. 9.4 Evans shall forthwith notify Aviron UK if there is an effective change of ownership or control of Evans (which in these circumstances shall mean: (i) a change in the composition of the majority of the board directors of either Evans or its ultimate holding company; (ii) the acquisition by some other entity or person of the power (whether directly or indirectly) to appoint and/or remove all the members of the board of directors of either Evans or its ultimate holding company; or (iii) if Evans sells all or substantially all of the assets or all or substantially all of the business to which this Agreement relates. Within a period of [***] of receipt of such notice or actual sale, should Aviron UK in its reasonable opinion decide that the party assuming effective ownership or control of, or purchasing the assets or business of Evans [***] or a party [***] Aviron UK [***] then Aviron UK may by a further [***] written notice terminate this Agreement. 9.5 Any purported assignment in violation of this section by either party shall be voidable by the other party. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 15 18 10. TERM AND TERMINATION 10.1 Unless sooner terminated as provided under Clauses 9, 10.2 or 10.3 this Agreement shall come into force on the date hereof and shall continue in force until 30th June 2006 (the "Initial Period"). Following expiry of the Initial Period this Agreement shall terminate, provided always that from the date which is on or about 18 months from the end of the Initial Period the parties will enter into good faith discussions concerning their ongoing relationship concerning this Agreement and provided further that there shall be no obligation on Evans to provide all or any Services to Aviron UK (whether similar to the Services or otherwise) on expiry of the Initial Period and provided further that each party shall be entitled to consider the interests of their own business operations at such time. 10.2 Either party shall be entitled forthwith to terminate this Agreement by written notice to the other if: (a) the other party makes serious or persistent default in performing and observing any of its obligations under this Agreement or is guilty of any conduct or omission which in any such case, in the reasonable opinion of the non-defaulting party, materially prejudices its interests and (where such default, conduct or omission is remediable) fails to remedy it within 30 days after service of written notice from the non defaulting party requiring such remedy; (b) an encumbrancer takes possession or a receiver is appointed over any of the property or assets of that other party; or (c) the other party becomes subject to an administration order; or (d) that other party goes into liquidation except for the purposes of solvent amalgamation or reconstruction and in such manner that the company resulting therefrom effectively agrees to be bound by or assumes the obligations imposed on that other party under this Agreement; (e) that other party is the subject of any proceeding or order or other event in any applicable jurisdiction which would have an effect analogous to any of the events mentioned in sub-clauses 10(b) to (c). 10.3 The parties acknowledge and agree that Evans shall not be obliged to provide any of the Services from the date on which Aviron UK or any of its Associated. Companies cease to occupy the AVU Unit and from such date Aviron UK shall not be entitled to recover any amounts under a Dose Recovery (pursuant to sub-clause 5.7) in respect of the curtailment of the Services in such circumstances. 10.4 For the purpose of Clause 10.2(a) a default shall be considered capable of remedy if the party in breach can comply with the provisions in question in all respects other than as to time of performance provided that time of performance is not of the essence. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 16 19 10.5 Save as specifically provided in this Agreement, a failure by any party to exercise and any delay, forbearance or indulgence by any party in exercising any right, power or remedy under this Agreement shall not operate as a waiver of that right, power or remedy or preclude its exercise at any subsequent time or on any subsequent occasion. The single or partial exercise of any right, power or remedy shall not preclude any other or further exercise of that right, power or remedy. No custom or practice of the parties at variance with the terms of this Agreement shall constitute a waiver of the rights of any party under this Agreement. The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers or remedies provided by law. 10.6 The rights to terminate this Agreement given by this clause shall be without prejudice to any other right or remedy of either party in respect of the material breach concerned (if any). 10.7 On expiration or termination of this Agreement for any reason: (a) Subject to 7.3, each party shall deliver up to the other all materials, reports, and other documents (including copies thereof) in its possession or control containing Restricted Information and Materials of the other party, and each will cease to make use of the others Restricted Information and Materials; (b) Aviron UK will be obliged to purchase and Evans will be obliged to supply all stocks of Raw Materials purchased by Evans in support of purchase orders submitted by Aviron UK at [***]; (c) Aviron UK will collect all Raw Materials supplied to Evans free of charge. In the event that Aviron UK has not collected all Raw Materials within [***] of the date of termination of this Agreement, Evans may, after [***], destroy such other Raw Materials and [***] a [***] such Raw Materials. (d) Termination of this Agreement for any reason shall be without prejudice to any rights or obligations which shall have accrued prior to such termination and shall not bring to an end any provisions of this Agreement which, in order to give effect to their meaning, need to survive its termination and such provisions shall remain in full force and. effect thereafter and in particular, but without limiting the scope of foregoing the rights and obligations of the parties under clauses 4, 5, 6, 7, 10 and 12. 11. NOTICES 11.1 Any notices (other than a notice given pursuant to sub-clause 5.4)or other information required or authorized by this Agreement to be given by either party to the other may be given in writing, by hand or sent to the other by first class airmail registered pre-paid post, telex facsimile transmission or comparable means of communication. The same shall be sent or delivered to the other party at the address shown for that party at the beginning of this Agreement or to such other address which may be notified in writing to the other party from time to time. Six (6)-working days should be allowed for delivery. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 17 20 11.2 Any notice or other information given by post pursuant to clause 11.1 which is not returned to the sender as undelivered shall be deemed to have been given on the sixth working day after the envelope containing the same was so posted. Proof that the envelope containing any such notice or information was properly addressed, pre-paid, registered and posted, and that it has not been so returned to the sender, shall be sufficient evidence that such notice or information has been duly given. 11.3 Any notice or other information sent by facsimile transmission or comparable means of communication shall be deemed to have been duly sent on the date of transmission, provided that a confirming copy thereof is sent by first class airmail registered pre-paid post to the other party at the address referred to in clause 11.1 within one working day after transmission. 12. GENERAL 12.1 Any reference in this Agreement to "writing" or cognate expressions includes a reference to facsimile transmission or any legible reproduction of words delivered in permanent and tangible form (but does not include e-mail). 12.2 The headings in this Agreement are for convenience only and shall not affect its interpretation. 12.3 No variation or amendment of this Agreement shall bind either party unless made in writing in the English language and agreed to in writing by duly authorized officers of both parties. 12.4 If any provision of this Agreement is agreed by the parties to be illegal void or unenforceable under any law that is applicable hereto or if any court of competent jurisdiction in a final decision so determines this Agreement shall continue in force save that such provision shall be deemed to be excised here from with effect from the date of such agreement or decision or such earlier date as the parties may agree. 12.5 This Agreement shall be governed by and construed in all respects in accordance with the [***] and the parties hereby submit to the exclusive jurisdiction of the [***] for the determination of any dispute arising hereunder. Either party shall be entitled to enforce any order of the [***] in any other jurisdiction. 12.6 The parties agree that the provisions of the [***] shall not apply to this Agreement. 12.7 This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, and which together shall constitute one and the same Agreement. Unless otherwise provided in this Agreement, this Agreement shall become effective and be dated (and each counterpart shall be dated) on the date on which this Agreement (or a counterpart of this Agreement) is signed by the last of the parties to execute this Agreement or, as the case may be, a counterpart thereof. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 18 21 12.8 In the event of a conflict between this Agreement and the Quality Agreement the provisions of this Agreement shall prevail in all respects and for the avoidance of doubt, the Quality Agreement shall not impose any further obligations on any of the parties. 13. PUBLIC DISCLOSURE No public announcement of any kind shall be made in respect of or in connection with this Agreement except as specifically agreed in writing between the parties, or except to the extent that an announcement is required by law or by any applicable stock exchange or any regulatory or governmental body to which either party is subject but in such event any announcement by either party shall, if reasonably practicable, be issued after prior discussion with the other. 14. ENTIRE AGREEMENT 14.1 This Agreement and the Quality Agreement are the entire agreements and understandings between the parties relating to the subject matter of this Agreement, and supersedes any previous agreement between the parties. 14.2 Each of the parties acknowledges and agrees that in entering into this Agreement, and the documents referred to in it, it does not rely on and shall have no remedy in respect of, any statement, representation, warranty or understanding (whether negligently or innocently made and whether written or oral) of any person (whether party to this Agreement or not) other than as expressly set out in this Agreement. 14.3 Nothing in this clause shall operate to limit or exclude any liability from fraud. 15. FORCE MAJEURE 15.1 If Evans is prevented, hindered or delayed from performing any of its obligations under this agreement by an Event of Force Majeure, then as long as that situation continues, Evans shall be excused from performance of such obligation to the extent it is so prevented, hindered or delayed, and the time for performance of such obligation shall be extended accordingly. 15.2 If affected by an Event of Force Majeure, Evans shall promptly notify Aviron UK of its occurrence and its effect or likely effect, and subject to clause 15.3 use all reasonable endeavours to minimize the effect of the Event of Force Majeure and to bring it to an end. 15.3 Neither party shall be obliged to settle any strike or other industrial action, dispute or disturbance of any kind, except on terms wholly satisfactory to it. 15.4 During the period of an Event of Force Majeure Aviron UK shall not be obliged to pay for any of the Services which are directly affected by such Event of Force Majeure. 16. DISPUTES [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 19 22 16.1 If any dispute or difference (the "Dispute") arises in respect of the construction, meaning or effect of this Agreement or any matter arising out of or in connection with this Agreement, then such Dispute shall in the first instance, [***] of a written request of one party to the other, [***]. 16.2 If the Dispute is not resolved as a result of [***], Aviron UK or Evans may refer the Dispute to [***] or to [***], who shall meet for discussion in good faith with a view to resolution of the Dispute, without recourse to legal proceedings. If such persons fail to reach agreement within [***] of the referral of the Dispute to them, the matter may be referred by either party immediately to [***], or in the absence of such agreement within [***] of notice by one party to the other requiring such appointment, the [***] and shall be instructed to determine the resolution of the Dispute between the parties. The [***] shall notify both parties of his or her determination as soon as possible and in any event shall be requested so to notify within [***] of his or her appointment. The findings of the [***] shall be final and binding on the parties. Costs arising out of or in connection with instructing the [***] under this clause 16.2 shall be borne by [***] or in such other proportions as the [***] may determine to be fair and reasonable. The [***] may instruct [***] to assist him or her in arriving at his or her decision and the fees and expenses of any such [***] shall be payable by [***]. The [***] shall act as [***]. 17. ASSETS Evans agrees and acknowledges that the assets [***], belong to Aviron UK and Evans has no right, title or interest in such assets. 18. [***] 18.1 Notwithstanding anything contained in this Agreement, if any of the amounts payable by Aviron UK to Evans under this Agreement are expressed to be [***] then [***] shall only be payable [***] if: (a) [***] on such sums or amounts; and (b) a proper [***] invoice is submitted to [***]. 18.2 If [***] under this Agreement, in accordance with clause 18.1, or, notwithstanding clause 18.1, if (as applicable) no ruling under clause 18.3 has been received to the effect that [***] in respect of any relevant amount by the date on which any [***] under this Agreement, then it shall be [***] on the date of this Agreement within 14 Business Days of the date of this Agreement and in any other case on the date on which [***]. 18.3 (a) The parties consider that the transactions detailed in the Transaction Agreements shall not together constitute a [***] or [***] for [***] purposes, and agree that [***] shall prepare a [***] to this effect. This [***] shall be sent first to [***] or its agents for approval (such approval not to be unreasonably withheld or delayed) and once approved shall be sent to [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 20 23 (b) The parties shall use their reasonable endeavours to ensure that the [***] is obtained on or before the date of this Agreement. If no [***] by the date of this Agreement the parties should use their reasonable endeavours to ensure that within 5 Business Days of the date of this Agreement a letter is sent to [***]. [***] shall send a copy of any [***] to [***] and [***] within 5 Business Days of receipt of it from [***]. (c) If no such [***] has been obtained by the time that [***] or [***] (as the case may be) is due to [***] which include a [***] it may notify [***] that they have [***] on a transfer of assets which has not been treated as [***]. 18.4 (a) If [***] that any or all of the [***] which are being treated as [***] under any of the Transaction Agreements constitute a [***] or [***] or a [***]: (i) [***], if it has not submitted a [***] on which it has accounted for the [***] on the date on which such [***], will forthwith issue [***] which has been [***] in which case [***] will on the date of [***] as applicable the [***] detailed in the applicable [***]; or (ii) [***], if it has submitted a [***] on which the [***] has been accounted for, will make an [***] as appropriate for recovery of the applicable [***] from [***] and will account to [***] as appropriate on the date of such [***] and will issue at that date [***] which has been [***]. (b) For the avoidance of doubt any failure by [***] to comply with any conditions detailed in the [***] under which a [***] is made (such that [***] do not receive a [***] or only receive a [***] from [***]) will not affect the obligation of [***] to refund to [***] any [***] and for the purposes of clause 18.4 (a) (ii) it shall be regarded as having [***] on the date on which it would have [***] were it not for such failure. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 21 24 IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the parties the day and year first above written. EVANS VACCINES LIMITED By: /s/ C. S. W. Swingland ------------------------------ Name: C. S. W. Swingland Title: Director AVIRON UK LIMITED By: /s/ Fred Kurland ------------------------------ Name: Fred Kurland Title: SVP & CFO [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 25 SCHEDULE 1 THE SERVICES [ - -------------------------------------------------------------------------------- [***] [***] - -------------------------------------------------------------------------------- 1. [***] [***] - -------------------------------------------------------------------------------- 2. [***] [***] - -------------------------------------------------------------------------------- 3. [***] [***] - -------------------------------------------------------------------------------- 4. [***] [***] - -------------------------------------------------------------------------------- 5. 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[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 26 ] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 27 SCHEDULE 2 SERVICES CHARGES [ - -------------------------------------------------------------------------------- [***] - -------------------------------------------------------------------------------- [***] [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - --------------------------------------------------------------------------------
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 28 - -------------------------------------------------------------------------------- [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] ---------------------------------------------------------------- [***] [***] ---------------------------------------------------------------- [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] ---------------------------------------------------------------- [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] ---------------------------------------------------------------- [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] - --------------------------------------------------------------------------------
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 29 - -------------------------------------------------------------------------------- [***] - -------------------------------------------------------------------------------- [***] [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] [***] ----------------------------------------- [***] [***] ----------------------------------------- [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] [***] - -------------------------------------------------------------------------------- [***] [***] [***] [***] - --------------------------------------------------------------------------------- [***] [***] [***] [***] - --------------------------------------------------------------------------------- [***] [***] [***] [***] - ---------------------------------------------------------------------------------
] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 EX-10.46 15 f69956ex10-46.txt EXHIBIT 10.46 1 EXHIBIT 10.46 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DATED: 11 OCTOBER 2000 (1) EVANS VACCINES LIMITED (2) AVIRON UK LIMITED -------------------------- TRANSFER AGREEMENT -------------------------- CMS Cameron McKenna Mitre House 160 Aldersgate Street London EC1A 4DD Tel: +44 (0) 20 7367 3000 Fax: +44 (0) 20 7367 2000 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE ---- 1. Definitions and interpretation ...................................... 1 2. Completion .......................................................... 3 3. Consideration ....................................................... 3 4. The Employees ....................................................... 3 5. Warranties .......................................................... 5 6. Limitations to the Warranties ....................................... 5 7. Successors and Assigns .............................................. 7 8. Protection of Goodwill .............................................. 7 9. Announcements and Publicity ......................................... 7 10. Variation ........................................................... 8 11. Costs ............................................................... 8 12. Severance ........................................................... 8 13. Waivers ............................................................. 8 14. Entire agreement .................................................... 8 15. Notices ............................................................. 8 16. Counterparts ........................................................ 8 17. Applicable Law and jurisdiction ..................................... 8 18. [***] ............................................................... 9 19. [***] ............................................................... 9 20. Post-completion effect .............................................. 10 SCHEDULE 1 THE EMPLOYEES ................................................... 15 SCHEDULE 2 EMPLOYEE WARRANTIES ............................................. 16
i 3 THIS AGREEMENT is made the 11th day of October 2000 BETWEEN: (1) EVANS VACCINES LIMITED (registered in England under Company Number: 3970089) the registered office of which is at Florey House, Robert Robinson Avenue, The Oxford Science Park, Oxford OX4 4GA (the "TRANSFEROR"); and (2) AVIRON UK LIMITED (registered in England under Company Number: 3854275) the registered office of which is at Carmelite, 50 Victoria Embankment, London, EC4Y 0DX (the "TRANSFEREE"). WHEREAS: (A) Pursuant to an agreement (the "RESTATED AGREEMENT") dated on or about the date of this Agreement the Transferor and the holding company of the Transferee, Aviron ("AVIRON") have agreed to amend and restate the terms of an amended and restated contract manufacture agreement (the "CONTRACT MANUFACTURE AGREEMENT") dated 7 June 1999 between the Transferor (as assignee of Medeva Pharma Limited ("MEDEVA")) and Aviron, with the result that Aviron has agreed that the manufacture of the Intermediate Product at premises situated in Gaskill Road, Speke, Liverpool will be carried on by the Transferee. (B) On completion of the Transaction Agreements, the Transferor has agreed to transfer the Employees listed in Schedule 1 to this Agreement to the Transferee. It is the Parties understanding that the Transfer Regulations will apply to transfer the Employees to the Transferee. IT IS AGREED as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 In this Agreement, unless the context requires otherwise, the following words shall have the following meanings: "BUSINESS" means the contract manufacture of the Intermediate Product as more fully described in the Contract Manufacture Agreement prior to the Restated Agreement having effect; "COMPLETION" means completion of this Agreement in accordance with Clause 2; "COMPLETION DATE" means the date of this Agreement; "DISCLOSED" means fairly disclosed to the Transferee for the purposes of this Agreement in the Disclosure Letter; "DISCLOSURE LETTER" means a letter dated the date of this Agreement from the Transferor to the Transferee including the documents listed in the index attached to it; "EMPLOYEES" means the persons employed in the Business at the date of this Agreement (whose names are set out in Schedule 1 together with certain particulars of their respective employment); "INTERMEDIATE PRODUCT" shall have the meaning ascribed to it in the Shared Services
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 4 Agreement; "IP LICENCE" means the licence of certain intellectual property rights dated on or about the date of this Agreement between the Parties; "MASTER AGREEMENT" means the agreement dated on or about the date of this Agreement between, inter alia, the Parties providing, inter alia, for the entry into the Transaction Agreements; "MEDEVA SALE AGREEMENT" means the agreement dated 7 September 2000 between Medeva (1), and the Transferor (2) pursuant to which the Business (as defined therein) was acquired by the Transferor; "PARTIES" means the Transferor and the Transferee; "PROPERTY AGREEMENTS" means (i) the agreements for sub-lease of the AVU Premises and the AVU Extension Premises; and (ii) the three licences to jointly occupy or access certain areas of the Transferor's premises in Speke, Liverpool to be entered into by the Parties on or about the date of this Agreement; "QUALITY AGREEMENT" means the quality agreement entered into by the Parties on or about the date of this Agreement; "SHARED SERVICES AGREEMENT" means the shared services agreement dated on or about the date of this Agreement between the Parties and Aviron; "TRANSACTION AGREEMENTS" means the Property Agreements, the Shared Services Agreement, the IP Licence, the Restated Agreement, the Master Agreement, the Warrants and the Quality Agreement; "TRANSFER REGULATIONS" means the [***]; "TRANSFEREE GROUP" means the Transferee, its holding company from time to time and all companies and undertakings which now are or in the future become subsidiaries or subsidiary undertakings of the Transferee or of any such holding company; "TRANSFEROR GROUP" means the Transferor, its holding company from time to time and all companies and undertakings which now are or in the future become subsidiaries or subsidiary undertakings of the Transferor or of any such holding company; "VAT" means value added tax under VATA 1994 or any similar tax from time to time replacing it or performing a similar function; "VATA 1994" means the Value Added Tax Act 1994; "WARRANTIES" means the warranties set out Schedule 2; and "WARRANTS" means the warrant instrument(s) dated on or about the date of this Agreement entered into by Aviron granting the Transferor the right
[***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 5 to subscribe for certain shares in the capital of Aviron. 1.2 In this Agreement: 1.2.1 the index and the clause headings are included for convenience only and shall not affect the construction of this Agreement; 1.2.2 words denoting the singular shall include the plural and vice versa; 1.2.3 words denoting any gender shall include a reference to each other gender; 1.2.4 references to persons shall be deemed to include references to natural persons, firms, partnerships, companies, corporations, associations, organisations, foundations and trusts (in each case whether or not having separate legal personality); and 1.2.5 words and expressions defined in the Companies Act 1985 (as amended) shall, where the context so admits, bear the same meanings in this Agreement. 1.3 References in this Agreement to statutory provisions shall (where the context so admits and unless otherwise expressly provided) be construed as references to those provisions as respectively amended, consolidated, extended or re-enacted as at the date of this Agreement and to any orders, regulations, instruments or other subordinate legislation made under the relevant statutes. 1.4 References to Clauses or Schedules are to Clauses or Schedules to this Agreement and the Schedules are deemed to be incorporated in this Agreement, and a reference to "this Agreement" includes a reference to the Schedules. 1.5 For the purposes of the Warranties a matter shall be treated as being within the [***] of the Transferor if, and only if such matter was (i) [***]; or (ii) is within the [***] and references in this Agreement to any matter warranted "so far as the Transferor is aware" or "to the best of the knowledge, information or belief of the Transferor" or with any similar qualification shall be construed accordingly. 2. COMPLETION At Completion: 2.1 the Transferor shall deliver to or procure the delivery to the Transferee of all [***] of the Employees then in its possession; and 2.2 against compliance by the Transferor with its obligations under Clause 2.1 the Transferee shall pay the consideration as provided in Clause 3. 3. CONSIDERATION The total consideration for the transfer of the Employees to the Transferee shall be the payment by the Transferee to the Transferor of the cash sum of [***] to be paid at Completion. 4. THE EMPLOYEES 4.1 Subject to Clause 4.4, the Parties acknowledge and agree that the amendment and restatement of the Contract Manufacture Agreement pursuant to the Restated Agreement and the completion of each of the other Transaction Agreements will constitute a relevant transfer for the purposes of the Transfer Regulations and that it will [***] and such contracts shall [***] with effect from the Completion Date. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 6 4.2 The Transferee will indemnify and keep indemnified the Transferor against any loss, damage, cost, action, award, penalty, fine, proceeding, claim, demand, liability and expense (together "LIABILITY") in respect of [***] or any other matter or circumstance occurring after Completion which arises out of: 4.2.1 the [***] occurring by virtue of the Transfer Regulations and/or this Agreement; 4.2.2 a change on or after Completion to [***] (including any term or condition relating to [***]) or any proposal to make such a change including any proposal communicated [***] by the Transferee or by the Transferor on the basis of any information received from the Transferee regarding such a proposal; 4.2.3 any claim by any [***] that as a result of [***], or as a result of [***], or as a result of [***] that they have been [***] by the [***] Completion; or 4.2.4 the [***] with its obligations under [***] in respect of any [***]; PROVIDED ALWAYS THAT the Transferee shall not have indemnified the Transferor under this Clause in relation to: (a) any Liability in respect of which the Transferor has [***] (subject always to any [***]); and (b) any matter for which the Transferor is [***] under [***]. 4.3 The Transferor will indemnify and keep indemnified the Transferee against any Liabilities incurred by the Transferee in relation to the [***] by reason or on account of or arising from all and any matters arising [***] or attributable to [***] including, but in no way limited to: 4.3.1 the [***] during the period [***] to the extent that it arises out of [***] by the [***] or by [***]; 4.3.2 any [***] (other than any [***] or [***]), [***] and any other [***] any extent to [***] and any applicable [***]; 4.3.3 any claim or other legal recourse by any [***] or [***] recognised by the Transferor arising from or connected with the [***] to such [***] or [***]; PROVIDED ALWAYS THAT the Transferor shall not have indemnified the Transferee under this Clause in relation to: (a) any Liability in respect of which the Transferee has [***] (subject always to any [***]); and (b) any matter for which the Transferee is [***] under [***]; (c) any obligation in respect of the [***] to make any payment as a result of [***] by the Transferee up to the extent which is calculated by reference to [***] with the Transferor or any member of the Transferor Group as well as the [***] with the Transferee; and (d) any Liability which arises out of a [***] by the [***] to comply with any requirement of [***] in respect of any [***]. 4.4 If, but only if, the [***] of [***] is found or alleged [***] after the Completion Date as if [***] as a consequence of the completion of the [***] other than by virtue of [***], the Transferee agrees that, provided that such [***] is [***] in the [***]: [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 7 (a) in consultation with the Transferor, it will, within [***] of being so [***] by the Transferor (as long as the [***] is made no later than [***] after the Transferor [***] such finding or allegation), [***] to that [***] an [***] referred to below; and (b) the [***] to be [***] will be such that [***] of the [***] (other than the [***] and any [***]) will [***] from the [***] of the [***] (as such [***] have been [***]) immediately before the Completion Date. Upon that [***] being [***] (or at any time after the expiry of the [***] if the [***] is not [***] as [***]), the Transferor shall [***] concerned from [***] and the Transferee shall indemnify the Transferor against [***] of all Liabilities arising from [***] and [***] of all liabilities which are [***] or [***] and which arise directly from [***] after the Completion Date until [***]. 4.5 For the avoidance of doubt the Transferee agrees that it shall pay and discharge [***] due to certain of the [***] (as [***]) in respect of the year ended [***] regardless of whether an [***] to such payment accrued [***] the Completion Date. 5. WARRANTIES 5.1 The Transferor warrants to the Transferee in the terms set out in Schedule 2 and acknowledges that the Transferee is entering into this Agreement in reliance on the Warranties. 5.2 The Warranties are given subject only to matters [***]. 5.3 Each of the Warranties shall be given on the date of this Agreement. 6. LIMITATIONS TO THE WARRANTIES 6.1 The Transferee acknowledges and agrees that: 6.1.1 the Warranties are the only warranties or other assurances of any kind given by or on behalf of the Transferor or any member of the Transferor's Group and on which the Transferee may rely in entering into this Agreement; 6.1.2 no other statement, promise or forecast made by or on behalf of the Transferor or any member of the Transferor's Group may form the basis of, or be pleaded in connection with, any claim by the Transferee under or in connection with this Agreement; 6.1.3 any claim by the Transferee or any person deriving title from it in connection with the Warranties (a "WARRANTY CLAIM") shall be subject to the following provisions of this clause; and 6.1.4 at the time of entering into this Agreement it is not aware of any matter or thing which constitutes a breach of any of the Warranties. 6.2 The maximum aggregate liability of the Transferor under the Warranties and under Clause 5.2 of the IP Licence and Clause 4.4(c) of the Shared Services Agreement inclusive of all costs and interest, shall in no event exceed US$[***]. 6.3 Subject to Clause 6.4, the Transferee shall not be entitled in any event to damages or other payment in respect of any claim or claims under any of the Warranties in respect of any individual claim (or series of related claims with respect to related facts or circumstances) unless and until the aggregate amount of all claims made in respect of the Warranties and under Clause 5.2 of the IP Licence and Clause 4.4(c) of the Shared Services Agreement exceeds US$[***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 8 6.4 The Transferee shall not be entitled to make any claim against the Transferor in respect of any breach of the Warranties unless the Transferee has given written notice of its intention to make such a claim on or before [***], such notice to specify all relevant facts relating to the Warranty Claim, as soon as reasonably practicable, and in any event within [***] of the Transferee becoming aware of those facts, to the Transferor in the case of any other Warranties, Provided always that the [***] of the [***] in respect of such Warranty Claims shall [***] if proceedings in respect of it have not been commenced within [***] of service of notice of that Warranty Claim. 6.5 The Transferee shall not be entitled to make any Warranty Claim: (a) in respect of anything [***]; (b) if the Warranty Claim would not have arisen [***] a change in [***] made after the date of this Agreement (whether or not the change purports to be effective retrospectively in whole or in part); or (c) to the extent that the Warranty Claim arises as a result only of any change after Completion in the [***] upon which any member of the Transferee's Group [***] its [***]. 6.6 If the Warranty Claim in question arises as a result of or in connection with a liability or alleged liability to a third parry (a "RELEVANT CLAIM") the Transferee shall [***] give written notice of the Relevant Claim and subject to the Transferee being fully indemnified against any reasonable costs, liabilities and expenses thereby incurred: 6.6.1 [***]; 6.6.2 [***]; 6.6.3 [***]; 6.6.4 [***]; 6.6.5 [***]; 6.6.6 [***]: (a) [***]; (b) [***]; Provided always that nothing in this Clause 6.7 shall require the Transferee to take any action which is reasonably likely to have a [***] on the [***] of the Transferee's Group. 6.7 The provisions of this Clause shall have effect notwithstanding any other provisions of this Agreement and shall apply to all or any claims of the Transferee under Clause 5.2 of the IP License and Clause 4.4(c) of the Shared Services Agreement. 6.8 Without prejudice to the Transferee's duty to mitigate any loss in respect of any breach of the Warranties, if in respect of any matter which would otherwise give rise to a breach of the Warranties, the Transferee is entitled to [***] the amount of [***] to which the Transferee is or would have been entitled shall [***] or [***] the Warranty Claim. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 9 6.9 If the Transferor makes any payment by way of damages for breach of the Warranties (the "DAMAGES PAYMENT") and within [***] of the making of the relevant payment the Transferee [***] otherwise than from the Transferor which would not have been [***] the circumstance giving rise to the Warranty Claim in respect of which the Damages Payment was made the Transferee shall, once it has [***], [***] to the [***] an amount equal to [***] and the [***], less the [***] and all and any [***]. 6.10 The [***] shall refrain from [***](other than [***]) which it [***] may give rise to a Warranty Claim which would not otherwise arise. 6.11 The [***] of the [***] for a breach of the Warranties shall be [***] and the Transferee shall [***] in any circumstances or at any time. 7. SUCCESSORS AND ASSIGNS [***] party may assign [***] its rights or delegate [***] its obligations under this Agreement (other than [***] as the case may be, provided that such assignee [***] and provided further that before such assignee [***] will procure that the benefit of this Agreement is re-assigned to [***] or (upon giving further written notice to [***]) to [***](subject always to the foregoing provisions of this Clause) of such party [***] the prior written consent of [***], except as expressly provided herein. 8. PROTECTION OF GOODWILL 8.1 As further consideration for the Transferee agreeing to indemnify the Transferor on the terms contained in this Agreement, the Transferor shall not (and shall procure that no member of the Transferor Group shall) for [***] following Completion, [***] any [***] to [***] the Transferee. 8.2 As further consideration for the Transferor agreeing to enter into this Agreement, the Transferee shall not (and shall procure that no member of the Transferee Group shall) for [***] following Completion, [***] any [***] or [***] to [***] the Transferor or the relevant member of the Transferor's Group. 8.3 The undertakings in Clauses 8.1 and 8.2 are considered by the Parties to be reasonable in all the circumstances. If any of these undertakings should for any reason be held to be invalid but would have been held to be valid if part of the wording were deleted, the undertakings shall apply with such part of the wording deleted. 8.4 Nothing in Clause 8.1 shall prevent the Transferor, or any member of the Transferor's Group, from [***] in any [***] or other [***], or from [***] or [***] with the Transferor, or any member of the Transferor's Group. 8.5 Nothing in Clause 8.2 shall prevent the Transferee, or any member of the Transferee's Group, from [***] in any [***] or other [***], or from [***] or [***] with the Transferee, or any member of the Transferee's Group. 9. ANNOUNCEMENTS AND PUBLICITY No announcement or circular or other publicity in connection with the subject matter of this Agreement (other than as permitted by this Agreement) shall be made by or on behalf of the Transferor and the Transferee without the approval of the other as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed) save that any announcement, circular or other publicity required to be made or issued by the Transferor or the Transferee pursuant to any legal or regulatory authority may be made or issued by the Transferor or the Transferee without such approval. The Parties shall consult together upon the form of any such announcement, circular or other publicity and [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 10 the other party shall promptly provide such information and comment as the party issuing any such announcement, circular or other publicity may from time to time reasonably request. 10. VARIATION No variation of this Agreement shall be effective unless made in writing and signed by or on behalf of each of the Parties. 11. COSTS Save as expressly provided in this Agreement, the Parties shall [***] costs and expenses in relation to the preparation, execution and carrying into effect of this Agreement. 12. SEVERANCE If at any time any provision of this Agreement is or becomes invalid or illegal in any respect, such provision shall be deemed to be severed from this Agreement but the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. 13. WAIVERS A failure by any party to exercise and any delay, forbearance or indulgence by any party in exercising any right, power or remedy under this Agreement shall not operate as a waiver of that right, power or remedy or preclude its exercise at any subsequent time or on any subsequent occasion. The single or partial exercise of any right, power or remedy shall not preclude any other or further exercise of that right, power or remedy. No custom or practice of the Parties at variance with the terms of this Agreement shall constitute a waiver of the rights of any party under this Agreement. The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers or remedies provided by law. 14. ENTIRE AGREEMENT This Agreement and the Transaction Agreements and all other agreements entered, or to be entered into, pursuant to the terms of this Agreement or entered into between the Transferor and the Transferee together constitute the entire agreement and understanding between the Parties with respect to the subject matter of this Agreement and supersede all prior agreements between the Parties. 15. NOTICES The provisions of the Master Agreement shall apply mutatis mutandis to this Agreement. 16. COUNTERPARTS This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, and which together shall constitute one and the same Agreement. Unless otherwise provided in this Agreement, this Agreement shall become effective and be dated (and each counterpart shall be dated) on the date on which this Agreement (or a counterpart of this Agreement) is signed by the last of the Parties to execute this Agreement or, as the case may be, a counterpart thereof. 17. APPLICABLE LAW AND JURISDICTION 17.1 This Agreement shall be governed by [***] and each of the Parties submits to the exclusive jurisdiction of the [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 11 17.2 The Parties irrevocably consent to any process in a legal action or proceedings in connection with this Agreement being served on it in accordance with the provisions of this Agreement relating to the service of notices. Nothing contained in this Agreement shall affect the right to serve process in any other manner permitted by law. 18. [***] The Parties agree that the provisions of the [***] shall not apply to this Agreement. 19. [***] 19.1 Notwithstanding anything contained in this Agreement, if any of the amounts payable by the Transferee to the Transferor are expressed to be [***] then [***] shall only be payable [***] if: 19.1.1 [***] on such sums or amounts; and 19.1.2 a proper [***] invoice is submitted to the [***]. 19.2 If [***] under this Agreement, in accordance with Clause 19.1, or, notwithstanding Clause 19.1, if (as applicable) no ruling under Clause 19.3 has been received to the effect that [***] in respect of any relevant amount by the date on which any [***] under this Agreement, then it shall be [***] on the date of this Agreement within 14 business days of the date of this Agreement and in any other case on the date on which [***]. 19.3 19.3.1 The Parties consider that the transactions detailed in the Transaction Agreements shall not together constitute a [***] or [***] for [***] purposes, and agree that the Transferor shall prepare a [***] to this effect. This [***] shall be sent first, [***] or its agents for approval (such approval not to be unreasonably withheld or delayed) and once approved shall be sent to [***]. 19.3.2 The Parties shall use their reasonable endeavours to ensure that the [***] is obtained on or before the date of this Agreement. If no [***] by the date of this Agreement the Parties should use their reasonable endeavours to ensure that within 5 business days of the date of this Agreement a letter is sent to [***]. The [***] shall send a copy of any [***] to [***] and the [***] within 5 business days of receipt of it from [***]. 19.3.3 If no such [***] has been obtained by the time that [***] and the [***] (as the case may be) are due to [***] which include a [***] they may notify [***] that they have [***] on a transfer of assets which has not been treated as [***]. 19.4 19.4.1 If [***] that any or all of the [***] which are being treated as [***] under this Agreement constitute a [***] or [***] or a [***]: (a) the [***], if it has not submitted a [***] on which it has accounted for the [***] on the date on which such [***], will forthwith issue [***] which has been [***] in which case the [***] will on the date of [***] as applicable the [***] detailed in the applicable [***]; or (b) the [***], if it has submitted a [***] on which the [***] has been accounted for, will make an [***] as appropriate for recovery of the applicable [***] from [***] and will [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 12 account to [***] as appropriate on the date of such [***] and will issue at that date [***] which has been [***]. 19.4.2 For the avoidance of doubt any failure by the [***] to comply with any conditions detailed in the [***] under which a [***] is made (such that the [***] does not receive a [***] or only receives a [***] from [***]) will not affect the obligation of the [***] to refund to [***] any [***] and for the purposes of clause 19.4.1(a) it shall be regarded as having [***] on the date on which it would have [***] were it not for such failure. 20. POST-COMPLETION EFFECT This Agreement shall remain in full force and effect after and notwithstanding Completion in respect of all obligations, agreements, covenants, undertakings or conditions contained in or implied by this Agreement which have not been done, observed or performed at or prior to Completion the Warranties shall continue in full force and effect after and notwithstanding Completion. AS WITNESS the hands of the Parties to this Agreement or their duly authorised representatives on the date written above. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 13 SCHEDULE 1 THE EMPLOYEES [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 1 14 SCHEDULE 2 EMPLOYEE WARRANTIES [***] [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 2 15 SIGNED by /s/ C.S.W. Swingland ----------------------------- for and on behalf of EVANS VACCINES LIMITED SIGNED by /s/ Fred Kurland ----------------------------- for and on behalf of AVIRON UK LIMITED [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. Sch. 3 EX-10.47 16 f69956ex10-47.txt EXHIBIT 10.47 1 EXHIBIT 10.47 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DATED 11TH OCTOBER 2000 (1) EVANS VACCINES LIMITED (2) AVIRON ----------------------- AMENDED AND RESTATED CONTRACT MANUFACTURE AGREEMENT ----------------------- LATHAM & WATKINS 99 BISHOPSGATE LONDON EC2M 3XF TEL: +44 (0) 20 7710 1000 FAX: +44 (0) 20 7374 4460 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
Page ---- 1. AMENDMENT AND RESTATEMENT............................................ 1 2. DEFINITIONS AND INTERPRETATION....................................... 1 3. CONSIDERATION........................................................ 3 4. PROFIT SHARE PAYMENTS................................................ 3 5. CURRENCY............................................................. 4 6. [***]................................................................ 4 7. RESTRICTIVE COVENANT................................................. 5 8. ANNOUNCEMENTS AND PUBLICITY.......................................... 5 9. NOTICES.............................................................. 5 10. COUNTERPARTS......................................................... 6 11. VARIATION............................................................ 7 12. COSTS................................................................ 7 13. SEVERANCE............................................................ 7 14. WAIVERS.............................................................. 7 15. APPLICABLE LAW AND JURISDICTION...................................... 7 16. [***]................................................................ 7 17. ASSIGNMENT........................................................... 8 18. [***]................................................................ 8
i 3 THIS AGREEMENT is made the 11th day of October 2000. BETWEEN: (1) EVANS VACCINES LIMITED (registered in England and Wales under Company Number: 3970089) the registered office of which is at Florey House, Robert Robinson Avenue, Oxford, Oxfordshire OX4 4GA ("EVANS"); and (2) AVIRON (registered in Delaware) the registered office of which is at 297 North Bernardo Avenue, Mountain View, California 94043, United States of America ("AVIRON"). WHEREAS: (A) Pursuant to an amended and restated contract manufacture agreement dated 7th June 1999 and made between Medeva Pharma Limited ("MEDEVA") and Aviron (the "CMA"), Medeva agreed, inter-alia, to manufacture the Intermediate Product (as defined below) for Aviron. (B) Pursuant to an agreement dated 7th September 2000 the Evans has acquired from Medeva the business carried on at the premises situated in Gaskill Road, Speke, Liverpool, of the manufacture, assembly and packaging of pharmaceutical products, or components thereof (the "Medeva Sale Agreement"). (C) On 28th September 2000, being the date of completion of the Medeva Sale Agreement, the CMA was assigned from Medeva to Evans, in accordance with its terms. (D) Evans and Aviron now wish to amend and restate the CMA as provided in this Agreement. In consideration of the mutual covenants set forth herein the parties agree as follows. 1. AMENDMENT AND RESTATEMENT The parties hereby amend and restate the CMA to read in full as set forth below and each of the parties agrees that the remaining provisions of the CMA, as are not reflected in this Agreement, are hereby terminated and that neither party shall have any further rights, obligations or liabilities in respect thereof. 2. DEFINITIONS AND INTERPRETATION In this Agreement the following words shall have the following meanings: "ANNUAL PRODUCTION FORECAST" shall have the meaning ascribed to it in the Shared Services Agreement; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 1 4 "ASSOCIATED COMPANIES" means in respect of any party, any company which at the relevant time is a subsidiary of that party's ultimate holding company or any subsidiary of such a subsidiary where the term subsidiary shall have the meaning as defined in section 736 of the Companies Act 1985 (as amended) and in respect of Aviron any entity that directly or indirectly owns, is owned by or is under common ownership with Aviron, where own or ownership means direct or indirect possession of at least fifty percent (50%) of the outstanding voting securities of a corporation or a comparable equity interest in any other type of entity; "AVIRON UK" means Aviron UK Limited, a company registered in England and Wales (under company number 3854275), a wholly owned subsidiary of Aviron; "BUSINESS DAY" means any day that is not a Saturday or a Sunday or a public holiday in England and Wales; "CAIV PRODUCT" means Aviron's live, attenuated, intranasally deliverable cold-adapted influenza vaccine; "CUSTOMS" means HM Customs & Excise; "MILESTONE" means in respect of the following calendar years: (a) 2001 - the obtaining by Aviron of its BLA Licence for the Vaccine; (b) 2002 - achievement of net sales of US$ [***] of the Vaccine; (c) 2003 - achievement of net sales of US$ [***] of the Vaccine; (d) 2004 - achievement of net sales of US$ [***] of the Vaccine; (e) 2005 - achievement of net sales of US$ [***] of the Vaccine; (f) 2006 - achievement of net sales of US$ [***] of the Vaccine; "NET SALES" shall have the meaning ascribed to it in sub-clause 4.3; "PAYMENT DATE" means each of [***]; "SHARED SERVICES AGREEMENT" means the agreement entered into on the date of this Agreement between Evans and Aviron UK relating to the provision and sharing of certain services; "TRANSACTION AGREEMENTS" shall have the same meaning as that ascribed to it in a Master Agreement dated the date of this Agreement made between, inter alia, the parties to this Agreement; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 2 5 "VACCINE" means the frozen formulation of Aviron's CAIV Product; "VAT" means value added tax under the Value Added Tax Act 1994 ("VATA"); "WARRANT INSTRUMENTS" means the warrant instruments to be constituted by Aviron as referred to in clause 3(c). 3. CONSIDERATION In consideration of Evans agreeing to the amendment and restatement of the CMA in accordance with the terms of this Agreement, Aviron agrees to: (a) pay to Evans the sum of US$[***] to be paid on the date of this Agreement; (b) pay to Evans the sum of US$ [***] to be paid in cleared funds within seven days of each Payment Date provided always that such sum shall only be payable if the following conditions are met: (i) no [***] pursuant to sub-clause [***] of the [***] has arisen during the year in which the [***] falls; (ii) the [***] for the year in which the [***] falls has been [***]; and (iii) the [***] for the year in which the [***] falls has been [***]; and (c) issue to Evans warrants over 63,162 common shares of Aviron at an exercise price of US$ 47.50 per share pursuant to and on the terms of the Warrant Instruments, such warrants to be issued to Evans within 3 (three) Business Days of the date of this Agreement. 4. PROFIT SHARE PAYMENTS 4.1 As further consideration for Evans agreeing to the amendment and restatement of the CMA pursuant to this Agreement, save as provided below, within 45 days from the end of each calendar quarter, Aviron shall pay to Evans an amount corresponding to [***]% of net sales of the Vaccine up to a total of US$ 20 million, provided that any amount of said US$ 20 million not paid on [***] shall be due and payable within thirty (30) days of such date. 4.2 Aviron's obligation to make any profit share payment to Evans pursuant to sub-clause 4.1 shall not commence until such time as Evans's profit share entitlement exceeds an amount equal to US$ 1 million together with interest on such sum calculated from January 1, 2000 at a rate of [***] percent ([***]%) per annum up to the time of grant of the [***] and thereafter at a rate of [***] percent ([***]%) per annum up to the date Evans' profit share entitlement exceeds such sum. For the avoidance of doubt, Evans's total profit share entitlement pursuant to sub-clause 4.1 shall be reduced by the amount [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 6 equal to US$ 1 million and interest thereon calculated in accordance with this sub-clause 4.2. 4.3 As used herein, "net sales" means the [***] by Aviron or its Associated Companies or licensees from persons or entities due to or by reason of the [***], less the following [***], but only to the extent such sums are otherwise included in the [***], or are [***]; (a) [***]; (b) [***]; (c) [***] other than those described above; (d) [***] (to the extent that the foregoing [***] do not exceed [***] percent ([***]%) of the sum of [***] and [***]; (e) [***]; and (f) [***]. [***] not intended for [***], and made [***] shall not be [***]. 4.4 Evans shall be entitled upon reasonable notice and during normal business hours to have an independent auditor reasonably acceptable to Aviron inspect the financial records of Aviron pertaining to sales of the Vaccine to confirm the accuracy of any report or information provided to Evans concerning Evans's [***] and Evans and Aviron shall make available to said independent auditor such records, in whatever form. Under no circumstances shall the combined [***] from [***] attributable to the factors listed in sub-clauses 4.3 (a) and 4.3 (d) exceed [***] percent ([***]%). 4.5 Evans covenants that any sums paid by Aviron to Evans pursuant to this clause 4 shall be [***] in accordance with Evans' agreement with Medeva Pharma Limited dated 7th September 2000 and in the event that Aviron becomes [***] then Evans hereby agrees to [***] provided always that Aviron has paid such sums to Evans in accordance with this clause 4. 5. CURRENCY Any sums payable pursuant to this Agreement shall be paid in US$. 6. [***] 6.1 Any sum payable by Aviron to Evans under this Agreement shall be paid [***], save only as may be required by law. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 7 6.2 If any [***] is required by law to be made [***] under this Agreement, Aviron shall [***]. 6.3 If Evans obtains a [***] in respect of the said [***] then to the extent that Evans is able to [***] as determined by Evans in its absolute discretion Evans shall [***] been obtained Provided that Evans will not be obliged to make any such [***]to the extent that such [***] available to Evans. Evans shall not be obliged to arrange its affairs so as to [***]. 7. RESTRICTIVE COVENANT 7.1 As consideration for Aviron agreeing to the amendment and restatement of this Agreement Evans shall not (and shall procure that no Associated Company shall) for so long as the [***] is in force and effect and for a period of [***] after the termination of the [***], [***], and Evans shall not [***], which have not been not authorised in writing by Aviron, including but not limited to any [***] and Evans shall not [***]. 7.2 The undertaking in sub-clause 7.1 is considered by the parties to be reasonable in all the circumstances. If such undertaking should for any reason be held to be invalid but would have been held to be valid if part of the wording were deleted, the undertaking shall apply with such part of the wording deleted. 8. ANNOUNCEMENTS AND PUBLICITY No announcement or circular or other publicity in connection with the subject matter of this Agreement (other than as permitted by this Agreement) shall be made by or on behalf of Evans and Aviron without the approval of the other as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed) save that any announcement, circular or other publicity required to be made or issued by Evans or Aviron pursuant to any legal or regulatory authority may be made or issued by Evans or Aviron without such approval. The parties shall consult together upon the form of any such announcement, circular or other publicity and the other party shall promptly provide such information and comment as the party issuing any such announcement, circular or other publicity may from time to time reasonably request. 9. NOTICES 9.1 Any notice required to be given under this Agreement shall be in writing signed by (or by some person duly authorized by) the person giving it and may be served by leaving it or sending it by facsimile to the address of the relevant party set out in sub-clause 9.2. Any notice so served shall be deemed to have been received: (a) if delivered personally, at the time of delivery; or [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 8 (b) in the case of a notice sent by facsimile, if the notice was sent during the business hours of the addressee then on the day of transmission, and otherwise on the next following Business Day. For the purposes of this Clause "business hours" means the hours of 9.00 a.m. to 5.30 p.m. local time in the country of the addressee. 9.2 Any notice required to be given under this Agreement shall be sent: (a) to Evans at: Florey House, Robert Robinson Avenue, Oxford, Oxfordshire OX4 4GA. Facsimile No: 01865 332601 For the attention of: [***] (b) to Aviron at: 297 North Bernardo Avenue, Mountain View, California 94043, USA. Facsimile No: +1 (650) 919 2455 For the attention of: [***] or to such other address or facsimile number as is notified in writing from time to time by Evans or Aviron (as the case may be) to the other party to this Agreement. 9.3 Aviron irrevocably agrees that any writ, summons, claim form, order, judgment, or other process issued out of the courts of [***] in connection with any proceedings (a "Service Document") may be sufficiently and effectively served on it by the service on [***], if no replacement agent has been appointed and notified to Evans pursuant to sub-clause 9.3(b) or on the replacement agent if one has been appointed and notified to Evans. (a) Any Service Document served pursuant to this clause shall be marked for the attention of: (i) [***] or (ii) such other person as is appointed as agent for service pursuant to clause 9.3. (b) If the agent referred to in sub-clause 93(a) (or any replacement agent appointed pursuant to this sub-clause) at any time ceases for any reason (including its dissolution) to act as Aviron's agent for service, Aviron shall promptly and irrevocably appoint another person with an address for service in [***] to be its agent for service on the terms of this clause and promptly notify Evans of the replacement's name and address. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 9 (c) A copy of any Service Document served on an agent pursuant to this clause shall be sent by post to Accrington at its address for the time being for the service of notices and other communications under this clause 9. 10. COUNTERPARTS This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, and which together shall constitute one and the same Agreement. Unless otherwise provided in this Agreement, this Agreement shall become effective and be dated (and each counterpart shall be dated) on the date on which this Agreement (or a counterpart of this Agreement) is signed by the last of the parties to execute this Agreement or, as the case may be, a counterpart thereof. 11. VARIATION No variation of this Agreement shall be effective unless made in writing and signed by or on behalf of each of the parties. 12. COSTS The parties shall pay their own costs and expenses in relation to the preparation, execution and carrying into effect of this Agreement. 13. SEVERANCE If at any time any provision of this Agreement is or becomes invalid or illegal in any respect, such provision shall be deemed to be severed from this Agreement but the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. 14. WAIVERS A failure by any party to exercise and any delay, forbearance or indulgence by any party in exercising any right, power or remedy under this Agreement shall not operate as a waiver of that night, power or remedy or preclude its exercise at any subsequent time or on any subsequent occasion. The single or partial exercise of any right, power or remedy shall not preclude any other or further exercise of that right, power or remedy. No custom or practice of the parties at variance with the terms of this Agreement shall constitute a waiver of the rights of any party under this Agreement. The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers or remedies provided by law. 15. APPLICABLE LAW AND JURISDICTION 15.1 This Agreement shall be governed by [***] law and each of the parties submits to the exclusive jurisdiction of the [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 10 15.2 The parties irrevocably consent to any process in a legal action or proceedings in connection with this Agreement being served on it in accordance with the provisions of this Agreement relating to the service of notices. Nothing contained in this Agreement shall affect the right to serve process in any other manner permitted by law. 16. [***] The parties agree that the provisions of the [***]shall not apply to this Agreement. 17. ASSIGNMENT [***] party may assign [***] its rights or delegate [***] its obligations under this Agreement (other than [***] as the case may be provided that such assignee [***] and provided further that before such assignee [***] will procure that the benefit of this Agreement is re-assigned to [***] or (upon giving further written notice to [***]) to [***] (subject always to the foregoing provisions of this clause) [***] the prior written consent of [***], except as expressly provided herein. 18. [***] 18.1 Notwithstanding anything contained in this Agreement, if any of the amounts payable by Aviron to Evans under this Agreement are expressed to be [***] then [***] shall only be payable [***] if: (a) [***] on such sums or amounts; and (b) a proper [***] invoice is submitted to [***]. 18.2 If [***] under this Agreement, in accordance with clause 18.1, or, notwithstanding clause 18.1, if (as applicable) no ruling under clause 18.3 has been received to the effect that [***] in respect of any relevant amount by the date on which any [***] under this Agreement, then it shall be [***] on the date of this Agreement within 14 business days of the date of this Agreement and in any other case on the date on which [***]. 18.3 (a) The parties take the view that the supplies under this Agreement should be treated as [***] and agree that [***] shall prepare a [***] to this effect. This [***] shall be sent first to [***] or its agents for approval (such approval not to be unreasonably withheld or delayed) and once approved shall be sent to [***]. (b) The parties shall use their reasonable endeavours to ensure that the [***] is obtained on or before the date of this Agreement. If no [***] by the date of this Agreement the parties should use their reasonable endeavours to ensure that within 5 Business Days of the date of this Agreement a letter is sent to [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 11 [***] shall send a copy of any [***] to [***] and [***] within 5 Business Days of receipt of it from [***]. (c) If no such [***] has been obtained by the time that [***] is due to [***] which includes a [***] it may notify [***] that it has [***] on a transaction which may be treated as a [***]. 18.4 (a) If [***] that any or all of the [***] which are being treated as [***] under any of the Transaction Agreements constitute a [***] or [***] or a [***]: (i) [***], if it has not submitted a [***] on which it has accounted for the [***] on the date on which such [***], will forthwith issue [***] which has been [***] in which case [***] will on the date of [***] the [***] detailed in the applicable [***]; or (ii) [***], if it has submitted a [***] on which the [***] has been accounted for, will make an [***] as appropriate for recovery of the applicable [***] from [***] and will account to [***] on the date of such [***] and will issue at that date [***] which has been [***]. (b) For the avoidance of doubt any failure by [***] to comply with any conditions detailed in the [***] under which a [***] is made (such that [***] do not receive a [***] or only receive a [***] from [***]) will not affect the obligation of [***] to refund to [***] any [***] and for the purposes of clause 18.4 (a) (ii) it shall be regarded as having [***] on the date on which it would have [***] were it not for such failure. IN WITNESS WHEREOF this Agreement has been executed by the duly authorised representatives of the parties the day and the year first above written. EVANS VACCINES LIMITED By: /s/ C.S.W. Swingland -------------------------------- Name: C.S.W. Swingland Title: Director AVIRON By: /s/ Fred Kurland -------------------------------- Name: Fred Kurland Title: SVP & CFO [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 EX-10.48 17 f69956ex10-48.txt EXHIBIT 10.48 1 EXHIBIT 10.48 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DATED 11 OCTOBER 2000 ----------------------------- EVANS VACCINES LIMITED (1) AND AVIRON UK LIMITED (2) ----------------------------- KNOW HOW LICENCE AGREEMENT ----------------------------- CMS CAMERON MCKENNA MITRE HOUSE 160 ALDERSGATE STREET LONDON EC1A 4DD) T +44(0)20 7367 3000 F +44(0)20 7367 2000 2 [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. TABLE OF CONTENTS
PAGE ---- 1. Definitions And Interpretation.........................................2 2. Licence................................................................6 3. Payments...............................................................6 4. Intellectual Property..................................................7 5. Warranties and Liability...............................................7 6. Confidentiality and Security...........................................8 7. Inspections............................................................9 8. Improvements...........................................................9 9. Miscellaneous..........................................................9 10. [***].................................................................11 11. [***].................................................................11
i 3 THIS AGREEMENT is made the 11th day of October 2000 BETWEEN (1) EVANS VACCINES LIMITED whose registered office is at Florey House, 4 Robert Robinson Avenue, The Oxford Science Park, Oxford OX4 4GA (the "LICENSOR"); and (2) AVIRON UK LIMITED whose registered office is at Carmelite, 50 Victoria Embankment, London EC4V 0DX (the "LICENSEE"). RECITALS (A) The Licensor is at the date of this Agreement the proprietor of the Evans Process Technology (as defined below). (B) The Licensor has agreed to license to the Licensee its rights in the Evans Process Technology on the terms and subject to the conditions of this Agreement. (C) The Licensee has agreed to make the Payments (as defined below) stated in this Agreement for a licence of the Evans Process Technology. IT IS AGREED as follows:- 1. DEFINITIONS AND INTERPRETATION 1.1 In this Agreement the following words and phrases shall have the following meanings unless the context requires otherwise:- "AGENCY" means any governmental body responsible for licensing of the Finished Product (as defined in the Shared Services Agreement) for commercial sale and the licensing of premises and facilities of the manufacturer. "AGREEMENT" means this agreement as varied from time to time in accordance with the provisions of this agreement. "ASSOCIATED COMPANIES" means in respect of any party, any company which at the relevant time is a Subsidiary of that party's ultimate Holding Company or any Subsidiary of such a subsidiary provided always that in the case of the Licensee any licensee or licensor of it in connection with the Vaccine shall be included in this definition of "Associated Company". "CAIV PRODUCT" means a live, attenuated intranasally deliverable cold-adapted influenza vaccine. "COMMENCEMENT DATE" means the date of this Agreement. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 "COMPETENT AUTHORITY" means any local or national agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of or of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties, including the European Commission and the European Court of justice. "EVANS PROCESS TECHNOLOGY" means all Know-How, technology developed, owned, controlled or licensed (with the right to sub-license) by Evans pertaining to [***] or any other formulation of a product [***] which is not in the public domain or otherwise generally available to the public including any Improvements. "IMPROVEMENT" means any improvement, enhancement, derivative, work or other modifications to the Evans Process Technology or its method of manufacture which is made by Evans within 5 years from the date of this Agreement. "INTELLECTUAL PROPERTY" means patents, know-how, registered and unregistered trade marks and service marks (including any trade, brand or business names), domain names, registered designs, design rights, utility models, copyright (including all such rights in computer software, and any databases), moral rights and topography rights (in each case for the full period thereof and all extensions and renewals thereof), applications for any of the foregoing and the right to apply for any of the foregoing in any part of the world and any similar rights situated in any country; "INTERMEDIATE PRODUCT" means Monovalent Virus Harvest and/or NAF manufactured according to and conforming with the Specifications which is intended for use in the manufacture of the Vaccine. "KNOW HOW" means unpatented technical and other information which is not in the public domain, including information comprising or relating to concepts, discoveries, data, formulae, ideas, inventions, procedures for experiments and tests and results of experimentation and testing, including results of research or development process including any industrial information and techniques likely to assist in the manufacturing or processing of goods and materials. "MASTER DONOR STRAINS" means the live attenuated influenza strains derived by Dr Maassab and designated Type A/Ann Arbor/6/60 - H2N2 and Type B/Ann Arbor/ 1/66, exclusively licensed from the University of Michigan to the Licensee and which are used by the Licensee to produce Master Virus Seeds. "MASTER VIRUS SEEDS" means certain reassortants produced by the Licensee from the Master Donor Strains. "MONOVALENT VIRUS HARVEST" means each of the three virus strains to be incorporated in the Vaccine for a given flu season in bulk form. "NAF" means "Normal Allentoic Fluid" used as a dilutant in the Vaccine and/or any other materials used as a dilutant in the Vaccine. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 3 5 "PARTIES" means the Licensor and the Licensee and "PARTY" shall mean either one of them. "RESTRICTED INFORMATION AND MATERIALS" means (i) Master Donor Strains, Master Virus Seeds, Manufacturing Working Virus Seeds, Monovalent Virus Harvest and NAF (the "STRAINS"); (ii) all Technical Information (together with the Strains, the "AVIRON RESTRICTED MATERIAL"); (iii) all information relating to the Discloser's (as defined below) business that is identified at the time of disclosure as confidential; and (iv) all information arising pursuant to this Agreement, and the amended and restated contract manufacturing agreement dated 7 June 1999 between the Licensor (as assignee of Medeva Pharma Limited ("MEDEVA")) (1) and Aviron (2), disclosed by one party to this Agreement (the "DISCLOSER") to the other or to any Agency or to any third party (in each case by one Party at the request of the other) (the "RECIPIENT") in connection with this Agreement, excluding any such information which: (a) is or was already known to the Recipient at the time of disclosure by the Discloser as evidenced by the written records of the Recipient; or (b) was at the time of such disclosure or communication by the Discloser or thereafter becomes or became published, accessible to the public or otherwise in the public domain other than through any act or omission of the Recipient; or (c) must be disclosed to government inspectors in the discharge of statutory obligations provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from such government inspectors any assurances as regards confidentiality as may be afforded to such information in the circumstances; or (d) must be disclosed by the Recipient to the relevant Competent Authority in the course of applying for, obtaining or maintaining regulatory approval provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from such Competent Authority any assurances as regards confidentiality as may be afforded to such information in the circumstances; or (e) is hereafter disclosed to the Recipient by a third party, who to the knowledge of the Recipient does not have any obligations of confidentiality to any third party or who has not, to the actual knowledge of the Recipient, derived it directly or indirectly from the Discloser provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain from such third party any assurances as regards confidentiality as may be afforded to such information in the circumstances; or (f) is required to be disclosed by law provided that before disclosure the Recipient shall use reasonable endeavours as it would in respect of its own Restricted Information and Materials to obtain any assurances from the recipient as regards confidentiality as may be afforded to such information in the circumstances. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 4 6 "SHARED SERVICES AGREEMENT" means the shared services agreement dated on or about the date of this Agreement between the Parties. "SPECIFICATIONS" means requirements and specifications for the Intermediate Product and its manufacture as provided by the Licensee to the Licensor from time to time. "SUBSIDIARY" OR "HOLDING COMPANY" shall have the meaning ascribed to such expressions by Section 736 of the Companies Act 1985. "TECHNICAL INFORMATION" means all registration data, know-how, experience, formulation, manufacturing instructions, standard operating procedures, policies, instructions, standards, methods, test and trial results, manufacturing and formulation processes, hazard assessments, quality control standards, formulae, specifications, storage and data, samples, drawings, designs, description of packaging materials and all other relevant information relating to the Intermediate Product or its design, manufacture, formation, handling, storage, testing and use and/or Master Donor Strains and/or Master Virus Seeds. "TRANSACTION AGREEMENTS" shall have the meaning ascribed thereto in the Transfer Agreement. "TRANSFER AGREEMENT" means the agreement dated on or about the date of this Agreement between the Parties relating to certain employees of the Licensor. "VAT" means value added tax under the VATAct 1994 or any similar tax from time to time replacing it or performing a similar function. "VATA 1994" means the Value Added Tax Act 1994. "VACCINE" means the Licensee's CAIV Product. 1.2 In this Agreement: 1.2.1 unless the context otherwise requires all references to a particular Clause or paragraph shall be a reference to that Clause or paragraph, in or to this Agreement as the same may be amended from time to time pursuant to this Agreement; 1.2.2 the table of contents and headings are inserted for convenience only and shall be ignored in construing this Agreement; 1.2.3 unless the contrary intention appears words importing the masculine gender shall include the feminine and vice versa and words in the singular include the plural and vice versa; 1.2.4 unless the contrary intention appears words denoting persons shall include any individual, partnership, company, corporation, joint venture, trust, association, [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 5 7 organisation or other entity, in each case whether or not having separate legal personality; 1.2.5 reference to the words "include" or "including" are to be construed without limitation to the generality of the preceding words; and 1.2.6 reference to any statute or regulation includes any modification or re-enactment of that statute or regulation. 2. LICENCE 2.1 The Licensor hereby grants to the Licensee a worldwide, [***], irrevocable, sub-licenseable (solely as provided in Clause 2.2) [***] licence under Evans Process Technology to make, have made, use, import, offer for sale and sell CAIV Products and for the avoidance of doubt the Licensee may utilise those aspects of the Evans Process Technology that are in the public domain or otherwise generally available without any restrictions including, without limitation, to make, have made, use, import, offer for sale, sell and have sold products other than CAIV Products. If the Licensee is in any doubt as to whether or not a particular aspect of the Evans Process Technology is in the public domain, or otherwise generally available without any restrictions, it shall provide to the Licensor a [***] setting forth sufficient detail to allow the Licensor to [***] and the Licensor shall, within [***] of receipt of such [***], provide to the Licensee an [***]; provided that if the parties disagree whether or not a particular aspect of Evans Process Technology is in the public domain, the matter shall be [***] and, thereafter, if the matter is still unresolved, either Party may [***]. 2.2 The Licensee shall have the right to grant sub-licences under the licence granted under Clause 2.1 above to its Associated Companies, contract manufacturers and the licensees of CAIV Products provided that any sub-licences granted pursuant to this Clause 2.2 shall be on such terms and conditions [***] as set out in [***] and the Licensee shall be [***] for the [***] of any sub-licensee of the licence. 2.3 As soon as reasonably practicable following the Commencement Date, the Licensor shall disclose, deliver and make fully available to the Licensee in the form reasonably requested by the Licensee, all of the Know How relating to the Evans Process Technology. 3. PAYMENTS 3.1 The Licensee shall pay to the Licensor in consideration of the rights granted to the Licensee under this Agreement the aggregate sum of $34,250,000 payable in the following amounts and on the following dates (the "PAYMENTS"):- 3.1.1 US$15,000,000 on the Commencement Date; 3.1.2 US$3,850,000 on [***] 2001; [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 6 8 3.1.3 US$3,850,000 on [***] 2002; 3.1.4 US$3,850,000 on [***] 2003; 3.1.5 US$3,850,000 on [***] 2004; and 3.1.6 US$3,850,000 on [***] 2005. 3.2 All payments to the Licensor under the terms of this Agreement are expressed to be [***] and the Licensee shall pay to the Licensor [***] on each Payment or other sum paid to it hereunder. 3.3 If any sum due for payment under this agreement is not paid on the due date the Licensee shall [***] for the time being. 3.4 The Parties hereby agree to notify Her Majesty's Inspector of Taxes of an election (no later than [***] after the Commencement Date) to the effect that [***] shall not apply to the acquisition and disposal of the Know-How in a form to be agreed between the parties (acting reasonably). 4. INTELLECTUAL PROPERTY 4.1 The Licensor agrees and acknowledges that, save as specifically provided in this Agreement it has and shall have following the date of this Agreement no right or interest, whether legal, equitable or moral in any Intellectual Property relating directly to or arising from the Intermediate Product and for the avoidance of doubt, the Licensor hereby waives any such right or interest. 4.2 Nothing in this Agreement shall operate to transfer ownership of any right in the Evans Process Technology to the Licensee. 5. WARRANTIES AND LIABILITY 5.1 Each of the Licensor and the Licensee warrants that it is able to enter into this Agreement and is not restricted by any provisions of any agreements of any nature which prevent it from carrying out this Agreement fully according to its terms. 5.2 The Licensor warrants that: (i) the Licensor has not licensed or assigned any interest in the Evans Process Technology to any third party that would prevent the Licensee's full enjoyment of its rights hereunder; (ii) the Licensor possesses sufficient right, title and interest in and to the Evans Process Technology as provided herein; and (iii) it has not received and is not aware that [***] has received any written notice that [***] infringes any third party intellectual property rights. 5.3 Subject to Clauses 5.5 and 5.6, the Licensee shall indemnify and keep indemnified and hold harmless the Licensor and its Associated Companies against any and all losses, damages, costs and expenses suffered or incurred by the Licensor as a direct result of any [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 7 9 [***] arising out of the use of the [***] by the Licensee and its Associated Companies under this Agreement provided that the Licensee shall have no obligation to indemnify the Licensor for any claims due to the Licensor's [***] of Know-How pursuant to Clause 2.3. 5.4 Subject to Clauses 5.5 and 5.6, the Licensor shall indemnify and keep indemnified and hold harmless the Licensee and its Associated Companies against any and all losses, damages, costs and expenses suffered or incurred by the Licensee as a direct result of any [***] based on [***]. 5.5 Neither Party shall be liable to the other in contract, tort, negligence, breach of statutory duty or otherwise for any loss, damage, costs or expenses of any nature whatsoever incurred or suffered by the other of an [***] including any [***]. 5.6 The provisions of this clause shall apply to any claim by [***] against the Licensee or the Licensor (as the case may be) in respect of a matter which has given rise to a claim pursuant to the indemnities given in Clauses 5.3 and 5.4 above (in each case a "RELEVANT CLAIM"). The Licensee or the Licensor (as the case may be) shall as soon as reasonably practical give written notice of the Relevant Claim and subject to the Licensor or the Licensee (as the case may be) acknowledging, in writing, its [***] to the Licensee for such Relevant Claim pursuant to Clause 5.3 or 5.4 (as the case may be) and the Licensee or the Licensor (as the case may be) being fully indemnified against any reasonable costs, liabilities and expenses thereby incurred: 5.6.1 [***]; 5.6.2 [***]; 5.6.3 [***]; 5.6.4 [***]; 5.6.5 [***]; 5.6.6 [***]: (a) [***]; (b) [***]; Provided always that nothing in this Clause 5.6 shall require the Licensee to take any action which is reasonably likely to have a [***] on the [***] of the Licensee and its Associated Companies or Licensor and its Associated Companies (as the case may be). 6. CONFIDENTIALITY AND SECURITY 6.1 The Recipient undertakes to keep confidential all Restricted Information and Materials received by it directly or indirectly from the Discloser or obtained by it pursuant to the [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 8 10 performance of this Agreement and not to use such Restricted Information and Materials except as provided in this Agreement. The obligations set forth in this Clause 6.1 shall apply during the period of this Agreement and for a period of [***] after the termination of this Agreement. 6.2 The Recipient shall allow access to the Discloser's Restricted Information and Materials exclusively to those of its employees who have reasonable need to see and use it for the purposes of this Agreement and shall inform each of such employees of the confidential nature of the Restricted Information and Materials and of the obligations on the Recipient with respect to such Restricted Information and Materials and shall ensure that each of its employees having access to the Restricted Information and Materials is contractually bound by obligations of confidentiality and shall take such steps as may be necessary to enforce such obligations. 6.3 On the expiry or termination of this Agreement, the Recipient will return to the Discloser all Restricted Information and Materials of the Discloser in its possession and the Recipient shall, save in respect of the Aviron Restricted Material have the option to retain (1) copy, but shall not make any further use of that information save for record keeping purposes or in order to comply with regulatory requirements from time to time. 6.4 In this Clause 6 references to the Discloser or Recipient shall be deemed to include any Associated Companies of that party. 7. INSPECTIONS The provisions of Clause 3 (Inspections) of the Shared Services Agreement shall apply to this Agreement as they apply to that Agreement. 8. IMPROVEMENTS Any Improvement developed by [***] shall be owned by [***] and [***] shall own all intellectual property rights in the Improvement, provided always that in the event that [***] develops any Improvements directly as a result of the performance by [***] of the [***] (as defined in the [***]), [***] agrees to notify [***] of the existence of such Improvements and grants to [***] a [***] licence to use such Improvements on substantially the same terms of this Agreement. 9. MISCELLANEOUS 9.1 The Licensor [***] assign [***] its rights or delegate [***] its obligations under this Agreement to its Associated Companies, provided that such assignee [***] and provided further that before such assignee [***]will procure that the benefit of this Agreement is re-assigned to [***] or (upon giving further written notice to [***]) to [***] (subject always to the foregoing provisions of this clause) [***] the prior written consent of [***], except as expressly provided herein. 9.2 The Licensee [***] assign the benefit of its rights or interest in this Agreement [***]. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 9 11 9.3 The validity, construction and interpretation of this Agreement and any determination of the performance which it requires shall be governed by [***]. All disputes between the Parties arising out of the circumstances and relationships contemplated by this Agreement including disputes relating to the validity, construction or interpretation of this Agreement, and including disputes relating to pre-contractual representations, which result in any action or proceeding shall be subject to the exclusive jurisdiction of the [***]. 9.4 Save as expressly provided in this Agreement nothing herein takes away from the Parties or constitutes a waiver by any party of any of their rights or remedies under common law, statute or otherwise. 9.5 If the whole or any part of this Agreement is or becomes or is declared illegal, invalid or unenforceable for any reason (including both by reason of the provisions of any legislation and also by reason of any decision of any court or competent authority which either has jurisdiction over this Agreement or has jurisdiction over any of the Parties): 9.5.1 (except as provided by Clause 9.6) in the case of the illegality invalidity or unenforceability of the whole of this Agreement, it shall terminate forthwith: or 9.5.2 in the case of the illegality, invalidity or unenforceability of part of this Agreement, part shall be severed from this Agreement and that illegality, invalidity or unenforceability shall not in any way whatsoever prejudice or affect the remaining parts of this Agreement which shall continue in full force and effect. 9.6 This Agreement constitutes the entire agreement and understanding between the Parties and supersedes all prior oral or written understandings, arrangements, representations or agreements between them relating to the subject matter of this Agreement provided that this does not remove any right of action by either Party, in respect of any fraudulent misrepresentation, fraudulent concealment or other fraudulent action. No director, employee or agent of any Party is authorised to make any representation or warranty to any other Party not contained in this Agreement, and each Party acknowledges that it has not relied on any such oral or written representations or warranties. 9.7 All notices to be given pursuant to this Agreement shall be given in accordance with Clause 11 (Notices) of the Shared Services Agreement. 9.8 The activities of the Parties contemplated pursuant to this Agreement shall not constitute a partnership and neither party has the authority to bind the other Party in anyway except provided in this Agreement. 9.9 Each Party shall bear its own legal costs and other expenses incurred in the negotiation, preparation, execution and implementation of this Agreement. [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 10 12 9.10 No announcement or circular or other publicity in connection with the subject matter of this Agreement (other than as permitted by this Agreement) shall be made by or on behalf of the Licensor and the Licensee without the approval of the other as to its content, form and manner of publication (such approval not to be unreasonably withheld or delayed) save that any announcement, circular or other publicity required to be made or issued by the Licensor or the Licensee pursuant to any legal or regulatory authority may be made or issued by the Licensor or the Licensee without such approval. The Parties shall consult together upon the form of any such announcement, circular or other publicity and the other party shall promptly provide such information and comment as the party issuing any such announcement, circular or other publicity may from time to time reasonably request. 9.11 The [***] remedy of the Licensee for a breach of this Agreement: shall be [***] and the Licensee shall [***] in any circumstances or at any time. 10. [***] The Parties agree that the provisions of the [***] shall not apply to this Agreement. 11. [***] 11.1 Notwithstanding anything contained in this Agreement, if any of the amounts payable by the Licensee to the Licensor are expressed to be [***] then [***] shall only be payable [***] if: 11.1.1 [***] on such sums or amounts; and 11.1.2 a proper [***] invoice is submitted to [***]. 11.2 If [***] under this Agreement, in accordance with clause 11.1, or, notwithstanding clause 11.1, if (as applicable) no ruling under clause 11.3 has been received to the effect that [***] in respect of any relevant amount by the date on which any [***] under this Agreement, then it shall be [***] on the date of this Agreement within 14 business days of the date of this Agreement and in any other case on the date on which [***]. 11.3 11.3.1 The Parties consider that the transactions detailed in the Transaction Agreements shall not together constitute a [***] or [***] for [***] purposes, and agree that the Licensor shall prepare a [***] to this effect. This [***] shall be sent first to [***] for approval (such approval not to be unreasonably withheld or delayed) and once approved shall be sent to [***]. 11.3.2 The Parties shall use their reasonable endeavours to ensure that the [***] is obtained on or before the date of this Agreement. If no [***] by the date of this Agreement the Parties should use their reasonable endeavours to ensure that within 5 business days of the date of this Agreement a letter is sent to [***]. The [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 11 13 [***] shall send a copy of any [***] to [***] and the [***] within 5 business days of receipt of it from Customs. 11.3.3 If no such [***] has been obtained by the time that [***] and the [***] (as the case may be) are due to [***] which include a [***] they may notify [***] that they have [***] on a transfer of assets which has not been treated as [***]. 11.4 11.4.1 If [***] that any or all of the [***] which are being treated as [***] under this Agreement constitute a [***] or [***] or a [***]: (a) the [***], if it has not submitted a [***] on which it has accounted for the [***] on the date on which such [***], will forthwith issue [***] which has been [***] in which case the [***] will on the date of [***] as applicable the [***] detailed in the applicable [***]; or (b) the [***], if it has submitted a [***] on which the [***] has been accounted for, will make an [***] as appropriate for recovery of the applicable [***] from [***] and will account to [***] as appropriate on the date of such [***] and will issue at that date [***] which has been [***]. 11.4.2 For the avoidance of doubt any failure by [***] to comply with any conditions detailed in the [***] under which a [***] is made (such that [***] does not receive a [***] or only receives a [***] from [***]) will not affect the obligation of [***] to refund to [***] any [***] and for the purposes of clause 11.4.1 (a) it shall be regarded as having [***] on the date on which it would have [***] were it not for such failure. IN WITNESS WHEREOF the Parties have executed this document as an agreement the day and year first above written. SIGNED by C.S.W. Swingland ) /s/ C.S.W. Swingland for and on behalf of ) EVANS VACCINES LIMITED ) SIGNED by ) /s/ Fred Kurland for and on behalf of ) AVIRON UK LIMITED [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***] HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 12 EX-10.49 18 f69956ex10-49.txt EXHIBIT 10.49 1 EXHIBIT 10.49 FLUMISTTM SUPPLY AGREEMENT AMENDMENT This FLUMISTTM SUPPLY AGREEMENT AMENDMENT (the "Amendment"), dated as of January 1, 2001, is by and between AVIRON, a Delaware corporation with its principal place of business at 297 North Bernado Avenue, Mountain View, California 94043 ("AVIRON") and American Home Products Corporation ("AHPC"), acting through its Wyeth-Ayerst Laboratories Division, a Delaware corporation with is principal place of business at 555 Lancaster Avenue, St. Davids, Pennsylvania 19087 ("WYETH"). AVIRON and WYETH are sometimes referred to as the "Parties." WHEREAS, AVIRON and WYETH entered into a FluMist Supply Agreement, dated January 11, 1999 ("Supply Agreement"), establishing the Parties' respective rights and obligations concerning the manufacture and supply of bulk and Finished Product; WHEREAS, the Parties hereby desire to revise and amend the Supply Agreement; NOW THEREFORE, the Parties hereby agree as follows: 1. All capitalized terms, unless defined herein, shall have the definition assigned such term(s) by the Supply Agreement. 2. Notwithstanding anything in the Supply Agreement to the contrary, including but not limited to Articles 3 and 7, WYETH agrees to pay and AVIRON agrees to accept an advance payment of $10 million in full satisfaction of all duties, obligations and responsibilities of WYETH under Section 7.2(a) of the Supply Agreement (the "January Advance Payment"). 2 3. AVIRON shall, as provided in Section 7.2(a) of the Supply Agreement, apply the January Advance Payment to the payment of its costs and expenses incurred in connection with its manufacture for commercial sale of Frozen Product for the 2001 Flu Season ("2001 Product"). In the event the Parties elect not to sell 2001 Product for the 2001 Flu Season, such 2001 Product and any unexpended portions of the January Advance Payment shall be applied by AVIRON to any clinical trials supporting field use conducted by the parties. 4. The January Advance Payment shall be wired transferred to AVIRON's account at, State Street Bank & Trust Company for credit to AVIRON's account # 17039843 (payment per Supply Agreement) no later than January 15, 2001. 5. Notwithstanding anything in the Supply Agreement to the contrary, WYETH agrees to pay and AVIRON agrees to accept an advance payment of $10 million (the "April Advance Payment"), provided no later March 31, 2001, both Parties agree (in writing) to plan a commercial launch of Frozen Product for the 2001 Flu Season (the "2001 Launch"). In the event of such agreement, the April Advance Payment shall be wired transferred, (per wire instructions set forth in Paragraph 4 hereof) to AVIRON no later than April 7, 2001. 6. The April Advance Payment shall be applied by AVIRON to the payment of costs and expenses to be incurred in connection with its manufacture for commercial sale of Frozen Product for the 2001 Flu Season. In the event the 2001 Launch does not occur, the full April Advance Payment shall be credited against any payment obligations (as contemplated by Article 3 and 7 of the Supply Agreement) of WYETH for the 2002 Flu Season. 3 IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized. AMERICAN HOME PRODUCTS CORP. AVIRON THROUGH ITS WYETH-AYERST LABORATORIES DIVISION By: /s/ Kevin L. Reilly By: /s/ Carol A. Olson --------------------------------- --------------------------------- Name: Kevin L. Reilly Name: Carol A. Olson --------------------------------- --------------------------------- Title: President Title: Sr. VP, Commercial Development --------------------------------- --------------------------------- Wyeth-Lederle Vaccines & Nutritionals
EX-10.50 19 f69956ex10-50.txt EXHIBIT 10.50 1 CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. EXHIBIT 10.50 AMENDMENT NUMBER ONE (1) TO COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT AI-000062 This Amendment Number One (1) to Cooperative Research and Development Agreement ("CRADA") AI-00062 between Aviron ("Collaborator") and the National Institute of Allergy and Infectious Diseases ("NIAID"), will be effective as of the date of the last duly authorized signature below. The CRADA, which is entitled "Development of a Live, Attenuated Cold-Adapted Influenza Vaccine," was executed on June 12, 1995 for a term of five (5) years. The purpose of this Amendment is to allow for a change in Principal Investigator (PI) for the NIAID and for the funding of additional NIAID travel and NIAID personnel by Collaborator. This Amendment is being executed in duplicate. Collaborator shall retain one original, and one original shall be retained by NIAID. Except as herein amended, all of the other terms and conditions of the CRADA shall remain in full force and effect. Pursuant to Article 14.6 of the CRADA, both parties do hereby amend the CRADA as follows: APPENDIX B (RESEARCH PLAN) On the title page of Appendix B "Carole A. Heilman, Ph.D." is deleted and replaced by "Pamela McInnes, Ph.D.", as the NIH Principal Investigator. APPENDIX C (FINANCIAL AND STAFFING CONTRIBUTIONS OF THE PARTIES) Section II of Appendix C is deleted in its entirety and replaced by the following: "II. To be provided to NIAID by Aviron annually: ------------------------------------------ A. Supply funds: [***] B. Equipment funds: [***] C. Travel funds: [***] travel to contract and cooperative agreement sites travel to scientific meetings travel to DSMB CRADA AI-000062 AMENDMENT NUMBER ONE (1) PAGE 1 OF 3 2 D. Personnel funds: [***] [***] E. Contract support: [***] F. Overhead: [***] SIGNATURES BEGIN ON NEXT PAGE CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. CRADA AI-000062 AMENDMENT NUMBER ONE (1) PAGE 2 OF 3 3 AMENDMENT NUMBER ONE (1) TO CRADA A1-000062 SIGNATURE PAGE FOR NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: /s/ John R. LaMontague, Ph.D. August 3, 1999 - ------------------------------------------------------- -------------- John R. LaMontague, Ph.D. Date Deputy Director FOR AVIRON: /s/ J. Leighton Read, M.D. July 29, 1999 - ------------------------------------------------------- ------------- J. Leighton Read, M.D. Date Chairman and CEO CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. CRADA AI-000062 AMENDMENT NUMBER ONE (1) PAGE 3 OF 3 EX-10.51 20 f69956ex10-51.txt EXHIBIT 10.51 1 CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. EXHIBIT 10.51 AMENDMENT NUMBER TWO (2) TO COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT AI-0062 This Amendment Number Two (2) to Cooperative Research and Development Agreement ("CRADA") AI-0062 between Aviron ("Collaborator") and the National Institute of Allergy and Infectious Diseases ("NIAID"), will be effective as of the date of the last duly authorized signature below. The CRADA, which is entitled "Development of a Live, Attenuated Cold-Adapted Influenza Vaccine," was executed on June 12, 1995 for a term of five (5) Years and was first amended on August 3, 1999. The purposes of this second Amendment are to add clinical trial-related provisions to the CRADA, to modify the Research Plan and budget to allow for [***], and to extend the term of the CRADA for an additional three (3) Years to allow [***] described in the modified Research Plan. This Amendment is being executed in duplicate. The Collaborator shall retain one original, and one original shall be retained by NIAID. Except as herein amended, all of the other terms and conditions of the CRADA shall remain in full force and effect. Pursuant to Article 14.6 of the CRADA, both Parties do hereby amend the CRADA as follows: I. Extension of CRADA Term In order to continue the clinical research program described in Appendix B (Research Plan) of the CRADA as modified below, the term of the CRADA is extended by three (3) years. The new expiration date for the CRADA will be June 12, 2003. II. Modifications to Appendix B (Research Plan) Appendix B is amended by changing or adding the following for CRADA Years 4 through 8: A. Background As stated in the original Research Plan, dated May 19, 1995, the CRADA has been, and continues to be, undertaken to advance the live attenuated, cold-adapted (ca) influenza vaccine system ("CAIV-T") to an FDA-approved vaccine for use [***]. To accomplish this goal, it was felt, in 1995, that the NIH and the Collaborator would need to show that the vaccine could be consistently CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 1 OF 16 CONFIDENTIAL 2 manufactured and remain safe after transfer to a new producer, and that [***] envisioned was efficacious in the target populations. Clinical trials conducted under the CRADA since 1995, include [***]. The original goals of the CRADA, i.e. to show consistent manufacture and safety after transfer to a new producer, and efficacy in a target population, [***] B. Description of the Revised Clinical Research Program This Research Plan describes a clinical research program that includes, or will include the following studies: [***] [***] [***] [***] [***] [***] C. Respective Contributions of the Parties Changes in each Party's contributions to the clinical studies for CRADA Years 6, 7 and 8 are as follows: Enrollment of Subjects by DMID Contractors [***] and Grantees Operations Manual, Case Report Forms [***] IND preparation and filing [***] Data reports for regulatory filings [***] (related to IND sponsor) Supply of all vaccine for [***] investigator-proposed trials Special requirements of [***] investigator-proposed trials Monitoring of Study sites: CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 2 OF 16 CONFIDENTIAL 3 Study #1 [(***)] [***] Study #2 [(***)] [***] Study #3 [(***)] [***] Study #4 [(***)] [***] Study #5 [(***)] [***] Note: NIH is not required to produce the live virus challenge lots as described in the original Research Plan. III. Modifications to Appendix C (Financial and Staffing Contributions of the Parties) Appendix C is amended by changing the following for CRADA Years 1 through 5: Item E. ("Contract support"), including accompanying footnote 2, of Section III. entitled "Annual Collaborator Contributions (internal)" is hereby deleted in its entirety. Appendix C is amended by changing or adding the following for CRADA Years 6, 7 and 8: I. Annual NIH Institute (DMID, NIAID) Contributions (internal): A. Supply funds: [$***] B. Equipment funds: [$***] (photocopier and/or computer equipment) C. Time requirements of NIAID personnel: [***] FTE Professional [***] FTE Administrative D. Contract and Grant/Cooperative Agreement support provided to Study site institutions by NIAID: CONTRACTS ANNUAL BUDGET --------- ------------- [***] $ [***] [***] $ [***] [***] $ [***] [***] $ [***] [***] $ [***] [***] $ [***] Sub-Total $* [***]*
CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 3 OF 16 CONFIDENTIAL 4 *Exact amounts spent at any one Contract site may vary from Year to Year but the annual total Contract expenditure is expected to remain constant at approximately 2.0 million U.S. dollars per year. COOPERATIVE AGREEMENT ANNUAL BUDGET [***] $ [***] Sub-Total $ [***] Total NIAID Support $ [***]
II. Funds to be Provided to NIH (DMID, NIAID) by the Collaborator Annually: A. Supply funds: [$***] B. Equipment funds: [$***] C. Travel funds: [$***] travel to contract and cooperative agreement sites travel to scientific meetings travel to DSMB D. Personnel funds: [$***] [***] E. Contract support: [$***] F. Overhead: [$***] Total: [$***] No full-time permanent NIH employees will be supported by funds provided by the Collaborator to NIH under this CRADA. CRADA payment schedule and instructions: 1. Funds for CRADA Year 6 are due at NIAID on [***], which is the [***] 2. Funds for subsequent CRADA Years are due at NIAID [***] 3. The Collaborator shall make CRADA checks payable to "National Institute of Allergy and Infectious Diseases," shall reference the CRADA CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 4 OF 16 CONFIDENTIAL 5 number (AI-0062) and the NTH CAN number (if known) on the checks, and send them to NIAID as follows: Office of Technology Development National Institute of Allergy and Infectious Diseases National Institutes of Health 31 Center Drive, MSC 2137 Building 31, Room 3B62 Bethesda, MD 20892-2137 Attn: Director 4. The Collaborator authorizes NIAID to redistribute these funds between categories to support the objectives of this CRADA. III. Annual Collaborator Contributions (internal): (All U.S. Dollars in Thousands ($000))
Year 6 Year 7 Year 8 ------ ------ ------ A. Supply funds: [$ *** *** *** B. Equipment funds(1): $ *** *** *** C. Travel funds: $*** *** *** D. Time requirements of Company *** *** *** personnel (approximate FTE Requirements) E. Monitoring Costs: $ *** *** ***]
Notes: Internal contributions shown are estimated costs, dependent upon trial scheduling, and not including costs relating to study drugs provided by Collaborator. IV. Modifications to the CRADA (Appendix D) The Agreement is modified as follows: A. The following twelve new provisions are added to Article 2: - -------- (1) Collaborator will provide sufficient support to fulfill its obligations under the Research Plan. CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 5 OF 16 CONFIDENTIAL 6 2.9 "ADVERSE DRUG EXPERIENCE" means an adverse clinical experience as defined under 21 C.F.R. Section 310.305 or Section 312.32 as applicable. 2.10 "ANNUAL REPORT" means the brief report of the progress of an IND associated investigation that the IND sponsor is required to submit to the FDA within sixty (60) days of the anniversary date on which the IND went into effect (pursuant to 21 C.F.R. Section 312.33). 2.11 "CLINICAL DATA AND RESEARCH RESULTS IN NIH'S POSSESSION AND CONTROL" means all data obtained by NIH under Contract(s) with Extramural Investigator(s) for completion of Studies within the scope of the Protocol(s), and all information and data in the NIH-sponsored INDs for the Study Drug. 2.12 "CONTRACT" means a written funding agreement between the Government and an eligible party ("the Contractor"), which is subject to the Federal Acquisition Regulations, Title 48 CFR. For purposes of this CRADA, the term "Contract" includes research and development Contracts, under which the Contractor performs research and development work for the Government with an expectation of the delivery to the Government of a report, data, material(s) and/or other product(s) resulting from the research and development work. 2.13 "EXTRAMURAL INVESTIGATOR(s)" means the principal investigator(s) who conduct(s) research under an NIH-funded Contract, Grant or Cooperative Agreement. 2.14 "GRANT" means a financial assistance mechanism through which the Government provides money, property, or both to an eligible party to carry out a Government-approved project or activity. A "Cooperative Agreement" is a type of Grant in which there is substantial programmatic involvement of the Government funding agency in the project or activity. 2.15 "IND" means an Investigational New Drug Application submitted to the FDA to receive approval to conduct experimental clinical trials. 2.16 "INFLUENZA PROGRAM OFFICER" means the individual within DMID who has primary responsibility for the research activities of the DMID Influenza Program and all administrative responsibility for that program's Grants and Cooperative Agreements, and who serves as the liaison between the Collaborator and the Project Officer and/or the Extramural Investigator(s). CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 6 OF 16 CONFIDENTIAL 7 2.17 "PROJECT OFFICER" means the individual within DMID whose responsibilities include oversight of the Contract(s) relevant to the research to be conducted under this CRADA. 2.18 "PROTOCOL(s)" means the Study protocols that are described briefly in the Research Plan (Appendix B) and that are incorporated herein by reference. 2.19 "STUDY(ies)" means the work performed by the Principal Investigators and the Extramural Investigator(s) in connection with the Protocol(s). 2.20 "STUDY DRUG" means [***]. The term also includes a finished dosage form that does not contain an agent but is intended to be used as a placebo, as stated in the definition of "Drug product" at 21 C.F.R. Section 210.3(a)(4). B. Article 3.5 is deleted in its entirety and replaced by the following: 3.5 INVESTIGATIONAL NEW DRUG APPLICATIONS (INDS). The Parties expect that either NIH or the Collaborator will submit an IND that may cross-reference an IND sponsored by the other. The Collaborator will supply all manufacturing information required by the FDA in support of the INDs. a. The Collaborator owns IND numbers [***] ("Aviron INDs"). [***] The Collaborator shall allow NIH to review, cross-reference or, as appropriate, otherwise use those INDs for the conduct of clinical trials involving the technology that is the subject of this CRADA. b. [***] NIH shall allow the Collaborator and those corporate entities that Collaborator may from time to time designate in writing to review, cross reference or, as appropriate, otherwise use those INDs for the conduct of clinical trials involving the technology that is the subject of this CRADA, and to fulfill all the requirements necessary to obtain regulatory approval to market products that incorporate the technology that is the subject of this CRADA and to use in patent applications covering the technology. Subject to Article 9.8 and to the extent permitted by law, NIH shall make available [***] c. Both Parties shall keep the information in these INDs confidential in accordance with Article 9. However, nothing in this Agreement shall prohibit NIH or the Extramural Investigator(s) from CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 7 OF 16 CONFIDENTIAL 8 publishing in accordance with NIH policy or submitting to the U.S. or international patent offices [***] C. The following five new provisions are added to Article 3: 3.6 PROTOCOL MODIFICATION. The Studies will be conducted in strict accordance with the Protocol(s) and no changes in the finalized Protocol(s) will be made unless mutually agreed upon in advance by both Parties. If the appropriate Institutional Review Board (IRB) [***] the Protocol(s) or the informed consent form(s), both Parties agree to [***] the Protocol(s) and/or informed consent form(s) as appropriate. 3.7 DRUG INFORMATION AND SUPPLY. The Collaborator agrees to provide to the Extramural Investigators, at time and in quantities that are commercially reasonable, [***] in sufficient quantity to complete the clinical trial Protocol(s) funded by NIH. The Collaborator will provide lot release documents to NIH for each lot of finished Study Drug provided for clinical trials. 3.8 DRUG DELIVERY AND USAGE. The Collaborator shall ship the Study Drug to the Study sites in appropriately marked containers in accordance with the Code of Federal Regulations. 3.9 PROTECTION OF HUMAN SUBJECTS. All human clinical trials performed under this CRADA shall conform to the appropriate federal laws including, but not limited to, all applicable FDA regulations and DHHS regulations relating to the protection of human subjects (see 45 C.F.R. Part 46). Additional information is available from the NIH Office for Protection from Research Risks, Telephone, 301-496 7163. 3.10 MONITORING. For each Study, responsibility for clinical site monitoring and the quality assurance of all data will be established prior to the start of the Study. Monitoring shall be done in compliance with FDA Good Clinical Practices Guidelines. D. The following two sentences are added to the end of Article 4.1: Copies of the Annual Reports and other pertinent IND data (including, but not limited to, clinical brochure data, and formulation and preclinical data, including toxicology findings) will be exchanged by the Parties as they become available. Exchange of copies of the Annual Reports will fulfill the Parties' reporting requirements under this Article 4.1. Article 4.1 now reads as follows: CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 8 OF 16 CONFIDENTIAL 9 4.1 INTERIM REPORTS. The Parties shall exchange formal written interim progress reports on a schedule agreed to by the PIs, but at least within six (6) months after this CRADA becomes effective and at least within every six (6) months thereafter. Such reports shall set forth the technical progress made, identifying such problems as may have been encountered and establishing goals and objectives requiring further effort. Copies of the Annual Reports and other pertinent IND data (including, but not limited to, clinical brochure data, and formulation and preclinical data, including toxicology findings) will be exchanged by the Parties as they become available. Exchange of copies of the Annual Reports will fulfill the Parties' reporting requirements under this Article 4.1. E. The following new provision is added to Article 4: 4.3 ADVERSE DRUG EXPERIENCE REPORTING. In accordance with FDA requirements, the Party that sponsors the IND (hereinafter referred to as the "IND Sponsor"), shall establish and maintain records and make reports to the FDA as required by 21 C.F.R. Section 310.305 and 21 C.F.R. Section 312.32 as applicable. In the conduct of research under this CRADA, the Parties also agree to adhere to specific NIH and NIAID guidelines and policies for reporting Adverse Drug Reporting, as specified in each Protocol. The IND Sponsor agrees to provide to the other Party copies of all Adverse Drug Experience reports concurrently with their submission to the FDA, including copies of any warning letters or other information affecting the safety and/or well-being of human subjects in research conducted under this CRADA. F. Article 9.1 is deleted in its entirety and replaced by the following: 9.1 RIGHT OF ACCESS. NIH and the Collaborator agree to exchange all Clinical Data and Research Results, and Raw Data produced in the course of research under this CRADA, whether developed solely by NIH, jointly with the Collaborator, or solely by the Collaborator. Tangible research products developed under the CRADA will be shared equally by the Parties to the CRADA unless other disposition is agreed to by the Principal Investigators. The Parties to the CRADA will be free to utilize Clinical Data and Research Results and Raw Data for their own purposes, consistent with their obligations under this CRADA. [***] G. Article 9.2 is deleted in its entirety and replaced by the following: CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 9 OF 16 CONFIDENTIAL 10 9.2 OWNERSHIP OF AND ACCESS TO CLINICAL DATA AND RESEARCH RESULTS. Subject to the requirements of Article 3.5 and Article 9.1, the [***] The Collaborator's right of access to data produced by Extramural Investigator(s) is set forth in Article 9.8. H. The seventh sentence of Article 9.3 is amended as follows: Unless disclosure is otherwise mutually agreed upon, the Parties to this CRADA agree to keep Clinical Data and Research Results in NIH's Possession and Control, and Raw Data received by NIH confidential, to the extent permitted by law, until published or reasonable opportunity has been provided for publication, or filing or publication of corresponding IP applications. (The Parties mutually agree that Collaborator may share, Clinical Data and Research Results, and Raw Data with regulatory agencies and, under appropriate confidentiality agreements, its commercial partners, advisory bodies and otherwise as necessary to exercise its rights under Article 9.2, but shall not publish such information in academic journals.) Article 9.3 now reads as follows: 9.3 CONFIDENTIAL INFORMATION. Each Party agrees to limit its disclosure of Confidential Information to [***], and shall place a confidentiality notice on all such information. Materials required for the RP may also be designated as Confidential Information from the party receiving Confidential Information. Each party receiving Confidential Information from the other Party agrees that any information so designated shall be used by it [***]. Any party may object to the designation of information as Confidential Information by another Party and may decline to accept such information. In addition to all other information identified as Confidential Information as set forth in Section 2.2 above, [***] may be designated as Confidential Information when they are [***], and advance designation of such data and product categories is set forth in the Research Plan. The exchange of confidential information, e.g., [***] should be similarly limited and treated. Unless disclosure is otherwise mutually agreed upon, the Parties to this CRADA agree to keep [***], to the extent permitted by law, [***]. (The Parties CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 10 OF 16 CONFIDENTIAL 11 mutually agree that Collaborator may [***] The use of Confidential Information shall be governed by Sections 9.4 and 9.6 below. However, nothing contained herein shall be deemed to [***] consistent with NIH policy. Information provided to one or more third parties pursuant to Confidential Disclosure Agreements in connection with their determination of the desirability of entering into a CRADA for [***] shall be maintained as Confidential Information. I. The following new provisions are added to Article 9: 9.8 EXTRAMURAL RESEARCH AND DATA. In pursuing the development of the Study Drug under this CRADA, NIH may utilize Extramural Investigator(s) for part or all of the completion of the Protocol(s) through either Grants, including Cooperative Agreements, or Contracts. However, those Extramural Investigator(s) are not parties to this CRADA, and this CRADA does [***], a. To the extent permitted by law and subject to the other provisions of Article 9 of this CRADA, NIH shall [***] all Clinical Data and Research Results [***] as Confidential Information, and make them available [***] to the Collaborator for [***] and for [***]. b. In the case of an Extramural Investigator(s) being funded under a Contract, NIH shall [***] a Contract for preclinical studies or clinical trials for the development of the Study Drug unless the Extramural Investigator(s) agree(s) to [***] and agrees to [***] in accordance with Article 9.8(a) for [***] and for [***]. c. In the case of an Extramural Investigator(s) being funded under a Grant or Cooperative Agreement, NIH shall [***] all Extramural CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 11 OF 16 CONFIDENTIAL 12 Investigator(s) participating in the Studies sponsored by NIH and using the Study Drug to [***] with the Collaborator in providing [***]. However, NIH's [***] will not constitute a [***] a Grant award to the Extramural Investigator(s). d. Collaborator acknowledges that NIH is [***] for management of clinical trials at the Study site of each Extramural Investigator, and NIH acknowledges the [***] by Collaborator to [***] and agrees to [***] Extramural Investigators to [***] to the Collaborator as described in Article 9.8(c). e. In seeking direct access to Raw Data, Clinical Data and Research Results or any other information that is in the possession of Extramural Investigator(s) working with the Study Drug under the sponsorship of NIH, the Collaborator shall first contact the Influenza Program Officer, who currently is [***]. For efficiency, direct contact between Collaborator and Extramural Investigators for certain types of discussions may be arranged by the NIAID Influenza Program Officer and Collaborator on a study by study basis. Subsequent to authorization by DMID, the Collaborator may directly contact the Extramural Investigator(s). Costs associated with providing Raw Data, Clinical Data and Research Results or any other information to the Collaborator in customized formats shall be borne by the Collaborator. f. The Collaborator's exclusive access under subsection (a) above to Clinical Data and Research Results in NIH's Possession and Control is dependent, however, upon [***]. If the Collaborator [***] without the transfer of its [***] to another party within [***], NIH retains the right to make the Clinical Data and Research Results in NIH's Possession and Control available to another party. 9.9 MATERIAL TRANSFER AGREEMENTS BETWEEN COLLABORATOR AND STUDY SITE INSTITUTIONS. The Parties acknowledge that Collaborator requires that an appropriate Materials Transfer Agreement (MTA) be in place and maintained with each Study site institution for each shipment of Study Drug provided as a condition of receipt and use by the Extramural Investigator (to manage and protect, among other matters, the intellectual CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 12 OF 16 CONFIDENTIAL 13 and physical property rights of Collaborator in the Study Drug). With respect to MTAs, the Parties agree as follows: a. Collaborator acknowledges that NIH funds the Study site institutions under Contracts or Cooperative Agreements and is the IND Sponsor for certain of the Protocols, and therefore the Study site institutions have certain preexisting contractual or other legal obligations to the NIH. NIH acknowledges that Collaborator entered into certain MTAs with Study site institutions. The Parties collectively acknowledge that these agreements [***]. Accordingly, in order to ensure that [***] do not impede the progress of the Studies, [***]. As an example of the foregoing, [***] b. For further shipments of Study Drug for which Collaborator requires new MTAs, Collaborator shall [***] J. Article 11.2 is deleted in its entirety and replaced by the following: 11.2 UNILATERAL TERMINATION. Either NIH or the Collaborator may unilaterally terminate this entire CRADA at any time by giving written notice at least six (6) months prior to the desired termination date, and any rights accrued in property, patents or other IP rights shall be disposed of as provided in Article 11.1. K. The following new provision is added to Article 11: 11.6 ALTERNATIVE SOURCES OF SUPPLY AND RESEARCH LICENSE IN THE EVENT THE COLLABORATOR TERMINATES DEVELOPMENT OF THE STUDY DRUG a. If the Collaborator elects to terminate its development of the Study Drug without the transfer of its development efforts and obligations under this CRADA to another party acceptable to NIH within [***] of discontinuation, and NIH wishes to continue its development of the Study Drug, then the Collaborator shall: (i) [***]; or (ii) [***] b. In the event that Collaborator provides written notification that Collaborator is terminating development of Study Drug, and only to the extent permitted by the Materials Transfer and Intellectual Property Agreement between Aviron and the University of CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 13 OF 16 CONFIDENTIAL 14 Michigan effective February 24, 1995 (redacted version attached hereto as Exhibit I), the Collaborator [***] L. The following three new provisions are added to Article 14: 14.13 FDA MEETINGS. All meetings with the FDA concerning clinical studies for the development of the Study Drug within the scope of the CRADA Research Plan will be discussed by the Collaborator and NIH in advance and will be held on mutually agreed upon dates. The Collaborator reserves the right to set jointly with NIH the agenda for any such meeting. 14.14 CONFLICTS. In the event of a conflict between the Protocol(s) incorporated herein by reference and the other provisions of this Agreement, the other provisions of this Agreement shall prevail. 14.15 STATUTORY COMPLIANCE. NIH and the Collaborator agree to conduct the Studies in accordance with the applicable portions of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 301 et. seq., and its implementing regulations including FDA good clinical practices guidelines and other applicable federal statutes and regulations. M. Article 15.2 is deleted in its entirety and replaced by the following: 15.2 SURVIVABILITY. The provisions of Articles 3.5, 3.7, 4.2, 4.3, Articles 5-9, 11.3, 11.4, 11.5, 11.6, 12.1, 13.2, 13.3, 13.4, 14.1, 14.10 and 15.2 shall survive expiration or earlier termination of this CRADA. CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 14 OF 16 CONFIDENTIAL 15 SIGNATURES BEGIN ON NEXT PAGE CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 15 OF 16 CONFIDENTIAL 16 AMENDMENT NUMBER TWO (2) TO CRADA AI-0062 SIGNATURE PAGE FOR NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: /s/ John R. LaMontague, Ph.D. 6/12/00 - ----------------------------------- John R. LaMontague, Ph.D. Date Deputy Director Mailing Address for Notices: Office of Technology Development National Institute of Allergy and Infections Diseases National Institutes of Health Building 31, Room 3B62 31 Center Drive, MSC 2137 Bethesda, MD 20892-2137 (301) 496-2644/tel. (301) 402-7123/fax Attn: Director FOR AVIRON: /s/ C. Boyd Clarke June 6, 2000 - ----------------------------------- C. Boyd Clarke Date President and CEO Mailing Address for Notices: Aviron 297 North Bernard Avenue Mountain View, CA 94043 (650) 919-6500/tel. (650) 919-6610/fax CONFIDENTIAL TREATMENT REQUESTED BY AVIRON [***] - CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES ACT OF 1934, AS AMENDED. PAGE 16 OF 16 CONFIDENTIAL EX-21.1 21 f69956ex21-1.txt EXHIBIT 21.1 1 EXHIBIT 21.1 SUBSIDIARIES OF AVIRON Aviron UK Limited Incorporated in United Kingdom Conducts business under the following names: Aviron UK Limited Aviron UK Ltd. EX-23.1 22 f69956ex23-1.txt EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Forms S-8, Nos. 333-17029, 333-58955, 333-87183, 333-91607 and 333-44350) pertaining to the 1996 Equity Incentive Plan, Employee Stock Purchase Plan, 1996 Non-Employee Directors' Stock Option Plan, 1999 Non-Officer Equity Incentive Plan and Individual Stock Option Grants Outside of a Plan and in the Registration Statements (Forms S-3, Nos. 333-41649, 333-50505, 333-87185, 333-31938, 333-45072, 333-52028, 333-53444) and in the related Prospectuses of Aviron, of our report dated January 25, 2001, with respect to the consolidated financial statements of Aviron included in this Annual Report (Form 10-K) for the year ended December 31, 2000. /s/ Ernst & Young LLP Palo Alto, California March 26, 2001 -----END PRIVACY-ENHANCED MESSAGE-----