EXHIBIT 10.2
ADDENDUM TO AN AGREEMENT
Executed and signed on 16.12.2004
Between:
(1) MAGEN ▇▇▇▇▇ ▇▇▇▇ IN ISRAEL, (Hereinafter "MDA"), and
(2) OMRIX BIOPHARMACEUTICALS LTD., (Hereinafter "OMRIX")
This agreement is an addendum to the Agreement between the parties entered into
on April 1997, as amended from time to time "THE AGREEMENT". This addendum to
the Agreement will be called hereinafter "THE ADDENDUM".
Following negotiations between the parties it has been agreed between the
parties as follows;
1. The parties acknowledge that the total debt of Omrix to MDA as of 31.12.03
amounts to *** million USD.
2. MDA accepts the requests and the arguments of Omrix for the set-off of the
amount of *** million USD from the outstanding debt of Omrix indicated
in Section 1 above, as detailed herein below:
2.1. *** million USD - participation of MDA in "Compulsory Investments"
(as defined in the Agreement) made by Omrix until the day of
31.12.03.
2.2. *** million USD for inadequate plasma sold by MDA to Omrix.
2.3. *** million USD - an amount to which MDA is entitled, according to
the terms of the Agreement as a "FDA bonus" - the right to which MDA
hereby waves.
3. (a) Omrix has provided MDA with a list of equipment purchased by
Omrix for purposes of manufacturing, in the value of 1.5 million
USD, which MDA does not accept to be part of Compulsory Investments.
The part of this equipment which is subject to the terms of
subsection (b) herein below in respect of the "Glue Equipment" as
herein below defined, will be transferred to the ownership of MDA
subject to the terms detailed in section (b) below (hereinafter:
"THE EQUIPMENT LIST"). MDA is ready, subject to the provisions of
the Addendum, to accept that an amount of 1.150 million USD out of
the value of the items on the "Equipment List" are items that are
part of "the Compulsory Investment" as defined in the Agreement.
(b) In addition, it is agreed that out of the Equipment List, MDA will
have an option to buy equipment in return for *** USD. Such
equipment which has been designated solely for the manufacturing of
the biological
PORTIONS OF THIS EXHIBIT MARKED BY AN *** HAVE BEEN OMITTED PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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glue (Hereinafter: "the Glue Equipment") and which was identified by
the parties in the attachment to the Addendum. The amount of ***
USD, will be deducted from the debt of Omrix at the end of the rent
period (31.12.2007). For the avoidance of doubt, if Omrix stays in
the plant, after 1.1.2008, Omrix shall have the option to sell the
Glue Equipment to MDA at said price, provided that the license for
the manufacturing of biological glue which was promised to MDA in
the Agreement, will be granted by Omrix to MDA, and Provided further
that until that date an agreement between MDA and Omrix with respect
to cooperation in additional subjects shall have been reached.
4. In view of the above, it is agreed that the total amount due to MDA from
Omrix as of 31.12.03 shall be *** million USD payable as follows:
4.1. *** million USD in the year of 2004.
4.2. *** million USD in the year of 2005.
4.3. The balance in the amount of *** USD shall be paid in four
equal, annual installments of *** USD each starting in the year
2007, provided, however, that if Omrix leaves the plant before the
above amount is fully paid, then the balance of the above amount due
then shall be payable immediately
5. THE RENT
Notwithstanding the provisions of the Agreement and of the Addendum dated
March 26th, 2003, the rent that Omrix shall be liable to pay as from
1.1.04 will be as follows:
(a) For the year 2004 Omrix shall pay the rent in the amount of 700,000
USD plus an amount being *** of the overall net turnover of the sale
of products by Omrix to third parties (including also biological
glue and products which are not "Licensed Products" as defined in
the Agreement) that will be sold during the year of 2004.
In this respect, the "total net sales turnover" shall mean the sales
to third parties of all the products of any kind which Omrix has
sold in the course of 2004 (without VAT), after deduction of
commercial reductions given to third parties, returned products and
credits for damaged goods which will be given or paid to third
parties. In this respect, a mother company, an affiliated company or
any other business that Omrix is a partner in shall not be deemed
to be "third parties".
(b) As of January 1st 2005 Omrix shall pay MDA yearly rent in the amount
of 700,000 USD per annum plus an amount being *** from the overall
net turnover sales of the products (as defined in subsection (a)
above), but not less than $1.1 million and not more than 2 million
USD, in one year.
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(c) It is agreed that payments based on turnover as indicated in
subsections (a) and (b) above, shall be paid twice a year, on June
30th and on December 31st each year, accompanied by sales reports.
If it appears that the sales turnover was different from what was
expected according to the actual payments, the final payment for
each year shall be determined until March 31st of the calendar year
thereafter.
6. THE TERM OF THE LEASE
(a) Notwithstanding the provisions of the Agreement, the term of the
lease of Omrix shall terminate on 31.12.2010.
(b) Notwithstanding the aforesaid in subsection (a) above and subject to
the provisions of subsection (c) herein below, Omrix shall be
entitled to terminate the lease by giving a written notice to MDA,
12 months in advance, provided however that the lease will not end
before 31.12.2007.
(c) If Omrix exercises its right to terminate the lease before
31.12.2010, as aforesaid, and leaves the plant before that date -
Omrix shall be liable to pay MDA an amount of 500,000 USD for each
year as from the date of the actual termination of the lease and
until 31.12.2010 (for parts of a year - the proportional part of
500,000 USD), and shall be exempted from paying rent and from all
other obligations and undertakings towards MDA as stipulated in the
Agreement and for the period starting from Omrix' actual eviction of
the premises.
7. THE PLASMA PRICE
(a) As from 1.1.2004, Omrix will pay MDA for Fresh Frozen Plasma ***,
instead of ***, and for frozen Plasma it will pay ***, instead of
***. As from 1.1.05, Omrix will be permitted to notify MDA at the
beginning of each quarter, what are the components of plasma which
it intends to use for the actual production of final products. If
MDA does not exercise its rights according to section 7(b) herein
below, there will be made an accounting, once for each two quarters,
and Omrix shall pay MDA the proper proportional price, for those
components of plasma which shall have actually been used for
manufacturing. In addition, if Omrix manufactures additional
products (which are not included in the Licensed Products) the price
of the plasma shall be accordingly increased. For the avoidance of
doubt it is hereby clarified that if Omrix exercises its right
herein above, the proportional price for those components of plasma,
which are to be used by Omrix as aforesaid, shall be fixed in
proportion to the price of *** of fresh frozen plasma and *** of
frozen plasma.
(b) Notwithstanding the aforesaid in subsection 7(a), in the event MDA
succeeds in finding a buyer for its plasma ready to pay higher
prices then
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the prices mentioned in subsection 7(a) above, Omrix will have the
option to purchase from MDA the plasma for the same prices which
said third party is ready to pay, by giving a notice in writing to
MDA to that effect not later than 15 days after receiving a written
letter from MDA in which MDA states the prices offered by third
party.
8. MDA is ready to purchase from Omrix approximately 2 tons of pasta for the
manufacturing of Albumin and 150 kg of the final product of Albumin, both
of which their expiry date will not be before June 30st 2005, at a total
price of ***. The transaction will take place before the end of 2004.
9. Without derogating from the obligations of the parties under the Agreement
for the maintenance of the Systems as defined therein, it is agreed, that
the following maintenance or repair works in that Plant shall be born by
MDA, in the following events:
a. The official standard of a certain equipment in the building of the
Plant or in relation to some appliances permanently connected to the
walls have been changed, so that it is obligatory to amend it or to
replace some parts in it.
b. There is a permanent shortage of spare parts for a certain equipment
or system, being permanent and inseparable part of the building,
e.g. an electricity, water, sewage, which prevent the proper
operation of the system to which it belongs.
c. There is damage to the building of the Plant, which is not the
result of a wear and tear caused by the use of the Plant by Omrix
and in which is not included in the day-to-day maintenance work.
d. There is a breakdown of a system or a component, even if it does not
fall in the meaning of the term "System", as defined in the
Agreement, provided it was originally built or erected by MDA
designated solely for the Plant and the breakdown is not the result
of a negligent or intentional action of Omrix or any of its
employees or subcontractors.
e. The obligation of MDA to finance or to pay the maintenance or repair
works as per subsections b and d shall not exceed the amount of
100,000$ in one calendar year, unless and to the extend the rent
paid to MDA in such a year exceeds 1,300,000$. It is further
clarified that MDA will not have to pay for any repairs or
maintenance work unless it certifies in advance such payment. In the
event of urgent work Omrix may execute it without a prior approval
provided that in such a case MDA will not be responsible for more
than 10.000$.
10. The parties will examine positively the possibility to construct in the
area of the blood services a plant for biological glue, both from the
point of view of the laws of town planning and environmental requirements,
and from the point of view of the required investment and its financing
and also from the point of view of payments that should be made to MDA.
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11. For the avoidance of doubt Omrix hereby declares the abovementioned amount
in this Addendum which it undertakes to pay to MDA in the years 2004 and
2005 respectively - are in addition to the current amounts for the rent
and for the plasma it has to pay during these years respectively,
according to the agreement, unless such amounts have been changed,
expressly in this Addendum.
12. a. All the debts of Omrix to MDA for the year 2004 either for Rent or for
the Plasma shall be paid by Omrix not later than January 31st, 2005.
b. The payment of 3.2 million USA dollars as per section 4.2 above
shall be paid in two equal installments; the first one not later than
June 30st, 2005 and the second one not later than December 31st, 2005.
13. The terms of this Addendum are to be amendments and additions to the terms
of the Agreement. All the other terms of the Agreement insofar they have
not been amended by the provisions and terms of this Addendum or any
previous addendum will continue to be in force and effect.
In witness whereof, the Parties affix their signatures hereto:
/s/ Avi Zohar /s/ ▇▇▇▇▇▇ ▇▇▇▇
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MDA OMRIX BIOPHARMACEUTICALS LTD.
[SEAL]
16.12.04
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