EXHIBIT 10.17
FACILITY RESERVATION AGREEMENT
BY AND BETWEEN
PACKAGING COORDINATORS, INC.
AND
AVIRON
PAGE
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ARTICLE 1 REFERENCE........................................................... 1
1.1 Definitions......................................................... 1
ARTICLE 2 AVIRON AREA, TERM AND POSSESSION.................................... 2
2.1 Demise of Aviron Area............................................... 2
2.2 Term of this Agreement.............................................. 2
2.3 Construction of the Building; Acceptance of Possession; Allowance... 3
2.4 Delivery of Possession.............................................. 3
2.5 Repayment of Aviron Improvement Allowance........................... 3
2.6 Surrender of Possession............................................. 3
2.7 PCI Access to the Aviron Area....................................... 3
ARTICLE 3 BASE MONTHLY FEE AND DEFERRED FEE................................... 4
3.1 Base Monthly Fee.................................................... 4
3.2 Deferred Fee........................................................ 4
ARTICLE 4 USE OF AVIRON AREA.................................................. 4
4.1 Permitted Use....................................................... 4
4.2 Compliance with Laws and Private Restrictions....................... 4
4.3 Compliance with Insurance Requirements.............................. 4
4.4 Environmental Compliance and Hazardous Materials.................... 5
ARTICLE 5 REPAIRS, MAINTENANCE, SERVICES AND UTILITIES........................ 5
5.1 Repair and Maintenance.............................................. 5
5.2 Utilities........................................................... 5
ARTICLE 6 ALTERATIONS AND IMPROVEMENTS........................................ 5
6.1 By Aviron........................................................... 5
6.2 Ownership of Improvements........................................... 5
6.3 Liens............................................................... 6
ARTICLE 7 LIMITATION ON PCI's LIABILITY AND INDEMNITY......................... 6
7.1 Limitation on PCI's Liability and Release........................... 6
7.2 Aviron's Indemnification of PCI..................................... 6
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ARTICLE 8 INSURANCE.......................................................... 6
8.1 Aviron's Insurance................................................. 6
8.2 PCI's Insurance.................................................... 8
8.3 Certificate of Insurance........................................... 8
8.4 Mutual Waiver of Subrogation....................................... 8
ARTICLE 9 DAMAGE TO AVIRON AREA.............................................. 9
9.1 PCI's Duty to Restore.............................................. 9
9.2 PCI's Right to Terminate........................................... 9
9.3 Aviron's Right to Terminate........................................ 9
9.4 Abatement of Fee................................................... 10
ARTICLE 10 DEFAULT, REMEDIES AND TERMINATION.................................. 10
10.1 Events of Aviron's Default......................................... 10
10.2 PCI's Remedies..................................................... 10
10.3 PCI's Default...................................................... 11
10.4 Aviron's Remedies.................................................. 11
10.5 Termination........................................................ 11
10.6 Termination of Production Agreement................................ 12
ARTICLE 11 ASSIGNMENT......................................................... 12
11.1 Assignment and Subletting.......................................... 12
11.2 Exceptions......................................................... 12
ARTICLE 12 GENERAL PROVISIONS................................................. 13
12.1 Taxes.............................................................. 13
12.2 Subordination to Mortgages......................................... 13
12.3 Aviron's Attornment Upon Foreclosure............................... 13
12.4 Estoppel Certificate............................................... 13
12.5 Transfer by PCI.................................................... 14
12.6 Force Majeure...................................................... 14
12.7 Notices............................................................ 14
12.8 General Waivers.................................................... 15
12.9 Holding Over....................................................... 15
12.10 Miscellaneous..................................................... 15
12.11 Entire Agreement.................................................. 16
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FACILITY RESERVATION AGREEMENT
THIS FACILITY RESERVATION AGREEMENT (the "Agreement") is made by and
between PACKAGING COORDINATORS, INC., a Pennsylvania corporation with offices at
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ("PCI") and AVIRON, a Delaware
corporation with offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Aviron"), to be effective and binding upon the parties as of October 31,
1997 (the "Effective Date").
ARTICLE 1
REFERENCE
1.1 DEFINITIONS. Any term that is given a special meaning by any
provision in this Agreement shall, unless otherwise specifically stated, have
such meaning wherever used in this Agreement or in any Exhibit attached hereto.
In addition, the following terms shall have the following meanings:
"AVIRON AREA" shall mean all the interior space within the Building
consisting of approximately 34,380 square feet, including reasonable rights of
ingress and egress, as mutually agreed from time to time.
"AVIRON IMPROVEMENTS DESIGN PLAN" shall mean the design plans pursuant to
which the Aviron Improvements shall be constructed and which are attached hereto
as Exhibit A.
"AVIRON IMPROVEMENT ALLOWANCE" shall mean the amount of One Million Dollars
provided by PCI for construction of the Building and the Aviron Improvements
pursuant to Section 2.4, five hundred thousand dollars ($500,000) of which will
be repaid to PCI by Aviron in accordance with Section 2.5.
"AVIRON IMPROVEMENTS" shall mean all modifications, alterations and
improvements made or added to the Aviron Area, excluding Aviron's equipment,
moveable improvements and trade fixtures.
"AVIRON SPECIAL FIXTURES" shall mean those of the Aviron Improvements
constituting the USP Water System (exclusive of piping), the SIP System, the
Process Chilled Water/Glycol System and the freezer (including storage rack
system).
"BASE MONTHLY FEE" shall mean $110,016 per month.
"BUILDING" shall mean that certain addition to the building currently
existing on the Property in which the area reserved for Aviron's manufacture,
packaging and storage of pharmaceutical products is located, which addition is
shown outlined on Exhibit B hereto and which will be constructed pursuant to the
Building Design Plan.
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"BUILDING DESIGN PLAN" shall mean the plans and specifications pursuant to
which the Building will be constructed and which are attached hereto as Exhibit
C.
"DEFERRED FEE" shall mean that portion of the Base Monthly Fee which is
deferred in accordance with Section 3.2.
"HAZARDOUS MATERIALS" shall mean any toxic substance, hazardous substance,
hazardous material, hazardous constituent, hazardous waste, pollutant or
contaminant which is or becomes regulated by any local governmental authority,
the Commonwealth of Pennsylvania, or the United States government, including any
material or substance defined as a "hazardous waste" pursuant to Section 1004 of
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42
U.S.C. Section 6903) or as a "hazardous substance" pursuant to Section 101 of
the Comprehensive Environmental Response Compensation, and Liability Act, 42
U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601).
"LENDER" shall mean the holder of any promissory note or other evidence of
indebtedness secured in whole or in part by the Property or any portion thereof.
"OCCUPANCY DATE" shall mean the date upon which PCI delivers to Aviron a
certificate signed by the architect for construction of the Building, certifying
that the Building is substantially complete, subject to construction of the
Aviron Improvements.
"PERMITTED USE" shall mean the preparation, blending, aseptic filling,
assembly, packaging, cartoning, palletization, distribution and/or related
storage of pharmaceutical products and related legal uses, and for no other use
whatsoever.
"PRODUCTION AGREEMENT" shall mean that certain Production Agreement between
the Parties dated October 31, 1997 under which PCI shall provide certain
services to Aviron in connection with the manufacture of Aviron's flu vaccine
product.
"PROPERTY" shall mean that certain improved real property owned by PCI and
commonly known as ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇.
ARTICLE 2
AVIRON AREA, TERM AND POSSESSION
2.1 DEMISE OF AVIRON AREA. PCI hereby leases to Aviron and Aviron hereby
leases from PCI for the term of this Agreement, and upon the terms and subject
to the conditions of this Agreement, the Aviron Area.
2.2 TERM OF THIS AGREEMENT. Subject to Paragraph 2.4 below, the term of
this Agreement shall begin on the Effective Date and unless extended by mutual
agreement of the Parties, shall end on October 30, 2004 (the "Agreement
Expiration Date").
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2.3 CONSTRUCTION OF THE BUILDING; ACCEPTANCE OF POSSESSION; ALLOWANCE.
PCI agrees to construct the Building in accordance with all applicable laws and
the Building Design Plan, and to deliver the Aviron Area to Aviron in good
working order as set forth in the Building Design Plan and in compliance with
the Americans with Disabilities Act. Aviron agrees to construct the Aviron
Improvements pursuant to the Aviron Improvements Design Plan and in compliance
with the Americans with Disabilities Act. PCI agrees to provide the Aviron
Improvement Allowance for construction of the Building. In the event that
construction costs for the Building are less than the Aviron Improvement
Allowance, Aviron may use the remaining amount of the Aviron Improvement
Allowance to make Aviron Improvements, and PCI shall pay the Aviron Improvement
Allowance to Aviron's designated construction contractor upon presentation of
invoices evidencing the work done or installations made. In the event that
construction costs for the Building exceed the Aviron Improvement Allowance,
Aviron shall bear all costs for such construction in excess of the Aviron
Improvement Allowance; provided, however, that Aviron shall not be required to
pay excess costs resulting from change orders or changes to the Building Design
Plan not approved in advance by Aviron.
2.4 DELIVERY OF POSSESSION. Upon receipt of an occupancy certificate for
the Building granted by the appropriate governmental agency, PCI shall deliver
to Aviron possession of the Aviron Area. Such delivery is intended to occur on
or about October 15, 1997 ("the Intended Commencement Date"). If PCI is unable
to so deliver possession of the Aviron Area to Aviron in the agreed condition on
or before the Intended Commencement Date, PCI shall not be in default under this
Agreement; however, the Occupancy Date shall not be deemed to have occurred
until the actual date of delivery.
2.5 REPAYMENT OF AVIRON IMPROVEMENT ALLOWANCE. Aviron agrees that it will
repay to PCI five hundred thousand dollars ($500,000) of the Aviron Improvement
Allowance (the "AI Repayment Amount") through a surcharge of $.02 per unit on
the first twenty-five million units of product sold to Aviron, payable on an
annual basis out of the escrow described below. Aviron will maintain the AI
Repayment Amount (as the same may be calculated from time to time, based on
decreases due to repayment by Aviron to PCI) in an escrow account with a third
party escrow holder reasonably acceptable to PCI until such time as the AI
Repayment Amount has been repaid in full. Any interest accruing on the AI
Repayment Amount shall belong to Aviron.
2.6 SURRENDER OF POSSESSION. Within thirty (30) days following expiration
or termination of this Agreement, Aviron shall remove Aviron's production
equipment and shall vacate and surrender the Aviron Area to PCI broom clean, in
the same condition as existed at the Occupancy Date, reasonable wear and tear
excepted. In addition, prior to termination of this Agreement, Aviron may, in
its discretion, remove from the Aviron Area, any of its equipment, personal
property or trade fixtures and any of the Aviron Special Fixtures. Aviron
shall, at Aviron's sole expense, repair any damage to the Aviron Area, the
Building or the Property, caused by Aviron's removal of such items. Any Aviron
Improvements Aviron does not remove from the Aviron Area shall be deemed to have
been assigned, without cost or further action by Aviron, to PCI. Aviron agrees
to execute such additional documents as PCI may reasonably request to
acknowledge and confirm such assignment.
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2.7 PCI ACCESS TO THE AVIRON AREA. PCI shall have access to the Aviron
Area: (i) to comply with its obligations under this Agreement and the Production
Agreement, (ii) for any necessary purpose in the event of an emergency, (iii) to
show the Aviron Area to prospective lenders or purchasers of PCI or the
Property, (iv) to perform any required or necessary maintenance or repairs to
the Building or the Property, and (v) if required to comply with applicable law.
PCI shall retain the master keys to the Aviron Area. PCI may, at its option,
modify the Building to add a separate entrance to the Aviron Area, provided that
such modification is accomplished at PCI's expense, with reasonable prior
written notice to Aviron, in compliance with all applicable laws and
restrictions and does not interfere with Aviron's use of the Aviron Area.
ARTICLE 3
BASE MONTHLY FEE AND DEFERRED FEE
3.1 BASE MONTHLY FEE. Commencing on the Occupancy Date and continuing
throughout the term of this Agreement, Aviron shall pay to PCI, without prior
demand therefor, in advance on the first day of each calendar month, the amount
set forth as the Base Monthly Fee, less the Deferred Fee pursuant to Section 3.2
below.
3.2 DEFERRED FEE. Commencing upon the Occupancy Date and each month
thereafter until January 1, 2000, PCI shall defer receipt of forty percent (40%)
of the Base Monthly Fee (the "Deferred Fee"). Aviron will deposit and maintain
the Deferred Fee (as the same may be increased from time to time) in an escrow
account with a third party escrow reasonably acceptable to PCI holder until
payment of such amount in accordance with this Section. Any interest accruing
on the Deferred Fee shall belong to Aviron. The Deferred Fee shall be released
to PCI as follows: (i) The first installment of the Deferred Fee in an amount
equal to one half the total amount of the Deferred Fee shall be released and
paid to PCI January 1, 2000; (ii) The balance of the Deferred Fee shall be
released and paid to PCI September 1, 2000; provided, however, that in the event
that production does not commence under the Production Agreement prior to
December 31, 1999, the balance of the Deferred Fee shall be further deferred and
shall instead be released and paid to PCI January 1, 2001. Notwithstanding the
foregoing, in Aviron's sole discretion, Aviron may elect to prepay all or any
part of the Deferred Fee prior to its becoming due and payable.
ARTICLE 4
USE OF AVIRON AREA
4.1 PERMITTED USE. Aviron shall be entitled to use the Aviron Area for
the Permitted Use. Office space within the Aviron area shall be allocated for
the use of the Aviron Technical Representative during the term of the Production
Agreement.
4.2 COMPLIANCE WITH LAWS AND PRIVATE RESTRICTIONS. Subject to the
obligations of PCI pursuant to Sections 4.3 and 4.4 below, Aviron agrees that
its use of the Aviron Area will
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be in compliance with all laws and regulations respecting its use and occupancy
of the Aviron Area.
4.3 COMPLIANCE WITH INSURANCE REQUIREMENTS. PCI and Aviron shall comply
with all requirements of any insurance company, insurance underwriter, or Board
of Fire Underwriters which are necessary to maintain reasonable insurance
coverages covering the Building, the Aviron Area or the Property.
4.4 ENVIRONMENTAL COMPLIANCE AND HAZARDOUS MATERIALS. PCI will comply with
all local, Commonwealth of Pennsylvania and federal laws regarding environmental
compliance and Hazardous Materials ("Laws") in connection with PCI's operations
in the Aviron Area pursuant to the Production Agreement. Subject to the
foregoing, Aviron will comply with all Laws in its use and occupancy of the
Aviron Area. Aviron will indemnify, defend and hold harmless PCI and PCI's
directors, officers, employees and agents, and the directors, officers,
employees and agents of any PCI parent, subsidiary or related company from and
against any and all claims, suits, losses, damages, costs, fees and expenses
resulting from or arising out of any breach of Aviron's obligations pursuant to
this section relating to its use of Hazardous Materials in the Aviron Area. PCI
will indemnify, defend and hold harmless Aviron and Aviron's directors,
officers, employees and agents from and against any and all claims, suits,
losses, damages, costs, fees and expenses resulting from the presence or release
of Hazardous Materials in and around the Aviron Area (except if caused by Aviron
or its agents or assigns), or otherwise as resulting or arising from any breach
of PCI's obligations pursuant to this section.
ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES
5.1 REPAIR AND MAINTENANCE. PCI shall, at all times during the term of
this Agreement and at its sole cost and expense, maintain in good order,
condition and repair the Building and every part thereof including without
limiting the generality of the foregoing, foundation, roof (structure and
membrane), load-bearing and exterior walls, building systems, windows, doors,
skylights, all structural elements of the Building, and all plumbing,
electrical, wiring, conduits, connectors and fixtures; provided, however, that
PCI shall not be responsible for the cost and expense to maintain any plumbing,
heating, ventilation or air conditioning systems (including the 700-ton ▇▇▇▇▇▇▇
chiller) within the Aviron Area, such cost and expense being the responsibility
of Aviron.
5.2 UTILITIES. PCI shall pay all charges for water, and storm and
sanitary sewer services supplied to the Aviron Area at Aviron's request or for
its benefit. Aviron shall pay charges for electricity and gas supplied to the
Aviron Area, as recorded by a dedicated meter.
ARTICLE 6
ALTERATIONS AND IMPROVEMENTS
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6.1 BY AVIRON. Except as provided in Section 2.3, Aviron shall, at
Aviron's sole expense, construct the Aviron Improvements; provided, however,
that selection of a contractor shall be subject to the approval of PCI.
6.2 OWNERSHIP OF IMPROVEMENTS. All Aviron Improvements shall remain the
property of Aviron during the term of this Agreement. Upon expiration or
termination of this Agreement, any Aviron Improvements not removed from the
Aviron Area in accordance with the provisions of Section 2.6 shall be deemed to
have been assigned, without cost or further action by Aviron, to PCI.
6.3 LIENS. PCI shall keep the Aviron Improvements and any personal
property, equipment or trade fixtures of Aviron located in the Aviron Area
(collectively, the "Aviron Fixtures") free from any liens or encumbrances, and
shall pay when due all bills or obligations incurred by PCI, its agents,
employees or contractors relating to the Building. If any such claim of lien is
recorded against Aviron's interest in any of the Aviron Fixtures or the Aviron
Area or any part thereof, PCI shall bond against, discharge or otherwise cause
such lien to be entirely released within thirty (30) days after the same has
been recorded. As soon as possible following the Effective Date, PCI shall
provide Aviron with lien releases from its existing Lenders covering the Aviron
Fixtures. Aviron shall keep the Building, Property and Aviron Area (but not the
Aviron Improvements) free from any lien caused by it and shall pay when due all
bills or obligations incurred by Aviron, its agents, employees or contractors
relating to the Building and Aviron Improvements. If any such claim of lien is
recorded against PCI's interest in the Aviron Area, the Building or the Property
or any part thereof, Aviron shall bond against, discharge or otherwise cause
such lien to be entirely released within thirty (30) days after the same has
been recorded.
ARTICLE 7
LIMITATION ON PCI'S LIABILITY AND INDEMNITY
7.1 LIMITATION ON PCI'S LIABILITY AND RELEASE. PCI shall not be liable to
Aviron for, and Aviron hereby releases PCI and its officers, agents, employees,
Lenders, attorneys, and consultants from, any and all liability, whether in
contract, tort or on any other basis, for any injury to or any damage sustained
by Aviron, Aviron's agents, employees or contractors in connection with Aviron's
use of the Aviron Area, except to the extent such damage was proximately caused
by PCI's negligence, willful misconduct, or breach of this Agreement. The
provisions of this paragraph shall not release PCI from its obligations or
liability under the Production Agreement.
7.2 AVIRON'S INDEMNIFICATION OF PCI. Aviron shall defend with counsel
reasonably satisfactory to Aviron any claims made or legal actions filed or
threatened against Aviron with respect to the violation of any law, or the
death, bodily injury, personal injury or property damage suffered by any third
party occurring within the Aviron Area and Aviron shall indemnify and hold PCI,
PCI's partners, principals, members, employees, agents and contractors harmless
from any loss liability, penalties, or expense resulting therefrom, except to
the extent
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proximately caused by the negligence or willful misconduct of PCI. This
indemnity agreement shall survive the expiration or termination of this
Agreement.
ARTICLE 8
INSURANCE
8.1 AVIRON'S INSURANCE. Aviron shall maintain insurance complying with
all of the following:
(a) Aviron shall procure, pay for and keep in full force and effect,
at all times during the term of this Agreement the following:
(i) Commercial general liability insurance insuring Aviron
against liability for personal injury, bodily injury, death and damage to
property occurring within the Aviron Area, or resulting from Aviron's use or
occupancy of the Aviron Area, or resulting from Aviron's activities in or about
the Aviron Area, the Building or the Property, with coverage in the amount of
five million dollars ($5,000,000), which insurance shall contain the equivalent
of a "broad form liability" endorsement insuring Aviron's performance of
Aviron's obligations to indemnify PCI as contained in this Agreement;
(ii) Fire and property damage insurance in so-called "fire
and extended coverage" form insuring Aviron against loss from physical damage to
Aviron's personal property, inventory, trade fixtures and improvements within
the Aviron Area, including the Aviron Improvements, with coverage for the full
actual replacement cost thereof; and
(iii) With respect to making of alterations or the
construction of improvements or the like undertaken by Aviron, contingent
liability and builder's risk insurance, in an amount and with coverage
reasonably satisfactory to Aviron; and
(iv) Workers' compensation insurance and any other employee
benefit insurance sufficient to comply with all laws.
(b) Each policy of liability insurance required to be carried by
Aviron pursuant to this paragraph or actually carried by Aviron with respect to
the Aviron Area, the Building or the Property: (i) shall name PCI, and such
others as are designated by PCI, as additional insureds; (ii) shall be primary
insurance providing that the insurer shall be liable for the full amount of the
loss, up to and including the total amount of liability set forth in the
declaration of coverage, without the right of contribution from or prior payment
by any other insurance coverage of PCI; (iii) shall be in a form satisfactory to
PCI; (iv) shall be carried with companies reasonably acceptable to PCI with
Best's ratings of at least A + VI; (v) shall provide that such policy shall not
be subject to cancellation, lapse or change except after at least thirty days
prior written notice to PCI, and (vi) shall contain a so-called "severability"
or "cross liability" endorsement. Each policy of property insurance maintained
by Aviron with respect to the Aviron Area, the Building or the Property (i)
shall provide that such policy shall not be subject
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to cancellation, lapse or change except after at least thirty days prior written
notice to PCI and (ii) shall contain a waiver and/or a permission to waive by
the insurer of any right of subrogation against PCI, its partners, principals,
members, officers, employees, agents and contractors, which might arise by
reason of any payment under such policy or by reason of any act or omission of
PCI, its partners, principals, members, officers, employees, agents and
contractors.
8.2 PCI'S INSURANCE. With respect to insurance maintained by PCI:
(a) PCI shall maintain, as the minimum coverage required of it by this
Agreement, fire and property damage insurance in so-called "fire and extended
coverage" form insuring PCI (and such others as PCI may designate) against loss
from physical damage to the Building and against loss of Base Monthly Fees for a
period of not less than six months. Such fire and property damage insurance (i)
shall be written in so-called "all risk" form, excluding only those perils
commonly excluded from such coverage by PCI's then property damage insurer; (ii)
shall provide coverage for physical damage to the Building so insured for up to
the entire full actual replacement cost thereof; and/or (iii) may be endorsed to
cover loss or damage caused by any additional perils against which PCI may elect
to insure. PCI shall not be required to cause such insurance to cover any of
Aviron's personal property, inventory, and trade fixtures, or any modifications,
alterations or improvements made or constructed by Aviron to or within the
Aviron Area, including the Aviron Improvements.
(b) PCI shall maintain commercial general liability insurance insuring
PCI (and such others as are designated by PCI) against liability for personal
injury, bodily injury, death, and damage to property occurring in, on or about,
or resulting from the use or occupancy of the Property, the Building and the
Aviron Area, or any portion thereof, with combined single limit coverage of at
least five million dollars ($5,000,000); provided, however, that the liability
insurance coverage maintained by Aviron under Section 8.1 shall be primary. PCI
may carry such greater coverage as PCI or PCI's Lender, insurance broker,
advisor or counsel may from time to time determine is reasonably necessary for
the adequate protection of PCI and the Property.
(c) PCI shall maintain workers' compensation insurance and any other
employee benefit insurance sufficient to comply with all laws.
8.3 CERTIFICATE OF INSURANCE. Prior to the time Aviron or any of its
contractors enters the Aviron Area, each Party shall deliver to the other Party,
with respect to each policy of insurance required to be carried by it pursuant
to this Article, a copy of such policy (appropriately authenticated by the
insurer as having been issued, premium paid) or a certificate of the insurer
certifying in form satisfactory to the other Party that a policy has been
issued, premium paid, providing the coverage required by this Paragraph and
containing the provisions specified herein. With respect to each renewal or
replacement of any such insurance, the requirements of this Paragraph must be
complied with not less than thirty (30) days prior to the expiration or
cancellation of the policies being renewed or replaced.
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8.4 MUTUAL WAIVER OF SUBROGATION. PCI hereby releases Aviron, and Aviron
hereby releases PCI and their respective partners, principals, members,
officers, agents, employees and servants, from any and all liability for loss,
damage or injury to the property of the other in or about the Aviron Area, the
Building or the Property which is caused by or results from a peril or event or
happening which is covered by insurance actually carried and in force at the
time of the loss by the party sustaining such loss; provided, however, that such
waiver shall be effective only to the extent permitted by the insurance covering
such loss and to the extent such insurance is not prejudiced thereby.
ARTICLE 9
DAMAGE TO AVIRON AREA
9.1 PCI'S DUTY TO RESTORE. If the Aviron Area or the Building are damaged
by any peril after the Occupancy Date of this Agreement, PCI shall restore the
same, as and when required by this paragraph, unless this Agreement is
terminated by Aviron pursuant to Paragraph 9.3 or by PCI pursuant to Paragraph
9.2. If this Agreement is not so terminated, then upon the issuance of all
necessary governmental permits, PCI shall commence and diligently prosecute to
completion the restoration of the Aviron Area or the Building, as the case may
be, to the extent then allowed by law, to substantially the same condition in
which it existed as of the date production in the Aviron Area began.
9.2 PCI'S RIGHT TO TERMINATE. PCI shall have the option to terminate this
Agreement in the event any of the following occurs, which option may be
exercised only by delivery to Aviron of a written notice of election to
terminate within sixty (60) days after the date of such damage or destruction:
(a) The Building is damaged by any peril covered by insurance required
to be carried by PCI pursuant to Article 8 (an "Insured Peril") to such an
extent that the estimated cost to restore the Building exceeds fifty percent
(50%) of the then actual replacement cost thereof; or
(b) The Building is damaged by any peril other than an Insured Peril
and the cost to repair such damage exceeds twenty-five percent (25%) of the then
actual replacement cost thereof; or
(c) The Building is damaged by any peril and, because of the laws then
in force, the Building (i) cannot be restored at reasonable cost or (ii) if
restored, cannot be used for the same use being made thereof before such damage.
9.3 AVIRON'S RIGHT TO TERMINATE. If the Aviron Area or the Building are
damaged by any peril and PCI does not elect to terminate this Agreement or is
not entitled to terminate this Agreement pursuant to this Article, then as soon
as reasonably practicable, PCI shall furnish Aviron with the written opinion of
PCI's architect or construction consultant as to when the restoration work
required of PCI may be complete. Aviron shall have the option to terminate
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this Agreement in the event any of the following occurs, which option may be
exercised only by delivery to PCI of a written notice of election to terminate
within sixty (60) days after Aviron receives from PCI the estimate of the time
needed to complete such restoration:
(a) If the time estimated to substantially complete the restoration
exceeds four (4) months from and after the date the architect's or construction
consultant's written opinion is delivered; or
(b) If the damage occurred within twelve (12) months of the last day
of the term of this Agreement and the time estimated to substantially complete
the restoration exceeds ninety (90) days from and after the date such
restoration is commenced.
9.4 ABATEMENT OF FEE. In the event of damage to the Aviron Area which
does not result in the termination of this Agreement, the Base Monthly Fee shall
be temporarily abated during the period of damage and restoration in proportion
in the degree to which Aviron's use of the Aviron Area is impaired by such
damage.
ARTICLE 10
DEFAULT, REMEDIES AND TERMINATION
10.1 EVENTS OF AVIRON'S DEFAULT. Aviron shall be in default of its
obligations under this Agreement upon the occurrence of any of the following:
(a) If Aviron shall have failed to pay when due any sum required to be
paid hereunder by Aviron, and such failure shall continue for fifteen (15) days
after notice thereof by PCI; or
(b) If Aviron shall have failed to perform any term, covenant or
condition of this Agreement other than an obligation to pay money, and such
failure shall continue for thirty (30) days after written notice from PCI to
Aviron specifying the nature of such failure and requesting Aviron to perform
same (provided that, if longer than thirty (30) days is reasonably required in
order to perform such term, covenant or condition, Aviron shall have such longer
period); or
(c) If Aviron shall make a general assignment or general arrangement
for the benefit of creditors, if a petition for adjudication of bankruptcy or
for reorganization is filed by or against Aviron and is not dismissed within
ninety (90) days, if a trustee or receiver is appointed to take possession of
substantially all of Aviron's assets located at the Property or of Aviron's
interest in this Agreement and possession is not restored to Aviron within
ninety (90) days, or if substantially all of Aviron's assets located at the
Property or of Aviron's interest in this Agreement is subjected to attachment,
execution or other judicial seizure which is not discharged within ninety (90)
days.
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10.2 PCI'S REMEDIES. In the event of any default by Aviron, PCI may, at
PCI's election, terminate this Agreement by giving Aviron written notice of
termination, in which event this Agreement shall terminate on the date set forth
for termination in such notice. Any termination under this subsection shall not
relieve Aviron from its obligation to pay to PCI all Base Monthly Fee then due,
or any other sums due to PCI, or from any claim against Aviron for damages
previously accrued or then or thereafter accruing including any amounts then
owing pursuant to Sections 2.5 and 3.2. Upon delivery of such notice of
termination, Aviron's obligations under Sections 2.5 and 3.2 shall be
accelerated and shall be payable in full within thirty (30) days of the date of
such notice from the escrow account. Notwithstanding anything to the contrary
contained or implied in the foregoing, in no event shall Aviron be liable to PCI
for any special, indirect or consequential loss, damage, costs or expenses of
any nature whatsoever, including, without limitation, lost revenues or profits.
10.3 PCI'S DEFAULT. PCI shall be in default of its obligations under this
Agreement if PCI shall have failed to perform any term, covenant or condition of
this Agreement within thirty (30) days after written notice from Aviron to PCI
specifying the nature of such failure and requesting PCI to perform same
(provided that, if longer than thirty (30) days is reasonably required in order
to perform such term, covenant or condition, PCI shall have such longer period).
10.4 AVIRON'S REMEDIES. In the event of PCI's default, Aviron may proceed
in equity or at law to compel PCI to perform its obligations, to terminate this
Agreement and/or to recover damages proximately caused by such failure to
perform (except as and to the extent Aviron has waived its right to damages as
provided in this Agreement and except that in no event shall PCI be liable to
Aviron for any special, indirect or consequential loss, damage, costs or
expenses of any nature whatsoever, including, without limitation, lost revenues
or profits). Any termination under this subsection shall not relieve from its
obligation to pay PCI the AI Repayment Amount pursuant to Section 2.3 or the
Deferred Fee pursuant to Section 3.2.
10.5 TERMINATION. In the event this Agreement shall terminate or if
either party shall have the right to elect to terminate this Agreement prior to
its expiration date for any reason (other than a right to terminate pursuant to
Article 9), Aviron shall have the following options, any one of which may be
exercised by Aviron in its sole discretion:
(a) PAYMENT OF BUY-BACK AMOUNT. Aviron may elect to have this
Agreement terminate and to receive from PCI an amount in partial compensation
for its contribution to the Aviron Improvements and/or construction of the
Building (the "Buy-Back Amount") as follows:
(i) AMOUNT.
(A) In the event this Agreement shall terminate at any
time during calendar year 1997 or calendar year 1998, no payment
of a Buy-Back Amount shall be required of PCI.
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(B) In the event this Agreement shall terminate at any
time during calendar year 1999 or 2000, the Buy-Back Amount shall
be eight hundred thousand dollars ($800,000);
(C) In the event this Agreement shall terminate at any
time during calendar year 2001 or 2002, the Buy-Back Amount shall
be seven hundred thousand dollars ($700,000);
(D) In the event this Agreement shall terminate at any
time during calendar year 2003, the Buy-Back Amount shall be six
hundred thousand dollars ($600,000); and
(E) The parties agree to negotiate in good faith a Buy-
Back Amount applicable to periods after calendar year 2003.
(ii) PAYMENT. The Buy-Back Amount shall be paid to Aviron
within sixty (60) days after termination of this Agreement, and may be offset
from amounts (if any) owing by Aviron to PCI under the Production Agreement or
this Agreement.
(iii) TITLE TO AVIRON IMPROVEMENTS. Upon payment of the Buy-
Back Amount, PCI shall acquire title to all Aviron Improvements other than the
Aviron Special Fixtures.
(iv) AVIRON SPECIAL FIXTURES. PCI shall have a right of first
refusal to purchase the Aviron Special Fixtures, in the event Aviron shall elect
to sell them.
(b) SUBLEASE TO ANOTHER PARTY. Aviron may elect to keep this
Agreement in effect and sublease the Aviron Area to another party; provided,
however, that such subletting shall be to another party which is acceptable to
both PCI and Aviron and that PCI is the labor provider to said party. Both
Aviron and PCI shall use all reasonable efforts to reach such an agreement.
(c) SUBLEASE TO PCI. In the event that PCI desires to use the Aviron
Area, Aviron may elect to keep this Agreement in effect and sublease the Aviron
Area to PCI for a rent equal to the fair market rental value of the Aviron Area,
taking into account the use intended by PCI. In the event of a sublease to PCI,
PCI shall have a right of first refusal to purchase the Aviron Special Fixtures,
in the event Aviron shall elect to sell them.
10.6 TERMINATION OF PRODUCTION AGREEMENT. Subject to the provisions of
Section 10.6, this Agreement shall terminate effective upon the termination of
the Production Agreement.
ARTICLE 11
ASSIGNMENT
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11.1 ASSIGNMENT AND SUBLETTING. Aviron shall not assign this Agreement or
sublet the Aviron Area except to another party which is acceptable to both PCI
and Aviron and where PCI is the labor provider to such party. Both Aviron and
PCI shall use all reasonable efforts to reach agreements which would allow such
assignment or subletting.
11.2 EXCEPTIONS. Notwithstanding Section 11.1 above, Aviron, without
consent, may assign its interest in this Agreement to a direct or indirect
parent or subsidiary of Aviron; to a party controlling, controlled by or under
common control with Aviron; to any party with whom Aviron may merge or
consolidate; or to any party acquiring all or substantially all of the assets of
Aviron.
ARTICLE 12
GENERAL PROVISIONS
12.1 TAXES. PCI shall pay before delinquency any and all real property
taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed by a governmental
agency arising out of, caused by reason of or based upon Aviron's estate in this
Agreement or improvements made by Aviron to the Aviron Area. If any such taxes,
assessments, fees or public charges are levied against Aviron, Aviron shall have
the right to require PCI to pay such taxes.
12.2 SUBORDINATION TO MORTGAGES. This Agreement is subject to and
subordinate to all ground leases, mortgages and deeds of trust which affect the
Building or the Property and which are of public record as of the Effective
Date, and to all renewals, modifications and extensions thereof. Aviron hereby
consents to PCI's ground leasing the land and/or encumbering the Building or the
Property as security for future loans on such terms as PCI shall desire, and
Aviron agrees to subordinate to the interest of any such ground lessor or
encumbrancer; provided, only, that such ground lessor or encumbrancer provide
Aviron with a nondisturbance agreement, in a commercially reasonable and
customary form, pursuant to which such ground lessor or encumbrancer agrees to
recognize Aviron's rights under this Agreement and agrees not to disturb
Aviron's quiet possession of the Aviron Area so long as Aviron is not in default
under this Agreement, and Aviron agrees to execute such documents as may be
necessary to accomplish the purposes of this paragraph.
12.3 AVIRON'S ATTORNMENT UPON FORECLOSURE. Aviron shall, upon request,
attorn (i) to any purchaser of the Building or the Property at any foreclosure
sale or private sale conducted pursuant to any security instruments encumbering
the Building or the Property, (ii) to any grantee or transferee designated in
any deed given in lieu of foreclosure of any security interest encumbering the
Building or the Property, or (iii) to the lessor under an underlying ground
Agreement of the land underlying the Building or the Property, should such
ground Agreement be terminated; provided that such purchaser, grantee or lessor
recognizes Aviron's rights under this Agreement.
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12.4 ESTOPPEL CERTIFICATE. Aviron will, following any request by PCI,
promptly execute and deliver to PCI an estoppel certificate (i) certifying that
this Agreement is unmodified and in full force and effect, or, if modified,
stating the nature of such modification and certifying that this Agreement, as
so modified, is in full force and effect, (ii) stating the date to which the
Base Monthly Fees are paid in advance, if any, (iii) acknowledging that there
are not, to Aviron's knowledge, any uncured defaults on the part of PCI
hereunder, or specifying such defaults if any are claimed, and (iv) certifying
such other information about this Agreement as may be reasonably requested by
PCI, its Lender or prospective Lenders, investors or purchasers of the Building
or the Property.
12.5 TRANSFER BY PCI. PCI and its successors in interest shall have the
right to transfer their interest in the Building, the Property, or any portion
thereof at any time and to any person or entity. In the event of any such
transfer, PCI (and in the case of any subsequent transfer, the transferor), from
the date of such transfer, (i) shall be automatically relieved, without any
further act by any person or entity, of all liability for the performance of the
obligations of PCI hereunder which may accrue after the date of such transfer
and (ii) shall be relieved of all liability for the performance of the
obligations of PCI hereunder which have accrued before the date of transfer;
provided, however, that its transferee agrees to assume and perform all such
prior obligations of PCI hereunder. Aviron shall attorn to any such transferee.
After the date of any such transfer, the term "PCI" as used herein shall mean
the transferee of such interest in the Building or the Property.
12.6 FORCE MAJEURE. The obligations of each of the parties under this
Agreement (other than the obligations to pay money) shall be temporarily excused
if such party is prevented or delayed in performing such obligations by reason
of any strikes, lockouts or labor disputes; government restrictions,
regulations, controls, action or inaction; civil commotion; or extraordinary
weather, fire or other acts of God.
12.7 NOTICES. Any notice required or desired to be given by a party
regarding this Agreement shall be in writing and shall be personally served, or
in lieu of personal service may be given by reputable overnight courier service,
postage prepaid, addressed to the other party as follows:
If to PCI: Packaging Coordinators, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to: Cardinal Health, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
If to Aviron: Aviron
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to: Cooley Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Any notice given in accordance with the foregoing shall be deemed received upon
actual receipt or refusal to accept delivery.
12.8 GENERAL WAIVERS. One party's consent to or approval of any act by
the other party requiring the first party's consent or approval shall not be
deemed to waive or render unnecessary the first party's consent to or approval
of any subsequent similar act by the other party. No waiver of any provision
hereof, or any waiver of any breach of any provision hereof, shall be effective
unless in writing and signed by the waiving party. The receipt by PCI of any
Base Monthly Fee or payment with or without knowledge of the breach of any other
provision hereof shall not be deemed a waiver of any such breach. No delay or
omission in the exercise of any right or remedy accruing to either party upon
any breach by the other party under this Agreement shall impair such right or
remedy or be construed as a waiver of any such breach theretofore or thereafter
occurring. The waiver by either party of any breach of any provision of this
Agreement shall not be deemed to be a waiver of any subsequent breach of the
same or any other provisions herein contained.
12.9 HOLDING OVER. This Agreement shall terminate without further notice
on the date set forth in Section 2.2. Any holding over by Aviron after such
date shall neither constitute a renewal nor extension of this Agreement nor give
Aviron any rights in or to the Aviron Area except as expressly provided in this
Paragraph. Any such holding over to which PCI has consented shall be construed
to be a tenancy from month to month, on the same terms and conditions herein
specified insofar as applicable except that the Base Monthly Fee charged to
Aviron shall be one hundred twenty-five percent (125%) of the Base Monthly Fee
under this Agreement; provided, however, that the Base Monthly Fee shall not
increase in the event Aviron is engaged in good faith negotiations to extend the
terms of this Agreement.
12.10 MISCELLANEOUS. Should any provisions of this Agreement prove to be
invalid or illegal, such invalidity or illegality shall in no way affect, impair
or invalidate any other provisions hereof, and such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Agreement in which time of performance is
a factor. Any copy of this Agreement which is executed by the parties shall be
deemed an original for all purposes. This Agreement shall, subject to the
provisions regarding assignment, apply to and bind the respective heirs,
successors, executors, administrators and assigns of PCI and Aviron. The term
"party" shall mean PCI or Aviron as the context implies. This Agreement shall
be construed and enforced in accordance with the Laws of the Commonwealth of
Pennsylvania. The captions in this Agreement are for
15
convenience only and shall not be construed in the construction or
interpretation of any provision hereof. When the context of this Agreement
requires, the neuter gender includes the masculine, the feminine, a partnership,
corporation, limited liability company, joint venture, or other form of business
entity, and the singular includes the plural. The terms "must," "shall,"
"will," and "agree" are mandatory. The term "may" is permissive. When a party
is required to do something by this Agreement, it shall do so at its sole cost
and expense without right of reimbursement from the other party unless specific
provision is made therefor. PCI and Aviron shall both be deemed to have drafted
this Agreement, and the rule of construction that a document is to be construed
against the drafting party shall not be employed in the construction or
interpretation of this Agreement.
12.11 ENTIRE AGREEMENT. This Agreement and the Exhibits (as described in
Article 1), which Exhibits are by this reference incorporated herein, and the
Production Agreement dated September 19, 1997, constitute the entire agreement
between the parties, and there are no other agreements, understandings or
representations between the parties relating to the reservation of the Aviron
Area, except as expressed herein.
IN WITNESS WHEREOF, PCI and Aviron have executed this Agreement as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Agreement first above set forth.
PCI
PACKAGING COORDINATORS, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President
------------------------------------
Dated:
------------------------------------
AVIRON
By: /s/ ▇. ▇▇▇▇▇▇▇▇ Read, M.D.
---------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
Dated:
------------------------------------
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EXHIBIT A
AVIRON IMPROVEMENTS DESIGN PLAN
Those certain progress issue drawings prepared by ▇▇▇▇▇▇/Wyper, Architects,
dated 10/8/97, described as follows:
PAGE TITLE
---- -----
A0.1 Keynote and Designation
A2.1 First Floor Plan
A2.2 Mezzanine Plan
A4.1 Coordination Plan
A5.1 Interior Elevations
A5.2 Interior Elevations
A6.1 Reflected Ceiling Plan: First Floor
A6.2 Reflected Ceiling Plan: Mezzanine
A7.1 Doors and Windows: Details/Schedules
A8.1 Details
EXHIBIT B
SITE PLAN
EXHIBIT C
BUILDING DESIGN PLAN
Those certain drawings prepared by ▇▇▇▇▇▇▇▇ Development Company described
as follows:
PAGE DATE TITLE
---- ---- -----
A1 8/21/97 Revised 9/15/97 Site Plan
A2 8/21/97 Revised 9/16/97 Floor Plan and Details
A3 8/21/97 Revised 9/5/97 Mech. Mezzanine Plan and Details
A4 8/21/97 Revised 9/12/97 Roof Plan and Elevations
A5 8/21/97 Revised 9/5/97 Wall Sections