Non-competition & Confidentiality Agreement

NON-COMPETITION AND CONFIDENTIALITY AGREEMENT


This NON-COMPETITION AND CONFIDENTIALITY AGREEMENT (the "Agreement") is made and entered into as of this 17th day of December, 1997, by and among Baxter Healthcare Corporation, a Delaware corporation with its principal place of business at 1627 Lake Cook Road, Deerfield, Illinois 60015 ("Baxter"), VIMRx Pharmaceuticals Inc., a Delaware corporation with its principal place of business at 2751 Centerville Road, Suite 210, Wilmington, Delaware 19808 ("VIMRx"), and BIT ACQUISITION CORP., a Delaware corporation with its principal place of business at Nine Parker, Irvine, California 92718 ("Newco").


RECITALS


A. Baxter and VIMRx have agreed to enter into a strategic alliance by engaging in the ex vivo cell therapy business through Newco (the "Transaction").


B. Pursuant to that certain Asset Purchase Agreement dated as of October 10, 1997, by and among Baxter, VIMRx and Newco (the "Acquisition Agreement"), Baxter has transferred to Newco certain Isolex(R) and Maxsep(R) Technology as well as other Assets of the Business (as those capitalized terms are defined in the Acquisition Agreement).


C. Baxter has agreed pursuant to the terms of that certain Hardware and Disposables Manufacturing Agreement of even date herewith (the "Hardware and Disposables Manufacturing Agreement") to manufacture for Newco the Isolex(R) and Maxsep(R) Products (as such capitalized term is defined in the Hardware and Disposables Manufacturing Agreement) and pursuant to the Antibody Manufacturing and Storage Agreement of even date herewith (the "Antibody Manufacturing Agreement") to manufacture certain Antibodies, Reagents and Reagent Kits (as such capitalized terms are defined in the Antibody Manufacturing Agreement).


D. Baxter also has agreed to supply to Newco certain other products and components which are utilized in connection with the Business pursuant to the terms of that certain Hardware and Disposables Supply Agreement of even date herewith (the "Hardware and Disposables Supply Agreement").


E. Pursuant to the Marketing, Sales and Distribution Agreement of even date herewith (the "Marketing, Sales and Distribution Agreement") (the Acquisition Agreement, the Hardware and Disposables Supply Agreement, the Hardware and Disposables Manufacturing Agreement, the Antibody Manufacturing Agreement and the Marketing, Sales and Distribution Agreement, collectively referred to as the "Acquisition and Operating Documents" and each an "Acquisition and Operating Document"), Baxter has agreed to market, sell and distribute Isolex(R) and Maxsep(R) Products, Reagents and Reagent Kits in the Field of Distribution (as those capitalized terms are defined in the Marketing, Sales and Distribution Agreement).


F. Pursuant to the Acquisition and Operating Documents, Baxter and VIMRx will be the shareholders of Newco and will undertake certain obligations with respect to the capitalization of Newco.


G. Baxter, VIMRx and Newco recognize that (i) the ex vivo cell therapy business to be conducted by Newco is very valuable to Newco and that the success of Newco in that business will benefit each of Baxter and VIMRx as investors in Newco, and (ii) Baxter's remaining business operations (other than the Business) are very valuable to Baxter, and that the parties' above-described interests are protectible in the manner and subject to the terms set forth in this Agreement.


H. In connection with and in furtherance of the Transaction, the VIMRx Group has provided and will provide to Baxter certain Confidential Information (as those capitalized terms are defined below) relating to the VIMRx Group, and the Baxter Group (as that capitalized term is defined below) has provided and will provide to VIMRx and Newco certain Confidential Information relating to the Baxter Group, including but not limited to certain Confidential Information delivered pursuant to that certain Confidentiality and Non-Solicitation Agreement by and between Baxter and VIMRx dated as of November 11, 1996 (the "CDA"), that certain letter agreement, dated as of July 8, 1997, by and between Baxter and Innovir Laboratories, Inc. (the "Innovir Letter"), and Section 13 of that certain Letter of Intent by and between Baxter and VIMRx, dated as of June 11, 1997, as subsequently extended (the "LOI") (the CDA, the Innovir Letter and the LOI are hereinafter collectively referred to as the "Prior Confidentiality Agreements").


I. The VIMRx Group and the Baxter Group both desire that the Recipient (as that capitalized term is defined below) of Confidential Information reasonably protect the confidentiality of such Confidential Information as described herein and subject to the terms hereof.


AGREEMENT


NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby acknowledge and agree as follows:


1. DEFINITIONS.
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1.1. Terms Defined in Preamble and Recitals: As used herein, all capitalized terms defined in the Preamble and Recitals of this Agreement shall bear the meanings ascribed to such terms as set forth therein.


1.2. As used herein, the following capitalized terms shall have the following meanings:


(a) "Affiliate" of a party means any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by or
is under


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common Control with, the party or (ii) fifty percent (50%) or more of the
voting capital stock (or in the case of an entity which is not a
corporation, fifty percent (50%) or more of the equity interest) of which
is beneficially owned or held by a party or any of such party's
Subsidiaries. The term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of an entity (other than a natural person), whether through
the ownership of voting capital stock, by contract or otherwise.


(b) "Baxter Group" means Baxter and its Affiliates including, without
limitation, each of their respective divisions and business units.


(c) "Business" shall mean the ex vivo cell therapy business described
in Exhibit __ attached to the Acquisition Agreement.


(d) "Chiron" shall mean Chiron Corporation, a Delaware corporation.


(e) "Chiron Collaboration Agreement shall mean that certain
Collaboration Agreement by and between Baxter and Chiron dated December 27,
1996.


(f) "Confidential Information" means any information in any form of
expression or medium whatsoever (including, without limitation, whether
oral, written or electronically coded) furnished to the Recipient that is
owned by or pertains to the Owner, which is not Non-Confidential
Information, including, but not limited to, any information regarding: (i)
Confidential Information (as that term is defined in the CDA) previously
delivered by the Owner to the Recipient pursuant to the Prior
Confidentiality Agreements, (ii) business and/or strategic plans, (iii)
research, technology, development, manufacturing, marketing, sales or
distribution of products, goods or services, (iv) lists and identities of
actual or potential customers, vendors or suppliers, (v) pricing of goods
and services to, or prices of goods or services from, actual or potential
customers, vendors or suppliers, (vi) any technical or non-technical data,
formulae, patterns, compilations, programs, devices, methods, techniques,
know-how, drawings, designs, processes, procedures, inventions,
improvements, models, manuals or financial data, (vii) other confidential
intellectual property, including, without limitation, patent applications
and invention records and (viii) any information or materials the Recipient
may derive, develop or discern by reason of the Recipient's analysis,
evaluation or research regarding or in connection with any of the
foregoing, including, without limitation, any derivatives or variances
therefrom. In the event that the Recipient can prove that any part of the
Confidential Information is or has become Non-Confidential Information,
that part of the Confidential Information shall no longer be deemed
Confidential Information for the


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purposes of this Agreement, but Recipient shall continue to be bound by the
terms of this Agreement as to all other Confidential Information.


(g) "Ex Vivo Cell Processing" shall mean the active selection, and any
subsequent modification, genetic alteration, activation and/or expansion,
of nucleated cells outside the body for therapeutic purposes such as
cellular therapy or gene therapy. For the purpose of this definition,
"active selection" shall mean processing involving the action of a
biological component, such as an antibody or modified antibody, a lectin,
or a ligand, to selectively and specifically bind to a particular molecule
on the surface of the cells to be selected so as to confer specificity or
selectivity for such cells in the cell selection process.


(h) "Legitimate Origins" means that the source or channel of
communications and/or documentation relating to the Confidential
Information was entitled to permit the transmission of the relevant
information without breach of this Agreement, any other applicable
agreement or duty, or any applicable law.


(i) "Non-Confidential Information" means (i) information which is
generally known by or available to third parties, or is generally
known or available within the Owner's industry, without breach of
this Agreement, any other applicable agreement or duty, or any
applicable law by the Recipient or its Representatives; (ii)
information which is disclosed or made available to the Recipient
from Legitimate Origins other than the Owner (and such receipt
from Legitimate Origins can be demonstrated by the Recipient);
(iii) information which is in the possession of the Recipient and
was received by the Recipient from Legitimate Origins prior to
receiving such information from the Owner (and such prior
possession and receipt from Legitimate Origins can be
demonstrated by the Recipient); or (iv) information which is or
has been independently developed by the Recipient and/or its
Representatives without the use of any Confidential Information
of the Owner (and such independent development can be
demonstrated by the Recipient).


(j) "Owner" means (i) the Baxter Group, where the subject Confidential
Information is owned by or pertains to the Baxter Group, and (ii) the VIMRx
Group, where the subject Confidential Information is owned by or pertains
to the VIMRx Group.


(k) "Recipient" means (a) VIMRx or Newco, as the case may be, where
the subject Confidential Information is owned by or pertains to the Baxter
Group, and (b) Baxter, where the subject Confidential Information is owned
by or pertains to the VIMRx Group.


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(l) "Representatives" means all of Recipient's officers, directors,
employees, attorneys, tax advisors, accountants, financial consultants and
other authorized agents.


(m) "Subsidiary" shall mean, as to any party, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power
to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly
owned by the party, by one or more of its subsidiaries, or by the party and
one or more of its subsidiaries.


(n) "Supplied Products" means the Baxter Products, the Baxter Products
Components and the Spinning Membrane. For purposes of this definition,
"Baxter Products" shall have the meaning ascribed to such capitalized term
in the Hardware and Disposables Supply Agreement; "Baxter Products
Components" shall have the meaning ascribed to such capitalized term in the
Hardware and Disposables Supply Agreement; and "Spinning Membrane" shall
have the meaning ascribed to such capitalized term in the Hardware and
Disposables Supply Agreement.


(o) "VIMRx Group" means VIMRx and its Affiliates including, without
limitation, each of their respective divisions and business units and, for
purposes of this definition, Newco.


2. NON-COMPETE COVENANTS BY BAXTER.
-------------------------------


2.1. Except as otherwise agreed by Newco in writing, including in any Acquisition and Operating Document, Baxter covenants and agrees that neither Baxter nor any of its Affiliates shall, directly or indirectly, anywhere in the world, (i) engage in, or (ii) render consulting or advisory services to any entity that engages in, or (iii) be a joint venturer, partner, licensor, member, shareholder (other than, in the case of an entity with securities that are publicly traded, a holder of 2% or less of the voting securities of such entity) or trustee of any entity for the purpose of engaging in, the marketing, sale or distribution of any product which directly competes with any product of the Business:


(a) for use in the ex vivo selection of a desired human, nucleated
cell type using a biological component, such as an antibody or modified
antibody, a lectin, or a ligand to selectively and specifically bind to a
particular molecule on the surface of the cells to be selected so as to
confer specificity or selectivity for such cells in the cell selection
process; or


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(b) for genetic alteration, modification, activation and/or expansion
in combination with such selection;


for therapeutic purposes such as cellular or gene therapy, except as Baxter is required to manufacture, supply, market, distribute and sell products of the Business pursuant to the Acquisition and Operating Documents. Notwithstanding the foregoing, for purposes of this Agreement, ex vivo selection as described in subpart (a) of this Section 2.1 shall not include an ex vivo selection process directed to the removal of non-cell-bound antibodies from human blood using a biological component even though such ex vivo selection process may result in the biological component binding to human nucleated cells and thereby incidentally selecting and separating such cells, provided that such
-------- incidentally selected cells shall not be utilized commercially.


2.2. Baxter's obligations under the foregoing covenant and agreement shall begin on the date hereof and shall expire on the date that is the later of (i) the date that is five (5) years after the date hereof or (ii) one year after the first date on which Baxter neither owns at least ten percent (10%) of the Common Stock of Newco, on a fully diluted basis, nor retains a seat on Newco's board of directors, or (iii) the date on which the Marketing, Sales and Distribution Agreement expires, as its term may be extended, provided that all
-------- of Baxter's obligations under the foregoing covenant and agreement shall expire not later than the date that is fifteen (15) years after the date hereof, except that following the date that is fifteen (15) years after the date hereof, Baxter's obligations shall continue (a) to the extent and for the period of time that Baxter continues to act as Newco's exclusive worldwide distributor for an Isolex(R) or Maxsep(R) Product or Reagent Kit under the terms of the Marketing, Sales and Distribution Agreement, but only with respect to such Isolex(R) or Maxsep(R) Product or Reagent Kit, and (b) to the extent and for the period of time that Baxter continues to supply any Supplied Product under the terms of the Hardware and Disposables Supply Agreement, but only with respect to such Supplied Product.


2.3. Notwithstanding the provisions of Section 2.1, Baxter shall not be prohibited from acquiring any interest in any company or other entity which is engaged in a business the products of which compete with any product of the Business in a manner which may violate the terms of Section 2.1, provided that
-------- (i) such company or other entity becomes an Affiliate of Baxter after the date hereof or is merged with or into Baxter or an Affiliate of Baxter after the date hereof; and (ii) the purpose of Baxter's acquisition of such company or other entity is not to acquire a technology which would compete with any product of the Business in a manner otherwise prohibited by Section 2.1. Baxter shall promptly notify Newco of any such acquisition by Baxter, and Newco will have sixty (60) days after the receipt of such notice to negotiate the material terms and conditions of an acquisition or other transaction to acquire rights to that portion of the business of such company or other entity the products of which compete with any product of the Business. The terms and conditions of such an acquisition or other transaction with Newco shall be negotiated by Newco and Baxter, bargaining in good faith, and documented in a written agreement, signed by authorized representatives of both parties. If, after notice to Newco and expiration of sixty (60) days without completed negotiation of the material terms of such an


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acquisition or other transaction with Newco, Baxter desires to enter into an agreement with a third party on terms and conditions that are less favorable to Baxter than the terms and conditions offered by or to Newco (a "New Offer"), then Baxter must give Newco notice and an additional thirty (30) days to respond to Baxter's offer on substantially the same terms and conditions as those of the New Offer. The culmination of any transaction pursuant to this Section 2.3 is subject to the parties entering into a definitive agreement on terms which are agreeable to each of the parties, in their sole discretion.


2.4. Subject to the provisions of Section 2.5, it is understood and agreed that Baxter shall refrain from exercising the Baxter Retained License Rights and the Baxter GmbH Retained License Rights (as those terms are defined in the First BD Sublicense, the Second BD Sublicense, the Chiron Sublicense and the Dorken Sublicense (collectively, the "Sublicense Agreements"), as such terms are defined in the Acquisition Agreement).


2.5. The foregoing notwithstanding, Baxter may exercise the Baxter Retained License Rights and the Baxter GmbH Retained License Rights in the event:


(a) the Marketing, Sales and Distribution Agreement is terminated by
Baxter as a result of Newco's breach thereof;


(b) any of the Sublicense Agreements is terminated by Baxter as a
result of Newco's breach thereof, provided that Baxter may exercise only
--------
those Baxter Retained License Rights or Baxter GmbH Retained License
Rights, as the case may be, retained with respect to such terminated
Sublicense Agreement; or


(c) a final, non-appealable decision is rendered by an arbitrator or a
court of competent jurisdiction holding that Newco has materially breached
its obligations under Section 4 hereof after having been given at least 180
days notice of such breach by Baxter;


(d) a receiver, conservator, custodian, liquidator or trustee of Newco
or of a material portion of the property of Newco, is appointed by court
order and such order remains in effect for more than ninety (90) days; or
an order for relief is entered under the federal bankruptcy laws with
respect to Newco; or all or any material portion of the property of Newco
is sequestered by court order and such order remains in effect for more
than ninety (90) days; or a petition is filed against Newco ...