Exhibit 10.34.1


 


Execution
Copy


 


***TEXT
OMITTED AND SUBMITTED SEPARATELY


PURSUANT
TO CONFIDENTIAL TREATMENT REQUEST


UNDER
17 C.F.R. SECTIONS 200.80(b)(4) AND 230.406


 


 


DISTRIBUTION
AGREEMENT


 


THIS DISTRIBUTION AGREEMENT (this “Agreement”) is
entered into as of March 31, 2005 (the “Effective Date”) by and between
Talecris BioTherapeutics, Inc. (f/k/a NPS BioTherapeutics, Inc. (“Newco”), Bayer
Biologicals S.r.l. (“B.Biologicals”) and,
Bayer Healthcare LLC, and such Distributors as may hereinafter execute Exhibit J which is attached hereto.
Newco, B.Biologicals and each Distributor (as listed on Exhibit A and upon execution of Exhibit J) (each a “Distributor”) are
collectively hereinafter referred to as the “Parties”.


 


WITNESSETH


 


WHEREAS,
Bayer Healthcare LLC (“Bayer”),
Newco and Talecris Holdings, LLC (formerly known as NPS Bio Holdings,
LLC) and Talecris Biotherapeutics Holdings Corp. have entered into that
certain Amended and Restated Joint Contribution Agreement, dated as of March 30,
2005 (the “Contribution
Agreement”);


 


WHEREAS,
Newco will be upon closing engaged in the manufacture of plasma-derived
biological products;


 


WHEREAS,
Newco and B.Biologicals have entered into that certain European Product Sales
Agreement (Phase I) of even date herewith (the “Phase I Agreement”) pursuant
to which Newco shall sell certain products to B.Biologicals which B.Biologicals
shall import, test, package and release in Europe (the “Phase I Period”);


 


WHEREAS,
it is intended that once Newco qualifies an affiliated entity of Newco (“European Newco”) as
an importer/manufacturer responsible for batch release in Europe, Newco,
European Newco and B.Biologicals shall enter into that certain Services
Agreement (the “Phase II
Agreement”) pursuant to which B.Biologicals shall test and
package certain products which European Newco shall release in Europe (the “Phase II Period”);


 


WHEREAS,
it is intended that each Distributor shall become a party to this Agreement and
that until such time Bayer shall meet certain obligations and provide certain
guarantees as set forth in Article 19;


 


WHEREAS,
the Parties desire for the Distributors to distribute those products referenced
above in Europe consistent with current practice for the term provided herein;


 


WHEREAS,
the Parties acknowledge that, once European Newco is established and qualified,
Newco may desire to assign certain of its rights and obligations under
this Agreement to European Newco consistent with Section 20.1 hereof; and


 


WHEREAS,
the Parties wish to set forth their mutual agreements and understandings
regarding the distribution of products by the Distributors in accordance with
the terms of this Agreement.


 

















 


NOW, THEREFORE,
for and in consideration of the premises and the mutual’ covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto do hereby agree as
follows:


 


ARTICLE 1           TERM


 


This Agreement shall have an initial term commencing on the Effective
Date and terminating on the date twelve (12) months after the Effective
Date (“Initial Term”),
unless earlier terminated as provided in Article 17 below. If Newco
provides written notice to a Distributor one hundred and eighty (180) days
prior to the expiration of the Initial Term, Newco may extend this
Agreement for one (1) additional twelve (12) month period (“Extended Term”). The
written notice requesting an extension shall be specific as to the identity of
the Distributors to which it applies. Except for any provisions surviving
termination of this Agreement with respect to such Distributors, Distributors
not identified in such notice will have no obligations under this Agreement
during the Extended Term or thereafter to purchase from Releasor or distribute
any Products or otherwise support Newco’s business. The Initial Term and the
Extended Term shall collectively constitute the “Term.” 
If Newco provides written notice one hundred and eighty (180) days
prior to the expiration of the Extended Term to a Distributor then obligated
under this Agreement requesting an extension of the term of this Agreement
beyond the Extended Term and if Distributors receiving such notice and Newco
can mutually agree upon the terms and conditions to be applied for such period
the Agreement may be extended for that Distributor consistent with that
mutual agreement. Nothing herein shall be interpreted to require any Party to
extend this Agreement beyond the end of the Extended Term.


 


ARTICLE 2           PURCHASE AND SALE OF
THE PRODUCTS


 


2.1           Exclusivity.
Except as the Parties may otherwise mutually agree in writing, Newco and
B.Biologicals hereby appoint and designate each of the Distributors as their
exclusive distributor for those products set forth in Exhibit A attached hereto (the “Products”) in
the indicated countries as set forth in Exhibit A.
During the Phase I Period, each Distributor hereby appoints and designates
B.Biologicals as its exclusive supplier of Products in the Territory for the
Term. During the Phase II Period, each Distributor to which this Agreement then
applies hereby appoints and designates Newco as its exclusive supplier of
Products in the Territory for the Term (the term “Releasor” shall refer to B.Biologicals
during the Phase I Period and Newco during the Phase II Period.). The Parties
shall not enter into any agreement or arrangement with any other third party
for the sale or purchase, respectively, of the Products or any plasma-derived
products in any country where a Distributor remains obligated to distribute
Products for Newco under this Agreement. For purposes of this Agreement the
countries served by the Distributors to distribute Products for Newco as listed
in Exhibit A
collectively will be referred to as “Territory.” 
If Newco chooses not to renew a particular Distributor for an Extended
Term, the countries served by that Distributor will, for such Extended Term,
not be a part of the Territory. Notwithstanding the foregoing, upon mutual
agreement of Newco, B.Biologicals and the Distributor in any country identified
on Exhibit A, Newco may appoint
a third party distributor to distribute Products in such country and, upon such
agreement, B.Biologicals and the effected Distributor shall no longer be the
exclusive supplier and exclusive distributor, respectively, in such country.


 


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2.2           Volume
Requirements.


 


(i)            During the Initial Term, the Releasor
agrees to make available to the Distributors up to one hundred percent
(100%) of each Product specified for that Distributor by country in Exhibit B and each of the
Distributors shall purchase from the Releasor at least seventy five percent
(75%) of the amounts of each Product set forth for each country in Exhibit B (the “Required Amount”). The
requirements to supply and to purchase Required Amounts shall be subject to
modification based upon the following:  (a) for
Prolastin, once volumes are committed by a Distributor and confirmed by Newco
based on a reasonable anticipated patient count, Newco, the Releasor and the
applicable Distributor shall use commercially reasonable efforts to maintain
such commitment; (b) for IGIV, Newco’s obligation to make available the
Required Amount to a Distributor is contingent upon that Distributor’s
continuing ability to sell IGIV [***];
and (c) for prospective sales based on tender offers or upon bids when a
Distributor presents its prospective proposal to Newco and Newco agrees to the
price level and volume target Newco will be obligated to provide Product at
such price and volume.


 


(ii)           During the Extended Term, Newco and each
Distributor and, during the Phase I Period, B.Biologicals shall negotiate in
good faith the amounts of each Product, by country and for each Distributor,
which Newco shall make available and the Distributors shall purchase; provided
that the volume targets in the aggregate for all Distributors during the
Extended Term shall be no less than during the Initial Term, taking into
account trends in market pricing and assuming that Newco continues this
Agreement with respect to all Distributors for the Extended Term.


 


(iii)          Upon a Distributor’s request, Newco shall use
commercially reasonable efforts to increase the supply of Products to that
Distributor above the Required Amount for any Product or any amount as the
Parties may mutually agree, subject to the terms of this Agreement and the
consent of Newco on the price set by the Distributor of such additional
delivery; provided, however, that Newco shall have no liability for any failure
to supply any Products in excess of the Required Amount except that to the
extent such increased amount becomes part of a Binding Forecast (as
defined below), it shall be treated the same as any other Binding Forecast
pursuant to Section 2.3(ii).


 


2.3           Forecasts.


 


(i)            Upon the Effective Date, each Distributor
shall provide Newco and B.Biologicals with a twelve (12) month rolling
forecast of the Distributor’s estimated requirements for each Product by
country and calendar month (the “Initial Forecast”). The Initial Forecast is
attached hereto as Exhibit C
and incorporated herein by reference. Each Distributor shall provide an updated
twelve (12) month rolling forecast on or about the commencement of each
calendar month but no later than the fifth (5th) calendar day
of each such month; provided, however, that the Distributors’ obligation to
provide a forecast for periods beyond the end of the Initial Term or Extended
Term, as applicable, shall cease if Newco does not provide notice of an intent
to renew as provided in Article 1. For the avoidance of doubt,
B.Biologicals shall have no responsibility for accuracy or completeness of the
twelve (12) month rolling forecasts provided by the Distributors.


 






***CONFIDENTIAL TREATMENT REQUESTED


 


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(ii)           Subject to meeting the volume requirements
of Section 2.2(i) above as may be adjusted in accordance with Section 2.2(iii),
Newco’s and, during the Phase I Period, B.Biologicals’, obligation to supply
Products pursuant to this Agreement are subject to its approval of each Binding
Forecast (as defined below). Newco and, during the Phase I Period,
B.Biologicals, shall approve or disapprove in writing the third month of each
subsequent rolling forecast beyond the Initial Forecast within ten (10) Business
Days of receipt of such forecast, which approval shall not be unreasonably
withheld or delayed. If Newco or B.Biologicals fails to approve or disapprove
such third month of the rolling forecast within such ten (10) Business Day
period, such third month of the rolling forecast shall be deemed approved. The
first three (3) months of the Initial Forecast is, and once any additional
forecast periods beyond the first three (3) months of the Initial Forecast
are approved by Newco, they shall become, a binding forecast (the “Binding Forecast”) on
each applicable Distributor and Releasor. In addition, if Releasor agrees to
increase any amounts above that in an already Binding Forecast pursuant to
Sections 2.2(ii) or (iii), that amount shall also become a Binding
Forecast. Except as set forth herein, the Distributors agree to purchase and
the Releasor agrees to deliver the Products in such quantities equal to the
applicable Binding Forecast, on such delivery dates as are specified in the
Purchase Order issued by Distributors pursuant to Section 2.4 provided
that Distributors shall, upon the request of the Releasor, use commercially
reasonable efforts to modify the delivery dates on the Purchase Order to
accommodate reasonable scheduling of production and shipment when such modified
delivery dates would not cause a Distributor to directly violate any
contractual commitments to third parties with respect to the delivery of
Products.


 


(iii)          The Parties shall use commercially reasonable
efforts to make adjustments to the forecasts including, without limitation, the
Binding Forecasts, and production schedules in consideration of market
opportunities, manufacturing shutdowns, capacity constraints, maintenance
turnarounds and optimization of lot sizes. All adjustments made pursuant to
this Section 2.3(iii) shall be in writing and signed by Releasor and
Distributor.


 


2.4           Purchase
Orders. Simultaneous with the submission of the Initial Forecast, each
Distributor shall deliver to Releasor, and Newco if it is not the Releasor, a
purchase order, in the form of Exhibit D
attached hereto, reflecting the aggregate Product quantities set forth in the
initial Binding Forecast and with each subsequent Binding Forecast described in
Section 2.3 above, each Distributor shall deliver to Releasor, and Newco
if it is not the Releasor, a purchase order, in the form of Exhibit D attached hereto,
reflecting the aggregate additional Product quantities that have become binding
with that forecast (in each case, a “Purchase Order”). Each Purchase Order shall
specify the quantity of the Products ordered and the delivery date consistent
with normal lot sizes and consistent with past practice to be reasonably agreed
upon. Subject to Section 2.3(iii), each Purchase Order delivered by a
Distributor to a Releasor shall be a binding obligation of that Distributor to
purchase the Products and Releasor to supply the Products as set forth in such
Purchase Order.


 


2.5           Shipments.
The Releasor agrees that it shall provide the Products in conformance with the
Specifications, the quality requirements set forth in this Agreement and the
delivery dates set forth in the Purchase Orders provided by Distributors. Releasor
shall deliver to each Distributor Products the shelf life of which is
twenty-one (21) months or longer at the point of destination unless Newco
obtains the prior express written consent of that Distributor, which consent
will not be unreasonably withheld. Releasor shall include copies of the COA 


 


4

















 


(as defined below) with each shipment. Releasor shall be responsible
for making the necessary arrangements to ship Products to Distributors. Risk of
loss in transit of Products to Distributor shall lie with Releasor. All the
Products purchased and sold hereunder shall be delivered by Releasor F.O.B. at
B.Biologicals’ facility in Rosia, Italy, unless mutually agreed by a Releasor
and a Distributor with respect to deliveries to that Distributor. All financial
arrangements for transport of the Products from Newco to Distributor and
handling of the Products until delivery to Distributor shall be the
responsibility of Releasor.


 


2.6           Newco
Facilities. Newco shall ship Products manufactured only from its locations
that are properly licensed to manufacture such Products and deliver such
Products in the Territory by the relevant Regulatory Authorities, including,
without limitation, Newco’s facility in Clayton, NC. In addition, the Releasor
shall not ship to Distributors any Products tested and packaged at any location
other than its Clayton facility or B.Biologicals’ facility in Rosia, Italy,
without the prior written consent of the Distributor. In certain limited
circumstances Newco and Distributor may agree in writing that Products may be
shipped directly to named customers by Newco.


 


ARTICLE 3           COOPERATION OF THE
PARTIES


 


To the extent permitted by Applicable Law, Newco, B.Biologicals and the
Distributors shall cooperate with each other in the performance of their
respective obligations under this Agreement during the Term, including:


 


(i)            Each Party shall provide reasonable support
to the other Party to assist the other Party in complying with applicable
Regulations (as defined below) or activities in conjunction with the
requirements of Regulatory Authorities (as defined below), including activities
by Newco to obtain the necessary marketing authorizations.


 


(ii)           The Parties shall cooperate during the Term
of this Agreement in the development and implementation of plans designed to
provide minimal disruption to Distributors’ customers, as if such customers are
dealing with a single supplier of Products.


 


(iii)          The Distributors shall maintain those
commercial activities ongoing or planned (where planned activities have been
approved by Newco as Discretionary P&I as defined in Section 6.1(iii) on
or as of the Effective Date in support of sales development at levels
equivalent to, but in no event less than, those conducted in the twelve
(12) months prior to the Effective Date, whether the goal of such sales
development activity is within the Term or beyond.


 


(iv)          During the Initial Term, each Distributor
shall support programs consistent in scope, volume and expenditure levels with
those programs for ongoing product development in the twelve (12) months
prior to the Effective Date, including, without limitation, clinical trials and
regulatory activities.


 


(v)           In the event that Newco seeks support for (A) programs
for ongoing product development or (B) Newco’s actions and efforts to
establish its plasma business in the Territory, including without limitation,
re-labeling Products, resolution of any import and export issues relating to
the re-licensing of Products by Newco and any other actions required by Newco 


 


5

















 


to be taken in order to effect the sales, distribution or transfer of
Products by Newco, in each case which would require Distributors to incur
additional expenditures beyond the expenditures incurred for normal operating
activities (such as, for example, expenditures for Product acquisition or
research and development) during the twelve (12) months prior to
Effective Date, Distributors shall, in each case, upon request and upon
agreement by Newco that such efforts shall be VSG&A Costs (as described in Section 6.2),
take commercially reasonable efforts to support programs and efforts.


 


(vi)          In order to ensure timely delivery of the
Products, Newco and B.Biologicals shall inform the Distributors
immediately of any problems that may prevent Newco and/or B.Biologicals
from providing timely deliveries of the Products and the Parties shall
cooperate in resolving such problems relating to the manufacture and supply of
the Products under this Agreement. For purposes of clarification, this section (vi) does
not expand or diminish the Releasors’ or the Distributors’ obligations to
supply and purchase, as applicable, the Products in accordance with the Binding
Forecast set forth in Section 2.3.


 


ARTICLE 4           QUALITY AND
SPECIFICATIONS


 


4.1           Specifications.
Newco shall manufacture and process, B.Biologicals shall package and test, the
applicable Releasor shall release, and the applicable Releasor and each
Distributor shall store, distribute, inspect, transport, dispose and otherwise
handle the Products, in each case, at all times in compliance with current Good
Manufacturing Practices (“cGMPs”) and
other applicable Regulations (as defined in Section 10.1 below), the
specification requirements prescribed by the Phase I Agreement and Phase II
Agreement (“Specifications”) and
the applicable EU Dossier/registration formulae and European registrations and
applicable SOPs (as defined in Section 10.2). The initial Specifications
shall be the same as in effect as of the Effective Date. Newco shall not make
any changes to the batch production records, and neither Releasor nor any
Distributor shall make any changes to the Specifications or the SOPs without
the prior written approval of the applicable other Parties, such approval not
to be unreasonably withheld. All Parties shall maintain all records as are
necessary and appropriate to demonstrate compliance with cGMPs, the
Specifications, the SOPs and Regulations (as defined in Section 10.1).


 


4.2           Testing.
B.Biologicals shall test, or cause to be tested, the Products’ compliance with
the Specifications and provide a certificate of analysis (“COA”) to the
Distributors showing conformance with the Specifications.


 


4.3           Acceptance.
A Distributor shall have a period of forty-five (45) days from the date of
its receipt of a shipment of Products (the “Inspection Period”) to inspect the
delivered Products and the transmitted COA and reject the corresponding shipment
of Products for nonconformity with the Specifications. If a Distributor rejects
such shipment or a portion thereof in accordance with the preceding sentence,
it shall promptly so notify the Releasor, such rejected Products shall be
considered Nonconforming Products and the provisions of Section 11.1 below
shall apply.


 


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4.4           Records.
All Parties shall maintain production records and other records required by the
Phase I Agreement, the Phase II Agreement, cGMPs, Specifications, SOPs or
Regulations. Each Party shall make such records available to the other Party
for inspection following a written request by any other Party.


 


ARTICLE 5           DISTRIBUTOR PRICE ‘AND
PRICE ADJUSTMENT


 


5.1           Market
Price. Each Distributor will set the prices for all Products it seeks to
sell in the Territory. Notwithstanding anything else in this Agreement, the
Parties acknowledge and agree that Distributors shall have the sole right to
determine that price and other terms and conditions upon which it sells the
Products to third parties in the applicable countries in the Territory and
nothing in this Agreement or any other agreement between Newco and the
Distributors shall be construed to constitute an agreement by any Distributor
to comply with any recommendation by Newco regarding the price of sales to
third parties.


 


5.2           Distributor
Purchase Price. [***]


 


5.3           [***]


5.4           [***]


 


5.5           (i)            [***]


 










***CONFIDENTIAL TREATMENT REQUESTED


 


 


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                (ii)           [***]


 


                (iii)          [***]


 


(iv)          The Distributors shall make available to
Newco and, if Newco so elects, Newco’s independent certified public
accountants, at no expense, such of the facilities, books, records and
personnel of Distributors and such of the work papers of independent certified
public accountants designated by the Distributors as are reasonably requested
to review and verify the Actual Distributor Margin. In the event Newco disputes
the Distributor’s calculations pursuant to this Section 5.5, it shall,
within thirty (30) days of delivery thereof pursuant 


 


8

















 


to Section 5.5(ii), deliver a notice to the Distributors (the “Dispute Notice”) setting
forth in reasonable detail the basis of such dispute. If the Dispute Notice is
not delivered within such thirty (30) day period, then the [***] shall be final. In the event that the
Dispute Notice is so delivered, the Parties shall negotiate to attempt to
resolve the portion which is in dispute and the portion which is not in
dispute, together with interest accrued thereon for the applicable period at
the London Interbank Offered Rate (“LIBOR”), shall be promptly paid by the Party
owing the same. If the Parties fail to resolve any such dispute within
forty-five (45) days after receipt of any Dispute Notice, a firm of
independent certified public accountants of national standing mutually and
reasonably agreeable to Newco and Distributor (the “Reviewing Accountant”) will
review the portions of the calculation which are subject to dispute. The
Parties shall make available to the Reviewing Accountant all work papers and
all other information and material in their possession relating to the matters
asserted in the Dispute Notice. The Reviewing Accountant shall be instructed by
the Parties to use its best efforts to deliver to the Parties its determination
as promptly as practicable after such submission of the dispute to the
Reviewing Accountant. The determination of the Reviewing Accountant shall be
final and binding on the Parties and any amounts determined by the Reviewing
Accountant to be owed by one Party to the other Party, together with interest
at LIBOR accrued thereon for the period commencing on the date the original
payment was made and ending on the date the Reviewing Accountant makes its
determination, shall be promptly paid by the Party owing such amounts. Each
party shall bear its own expenses and the fees and expenses of its own
representatives and experts, including its independent accountant, in
connection with the preparation, review, dispute (if any) and final
determination of the [***]. The
applicable Distributor and Newco shall share equally in the costs, expenses and
fees of the Reviewing Accountant.


 


“Target Net Sales” means, for the purposes of
this Section 5.5, the amounts specified in Exhibit E.


 


5.6           True-Up
for Governmental Price Action. In the event an applicable Regulatory
Authority reviews the Distributor Price for Products sold pursuant to this
Agreement as calculated above and determines that such price should be reduced
in a particular country and imposes a retroactive obligation to adjust the
same, Newco will defend, indemnify and hold the applicable Distributor harmless
from any and all claims and/or obligations arising from such price adjustment. [***]


 






***CONFIDENTIAL TREATMENT REQUESTED


 


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ARTICLE 6           DIRECT CHARGES


 


6.1           Fixed
Selling, General and Administrative and Committed Promotion and Information
Costs. 


 


(i)            In accordance with Article 7 hereof,
except as set forth in and as may be adjusted in accordance with Section 9.3,
Newco agrees to pay each Distributor an amount, on a monthly basis, equal to
one twelfth of the fixed annual Selling, General and Administrative (“SG&A”) costs
for each Distributor as set forth on the attached Exhibit F; provided that the administrative and
operational support (the “Support”) levels
and employee headcount of such Distributor in support of the distribution of
Products are no less than those in the twelve (12) month period preceding
the Effective Date. During the Initial Term and the Extended Term, Distributor
agrees that its Support shall include, without limitation, support of
regulatory activities and clinical studies by sales and administrative staff
consistent with the practice during the twelve (12) month period prior to
the Effective Date.


 


(ii)           (a) With respect to German Distributor
Bayer Vital it is agreed that such Distributor shall spend in each year amounts
on Promotion & Information (“P&I”) with respect to Germany at
least equal to sixty percent (60%) of its historical P&I spending
level as set forth on the attached Exhibit F
and in accordance with Article 7 hereof, Newco shall reimburse Bayer Vital
for [***] of its actual
expenditures up to [***] of
such historical P&I spending level. (b) With respect to Distributors,
other than Bayer Vital, such Distributors agrees to spend amounts on P&I at
least equal to [***] of its
historical P&I spending level as set forth on the attached Exhibit F and in accordance with Article 7
hereof, Newco shall reimburse each such Distributor for its actual expenditures
up to [***] of such
Distributor’s historical P&I, unless otherwise mutually agreed between
Newco and such Distributor.


 


(iii)          In addition, all Distributors may, as
appropriate, propose in writing discretionary P&I, including any P&I
activities to which Distributor is already committed, which supports longer
term sales development or other discretionary initiatives for review and
written approval by Newco (“Discretionary P&I”). In the event Newco approves
such Discretionary P&I, in accordance with Article 7 hereof, Newco
shall reimburse the Distributor one hundred percent (100%) of the amount
of such approved expenditures. If Newco does not approve a proposed
Discretionary P&I expenditure, the Distributor shall be under no obligation
to incur such cost. For purposes hereof, P&I shall include reasonable out
of pocket expenses incurred by Distributor on media, trade shows, promotional
items and the Distributors’ actual, direct compensation of their employees to
the extent such employees are employed in support of such P&I. P&I
costs shall not be deemed to include overhead, including, without limitation,
costs relating to facilities, information technology, corporate allocation or
taxes. Within thirty (30) Business Days of the commencement of the
Extended Term, Distributor shall prepare and submit a P&I budget and
marketing plan for Newco’s approval, which approval shall not be unreasonably
withheld.


 






***CONFIDENTIAL TREATMENT REQUESTED


 


 


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(iv)          If the aggregate net sales by any Distributor
during the Initial Term or the Extended Term are less than ninety percent
(90%) of the Target Net Sales in the applicable country for that period,
then reimbursement for the fixed SG&A costs and committed, actual P&I
(excluding Discretionary P&I) will be reduced pro rata for the period
during which sales are below ninety percent (90%) (for example:  net sales of 85% of plan would result in a
reduction of 5.6% (i.e., [90-85]/90)). For the avoidance of doubt, there shall
be no adjustment in the amount of the reimbursement by Newco to each
Distributor for fixed SG&A costs and committed P&I costs in the event such
Distributor’s actual net sales exceed the Target Net Sales in the applicable
country.


 


(v)           SG&A costs and P&I costs for each
country for the Extended Term shall be adjusted on the commencement date of the
Extended Term by increasing the SG&A and P&I costs for the Initial Term
by the positive (or decreasing such costs by the negative) change in the
appropriate escalation index for such country unless Newco approves any changes
in structure or headcount, in which case the SG&A will be reimbursed at a
mutually agreed cost. Such adjustment shall be final and binding in the absence
of manifest error. Newco and the applicable Distributor shall agree on the
appropriate escalation index for each country within 90 days after the
Effective Date.


 


6.2           Variable
Selling, General and Administrative Costs. (a) To the extent that any
Distributor requires services from Bayer AG or third parties, provided such
services and associated costs thereof are identifiable and documented and not
historically part of SG&A, and Newco approves such services and costs
in advance in writing, which approval shall not be unreasonably withheld (“VSG&A Costs”),
Newco shall reimburse the appropriate Distributor for the cost, to the extent
approved by Newco, of obtaining such services from Bayer AG or third parties; (b) For
purposes of this Section 6.2 actual costs recoverable by a Distributor
shall mean that Distributor’s reasonable direct costs which include all (i) employee
costs and employee supporting costs for employees working directly to provide
the service, pro rated for the amount of time spent by such employees working
directly to provide such service but in no event shall this include any general
overhead costs, and (ii) documented out of pocket costs incurred in the
provision of such services.


 


6.3           Disputes.
Any dispute on the calculation of the SG&A costs, the P&I costs,
Discretionary P&I costs, or VSG&A Costs shall be resolved using the
methodology set forth in Section 5.5(iv).


 


ARTICLE 7           PAYMENT TERMS


 


7.1           Invoices.
Upon shipment of the Products to a Distributor, the applicable Releasor shall
issue a written invoice to the Distributor showing the type and amount of
Products shipped, and the Distributor Price therefor, as computed in accordance
with Article 5 above. Each Distributor shall also issue an invoice to
Newco once each calendar month for one-twelfth (1/12) of the annual fixed
SG&A costs and P&I costs, both as computed in accordance with Article 6
above. Once each calendar month each Distributor shall also issue an invoice to
Newco for VSG&A Costs and Discretionary P&I costs that Distributor
incurs in the previous month as provided in Section 6.2, together with
reasonable supporting documentation.


 


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7.2           Payment.
The Distributors shall pay the appropriate Releasor for the Products within
thirty (30) days of receipt of the invoice for such Products from Releasor.
Newco shall pay for SG&A costs, P&I costs, Discretionary P&I costs,
and VSG&A Costs within thirty (30) days of receipt of an invoice from
a Distributor in accordance with Section 7.1. All payments hereunder for
Products shall be made in Euros and all payments for SG&A costs, P&I
costs, Discretionary P&I costs, and VSG&A Costs shall be paid in Euros
or, for countries that have not adopted Euros, U.S. Dollars provided that for
purposes of determining such U.S. Dollar amount, the applicable amount in local
currency shall be converted to U.S. Dollars based on the exchange rate
published in the Wall Street Journal
on the last business day of the month for which the amount is calculated, which
exchange rate will be determinative except in the case of manifest error.


 


7.3           Payment
Disputes. Except as provided in Sections 5.5(iv), 5.6 and 6.3, all billing
and payment disputes between the Parties shall be resolved in accordance with Section 20.9
below. Notwithstanding the foregoing, any undisputed amounts shall be paid by
the owing Party pursuant to Section 7.2 and within the time periods stated
therein.


 


ARTICLE 8           MARKETING


 


8.1           Marketing
Plan. Each Distributor shall establish an annual marketing plan for Newco’s
approval for the applicable country (each, a “Marketing Plan”). The 2005 budget plan
shall be the initial Marketing Plan for the Distributors and is attached hereto
as Exhibit G. In
conjunction with creating each Marketing Plan, the Distributors and Newco shall
discuss any necessary adjustments to the Benchmark Prices as provided for in Section 5.3(ii).
Newco will be entitled to ongoing participation in the development of future
annual Marketing Plans. No annual Marketing Plans need be prepared for an
Extended Term unless the Parties have given notice of their respective intents
to renew, as applicable, as provided in Article 1.


 


8.2           Promotion
and Advertising Materials. The Distributors shall present all promotion and
advertising materials for Newco’s review prior to use. Newco shall, with
reasonable promptness, notify Distributor of any changes it requires to such
materials and Distributor shall make such changes and thereafter submit the
revised materials to Newco for approval. Distributor shall use only such
promotion and advertising materials in approved form and with Newco’s
usage guidelines, as made available to Distributor from time to time. The costs
of changing over any promotion or advertising materials to bear the Newco name
will be included in Discretionary P&I costs.


 


ARTICLE 9           REPORTING, MEETING, AND
DELEGATION


 


9.1           Monthly
Reports. Distributors shall assure Newco and B.Biologicals are provided
with a monthly report, within ten (10) business days of the end of each
month, in the form set forth in Exhibit H
hereto. The monthly report shall set forth, by country, sales volumes by
Product and average sales price by Product for the previous month and year to
date, pricing issues, key customer issues, competitive activities and general
sales and marketing matters.


 


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9.2           Meetings.
During the Phase I Period, representatives of Newco and B.Biologicals an
Distributor country managers, as required, shall meet quarterly to review the
actual results and business development trends, pricing and key customer issues
and sales by customer in the relevant markets for each Distributor. During the
Phase II Period, those meetings shall continue, but B.Biologicals will not
attend. In addition, at Newco’s request, Newco and Distributor shall conduct
joint sales meetings or calls with customers.


 


9.3           Delegation.
During the Initial Term and the Extended Term, the Distributors shall be deemed
to have delegated authority to Bayer Healthcare AG - Division Biological
Products/European Regional Office (“Regional Office”) when that office acts
on their behalf to perform actions required of a Distributor hereunder. Each
Distributor will be fully responsible for acts or omissions of the Regional
Office performed on behalf of that Distributor. Bayer Health Care AG will have
no liability to Newco for acts performed on behalf of any Distributor. Except
as set forth below in this Section 9.3, in such instances where the Regional
Office incurs costs on behalf of any particular Distributor hereunder at the
request of that Distributor, the Regional Office shall bill those costs to that
Distributor and that Distributor shall seek to recover those costs from Newco
in accordance with the terms of this Agreement. In such event or events that
the Regional Office incurs costs (i) on behalf of all or a group of
Distributors, or (ii) at the written request of Newco, upon mutual
agreement of Newco, the applicable Distributor(s) and the Regional Office,
the Regional Office may recover these costs directly from Newco and, if
and to the extent that such activities generating such costs were included in a
Distributor’s SG&A costs provided in Section 6.1(i), the SG&A
costs paid by Newco to such Distributor shall be reduced by the amount of such
costs paid to the Regional Office as agreed to in writing by Newco, the
applicable Distributor(s) and the Regional Office prior to the undertaking
such activities.


 


ARTICLE 10        REGULATORY REQUIREMENTS


 


10.1         Compliance
with Regulations.


 


Newco shall comply in all material respects with all applicable laws,
requirements, regulations, guidelines and directives of the United States Food
and Drug Administration and all applicable regulatory agencies in the Territory,
and any successor agencies thereto including, without limitation, applicable
cGMPs as defined in national and international accepted Good Manufacturing
Practices (GMP) compendia including PIC/C and World Health Organization
guidebook entitled “Good Manufacturing Practices and Inspections” including all
specifications and procedures for plasma sourcing, plasma testing, and in
process testing and all regulations, specifications, and procedures contained
therein, and of all local, state, federal and foreign governmental authorities
(collectively, “Regulations”) applicable
to the performance of its obligations hereunder. The Distributors shall comply
in all material respects with Regulations applicable to the performance of its
obligations hereunder. Each Party shall comply with such Regulations that
become effective after the Effective Date within the timeframe required by such
Regulation or applicable Regulatory Authority. Each Party shall maintain all
government approvals, permits and licenses necessary or desirable in the
performance of their respective obligations under this Agreement. Notwithstanding
the foregoing, until the second anniversary of the Effective Date, Newco shall
not be liable to a Distributor for, or considered in breach of 


 


13

















 


this Agreement as a result of, any noncompliance or failure to comply
with any Regulations to the extent such noncompliance or failure was in
existence at the time of Closing (as defined in the Contribution Agreement;
provided, however, that such absence of liability or breach shall not apply
after any such noncompliance or failure had been, upon discovery or
notification thereof, capable of remedy through the application of commercially
reasonable efforts, but only if Bayer is in compliance in all material respects
with its obligations, if any, under the Contribution Agreement with respect to
any such noncompliance or failure; provided, further, that in any event all
other obligations of Newco contained herein shall remain in full force and
effect at all times from and after the Effective Date. “Regulatory Approvals”
shall mean all licenses, approvals, permissions, or consents required for the
manufacture, processing, inspecting, testing, packaging, storage, transport,
distribution or sale of the Products. “Regulatory Authority and Regulatory Authorities”
shall mean the U.S. Food and Drug Administration, and any successor agencies
and all other local, state, federal, or foreign governmental authorities with
authority to grant or deny the necessary Regulatory Approvals or to regulate
the manner of means by which the Products are manufactured, processed,
inspected, tested, packaged, stored, transported, distributed, or sold in the
Territory.


 


10.2         Inspection
of Facilities. Each Party shall have the right, on reasonable written
advance notice and during normal business hours, to inspect the other Party’s
facilities, standard operating procedures (as in effect as of the Effective
Date and amended from time to time upon mutual agreement of the Parties, and
any replacement or successor thereof, “SOPs”), operations, testing, storage and
books and records to confirm compliance with Section 10.1 and the other
Party’s compliance with the terms and conditions of this Agreement, provided
that what is being inspected is relevant to the Products and that such
inspection does not unreasonably interfere with the conduct of business of such
other Party. Each Party shall use its commercially reasonable efforts to
accommodate any reasonable request made by the other Party to inspect such facility.


 


10.3         Regulatory
Filings. Each Party shall promptly accommodate all requests made by any
Regulatory Authority to audit such Party’s facilities that relate to the
Products. Both Parties shall have the right to review, during the Term and for
a period of five (5) years thereafter, all audit findings or notices of
Regulatory Authorities as such may, directly or indirectly, bear upon each
Party’s obligations under this Agreement. Each Party shall promptly provide a
copy of any audit finding with such Party’s corrective action response to the
other Party for items that relate to the Products.


 


10.4         Regulatory
Approvals. Each Distributor is solely responsible for obtaining and shall
maintain and keep in full force and effect and good standing all necessary
regulatory approvals to distribute the Products in the applicable countries in
the Territory. The applicable Releasor shall upon request, at the Releasor’s
sole cost and expense, and as reasonably necessary provide each Distributor
with all necessary information, including but not limited to all information
filed by the Releasor with any Regulatory Authority in the Territory and the
United States, and other information for obtaining required regulatory
approvals in a country. In addition, Releasor and Newco shall promptly provide
each Distributor with notice of any planned changes to any Product, any SOP
relative to making that product, or any labeling, and with notice of any
directive or requirement, of any Regulatory Authority which may effect the



 


14

















 


delivery of Product to a Distributor or may require a Distributor
to obtain, amend or revise an necessary Regulatory Approvals.


 


ARTICLE 11        NONCONFORMING PRODUCTS AND
RECALLS


 


11.1         Nonconforming
Product. In the event that Releasor provides Products that do not meet the
Regulations, do not conform to the Specifications, contain latent defects,
or have not been manufactured, processed, stored, distributed, tested,
transported, disposed of or otherwise handled in accordance with applicable
SOPs, the Specifications, the Registrations, cGMPs or Regulations (“Nonconforming Product”),
Releasor will, as soon as reasonably feasible, reimburse the Distributors for
such Nonconforming Product and shall supply an equivalent amount of conforming
Products based on a new Purchase Order. The Distributors shall destroy on
behalf of Releasor all Nonconforming Product and promptly provide a certificate
of destruction to Releasor. Releasor shall reimburse such Distributors for the
import/customs related costs and all other reasonable costs incurred by such
Distributors related to such destruction; provided, however, that if Releasor
is not Newco, Newco shall reimburse Releasor in full if the nonconformity was
Newco’s fault. Releasor shall provide the applicable Distributors with the lot
number and plasma unit identification number of any Nonconforming Products
delivered to such Distributor.


 


11.2         General
Requirements. Each Distributor shall maintain accurate records of the
quantities of the Products received.


 


11.3         Distribution
and Use Records. Releasor shall maintain and give Distributor access, upon
advance notice and at reasonable times, to, for such period as required by
applicable Regulations, donor records and test results with respect to each
unit of plasma included in the Products delivered to such Distributor. Such
records and results shall be maintained in a manner that assures that they can
rapidly and unequivocally be accounted for and made available to a Distributor
no later than fourteen (14) days from the date of request. Each
Distributor shall maintain and give Newco access, upon advance notice and at
reasonable times for a period not less than that required by applicable
Regulations, records identifying the use and sale of the Products, including
without limitation, records indicating each sale of Products by lot number,
customer, volume and dollar amounts, as well as customer relationship records,
including customer complaints, disputes and resolutions of any of the foregoing.
Such records and results shall be maintained in a manner that assures that they
can rapidly and unequivocally be accounted for and made available to Releasor
no later than fourteen (14) days from the date of request. Each
Distributor shall assist Releasor in identifying, tracking and controlling the
use of any Products identified in post-donation information as contaminated or
otherwise unsuitable for use.


 


11.4         Adverse
Events. Each Party shall record and investigate all reports of adverse
events in which the Products or any other products manufactured from the
Products have been implicated. If either Party determines that the Products or
any other products manufactured from the Products have caused adverse
reactions, such Party shall immediately notify the applicable Regulatory
Authority as required by the Regulations and shall promptly notify the other
Party. Both Parties shall aim at transferring adverse event data using the E2B data


 


15

















 


transfer standard. The Parties shall determine in a separate memorandum
an appropriate communication mechanism for effective and efficient information
exchange relating to safety matters.


 


11.5         Customer
Notification of Adverse Reactions. In the event that during the course of a
preliminary investigation related to a report of any adverse reaction
associated with any Product or any other product manufactured using the
Products, a Distributor obtains preliminary evidence indicating that the
Product or any other product manufactured from the Products, according to
indications and dosage, may have caused such specific adverse reaction,
each Distributor customer that received any such Product or such other product
shall be notified by such Distributor and cautioned that any unused containers
of the suspect lots should be withheld from use, pending the outcome of more
definitive investigations and evaluations, with a copy of such notice to the
applicable Regulatory Authority if required. Each Distributor shall promptly
provide Releasor and Newco (if it is not the Releasor) with a copy of such
notice. Any and all of the foregoing actions will be executed with the
concurrence of Regulatory Authority, to the extent required by law.


 


11.6         Withdrawals
and Recalls. Distributors shall make all contacts with the relevant
governmental Regulatory Authorities and shall be responsible for coordinating
all activities in connection with any recall or withdrawal of any Product. In
the event that a Releasor believes a recall or withdrawal of a Product may be
necessary or appropriate, Releasor shall promptly notify the applicable Distributors
and Newco (if it is not the Releasor) in writing. The Distributors shall
consult with Newco prior to initiating any recall or withdrawal of any Product
and, in the event that a Distributor initiates any recall or withdrawal of a
Product, Distributor shall promptly so notify Newco. In the event of the
discontinuance of B.Biologicals’ performance with respect to any Product
pursuant to Section 12.6(b) of the Phase I Agreement, the applicable
Distributors’ performance with respect to such Product pursuant to this
Agreement shall also terminate.


 


11.7         Complaints.
The Distributors and Releasor and Newco (if it is not the Releasor) will
cooperate in the reporting, investigation and evaluation of customer
complaints, according to policies mutually determined by the Parties in
writing.


 


11.8         Responsibility.
In the event that a Releasor supplies Nonconforming Product, and such
Nonconforming Product has already been distributed, then the Distributors shall
use their commercially reasonable efforts to mitigate damages and the
applicable Releasor shall compensate such Distributors for reasonable direct
damages arising from such delivery, including but not limited to (i) lost
profits, (ii) damages, penalties, fines and costs related to any market
withdrawal, recall or third party return, and (iii) the destruction costs
of implicated Products including personnel costs of Distributors to the extent
attributable to Releasor’s Nonconforming Product.


 


ARTICLE 12        FORCE MAJEURE


 


For the purpose of this Agreement, “Force Majeure” shall mean only (i) acts
of God, acts of the public enemy, insurrections, riots, sabotage, strike,
work-stoppage or other labor dispute and 


 


16

















 


natural disasters; (ii) explosions, fires, flood damage, or loss
of electric power not resulting from the negligence of the Party invoking Force
Majeure; (iii) regulatory actions not attributable to any violation of law
after the date hereof on the part of the Party invoking Force Majeure,
unless,/ in the case of Newco, Newco is required as a result of any statute,
law, regulation, ordinance, rule, judgment, code, order, decree or other
requirement of a Regulatory Authority (“Applicable Law”), not initiated by Newco, to
cease or materially curtail production primarily based upon (x) violation
of any Applicable Law which violation was in existence on the Effective Date or
(y) any condition in existence on the Effective Date or any condition
alleged in writing to have been in existence on or prior to the Effective Date
by a Regulatory Authority which condition remained outstanding on the Effective
Date and which condition constituted a violation or alleged violation of
Applicable Law or impacts the safety or efficacy of the Products; and (iv) in
the case of Newco, events, circumstances, conditions and actions outside of the
control of Newco that materially and adversely affect the plasma-derived
products industry generally, including interruptions of supply of raw plasma
due to viral outbreaks, eruption of new viruses and similar events, that are
reasonably likely to be subject to action by any Regulatory Authority; any of
(i), (ii), (iii) or (iv) of which, in the case of Newco, prevents
Newco from performing its obligations under this Agreement, or, any of (i), (ii) or
(iii) of which, in the case of B.Biologicals or the Distributors, prevents
B.Biologicals or the Distributors from performing their obligations under this
Agreement; provided that nothing in clause (iii) or (iv) shall excuse
Newco from complying with cGMPs or excuse them from remedying those matters which
were capable of remedy by Newco through the application of commercially
reasonable efforts prior to the occurrence of the events identified in (iii) or
(iv) preventing Newco from performing under the Agreement. Notwithstanding
anything in this Agreement to the contrary, except Article 18 and Article 20,
the Party experiencing the Force Majeure shall be excused from the performance
of each of its obligations under this Agreement upon a Force Majeure, but only
to the extent performance of any such obligation is necessarily prevented,
hindered or delayed thereby and only during the continuance of any such Force
Majeure, and shall have no liability for damages arising from non-performance
of any obligation excused by a Force Majeure. Furthermore, if either Party
terminates this Agreement pursuant to Section 17.2, there shall be no
further damages arising from any non-performance excused by a Force Majeure except
as provided in Section 17.4(vi). The Party suffering such Force Majeure
shall invoke this provision by promptly notifying the other Parties in writing
of the nature and estimated duration of the suspension period, as well as the
extent to which it will be unable to fulfill its obligations under this
Agreement. Each Party shall be relieved of performance of its obligations under
this Agreement during the time when it is prevented from performing by the
failure of another Party to perform its obligations or because of any
event of Force Majeure.


 


ARTICLE 13        REPRESENTATIONS,
WARRANTIES AND COVENANTS


 


13.1         Debarment.
Each Party certifies it will not, in connection with its obligations under this
Agreement, use in any capacity the services of any person, including any firm
or individual, that has been debarred or is subject to debarment under the
Generic Drug Enforcement Act of 1992, amending the Food Drug and Cosmetic Act
of 21 U.S.C. 335a (a) or (b), or any comparable requirement of any other
Regulation. Each Party agrees to notify the other Party promptly in the event
any person providing services to such Party under the scope of this Agreement
is debarred or becomes subject to debarment.


 


17

















 


13.2         Compliance.


 


(i)            Each Distributor represents, warrants and
covenants that the distribution transport, storage, disposal, and other
handling of the Products by that Distributor shall conform to applicable
SOPs, Specifications, cGMPs and Regulations.


 


(ii)           Newco and B.Biologicals each represent,
warrant and covenant that the manufacture, processing, distribution, testing,
transport, storage, disposal and other handling of the Products by such Party,
to the extent applicable to such Party, shall at all times (i) conform to
applicable SOPs, Specifications, cGMPs and Regulations, (ii) conform to
the requirements of the Phase I Agreement and Phase II Agreement, and (iii) be
free from defects in materials and workmanship and shall not be adulterated or
misbranded within the meaning of the applicable Regulations.


 


13.3         Intellectual
Property.


 


During the Term of this Agreement, Newco represents and warrants that
the manufacturing, processing, testing, distribution, transport, storage,
disposal and other handling of the Products pursuant to this Agreement will not
infringe the intellectual property rights of any third party; provided that for
purposes of making this representation and warranty Newco is entitled to rely
to the extent applicable on the representations and warranties made by Bayer as
of the Closing Date (as defined in the Contribution Agreement) pursuant to
the Contribution Agreement for so long as such representations and warranties
survive in the Contribution Agreement and Newco shall not be in breach of this Section 13.3
to the extent Bayer was in breach of any applicable corresponding
representation and warranty under the Contribution Agreement. During the Term
of this Agreement, Newco agrees to maintain at its sole cost and expense all
licenses to third party intellectual property necessary or appropriate for the
manufacturing, processing, testing, distribution, transport, storage, disposal
and other handling of the Products.


 


13.4         Representations
and Warranties.


 


(i)            Each Distributor hereby represents and
warrants to Newco that:


 


(a)           Due Organization, Good Standing and Power.
Distributor is a corporation or other organization duly organized, validly
existing and in good standing under the laws of its country of organization. Distributor
has all requisite corporate or other power and authority to own or lease and to
operate its assets and to conduct the business now being conducted by it. Distributor
is duly authorized, qualified or licensed to do business as a foreign
corporation or other organization in good standing in each of the jurisdictions
in which its ownership of property or the conduct of its business requires such
authorization, qualification or licensing, except where the failure to have
such authorization, qualification or licensing could not reasonably be expected
to have a material adverse effect on Distributor or on the consummation of the
transactions contemplated hereunder. Distributor has all requisite corporate
power and authority under Applicable Law and its Charter Documents (as
hereinafter defined) to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.


 


18

















 


“Charter Documents,” in respect of a body
corporate means the original or restated articles of incorporation, articles of
formation, articles of amendment, articles of amalgamation, articles of
arrangement, articles of reorganization, articles of revival, bylaws, operating
or limited liability company agreement, letters patent, memorandum of
agreement, special Act or statute and any other instrument or consenting
documents by or pursuant to which the body corporate is incorporated or comes
into existence.


 


(b)           Authorization and Validity of Agreement.
The execution and delivery of this Agreement by Distributor and the
consummation by it of the transactions contemplated hereby have been duly
authorized and approved by all necessary corporate action under Applicable Law
and the relevant Charter Documents on the part of Distributor and do not
require the approval of the stockholders of Distributor. This Agreement has
been duly executed and delivered by Distributor and constitutes the legal,
valid and binding obligation of Distributor enforceable against it in
accordance with its terms, except as that enforceability may be (i) limited
by any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors’ rights generally, (ii) subject
to general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law) and (iii) limited by
general principles of Applicable Law regarding the enforceability of arbitral
awards and judicial decisions.


 


(c)           Lack of Conflicts. Neither the
execution and delivery of this Agreement by Distributor or the consummation by
it of the transactions contemplated hereby, does or will (i) conflict
with, or result in the breach of any provision of, the Charter Documents of
Distributor or (ii) violate any Applicable Law or any permit, order,
award, injunction, decree or judgment of any Governmental Authority applicable
to or binding upon Distributor or to which any of its properties or assets is
subject.


 


(d)           No Consents. The execution, delivery
and performance of this Agreement by Distributor and the consummation of the
transactions contemplated by this Agreement do not require any Governmental
Approval. No consent (other than Governmental Approvals) will be required
to be obtained by Distributor for the consummation of the transactions
contemplated by this Agreement.


 


(ii)           Newco hereby represents and warrants to each
Distributor that:


 


(a)           Due Organization, Good Standing and Power.
Newco is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware. Newco has all requisite corporate or
other power and authority to own or lease and to operate its assets and to
conduct the business now being conducted by it. Newco is duly authorized,
qualified or licensed to do business as a foreign corporation or other
organization in good standing in each of the jurisdictions in which its
ownership of property or the conduct of its business requires such
authorization, qualification or licensing, except where the failure to have
such authorization, qualification or licensing could not reasonably be expected
to have a material adverse effect on Newco or on Newco consummation of the
transactions contemplated hereunder. Newco has all requisite corporate power
and authority under Applicable Law and its Charter Documents to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby.


 


 


19

















 


(b)           Authorization and Validity of Agreement.
The execution and delivery of this Agreement by Newco and the consummation by
it of the transactions contemplated hereby have been duly authorized and
approved by all necessary corporate action under Applicable Law and the
relevant Charter Documents on the part of Newco and do not require the
approval of the stockholders of Newco. This Agreement has been duly executed
and delivered by Newco and constitutes the legal, valid and binding obligation
of Newco enforceable against it in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally, (ii) subject to general
principles of equity (regardless of whether that enforceability is considered
in a proceeding in equity or at law) and (iii) limited by general
principles of Applicable Law regarding the enforceability of arbitral awards
and judicial decisions.


 


(c)           Lack of Conflicts. Neither the execution
and delivery of this Agreement by Newco or the consummation by it of the
transactions contemplated hereby, does or will (i) conflict with, or
result in the breach of any provision of, the Charter Documents of Newco or (ii) violate
any Applicable Law or any permit, order, award, injunction, decree or judgment
of any Governmental Authority applicable to or binding upon Newco or to which
any of its properties or assets is subject.


 


(d)           No Consents. The execution, delivery
and performance of this Agreement by Newco and the consummation of the
transactions contemplated by this Agreement do not require any Governmental
Approval. No consent (other than Governmental Approvals) will be required
to be obtained by Newco for the consummation of the transactions contemplated
by this Agreement.


 


13.5         Disclaimer.
NEWCO, B. BIOLOGICALS, BAYER AND THE DISTRIBUTORS MAKE NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THOSE EXPRESSLY MADE IN THIS
AGREEMENT. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED.


 


ARTICLE 14        INTELLECTUAL PROPERTY


 


Newco grants to each Distributor a fully paid, non-exclusive,
non-transferable right and license, with no right to sublicense, to use Newco’s
trademarks listed on Exhibit I
attached hereto and incorporated herein by reference (the “Trademarks”) solely
for the purpose of importing, distributing and selling the Products in the
Territory. A Distributor shall only use the Trademarks strictly in accordance
with Newco’s trademark usage guidelines, and when made available to that
Distributor from time to time. A Distributor shall not change or modify the
Trademarks or use the Trademarks in any modified form. A Distributor may not
use the Trademarks in connection with any goods other than the Products. Without
Newco’s prior written consent, a Distributor shall not at any time during or
after the term of this Agreement, (i) use or display any of the Trademarks
electronically on the Internet or use as part of an Internet domain name,
or (ii) use, directly or indirectly, any of the Trademarks in combination
with any 


 


20

















 


trademark, logo, symbol or commercial slogan. The grant of this license
in the Trademarks in no way provides a Distributor any rights in or
authorization to use any other trademarks, service marks, trade names,
tradedress or other similar property or rights of Newco. A Distributor shall
not at any time during or after the term of this Agreement, (i) knowingly
use any of the Trademarks in any way that would impair the validity of such
Trademark as a proprietary trademark, service mark, trade name and/or trade
dress in the Territory or any other jurisdiction, (ii) knowingly take any
action which would impair Newco’s ownership of any Trademarks or their legality
or enforceability, (iii) register, or cause to be registered, in a
Distributor’s name or the name of another, any of the Trademarks or any other
trademarks, names, logos, color schemes, symbols, trade dress or designs they
know to be confusingly similar to the Trademarks, (iv) use, display,
advertise or promote any trademarks, names, logos, color schemes, symbols,
trade dress or designs they know to be confusingly similar to any of the Trademarks
in the Territory or any other jurisdiction, or (v) use any of the
Trademarks as part of a corporate or trade name of any business
organization. A Distributor shall not challenge the validity of the Trademarks
or Newco’s ownership thereof in any form or manner. All goodwill deriving
from the use of the Trademarks by a Distributor pursuant to the terms of this
Agreement or arising out of this Agreement shall accrue solely and exclusively
to Newco. Newco represents and warrants that it has the right to license such
Trademarks hereunder. In the event of termination of this Agreement, the
licenses granted in this Article 14 will immediately and automatically
terminate and the Distributors shall cease using or displaying the Trademarks,
except the right to sell Products as in accordance with Section 17.4(vi).


 


ARTICLE 15        COVENANTS


 


15.1         Marketing
and Promotion. Each Distributor will use commercially reasonable efforts to
sell, market and promote the Products in the applicable countries in the
Territory. Such efforts shall (a) include maintaining an adequate number
of experienced sales personnel in the applicable countries in the Territory to
maintain the level of sales, marketing and promotion effort equivalent to that
for the twelve (12) months prior to the Effective Date; and (b) be
equivalent in all material respects to each Distributor’s efforts during the
twelve (12) months prior to the Effective Date, except for P&I
spending which shall be made as provided in Article 6 above.


 


15.2         Inventory
Requirements. Subject to the volume requirements set forth in Section 2.2(i) above,
Distributor shall maintain a level of inventory of Products consistent with
past practice and sufficient in all material respects to support the Marketing
Plan and forecasts.


 


15.3         Operation
of Distribution Business. Each Distributor will operate its distribution
business throughout the Term in the ordinary course of business and consistent
with past practice. Each Distributor shall not initiate any changes that (i) are
reasonably expected to materially impact its distribution business, such as
warehousing and logistics, without Newco’s prior written approval and (ii) are
not reasonably expected to materially impact its distribution business without
Newco’s prior written approval, which such approval shall not be unreasonably
withheld or delayed. Without the prior written consent of Newco, each
Distributor shall not and shall cause its affiliates, agents and representative
not to (i) enter into, during the Extended Term, any contracts for the
sale of Products with a term longer than two (2) years, (ii) sell any
Product to another wholesale or retail distributor other than directly to 


 


21

















 


patients, care providers or entities purchasing Products on behalf of
care providers, or governmental or quasi-governmental entities, (iii) offer
any warranties with respect to any Product except in the ordinary course of
business consistent with past practice and (iv) if this Term of this
Agreement will not be extended for the Extended Term or any period beyond the
Extended Term, during the last three (3) months of the then current Term,
sell any Product to any customer in excess of the amount of such Product
reasonably expected to be consumed by such customer in the ordinary course of
business and consistent with past practice (to the extent Distributor has
knowledge of such consumption and to the extent such sale is not in the
ordinary course of business). The performance by Distributors of their duties
and obligations hereunder shall be performed by experienced and qualified
personnel when viewed in the aggregate across all distributors in a manner and
with the same degree of care, skill, diligence and timeliness with which
Distributors performed such functions for themselves during the twelve
(12) months prior to the Effective Date and consistent with past practice.
For avoidance of doubt the Parties agree that the effect on operations caused
by changes in the identity and census of employees in the normal course will
not be deemed to cause a violation of the preceding sentence.


 


15.4         Changes
in Personnel or Structure in Germany. The German Distributor, Bayer Vital
shall not initiate changes in key personnel or management structure in Germany
other than in the ordinary course of business consistent with past practice
without Newco’s approval, which approval shall not be unreasonably withheld or
delayed.


 


ARTICLE 16        LIABILITY AND INDEMNITY


 


16.1         Indemnity.
Newco hereby agrees to save, defend and hold B.Biologicals, Bayer, Distributors
and their respective affiliates and their respective directors, officers,
managers, employees, representatives, consultants, stockholders, controlling
persons and agents and each of the heirs, executors, successors and assigns of
any of the foregoing (together, the “Distributor Group”) harmless from and
against any and all claims, suits, actions, liabilities, expenses and/or
losses, including punitive or exemplary damages and reasonable attorney’s fees
and expenses (“Claims”) asserted
by a person or entity other than a member of the Distributor Group arising from
any material breach of obligations under this Agreement by Newco Group (as
defined below). B.Biologicals, Bayer, and each Distributor hereby agrees to
save, defend and hold Newco, and its respective affiliates and their respective
directors, officers, managers, employees, representatives, consultants,
stockholders, controlling persons and agents and each of the heirs, executors,
successors and assigns of any of the foregoing (together, the “Newco Group”)
harmless from and against any and all Claims asserted by a person or entity
other than a member of the Newco Group arising from any material breach of
obligations under this Agreement by B.Biologicals, Bayer or that Distributor,
provided for avoidance of doubt neither B.Biologicals, Bayer, nor any
Distributor will be obligated to indemnify the Newco Group for Claims arising
out of any acts or omissions other than its own or any other person acting on
behalf of Biologicals, Bayer, or any Distributor. Where a Claim arises directly
or indirectly from acts or omissions in relation to this Agreement of both (i) the
Newco Group and (ii) one or more of B.Biologicals, Bayer, or Distributors,
the obligation of Newco, or the applicable Distributors to indemnify the others
shall not exceed the extent of the indemnifying party’s contribution to the
harm giving rise to the Claim.


 


22

















 


16.2         Indemnification
Process. Each party indemnified under the provisions of this Agreement,
upon receipt of written notice of any Claim or the service of a summons or
other initial legal process upon it in any action instituted against it for
which it may be entitled to indemnification pursuant to this Agreement,
shall promptly give written notice of such Claim, or the commencement of such
action, or threat thereof, to the Party from whom indemnity shall be sought
hereunder; provided, however, that the failure to provide such notice within a
reasonable period of time shall not relieve the indemnifying party of any of
its obligations hereunder except to the extent the indemnifying party is
prejudiced by such failure. Each indemnifying party shall be entitled at its
own expense to participate in the defense of such Claim or action, or, if it
shall elect, so long as it has acknowledged in writing to the indemnified party
its indemnification obligations hereunder, by written notice to the indemnified
party within twenty (20) days of receipt of notice of the Claim or action
from the indemnified party to assume such defense, in which event such defense
shall be conducted by counsel chosen by such indemnifying party (without
prejudice to the right of the indemnified party to fully participate at its own
expense through counsel of its own choosing) which counsel may be any
counsel reasonably satisfactory to the indemnified party against whom such
Claim is asserted or who shall be the defendant in such action, and such
indemnified party shall bear all fees and expenses of any additional counsel
retained by it or them, provided that the indemnifying party shall obtain the
consent of the indemnified party (which consent may be withheld in its
sole discretion) before entering into any settlement, adjustment or
compromise of such Claims, provided further that the indemnifying party may,
without the consent of the indemnified party, settle or compromise or consent
to the entry of any judgment in any action involving only the payment of money
which includes as an unconditional term thereof the delivery by the claimant or
plaintiff to the indemnified party of a duly executed written release of the
indemnified party from all liability in respect of such Claim or action which
written release shall be reasonably satisfactory in form and substance to
the indemnified party. Notwithstanding the immediately preceding sentence, if
the named parties in such action (including impleaded parties) include the
indemnified and the indemnifying parties, and the indemnified party shall have
been advised by counsel that there may be a conflict between the positions
of the indemnifying party and the indemnified party in conducting the defense
of such action or that there are legal defenses available to such indemnified
party materially different from or in addition to those available to the
indemnifying party, then counsel for the indemnified party, shall be entitled,
if the indemnified party so elects, to conduct the defense and, in such event,
the reasonable fees and expenses of such counsel shall be borne by the
indemnifying party. If the indemnifying party shall elect not to assume the
defense of such Claim or action, such indemnifying party shall reimburse such
indemnified party for the reasonable fees and expenses of any counsel retained
by it, and shall be bound by the results obtained by the indemnified party in
respect of such Claim or action; provided, however, that no such Claim or
action shall be settled without the written consent of the indemnifying party
(which consent shall not be unreasonably withheld or delayed).


 


16.3         Insurance.
During the Term of this Agreement and for a period of five (5) years
following the expiration or earlier termination of this Agreement, each Party
shall maintain, at its sole cost and expense, general liability insurance
including product liability coverage, with bodily injury, death and property
damage limits, in such amounts and with such scope of coverage as is consistent
with plasma industry standards. Each Party shall have its insurance carrier
furnish to the other Party certificates evidencing that all insurance required
under this 


 


23

















 


Agreement is in force. Such certificates shall indicate any deductible
and self insured retention and the effective expiration dates of the relevant
policies. All certificates are to stipulate that the other Party shall be given
thirty (30) days written notice of all cancellation, non-renewal or
material changes in policy.


 


16.4         Insurance
Recoveries. If and to. the extent the indemnifying party has acquired
insurance in compliance with Section 16.3, and to the extent such coverage
is inadequate to cover all Claims asserted against an indemnified party and if
and to the extent the indemnified party, has its own policy of insurance
purporting to provide coverage for Claims against the indemnified party, the
indemnified party, shall not be entitled to indemnification from the indemnifying
party over and above the indemnifying party’s insurance coverage for such
Claims under Section 16.1 until the indemnified party has utilized all
commercially reasonable means to recover such loss under the indemnified party’s
policy of insurance.


 


16.5         Limitation
of Liability. EXCEPT AS OTHERWISE PROVIDED HEREIN, NO PARTY SHALL BE LIABLE
TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL OR INDIRECT LOSSES (INCLUDING LOSS OF PROFITS OR LIQUIDATED
DAMAGES) ATTRIBUTABLE TO ITS PERFORMANCE UNDER THIS AGREEMENT OR TO ANY
OTHER MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.


 


ARTICLE 17        TERMINATION


 


17.1         Termination
for Cause. This Agreement may be terminated for cause as follows:


 


(i)            Newco may, without prejudice to any other
right or remedy, and after giving B.Biologicals, Bayer, or the breaching
Distributor (and B.Biologicals and Bayer), as the case may be, sixty
(60) days’ written notice of the breach, terminate this Agreement
(x) if B.Biologicals commits a substantial violation of this Agreement or
material breach of any representation, warranty, covenant or performance
obligation of B.Biologicals under this Agreement, (y) if Bayer commits a
substantial violation of Article 19 of this Agreement or any other
provision of this Agreement where Article 19 would require Bayer to take
some act or a material breach of any covenant or performance obligation of
Bayer in Article 19 of this Agreement or any other provision of this
Agreement where Article 19 would require Bayer to take some act or
(z) as to a particular Distributor where that Distributor commits a
substantial violation of the Agreement (which means nonpayment of amounts owing
to Newco in accordance with Section 7.2, the failure of that Distributor
to purchase Products meeting the Binding Forecasts and the Required Amounts,
the failure of that Distributor to achieve aggregate net sales in the
applicable countries within the Territory which are at least seventy five
percent (75%) of the Target Net Sales for Products within such countries
for any consecutive six (6) month period during the Initial Term, or any
other material breach of any representation, warranty, covenant or performance
obligation of a Distributor under this Agreement).


 


(ii)           B.Biologicals, Bayer or a Distributor (with
respect to itself only) may, without prejudice to any other right or
remedy, and after giving the breaching Party (and Newco if Newco is not the
breaching party) sixty (60) days’ written notice of the breach,
terminate the 


 


24

















 


Agreement if Newco commits a substantial violation of this Agreement
(which means nonpayment of amounts owing to that Distributor in accordance with
Section 7.2, or any failure to deliver Products meeting the Binding
Forecast or the Required Amounts or material breach of any representation,
warranty, covenant or performance obligation of Newco under this Agreement).


 


However, that in the case of (i) and (ii) above, this
Agreement shall not be so terminated if the breaching Party has cured the
breach, or submitted a plan for curing the breach reasonably acceptable to the
non-breaching Party within sixty (60) days after the non-breaching Party’s
notice. If the breaching Party fails to cure the breach as set forth in the
aforementioned plan and in accordance with the deadlines set forth therein, the
non-breaching Party may terminate this Agreement without further notice. The
non-breaching Party shall have the right to recover all direct damages and
losses arising as a result of any such material breach, including lost profits
but not including consequential damages, provided that any such recovery shall
be reduced by the amount that such non-breaching Party actually recovers under
any insurance it maintains.


 


In addition, with respect to violations by a particular Distributor,
Newco’s right to terminate the Agreement in (i) above shall only apply to
that Distributor and the countries associated with that Distributor and this
Agreement would continue in effect with respect to the other Distributors and
countries and with respect to the violations of Newco pertaining to a single
Distributor, a Distributor’s right to terminate under (ii) would only
apply to it and the Agreement would continue in effect with respect to other
Distributors and countries.


 


17.2         Termination
for Force Majeure.


 


(i)            Newco may terminate this Agreement
with respect to any Distributor in its sole discretion upon thirty
(30) days’ prior written notice in the event of any failure or inability
extending beyond ninety (90) days of a Distributor to distribute Products
hereunder due to Force Majeure. In the event of termination under this Section 17.2(i),
such Distributor shall have no liability for damages arising solely from such
termination or otherwise excused by a Force Majeure except as provided in Section 17.4(vi).


 


(ii)           B.Biologicals, Bayer or a Distributor (with
respect to itself only) may terminate this Agreement in its sole
discretion upon thirty (30) days’ prior written notice in the event of any
failure or inability extending beyond ninety (90) days of Newco to provide
Products hereunder due to Force Majeure. In the event of termination under this
Section 17.2(ii), Newco shall have no liability for damages arising solely
from such termination or otherwise excused by a Force Majeure.


 


17.3         Termination
for Insolvency. The Agreement may be terminated (a) by
B.Biologicals or a Distributor (with respect to itself only) if Newco, (b) by
Newco if B.Biologicals, or (c) by Newco with respect to any Distributor if
such Distributor:


 


(i)            admits in writing that it is unable to pay
its debts as they become due;


 


(ii)           starts a proceeding, or indicates its
acquiescence to a proceeding started by another, relating to it under any
bankruptcy, reorganization, rearrangement, insolvency, readjustment of debt,
dissolution, liquidation or similar law;


 


25

















 


(iii)          makes an assignment for the benefit of
creditors;


 


(iv)          consents to the appointment of a receiver,
trustee or liquidator for a substantial part of its property;


 


(v)           files, or has filed against it, a petition
in bankruptcy, reorganization, rearrangement or insolvency which, if filed
against it, is not dissolved or dismissed within ninety (90) days after
filing; or


 


(vi)          has entered against it an order by a court of
competent jurisdiction appointing a receiver, trustee or liquidator for it or a
substantial part of its property, or approving its dissolution or
termination, and if not consented to or acquiesced in by such Party, such order
is not vacated or set aside or stayed within ninety (90) days.


 


Notwithstanding anything to the contrary herein, no Party shall take or
cause to be taken any action relating to the voluntary liquidation or
dissolution of such Party.


 


17.4         Effect
of Termination. In the event of termination of this Agreement in accordance
with Article 17 or on the expiration of the Term of this Agreement:


 


(i)            Newco shall immediately cease delivery of
all Products under this Agreement, and Newco shall prepare and submit to each
applicable Distributor an invoice for all Products shipped by Newco to such
Distributor in accordance with this Agreement and not paid for by such
Distributor. Distributor shall, within thirty (30) days of receipt
thereof, pay the full amount of the applicable invoice.


 


(ii)           Each Distributor shall provide to Newco or its
designee all Plasma Business records, any dedicated plasma systems and any
information technology systems in each case used exclusively in the operation
of the Plasma Business in the Territory, both from the period prior to the
Effective Date and for the period during the Term of this Agreement. Such
business records shall include, but are not limited to, marketing studies,
customer and sales data, customer contracts, competitive data, strategies and
execution plans, regulatory requirements and license information, regulatory
trends, qualification status of products, legal briefs (only to the extent the
liability for the claims/cases transfers to Newco), shipping and logistics,
packaging requirements and practices, and credit profiles. To the extent that systems
are not used exclusively in the Plasma Business, the Parties shall cooperate to
format data and business records to enable transfer of the Plasma Business
records to Newco’ s systems at Newco’s expense.


 


(iii)          Provided that this Agreement is not terminated
by a Distributor in accordance with Sections 17.1, 17.2 or 17.3, upon
termination, each Distributor shall assist in the transfer of all marketing
authorizations and other regulatory permits and licenses in its countries at
Newco’s expense and shall cooperate, upon Newco’s request and at Newco’s
expense, with Newco’s or its designee’s effort to obtain any new licenses,
permits or authorizations required by Newco or its designee to operate as an
independent distributor in these countries.


 


(iv)          Provided that this Agreement is not
terminated by a Distributor in accordance with Sections 17.1, 17.2 or 17.3,
upon termination, each Distributor shall assign and transfer to Newco any
remaining open customer contracts and tender rights and obligations assuming 


 


26

















 


Newco has purchased from the Distributors all of their inventory in
accordance with Section 17.4(vi) below. If any such consent to assign
such contract is not obtained, the Parties will cooperate to secure a
reasonable, mutually agreeable arrangement designed to provide Newco with the
benefits of any such contract, including enforcement for the benefit of Newco
of any and all rights of the transferring party against the other party or
parties thereto arising out of the breach or cancellation by such other party
or parties or otherwise.


 


[***]


 


(vi)          Each Distributor shall have the right to sell
back to Newco all inventory of Products remaining unsold at the time of
termination to the extent that such Products have a shelf life of at least
sixteen (16) months remaining; provided that such inventory is packaged
and labeled in a manner that enables Newco to re-use or re-sell such inventory
at the Distributor Price then in effect. Notwithstanding the foregoing, Newco
shall have the right but not the obligation to purchase from such Distributor
any and all Products in the Distributors’ inventory, in each case [***] 
To the extent that neither a Distributor nor Newco exercises its sell
back or purchase rights above, such Distributor shall use commercially reasonable
efforts to sell such inventory at prevailing market prices within three months
of termination. During the termination notice period, Newco and each of the
Distributors will work together to minimize ending inventory held by the
Distributors, subject to the sell back and purchase rights set forth above. In
the event that this Agreement is terminated by Newco for Distributors’ Force
Majeure in accordance with Section 17.2, each Distributor shall be
obligated to pay [***] for the
Products already manufactured and filled in final container by Newco pursuant
to the then Binding Forecast for such Distributor as of the date of termination
and not then paid for by such Distributor; provided,
Newco shall deliver such Products to the Distributors and such Distributors
shall have the right to sell such Products; provided that such sale of Products
by such Distributors occurs within ninety (90) days of the effective date
of termination of this Agreement. Notwithstanding anything to the contrary
herein, upon termination of this Agreement, except where such termination is by
a Distributor pursuant to Sections 17.1, 17.2, or 17.3, if the aggregate total
of the Purchase Orders placed by the Distributors prior to the effective date
of such termination does not meet the Required Amounts, the Distributors shall
be obligated to pay amounts associated with Products to be delivered under the
then current Binding Forecast and, at Distributors’ sole discretion, Newco
shall be obligated to deliver such Products.


 


(vii)         To the extent not previously transferred to
Newco, each Distributor -shall assign and transfer to Newco all Acquired
Intellectual Property.


 






***CONFIDENTIAL TREATMENT REQUESTED


 


27

















 


(viii)        Provided that the Agreement is not terminated
by a Distributor in accordance with Sections 17.1, 17.2 or 17.3 of this
Agreement, each Distributor shall use reasonable efforts at Newco’s cost to
assist with Newco’s transition of the release and sale of Products in the
applicable countries in the Territory to Newco or alternative distributors.


 


ARTICLE 18        CONFIDENTIALITY


 


18.1         Confidentiality
Obligations. All information (i) provided by Newco to a Distributor in
connection with this Agreement (including, without limitation, the
Specifications and forecasts provided by Distributors) or (ii) obtained
by, developed by or otherwise disclosed to a Distributor in its capacity as a
distributor of Products before or after the Effective Date, including without
limitation, any and all customer and marketing data, shall be maintained in strict
confidence by a Distributor. Such information shall be the property of Newco,
and a Distributor shall not make use of any such information except for the
purposes for which it was provided. At the termination of this Agreement, each
Distributor shall promptly return to Newco any physical embodiments (including
copies) of any such information. All information provided by a Distributor
to Newco which is marked or otherwise indicated as confidential, shall be
maintained in strict confidence by Newco. Each Party agrees to keep
confidential the existence of this Agreement, as well as all of its terms and
conditions; provided that if a public announcement or disclosure is required by
law, rule, regulation, court order, subpoena, interrogatory or other discovery
request (including, without limitation applicable securities laws or stock
exchange regulations), and subject to Section 18.2(iii), the Party
required to make the public announcement or disclosure shall be permitted to
make such disclosure and shall provide prompt prior written notice of such
requirement to the other Party, and the Parties shall thereafter negotiate in
good faith, to the extent appropriate and feasible, the contents of the public
announcement or disclosure.


 


18.2         Exceptions.
The covenants of the Distributors contained in Section 18.1 shall not
apply to information which:  (i) is
already in the public domain at the time of disclosure; (ii) becomes part of
the public domain through no action or omission of the receiving Party after
disclosure to the receiving Party; or (iii) is required to be disclosed by
law, provided that the Distributors shall cooperate with Newco (at Newco’s
expense) in obtaining any available protection for such information to be
disclosed.


 


18.3         Term
of Obligations. Sections 18.1 and 18.2 shall survive termination of this
Agreement for a period of five (5) years.


 


18.4         Competition.
Each Distributor will not and will cause its affiliates not to, directly or
indirectly engage or invest in the business of the distribution of plasma
derived products in the countries assigned to it pursuant to Exhibit A for a period no greater
than the longer of (i) the period permitted under Section 11.5 of the
Contribution Agreement or (ii) a period of [***] after the date on which the termination of this
Agreement becomes effective provided however this Section 18.4 will
not apply where a Distributor terminates the Agreement in accordance with
Sections 17.1, 17.2, or 17.3 and provided further that if period defined by
subparagraph (ii) of this Section 18.4 is determined by any
governmental agency or court to be in violation of law, including, but not
limited to, statute, precedent, or regulation, the Parties 


 






***CONFIDENTIAL TREATMENT REQUESTED


 


28

















 


will be governed solely by subparagraph (i). It is understood and
agreed that a Distributor shall not be deemed to be in violation of this Section 18.4
as a result of any acquisition Distributor or any of its affiliates may make
after the Effective Date of not more than five percent (5%) of the
outstanding shares or other units of any security of any entity subject to the
requirements of Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended. In the event that a Distributor or any of its
affiliates acquires an entity that has a distribution of plasma-derived
products, that Distributor and its affiliates shall promptly divest itself of
that business to a third party.


 


ARTICLE 19        BAYER GUARANTY


 


Bayer hereby agrees to (i) cause each
Distributor to promptly after the Effective Date to duly execute and deliver an
original copy of Exhibit J
to Newco, (ii) prior to the time any Distributor becomes a party to this
Agreement by executing and delivering Exhibit J
to Newco, cause each Distributor to take any and all actions required by such
Distributor under this Agreement, as if such Distributor was a party hereto,
and (iii) prior to the time any Distributor becomes a party to this
Agreement by executing and delivering Exhibit J
to Newco, assumes the indemnification obligations of such Distributor pursuant
to Article 16; as if such Distributor was a party hereto.


 


ARTICLE 20        MISCELLANEOUS


 


20.1         Consent
to Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties hereto and their
respective successors and assigns, and it is not intended to confer upon any
other person any rights or remedies hereunder. Neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by any
of the Parties without the prior written consent of the other Parties hereto,
except that each Party may at any time assign any or all of its rights or
obligations hereunder to one of its wholly owned subsidiaries (but no such
assignment shall relieve such party of any obligations under this Agreement). Notwithstanding
the foregoing, Newco may assign this Agreement and any or all of its
rights or obligations hereunder to (i) any affiliate of Newco provided
that any such affiliate becomes a party to this Agreement, (ii) any lender
of Newco as collateral security or (iii) any successor in interest to
Newco provided that any such successor becomes a party to this Agreement;
provided that no assignment under (i), (ii) or (iii) above shall
relieve Newco from any obligation hereunder. B.Biologicals may assign this
Agreement and any or all of its rights or obligations hereunder to (i) any
affiliate of B.Biologicals provided that any such affiliate becomes a party to
this Agreement or (ii) any successor in interest to the entire business
conducted by B.Biologicals under this Agreement provided that any such
successor becomes a party to this Agreement; provided that no assignment under (i) or
(ii) 


 


29

















 


above shall relieve B.Biologicals from any obligation hereunder. A
Distributor may assign this Agreement and any or all of its rights or
obligations hereunder to (i) any affiliate of such Distributor provided
that any such affiliate becomes a party to this Agreement or (ii) any
successor in interest to the entire business conducted by such Distributor
under this Agreement provided that any such successor becomes a party to this
Agreement; provided that no assignment under (i) or (ii) above shall
relieve such Distributor from any obligation hereunder. Any purported
assignment in contravention of this Section 20.1 shall be void.


 


20.2         Entire
Agreement and Amendments. This Agreement, together with the Exhibits,
constitutes the entire agreement between the Parties, and merges and supersedes
all previous agreements and understandings between the Parties, whether oral or
written, relating to the subject matter hereof. In the event that this
Agreement conflicts with any Purchase Order, invoice or other written document,
the terms and conditions of this Agreement shall apply. No amendment, modification
or interpretation of this Agreement will have any effect unless it is reduced
to writing, makes specific reference to this Agreement and is signed by all of
the Parties.


 


20.3         Notices.
All notices, requests, demands and other communications required or permitted
hereunder shall be in writing and if mailed by prepaid first class mail or
certified mail, return receipt requested, at any time other than during a
general discontinuance of postal service due to strike, lockout or otherwise,
shall be deemed to have been received on the earlier of the date shown on the
receipt or three (3) Business Days after the postmarked date thereof and,
if telexed or telecopied, the original notice shall be mailed by prepaid first class mail
within twenty-four (24) hours after sending such notice by telex or
telecopy, and shall be deemed to have been received on the next business day
following dispatch and acknowledgment of receipt by the recipient’s telex or
telecopy machine. In addition, notices hereunder may be delivered by hand,
in which event the notice shall be deemed effective when delivered, or by
overnight courier, in which event the notice shall be deemed to have been
received on the next business day following delivery to such courier. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:


 


(a)           If to B.Biologicals, and Bayer HealthCare
LLC:


 


Bayer HealthCare LLC


 


400 Morgan Lane

West Haven, CT 06516-4175

Attention:  General Counsel


 


Marilyn Mooney

Fulbright & Jaworski L.L.P.

801 Pennsylvania Avenue, N.W.

Washington, D.C. 20004


 


(b)           If to a Distributor, to that Distributor at
the address set forth in the applicable Distributor Agreement in the form of
Exhibit J executed by
such Distributor.


 


30

















 


With a copy to:


 


Bayer HealthCare LLC

400 Morgan Lane

West Haven, CT 06516-4175

Attention:  General Counsel


 


Marilyn Mooney

Fulbright & Jaworski L.L.P.

801 Pennsylvania Avenue, N.W.

Washington, D.C. 20004


 


(c)           If to Newco to:


 


Chief Legal Counsel

Talecris Biotherapeutics, Inc.

P.O. Box 13887

79 TW Alexander Drive

4101 Research Commons

Research Triangle Park

Raleigh, NC  27709

Fax:  (919) 316-6669


 


With copies to:


 


Mark Neporent

General Counsel


Cerberus Capital Management, L.P.

299 Park Avenue, 28th Floor

New York, NY  10171

Fax:  (212) 891-1540


 


and


 


Alison S. Ressler, Esq.

Sullivan & Cromwell LLP

1888 Century Park East

Suite 2100

Los Angeles, CA  90067

Fax:  (310) 712-8800


 


and


 


31

















 


Joseph A. Simei, Esq.

Latham & Watkins LLP

555 11th Street, N.W.

Suite 1000

Washington, D.C. 20004

Fax:  (202) 637-2201


 


Any Party hereto may change its address specified for notices
herein by designating a new address by notice in accordance with this Section 20.3.


 


20.4         Independent
Contractor. This Agreement does not create an employer-employee
relationship between the Parties, and is not an agency, joint venture or
partnership. No Party shall have the authority to act for the other or to bind
the other in any way, nor to sign the name or to represent that the other is in
any way responsible for the acts or omissions of the other. Newco shall
maintain its status as an independent contractor engaged in the selling and
release of Products. Each of B.Biologicals and each Distributor shall maintain
its respective status as an independent contractor engaged in the business of
distributing Products.


 


20.5         Non-Waiver.
The waiver by any Party of any breach of any term, covenant, condition or
agreement contained herein or any default in the performance of any obligations
hereunder shall not be deemed to be a waiver of any other breach or default of
the same or of any other term, covenant, condition, agreement or obligation.


 


20.6         Choice
of Law. The rights and obligations of the Parties arising out of the
Agreement shall be governed in all respects by the laws of Germany, regardless
of the choice of law principles applicable in Germany or other jurisdictions.


 


20.7         Captions.
All captions are inserted for convenience only, and will not affect any
construction or interpretation of this Agreement.


 


20.8         Severability.
Any provision of this Agreement which is or may become prohibited or
unenforceable, as a matter of law or regulation, will be ineffective only to
the extent of such prohibition or unenforceability and shall not invalidate the
remaining provisions hereof if the essential purposes of this Agreement may be
given effect despite the prohibition or unenforceability of the affected
provision.


 


20.9         Dispute
Resolution.


 


(i)            Resolution by the Parties. The
Parties shall attempt to resolve any dispute, controversy, claim or difference
arising out of, or in connection with, this Agreement amicably and promptly by
negotiations between executives who have authority to settle the controversy. Either
Party may give the other Party written notice of any dispute not resolved
in the normal course of business (“Notice of Dispute”). Within seven (7) days
after delivery of such Notice of Dispute, executives of the Party shall agree
to meet at a mutually acceptable time and place, and thereafter as often as
they reasonably deem necessary, to attempt to resolve the dispute. If the
matter has not been resolved within ten (10) days of the first meeting of
such executives (or, if the Parties are unable to mutually agree upon an
acceptable time and place to meet, within ten 


 


32

















 


(10) days of the disputing Party’s Notice of Dispute), either
Party may, by notice to the other Party (“Dispute Escalation Notice”), refer the matter
to the respective officers of the Parties designated below.


 


For B.Biologicals and Bayer:  Joseph Akers, President Biological Products
Division (or his successors)


 


For Newco:            CEO/President for Talecris Biotherapeutics
Inc.


 


For Distributor[s]:                As shown on
executed Exhibit J


 


Such officers shall negotiate in good faith
to resolve the matter in an amicable manner within ten (10) days of the
Dispute Escalation Notice. In the event the matter is not resolved within such
ten (10) days, either Party may initiate arbitration of the dispute
as provided for in this Section 20.9.


 


(ii)           Binding Arbitration. In any event, if
any dispute, other than with respect to Section 5.5(iv) and 6.3, is
not resolved in accordance with this Section 20.9(ii) within thirty
(30) days of the date in which such dispute arose, either Party may submit
the dispute to binding arbitration by giving the other Party notice (the “Arbitration Notice”).
Such arbitration shall be conducted in Germany in accordance with the Rules of
Arbitration of the International Chamber of Commerce, in effect as of the
Effective Date (the “Rules”).
The arbitration shall take place in a location which is mutually agreeable to
the Parties and shall be held in the English language unless the parties agree
otherwise. The arbitration will be conducted by one (1) arbitrator
knowledgeable in the subject matter that is at issue in the dispute and who is
selected by mutual agreement of the Parties or, failing such agreement by
thirty (30) days after the Arbitration Notice was given, will be selected
according to the Rules. Either Party reserves the right to object to any
individual arbitrator who shall be employed by or affiliated with a competing
organization. The arbitrator shall render a decision no later than ninety
(90) days from the date of such arbitrator’s selection. The award of the
arbitrator shall be final and binding on both Parties. Each Party hereby
submits itself to the jurisdiction of the courts of the place where arbitration
is held, but only for the entry of judgment with respect to the decision of the
arbitrator hereunder. Notwithstanding the foregoing, judgment upon the award may be
entered in any court in the state where the arbitration takes place, or any
court having jurisdiction over the Parties. In the event of any actual or
threatened breach or default which could give rise to irreparable harm, nothing
in this Agreement shall prevent either Party from seeking injunctive relief (or
any other provisional remedy or equitable relief) from any court having
jurisdiction over the Parties and the subject matter of this dispute to protect
their respective rights pending the outcome of the arbitration. The Parties
bind themselves to carry out the awards of the arbitrator. The fees and
expenses of the arbitrators, the fees and expenses of the court report and any
expense for a hearing room, and reasonable attorney’s fees may be awarded
to the prevailing party by the arbitrator, or if such award is not made, will
be shared equally by the Parties. The Parties will otherwise bear their
respective expenses of arbitration.


 


20.10       Survival.
In the event of any termination of this Agreement the provisions of Articles 4,
5, 6, 7, 10, 11, 12, 13, 14, 16, 17, 18, 19, 20 and Sections 2.2, 2.4, and 2.5,
shall survive any 


 


33

















 


termination or expiration of this Agreement in full force and effect
indefinitely, unless a shorter period of survival is provided therein.


 


20.11       Defined
Terms. Defined terms used but not otherwise defined in this Agreement shall
have the meaning ascribed to those terms in the Contribution Agreement.


 


20.12       Phase
I Agreement and Phase II Agreement. Nothing in this Agreement shall modify
the rights and obligations between B.Biologicals and Newco pursuant to the
Phase I Agreement or the Phase II Agreement.


 


20.13       Set-Off.
No Party to this Agreement shall have any right of set off with respect to
amounts it has an obligation to pay hereunder.


 


{Remainder of this page has been intentionally left blank}


 


34

















 


IN WITNESS WHEREOF,
the Parties have caused their duly authorized representatives to execute this
Agreement as of the Effective Date.


 


	
   

  	
  BAYER BIOLOGICALS SRL

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Antonio Zamboh

  	
   

  
	
   

  	
  Name:

  	
  Antonio Zamboh

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TALECRIS BIOTHERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lawrence D. Stern

  	
   

  
	
   

  	
  Name:

  	
  Lawrence D. Stern

  	
   

  
	
   

  	
  Title:

  	
  Executive Chairman, President and 

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  	
   

  
						



 


 


Bayer Healthcare LLC is signing this
Agreement solely to evidence its agreement that it will meet the obligations in
Article 19 or any other provision of this Agreement where Article 19
would require Bayer to take some act.


 


	
   

  	
  BAYER HEALTHCARE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A. Akers

  	
   

  
	
   

  	
  Name:

  	
  Joseph A. Akers

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith R. Abrams

  	
   

  
	
   

  	
  Name:

  	
  Keith R. Abrams

  	
   

  
	
   

  	
  Title:

  	
  Assistant Secretary

  	
   

  
								



 


35

















 


Exhibit A


 


[***]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit B


 


[*** 3 pages redacted]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit C


 


[*** 4 pages redacted]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit E


 


[***]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit F


 


[***]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit G


 


[*** 195 pages redacted]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit H


 


[***]


 






***CONFIDENTIAL TREATMENT REQUESTED


 

















 


Exhibit J


 


[***]


 






***CONFIDENTIAL TREATMENT REQUESTED