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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended: December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission File No. 0-28494
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Millennium Pharmaceuticals, Inc.
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(Exact Name of registrant as Specified in its Charter)
Delaware 04-3177038
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
640 Memorial Drive, Cambridge, Massachusetts 02139
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(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (617) 679-7000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
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Common Stock, $.001 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [X]
The aggregate market value of voting Common Stock held by non-affiliates of
the registrant was $398,133,938, based on the last reported sale price of the
Common Stock on the Nasdaq Stock Market on March 25, 1997.
Number of shares outstanding of the registrant's class of Common Stock as of
March 25, 1997: 28,745,520.
Documents incorporated by reference:
1996 Annual Report to Stockholders - Part II
Proxy Statement for the 1997 Annual Meeting of Stockholders - Part III
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PART I
Item 1. BUSINESS
General
Millennium Pharmaceuticals, Inc. ("Millennium" or the "Company") is engaged
in the commercial application of genetics, genomics and bioinformatics to
discover and develop a broad range of novel therapeutic and diagnostic products.
Independently and in strategic alliances with leading pharmaceutical companies,
the Company has focused its research efforts on identifying and elucidating the
function of genes responsible for diseases (disease genes) that affect millions
of individuals and that are underserved by current therapeutic alternatives.
These diseases include obesity, type II diabetes, atherosclerosis, asthma,
cancer and diseases of the central nervous system. The Company's principal
objective is to use its technology platform to enable and accelerate the
discovery and development of new, proprietary therapeutic and diagnostic
products capable of addressing these diseases at their root causes, rather than
simply identifying and treating their symptoms.
The Company is distinctive in the genomics industry in employing a
comprehensive technology platform that couples multiple synergistic approaches
for identifying disease genes with a broad set of bench and computational
biology technologies for elucidating the function of these genes and their role
in disease initiation and progression. This highly automated, computer-enhanced
technology platform is designed to enable the Company and its strategic partners
to rapidly convert the Company's gene discoveries into useful targets for drug
discovery and pharmaceutical intervention. The Company believes that its
discoveries will be valuable for the development of therapeutic products
(including orally available small molecule drugs, therapeutic proteins, gene
therapy and antisense drugs), diagnostic products and services and disease
management programs for a wide range of diseases.
The Company has secured strategic partners for its most advanced disease
research programs: Hoffmann-La Roche Inc. ("Roche") in obesity and type II
diabetes; Eli Lilly and Company ("Lilly") in cardiovascular disease and select
areas within oncology; Astra AB ("Astra") in inflammatory respiratory diseases;
and American Home Products ("AHP") in certain disorders of the central nervous
system. The Company intends to pursue further strategic alliances as
appropriate. The Company has retained substantial rights to develop and market
certain diagnostic and therapeutic applications of the discoveries it makes in
its funded strategic alliance research programs.
In February 1997, the Company acquired ChemGenics Pharmaceuticals Inc., an
antifungal and antibacterial drug discovery company, for approximately 4,800,000
shares of Millennium's Common Stock. In addition, a principal shareholder of
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ChemGenics received $4.0 million in settlement of a promissory note and
repurchase of warrants previously issued by ChemGenics.
Background
The Drug Discovery and Development Process
Historically, pharmaceutical products have been developed primarily through
the synthesis and screening of large collections of chemical compounds and
natural products. Compounds are identified as pharmaceutical candidates based on
their activity in simple in vitro and in vivo assays believed to mimic aspects
of human physiology or biochemistry. Where significant activity is found in an
assay, the compound is then tested in animal models believed to simulate human
disease conditions. The principal limitation with this approach has been that
these assays and animal models have not always proven to be predictive of the
candidate drug's safety and efficacy in humans with the disease. In addition,
the mechanism of action of these compounds and the underlying causes of the
disease generally have remained unknown. Consequently, the resulting candidate
drugs are often either ineffective or only ameliorate symptoms without
addressing the root cause of the disease.
Recent advances in genetics have the potential to significantly improve drug
discovery and development by enabling the identification of the root causes of
diseases at the molecular level. In contrast to traditional drug discovery and
development, a genetics approach commences by identifying those genes that, when
defective, are responsible for the initiation or progression of disease. The
next step in this approach is to characterize the specific role of these genes
in the disease process. To identify an appropriate molecular target for
therapeutic intervention, it may also be necessary to characterize fully the
biochemical pathway in which the disease gene functions. Millennium believes
that this type of comprehensive commitment to understanding the disease process
is essential to realizing the full value of a genetics approach to drug
discovery and development.
A genetics approach to drug development also may guide more efficient
selection of the most appropriate therapeutic modalities by providing
significant information about the structure and function of the molecular target
for pharmaceutical intervention. These modalities include orally available small
molecule drugs, protein therapeutics, antibody therapeutics, gene therapy and
antisense drugs. As a result, it is expected that a genetics approach to drug
development will be important to both the pharmaceutical and biotechnology
industries. Genetics is already affecting the diagnostics industry, providing
tests used to identify an individual's predisposition to disease, to guide
therapy and to enhance disease management.
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Genetics, Genomics and Bioinformatics
All genetic information in an organism is maintained in chromosomes, which
contain deoxyribonucleic acid (DNA). DNA comprises a linear string of four
"bases" (known as adenine (A), guanine (G), cytosine (C) and thymine (T)), and
genetic information is encoded by the specific order (sequence) of the bases
within units called genes. An organism's complete set of chromosomes, embodying
its entire complement of genes, constitutes the organism's genome. The human
genome is estimated to comprise approximately three billion bases and 100,000
genes.
The information stored in the DNA of a gene is a set of instructions to
living cells of the organism. These instructions direct the cells to synthesize
specific proteins such as hormones or enzymes that perform basic biochemical and
physiological functions of the cells. Disease may occur when a defect (mutation)
in a gene or genes, resulting in incorrect instructions to the cells, disrupts
the normal balance or function of these essential proteins. The ability to
detect such a mutation and to understand how the disruption of normal protein
function contributes to the initiation and progression of the resultant disease
are potentially valuable aids to pharmaceutical discovery and development.
Many complex physiological processes rely on the interaction of sets of
different proteins to perform individual steps of such processes. An error or
breakdown in any one of the steps can affect the outcome of the process
resulting in a disease condition. Disease occurs when one or more steps in a
normal physiological process is upset or blocked. This can occur because of an
intrinsic defect, a harmful external stimulus (the environment) or the
combination of both. Intrinsic defects arise from mutations in particular genes,
affecting the proteins they encode. The study of the inheritance patterns of
genes, including disease genes, is the science of genetics.
A number of relatively rare diseases, such as cystic fibrosis and sickle cell
anemia, have a genetic basis resulting from a mutation in a single gene
(monogenic diseases). The genes responsible for many of these monogenic diseases
have been identified over the last decade. In contrast, the genes underlying the
major common diseases, including obesity, diabetes, heart disease, asthma,
cancer and diseases of the central nervous system, have remained more elusive.
These diseases tend to be complex conditions which involve multiple responsible
genes (polygenic diseases) and often the interaction of genetic and
environmental factors (multifactorial diseases). Understanding the genetic bases
of these diseases requires processing, analyzing and interpreting vast amounts
of data. Until recently, there have been technological limitations in the
requisite information systems, process technologies and laboratory reagents.
However, these technological limitations are being addressed by significant
advances in information technologies, automated robotics and high-throughput
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screening methods, particularly as part of the Human Genome Project (a worldwide
research effort to sequence the entire human genome). Genomics commonly refers
to genetic analysis, and even more broadly molecular biology, conducted in a
high-throughput, automated environment with high-level computer-supported data
analysis and integration. The use of computer-based information systems to
assist in the identification, analysis and elucidation of the biological
function of genes is referred to as bioinformatics.
Many observers of the genomics industry have found it useful to classify
genomics companies as either gene mappers or gene sequencers. Gene mappers
characteristically use human genetic approaches to isolate single genes that,
when defective, cause or predispose individuals to particular diseases. This
focused approach identifies specific molecular changes of undisputed importance
in disease origins. In contrast, gene sequencers use high-throughput,
non-genetic DNA sequencing methodologies to identify large numbers of genes on
an essentially random basis. Attempts to associate these genes with specific
disease mechanisms occur only subsequently. Both gene mapping and gene
sequencing are already making significant contributions to therapeutic and
diagnostic discovery and product development in the pharmaceutical and
biotechnology industries.
The Millennium Strategy
The Company's objective is to discover and develop novel, proprietary
therapeutic and diagnostic products that address diseases at their root causes.
Key elements of Millennium's strategy include:
Technology Strategy
o Focus on major common diseases that affect millions of individuals and
that are underserved by current therapeutic alternatives.
o Employ multiple synergistic gene identification approaches -- including
gene mapping, gene sequencing and additional approaches -- to optimize the
number and relevance of the Company's gene discoveries.
o Employ a comprehensive set of bench and computational biology technologies
to elucidate the function of the genes discovered by the Company and
convert them into useful targets for drug discovery and diagnostic
development.
Business Strategy
o Establish strategic alliances with leading pharmaceutical companies to
accelerate product development, regulatory approvals and commercialization
and to leverage the Company's technological resources.
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o Diversify business risk by securing multiple strategic alliance partners,
thereby minimizing the Company's reliance on any single partner or disease
research program while creating several potential royalty and
profit-sharing revenue streams.
o Minimize operating losses and equity requirements by obtaining from
strategic partners substantial payments that are not contingent on the
achievement of research and product development milestones.
o Create additional business opportunities by retaining significant rights
to develop and market certain therapeutic and diagnostic applications of
the discoveries the Company makes in its funded strategic alliance
research programs.
Millennium's Technology Platform
Millennium employs a comprehensive genomics approach to disease research with
the following three key elements:
o Gene Identification -- the use of multiple synergistic techniques,
including genetic approaches (human and mouse) and non-genetic approaches
to identify disease genes.
o Target Validation -- the integrated use of advanced bench and
computational biology techniques to elucidate mechanisms of disease
initiation and progression, to identify and validate molecular targets for
therapeutic intervention and diagnostics, and to develop bioassays and
animal models of disease to accelerate product development efforts.
o Drug Lead Generation -- the use of high throughput screening and
proprietary chemical sources to identify potential drug candidates for
optimization and subsequent pre-clinical and clinical development.
Millennium conducts its research using high-throughput, automated robotic
systems and advanced bioinformatics for data capture, analysis, integration and
interpretation.
Gene Identification Strategies
The Company employs multiple synergistic genetic and non-genetic approaches
to disease gene identification. This strategy combines the disease focus of gene
mapping with the breadth and rapidity of non-genetic approaches such as gene
sequencing.
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Genetic Approaches
The Company's genetic approaches to gene identification use a comparative,
statistical methodology that correlates disease susceptibility with the
inheritance of specific genes. The genomes of individuals with the disease are
physically compared with those of unaffected, normal individuals. Given a
sufficient number of appropriately selected individuals, a chromosomal region in
which a disease gene must reside can be identified. The disease gene of interest
is then identified based on this knowledge of its position in the genome, a
technique commonly referred to as positional cloning. Millennium uses both human
genetics and mouse genetics in its research programs.
Human Genetics. The Company bases its human genetics programs on the
identification of populations that contain families in which the disease of
interest appears to be inherited. For any given disease, the Company assembles
multiple family collections from different population structures and genetic
backgrounds. To gain access to appropriate populations and to obtain extensive
and accurate clinical data, the Company has established collaborations with
internationally recognized academic medical centers and leading clinical
experts. The Company believes that this "diversified portfolio" approach to
human genetics increases the likelihood of rapidly identifying prevalent disease
genes and provides a means of independently confirming results found in any
single population. For example, in Millennium's type II diabetes program, the
Company uses select family collections from homogeneous populations in
Scandinavia and Israel and from heterogeneous populations in the United States.
Millennium analyzes DNA taken from its sample populations to find linkages,
that is, small chromosomal regions with variations shared by those who have the
disease and lacking in those who do not. This process, referred to as
genotyping, involves the use of genetic markers that serve to identify these
variations and define or map the chromosomal position of genes. Millennium has
established a set of genetic markers that has been optimized for use in the
Company's high-throughput automated genotyping process. Compilation and analysis
of the resulting genotypic and clinical data are performed using proprietary and
public databases and bioinformatics systems. Millennium has utilized this
approach to identify small chromosomal regions inherited by certain individuals
with type II diabetes.
Once genetic linkage analysis is completed, Millennium employs additional
positional cloning techniques to identify the complete DNA sequence of a disease
gene. These techniques use the Company's proprietary automated DNA sequencing
technology and bioinformatics tools to analyze the linkage regions, identify and
analyze all of the genes in the region and compare the DNA sequences of these
genes taken from different individuals. The disease gene will show a consistent
difference between diseased and healthy individuals.
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Mouse Genetics. Millennium complements its human genetics programs with mouse
genetics where appropriate. Many mouse models exist in which genetic defects
give rise to conditions comparable or identical to human diseases. Mouse
genetics studies offer several significant advantages over human genetics
studies, including extensive genetic information relating to the animals;
availability of large, multigenerational pedigrees; much shorter generation
cycles; and the ability to control both genetic and environmental factors. These
advantages provide a more efficient process for positionally cloning disease
genes. In addition, many of the steps involved in cloning mouse genes are
identical to those pursued in the positional cloning of human disease genes,
allowing Millennium to utilize common technology platforms and resources.
Millennium's substantial capabilities in mouse genetics enable the Company to
identify multiple disease genes simultaneously in several of its disease
programs. Millennium has successfully employed its capabilities in mouse
genetics to clone the tub gene from an important mouse model of human obesity.
See "-- Millennium's Disease Research Programs -- Obesity".
Non-Genetic Approaches
In addition to its genetic approaches to disease gene identification, the
Company employs a variety of non-genetic approaches, including its proprietary
rapid analysis of differential gene expression (RADE) technology, additional
technologies for monitoring differences in gene expression, large-scale DNA
sequencing, and high-throughput expression cloning. These technologies take
advantage of the fact that, while all cells of an individual's body contain an
identical set of genes, not all of those genes are operative in all cells at all
times. When a gene is operative, it produces a protein and is said to be
expressed. In order to produce the protein it encodes, the gene is first
transcribed into an intermediary molecule called messenger RNA (mRNA). Using
various molecular biological techniques, researchers are able to reverse
transcribe these mRNAs back into complementary DNA (cDNA). A collection of cDNA
molecules corresponding to all of the mRNAs expressed in a particular cell type
is referred to as a cDNA library. The Company has developed a bank of cDNA
libraries and high-throughput methodologies for the isolation of full-length
genes from these libraries, which have increased the efficiency of the Company's
non-genetic approaches to disease gene identification.
Millennium's RADE technology allows the Company to compare patterns of gene
expression in cDNA libraries prepared from different tissue samples. For
example, a gene that is expressed in the fat cells of an obese mouse but not a
thin mouse, or a gene that is expressed at lower levels in cancerous human colon
cells than in normal colon cells, is potentially of interest as a disease gene.
Similarly, genes that are regulated by specific physiological stimuli, such as
increases in serum cholesterol, may be implicated in the initiation or
progression of a disease, such as atherosclerosis. Therefore, Millennium has
used RADE extensively in many of its disease research programs. More recently,
the Company has devoted considerable
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effort to the development of additional technologies for monitoring differences
in gene transcription or expression profiles.
In addition to RADE and other forms of transcriptional profiling, Millennium
employs high-throughput automated cDNA sequencing in a non-random,
disease-focused and tissue-selective manner. For example, in the context of its
type II diabetes research program, the Company has employed cDNA sequencing
extensively to identify candidate disease genes. The Company also uses its
sequencing technology in a focused manner to identify genes encoding specific
classes of molecules which may serve as suitable candidates for pharmaceutical
product development. These include genes encoding secreted hormones and growth
factors that represent potential protein therapeutics and genes encoding enzymes
and receptors from classes that are known to be good sites of action for orally
available small molecule drugs.
Millennium also uses techniques, such as expression cloning, to identify
unknown genes through detailed knowledge of the proteins they encode. Employing
expression cloning, Millennium identified ob-r, the leptin receptor which plays
a central role in modulating appetite and body weight. This receptor and other
proteins with which it interacts are currently being studied at Millennium and
Roche as potential targets for small molecule drug screens. Millennium is
currently using expression cloning techniques to identify additional novel drug
development targets of functionally proven relevance in its obesity and asthma
research programs.
Target Validation
Once a disease gene has been identified, the Company undertakes further
cellular and molecular biology studies to evaluate the gene's specific function
in the disease process (target validation). Where the target validation process
indicates that the disease gene (or the protein it encodes) may not be
practically useful or the most appropriate molecular target for therapeutic
intervention or product development, cellular and molecular biology studies may
also identify other molecules located in the same biochemical pathway(s) as the
disease gene. These other molecules may serve as better molecular targets for
drug discovery and therapeutic intervention. In addition, these studies assist
in the development of biological materials, reagents, cellular assays and animal
models, which are critical to the product development efforts of the Company and
its strategic partners.
The Company has dedicated a substantial portion of its research and
development activities to molecular target validation. The Company has
significant cellular and molecular biology capabilities, including (i) bench
biology, which involves a wide range of experimental laboratory techniques, and
(ii) computational biology, which uses computers to model the structure and
predict the function of genes and proteins.
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Bench Biology
Millennium's bench biology approaches take advantage of the Company's
capabilities in automation and bioinformatics, enabling a high-throughput,
comprehensive approach to molecular target validation. These efforts include:
(i) comparative profiling of the pattern of disease gene expression in diseased
and normal tissues, (ii) identification and elucidation of additional molecules
that participate in the same biochemical pathway(s) as the disease genes, (iii)
development of cellular and/or animal models of disease, and (iv) development of
cellular and/or biochemical assays for screening drug candidates.
Tissue Profiling. Millennium has access to well-characterized tissue banks
containing normal and diseased tissues for comparative profiling of a disease
gene's expression pattern. Such information is of value because selective
expression of the disease gene in only the diseased tissue suggests that a
therapeutic product that targets the gene is less likely to be active in normal
tissue and therefore less likely to have deleterious side effects. The Company
has used tissue profiling to characterize disease genes identified in its
obesity, atherosclerosis, asthma and oncology research programs.
Biochemical Pathways. The experience of the pharmaceutical industry indicates
that some classes of molecular targets are more likely than others to yield
commercializable therapeutic products. Capitalizing on this experience,
Millennium employs a variety of automated approaches to search the biochemical
pathways of the disease genes it discovers in order to find the most useful
molecular targets. In its obesity research program, the Company is currently
evaluating molecular targets found through its analysis of the biochemical
pathway in which the tub gene functions.
Cellular and Animal Models. Millennium elucidates the physiological function
of the disease genes it discovers by manipulating their normal expression levels
in cells and animals. This information can be critical to assessing the
desirability of a gene as a site for pharmaceutical intervention. The Company
has developed various viral-based systems to deliver genes to cells and tissues
and also creates animal models with new genes (transgenic mice) or with altered
genes (knock-out mice). Millennium is currently using these technologies to
confirm the function of disease genes in its obesity, atherosclerosis, asthma
and oncology research programs.
Bioassays. Millennium's bioassay group synthesizes the results of the
foregoing bench biology efforts to create bioassays that can be employed in
high-throughput drug screening, whether by the Company or its strategic
partners. This represents the culmination of Millennium's distinctive commitment
to rapidly convert the Company's gene discoveries into useful targets for drug
discovery and pharmaceutical intervention.
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Computational Biology
Computational biology comprises a set of sophisticated computer-assisted
techniques and algorithms for inferring information about the functional,
biological role of a protein directly from the DNA sequence of the gene that
encodes it. This ability to bypass and/or direct many of the more time-consuming
and arduous steps involved in bench biology can facilitate target validation,
thereby accelerating drug development. For example, when Millennium identified
the ob-r gene, computational biology techniques rapidly predicted from the
gene's DNA sequence that the leptin receptor encoded by the ob-r gene most
likely fell within a well-known class of cytokine receptors. This knowledge
immediately directed the Company's bench biology group to commence
investigations of specific classes of interacting molecules as potential targets
for drug screening and to utilize, from among the Company's large panel of
biochemical assays, test systems specifically appropriate for cytokine
receptors. See "-- Millennium's Disease Research Programs --Obesity".
Millennium believes that its computational biology capabilities will be
enhanced by the significant growth in publicly accessible DNA sequence databases
resulting from governmental, philanthropic and privately funded efforts
worldwide, such as the Human Genome Project. Millennium has developed
proprietary software to enable its computational biology research group to
access and rapidly synthesize information from these public databases.
Drug Lead Generation
Through its acquisition of ChemGenics Pharmaceuticals Inc. ("ChemGenics") on
February 10, 1997, the Company acquired significant additional capabilities to
move beyond the identification of targets to the screening, identification and
qualification of small molecule drug leads. See "-- ChemGenics Pharmaceuticals
Inc."
Bioinformatics and Automation
The Company's genomics approach to molecular genetics requires a broad
commitment to developing and implementing advanced bioinformatics and
high-throughput automated robotic systems. Millennium's proprietary
bioinformatics systems, including software, such as Sequence Explorer, and
relational databases, are used to store and analyze the large quantities of
information generated in the Company's gene identification and target validation
programs. In addition, the Company has developed software to enable efficient
access to public biomedical databases and to integrate information contained in
these databases with information in Millennium's proprietary databases.
Millennium has developed proprietary automated platforms to support its gene
identification and target validation technologies. The generation of raw data
from genotyping, DNA sequencing, RADE, expression cloning and other gene
identification technologies is achieved on fully- or semi-automated robotic
platforms. Automated methodologies are further applied to bench biology
techniques essential to target validation.
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In addition, Millennium has developed software that manages sample transfer
between research project teams and the Company's automated DNA sequencing
platform. This software integrates information with the samples and provides
instructions to both humans and robots. All DNA sequencing information is
transferred to a relational database that organizes the samples and the results
of DNA sequencing. Additional software uses feature-recognition analysis to
integrate public sequence and biomedical databases with the Company's results
and analyses. Millennium's automation and bioinformatics capabilities played a
key role in its discovery of the tub gene, identification of the ob-r gene, and
other targets which the Company has delivered to its pharmaceutical partners.
Millennium's Disease Research Programs
Overview
The Company's technology platform is broadly applicable to a wide range of
diseases. The Company has chosen to focus initially on large medical markets
underserved by current therapeutic products. In order to enhance its
pharmaceutical product commercialization efforts, the Company has entered into
strategic alliances with multinational pharmaceutical partners that have
substantial research and development resources, and clinical, regulatory and
marketing expertise. The Company's current major research programs include the
following disease areas: obesity, type II diabetes, atherosclerosis,
inflammatory respiratory diseases, oncology and diseases of the central nervous
system.
Millennium sponsors a number of research collaborations with leading academic
and medical institutions relating to specific disease areas in order to augment
the Company's internal research capabilities. Generally, in each collaboration
Millennium obtains an option to negotiate an exclusive, worldwide license to the
collaborator's rights in any invention resulting from the collaborative research
program. Inventions made solely by Millennium scientists in these collaborations
are owned exclusively by Millennium.
Obesity
In the field of obesity, the Company is conducting gene identification and
target validation activities and has entered into a strategic alliance with
Roche. See "-- Strategic Alliances -- Hoffman-La Roche Inc."
Approximately 34 million individuals in the United States may be classified
as obese (greater than 20% above ideal body weight). This serious medical
condition has limited therapeutic alternatives and can increase the risk of
additional serious medical conditions such as coronary heart disease, certain
cancers and type II diabetes. Although obesity is a multifactorial disease,
studies of identical twins suggest that genetic factors are a principal cause of
the disease.
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The Company is currently undertaking several projects in the field of
obesity. Millennium has identified three disease genes that have been shown to
cause obesity in animal models. Millennium and Roche are currently conducting
target identification, validation and development programs with respect to these
and other genes. The Company has also identified the gene encoding ob-r, the
receptor for the hormone leptin, which is a fundamental regulator of weight and
appetite. The Company has cloned another obesity gene, UCPH, that regulates
metabolism and energy expenditure. In addition, Millennium has shown that MC4, a
G-protein coupled receptor, is an important regulator of body weight. Biological
information about the site of action of these key obesity genes in human tissues
has been generated by Roche and Millennium. In addition, Millennium is
developing novel cellular bioassays for further analysis of the biochemical
mechanisms of action of these genes.
Millennium is conducting human genetics studies to map and identify genes
that underlie susceptibility to obesity. The Company entered into a
collaboration with the Medical College of Wisconsin Research Foundation ("MCW")
in 1994 and has access through MCW to a database with records covering over
65,000 overweight women. Millennium and MCW jointly are collecting DNA samples
and clinical information from over 400 families with a high incidence of obesity
identified through the use of this database. Millennium entered into a
collaboration with the Harvard School of Public Health in 1996 to obtain access
to DNA samples from a study of thousands of obese individuals in the rural Anhui
province of China. This collaboration is directed at identifying obese families
in this large, homogeneous population. Extreme obesity in China is rare and the
Company believes that its access to these samples will facilitate the
identification of the genetic components underlying obesity.
In July 1996, the Company and Roche announced the acceptance into Roche's
small molecule screening program of a target identified by Millennium, an
achievement for which Millennium received a milestone fee pursuant to its
strategic alliance agreement with Roche.
Type II Diabetes
In its type II diabetes research program, the Company is principally
employing a gene identification strategy based on human genetics and has entered
into a strategic alliance with Roche. See "-- Strategic Alliances --Hoffmann-La
Roche Inc".
Approximately 17 million persons in the United States are affected by type II
diabetes, also known as adult-onset or non-insulin dependent diabetes mellitus
(NIDDM). This condition is a complex disorder involving a combination of
factors, including the inability of certain tissues to respond to insulin and an
inability of the pancreas to produce appropriate levels of insulin. Millennium's
human genetics studies in type II diabetes are designed to identify disease
genes involved in both of
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these disease processes. Studies of identical twins indicate type II diabetes is
primarily due to genetic factors.
In September 1996, an international consortium of scientists including
scientists from the Company published results from the Company's type II
diabetes program in the journal Nature Genetics. This paper announced the
mapping of a gene, NIDDM2, which may be associated with the development of a
form of adult onset diabetes linked to low insulin secretion.
In November 1996, the Company and Roche announced the achievement of a
research milestone associated with the identification of a gene implicated in
the development of type II diabetes. The Company used various family collections
from diverse population sources to generate samples for this program. The
Company then used positional cloning techniques to detect the presence of a
mutation of the gene leading to an association of this gene with the development
of type II diabetes.
Cardiovascular Disease
The Company's research program in cardiovascular disease is part of a
strategic alliance with Eli Lilly that includes projects aimed at gene discovery
both in atherosclerosis as well as in congestive heart failure. See "--Strategic
Alliances -- Eli Lilly and Company."
Heart disease has a prevalence in the United States of approximately 18
million individuals and its major cause is atherosclerosis. The risk factors for
atherosclerosis include gender, elevated cholesterol levels, smoking, high blood
pressure, diabetes mellitus, and severe obesity. Studies indicate that a
person's genetic make-up, as indicated by a family history of heart disease, is
the single most significant risk factor for early onset of the disease. However,
the genetic basis of atherosclerosis remains largely unclear.
The Company's program in atherosclerosis utilizes three different approaches
to novel gene discovery in atherosclerotic vascular disease: human genetics,
mouse genetics and cDNA technologies to identify genes whose patterns of
expression correlate with disease processes. Congestive heart failure, an
important consequence of atherosclerotic cardiovascular disease, is a
challenging area for gene discovery. The Company's program in congestive heart
failure will be initiated in the first half of 1997 and will utilize proprietary
cDNA technologies at the Company to identify novel genes in critical pathways
involved in the transition from healthy to failing myocardium.
The human genetics program in atherosclerosis is composed of two projects:
GeneQuest, a collaboration with the Cleveland Clinic to identify genes involved
in early onset vascular disease through analysis of DNA samples from individuals
below age 45 who have established atherosclerosis. Five additional research
centers across the U.S. are now part of the collaboration. The Pediatric Lipid
Study, a
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collaboration with investigators at Children's Hospital Medical Center in
Boston, was initiated to identify single genes responsible for inherited lipid
defects in children that promote atherosclerosis in adulthood.
The mouse genetics approach focuses on the apolipoprotein E knockout mouse
model of atherosclerosis which develops lesions of atherosclerosis which are
similar to human lesions. The goal of this project is to identify genes that
modify or protect against developing atherosclerosis.
In the cDNA discovery area, the Company has used transcriptional profiling
approaches to identify novel targets whose expression correlates with processes
involved in disease pathology. One approach, in collaboration with investigators
at Brigham and Women's Hospital in Boston, has identified a number of novel
genes induced in human endothelial cells treated with biomechanical forces that
are thought to be atheroprotective. Novel animal models using these genes have
been developed to examine their role in the initiation and progression of
atherosclerosis.
In September 1996, the Company announced the publication in The Proceedings
of the National Academy of Sciences of a paper describing the discovery of genes
that appear to regulate mechanisms that protect blood vessels from the formation
of atherosclerotic lesions.
As part of the gene discovery program in atherosclerosis, the Company
isolated a novel receptor involved in lipid metabolism. In December 1996, the
Company announced that this target was ready to move into high throughput
screening for drug candidates at Lilly. This marked the achievement of a
milestone in the Company's disease program with Lilly pursuant to the strategic
alliance agreement with Lilly.
At least 5 million Americans suffer from heart failure and an additional
500,000 cases are diagnosed annually. The mortality rate from heart disease is
extremely high with few effective therapies available. In the first half of
1997, the Company intends to launch a comprehensive gene discovery effort in
congestive heart failure employing multiple cDNA technologies and a variety of
cell based and animal models. The goal of the program will be to identify novel
genes, whose patterns of expression change dramatically between healthy and
diseased conditions in cellular models and animal models of heart muscle cell
failure, which may represent potential drug targets.
Inflammatory Respiratory Diseases
In the field of inflammatory respiratory diseases, the Company is conducting
gene identification and target validation activities and has entered into a
strategic alliance with Astra. See "-- Strategic Alliances -- Astra AB".
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Asthma affects approximately 12 million individuals in the United States.
Current treatments for moderate to severe asthma, while effective in managing
symptoms of the disease, are known to have significant side effects over the
long term. Although asthma has both genetic and environmental factors, a number
of studies have indicated that asthma is substantially attributable to a genetic
component.
The Company currently is undertaking several projects in the field of
inflammatory respiratory diseases, through human and mouse genetics and through
cDNA approaches. Millennium's cDNA disease gene identification program
extensively employs RADE and expression cloning to identify critical regulatory
genes that control harmful immune responses characteristic of inflammatory
respiratory diseases, including asthma.
Millennium is conducting two human genetics studies to map and identify human
genes that underlie susceptibility to asthma. In the first, a collaboration with
the Channing Laboratory (a joint laboratory of Harvard Medical School and the
Brigham and Women's Hospital), several thousand DNA samples from asthmatic
Chinese families have been collected through Channing's relationship with Anhui
Medical University, China. These DNA samples are being genotyped. The second
study is being conducted in collaboration with the Massachusetts General
Hospital. In this study, DNA samples and clinical information are being
collected from families with severe pediatric asthma in Northern New England.
Millennium is using mouse genetics to identify key genes that control
immunological conditions important in inflammatory respiratory diseases,
including asthma. Millennium has entered into a Cooperative Research and
Development Agreement with the National Institute of Allergy and Infectious
Diseases of the National Institutes of Health to analyze the genetics of a
strain of mice that exhibits a defect in the pathway that generates normal,
mature T-cells, an important component of the body's immune system. Genomic
linkage regions have been identified and are being isolated. Several animal
disease models expressing physiologic and inflammatory disease markers have been
established for use in both gene discovery and gene validation.
Oncology
In the field of oncology, the Company is conducting gene identification
activities related to a variety of cancers, including prostate, breast and
colorectal cancer, and for melanoma, and has entered into a strategic alliance
with Lilly with respect to select areas within oncology. See "-- Strategic
Alliances -- Eli Lilly and Company".
Approximately one million new cancer cases are reported in the United States
annually. Cancers of all types result in approximately 500,000 deaths in the
United States each year, making cancer the second leading cause of death in the
United States. In addition to surgery and radiotherapy, there are nearly 50
FDA-approved
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drug therapies for the treatment of a variety of cancers, although
many of these therapies have severe adverse side effects.
The Company is currently undertaking several projects focusing on the areas
of hormone refractory prostate cancer, multi-drug resistant tumors, melanomas
and breast cancer using both human genetics and cDNA approaches. Millennium is
searching for genetic changes that underlie the progression of human prostate
cancer through the use of positional cloning techniques. Further, Millennium is
employing its RADE technology and other transcriptional profiling technologies
to identify genes that function in the progression of a variety of different
types of cancer. Millennium has entered into a collaboration with the University
of Michigan to gain access to tumor samples. The Company has identified target
candidates in multi-drug resistant tumors. Millennium has also identified genes
implicated in the initiation and progression of melanomas. The Company has
commenced target validation studies on these genes, including gene transfer into
animal models of cancer progression.
Diseases of the Central Nervous System
In the field of diseases of the central nervous system, Millennium is
principally employing human genetics to identify the genes responsible for
affective disorders and schizophrenia and has entered into a strategic alliance
with AHP. In addition, the Company is using cDNA approaches to identify genes
potentially implicated in the initiation and/or progression of generalized
depression, epilepsy and neurodegeneration. See "--Strategic Alliances--AHP".
Bipolar affective disorder, also known as manic depression, affects
approximately 4 million people in the United States, while the related disorder,
common depression, may affect up to 13 million persons. Genetic studies suggest
that the relative risk to siblings of individuals affected with bipolar
affective disorder is increased up to tenfold over siblings in the general
population. Schizophrenia is a debilitating disease of the central nervous
system, characterized by severe cognitive impairment, which affects
approximately 2.5 million persons in the United States.
In the area of bipolar affective disorder, Millennium has entered into a
collaboration with investigators from the University of California, San
Francisco, who have access to clinical samples from an isolated homogeneous
population of substantial utility for genetic analysis. Genetic linkages have
already been identified using DNA samples from this population. Millennium and
its collaborators have initiated positional cloning efforts to identify these
disease genes. Collection of DNA samples from affected individuals representing
diverse ethnic backgrounds is also underway in the wider United States
population. Upon identification of disease-causing genes in the isolated
population, this broader, more diverse collection will allow quantification of
the contribution of particular genes to the global diseased population.
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In the area of schizophrenia and schizoaffective disorders, Millennium has
entered into a collaboration with a consortium of academic clinicians based at
Harvard Medical School and Washington University. These institutions have access
to populations of schizophrenia families who have undergone extensive clinical
characterization. Significant numbers of DNA samples and clinical information
have already been collected. Millennium has initiated genotyping and,
simultaneously, the family collection is being expanded by the academic centers.
Other Programs
In addition to the foregoing disease research programs, Millennium has
recently commenced additional research efforts in the fields of osteoporosis and
autoimmune diseases.
Strategic Alliances
In order to accelerate its product development efforts, Millennium has
established strategic alliances with Roche in obesity and type II diabetes;
Lilly in cardiovascular disease and select areas within oncology; Astra in
inflammatory respiratory diseases and AHP in certain disorders of the central
nervous system. These alliances are designed to provide the Company with the
requisite capital and development and marketing capabilities to commercialize
the results of its discovery programs. Each provides significant up-front
payments, follow-on fees and research funding which will reduce the Company's
overall operating losses and need for additional equity capital. In each of its
strategic alliances, Millennium has agreed not to conduct certain research,
independently or with any commercial third party, that is in the same field as
that covered by the alliance agreement. The Company has retained
commercialization rights to certain therapeutic and diagnostic applications of
the discoveries resulting from these funded research programs. See "-- Retained
Commercialization Rights". The Company intends to pursue further strategic
alliances as appropriate.
Each of the agreements governing Millennium's strategic alliances is subject
to certain contingencies including, in certain instances, early termination
rights. Assuming each alliance research program continues for its full five-year
term and the Company achieves certain research objectives, the Company expects
to receive a total of approximately $260.0 million in up-front and follow-on
payments, equity contributions and research funding. Through December 31, 1996,
the Company had recognized $62.6 million under these alliances. In the event
that specified research, product development and associated regulatory
milestones are achieved, the Company's strategic partners will be obligated to
make additional milestone payments to the Company. Generally, each of these
agreements also entitles the Company to royalties and/or a share of the profits
on product sales, which are payable for the longer of the life of the applicable
patent or a period of time specified in each agreement.
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Hoffmann-La Roche Inc.
In March 1994, the Company and Hoffmann-La Roche Inc. (Nutley, New Jersey)
entered into a strategic alliance in the fields of obesity and type II diabetes.
Under the terms of a related stock purchase agreement, F. Hoffmann-La Roche Ltd.
(Basel, Switzerland), an affiliate of Roche, made a $6.0 million equity
investment in the Company. Roche has agreed to fund a five-year program of
obesity and type II diabetes research by the Company. Payments by Roche to the
Company in the form of up-front fees and research funding could total up to
$44.5 million if the research program continues for its full five-year term. In
the event that specified research, product development and associated regulatory
milestones are achieved, Roche will be obligated to make additional milestone
payments to the Company. In July 1995 and in January 1996, Roche made research
milestone payments to the Company in connection with the discovery of two novel
genes associated with obesity. Roche also will be obligated to pay to the
Company royalties and/or share profits on the sale of certain therapeutic and/or
diagnostic products that may result from the alliance.
The agreement provides Roche with exclusive worldwide royalty-bearing rights
to develop and commercialize small molecule therapeutics for obesity and type II
diabetes based on the Company's gene discoveries. Roche has an exclusive
royalty-bearing right to develop and commercialize therapeutic proteins,
antisense drugs and gene therapy for obesity and type II diabetes outside of
North America. Within North America, Millennium has retained the right to
develop and commercialize therapeutic proteins, antisense drugs and gene therapy
for obesity and type II diabetes, subject to Roche's right to co-promote such
products. In addition, the agreement provides Roche with a worldwide option to
develop and commercialize diagnostic products for obesity and/or type II
diabetes based on the Company's gene discoveries. Subject to the foregoing
rights, the agreement provides that each party will retain ownership of all
inventions (and any related patents) made solely by its employees during the
course of the arrangement.
The agreement with Roche is subject to termination by Roche at any time after
the completion of the five-year research program in March 1999 on six months'
notice, as well as upon three months' notice upon a sale of majority control of
the Company or the sale of all or substantially all of Millennium's assets.
Eli Lilly and Company
In October 1995, the Company and Eli Lilly and Company entered into a
strategic alliance in the field of atherosclerosis (the "Atherosclerosis
Agreement") and in March 1996 Millennium and Lilly entered into a strategic
alliance in select areas within oncology (the "Oncology Agreement"). Under the
terms of the Atherosclerosis Agreement, Lilly made an $8.0 million equity
investment in the Company. Lilly also agreed to fund five-year programs of
atherosclerosis and cancer research by the Company. Payments by Lilly to the
Company in the form of up-front fees and research funding could total up to
$61.0 million if both of the research
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programs continue for their full five-year terms. Lilly also may elect to extend
the funding of the Company's research in either or both of these fields to up to
eight years. In the event that specified research, product development and
associated regulatory milestones are achieved, Lilly will be obligated to make
additional milestone payments to the Company. Lilly also will be obligated to
pay royalties to the Company on the sale of certain therapeutic products that
may result from the alliance.
Each of the agreements provides Lilly with exclusive worldwide
royalty-bearing rights to develop and commercialize small molecule drugs and
therapeutic proteins and co-exclusive rights to develop and commercialize gene
therapy products for atherosclerosis or cancer based on the Company's gene
discoveries. Millennium has retained exclusive rights to all antisense drug
applications arising from the strategic alliance research programs. Lilly has
granted the Company non-exclusive rights to use select combinatorial chemistry
libraries and high-throughput screening technologies controlled by Lilly to
conduct a limited number of screens with the Company's targets to identify
product candidates for medical indications other than specific medical
indications designated by Lilly as being of strategic importance. The Company
has exclusive worldwide rights to develop and commercialize such product
candidates. The Company will be obligated to pay Lilly royalties on the sale of
products identified by the Company using Lilly's combinatorial chemistry
libraries. The Company also has granted Lilly a non-exclusive right to use
certain genomics technologies. Subject to the foregoing rights, the agreements
provide that each party will retain ownership of all inventions (and any related
patents) made solely by its employees during the course of the arrangement.
Lilly has the right at any time after October 1998 to terminate the
Atherosclerosis Agreement and at any time after April 1999 to terminate the
Oncology Agreement, in each case on 90 days' notice and with continuation of
research funding for one year provided that Millennium has met specified
performance criteria. Lilly has the right to terminate its research funding
obligations under each agreement under various circumstances, including the
failure by Millennium to achieve specified research objectives, the termination
of the employment of two or more specified employees of the Company without
replacement reasonably acceptable to Lilly and the acquisition of majority
control of the Company by a competitor of Lilly.
Astra AB
In December 1995, the Company and Astra AB entered into a strategic alliance
in the field of inflammatory respiratory diseases. Astra has agreed to fund a
five-year program of inflammatory respiratory diseases research by the Company.
Payments by Astra to the Company for up-front, follow-on fees and research
funding could total up to approximately $53.3 million if the research program
continues for its full five-year term and the Company achieves specified
research objectives. Astra has
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the right to terminate the funded research program in early 1999 in the event
that Millennium fails to achieve these objectives. Astra may elect to extend its
funding of the Company's research in this field to seven years. In the event
that additional specified research, product development and regulatory
milestones are achieved, Astra is obligated to make additional milestone
payments to the Company. Astra also will be obligated to pay to the Company
royalties based on the sale of certain therapeutic products that may result from
the alliance.
The agreement provides Astra with exclusive worldwide royalty-bearing rights
to develop and commercialize small molecule drugs in the inflammatory
respiratory diseases field based on the Company's gene discoveries. Millennium
and Astra have agreed to explore opportunities to jointly develop and
commercialize therapeutic proteins in the field of inflammatory respiratory
diseases. In the absence of an agreement on joint development, Astra has
exclusive worldwide rights for therapeutic proteins in the field of inflammatory
respiratory diseases delivered by oral inhalation or nasal administration.
Millennium and Astra also have agreed to explore opportunities to jointly
develop and commercialize antisense drugs. In the absence of an agreement on
joint development, Astra has exclusive worldwide rights in the field of
inflammatory respiratory diseases for antisense drugs delivered by oral
inhalation or nasal administration, as well as co-exclusive worldwide rights in
such field for antisense drugs not delivered by oral inhalation or nasal
administration. The Company also has granted Astra a non-exclusive right to use
certain genomics technologies. Millennium has retained exclusive rights to all
gene therapy applications arising from the strategic alliance research program.
Subject to the foregoing rights, the agreement provides that each party will
retain ownership of all inventions (and any related patents) made solely by its
employees during the course of the arrangement.
American Home Products
In July 1996, the Company entered into a strategic alliance with American
Home Products Corporation to discover and develop targets and assays to identify
small molecule drugs and vaccines for treatment and prevention of disorders of
the central nervous system. Payments by AHP to the Company for up-front fees and
research funding could total up to approximately $90.0 million if the research
program continues for its full seven year period and the Company achieves
specified research objectives. In the event that specified research, product
development and associated regulatory milestones are achieved, AHP will be
obligated to make milestone payments.
The strategic alliance with AHP consists of three major components, central
nervous system ("CNS") disease drug discovery research, bioinformatics
technology and support, and technology exchange.
The Company will initially focus the CNS drug discovery research program on
psychiatric disorders including anxiety, depression and schizophrenia with
future
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programs envisioned in additional CNS disorders of high unmet medical
need, such as Alzheimer's disease, stroke, substance abuse and epilepsy. The
Wyeth-Ayerst division of AHP will be responsible for the worldwide development
and marketing of small molecule drugs and vaccines arising from the
collaboration for the prevention and treatment of CNS diseases and disorders.
The Company will retain primary responsibilities for the worldwide development
and marketing of antisense drugs and prognostic and diagnostic products and
services arising from the collaboration. The companies will explore further
opportunities for the joint development of non-vaccine therapeutic proteins and
gene therapy products identified in the research program.
Through the bioinformatics technology and support program, the Company will
transfer certain proprietary data processing and analysis tools to AHP. These
tools, once installed and accepted by AHP, will be supported on an ongoing basis
by the Company. Additional enhancements to the software platforms will be made
by the Company as appropriate.
Through the technology exchange program, the Company will provide its
proprietary RADE technology and additional transcriptional profiling
technologies to AHP in exchange for access to small molecule compound libraries
owned by AHP.
Retained Commercialization Rights
The Company has retained a broad range of rights to commercialize certain
therapeutic and diagnostic applications of the discoveries resulting from the
research programs funded by its strategic partners.
The Company's retained commercialization rights fall broadly into three
categories -- diagnostics, small molecule drugs and biologics (therapeutic
proteins, antibody therapeutics, gene therapy and antisense drugs). The Company
currently is at an early stage of formulating strategies and assembling the
resources and capabilities necessary to commercialize these rights, and is
assessing its alternatives including, among others, joint ventures, acquisitions
and strategic collaborations. The Company intends to seek to retain similar
rights in any future strategic alliances.
Diagnostics
Generally, diagnostic products and services have shorter product development
and regulatory approval time than therapeutic products. Therefore, Millennium
believes that the first commercial opportunity to arise from its disease
research programs is likely to be realized in the area of diagnostics. The
current major uses of genetic diagnostics are for carrier testing (in
prospective parents) and prenatal screening (for severe genetic defects in
fetuses). The Company believes that three additional diagnostic applications,
predispositional testing, differential diagnosis and pharmacogenetics, may
represent significant commercial opportunities.
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Predispositional testing is expected to detect genetic mutations that
predispose an individual to disease. In conjunction with preventive medicines,
early intervention therapeutics and lifestyle modifications, predispositional
testing may significantly decrease disease occurrence, disease severity and the
cost of disease treatment and management. Differential diagnosis will enable
differentiation among diseases which share clinical characteristics but differ
at the level of underlying biological mechanism. Successful implementation of
differential diagnostic testing will guide the prescription of medicines
appropriate to the underlying cause of clinically indistinguishable conditions.
The Company believes that differential diagnosis also may be used for patient
selection in connection with clinical trials of new candidate therapeutic
agents. Pharmacogenetics assays will be used to identify the genetic basis of an
individual's response to specific drugs. The Company believes that
pharmacogenetic testing may prove especially valuable in connection with the
registration, administration and modification of therapies of known efficacy
which have toxic side effects in a small group of patients.
Millennium has retained the right to develop and market all diagnostic
products and services resulting from the research programs conducted under the
Lilly, Astra and AHP strategic alliances.
In connection with its genomics research efforts, the Company has assembled
significant resources and expertise in several technological areas relevant to
diagnostic medicine, such as RADE, transcriptional profiling, gene mutation
detection and analysis, tissue profiling, automation and bioinformatics. The
Company is exploring the potential for strategic collaborations with a range of
industry participants, including diagnostic companies, clinical and reference
laboratories, clinical research organizations, technology developers, health
management organizations and pharmacy benefit managers.
Small Molecule Drugs
Small molecule drugs are the mainstay of the traditional pharmaceutical
industry. Characteristically amenable to formulation for oral administration,
they are particularly appropriate for the treatment of chronic diseases that
often require the daily administration of medications over many years.
Millennium believes that small molecule drugs will continue to be an important
therapeutic modality and business opportunity.
In each of its strategic alliances, Millennium has retained the co-exclusive
right to use the molecular targets that result from the funded research programs
to identify and develop small molecule drugs to treat medical indications that
fall outside of the field(s) covered by the alliance from which the target
originated.
The Company has obtained certain rights to use high-throughput drug screening
and combinational chemistry library technologies from Lilly. See "-- Strategic
Alliances -- Eli Lilly and Company".
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The Company has retained certain rights to screen against small molecule
compound libraries owned by AHP as part of its technology exchange program with
AHP. See " -- Strategic Alliances-American Home Products."
In part to capitalize on its retained rights in the area of small molecule
drugs, in early 1997 the Company acquired ChemGenics Pharmaceuticals Inc. See
"-- ChemGenics Pharmaceuticals Inc."
Biologics (Therapeutic Proteins, Therapeutic Antibodies, Gene Therapy and
Antisense Drugs)
The biotechnology industry has been built largely on the successful
development and commercialization of therapeutic proteins and therapeutic
antibodies. More recently, the industry has focused resources on the development
of gene therapy (the direct delivery of genes rather than the proteins they
encode) and antisense drugs (nucleic acid-based drugs that interfere with the
ability of genes to function properly). These biologics may offer significant
commercial opportunities particularly in "niche" medical indications.
In its strategic alliances, the Company has retained specific exclusive and
co-exclusive rights to develop and market therapeutic proteins and antibodies,
gene therapy and antisense drugs. See "-- Strategic Alliances". The Company also
has an internal program to identify genes encoding potential therapeutic
proteins.
ChemGenics Pharmaceuticals Inc.
On February 10, 1997, Millennium acquired ChemGenics Pharmaceuticals Inc.
("ChemGenics"), for approximately 4,800,000 shares of Millennium's Common Stock.
In addition, a principal shareholder of ChemGenics received $4.0 million in
settlement of a promissory note and the repurchase of warrants previously issued
by ChemGenics. ChemGenics, incorporated in 1992 and located in Cambridge,
Massachusetts, is a development stage company engaged in antifungal and
antibacterial drug discovery.
Reasons for Acquisition.
The Company acquired ChemGenics in order to obtain capabilities that are
complementary or synergistic to those already existing at the Company and to
broaden the commercial and scientific scope of the Company. Key factors in the
Company's decision to acquire ChemGenics included the following:
Drug Lead Discovery. ChemGenics brings to the Company small molecule drug
candidate screening capabilities that the Company expects will enable it to
forward integrate into the development of small molecule drug leads in all of
the areas where the Company has retained rights.
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Proprietary Drug Source. ChemGenics has a proprietary natural products drug
source as well as access to compound libraries through its corporate alliances.
These resources complement the combinatorial and pharmaceutical compound
libraries the Company has accessed through its collaborations with Lilly and
AHP.
Broadened Scope of Research Programs. The acquisition of ChemGenics broadens
the scope of the Company's therapeutic research to include anti-infectives,
including antibacterial and antifungal discovery programs.
Gene and Drug Target Discovery. ChemGenics' microbial genetics technologies
have applications in gene and target discovery across all disease states. These
applications complement the Company's expertise in human and mouse genetics and
the Company expects that these applications will enhance the Company's ability
to identify genes, elucidate valuable drug targets and configure drug screening
assays.
Drug Discovery Technology Relationships. In 1996, ChemGenics entered into
agreements with PerSeptive Biosystems, Inc. ("PerSeptive") through which it
acquired assets and a royalty-free, worldwide licenses to present and future
technology of PerSeptive for application in drug discovery. The Company plans to
utilize and further develop the technologies obtained through the agreement with
PerSeptive both separately and in conjunction with complementary technologies
obtained by the Company in strategic alliances through relationships with other
companies.
Expanded Strategic Collaborations. In January 1995, ChemGenics entered into a
strategic collaboration with Pfizer Inc. ("Pfizer") for the discovery of novel
drug leads for treating human fungal infections, which could provide over $50
million in equity, research funding and development milestone payments, plus
potential royalties. In December 1996, ChemGenics entered into a strategic
collaboration with Wyeth-Ayerst Laboratories, the pharmaceutical division of
American Home Products Corporation ("Wyeth-Ayerst") for the discovery of novel
drug leads for treating human bacterial infections, which could provide up to
$70 million in equity, research funding and development milestone payments, plus
potential royalties.
Retained Commercial Rights and Other Research Programs. In it agreements with
its various corporate partners, ChemGenics has retained some specific product
development and commercialization rights. Within the anti-microbial agreement
with AHP, ChemGenics has retained rights to develop and commercialize products
for the prevention and treatment of infection by the organism Helicobacter
pylori. In addition, in both the Pfizer and Wyeth agreements ChemGenics has
retained significant rights to develop plant agriculture products, diagnostic
and prognostic products and to develop and commercialize further applications of
all its proprietary technologies.
Overview of ChemGenics
ChemGenics is a drug discovery company that applies its two complementary
technology platforms, Drug Discovery Genomics and Advanced Drug Selection
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Technologies, to key rate limiting steps in identifying new drugs. These rate
limiting steps are the translation of genomic information into novel drug
targets and the selection and identification from sources of chemical diversity
of drug leads that interact with drug targets. ChemGenics' Drug Discovery
Genomics platform includes proprietary gene technologies and expertise in
microbial model systems used to determine the function of genes and to
prioritize drug targets. ChemGenics' Advanced Drug Selection Technologies
combine the steps of drug screening, chemical selection and structural analysis
into an integrated process designed to identify drug leads faster than
conventional methods. These technology platforms are used with ChemGenics'
growing drug source of 50,000 chemical-producing fungi collected worldwide.
Current rate limiting steps in drug discovery provide opportunities for
innovative technologies that can increase the speed, efficiency and productivity
of this process. A significant rate limiting step is the translation of genomic
information into novel drug targets. A second significant rate limiting step is
separation and identification of drug leads from large sources of chemical
diversity. Advances in combinatorial chemistry and other drug sourcing
technologies have expanded the size and diversity of chemical libraries, but
separation and identification of individual drug leads remain time consuming and
expensive. ChemGenics has designed its Drug Discovery Genomics and Advanced Drug
Selection Technologies to integrate the process of drug target and drug lead
discovery to enhance speed, efficiency and productivity.
ChemGenics' Drug Discovery Genomics platform encompasses proprietary gene
technologies and expertise in microbial model systems and is applied to gene
discovery, determination of gene function, selection of drug targets,
configuration of drug screens and genetic manipulation of fungi to produce its
novel drug source. ChemGenics believes that model organisms, such as its
microbial systems, offer solutions to translate efficiently genes and genomic
information into novel drug targets. ChemGenics seeks to translate genomic
information into useful drug targets by identifying essential genes for cell
function, using fungal homologs of human disease genes and measuring expression
levels of genes in model organisms to determine the function of unknown
microbial and human genes. ChemGenics is applying its Drug Discovery Genomics
platform to the discovery of both anti-infective drugs and drugs targeting other
human diseases.
ChemGenics' Advanced Drug Selection Technologies are designed to select drug
leads rapidly and cost effectively from large, complex chemical mixtures by
combining drug screening and chemical and structural analysis into a single
flow-through process. These technologies are supported and enhanced by
miniaturization, high throughput screening, automation and informatics.
ChemGenics has
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demonstrated that its Advanced Drug Selection Technologies are highly sensitive
and capable of identifying drug leads that cannot readily be found using
conventional methods and permit the direct quantification and prioritization of
drug leads. ChemGenics believes that the technology it acquired form PerSeptive
has enhanced its Advanced Drug Selection Technologies platform.
ChemGenics has assembled a large, diverse and productive collection of over
50,000 fungi as a drug source. ChemGenics has developed proprietary
BioCombinatorial methods of genetically manipulating these fungi to enhance
their chemical diversity. ChemGenics has also developed a proprietary,
informatics-based index to its fungal chemical source, referred to as QuickScan,
that has been used to increase the speed of identifying natural product drug
leads by five- to ten-fold compared to previous methods used by ChemGenics.
Research and Development
The Company's total research and development expenses were $10,990,000,
$17,838,000 and $34,803,000 for 1994, 1995 and 1996, respectively. Collaborative
research and development revenues totalled $7,963,000, $22,880,000, $31,764,000
in 1994, 1995 and 1996, respectively.
Patents and Proprietary Rights
As of March 1, 1997, Millennium and ChemGenics had more than 100 pending U.S.
and international patent applications and two issued U.S. patents. The Company
seeks United States and international patent protection for the drug leads and
genes it discovers, as well as therapeutic and diagnostic products and
processes, drug screening methodologies, transgenic animals and other inventions
based on such drug leads or genes. The Company's commercial success will depend
in part on obtaining such patent protection. The Company also intends to seek
patent protection or rely upon trade secret rights to protect certain other
technologies which may be used to discover and characterize drug leads, genes
and proteins and which may be used to develop novel therapeutic and diagnostic
products processes.
The patent positions of pharmaceutical, biopharmaceutical and biotechnology
companies, including Millennium, are generally uncertain and involve complex
legal and factual questions. There can be no assurance that any of the Company's
pending patent applications will result in issued patents, that the Company will
develop additional proprietary technologies that are patentable, that any
patents issued to the Company or its strategic partners will provide a basis for
commercially viable products or will provide the Company with any competitive
advantages or will not be challenged by third parties, or that the patents of
others will not have an adverse effect on the ability of the Company to do
business. In addition, patent law relating to the scope of claims in the
technology fields in which the Company operates is still evolving. The degree of
future protection for the Company's proprietary rights, therefore, is uncertain.
Furthermore, there can be no assurance that others will not
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independently develop similar or alternative technologies, duplicate any of the
Company's technologies, or, if patents are issued to the Company, design around
the patented technologies developed by the Company. In addition, the Company
could incur substantial costs in litigation if it is required to defend itself
in patent suits brought by third parties or if it initiates such suits.
The Company has applied for patent protection for novel genes, partial gene
sequences ("ESTs") of novel genes and novel uses for known genes identified
through its research programs. There is substantial uncertainty regarding the
patentability of ESTs or full-length genes absent data demonstrating functional
relevance. Based on recent technological advances in gene sequencing technology,
a number of groups other than the Company are attempting to rapidly identify
ESTs and full-length genes, whose functions have not been characterized.
Washington University, for example, is currently identifying ESTs through
partial sequencing pursuant to funding provided by Merck & Co., Inc., and
depositing the ESTs identified in a public database. The public availability of
EST information prior to the time the Company applies for patent protection on a
corresponding full-length gene could adversely affect the Company's ability to
obtain patent protection with respect to such gene. The Company routinely
conducts searches of publicly available databases to determine whether other
parties have previously cloned ESTs corresponding to the various ESTs and
full-length genes discovered by the Company. To the extent any patents issue to
other parties on such partial or full-length genes, the risk increases that the
potential products and processes of the Company or its strategic partners may
give rise to claims of patent infringement.
Others may have filed and in the future are likely to file patent
applications covering genes or gene products that are similar or identical to
those of the Company. No assurance can be given that any such patent application
will not have priority over patent applications filed by the Company. Any legal
action against the Company or its strategic partners claiming damages and
seeking to enjoin commercial activities relating to the affected products and
processes could, in addition to subjecting the Company to potential liability
for damages, require the Company or its strategic partner to obtain a license in
order to continue to manufacture or market the affected products and processes.
There can be no assurance that the Company or its strategic partners would
prevail in any such action or that any license required under any such patent
would be made available on commercially acceptable terms, if at all. The Company
believes that there may be significant litigation in the industry regarding
patent and other intellectual property rights. If the Company becomes involved
in such litigation, it could consume a substantial portion of the Company's
managerial and financial resources.
There is substantial uncertainty concerning whether human clinical data will
be required for issuance of patents for human therapeutics. If such data is
required, the Company's ability to obtain patent protection could be delayed or
otherwise adversely affected. Although the United States Patent and Trademark
Office ("USPTO") issued new utility guidelines in July 1995 that address the
requirements
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<PAGE> 29
for demonstrating utility for biotechnology inventions, particularly for
inventions relating to human therapeutics, there can be no assurance that USPTO
examiners will follow such guidelines or that the USPTO's position will not
change with respect to what is required to establish utility for gene sequences
and products and methods based on such sequences.
Prior to the time that the Company filed its patent application covering
ob-r, a third party, Progenitor Inc. ("Progenitor"), filed a patent application
disclosing DNA sequences that encode shorter forms of leptin receptors and
describing a potential role for such receptors in cell proliferative disorders
such as cancers and leukemias. Although the Company believes that the patent
application filed by Progenitor does not describe the Company's ob-r, or the
role of any receptor in body weight regulation or obesity control, there can be
no assurance that such patent application, or additional patent applications if
filed by others, will not result in issued patents covering ob-r or specific
fragments of the ob-r gene.
The Company relies upon trade secret protection for its confidential and
proprietary information. The Company believes that it has developed proprietary
technology for use in gene discovery, including proprietary genetic marker sets,
proprietary software (including proprietary software for DNA sequence analysis
and laboratory automation) and an integrated bioinformatics system. The Company
has not sought patent protection for these technologies. In addition, the
Company has developed a database of proprietary gene sequences which it updates
on an ongoing basis. The Company has taken security measures to protect its data
and continues to explore ways to further enhance the security for its data.
There can be no assurance, however, that such measures will provide adequate
protection for the Company's trade secrets or other proprietary information.
While the Company requires employees, academic collaborators and consultants to
enter into confidentiality agreements, there can be no assurance that
proprietary information will not be disclosed, that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its trade secrets.
The Company's academic collaborators have certain rights to publish data and
information in which the Company has rights. While the Company believes that the
limitations on publication of data developed by its collaborators pursuant to
its collaboration agreements will be sufficient to permit the Company to apply
for patent protection on genes in which it is interested in pursuing further
research, there is considerable pressure on academic institutions to publish
discoveries in the genetics and genomics fields. There can be no assurance that
such publication would not affect the Company's ability to obtain patent
protection for some genes in which it may have an interest.
The Company is a party to various license agreements which give it rights to
use certain technologies in its research and development processes. There can be
no
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<PAGE> 30
assurance that the Company will be able to continue to license such
technology on commercially reasonable terms, if at all. Failure by the Company
to maintain rights to such technology could have a material adverse effect on
the Company's business, financial condition and results of operations.
Government Regulation
Prior to marketing, any new drug developed by the Company and its strategic
partners must undergo an extensive regulatory approval process in the United
States and other countries. This regulatory process, which includes preclinical
studies and clinical trials, and may include post-marketing surveillance, of
each compound to establish its safety and efficacy, can take many years and
require the expenditure of substantial resources. Data obtained from preclinical
studies and clinical trials are susceptible to varying interpretations that
could delay, limit or prevent regulatory approval. The rate of completion of
clinical trials is dependent upon, among other factors, the enrollment of
patients. Patient accrual is a function of many factors, including the size of
the patient population, the proximity of patients to clinical sites, the
eligibility criteria for the study and the existence of competitive clinical
trials. Delays in planned patient enrollment in clinical trials may result in
increased costs, program delays or both, which could have a material adverse
effect on the Company. Delays or rejections may also be encountered based upon
changes in United States Food and Drug Administration ("FDA") policies for drug
approval during the period of product development and FDA regulatory review of
each submitted new drug application ("NDA") in the case of new pharmaceutical
agents, or product license application ("PLA") in the case of biologics. Similar
delays also may be encountered in the regulatory approval of any diagnostic
product and in obtaining regulatory approval in foreign countries. Under current
guidelines, proposals to conduct clinical research involving gene therapy at
institutions supported by the National Institutes of Health ("NIH") must be
approved by the Recombinant DNA Advisory Committee ("RAC") and the NIH. There
can be no assurance that regulatory approval will be obtained for any drugs or
diagnostic products developed by the Company or its strategic partners.
Furthermore, regulatory approval may entail limitations on the indicated use of
a drug. Because certain of the products likely to result from the Company's
disease research programs involve the application of new technologies and may be
based upon a new therapeutic approach, such products may be subject to
substantial additional review by various government regulatory authorities and,
as a result, regulatory approvals may be obtained more slowly than for products
using more conventional technologies.
Even if regulatory approval is obtained, a marketed product and its
manufacturer are subject to continuing review. Discovery of previously unknown
problems with a product may have adverse effects on the Company's business,
financial condition and results of operations, including withdrawal of the
product from the market. Violations of regulatory requirements at any stage,
including preclinical studies and clinical trials, the approval process or
post-approval, may result in various adverse consequences to the Company,
including the FDA's delay in
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<PAGE> 31
approval or refusal to approve a product, withdrawal of an approved product from
the market or the imposition of criminal penalties against the manufacturer and
NDA or PLA holder. The Company has not submitted an investigational new drug
application ("IND") for any product candidate, and no product candidate has been
approved for commercialization in the United, States or elsewhere. The Company
intends to rely on its strategic partners to file INDs and generally direct the
regulatory approval process. No assurance can be given that the Company or any
of its strategic partners will be able to conduct clinical testing or obtain the
necessary approvals from the FDA or other regulatory authorities for any
products. Failure to obtain required governmental approvals will delay or
preclude the Company's strategic partners from marketing drugs or diagnostic
products developed by the Company or limit the commercial use of such products
and could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company's research and development activities involve the controlled use
of hazardous materials, chemicals and various radioactive materials. The Company
is subject to federal, state and local laws and regulations governing the use,
storage, handling and disposal of such materials and certain waste products.
Although the Company believes that its safety procedures for handling and
disposing of such materials comply with the standards prescribed by federal,
state and local laws and regulations, the risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result
and any liability could exceed the resources of the Company.
Competition
Millennium faces, and will continue to face, intense competition from
organizations such as large pharmaceutical, biotechnology, and diagnostic
companies, as well as academic and research institutions and government
agencies. The Company is subject to significant competition from organizations
that are pursuing the same or similar technologies as those which constitute the
Company's technology platform and from organizations that are pursuing
pharmaceutical or diagnostic products that are competitive with the Company's
potential products. Most of the organizations competing with the Company have
greater capital resources, research and development staffs and facilities, and
greater experience in drug discovery and development, obtaining regulatory
approval and pharmaceutical product manufacturing and marketing capabilities
than the Company.
In addition, research in the field of genomics is highly competitive.
Competitors of the Company in the genomics area include, among others, public
companies such as Genome Therapeutics Corporation, Genset, Human Genome
Sciences, Inc., Incyte Pharmaceuticals, Inc., Myriad Genetics, Inc. and Sequana
Therapeutics, Inc., as well as private companies and major pharmaceutical
companies. Universities and other research institutions, including those
receiving funding from
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<PAGE> 32
the federally funded Human Genome Project, also compete with Millennium. A
number of entities are attempting to rapidly identify and patent randomly
sequenced genes and gene fragments, typically without specific knowledge of the
function of such genes or gene fragments. In addition, certain other entities
are pursuing a gene identification, characterization and product development
strategy based on positional cloning. The Company's competitors may discover,
characterize or develop important genes in advance of Millennium, which could
have a material adverse effect on any related Millennium disease research
program. The Company also faces competition from these and other entities in
gaining access to DNA samples used in its research and development projects. The
Company expects competition to intensify in genomics research as technical
advances in the field are made and become more widely known.
The Company relies on its strategic partners for support in its disease
research programs and intends to rely on its strategic partners for preclinical
evaluation and clinical development of its potential products and manufacturing
and marketing of any products. Each of the Company's strategic partners is
conducting multiple product development efforts within each disease area that is
the subject of its strategic alliance with the Company. For example, Roche, with
whom the Company is collaborating in the field of obesity, currently has a
product for the treatment of obesity in late stage clinical trials. Generally,
the Company's strategic alliance agreements do not restrict the strategic
partner from pursuing competing development efforts. Any product candidate of
the Company, therefore, may be subject to competition with a potential product
under development by a strategic partner.
Employees
As of March 1, 1997, the Company had 359 full-time employees, of whom 116
hold Ph.D. or M.D. degrees and 88 hold other advanced degrees. Of the Company's
total workforce, 305 are engaged in research and development activities and 54
are engaged in business development, finance and administration. The Company
currently plans to hire approximately 140 additional employees by the end of
1997.
Factors that May Effect Results
This Annual Report on Form 10-K contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes", "anticipates", "plans", "expects", "intends",
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. Those factors include, without limitation, those set forth below and
elsewhere in this Annual Report on Form 10-K.
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<PAGE> 33
Uncertainties Relating to Technological Approaches of the Company. To date,
the Company has not developed or commercialized any products based on its
technological approaches. There can be no assurance that these approaches will
enable the Company to successfully identify and characterize genes that
predispose individuals to the diseases that are the principal focus of its
disease research programs or to use any resulting information to develop
molecular targets of utility for pharmaceutical product development. The
Company's lead programs and development focus are primarily directed to complex
polygenic and multifactorial diseases. There is limited scientific understanding
generally relating to the role of genes in these diseases and relatively few
products based on gene discoveries have been developed and commercialized.
Accordingly, even if the Company is successful in identifying genes associated
with specific diseases, there can be no assurance that its gene discoveries will
lead to the development of therapeutic and diagnostic products.
History of Operating Losses; Anticipation of Future Losses. As of December
31, 1996, the Company had an accumulated deficit of approximately $18,144,000.
Even if the Company succeeds in developing a commercial product, the Company
expects to incur losses for at least the next several years and that such losses
will increase as the Company expands its research and development activities. To
achieve profitability, the Company, alone or with others, must successfully
discover genes associated with particular diseases and, thereafter, utilize such
discoveries to develop products, conduct clinical trials, obtain required
regulatory approvals and successfully manufacture, introduce and market such
products. The time required to reach commercial revenue and profitability is
highly uncertain and there can be no assurance that the Company will be able to
achieve any such revenue and profitability on a sustained basis, if at all.
Future Capital Requirements; Uncertainty of Additional Funding. The Company's
comprehensive technological approach to developing products through the
application of genomics has required that Millennium establish a substantial
scientific infrastructure. The Company has consumed substantial amounts of cash
to date and expects capital and operating expenditures to increase over the next
several years as it expands its infrastructure and its research and development
activities. In the event that adequate funds are not available, the Company's
business would be adversely affected.
Reliance on Strategic Partners. The Company's strategy for development and
commercialization of diagnostic and therapeutic products based upon its gene
discoveries depends upon the formation of various strategic alliances and
licensing arrangements. The Company has entered into strategic alliances with
Astra, Eli Lilly, Roche and Wyeth-Ayerst. There can be no assurance that the
Company will be able to establish additional strategic alliance or licensing
arrangements, that any such arrangements or licenses will be on terms favorable
to the Company, or that the current or any future strategic alliances or
licensing arrangements ultimately will be successful. All of the Company's
strategic alliance agreements are subject to
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<PAGE> 34
termination under various circumstances. If any of the Company's strategic
partners were to breach or terminate its agreement with the Company or otherwise
fail to conduct its collaborative activities successfully in a timely manner,
such delay or termination could have a material adverse effect on the Company's
business, financial condition and results of operations.
Intense Competition. Millennium faces, and will continue to face, intense
competition from organizations such as large pharmaceutical, biotechnology and
diagnostic companies, as well as academic and research institutions and
government agencies. The Company is subject to significant competition from
organizations that are pursuing the same or similar technologies as those which
constitute the Company's technology platform and from organizations that are
pursuing pharmaceutical or diagnostic products that are competitive with the
Company's potential products. Most of the organizations competing with the
Company have greater capital resources, research and development staffs and
facilities, and greater experience in drug discovery and development, obtaining
regulatory approvals and pharmaceutical product manufacturing and greater
marketing capabilities than the Company. Each of the Company's strategic
partners is conducting multiple product development efforts within each disease
area that is the subject of its strategic alliance with the Company. Generally,
the Company's strategic alliance agreements do not restrict the strategic
partner from pursuing competing development efforts. Any product candidate of
the Company, therefore, may be subject to competition with a potential product
under development by a strategic partner.
Patents and Proprietary Rights; Third Party Rights. The Company's commercial
success will depend in part on obtaining patent protection on gene discoveries
and on products, methods and services based on such discoveries. The Company has
more than 100 pending U.S. and international patent applications and has two
issued U.S. patents. There can be no assurance that any of the Company's pending
patent applications will result in issued patents, that the Company will develop
additional proprietary technologies that are patentable, that any patents issued
to the Company or its strategic partners will provide a basis for commercially
viable products or will provide the Company with any competitive advantages or
will not be challenged by third parties, or that the patents of others will not
have an adverse effect on the ability of the Company to do business.
Furthermore, there can be no assurance that others will not independently
develop similar or alternative technologies, duplicate any of the Company's
technologies, or, if patents are issued to the Company, design around the
patented technologies developed by the Company. In addition, the Company could
incur substantial costs in litigation if it is required to defend itself in
patent suits brought by third parties or if it initiates such suits.
Prior to the time that the Company filed its patent application covering
ob-r, Progenitor filed a patent application disclosing DNA sequences that encode
shorter forms of leptin receptors and describing a potential role for such
receptors in cell proliferative disorders such as cancers and leukemias.
Although the Company believes that the patent application filed by Progenitor
does not describe the
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<PAGE> 35
Company's ob-r, or the role of any receptor in body weight regulation or obesity
control, there can be no assurance that such patent application, or additional
patent applications if filed by others, will not result in issued patents
covering ob-r or specific fragments of the ob-r gene.
Government Regulation; No Assurance of Regulatory Approval. Prior to
marketing, any new drug developed by the Company and its strategic partners must
undergo an extensive regulatory approval process in the United States and other
countries. This regulatory process can take many years and require the
expenditure of substantial resources. There can be no assurance that regulatory
approval will be obtained for any drugs or diagnostic products developed by the
Company or its strategic partners. Failure to obtain required governmental
approvals will delay or preclude the Company's strategic partners from marketing
drugs or diagnostic products developed by the Company or limit the commercial
use of such products and could have a material adverse effect on the Company's
business, financial condition and results of operations.
Attraction and Retention of Key Employees. The Company is highly dependent on
the principal members of its management and scientific staff. The loss of
services of any of these personnel could impede significantly the achievement of
the Company's development objectives. Furthermore, recruiting and retaining
qualified scientific personnel to perform research and development work in the
future will also be critical to the Company's success. There is intense
competition among pharmaceutical and health care companies, universities and
nonprofit research institutions for experienced scientists, and there can be no
assurance that the Company will be able to attract and retain personnel on
acceptable terms. Pursuant to the Lilly strategic alliance agreements in the
atherosclerosis and oncology fields, Lilly has the right to suspend funded
research programs under these agreements upon the termination of the employment
of two or more specified employees of the Company without replacement reasonably
acceptable to Lilly.
Expansion of Operations; Management of Growth. The Company recently has
significantly increased the scale of its operations to support the expansion of
its disease research programs and its strategic alliances including the
acquisition, in February 1997, of ChemGenics. See "-- ChemGenics
Pharmaceuticals, Inc." The increase has included the hiring of a significant
number of additional personnel. The Company currently employs approximately 359
persons and plans to hire approximately 140 additional employees in 1997. The
resulting growth in personnel and facilities could place significant strains on
the Company's management, operations and systems.
Dependence on Research Collaborators and Scientific Advisors. The Company has
relationships with collaborators at academic and other institutions who conduct
research at the Company's request, particularly with respect to the Company's
human genetics programs. All of Millennium's consultants are employed by
employers other than the Company and may have commitments to, or consulting or
advisory
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<PAGE> 36
contracts with, other entities that may limit their availability to the Company.
As a result, the Company has limited control over their activities and, except
as otherwise required by its collaboration and consulting agreements, can expect
only limited amounts of their time to be dedicated to the Company's activities.
The Company's ability to discover genes involved in human disease and
commercialize products based on those discoveries may depend in part on
continued collaborations with researchers at academic and other institutions.
There can be no assurance that the Company will be able to negotiate additional
acceptable collaborations with collaborators as academic and other institutions
or that its existing collaborations will be successful.
Product Liability Exposure. Clinical trials, manufacturing, marketing and
sale of any of the Company's or its strategic partners' potential pharmaceutical
products may expose the Company to liability claims from the use of such
pharmaceutical products. The Company currently does not carry product liability
insurance. There can be no assurance that the Company or its strategic partners
will be able to obtain such insurance or, if obtained, that sufficient coverage
can be acquired at a reasonable cost. An inability to obtain sufficient
insurance coverage at an acceptable cost or otherwise to protect against
potential product liability claims could prevent or inhibit the
commercialization of pharmaceutical products developed by the Company or its
strategic partners. A product liability claim or recall could have a material
adverse effect on the business or financial condition of the Company. While
under certain circumstances the Company is entitled to be indemnified against
losses by its strategic partners, there can be no assurance that this
indemnification would be available or adequate should any such claim arise.
Item 2. PROPERTIES
The Company's facilities currently consist of approximately 70,000 square
feet of office and research space and a 9,000 square foot animal facility
located at 640 Memorial Drive, Cambridge, Massachusetts pursuant to a lease
which expires in 2003, approximately 40,000 square feet of office and research
space located at Fort Washington Park, Cambridge, Massachusetts pursuant to a
lease which expire in 1999, and approximately 11,500 square feet of office and
research space at One Kendall Square, Cambridge, Massachusetts pursuant to a
lease which expires in 2003.
Item 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company,
through solicitation of proxies or otherwise, during the last quarter of the
year ended December 31, 1996.
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EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages and positions of the executive
officers of the Company.
Name Age Position
---- --- --------
Mark J. Levin 46 Chairman of the Board, Chief Executive
Officer and Director
Steven H. Holtzman 43 Chief Business Officer
Frank D. Lee, Ph.D. 45 Chief Scientific Officer
- - --------------------
Mark J. Levin has served as Chairman of the Board of Directors since March
1996, Chief Executive Officer of the Company since November 1994, and as a
director of the Company since inception. From 1987 to 1994, Mr. Levin was a
partner at Mayfield Fund ("Mayfield") a venture capital firm, and co-director of
its Life Science Group. While employed with Mayfield, Mr. Levin was the founding
Chief Executive Officer of several biotechnology and biomedical companies,
including Cell Genesys Inc., CytoTherapeutics Inc., Tularik Inc. and Focal, Inc.
Mr. Levin holds an M.S. in Chemical and Biomedical Engineering from Washington
University. Mr. Levin also serves on the Board of Directors of CytoTherapeutics
Inc.
Steven H. Holtzman has served as Chief Business Officer of the Company since
May 1994. From 1986 to 1993, Mr. Holtzman was with DNX Corporation ("DNX"), a
biomedical company, and its subsidiaries. He was a founder and the first
employee of DNX, served as a member of the Board of Directors, and held several
senior management positions including, from 1992 to 1993, President of DNX
Biotherapeutics Inc., a subsidiary of DNX, and from 1990 to 1993, Executive Vice
President of DNX. Mr. Holtzman received his graduate B.Phil. degree in
Philosophy from Oxford University, which he attended as a Rhodes Scholar. Mr.
Holtzman currently serves as co-chairperson of the Biotechnology Industry
Organization's Bioethics Committee and is a member of the National Bioethics
Advisory Commission.
Frank D. Lee, Ph.D. joined the Company in July 1994 as Vice President,
Research and became Chief Scientific Officer in January 1996. From 1989 to 1994,
Dr. Lee served as Director of Molecular Biology at DNAX Research Institute of
Molecular and Cellular Biology, Inc., a subsidiary of Schering-Plough
Corporation, a pharmaceutical company ("DNAX"), and from 1981 to 1989 he served
as a Senior Staff Scientist at DNAX. Dr. Lee received his Ph.D. from Stanford
University and did his postdoctoral research at Stanford University School of
Medicine in the Department of Pharmacology and was a Senior Fellow of the
American Cancer
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<PAGE> 38
Society. Dr. Lee also did postdoctoral research at the Massachusetts Institute
of Technology's Center for Cancer Research as a fellow of the Helen Hay Whitney
Foundation.
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of Millennium Pharmaceuticals, Inc. has been traded on the
Nasdaq National Market under the symbol MLNM since May 6, 1996. Prior to May 6,
1996, the Company's Common Stock was not publicly traded. On March 25, 1997, the
closing price for the sale of a share of the Company's Common Stock on the
Nasdaq Stock Market was $17.75. The following table sets forth for the periods
indicated the high and low closing prices per share of the Common Stock as
reported by the Nasdaq National Market.
1996
----
High Low
---- ---
Second Quarter ....................... $24.00 $15.50
(May 6 through June 30, 1996)
Third Quarter ........................ $19.12 $11.50
(ended September 30, 1996)
Fourth Quarter ....................... $21.75 $16.12
(ended December 31, 1996)
On March 14, 1997, the Company had approximately 352 stockholders of record.
The Company has never declared or paid any cash dividends on its Common Stock.
The Company currently intends to reinvest earnings, if any, to support the
development of its business and does not expect to pay cash dividends for the
foreseeable future.
Item 6. SELECTED FINANCIAL DATA
Incorporated by reference from the Company's 1996 Annual Report to
Shareholders under the heading "Selected Financial Data."
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<PAGE> 39
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated by reference from the Company's 1996 Annual Report to
Stockholders under the heading "Management's Discussions and Analysis of
Financial Condition and Results of Operations."
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements filed as part of this Annual Report on Form 10-K are
listed under Item 14 below and are incorporated by reference from the Company's
1996 Annual Report to Stockholders under the heading "Financial Statements and
Notes Thereto."
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with the Company's independent accountants
on accounting and financial disclosure matters.
PART III
Items 10-13.
The information required for Part III in this Annual Report on Form 10-K is
incorporated by reference from the Company's definitive proxy statement for the
Company's 1997 Annual Meeting of Stockholders. Such information will be
contained in the sections of such proxy statement captioned "Stock Ownership of
Certain Beneficial Owners and Management", "Election of Directors", "Board and
Committee Meetings", "Compensation for Directors", "Compensation of Executive
Officers", and "Certain Relationships and Related Transactions". Information
regarding executive officers of the Company is also furnished in Part I of this
Annual Report on Form 10-K under the heading "Executive Officers of the
Company."
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are included as part of this Annual Report
on Form 10-K or are incorporated by reference from the Company's 1996 Annual
Report to Stockholders.
Page
----
1. The following financial statements (and related
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<PAGE> 40
notes) of the Company are incorporated by reference
from the Company's 1996 Annual Report to
Stockholders.
Report of Independent Auditors on Financial
Statements 30*
Balance Sheets at December 31, 1996 and 1995 31*
Statements of Operations for the years ended
December 31, 1996, 1995, and 1994 32*
Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994 33*
Statements of Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994 34*
Notes to Financial Statements 36*
*Refers to page number of 1996 Annual Report
2. All other schedules are omitted as the
information required is inapplicable or the information
is presented in the consolidated financial
statements or the related notes.
3. The Exhibits listed in the Exhibit Index
immediately preceding the Exhibits are filed as a
part of this Annual Report on Form 10-K.
(b) No Current Reports on Form 8-K were filed by the Company during
the last quarter of the period covered by this report.
The following trademarks of the Company are mentioned in this Annual Report
on Form 10-K:
Millennium
Millennium Pharmaceuticals
RADE
Sequence Explorer
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<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Mark J. Levin
--------------------------
Mark J. Levin
Chief Executive Officer
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<PAGE> 42
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Signature Title Date
- - --------- ----- ----
/s/ Mark J. Levin
- - ---------------------------
Mark J. Levin Chief Executive Officer March 28, 1997
and Director
(Principal Executive Officer)
/s/ Steven H. Holtzman
- - ----------------------------
Steven H. Holtzman Chief Business Officer March 28, 1997
(Principal Financial Officer)
/s/ Peter J. Courossi
- - ----------------------------
Peter J. Courossi Director of Finance March 28, 1997
(Principal Accounting
Officer)
/s/ Joshua Boger, Ph.D.
- - ----------------------------
Joshua Boger, Ph.D. Director March 28, 1997
/s/ Eugene Cordes, Ph.D.
- - ----------------------------
Eugene Cordes, Ph.D. Director March 28, 1997
/s/ A. Grant Heidrich, III
- - ----------------------------
A. Grant Heidrich, III Director March 28, 1997
/s/ William W. Helman
- - ----------------------------
William W. Helman Director March 28, 1997
/s/ Raju Kucherlapati
- - ----------------------------
Raju Kucherlapati Director March 28, 1997
- - ----------------------------
Eric S. Lander, Ph.D. Director March __, 1997
/s/ Michael Steinmetz, Ph.D.
- - ----------------------------
Michael Steinmetz, Ph.D. Director March 28, 1997
41
<PAGE> 43
Exhibit Index
The following exhibits are filed as part of this Annual Report on Form 10-K.
Exhibit No. Description
- - ----------- -----------
** 3.1 Amended and Restated Certificate of
Incorporation of the Company
** 3.2 Amended and Restated Bylaws of the Company
* 4.1 Specimen Certificate for shares of Common
Stock, $.001 par value, of the Company
(1)* 10.1 1996 Director Option Plan
* 10.2 Series A Preferred Stock Purchase Agreement dated
April 27, 1993 by and among the Company and
the persons named on the signature pages
thereto
* 10.3 Series B Preferred Stock Stock Purchase Agreement
dated March 25, 1994 by and between the
Company and F. Hoffmann-La Roche, Ltd.
* 10.4 Series C Preferred Stock Stock Purchase Agreement
dated October 3, 1995 by and between the Company
and Eli Lilly and Company
* 10.5 Series D Preferred Stock Stock Purchase Agreement dated February
1, 1996 by and between the Company and Lombard Odier Inc.
* 10.6 Third Amended and Restated Investors' Rights Agreement, as
amended, dated February 1, 1996 by and among the Company and the
persons named on the signature pages thereto.
* 10.7 Voting Agreement dated March 25, 1994 by and among the Company,
the persons listed on Schedule I thereto and F. Hoffmann-La
Roche, Ltd.
* 10.8 Stock Purchase Agreement dated April 21, 1993 by and between the
Company and Raju Kucherlapati.
42
<PAGE> 44
* 10.9 Stock Purchase Agreement dated November 15, 1993, as amended, by
and between the Company and Jeffrey Friedman.
* 10.10 Stock Purchase Agreement dated March 31, 1993, as amended, by
and between the Company and Daniel Cohen.
* 10.11 Stock Purchase Agreement dated March 31, 1993, as amended, by
and between the Company and Eric Lander.
* 10.12 Agreement dated as of August 10, 1995 by and between the Company
and Joshua Boger.
* 10.13 Agreement dated as of August 10, 1995 by and between the Company
and Eugene Cordes.
* 10.14 Agreement dated as of April 21, 1993, by and between the Company
and Raju Kucherlapati.
* 10.15 Agreement for Consulting Services dated as of January 1, 1993 by
and between the Company and Eric Lander.
* 10.16 Letter Agreement dated November 30, 1994 by and between the
Company and Mark J. Levin.
* 10.17 Letter Agreement dated April 14, 1994 by and between the Company
and Steven H. Holtzman.
* 10.18 Promissory Note dated March 15, 1996 made in favor of the
Company by Steven H. Holtzman.
* 10.19 Letter Agreement dated June 6, 1994 by and between the Company
and Frank Lee.
* 10.20 Master Lease Agreement dated March 22, 1993 by and between the
Company and Comdisco, Inc.
* 10.21 Loan and Security Agreement dated October 28, 1994 by and
between the Company and MMC/GATX Partnership No. 1.
* 10.22 Master Equipment Lease Agreement dated July 14, 1995 by and
between the Company and Lighthouse Capital Partners, L.P.,
* 10.23 Warrant Agreement to Purchase Shares of Series A Preferred Stock
dated March 22, 1993 issued by the Company to Comdisco, Inc.
43
<PAGE> 45
* 10.24 Warrant Agreement to purchase shares of Series B Preferred Stock
dated February 22, 1994 issued by the Company to Comdisco, Inc.
* 10.25 Warrant to purchase shares of Series B Preferred Stock dated
October 28, 1994 issued by the Company to MMC/GATX Partnership
No. 1.
* 10.26 Preferred Stock Purchase Warrant dated August 25, 1995 issued by
the Company to Lighthouse Capital Partners, L.P.
* 10.27 Form of Preferred Stock Purchase Warrant dated February 15, 1996
issued by the Company to Lighthouse Capital Partners, L.P.
*+ 10.28 Sponsored Research Agreement dated March 25, 1994 by and between
the Company and F. Hoffmann-La Roche Ltd.
*+ 10.29 Research and License Agreement dated October 3, 1995 by and
between the Company and Eli Lilly and Company.
*+ 10.30 Research and License Agreement dated December 9, 1995 by and
between the Company and Astra AB.
* 10.31 Lease Agreement dated August 25, 1993, as amended, by and
between the Company and the Massachusetts Institute of
Technology.
*+ 10.32 Research and License Agreement dated April 8, 1996 by and
between the Company and Eli Lilly and Company.
* 10.33 Loan Agreement dated February 15, 1996 by and between the
Company and Lighthouse Capital Partners, L.P.
***+ 10.34 CNS Research, Collaboration and License Agreement effective as
of August 1, 1996 by and between American Home Products
Corporation and the Company.
***+ 10.35 Bioinformatics Access and License Agreement effective as of
August 1, 1996 by and between American Home Products Corporation
and the Company.
***+ 10.36 Transcription Profiling Technology Access and License Agreement
effective as of August 1, 1996 by and between American Home
Products Corporation and the Company.
44
<PAGE> 46
**** 10.37 Lease Agreement dated October 26, 1996 by and between the
Company and Fort Washington Limited Partnership.
**** 10.38 Form of Master Equipment Lease Financing Agreement, as amended,
dated September 19, 1996 by and between the Company and GE
Capital Corporation.
10.39 Intentionally left blank.
+10.40 Collaborative Research Agreement, dated as of January 1, 1995,
by and between ChemGenics and Pfizer, Inc.
+10.41 License Option, License and Royalty Agreement, dated as of
January 1, 1995, by and between ChemGenics and Pfizer, Inc.
+10.42 Collaborative Research and License Agreement, dated as of
November 1, 1996, by and between ChemGenics and American Home
Products Corporation, represented by its Wyeth-Ayerst
Laboratories Division.
+10.43 License Agreement, dated as of June 28, 1996, by and between
ChemGenics and PerSeptive Biosystems, Inc.
10.44 Master Agreement, dated as of May 7, 1996, by and between
ChemGenics and PerSeptive Biosystems, Inc.
10.45 Amendment, dated November 22, 1996, to the Master Agreement
dated May 7, 1996 between ChemGenics and PerSeptive Biosystems,
Inc.
10.46 Omnibus Amendment Agreement dated December 18, 1996 between
ChemGenics and PerSeptive Biosystems, Inc.
10.47 Consulting and Interim Services Agreement dated as of June 28,
1996 by and between ChemGenics and PerSeptive Biosystems, Inc.
10.48 Confidentiality and Non-Competition Agreement dated as of June
28, 1996, by and between ChemGenics and Biosystems, Inc.
10.49 Lease Agreement between ChemGenics and Old Cambridge Realty
Trust, Inc.
10.50 Form of Sub-Lease Agreement, dated June 28, 1996, by and between
ChemGenics and PerSeptive Biosystems, Inc.
45
<PAGE> 47
10.51 Amendment, Consent and Waiver dated January 18, 1997 by and
among Millennium, ChemGenics and American Home Products
Corporation acting through its Wyeth-Ayerst Division ("Wyeth-
Ayerst").
10.52 Letter Agreement dated January 18, 1997 by and among Millennium,
ChemGenics and Pfizer, Inc.
10.53 Letter Agreement dated January 18, 1997 by and among Millennium,
ChemGenics and PerSeptive Biosystems, Inc.
10.54 Amendment to Collaborative Research and License Agreement dated
March 20, 1997 by and among Millennium, ChemGenics and
Wyeth-Ayerst.
11.1 Statement regarding computation of per share earnings.
13 1996 Annual Report to Stockholders (which shall be deemed filed
only with respect to those portions specifically incorporated by
reference herein).
21 Subsidiaries of the Company.
23 Consent of Ernst & Young, LLP, Independent Auditors.
27 Financial Data Schedule.
- - ----------------
(1) Management contract or compensatory plan or arrangement filed as an
exhibit to this Form pursuant to Items 14(a) and 14(c) of Form 10-K.
* Incorporated herein by reference to the Company's Registration Statement
on Form S-1, as amended (File No. 333-2490).
** Incorporated herein by reference to the Company's 10-Q for the quarter
ending March 31, 1996.
*** Incorporated herein by reference to the Company's 10-Q for the quarter
ending June 30, 1996.
**** Incorporated herein by reference to the Company's 10-Q for the quarter
ending September 30, 1996.
+ Confidential treatment requested as to certain portions.
46
<PAGE> 1
EXHIBIT 10.40
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
COLLABORATIVE RESEARCH AGREEMENT
This COLLABORATIVE RESEARCH AGREEMENT is entered into as of January 1, 1995 by
and between PFIZER INC ("Pfizer"), a Delaware corporation, having an office at
235 East 42nd Street, New York, New York 10017 and its Affiliates, and MYCO
PHARMACEUTICALS INC. ("Myco") a Delaware corporation, having an office at 1
Kendall Square, Building 300, Boston, Massachusetts 02139.
WHEREAS, Myco has expertise in drug discovery utilizing fungi and in the
collection, molecular biology and screening of fungi; and
WHEREAS, Pfizer has the capability to undertake research for the discovery and
evaluation of agents for treatment of disease and also the capability for
clinical analysis, manufacturing and marketing with respect to fungal
infections in animals and humans;
NOW, THEREFORE, the parties agree as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this Section 1 shall have
the meanings specified.
1.1 "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, fifty percent (50%) or more of the voting capital shares
or similar voting securities of Pfizer or Myco; any corporation or other legal
entity fifty percent (50%) or more of the voting capital shares or similar
voting rights of which is owned, directly or indirectly, by Pfizer or Myco or
any corporation or other legal entity fifty percent (50%) or more of the voting
capital shares or similar voting rights of which is owned, directly or
indirectly, by a corporation or other legal entity which owns, directly or
indirectly, fifty percent (50%) or more of the voting capital shares or similar
voting securities of Pfizer or Myco.
<PAGE> 2
- 2 -
1.2 "Annual Commitment" means the maximum amount to be paid to Myco by
Pfizer to fund the Research Program for any Commitment Year.
1.3 "Annual Research Plan" means the written plan describing the
research and budgets in the Area to be carried out during each Commitment Year
by Pfizer and Myco pursuant to this Agreement. Each Annual Research Plan will be
attached to and made a part of this Agreement as Exhibit A.
1.4 "Research Program" is the collaborative research program in the
Area conducted by Pfizer and Myco pursuant to the Annual Research Plans in
effect during the Contract Period.
1.5 "Effective Date" is January 1, 1995.
1.6 "Contract Period" means the period beginning on the Effective Date
and ending on the date on which this Agreement terminates.
1.7 "Commitment Year" means a twelve-month period commencing on each
anniversary of the Effective Date.
1.8 "Area" means research or development with respect to drugs for the
treatment of fungal infections in human beings ("Antifungal Drugs").
1.9 "Profile of Activity" means each of those profiles in the Area set
forth in detail in Exhibits B1, B2 and B3.
1.10 "Animal Health" means the treatment of fungal infections in
animals.
1.11 "Technology" means and includes all materials, technology,
technical information, know-how, expertise and trade secrets within the Area.
1.12 "Myco Non-Program Technology" means Technology that is or was:
(a) developed by employees of or consultants to Myco
alone or jointly with third parties prior to the
Effective Date or since that date in the course of
activities not described in an Annual Research Plan;
or
<PAGE> 3
- 3 -
(b) acquired, under terms which permit the sublicensing
thereof, by purchase, license, assignment or other
means from third parties by Myco prior to the
Effective Date or since that date that would not be
otherwise part of Myco Program Technology.
For the avoidance of doubt, it is agreed that Myco's fungi collections
and other Myco drug sources, whether developed prior to or after the Effective
Date, shall be Myco Non-Program Technology.
1.13 "Myco Program Technology" means Technology that is or was
developed by employees of or consultants to Myco during the Contract Period in
the course of activities described in a then applicable Annual Research Plan.
1.14 "Joint Technology" means Technology that is or was:
(a) developed by employees of or consultants to Pfizer
and Myco jointly with each other during the Contract
Period in the course of activities described in an
Annual Research Plan; or
(b) acquired, under terms which permit the sublicensing
thereof, by purchase, license, assignment or other
means from third parties by Myco or Pfizer during the
Contract Period pursuant to an Annual Research Plan
for inclusion in the Research Program.
1.15 "Pfizer Non-Program Technology" means Technology that is or was:
(a) developed by employees of or consultants to Pfizer
alone or jointly with third parties prior to the
Effective Date or since that date in the course of
activities not described in an Annual Research Plan;
or
(b) acquired by purchase, license, assignment or to other
means from third parties by Pfizer prior to the
Effective Date or since that date that would
<PAGE> 4
- 4 -
not be otherwise part of Pfizer Program Technology.
For the avoidance of doubt, it is agreed that Pfizer's fungi
collections and other Pfizer drug sources, whether developed prior to or after
the Effective Date, shall be Pfizer Non-Program Technology.
1.16 "Pfizer Program Technology" means Technology that is or was
developed by employees of or consultants to Pfizer during the Contract Period in
the course of activities described in a then applicable Annual Research Plan.
1.17 "Myco Confidential Information" means all information about any
element of the Myco or Joint Technology which is disclosed by Myco to Pfizer and
designated "Confidential" in writing by Myco at the time of disclosure to Pfizer
to the extent that such information as of the date of disclosure to Pfizer is
not (i) demonstrably known to Pfizer other than by virtue of a prior
confidential disclosure to Pfizer by Myco; or (ii) disclosed in published
literature, or otherwise generally known to the public through no fault or
omission of Pfizer; or (iii) obtained from a third party free from any
obligation of confidentiality to Myco.
1.18 "Pfizer Confidential Information" means all information about any
element of Pfizer or Joint Technology which is disclosed by Pfizer to Myco and
designated "Confidential" in writing by Pfizer at the time of disclosure to Myco
to the extent that such information as of the date of disclosure to Myco is not
(i) demonstrably known to Myco other than by virtue of a prior confidential
disclosure to Myco by Pfizer or (ii) disclosed in published literature, or
otherwise generally known to the public through no fault or omission of Myco; or
(iii) obtained from a third party free from any obligation of confidentiality to
Pfizer.
1.19 "Patent Rights" shall mean the issued patents and pending patent
applications, whether domestic or foreign, claiming all inventions deemed
patentable within Pfizer Program
<PAGE> 5
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
-5-
Technology, Myco Program Technology, Myco Non-Program Technology and Joint
Technology, including all continuations, continuations-in-part, divisions, and
renewals, all letters patent granted thereon, and all reissues, reexaminations
and extensions thereof.
1.20 "Product" means an Antifungal Drug the manufacture, use or sale
of which in the absence of a license (i) would infringe a claim of an issued
patent within Patent Rights, (ii) would be covered by a claim of a pending
patent application within Patent Rights, or (iii) the discovery, development,
manufacture, use or sale of which employs or employed Myco Program Technology,
Myco Non-Program Technology or Joint Technology but which is not within clauses
(i) or (ii) of this Section 1.20, but which is within the claims of a patent or
patent application owned or controlled by Pfizer.
1.21 "Cost/person year" means [******].
2. Collaborative Research Program
2.1.1 Purpose Myco and Pfizer shall conduct the Research Program
throughout the Contract Period. The objective of the Research Program is to
discover and develop Products.
2.1.2 Annual Research Plan. The Annual Research Plan for the first
Commitment Year is described in the attached Exhibit A. For each Commitment year
after the first, the Annual Research Plan shall be prepared by the Research
Committee for submission to and approval by Pfizer and Myco no later than
[*******] days before the end of the prior Commitment Year. Each new Annual
Research Plan for each succeeding Commitment Year shall be appended to
Exhibit A and made part of this Agreement.
2.1.3 Screening. Both parties may conduct screening, as further
described in Exhibit A, at their own sites with respect to both natural products
and compound files; provided, however, Myco's screening activities shall be
consistent with its ability to perform its assigned tasks under the then
applicable Annual Research Plan.
<PAGE> 6
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 6 -
2.1.4 Exclusivity.
2.1.4(i) Area. Exhibit C sets forth a list of all research
sponsored by Myco at other institutions and all research at Myco being sponsored
by other institutions. Except as set forth in Exhibit C, Myco agrees that during
the Contract Period, neither Myco nor any of its Affiliates shall engage in any
research sponsored by any third party in the Area without Pfizer's consent. If
Myco develops or obtains rights to any prospective Antifungal Drug or candidate
Product for human use during the Contract Period outside of its activities in
the Research Program, or if Myco has rights or acquires rights from any third
party during the Contract Period to any prospective Antifungal Drug outside of
the Research Program, including any sponsored research noted in Exhibit C, then
such prospective Antifungal Drug shall be subject to the option set forth in
Article II of the License Agreement on the same basis as any prospective
Antifungal Drug developed in the Research Program.
2.1.4(ii) Animal Health. If Myco decides to seek a partner for
the discovery and development of Animal Health drugs, it will notify Pfizer of
that decision before notifying any third party. Pfizer shall have [*****
**] to determine whether to enter negotiations of any Animal Health research
collaboration with Myco. If the [*****] period expires without notice from
Pfizer or if, during the [*****] period Pfizer notifies Myco that Pfizer will
not begin such negotiation, Myco is free to enter an Animal Health research
collaboration with any third party without further obligation to Pfizer;
provided, however, Pfizer Program Technology, whenever acquired, shall remain
subject to the confidentiality provisions of this agreement and shall not be
divulged to any third party Animal Health collaborator. If, on the other hand,
Pfizer agrees during the [*****] period to attempt to negotiate an Animal
Health research collaboration agreement with Myco, the parties shall negotiate
in good faith for a period of [****************] to conclude such agreement.
If the parties fail to
<PAGE> 7
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 7 -
reach agreement during such [********] period, the negotiations shall
terminate, at the request of either party, and neither party shall have any
further obligation to the other with respect to Animal Health. If the parties
reach agreement, they shall each have an additional [****] days to obtain the
approval of their respective managements. If either party fails to obtain such
approval, the agreement reached shall be null and void without further action
of either party and neither party shall have any further obligation to the
other with respect to Animal Health. If negotiations fail or either party fails
to obtain management approval, Pfizer Program Technology shall be treated in
the manner set forth above as if Pfizer had declined to negotiate.
2.2 Research Committee
2.2.1 Purpose. Pfizer and Myco shall establish a Research
Committee (the "Research Committee");
(a) to review and evaluate progress under each Annual Research
Plan;
(b) to prepare the Annual Research Plan for each Commitment
Year; and
(c) to coordinate and monitor publication of research results
obtained from and the exchange of information and materials that relate to the
Research Program. (This function shall survive the termination of this
Agreement.)
2.2 Membership. Pfizer and Myco each shall appoint, in its sole
discretion, three members to the Research Committee.
Substitutes may be appointed at any time.
The members initially shall be:
Pfizer Appointees: Paul A. Armond, Ph.D.
Chris A. Hitchcock, Ph.D.
Ronnie Farquhar, Ph.D.
Myco Appointees: William Timberlake, Ph.D.
Yigal Koltin, Ph.D.
Sean O'Connor, Ph.D.
<PAGE> 8
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 8 -
2.2.3 Chair. The Research Committee shall be chaired by two
co-chairpersons, one appointed by Pfizer and the other appointed by Myco.
2.2.4 Meetings. The Research Committee shall meet at least quarterly,
at places and on dates selected by each party in turn. Representatives of Pfizer
or Myco or both, in addition to members of the Research Committee, may attend
such meetings at the invitation of either party.
2.2.5 Minutes. The Research Committee shall keep accurate minutes of
its deliberations which record all proposed decisions and all actions
recommended or taken. Drafts of the minutes shall be delivered to all Research
Committee members within five (5) business days after each meeting. The party
hosting the meeting shall be responsible for the preparation and circulation of
the draft minutes. Draft minutes shall be edited by the co-chairpersons and
shall be issued in final form only with their approval and agreement.
2.2.6 Decisions. All technical decisions of the Research Committee
shall be made by majority of the members.
2.2.7 Expenses. Pfizer and Myco shall each bear all expenses of their
respective members related to their participation on the Research Committee.
2.3 Reports and Materials.
2.3.1 Reports. During the Contract Period, Pfizer and Myco
each shall furnish to the Research Committee summary written reports within
[******] after the end of each three month period commencing on the Effective
Date, describing its progress under the Annual Research Plan.
2.3.2 Materials. Myco and Pfizer shall, during the Contract Period, as
a matter of course as described in the Annual Research Plan, or upon each
other's written or oral request, furnish to each other samples of biochemical,
biological or synthetic chemical materials which are part of Pfizer Non-Program
Technology, Pfizer Program Technology, Myco Program Technology, Myco Non-Program
Technology or Joint Technology and which are
<PAGE> 9
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 9 -
necessary for each party to carry out its responsibilities under the Annual
Research Plan. To the extent that the quantities of materials requested by
either party exceed the quantities set forth in the Annual Research Plan, the
requesting party shall reimburse the other party for the reasonable costs of
such materials if they are furnished.
2.4 Laboratory Facilities and Personnel. Myco and Pfizer shall each
provide suitable laboratory facilities, equipment and personnel for the work to
be done respectively by Myco and Pfizer in carrying out the Research Program.
2.5 Diligent Efforts Pfizer and Myco each shall use reasonably diligent
efforts to achieve the objectives of the Research Program. Myco will use
reasonably diligent efforts to achieve the assigned tasks listed in each Annual
Research Plan and Pfizer will use reasonably diligent efforts to assist Myco in
each Annual Research Plan in the pursuit of Myco's assigned tasks, to pursue
Pfizer's assigned tasks listed in each Annual Research Plan and to establish a
development plan for the Products.
3. Funding the Research Program.
3.1 The Annual Commitment for each Commitment Year is as follows:
COMMITMENT YEAR ANNUAL COMMITMENT
[ ** ******* ]
[ ** ******* ]
[ ** ******* ]
[ ** ******* ]
3.2 Payments by Pfizer to cover Myco's research costs (the "Funding
Payments") shall not exceed the Annual Commitment in any Commitment Year. The
amount of Funding Payments for each quarter shall be the number of person months
expended in the Research Program in the quarter multiplied by one-twelfth of the
Cost/person year for the applicable Commitment Year.
3.2.1 All Funding Payments shall be made quarterly in advance
for research and development activities scheduled to
<PAGE> 10
- 10 -
be performed by Myco during any three (3) month quarterly period, against Myco's
invoice for such three (3) month quarterly period. Adjustments as necessary to
reflect the person months by employee actually expended by Myco shall be made
within ninety (90) days of the end of each three (3) month quarterly period and
shall be reflected in Myco's next invoice.
3.2.2 Each Funding Payment shall be paid by Pfizer in U.S.
currency by check or by other mutually materially acceptable means on the first
day of the quarter or thirty (30) days after receipt of invoice, whichever is
later.
3.2.3 Myco shall keep for three (3) years from the conclusion
of each Commitment Year complete and accurate records of its expenditures of
effort and use of personnel on the Research Program. The records shall conform
to good accounting principles as applied to a similar company situated. Pfizer
shall have the right at its own expense during the term of this Agreement and
during the subsequent three-year period to appoint an independent certified
public accountant reasonably acceptable to Myco to inspect said records to
verify the accuracy of such expenditures of effort, pursuant to each Annual
Research Plan. Upon reasonable notice by Pfizer, Myco shall make its records
available for inspection by the independent certified public accountant during
regular business hours at the place or places where such records are customarily
kept, to verify the accuracy of the expenditures of effort. This right of
inspection shall not be exercised more than once in any calendar year and not
more than once with respect to records covering any specific period of time. All
information concerning such expenditures of effort, and all information learned
in the course of any audit or inspection, shall be deemed to be Myco
Confidential Information, except to the extent that it is necessary for Pfizer
to reveal the information in order to enforce any rights it may have pursuant to
this Agreement or if disclosure is required by law. The failure of Pfizer to
request verification of any expenditures of effort before or during the
three-year period shall be
<PAGE> 11
- 11 -
considered acceptance by Pfizer of the accuracy of such expenditures, and Myco
shall have no obligation to maintain any records pertaining to such report or
statement beyond such three- year period. The results of such inspection, if
any, shall be binding on the parties.
4. Treatment of Confidential Information
4.1 Confidentiality
4.1.1 Pfizer and Myco each recognize that the other's
Confidential Information constitutes highly valuable, confidential information.
Subject to the terms and conditions of the License Option, License and Royalty
Agreement between the parties of even date with this Agreement (the "License
Agreement"), the obligations set forth in Section 4.3 and the publication rights
set forth in Section 4.2, Pfizer and Myco each agree that during the term of
this Agreement and for five (5) years thereafter, it will keep confidential, and
will cause its Affiliates to keep confidential, all Myco Confidential
Information or Pfizer Confidential Information, as the case may be, that is
disclosed to it, or to any of its Affiliates pursuant to this Agreement. Neither
Pfizer nor Myco or any of their respective Affiliates shall use such
Confidential Information of the other party except as expressly permitted in
this Agreement or the License Agreement.
4.1.2 Pfizer and Myco each agree that any disclosure of the other's
Confidential Information to any officer, employee, consultant or agent of the
other party or of any of its Affiliates shall be made only if and to the extent
necessary to carry out its responsibilities under this Agreement and shall be
limited to the maximum extent possible consistent with such responsibilities.
Pfizer and Myco each agree not to disclose the other's Confidential Information
to any third parties under any circumstance without written permission from the
other party, except as expressly permitted by this Agreement or the License
Agreement. Each party shall take such action, and shall cause its Affiliates to
take such action, to preserve the
<PAGE> 12
- 12 -
confidentiality of each other's Confidential Information as it would customarily
take to preserve the confidentiality of its own Confidential Information. Each
party, upon the other's request, will return all the Confidential Information
disclosed to it by the other party pursuant to this Agreement, including all
copies and extracts of documents, within sixty (60) days of the request upon the
termination of this Agreement except for one (1) copy which may be kept for the
purpose of complying with continuing obligations under this Agreement.
4.1.3 Myco and Pfizer each represent that all of its employees, and any
consultants to such party, participating in the Research Program who shall have
access to Pfizer Program Technology, Pfizer Non-Program Technology, Myco Program
Technology or Myco Non-Program Technology or Joint Technology and Pfizer
Confidential Information and Myco Confidential Information are bound by
agreement to maintain such information in confidence.
4.2 Publication. Notwithstanding any matter set forth with
particularity in this Agreement to the contrary, results obtained in the course
of the Research Program may be submitted for publication following scientific
review by the Research Committee and subsequent approval by Myco's and Pfizer's
managements, which approval shall not be unreasonably withheld. After receipt of
the proposed publication by both Pfizer's and Myco's managements written
approval or disapproval shall be provided within thirty (30) days for a
manuscript, within fourteen (14) days for an abstract for presentation at, or
inclusion in the proceedings of a scientific meeting, and within fourteen (14)
days for a transcript of an oral presentation to be given at a scientific
meeting.
4.3 Publicity. Except as required by law, neither party may disclose
the terms of this Agreement nor the research described in it without the written
consent of the other party, which consent shall not be unreasonably withheld;
provided, however, the parties, upon the execution of this Agreement, will
<PAGE> 13
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 13 -
agree to a news release for publication in general circulation periodicals. The
parties may disclose the existence of this Agreement without the consent of the
other and, once a particular item has been generally disclosed, may further
disclose such item without the consent of the other.
4.4 Disclosure of Inventions. Each party shall promptly inform the
other about all inventions in the Area that are conceived, made or developed in
the course of carrying out the Research Program by employees of, or consultants
to, either of them solely, or jointly with employees of, or consultants to the
other.
4.5 Restrictions on Transferring Materials. Pfizer and Myco recognize
that the biological, synthetic chemical and biochemical materials which are part
of Pfizer Non-Program Technology, Pfizer Program Technology, Myco Program
Technology, Myco Non-Program Technology or Joint Technology, (collectively, the
"Materials") represent valuable commercial assets. Therefore, throughout the
Contract Period and the Option Period under the License Agreement and for [****]
years thereafter, Myco and Pfizer agree not to transfer such materials which are
part of Joint Technology or the other party's Technology to any third party,
unless prior written consent for any such transfer is obtained from the other
party, except as expressly permitted in this Agreement or the License Agreement.
Furthermore, throughout the Contract Period and the Option Period under the
License Agreement Myco agrees not to transfer such materials which are part of
the Myco Non-Program Technology or Myco Program Technology to any third party
for use in the Area.
5. Intellectual Property Rights. The following provisions relate to
rights in the intellectual property developed by Myco or Pfizer, or both, during
the course of carrying out the Research Program.
5.1 Ownership. (i) All Myco Confidential Information and Myco Program
Technology and Myco Non-Program Technology shall be owned by Myco. All Pfizer
Confidential Information and Pfizer
<PAGE> 14
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 14 -
Program Technology and Pfizer Non-Program Technology shall be owned by Pfizer.
All Joint Technology shall be owned jointly by Myco and Pfizer. All Patent
Rights shall be assigned to and owned by Myco, Pfizer or jointly by both of them
in accordance with their inventorship.
(ii) Except as set forth in Section 2.3.2, ***** ********
shall be part neither of the Research Program nor Pfizer Patent Rights;
provided, however, that if, ***** *****, ******** to employ ******** Technology
in the Research Program, ***** shall treat such Technology as **** Confidential
Information but shall in no event acquire any additional rights with respect to
such Technology; specifically, such ************** shall not become part of
*************, or **** ******, or ****************.
(iii) Notwithstanding anything herein or in the License
Agreement to the contrary, Myco shall have the unrestricted right to use and
license its fungi collections and other drug sources and its screening
technology for any purpose outside the Area.
5.2 Grants of Research Licenses. Myco and Pfizer each grants to the
other a nonexclusive, irrevocable, worldwide, royalty-free, perpetual license,
including the right to grant sublicenses to Affiliates, (i) to make and use
Confidential Information, Technology and Patent Rights for all research purposes
under the Research Program and (ii) to make and use Confidential Information,
Technology and Patent Rights other than culture collections and other drug
sources and screens or screening systems for research purposes ******* *****
other than (a) for purposes of ********** ********* and (b) the ************
********.
5.3 Rights outside the Area and Animal Health. Subject to any agreement
between the parties for Animal Health entered into pursuant to Section
2.1.4(ii), Myco shall have the exclusive right to use and license Myco
Non-Program Technology and Myco
<PAGE> 15
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Program Technology (and all related Materials and Confidential Information)
outside the Area.
5.4 Joint Technology outside the Area. Both parties shall have the
royalty-free worldwide right outside the Area to utilize any process which is
a part of the Joint Technology or within the claims of the Joint Patent Rights
("Joint Technology Process"). Notwithstanding the foregoing, neither party
shall have the right to manufacture, use or sell for use outside the Area any
compound which is part of the Joint Technology or within the claims of the
Joint Patent Rights, without the prior written agreement of the other party.
Without limiting the generality of the foregoing, each party shall have the
right to license any such Joint Technology Process to third parties for use
outside the Area and to disclose Confidential Information of the other party
relating to such Joint Technology Process and transfer Materials which are part
of Joint Technology to the third parties who agree in writing (i) to use such
Materials only as a part of the use of such Joint Technology Process, (ii) to
use such Joint Technology Process only outside the Area and (iii) to maintain
the confidentiality thereof and not further transfer them, on terms
substantially similar to those set forth herein.
6. PROVISIONS CONCERNING THE FILING, PROSECUTION AND MAINTENANCE OF
PATENT RIGHTS. The following provisions relate to the filing, prosecution and
maintenance of Patent Rights during the term of this Agreement:
6.1 Filing, Prosecution and Maintenance by Myco. With respect to Patent
Rights claiming Myco Program Technology and Myco Non-Program Technology ("Myco
Patent Rights"), Myco shall have the exclusive right and obligation:
(a) to file applications for letters patent on any invention
deemed patentable included in Myco Program Technology and Myco Non-Program
Technology; provided, however, that Myco shall consult with Pfizer regarding
countries in which such patent applications should be filed and shall file
patent applications in those countries where Pfizer requests that Myco file such
applications; and, further provided, that Myco, at its option and expense, may
file in countries where Pfizer does not request that Myco file such
applications;
<PAGE> 16
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(b) to take reasonable steps to prosecute all pending and new
patent applications included within Myco Patent Rights;
(c) to respond to oppositions, nullity actions,
re-examinations, revocation actions and similar proceedings filed by third
parties against the grant of letters patent for such applications;
(d) to maintain in force any letters patent included in Myco
Patent Rights by duly filing all necessary papers and paying any fees required
by the patent laws of the particular county in which such letters patent were
granted; and
(e) to cooperate fully with, and take all necessary actions
requested by, Pfizer in connection with the preparation, prosecution and
maintenance of any letters patent included in Myco Patent Rights.
Myco shall notify Pfizer in a timely manner of any decision to abandon
a pending patent application or an issued patent included in Myco Patent Rights.
Thereafter, Pfizer shall have the option, at its expense, of continuing to
prosecute any such pending patent application or of keeping the issued patent in
force.
6.1.1 Copies of Documents. Myco shall provide to Pfizer copies
of all patent applications that are part of Myco Patent Rights prior to filing,
for the purpose of obtaining substantive comment of Pfizer patent counsel. For
the same purpose Myco shall also provide to Pfizer copies of all documents
relating to prosecution of all such patent applications in a timely manner for
such review and shall provide to Pfizer every six (6) months a report detailing
their status.
6.1.2 Reimbursement of Costs for Filing Prosecuting and
Maintaining Patent Rights. Within thirty (30) days of receipt of invoices from
Myco, Pfizer shall reimburse Myco for all the costs of filing, prosecuting,
responding to opposition and the like and maintaining patent applications and
patents (including without limitation costs incurred by Myco with respect to
Patent Rights licensed to Myco by third parties) in countries
<PAGE> 17
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where Pfizer requests that patent applications be filed, prosecuted and
maintained. Such reimbursement shall be in addition to Funding Payments.
However, Pfizer may, upon sixty (60) days notice, request that Myco discontinue
filing or prosecution of patent applications in any country and discontinue
reimbursing Myco for the costs of filing, prosecuting, responding to opposition
and the like or maintaining such patent application or patent in any country.
Myco shall pay all costs in those countries in which Pfizer does not request
that Myco file, prosecute or maintain patent applications and patents, but in
which Myco, at its option, elects to do so.
6.1.3 Pfizer shall have the right to file on behalf of and as
an agent for Myco all applications and take all actions necessary to obtain
patent extensions pursuant to 35 USC Section 156 and foreign counterparts for
Myco or Joint Patent Rights described in this Section 6.1 licensed to Pfizer.
Myco agrees to sign, at Pfizer's expense, such further documents and take such
further actions as may be requested by Pfizer in this regard. If Pfizer
determines not to apply for any such extension, Pfizer shall so notify Myco at
least ninety (90) days prior to the deadline for such application, and Myco may
do so and Pfizer shall cooperate fully with Myco and provide all necessary
information within Pfizer's control to Myco for use therein.
6.2 Filing, Prosecution and Maintenance by Pfizer. With respect to
Patent Rights claiming Pfizer Technology ("Pfizer Patent Rights") and Patent
Rights claiming Joint Technology ("Joint Patent Rights"), Pfizer shall have
those rights and duties ascribed to Myco in Section 6.1.
6.3 Neither party may disclaim Patent Rights without the consent of the
other.
7. Acquisition of Rights from Third Parties. During the Contract Period, Myco
and Pfizer shall each promptly notify each other of any and all acquisitions
from third parties of technology or patents which may be useful in the Research
Program. Such acquired rights shall become part of the
<PAGE> 18
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Confidential Information, Technology or Patent Rights, whichever is appropriate,
of the acquiring party or Joint Technology, as the case may be.
8. Other Agreements, Condition Precedent.
8.1 Concurrently with the execution of this Agreement, Myco and Pfizer
shall enter into the License Agreement appended to and made part of this
Agreement as Exhibit ____ and the Stock Purchase Agreement appended to and made
a part of this Agreement as Exhibit ____. This Agreement, the Stock Purchase
Agreement and the License Agreement are the sole agreements with respect to the
subject matter and supersede all other agreements and understandings between the
parties with respect to same.
9. Term, Termination and Disengagement.
9.1 Term. Unless sooner terminated or extended, this Agreement shall
expire on December 31, 1998.
9.2 Events of Termination. The following events shall constitute events
of termination ("Events of Termination"):
(a) any written representation or warranty by Myco or Pfizer,
or any of its officers, made under or in connection with this Agreement shall
prove to have been incorrect in any material respect when made.
(b) Myco or Pfizer shall fail in any material respect to
perform or observe any term, covenant or understanding contained in this
Agreement or in any of the other documents or instruments delivered pursuant to,
or concurrently with, this Agreement, and any such failure shall remain
unremedied for thirty (30) days after written notice to the failing party.
9.3 Termination.
9.3.1 Upon the occurrence of any Event of Termination, the
party not responsible may, by notice to the other party, terminate this
Agreement.
9.3.2 If Pfizer terminates this Agreement pursuant to Section
9.3.1, the License Agreement shall continue according to its terms. If Myco
terminates this Agreement pursuant to Section 9.3.1, the License Agreement shall
terminate immediately.
<PAGE> 19
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 19 -
9.4 Termination by Pfizer. After this Agreement has been in effect for
a period of [********] months, during the next ensuring [******],
Pfizer may by notice terminate this Agreement, with or without cause. If Pfizer
terminates this Agreement pursuant to this Section, it will make a termination
payment within [*****] days equal to the Funding Payments which would
otherwise have been due for the [******] period from [*******
******] and will retain all rights and duties set forth in the License
Agreement. If Pfizer does not elect to terminate this Agreement during the [
***] period described in this Section, the Agreement will continue according
to its terms until its termination date.
9.5 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2.
9.6 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in
Section 4 and 12;
(b) Myco's right to receive all payments accrued under
Section 3; or
(c) any other remedies which either party may otherwise
have.
10. Representations and Warranties. Myco and Pfizer each represents and warrants
as follows:
10.1 It is a corporation duly organized, validly existing and is in
good standing under the laws of the State of Delaware and the State of Delaware,
respectively, is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification and has all requisite
power and authority, corporate or otherwise, to conduct its business as now
being conducted, to own, lease and operate its properties and to execute,
deliver and perform this Agreement.
<PAGE> 20
- 20 -
10.2 The execution, delivery and performance by it of this Agreement
have been duly authorized by all necessary corporate action and do not and will
not (a) require any consent or approval of its stockholders, (b) violate any
provision of any law, rule, regulations, order, writ, judgment, injunctions,
decree, determination or award presently in effect having applicability to it or
any provision of its certificate of incorporation or by-laws or (c) result in a
breach of or constitute a default under any material agreement, mortgage, lease,
license, permit or other instrument or obligation to which it is a party or by
which it or its properties may be bound or affected.
10.3 This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
10.4 It is not under any obligation to any person, or entity,
contractual or otherwise, that is conflicting or inconsistent in any respect
with the terms of this Agreement or that would impede the diligent and complete
fulfillment of its obligations.
10.5 It has good and marketable title to or valid leases or licenses
for, all of its properties, rights and assets necessary for the fulfillment of
its responsibilities under the Research Program, subject to no claim of any
third party other than the relevant lessors or licensors.
11. Covenants of Myco and Pfizer Other Than Reporting Requirements. Throughout
the Contract Period, Myco and Pfizer each shall
11.1 maintain and preserve its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in good standing in each jurisdiction in
which such
<PAGE> 21
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qualification is from time to time necessary in order to carry out the Research
Program.
11.2 comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government authority to
the extent necessary to conduct the Research Program, except for those laws,
rules, regulations, and orders it may be contesting in good faith.
12. Indemnification.
12.1 Indemnification of Myco by Pfizer. Pfizer shall indemnify, defend
and hold harmless Myco and its directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "Myco Indemnitees"), against
any liability, damage, loss or expense (including reasonable attorneys' fees and
expenses of litigation) incurred by or imposed upon the Myco Indemnitees, or any
one of them, in connection with any claims, suits, actions, demands or judgments
of third parties, including without limitation personal injury and product
liability matters (except in cases where such claims, suits, actions, demands or
judgments result from the material breach, negligence or willful misconduct on
the part of Myco), arising out of the production, manufacture, promotion, sale
or use by any person of any Product or Antifungal Drug which is manufactured or
sold by Pfizer or by an Affiliate, sublicensee, distributor or agent of Pfizer.
12.2 Indemnification of Pfizer by Myco. Myco shall indemnify, defend
and hold harmless Pfizer and its directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "Pfizer Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Pfizer
Indemnitees, or any one of them, in connection with any claims, suits, actions,
demands or judgments of third parties, including without limitation claims of
suppliers and Myco employees (except in cases where such claims, suits, actions,
demands or judgments result from the material
<PAGE> 22
- 22 -
breach, negligence or willful misconduct on the part of Pfizer), arising out of
the activities of Myco in the performance of the Research Program.
12.3 The foregoing indemnification shall not apply if an Indemnitee
fails to give the indemnitor prompt notice of any claim it receives and such
failure materially prejudices the indemnitor with respect to any claim or action
to which a party's obligation pursuant to this Section applies. The indemnifying
party, in its sole discretion, shall choose legal counsel, shall control the
defense of such claim or action and shall have the right to settle same on such
terms and conditions it deems advisable. 13. Notices. All notices shall be in
writing mailed via certified mail, return receipt requested, courier, or
facsimile transmission addressed as follow, or to such other address as may be
designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at
the beginning of this Agreement.
Attention: President, Central Research
with copy to: Office of the General
Counsel.
If to Myco: Myco at its address as set forth at the
beginning of this Agreement. Attention:
President
Notices shall be deemed given as of the date received.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. Miscellaneous.
15.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives,
successors and permitted assigns.
15.2 Headings. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
<PAGE> 23
- 23 -
15.3 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original.
15.4 Amendment; Waiver; etc. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
15.5 No Third Party Beneficiaries. Except as set forth in Section 12
hereof, no third party including any employee of any party to this Agreement,
shall have or acquire any rights by reason of this Agreement. Nothing contained
in this Agreement shall be deemed to constitute the parties as agents for the
other or as partners with each other or any third party.
15.6 Assignment and Successors. This Agreement may not be assigned by
either party, except that each party may assign this Agreement and the rights
and interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations.
15.7 Force Majeure. Neither Pfizer nor Myco shall be liable for failure
of or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of Pfizer or Myco.
15.8 Severability. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent
<PAGE> 24
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jurisdiction or is deemed unenforceable; it is the intention of the parties that
the remainder of the Agreement shall not be affected. IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their duly authorized
representatives.
PFIZER INC.
By: /s/ George M. Mubegh
---------------------
Title: Vice President
-------------------
Date: 13 February 1995
-------------------
MYCO PHARMACEUTICALS INC.
By:
---------------------
Title:
-------------------
Date:
-------------------
cc: Pfizer Inc, Legal Division, Groton, CT 06340
<PAGE> 25
EXHIBIT A
Pages 1 through 33 of Exhibit A contain confidential materials
which have been deleted and filed separately with the
Securities and Exchange Commission.
<PAGE> 26
EXHIBIT B-1
Page 1 of 1 page contains confidential materials
which have been deleted and filed separately with the
Securities and Exchange Commission.
<PAGE> 27
EXHIBIT B-2
Page 1 of 1 page contains confidential materials
which have been deleted and filed separately with the
Securities and Exchange Commission.
<PAGE> 28
EXHIBIT B-3
Page 1 of 1 page contains confidential materials
which have been deleted and filed separately with the
Securities and Exchange Commission.
<PAGE> 29
EXHIBIT C
Page 1 of 1 page contains confidential materials
which have been deleted and filed separately with the
Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 10.41
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
LICENSE OPTION, LICENSE AND ROYALTY AGREEMENT
This LICENSE OPTION, LICENSE AND ROYALTY AGREEMENT is entered into as
of January 1, 1995 (the "Effective Date") by and between PFIZER INC. ("Pfizer"),
a Delaware corporation, having an office at 235 East 42nd Street, New York, New
York 10017 and its Affiliates and MYCO PHARMACEUTICALS INC. ("Myco"), a Delaware
corporation, having an office at 1 Kendall Square, Building 300, Boston,
Massachusetts 02139.
WHEREAS, Pfizer desires to obtain an option to an exclusive license to
Myco's right, title and interest in the Myco and Joint Patent Rights so that
Pfizer exclusively can manufacture, use or sell the Products; and
WHEREAS, Myco is willing to grant such license option;
Therefore, in consideration of the mutual covenants and promises set
forth in this Agreement, the parties agree as follows:
1. DEFINITIONS.
The capitalized terms used in this Agreement and not defined elsewhere
in it shall have the meanings specified for such terms in this Section 1 and in
the Research Agreement.
1.1 "RESEARCH AGREEMENT" means the Collaborative Research Agreement
between Pfizer and Myco effective January 1, 1995.
1.2 "NET SALES" means the gross amount invoiced by Pfizer or any
sublicensee of Pfizer for sales to a third party or parties of Products, less
normal and customary trade discounts actually allowed, rebates, returns,
credits, taxes the legal incidence of which is on the purchaser and separately
shown on Pfizer's or any sublicensee of Pfizer's invoices and transportation,
insurance and postage charges, if prepaid by Pfizer or any sublicensee of Pfizer
and billed on Pfizer's or any sublicensee of Pfizer's invoices as a separate
item.
1.3 "MAJOR MARKET" means [***************************************
************************].
<PAGE> 2
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
1.4 "LICENSED PRODUCT" means a Product for which Pfizer has
rights under a License pursuant to this Agreement.
2. TERM AND GRANT OF LICENSE OPTION, EXERCISE OF OPTION, TERM
AND GRANT OF LICENSE, RIGHTS AND OBLIGATIONS.
2.1 LICENSE OPTION GRANTED TO PFIZER UNDER THE PATENT
RIGHTS.
During the term of the Research Agreement and for [**********]
after its termination ("Option Term"), Myco grants to Pfizer an exclusive option
("Option") to an exclusive, worldwide license ("License") including the right to
grant sublicenses, to manufacture, use and sell each prospective Product
identified in the Research Program and each prospective Antifungal Drug
developed by Myco outside of its activities under the Research Program under
all Myco's right, title and interest in the Myco and Joint Patent Rights.
Pfizer may exercise the Option in accordance with the procedure set forth in
Section 2.2 upon notice to Myco in a manner prescribed in Section 11.
2.2 PROCEDURE FOR EXERCISE OF OPTION.
2.2.1 Whenever Pfizer or Myco, individually or jointly,
identifies a compound in the course of the Research Program which it believes
may qualify as a candidate Product which satisfies a Profile of Activity, it
shall present the available information on the compound to the Research
Committee. The Research Committee shall review the data and determine whether it
believes the compound satisfies a Profile of Activity and is a bona fide
candidate for development as an Antifungal Drug and will so advise the parties
within [************] days after the presentation of the data to it.
2.2.2 If the Research Committee determines that a compound
should be proposed as a candidate Product which satisfies a Profile of Activity
and is a bona fide candidate for development as an Antifungal Drug, it shall so
notify the parties and shall issue a "Candidate Alert Notice," or equivalent, in
accordance with Pfizer's internal procedures. Pfizer shall then have
[*********] days to determine whether to exercise the Option
2
<PAGE> 3
for such candidate Product. If Pfizer exercises the Option for such candidate
Product, it will become a "Licensed Product" hereunder. If Pfizer does not
exercise the Option for such candidate Product, it shall nevertheless have the
right to reconsider such exercise and may exercise the Option for such candidate
Product at any time during the Option Term. If Pfizer does not exercise the
Option for such candidate Product during the Option Term, Myco will be free to
develop and commercialize such candidate Product itself or with third parties
after the expiration of the Option Term, if but only if Pfizer is not developing
or selling a Product with the same Profile of Activity pursuant to this
Agreement. If Myco commercializes such candidate Product, Myco shall be
obligated to pay a royalty to Pfizer with respect to commercial sales of such
Product, as set forth in Section 3.10. In such circumstances, Pfizer shall have
no rights to such candidate Product or any resulting Product.
2.3 TERM OF LICENSE.
Unless terminated earlier as provided below, if Pfizer
exercises the Option, the License for the Licensed Product in question shall
commence on the date of exercise and shall terminate on the date of the last to
expire of the Patent Rights.
2.4 PFIZER OBLIGATIONS.
During the term of any License:
2.4.1 Pfizer shall use reasonably diligent efforts to exploit
the Licensed Product to which such License applies commercially, including
conducting clinical trials and obtaining regulatory approvals. If Pfizer
determines to cease diligent efforts to exploit the Licensed Product, Pfizer
shall so notify Myco, whereupon Myco may terminate the License for such Licensed
Product in the manner (and with the consequences) set forth in Section 9 hereof.
2.4.2 If Pfizer grants a sublicense to a third party, Pfizer
shall guarantee that any such sublicensee fulfills all of Pfizer's obligations
under this Agreement; provided,
3
<PAGE> 4
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
however, that Pfizer shall not be relieved of its obligations pursuant to this
Agreement.
2.5 TECHNICAL ASSISTANCE.
During the term of any License, Myco shall provide Pfizer or
any sublicensee of Pfizer, at Pfizer's request and expense, any technical
assistance reasonably necessary to enable Pfizer or such sublicensee to
manufacture, use or sell each Licensed Product and to enjoy fully all rights
granted to Pfizer pursuant to this Agreement; provided, however, that Myco is
reasonably capable of providing that assistance.
2.6 NEGOTIATION OF MUTUAL OBLIGATIONS.
During the term of any License:
2.6.1 Section 2.4.1 to the contrary notwithstanding, if, at
any time that ************************ with resect to a Licensed Product, *****
******************************************************** for the conduct of
****************************** the parties agree to discuss in good faith the
possibility of ************************************************* in such
******************************************* may also participate in other
facets of **************** in ways that the parties agree is mutually
beneficial. If ********************************************************* the
parties will agree on appropriate compensation to ****. At the request of ****
the parties also agree to discuss in good faith the possibility of
*********************************** or *********************************
or******** for which *************** but **************************************
2.6.2 In general, Pfizer shall be responsible for the
manufacture of all Licensed Products; provided, however, that if (i) Myco
acquires the capacity or ability to manufacture or supply drug products by a
fermentation method consistent with FDA
4
<PAGE> 5
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Drug Good Manufacturing Practices; and (ii) Pfizer is then manufacturing or
having manufactured a Licensed Product by a similar fermentation method, then
Pfizer will, in good faith, discuss with Myco, the manufacture by Myco of part
of Pfizer's requirements for such Product in the United Sates and elsewhere.
Pfizer shall have no obligation place an order with Myco for its US requirements
if Myco quotes a price more than [*****************] above the price Pfizer is
then paying for such Licensed Product and for its foreign requirements if Myco
quotes a price which exceeds the [*****************] price including savings for
taxes and duty. Under no circumstances shall Myco have the right to be the sole
source for any Licensed Product.
3. PAYMENT OF ROYALTIES, ROYALTY RATES, ACCOUNTING FOR ROYALTIES, RECORDS,
MILESTONE PAYMENTS, ADDITIONAL STOCK PURCHASE.
3.1 PAYMENT OF ROYALTIES.
During the term of any License, Pfizer shall pay Myco a
royalty based on the Net Sales of each Licensed Product. Such royalty shall be
paid with respect to each country of the world from the date of the first
commercial sale (the date of the invoice of Pfizer or any sublicensee of Pfizer
with respect to such sales) of such Licensed Product in each such country until
the expiration of the last Patent Right to expire with respect to each such
country and each such Licensed Product. By way of further explanation, Pfizer
shall pay royalties pursuant to Section 3.2.3 with respect to the manufacture of
products whose manufacture would infringe or be covered by Patent Rights if it
were done by an unlicensed third party, such royalties to be paid on the Net
Sales of such Licensed Products even if the actual sale of such Licensed
Products would not alone infringe or be covered by Patent Rights if such sales
were made by an unlicensed third party.
3.2 ROYALTY RATES.
3.2.1 During the term of any License, Pfizer shall pay Myco a
royalty for the sale of each Licensed Product as set forth in Section 3.2.3;
provided, however, that the royalty rate
5
<PAGE> 6
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
otherwise applicable to Net Sales of a Licensed Product set forth below shall
be reduced by [***********] until [****************] after that Licensed
Product has been approved for sale by the US Food and Drug Administration
("FDA") and one of its regulatory counterparts in a Major Market; provided,
however, that such reduction shall in no event continue for more than [*******]
years and shall be terminated if worldwide sales of affected Licensed Product
exceed [*****************] for any year. Moreover, if [*************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
the otherwise applicable royalty rate set forth below shall be reduced by
[*********]; provided, however, that in no event shall the applicable royalty
rates after any reduction required under this Section 3.2.1 and under Section
3.2.2 be reduced to a percentage lower than that set forth in Section 3.2.3 in
the column labeled "Minimum Royalty Rates as a Percentage of net Sales."
3.2.2 THIRD PARTY LICENSES. If the manufacture, use or sale by
Pfizer of a Licensed Product in any country would, in the opinion of both Pfizer
and Myco infringe a patent owned by a third party, Pfizer and Myco shall attempt
to obtain a license under such patent. If Pfizer obtains a license under such
patent, [****] of any payments made by Pfizer to such third party shall be
deductible from royalty payments due from Pfizer to Myco pursuant to this
Agreement; provided, however, that in no event shall royalties payable to Myco
be reduced by more than [************] in any year as a result of all such
deductions under this Section 3.2.2. All such
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<PAGE> 7
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
computations, payments and adjustments shall be on a country by
country and patent by patent basis.
3.2.3 The royalty paid by Pfizer to Myco shall be the sum of
the Net Sales in each Tier multiplied by the applicable royalty rate for that
Tier. Royalty rates with respect to Products are as follows:
NET SALES IN ROYALTY RATES AS MINIMUM ROYALTY
MILLIONS OF DOLLARS A PERCENTAGE OF RATES AS A PERCENTAGE OF
("TIERS") NET SALES OF NET SALES
- - --------------------------------------------------------------------------------
[***** ** ** ]
[***** ** ** ]
[***** ** ** ]
[***** ** ** ]
[***** ** ** ]
The Minimum Royalty Rate in the third column is the absolute minimum after all
offsets and deductions permitted under this Agreement, except for the credit
permitted by Section 3.8.
3.3 RENEGOTIATION OF ROYALTY RATES.
The Parties acknowledge that the royalty rates set forth in
Section 3.2 are based on the premise that Licensed Products ********************
********************************************************************************
********************************************************************************
********. If ******************************************************************
************************ with respect to a Licensed Product which represents a
commercial opportunity for Pfizer or improves the safety or efficacy of such
Licensed Product, the parties shall negotiate a new royalty rate for such
Licensed Product ***************************************************************
********************************************************************************
***************. The foregoing provisions of this Section 3.3 regarding
renegotiation shall ************************************************************
*******************************************************************************.
3.4 PAYMENT DATES.
Royalties shall be paid by Pfizer on Net Sales within sixty
(60) days after the end of each calendar quarter in which
7
<PAGE> 8
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
such Net Sales are made. Such payments shall be accompanied by a statement
showing the Net Sales of each Licensed Product by Pfizer or any sublicensee of
Pfizer in each country, the applicable royalty rate for such Licensed Product,
and a calculation of the amount of royalty due.
3.5 ACCOUNTING.
The Net Sales used for computing the royalties payable to Myco
by Pfizer shall be computed and paid in US dollars by check or other mutually
acceptable means. For purposes of determining the amount of royalties due, the
amount of Net Sales in any foreign currency shall be computed by (a) converting
such amount into dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as quoted by Citibank in New York
on the last business day of the calendar quarter for which the relevant royalty
payment is to be made by Pfizer and (b) deducting the amount of any governmental
tax, duty, charge, or other fee actually paid in respect of such conversion
into, and remittance of dollars.
3.6 ROYALTIES WITH RESPECT TO PRODUCTS WHICH EMPLOY MYCO OR
JOINT TECHNOLOGY BUT WHICH DO NOT INFRINGE PATENT RIGHTS.
In those countries of the world in which Pfizer sells Antifungal Drugs which
employ Myco Program Technology, Myco Non-Program Technology or Joint Technology
but which, even in the absence of a license, do not infringe an issued patent
within Patent Rights claiming Myco Program Technology, Myco Non-Program
Technology or Joint Technology, and are not covered by a claim of a pending
patent application within Patent Rights claiming Myco Program Technology, Myco
Non-Program Technology or Joint Technology and are not within the claims of any
patent or patent application owned or controlled by Pfizer, Pfizer will pay
Myco a royalty equal to [************] of Net Sales of such Antifungal Drug.
Sections 3.2.2, 3.4, 3.5, 3.7 and 3.8 shall apply to such royalties, but
[*******************************************************************************
*****************************************************************************]
8
<PAGE> 9
3.7 RECORDS.
Pfizer shall keep for three (3) years from the date of each
payment of royalties complete and accurate records of sales by Pfizer of each
Product in sufficient detail to allow the accruing royalties to be determined
accurately. Myco shall have the right for a period of three (3) years after
receiving any report or statement with respect to royalties due and payable to
appoint at its expense an independent certified public accountant reasonably
acceptable to Pfizer to inspect the relevant records of Pfizer to verify such
report or statement. Pfizer shall make its records available for inspection by
such independent certified public accountant during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from Myco to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any calendar year nor
more than once with respect to sales in any given period. Myco agrees to hold in
strict confidence all information concerning royalty payments and reports, and
all information learned in the course of any audit or inspection, except to the
extent necessary for Myco to reveal such information in order to enforce its
rights under this Agreement or if disclosure is required by law. The failure of
Myco to request verification of any report or statement during said three-year
period shall be considered acceptance of the accuracy of such report, and Pfizer
shall have no obligation to maintain records pertaining to such report or
statement beyond said three-year period. The results of each inspection, if any,
shall be binding on both parties.
3.8 MILESTONE PAYMENTS.
Pfizer shall pay Myco, within sixty (60) days of the
completion of each respective event set forth below ("Event"), the payment
listed opposite that Event. payments shall be made in US dollars by check or
other mutually acceptable means. Pfizer shall be obligated to make each payment
only once with respect to the first Licensed Product in each Activity Profile
9
<PAGE> 10
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
affected by an Event so that the occurrence of an event with respect to
additional Licensed Products contemplated in each Activity Profile will not
require Pfizer to make an additional payment with respect to that Event. All
payments made by Pfizer pursuant to this Section 3.8 shall be credited against
all sums due to Myco pursuant to Section 3.2 of this Agreement; provided,
however, that the sums due pursuant to Section 3.2 in any calendar year shall
not be reduced by virtue of this credit by more than [****************].
EVENT AMOUNT
[******* *****
*******
*******
*****
******* *****
****
******* *****
*******
*****
******* *****
*******
****
3.9 ADDITIONAL STOCK PURCHASE.
If and when an *** filed by ***** with FDA or an equivalent
agency in any major market becomes effective with respect to a product, at the
request of [***********************************], Pfizer will purchase
additional shares of Myco common stock in accordance with the terms and
conditions of the Stock Purchase Agreement. Pfizer will invest ***** at the
rate of [*****] per share (adjusted for any stock split, stock dividend or
reverse stock split) if Myco common stock is not publicly traded or at the
**************** if Myco stock is publicly traded on that date. The purchase
price will not be applied to royalties due to Myco pursuant to this
10
<PAGE> 11
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Agreement and Pfizer shall be obligated to make such purchase once only during
the term of this Agreement.
3.10 MYCO ROYALTY PAYMENTS.
In the event Myco shall have the right to develop and
commercialize any Product pursuant to Section 2.2, 2.4 or 9.3, Myco shall be
obligated to pay royalties to Pfizer on commercial sales of such Product for
patient treatment pursuant to an approved NDA or foreign equivalent. In the
case of such sales by Myco or its Affiliates, such royalty shall be equal to
[********] of Net Sales by Myco or its Affiliates of such Product (Net Sales
having the meaning set forth in Section 1.2 with Myco substituted for Pfizer).
In the case of such sales by a licensee of Myco, such royalty shall be the
lesser of (i) [*****] of the licensee's Net Sales of such Product (Net Sales
having the meaning set forth above) or (ii) [*****] of royalties received by
Myco from the licensee with respect to such commercial sales of the Product by
the licensee. For the avoidance of doubt, it is acknowledged that equity
investments, payments for services and payments for the purchase of goods are
not considered royalties with respect to commercial sales by the licensee.
In the event Myco is obligated to pay royalties to Pfizer
pursuant to this Section 3.10, Sections 3.2.1 (after the first semi-colon),
3.2.2, 3.3, 3.4, 3.5 and 3.7 shall apply, with the rights and obligations of
Pfizer and Myco thereunder being reversed.
3.11 MYCO OBLIGATIONS TO LICENSORS. Myco shall be responsible for any
payment due as a result of this Agreement to any third party which has
heretofore licensed any Technology to Myco.
11
<PAGE> 12
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
4. LEGAL ACTION.
4.1 ACTUAL OR THREATENED INFRINGEMENT.
Subject to Myco's obligations to licensors, if any, of
Myco Patent Rights or Joint Patent Rights, when information comes to the
attention of Pfizer to the effect that any Myco or Joint Patent Rights relating
to a Licensed Product have been or are threatened to be unlawfully infringed
Pfizer shall have the right at its expense to take such action as it may deem
necessary to prosecute or prevent such unlawful infringement. Pfizer shall
notify Myco promptly of the receipt of any such information and of the
commencement of any such suit, action or proceeding. If Pfizer determines that
it is necessary or desirable for Myco to join any such suit, action or
proceeding, Myco shall, at Pfizer's expense, execute all papers and perform such
other acts as may be reasonably required to permit Pfizer to act in Myco's name.
If Pfizer brings a suit, it shall have the right first to reimburse itself out
of any sums recovered in such suit or in its settlement for all costs and
expenses, including attorney's fees, related to such suit or settlement, and
[***************] of any funds that shall remain from said recovery shall be
paid to Myco and the balance of such funds shall be retained by Pfizer. If
Pfizer does not, within one hundred twenty (120) days after giving notice to
Myco of the above-described information, notify Myco of Pfizer's intent to bring
suit against any infringer, Myco shall have the right to bring suit for such
alleged infringement, but it shall not be obligated to do so, and may join
Pfizer as party plaintiff, if appropriate, in which event Myco shall hold Pfizer
free, clear and harmless from any and all costs and expenses of such litigation,
including attorney's fees, and any sums recovered in any such suit or in its
settlement shall belong to Myco. However, [************************************
***] of any such sum received by Myco, after deduction of all costs and
expenses related to such suit or settlement, including attorney's fees paid,
shall be paid to Pfizer. Each party shall always have the right to be
represented by counsel of its own
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<PAGE> 13
selection and at its own expense in any suit instituted by the other for
infringement under the terms of this Section . If Pfizer lacks standing and Myco
has standing to bring any such suit, action or proceeding, then Myco shall do so
at the request of Pfizer and at Pfizer's expense.
4.2 DEFENSE OF INFRINGEMENT CLAIMS.
Myco will cooperate with Pfizer at Pfizer's expense in the
defense of any suit, action or proceeding against Pfizer or any sublicensee of
Pfizer alleging the infringement of the intellectual property rights of a third
party by reason of the use of Myco, Pfizer or Joint Patent Rights in the
manufacture, use or sale of the Licensed Product. Pfizer shall give Myco prompt
written notice of the commencement of any such suit, action or proceeding or
claim of infringement and will furnish Myco a coy of each communication relating
to the alleged infringement. Myco shall give to Pfizer all authority (including
the right to exclusive control of the defense of any such suit, action or
proceeding and the exclusive right after consultation with Myco, to compromise,
litigate, settle or to otherwise dispose of any such suit, action or
proceeding), information and assistance necessary to defend or settle any such
suit, action or proceeding; provided, however, Pfizer shall obtain Myco's prior
consent to such part of any settlement which requires payment or other action by
Myco or has a material adverse effect on Myco's business. If the parties agree
that Myco should institute or join any suit, action or proceeding pursuant to
this Section , Pfizer may at Pfizer's expense, join Myco s a defendant if
necessary or desirable, and Myco shall execute all documents and take all other
actions, including giving testimony, which may reasonably be required in
connection with the prosecution of such suit, action or proceeding.
5. REPRESENTATION AND WARRANTY, HOLD HARMLESS.
5.1 Myco represents and warrants to Pfizer that it has the right to
grant the Option and License pursuant to this Agreement and that the Option and
Licenses so granted do not conflict with
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<PAGE> 14
or violate the terms of any agreement between Myco and any third party.
5.2 Myco agrees to defend, protect, indemnify and hold harmless Pfizer
and any sublicensee of Pfizer, from and against any loss or expense arising from
any proven claim of a third party that it has been granted rights by Myco that
Pfizer or any sublicensee of Pfizer in exercising their rights granted to Pfizer
by Myco pursuant to this Agreement, has infringed upon such rights granted to
such third party by Myco.
6. TREATMENT OF CONFIDENTIAL INFORMATION.
6.1 Pfizer and Myco each recognize that the other's
Confidential Information constitutes highly valuable, confidential information.
Subject to rights and obligations of the parties pursuant this Agreement and the
Research Agreement, Pfizer and Myco each agree that during the term of the
Research Agreement and for five (5) years thereafter, it will keep confidential,
and will cause its Affiliates to keep confidential, all Myco Confidential
Information or Pfizer Confidential Information, as the case may be, that is
disclosed to it or to any of its Affiliates pursuant to this Agreement. Neither
Pfizer nor Myco nor any of their respective Affiliates shall use such
Confidential Information of the other party except as expressly permitted in
this Agreement or the Research Agreement.
6.1.1 Subject to the parties' rights and obligations pursuant
to this Agreement and the License Agreement, Pfizer and Myco each agree that any
disclosure of the other's Confidential Information to any officer, employee or
agent of the other party or of any of its Affiliates shall be made only if and
to the extent necessary to carry out its responsibilities under this Agreement
and shall be limited to the maximum extent possible consistent with such
responsibilities. Subject to the parties' rights and obligations pursuant to
this Agreement and the License Agreement, Pfizer and Myco each agree not to
disclose the other's Confidential Information to any third parties under any
circumstance without written permission from the other party.
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<PAGE> 15
Each party shall take such action, and shall cause its Affiliates to take such
action, to preserve the confidentiality of each other's Confidential Information
as it would customarily take to preserve the confidentiality of its own
Confidential Information. Each party, upon the other's request, will return all
the Confidential Information disclosed to it by the other party pursuant to this
Agreement, including all copies and extracts of documents, within sixty (60)
days of the request upon the termination of this Agreement except for one (1)
copy which may be kept for the purpose of complying with continuing obligations
under this Agreement.
6.1.2 Myco and Pfizer each represent that all of its
employees, and any consultants to such party, who shall have access to Pfizer
Program Technology, Pfizer Non-Program Technology, Myco Program Technology, Myco
Non-Program Technology or Joint Technology and Pfizer Confidential Information
and Myco Confidential Information are bound by agreement to maintain such
information in confidence.
6.1.3 Notwithstanding anything to the contrary set forth
herein or in the Research Agreement, in the event Myco shall have the right to
develop and commercialize a Product pursuant to this Agreement or the Research
Agreement, Myco shall have the right to disclose and transfer (i) Confidential
Information and Materials which are part of the Myco Program Technology or Myco
Non-Program Technology with respect to such Product and (ii) Confidential
Information and Materials other than compounds which are part of the Joint
Technology with respect to such Product, to third parties who execute a
Confidentiality agreement with respect thereto.
6.2 PUBLICITY.
Except as required by law, neither party may disclose the
terms of this Agreement without the written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, the parties, upon
the execution of this Agreement, will agree to a news release for publication in
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<PAGE> 16
general circulation periodicals. The parties may disclose the existence of this
Agreement without the consent of the other and, once a particular item has been
generally disclosed, may further disclose such item without the consent of the
other.
6.3 DISCLOSURE OF INVENTIONS.
Each party shall promptly inform the other about all
inventions in the Area that are conceived, made or developed in the course of
carrying out the Research Program by employees of, consultants to, either of
them solely, or jointly with employees of, or consultants to the other.
7. PROVISIONS CONCERNING THE FILING, PROSECUTION AND
MAINTENANCE OF PATENT RIGHTS.
The following provisions relate to the filing, prosecution and
maintenance of Patent Rights during the term of this Agreement:
7.1 FILING, PROSECUTION, AND MAINTENANCE BY MYCO.
With respect to Myco Patent Rights, Myco shall have the
exclusive right and obligation:
(a) to file applications for letters patent on any patentable
invention included in Myco Program Technology and Myco Non-Program Technology;
provided, however, that Myco shall consult with Pfizer regarding countries in
which such patent applications should be filed and shall file patent
applications in those countries where Pfizer requests that Myco file such
applications; and, further provided, that Myco, at its option and expense, may
file in countries where Pfizer does not request that Myco file such
applications;
(b) to prosecute all pending and new patent applications
included within Myco Patent Rights;
(c) to respond to oppositions, nullity actions, re-
examinations, revocation actions and similar proceedings filed by third parties
against the grant of letters patent for such applications;
(d) to maintain in force any letters patent included in Myco
Patent Rights by duly filing all necessary papers and
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<PAGE> 17
paying any fees required by the patent laws of the particular country in which
such letters patent were granted.
(e) to cooperate fully with, and take all necessary actions
requested by, Pfizer in connection with the preparation, prosecution and
maintenance of any letters patent included in Myco Patent Rights.
Myco shall notify Pfizer in a timely manner of any decision to
abandon a pending patent application or an issued patent included in Myco Patent
Rights. Thereafter, Pfizer shall have the option, at its expense, of continuing
to prosecute any such pending patent application or of keeping the issued patent
in force.
7.1.1 COPIES OF DOCUMENTS. Myco shall provide to Pfizer copies
of all patent applications that are part of Myco Patent Rights prior to filing,
for the purpose of obtaining substantive comment of Pfizer patent counsel. For
the same purpose Myco shall also provide to Pfizer copies of all documents
relating to prosecution of all such patent applications in a timely manner for
such review and shall provide to Pfizer every six (6) months a report detailing
their status.
7.1.2 REIMBURSEMENT OF COSTS FOR FILING, PROSECUTING AND
MAINTAINING PATENT RIGHTS. Within thirty (30) days of receipt of invoices from
Myco, Pfizer shall reimburse Myco for all the costs of filing, prosecuting,
responding to opposition and the like and maintaining patent applications and
patents (including without limitation costs incurred by Myco with respect to
Patent Rights licensed to Myco by third parties) in countries where Pfizer
requests that patent applications be filed, prosecuted and maintained. Such
reimbursement shall be in addition to Funding Payments. However, Pfizer may,
upon sixty (60) days notice, request that Myco discontinue filing or prosecution
of patent applications in any country and discontinue reimbursing Myco for the
costs of filing, prosecuting, responding to opposition and the like or
maintaining such patent application or patent in any country. Myco shall pay all
costs in those
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<PAGE> 18
countries in which Pfizer does not request that Myco file, prosecute or maintain
patent applications and patents, but in which Myco, at is option, elects to do
so.
7.1.3 Pfizer shall have the right to file on behalf of Myco
all applications and take all actions necessary to obtain patent extensions
pursuant to 35 USC Section 156 for Myco or Joint Patent Rights described in this
Section 7.1 licensed to Pfizer. Myco agrees to sign, at Pfizer's expense, such
further documents and take such further actions as may be requested by Pfizer in
this regard. If Pfizer determines not to apply for any such extension, Pfizer
shall so notify Myco in writing at least ninety (90) days prior to the deadline
for such application, and Myco may do so and Pfizer shall cooperate fully with
Myco and provide all necessary information within Pfizer's control to Myco for
use therein.
7.2 FILING, PROSECUTION AND MAINTENANCE BY PFIZER.
With respect to Pfizer Patent Rights and Patent Rights
claiming Joint Technology, Pfizer shall have those rights and duties ascribed to
Myco in Section 7.1
7.3 Neither party may disclaim a Patent Rights without the
consent of the other.
8. OTHER AGREEMENTS, CONDITION PRECEDENT.
8.1 Concurrently with the execution of this Agreement, Myco and Pfizer
shall enter into the Research Agreement and the Stock Purchase Agreement. This
Agreement, the Stock Purchase Agreement and the Research Agreement are the sole
agreements with respect to the subject matter and supersede all other agreements
and understandings between the parties with respect to the same.
9. TERMINATION AND DISENGAGEMENT.
9.1 EVENTS OF TERMINATION.
The following events shall constitute events of termination
("Events of Termination"):
(a) Any written representation or warranty by Myco or
Pfizer, or any of its officers, made under or in connection with
18
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this Agreement shall prove to have been incorrect in any material respect when
made.
(b) Myco or Pfizer shall fail in any material respect to
perform or observe any term, covenant or understanding contained in this
Agreement or in any of the other documents or instruments delivered pursuant to,
or concurrently with, this Agreement, and such failure shall remain unremedied
for thirty (30) days after written notice to the filing party.
9.2 TERMINATION.
Upon the occurrence of any Event of Termination, the party not
responsible may, by notice to the other party, terminate this Agreement.
9.3 Upon termination of this Agreement, all Licenses granted hereunder
shall terminate. In such event, all rights to Licensed Products covered by such
Licenses shall become the sole property of Myco and Myco will be free to develop
and commercialize such Products itself or with third parties after the
expiration of the Option Term, if, but only if Pfizer is not developing or
selling a Product with the same Profile of Activity pursuant to this Agreement.
Notwithstanding the foregoing, in the event Myco shall have the right to
terminate this Agreement as a result of an Event of Termination committed by
Pfizer, Myco may, in its sole discretion, terminate the License covering the
Licensed Product with respect to which the Event of Termination occurred, rather
than terminating this Agreement, in which event only Pfizer's rights to such
Licensed Product shall become the sole property of Myco and Myco shall only have
the right to develop and commercialize such Product, itself or with third
parties, after the expiration of the Option Term, if but only if Pfizer is not
developing or selling a Product with the same Profile of Activity pursuant to
this Agreement. In the event Myco shall develop and sell commercially any
Product for which Pfizer's License has terminated, or in the event Myco shall
license the rights to such Product to a third party, Myco shall be obligated to
pay royalties in accordance with Section 3.10.
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<PAGE> 20
9.4 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2 of the
Research Agreement.
9.5 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in
Sections 6 and 10;
(b) Myco's right to receive all royalty payments accrued
hereunder; or
(c) any other remedies which either party may otherwise have.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION OF MYCO BY PFIZER.
Pfizer shall indemnify, defend and hold harmless Myco
and its directors, officers, employees, and agents and their respective
successors, heirs and assigns (the "Myco Indemnitees"), against any liability,
damage, loss or expense (including reasonable attorneys' fees and expenses of
litigation) incurred by or imposed upon the Myco Indemnitees, or any one of
them, in connection with any claims, suits, actions, demands or judgments,
including without limitation personal injury and product liability matters
(except in cases where such claims, suits, actions, demands or judgments result
from the material breach, negligence or willful misconduct on the part of Myco),
arising out of the production, manufacture, promotion, sale or use by any person
of any Product or Antifungal Drug which is manufactured or sold by Pfizer or by
an Affiliate, sublicensee, distributor or agent of Pfizer.
10.2 The foregoing indemnification shall not apply if an Indemnitee
fails to give Pfizer prompt notice of any claim it receives and such failure
materially prejudices Pfizer with respect to any claim or action to which
Pfizer's obligation pursuant to this Section applies. Pfizer, in its sole
discretion, shall choose legal counsel, shall control the defense
20
<PAGE> 21
of such claim or action and shall have the right to settle same on such terms
and conditions it deems advisable.
11. NOTICES.
All notices shall be in writing mailed via certified mail, return
receipt requested, courier, or facsimile transmission addressed as follows, or
to such other address as may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at
the beginning of this Agreement
Attention: President, Central Research
with copy to: General Counsel
If to Myco: To Myco at its address as set forth at
the beginning of this Agreement
Attention: President
Notices shall be deemed given as of the date received.
12. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
13. MISCELLANEOUS.
13.1 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective legal representatives, successors and
permitted assigns.
13.2 HEADINGS.
Paragraph headings are inserted for convenience of reference
only and do not form a part of this Agreement.
13.3 COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
13.4 AMENDMENT; WAIVER; ETC.
This Agreement may be amended, modified, superseded or
canceled, and any of the terms may be waived, only by a written instrument
executed by each party or, in the case of waiver, by the party or parties
waiving compliance. The delay or failure of any party at any time or times to
require performance of any
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provisions shall in no manner affect the rights at a later time to enforce the
same. No waiver by any party of any condition or of the breach of any term
contained in this Agreement, whether by conduct, or otherwise, in any one or
more instances, shall be deemed to be, or considered as, a further or continuing
waiver of any such condition or of the breach of such term or any other term of
this Agreement.
13.5 NO THIRD PARTY BENEFICIARIES.
Except as set forth in Section 10 hereof, no third party
including any employee of any party to this Agreement, shall have or acquire any
rights by reason of this Agreement. Nothing contained in this Agreement shall be
deemed to constitute the parties as agents for the other or as partners with
each other or any third party.
13.6 ASSIGNMENT AND SUCCESSORS.
This Agreement may not be assigned by either party, except
that each party may assign this Agreement and the rights and interests of such
party, in whole or in part, to any of its Affiliates, any purchaser of all or
substantially all of its assets or to any successor corporation resulting from
any merger or consolidation of such party with or into such corporations.
13.7 FORCE MAJEURE.
Neither Pfizer nor Myco shall be liable for failure or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes reasonably beyond the control of Pfizer or Myco.
13.8 SEVERABILITY.
If any provision of this Agreement is or becomes invalid or is
ruled invalid by any court of competent jurisdiction or is deemed unenforceable,
it is the intention of the parties that the remainder of the Agreement shall not
be affected.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
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PFIZER INC. MYCO PHARMACEUTICALS INC.
By: ______________________ By: _______________________
Title: ___________________ Title: ____________________
Date: ____________________ Date: _____________________
cc: Pfizer Inc, Legal Division, Groton, CT 06430
23
<PAGE> 1
EXHIBIT 10.42
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
This COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement") is entered
into as of November 1, 1996 by and between AMERICAN HOME PRODUCTS CORPORATION, a
Delaware corporation, represented by its Wyeth-Ayerst Laboratories Division
having its principal place of business at 555 East Lancaster Avenue, St. Davids,
Pennsylvania 19087 ("WYETH-AYERST"), and CHEMGENICS Pharmaceuticals Inc.
("CHEMGENICS"), a Delaware corporation, having its registered office at One
Kendall Square, Building 300, Cambridge, Massachusetts 02139, U.S.A.
WHEREAS, CHEMGENICS has expertise in the discovery of bacterial genes and
antibacterial drug targets, the use of bacterial molecular biology and genetics
and the development and use of screening systems for the discovery of targets
and compounds for treating bacterial diseases and has developed a drug source,
including libraries of natural sources, for patentable therapeutic compounds;
and
WHEREAS, WYETH-AYERST has expertise in discovering, developing, testing,
obtaining regulatory approvals, manufacturing and marketing human therapeutic
products for bacterial diseases; and
WHEREAS, WYETH-AYERST and CHEMGENICS wish to enter into this Agreement in order
to collaborate in the performance of research to discover and develop
antibacterial drugs; and
<PAGE> 2
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
WHEREAS, CHEMGENICS will perform research which will be funded and supported by
WYETH-AYERST in order to discover drug targets and Compounds for use in the
Field and will license the results of such research to WYETH-AYERST in the
Territory for the purpose of research for Antibacterial Products for human use,
including drug discovery, and the development, testing, obtaining regulatory
approval, manufacture and sale of Antibacterial Products for human use;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
-----------
Whenever used in this Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.
1.0 "ACCEPTED TARGET" means an antibacterial target for which an assay has been
developed, that is accepted by the Joint Steering Committee ("JSC") for
development of
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<PAGE> 3
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
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1.1 "ACTIVITY PROFILE" means one of the activity profiles set forth in Exhibit
1, or any other activity profile agreed upon by the Joint Steering Committee.
1.2 "AFFILIATE" means any corporation, firm, limited liability company,
partnership or other entity which directly or indirectly controls or is
controlled by or is under common control with a party to this Agreement.
"Control" means ownership, directly or through one or more Affiliates, of fifty
percent (50%) or more of the shares of stock entitled to vote for the election
of directors, in the case of a corporation, or fifty percent (50%) or more of
the equity interests in the case of any other type of legal entity, status as a
general partner in any partnership, or any other arrangement whereby a party
controls or has the right to control the Board of Directors or equivalent
governing body of a corporation or other entity.
<PAGE> 4
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
1.3 "ANTIBACTERIAL PRODUCT" means any product which incorporates a CHEMGENICS
Product or a WYETH-AYERST Product (including analogs, derivatives or
modifications thereof) listed on Schedule I hereto, as amended from time to
time, in accordance with Section 2.4 hereof, and any product in the Field which
is discovered during the Research Term of this Agreement and a period of [****]
thereafter, whether or not under the R & D Program, utilizing any Compound,
which discovery would not have occurred but for such utilization of such
Compound.
1.4 "BACTERIAL DISEASE" means a disease in humans caused by infection
with bacterial organisms and which is capable of being treated by pharmaceutical
agents targeting the bacterial organisms. Bacterial disease shall not include
the treatment of H. pylori infection for peptic ulcer disease or gastritis.
1.5 "CHEMGENICS OWNED TECHNOLOGY" has the meaning set forth in Section 6.2.1.
1.6 "CHEMGENICS PRODUCT" means a Compound provided by CHEMGENICS that has been
designated an Antibacterial Product. "CHEMGENICS Product" shall also include
any other compound discovered or developed during the Research Term of this
Agreement and a period of [****] thereafter using any such CHEMGENICS
Compound or using structural, chemical, or biological information relating to
any such CHEMGENICS Compound.
1.7 "COMMERCIAL LICENSE TERM" means the time period referenced in Section 8.2
hereof.
<PAGE> 5
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
1.8 "COMPOUND" means a chemical compound or mixture of compounds that is
discovered or developed in the R & D Program by either party alone or jointly by
both parties, which is identified as having antibacterial activity [************
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****] Without limiting the generality of the foregoing, a Compound will be
deemed "discovered" in the R & D Program if the potential utility or mode of
action of such Compound in the Field is identified or investigated in the R & D
Program.
1.9 "CONFIDENTIAL INFORMATION" means all Technology and all information
(including but not limited to information about any element of Technology or a
party's business) which is disclosed by one party to the other hereunder or
under the Superseded Confidentiality Agreement (as defined in Section 12.14) and
indicated as confidential by the disclosing party except to the extent that such
information (i) as of the date of disclosure is demonstrably known to the party
receiving such disclosure or its Affiliates, as shown by written documentation,
other than by virtue of a prior confidential disclosure to such party or its
Affiliates; (ii) as of the date of disclosure is in, or subsequently enters, the
public domain, through no fault or omission of the party receiving such
disclosure; or (iii) as of the date of disclosure or thereafter is obtained from
a third party free from any obligation of confidentiality to the disclosing
party.
<PAGE> 6
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
1.10 "COST OF GOODS" means the following direct and indirect costs incurred by
WYETH-AYERST in the production of the Antibacterial Products:[*****************
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The amount to be allocated for departmental administrative and overhead
shall be determined by computing the percent of direct labor and materials
dollars applicable to the work performed in the production of the Antibacterial
Products in a given department as a proportion to all direct labor and materials
dollars charged to projects in that department, and multiplying that percent by
the total overhead dollars related to that department. The percentage amounts
used to determine the allocated amounts will be calculated using WYETH-AYERST's
accounting system which will compute such rates on a consistent basis. Should
WYETH-AYERST change its method of allocating overhead and administrative costs
to its projects it will so advise CHEMGENICS and the parties will renegotiate
the basis for
<PAGE> 7
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
allocating such costs to the work performed in the production of Antibacterial
Products.
1.11 "CPMP" means the Committee on Proprietary Medical Products of the European
Union.
1.12 "DISCOVERY PROJECT STATUS" means a designation given to a Compound when the
JSC determines that [***********************************************************
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1.13 "EFFECTIVE DATE" means the date of full execution of this Agreement by the
parties.
1.14 "FIELD" means drugs for the prevention and treatment of Bacterial Diseases
in humans.
1.15 "FIRST COMMERCIAL SALE" means the date of the first sale of an
Antibacterial Product in the ordinary course of business in any country by
WYETH-AYERST or an Affiliate or distributor, licensee or sublicensee of such
party.
1.16 "FISCAL QUARTER" means one quarter of WYETH-AYERST's Fiscal Year.
1.17 "FISCAL YEAR" means the twelve month period beginning January 1 and ending
December 31 of a calendar year.
1.18 "JOINT STEERING COMMITTEE" or "JSC" means the committee created pursuant to
Section 2.2.
1.19 "JOINT TECHNOLOGY" has the meaning set forth in Section 6.2.3.
<PAGE> 8
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
1.20 "NDA" means a New Drug Application, as defined by the U.S. FDA, or the
equivalent in any other country in the Territory.
1.21 "NET SALES" means with respect to an Antibacterial Product, the gross
amount invoiced by WYETH-AYERST, its Affiliates and/or its licensees and
sublicensees, on sales or other dispositions of the Antibacterial Product to
unrelated third parties, less the following items, provided that such items are
actually included in the price charged and do not exceed reasonable and
customary amounts in the country in which such sale occurred:
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Such amounts shall be determined from the books and records of
WYETH-AYERST, its Affiliates and/or its licensees or sublicensees, maintained in
accordance with generally accepted accounting principles, consistently applied.
If an Antibacterial Product is sold in bulk (as distinguished from packaged
pharmaceutical form) for resale in packaged or finished form, Net Sales shall be
calculated by
<PAGE> 9
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission
Asterisks denote such omissions.
determining the quantity of Antibacterial Product in packaged pharmaceutical
form that would reasonably be produced from the bulk quantity of Antibacterial
Product so sold, and by multiplying such quantity by the average price for such
Antibacterial Product in packaged pharmaceutical form during the applicable
royalty reporting period. If an Antibacterial Product is sold, or otherwise
commercially disposed of for value (including, without limitation, disposition
in connection with the delivery of other products or services), in a transaction
that is not a sale for cash to an independent third party, then the gross amount
invoiced in such transaction shall be deemed to be the gross amount that would
have been paid had there been such a sale at the average sale price of such
Antibacterial Product during the applicable royalty reporting period; provided,
however, that sale of Antibacterial Product in bulk to a third party end user
who repackages but does not resell such Antibacterial Product shall be
calculated at the actual transaction price.
Net Sales shall not include any consideration received by WYETH-AYERST,
its Affiliates or its licensees or sublicensees in respect of the sale, use or
other disposition of an Antibacterial Product in a country as part of a clinical
trial prior to the receipt of all regulatory approvals required to commence full
commercial sales of such Antibacterial Product in such country, except sales
under "treatment INDs," "named patient sales," "compassionate use sales," or
their equivalents pursuant to which
<PAGE> 10
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
WYETH-AYERST, its Affiliates or licensees and sublicensees is/are entitled,
under applicable regulatory policies, to recover costs incurred in providing
such products to the patients.
1.23 "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications in any country, including, but not limited to, all
provisional applications, substitutions, continuations, continuations-in-part,
divisions, and renewals, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof, whether owned solely or jointly by a
party or licensed in by a party with the right to sublicense. "CHEMGENICS Patent
Rights" shall mean Patent Rights owned or licensed by CHEMGENICS, with the right
to sublicense, which are necessary to develop, make, use or sell Antibacterial
Products, "WYETH-AYERST Patent Rights" shall mean Patent Rights owned or
licensed by WYETH-AYERST, with the right to sublicense, which are necessary to
develop, make, use or sell Antibacterial Products, and "Joint Patent Rights"
shall mean such Patent Rights owned or licensed jointly by the parties.
1.24 "PRE-PROJECT STATUS" means a WYETH-AYERST research designation for a
Compound that is a candidate for IND track, given to a Compound by WYETH-AYERST
in accordance with its customary drug development practices, and when, at a
minimum, it has been demonstrated to WYETH's satisfaction, consistent with its
customary criteria, [***********************************************************
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<PAGE> 11
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
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1.25 "PROJECT COMMENCEMENT DATE" means December 1, 1996.
1.26 "R & D PROGRAM" means the research and development program, to be conducted
by CHEMGENICS and WYETH-AYERST pursuant to Section 2 of this Agreement and
reflected in the Work Plans.
1.27 "RESEARCH PHASE" means research relating to Compounds that have not yet
received Pre-Project Status designation.
1.28 "TECHNOLOGY" means and includes all inventions, discoveries, improvements,
proprietary materials, compounds, biological substances, data, know-how and
trade secrets, whether or not patentable, including any negative results.
1.29 "TERRITORY" means all the countries of the world.
1.30 "VALID CLAIM" means any claim of a pending patent application or an
unexpired patent which has not been held unenforceable, unpatentable or invalid
by a decision of a court or other governmental agency of competent jurisdiction,
unappealed or unappealable within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through reissue, reexamination,
disclaimer or otherwise.
1.31 "WORK PLAN" means the written plan describing the activities to be carried
out during each year of the R & D Program pursuant to this Agreement. Each Work
Plan will be set forth in a written document prepared by CHEMGENICS and
WYETH-AYERST approved by the Joint Steering Committee.
<PAGE> 12
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
1.32 "WYETH-AYERST OWNED TECHNOLOGY" has the meaning set forth in Section 6.2.2.
1.33 "WYETH-AYERST PRODUCT" means a Compound provided by WYETH-AYERST that has
been designated an Antibacterial Product. "WYETH-AYERST Product" shall also
include any other Compound discovered or developed during the Research Term of
this Agreement and a period of [********] thereafter using any such WYETH-
AYERST Compound or using structural, chemical, or biological information
relating to any such WYETH-AYERST Compound.
2. R & D PROGRAM
-------------
2.1 IMPLEMENTATION OF R & D PROGRAM.
-------------------------------
2.1.1 Basic Provisions of Program.
---------------------------
The objective of the Research Phase of the R & D Program shall be the
discovery and characterization of Accepted Targets in areas covered by the four
Activity Profiles contained in Exhibit 1 and any other Activity Profiles
designated by the JSC from time to time. The objective of the development phase
of the R & D Program shall be the development of Compounds receiving Pre-Project
Status designation and the testing and regulatory approval of Antibacterial
Products in areas covered by such Activity Profiles. In carrying out the R & D
Program, CHEMGENICS shall devote an average of at least [****] full-time
equivalent employees per year to the Research Phase of the R & D Program over
its five year duration, and shall ensure that a reasonable number of such
employees are devoted solely to the R & D
<PAGE> 13
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Program, and that key members of such group will be Ph.D. level researchers.
CHEMGENICS and WYETH-AYERST shall each use commercially reasonable efforts to
perform such tasks as are set forth to be performed by it in the Work Plans,
including the provision of such facilities, materials, equipment and consultants
as each deems necessary to the achievement of such Work Plans.
2.1.2 Collaborative Efforts and Reports.
---------------------------------
The parties agree that the successful execution of the R & D Program will
require the collaborative use of both parties' areas of expertise. The parties
shall keep the JSC and each other fully informed about the status of the
portions of the R & D Program they respectively perform. In particular, without
limitation, each party shall furnish to the JSC and each other a quarterly
written report, describing the progress of its activities in reasonable detail,
no later than thirty (30) days after the end of each Fiscal Quarter.
Scientists at CHEMGENICS and WYETH-AYERST shall cooperate in the
performance of the R & D Program and, subject to any confidentiality obligations
to third parties, shall exchange information and materials as necessary to carry
out the R & D Program, but subject to the provisions of Sections 4 and 5 hereof.
Each party will attempt to accommodate any reasonable request of the other party
to send or receive personnel for purposes of collaborating or exchanging
information under the R & D Program. Such visits and/or access will have defined
<PAGE> 14
purposes and be scheduled in advance. The requesting party will bear the travel
and lodging costs of any such personnel.
2.1.3 Work Plans.
----------
The Work Plan for the first year of the R & D Program shall be prepared by
CHEMGENICS and WYETH-AYERST and approved by the JSC as promptly as practical
after the Effective Date. For each year of the R & D Program commencing with the
second year, the Work Plan shall be prepared by CHEMGENICS and WYETH-AYERST and
approved by the JSC no later than thirty (30) days before the end of the prior
year. The Work Plan shall set forth specific research and development
objectives, milestones and resource allocation requirements and shall be
designed to facilitate the earliest practical identification of Accepted Targets
and the fastest practical testing, regulatory approval and marketing of safe and
effective Antibacterial Products.
Each Work Plan shall be in writing and shall set forth with reasonable
specificity tasks for the period covered by the Work Plan. The JSC may make
adjustments in the Work Plan at its quarterly meetings or otherwise as it may
determine.
2.1.4 Exclusivity.
-----------
CHEMGENICS agrees that for the duration of the "Research Term" (Research
Phase of the R & D Program as specified in Section 2.3 below) and for a period
of four (4) months thereafter, CHEMGENICS will not collaborate with or grant
license rights to any other party in the Field, except as otherwise permitted
hereby. WYETH-AYERST agrees that for the duration of
<PAGE> 15
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
this Agreement, WYETH-AYERST will not utilize any CHEMGENICS Owned Technology,
as hereinafter defined, for any purpose other than (i) as provided herein or
(ii) otherwise for the benefit of CHEMGENICS.
2.2 JOINT STEERING COMMITTEE, PROJECT MANAGEMENT TEAM AND PROJECT LEADERS.
---------------------------------------------------------------------
2.2.1 Establishment and Functions of JSC.
----------------------------------
CHEMGENICS and WYETH-AYERST shall establish a "Joint Steering Committee"
(the "JSC"). The JSC will act on behalf of the two companies and will be
responsible for planning and monitoring of the R & D Program (until Pre-Project
Status designation by WYETH-AYERST with respect to any individual Compound) and
for setting forth specific research and development objectives, milestones,
determining when milestones are met, and resource allocation requirements. In
particular, the activities of the JSC shall include reviewing progress in the
R & D Program and recommending necessary adjustments to the R & D Program as the
research and development progresses, supervising the Project Management Team,
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***] Subject to Section 4.1, any technology in the Field to be considered for
in-licensing by either party during
<PAGE> 16
the Research Term, as hereinafter defined, shall be initially presented to the
JSC for discussion, utilizing only public, non-confidential information. Upon
review of such non-confidential information, the JSC may request the further
involvement of the JSC in any evaluation of such technology or may decline any
such involvement.
In planning and monitoring the R & D Program, the JSC shall assign tasks
and responsibilities taking into account each party's respective specific
capabilities and expertise in order in particular to avoid duplication and
enhance efficiency and synergies.
2.2.2 JSC Membership.
--------------
CHEMGENICS and WYETH-AYERST each shall appoint, in their sole discretion,
three members to the JSC, which shall include a Chair to be designated by
WYETH-AYERST and a Co-Chair to be designated by CHEMGENICS. Substitutes or
alternates for the Chair and Co-Chair or other JSC members may be appointed at
any time by notice in writing to the other party. The parties may mutually agree
to change the size of the JSC as long as there shall be an equal number of
representatives of each party on the JSC.
The initial Chair, Co-Chair and other JSC members shall be designated by
the parties upon execution of this Agreement.
2.2.3 Meetings.
--------
The JSC shall meet at least quarterly, with such meetings to be held,
alternately, in Cambridge or Framingham, Massachusetts
<PAGE> 17
and Pearl River, New York, unless the parties agree otherwise. Any additional
meetings shall be held at places and on dates selected by the Co-Chairs of the
JSC. In addition, the JSC may act without a formal meeting by a written
memorandum signed by the Co-Chairs of the JSC. Whenever any action by the JSC is
called for hereunder during a time period in which the JSC is not scheduled to
meet, the Co-Chairs of the JSC shall cause the JSC to take the action in the
requested time period by calling a special meeting or by action without a
meeting. Subject to the obligations set forth in Section 5, representatives of
each party or of its Affiliates, in addition to the members of the JSC, may
attend JSC meetings at the invitation of either party with the prior approval of
the other party, which shall not be unreasonably withheld.
2.2.4 Minutes.
-------
The JSC shall keep accurate minutes of its deliberations which record all
proposed decisions and all actions recommended or taken. Drafts of the minutes
shall be delivered to the Co-Chairs of the JSC within twenty (20) days after the
meeting. The party hosting the meeting shall be responsible for the preparation
and circulation of the draft minutes. Draft minutes shall be edited by the
Co-Chairs and shall be issued in final form only with their approval and
agreement as evidenced by their signatures on the minutes.
<PAGE> 18
2.2.5 Quorum; Voting; Decisions.
-------------------------
At each JSC meeting, at least two (2) member(s) appointed by each party
shall constitute a quorum. Each JSC member shall have one vote on all matters
before the JSC, provided that the member or members of each party present at a
JSC meeting shall have the authority to cast the votes of any of such party's
members on the JSC who are absent from the meeting. All decisions of the JSC
shall be made by majority vote, provided that such vote is supported by at least
one representative from each party. All JSC member actions shall be made in
consultation with the management of the party appointing such member. In the
event that the JSC is unable to resolve any matter before it, such matter shall
be referred at the request of either party to the Chief Executive Officer of
CHEMGENICS or some other individual nominated by him or her, and the President
of Wyeth-Ayerst Research or some other individual nominated by him or her, for
attempted resolution by good faith negotiations. If such officers cannot resolve
the matter, each party may, at its own expense, appoint an unaffiliated
scientific or other appropriate expert to advise such officers on the matter.
The scientific or other appropriate experts shall be reasonably acceptable to
the other party and shall be chosen based on their experience and expertise in
the particular type of issue which is unresolved. The experts shall render a
written advisory opinion to such officers, which may be considered by such
officers in an attempt to resolve the issue.
<PAGE> 19
2.2.6 Expenses.
--------
CHEMGENICS and WYETH-AYERST shall each bear all expenses of their
respective JSC members related to their participation on the JSC and attendance
at JSC meetings, and of any scientific experts appointed by them pursuant to
Section 2.2.5.
2.2.7 Project Leaders.
---------------
CHEMGENICS and WYETH-AYERST shall each appoint a "Project Leader" who shall
serve as such party's primary technical liaison with the other party to discuss
technical matters pertaining to the R & D Program.
2.2.8 Project Management Team.
-----------------------
CHEMGENICS and WYETH-AYERST shall establish a "Project Management Team"
(the "PMT"), which will act on behalf of the two companies and which shall
manage the R & D Program as directed by the JSC. CHEMGENICS and WYETH-AYERST
each shall appoint, in their sole discretion, three members to the PMT, which
shall include the Project Leaders. Substitutes or alternates for the Project
Leaders or other PMT members may be appointed at any time by notice in writing
to the other party. The parties may mutually agree to change the size of the PMT
as long as there shall be an equal number of representatives of each party on
the PMT.
The initial Project Leaders and other PMT members shall be designated by
the parties upon execution of this Agreement. The PMT shall meet, keep minutes
and establish operating procedures as directed by the JSC.
<PAGE> 20
The PMT shall be chaired by the two Project Leaders.
2.3 RESEARCH AND DEVELOPMENT TERM.
-----------------------------
2.3.1 Term of the R & D Program.
-------------------------
The Research Phase of the R & D Program shall terminate five (5) years
after the Project Commencement Date unless extended as provided below or unless
earlier terminated by either party pursuant to the termination provisions below
(hereinafter the "Research Term").
2.3.2 Extension of the Research Term.
------------------------------
The Research Term may be extended upon six (6) months prior notice by
mutual written agreement of the parties on terms to be agreed upon between the
parties.
2.3.3 Early Termination of the R & D Program.
--------------------------------------
(a) The R & D Program may be terminated by either party upon breach by the
other of the obligation to pay any amount due hereunder, or upon breach of any
other material obligation or condition, effective thirty (30) days after giving
written notice to the other of such termination in the case of a payment breach
and ninety (90) days after giving written notice to the other of such
termination in the case of any other breach, which notice shall describe such
breach in reasonable detail. The foregoing notwithstanding, (i) if the default
or breach is cured or shown to be non-existent within the aforesaid thirty (30)
or ninety (90) day period, the notice shall be deemed automatically withdrawn
and of no effect, and (ii) as to an alleged breach expressly set forth with
reasonable detail to be the subject of a
<PAGE> 21
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
good faith dispute as to whether or not such payment is due and owing or whether
a breach of any other material obligation or condition has occurred, within the
aforesaid thirty (30) day or ninety (90) day period, the running of the
remainder of the thirty (30) day or ninety (90) day period shall be tolled until
the dispute is resolved.
(b) If either party files for protection under bankruptcy laws, makes an
assignment for the benefit of creditors, appoints or suffers appointment of a
receiver or trustee over its property, files a petition under any bankruptcy or
insolvency act or has any such petition filed against it which is not discharged
within ninety (90) days of the filing thereof, then the other party may
terminate the R & D Program upon notice to such party.
(c) WYETH-AYERST may terminate the R & D Program at its sole discretion (i)
in the event of the "Acquisition" of CHEMGENICS by a third party, (ii) if
CHEMGENICS is no longer generally engaged in drug discovery as a primary
business activity or is generally unable to perform the types of obligations set
forth herein or (iii) if there have not been at least [*****] Accepted Targets
approved by the JSC by the [*****] anniversary of the Project Commencement Date
and there have not been at least [*****] Discovery Projects designated by the
JSC by such [*****] anniversary. For purposes hereof, an "Acquisition" shall be
deemed to have occurred if CHEMGENICS shall consolidate or merge with another
entity, or convey, sell or lease to another entity all or substantially all of
the stock, assets or business
<PAGE> 22
of CHEMGENICS and its subsidiaries, taken as a whole, or suffer a Change in
Control in which another entity shall come to control CHEMGENICS. Change of
Control as used herein shall mean any transaction or event as a result of which
any other entity acquires or for the first time controls and is able to vote
without restriction (directly or through nominees or beneficial ownership) fifty
percent (50%) or more of the capital stock of CHEMGENICS outstanding at the time
having the power ordinarily to vote for directors of CHEMGENICS.
(d) Any termination of the R & D Program shall be without prejudice to the
rights of either party against the other, then accruing or otherwise accrued
under this Agreement.
(e) Upon any early termination of the R & D Program by CHEMGENICS under
section 2.3.3(a) or (b), the provisions of Sections 8.7.3(a), (b), and (c) shall
apply as if all licenses granted to WYETH-AYERST under Section 8.1 had been
terminated.
(f) The licenses granted to WYETH-AYERST pursuant to Section 8.1(b) hereof
shall survive early termination of the R & D Program by WYETH-AYERST under this
Section 2.3.3. Further, as of the effective date of such early termination by
WYETH-AYERST of the R & D Program, WYETH-AYERST shall be released from its
future obligations of equity funding and research funding, pursuant to Sections
3.1, 3.2, and 3.3 hereof, except for any obligations which have accrued but have
not been satisfied as of such termination date.
<PAGE> 23
2.4 PRODUCT DEVELOPMENT
-------------------
2.4.1 Identification of Candidate Compounds for Pre-Project Status.
-------------------------------------------------------------
WYETH-AYERST and CHEMGENICS agree that a priority of the R & D Program
shall be to demonstrate as quickly as possible the antibacterial activity in
humans of a safe and effective Antibacterial Product in each Activity Profile.
At such time as CHEMGENICS or WYETH-AYERST has identified a CHEMGENICS Compound
or a WYETH-AYERST Compound discovered or developed by it (or jointly by it and
the other party) in the R & D Program which it believes should receive
Pre-Project Status, it shall notify the JSC in writing, and shall provide to the
JSC the data and information demonstrating that the Compound satisfies the
criteria for Pre-Project Status.
2.4.2 Designation of Antibacterial Products
-------------------------------------
At the request of CHEMGENICS or WYETH-AYERST, within thirty (30) days after
receipt of notice pursuant to 2.4.1 above, the JSC shall review the data and
information and shall notify the parties in writing of its determination as to
whether or not it believes the Compound should be given Pre-Project Status and
therefore be designated as a candidate for Pre-Project Status (a "Pre-Project
Status Candidate"). At the request of the JSC, either party, as appropriate,
shall provide the JSC with such additional data as the JSC shall reasonably
request, provided such party can reasonably obtain same. Any negative
determination by the JSC that it does not so recommend, shall be accompanied by
a detailed explanation of the reasons therefor.
<PAGE> 24
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
If the JSC does not act within such thirty (30) day period, it will be deemed to
have designated the Compound as a Pre-Project Status Candidate. Upon designation
of a Compound as a Pre-Project Status Candidate,[*******************************
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Upon issuance of an "Antibacterial Product Designation" the Compound will
become an "Antibacterial Product," Schedule I will be amended to include such
Compound, and such Antibacterial Product shall be deemed to
<PAGE> 25
be included in the license to WYETH-AYERST pursuant to Section 8 hereof. If a
Compound is designated as an Antibacterial Product, its development will no
longer be under the purview of the JSC, but will be the sole responsibility of
WYETH-AYERST. WYETH-AYERST will appoint Discovery and Pre-Project Teams to
manage the development thereof, with CHEMGENICS having at least one
representative on each such Team.
2.4.3 Pre-Project Status Compounds Not Selected by WYETH-AYERST as
------------------------------------------------------------
Antibacterial Products.
----------------------
In case of failure by WYETH-AYERST to issue an Antibacterial Product
Designation with respect to a particular CHEMGENICS Compound as provided in
Section 2.4.2, CHEMGENICS will not market nor grant rights in the Field in the
Territory to such Compound to any party for the longer of: (i) so long as
WYETH-AYERST is actively and diligently involved in the development and/or the
marketing of an Antibacterial Product in the Field in the Territory in the same
Activity Profile or (ii) until one year after the end of the Research Term.
CHEMGENICS shall have rights with respect to the commercialization of such
CHEMGENICS Compounds in the Territory solely as set forth in Section 2.5 hereof.
2.4.4 Development Obligations.
-----------------------
WYETH-AYERST agrees that it will exert commercially reasonable drug
development and marketing efforts that are consistent with those efforts
undertaken in its own global pharmaceutical business to develop and market in
the Field, throughout such areas of the Territory as it may reasonably
<PAGE> 26
determine, at its own expense, Antibacterial Products incorporating or derived
from any Compounds which receive Antibacterial Product Designation (a "Drug
Development Program").
2.4.5 Reports.
-------
WYETH-AYERST will keep CHEMGENICS fully informed concerning the status of
the Drug Development Program for each Antibacterial Product, it being understood
that all such information is Confidential Information subject to all the terms
and conditions of this Agreement, and particularly Article 5 hereof. WYETH-
AYERST shall (a) report to CHEMGENICS in reasonable detail no less frequently
than quarterly concerning all aspects of such development and commercialization
activities; (b) provide CHEMGENICS with access to Technology and Confidential
Information employed in or arising out of such development and commercialization
activities; (c) provide CHEMGENICS with summaries of all regulatory filings
filed in connection with such Products, together with all clinical protocols and
material correspondence with regulatory authorities in the United States and
other countries; and (d) provide such other information concerning such
development and commercialization activities as CHEMGENICS shall reasonably
request.
2.5 COMMERCIALIZATION RIGHTS.
------------------------
(a) Except as otherwise provided herein, (i) WYETH-AYERST shall have the
exclusive right to develop and commercialize Antibacterial Products
which are derived from either CHEMGENICS Products or WYETH-AYERST
Products in the Territory for use in the Field; and
<PAGE> 27
(ii) commencing one year after the end of the Research Term,
CHEMGENICS shall have the exclusive right in the Territory and in the
Field to develop and commercialize any Compound which is a CHEMGENICS
Product, but not an Antibacterial Product being developed by
WYETH-AYERST, by itself or with a third party and shall have an
exclusive right of first refusal as set forth in Section 2.6 hereof to
develop and commercialize by itself or with a third party, any
WYETH-AYERST Product that WYETH-AYERST makes available for licensing
in the Field; provided, however, that CHEMGENICS shall have no such
rights under subsection (ii) hereof if WYETH-AYERST has designated
and is developing another Compound as an Antibacterial Product
hereunder, which has the same Activity Profile; and, provided further,
that CHEMGENICS shall not have the right of first refusal set forth
above for WYETH-AYERST Products if WYETH-AYERST has terminated the
R & D Program in accordance with Section 2.3.3(a), 2.3.3(b), or
clause (i) of Section 2.3.3(c) hereof. Licenses for all such rights
shall be granted in accordance with the terms of Section 8 hereof.
<PAGE> 28
(b) Except as set forth in Section 2.5(c) or Section 2.7, if either party
wishes to develop and commercialize an Antibacterial Product listed on
Schedule I for use outside the Field, it shall notify the other party.
If both parties have the right to engage in such development and
commercialization, then such opportunities shall be reasonably
considered by both parties and shall only be pursued upon terms
mutually agreeable to both parties.
(c) Notwithstanding the foregoing, WYETH-AYERST will have an exclusive
right of first refusal as set forth in Section 2.6 hereof to license
Compounds and related Technology which reach Pre-Project Status for
use in the prevention and treatment of bacterial disease in animals,
said right vesting in WYETH-AYERST as of the date of designation of
such Compound as an Antibacterial Product.
(d) If at any time WYETH-AYERST elects to discontinue the development or
commercialization of an Antibacterial Product in the Field, (i) it
shall promptly notify CHEMGENICS, whereupon, WYETH-AYERST's license to
such Antibacterial Product from CHEMGENICS will be terminated, and,
(ii) commencing one year after the end of the Research Term and
provided that WYETH-AYERST is not actively developing another
Antibacterial Product in the same Activity Profile, (a) CHEMGENICS
will have the right to develop and commercialize any such
<PAGE> 29
Antibacterial Product which is a CHEMGENICS Product itself or with a
third party on the same basis as if the license for such Antibacterial
Product had been terminated by CHEMGENICS pursuant to Section 8.7.2
hereof and (b) CHEMGENICS shall have a right of first refusal as set
forth in Section 2.6 hereof related to any such Antibacterial Product
which is a WYETH-AYERST Product that WYETH-AYERST makes available for
licensing in the Field.
(e) In the event CHEMGENICS exercises its right to develop and
commercialize any Antibacterial Product as permitted in Section 2.5(a)
or 2.5(d) above, it shall give WYETH-AYERST written notice specifying
the Antibacterial Product to be developed and commercialized.
(f) At the request of CHEMGENICS, and provided that CHEMGENICS can
reasonably demonstrate to WYETH-AYERST that it has appropriate
capabilities, the parties will discuss CHEMGENICS' participation in
marketing, co-marketing, co-promoting or manufacturing Antibacterial
Products, but WYETH-AYERST will not be obligated to agree to
CHEMGENICS' participation in such activities.
(g) For the purposes of this Section, any Product which is within the
definition of both a WYETH-AYERST Product (as set forth in Section
1.33) and a CHEMGENICS Product
<PAGE> 30
(as set forth in Section 1.6) shall be treated for the purposes hereof
as being jointly owned and the provisions applying to CHEMGENICS
Products shall apply to CHEMGENICS' ownership interest therein and the
provisions applying to WYETH-AYERST Products shall apply to
WYETH-AYERST's ownership interest therein.
2.6 RIGHT OF FIRST REFUSAL.
----------------------
In the event that either party has a right of first refusal hereunder, the
other party (the "Offering Party") shall give written notice to the party having
such right (the "Receiving Party") specifying in reasonable detail the rights
that the Offering Party intends to license (the "Offer"). The Receiving Party
shall have thirty (30) days after the date of the Offer to provide a written
response to the Offering Party (the "Response") as to whether or not it wishes
to enter into negotiations with the Offering Party with respect to such rights.
If the Response states that the Receiving Party wishes to enter into
negotiations with the Offering Party, the parties shall negotiate in good faith
the licensing of such rights for a period of ninety (90) days from the date of
the Response. If the Response is not received within the thirty (30) day
response period or if the Receiving Party declines to enter into negotiations or
if the parties do not agree upon and execute a written agreement within the
ninety (90) day negotiation period, the Offering Party shall thereafter have the
right to negotiate with third parties with respect to such rights. However,
prior to the execution of any definitive agreement with any third party, the
Offering Party
<PAGE> 31
shall provide the complete terms of such agreement to the Receiving Party and
the Receiving Party shall have a period of fifteen (15) days in which to accept
such agreement for itself or to decline the execution of such agreement, after
which time the Offering Party may execute such Agreement with any other party.
2.7 RIGHT OF FIRST NEGOTIATION FOR H. PYLORI INFECTION.
--------------------------------------------------
In addition to the foregoing commercialization rights granted hereunder to
WYETH-AYERST, during the Research Term, in the event that CHEMGENICS determines
to undertake a program to develop and commercialize for itself or to license to
any non-Affiliate rights to develop, make, use, offer for sale, sell and import
any product having potential use for treatment of H. pylori infection in humans
for use in peptic ulcer disease or gastritis (an "H. pylori Program"),
CHEMGENICS shall give written notice to WYETH-AYERST, specifying in reasonable
detail the H. pylori Program that CHEMGENICS intends to pursue and any rights
CHEMGENICS intends to license or the product which it intends to develop (the
"CHEMGENICS Notice"). WYETH-AYERST shall have thirty (30) days after the date of
the CHEMGENICS Notice to provide a written response to CHEMGENICS ("WYETH-AYERST
Response") as to whether or not it wishes to enter into negotiations with
CHEMGENICS concerning such H. pylori Program. If CHEMGENICS does not receive a
WYETH-AYERST Response within such thirty (30) day period or if WYETH-AYERST
declines to enter into negotiations, CHEMGENICS shall thereafter have the right,
alone or in collaboration with a third party, to pursue
<PAGE> 32
development, commercialization or licensing of the rights which were the subject
of the CHEMGENICS Notice free of any restriction or limitation, or duty to
WYETH-AYERST whatsoever. If the WYETH-AYERST Response states that WYETH-AYERST
wishes to enter into negotiations with CHEMGENICS, the parties shall negotiate
in good faith the licensing of such rights to WYETH-AYERST for a period of sixty
(60) days from the date of the WYETH-AYERST Response.
If the parties do not agree upon and execute a written agreement for such
rights within such sixty (60) day period, as such period may be extended by
written agreement of both parties, WYETH-AYERST shall set forth in writing in
detail its "last best offer" with respect to such development, commercialization
or licensing of rights. If CHEMGENICS does not accept such last best offer,
CHEMGENICS will furnish WYETH-AYERST with a written statement that it rejects
such last best offer, and CHEMGENICS shall thereafter have the right, alone or
in collaboration with a third party, to pursue development, commercialization or
licensing of the rights which were the subject of the CHEMGENICS Notice, but
only on terms reasonably believed by CHEMGENICS to be more favorable in the
aggregate to CHEMGENICS than WYETH-AYERST's last best offer. Both parties
recognize that in evaluating the favorability to CHEMGENICS of development,
commercialization or licensing terms, numerous factors may be taken into account
and given appropriate weight, including without limitation, the amount of
upfront payments, the amount and timing of subsequent payments, the royalty
rate(s), the definition of territory, the purchase and pricing of equity, the
identity, experience and
<PAGE> 33
market position of the other party in the relevant markets, and the contribution
of patent or other intellectual property rights material to the commercial
success of CHEMGENICS. Moreover, WYETH-AYERST agrees that CHEMGENICS is entitled
to assign reasonable value to comarketing, copromotion, manufacturing or patent
rights or other consideration that CHEMGENICS receives in return for the rights
granted by CHEMGENICS.
2.8 RETAINED RIGHTS.
---------------
Except as set forth herein, and in particular as set forth in Sections
2.5(b) and 2.5(c) hereof, nothing in this Agreement shall limit in any respect
the right of either party to conduct research and development with respect to
and market products outside the Field using any of such party's technology,
information, or otherwise.
3. FUNDING
-------
3.1 EQUITY INVESTMENTS.
------------------
WYETH-AYERST will make three equity investments in CHEMGENICS in accordance
with the terms of a Series E Preferred Stock Purchase Agreement of even date
herewith (the "Stock Purchase Agreement"):
1. $5 million on the Effective Date of this Agreement
2. $5 million as set forth in Section 1.03(b) of the Stock Purchase
Agreement.
3. $3 million as set forth in Section 1.03(c) of the Stock Purchase
Agreement.
<PAGE> 34
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
3.2 RESEARCH FUNDING.
----------------
In partial consideration of the work to be done by CHEMGENICS in the R & D
Program, WYETH-AYERST will pay CHEMGENICS non-refundable research payments of
[*****] per month during the initial three-year-period of the Research Term
commencing retroactively as of October 1, 1996. During the fourth and fifth
years of the Research Term, WYETH-AYERST will pay CHEMGENICS [******************
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Such payments will be made in advance, on or before the first day of each
calendar quarter, with the first and last payments prorated in the event that
the Effective Date is not the first day of a calendar quarter. The first
research payment shall be made simultaneously with the execution of this
Agreement and shall include all amounts necessary to make WYETH-AYERST current
in research payments due since October 1, 1996. WYETH-AYERST will fund its own
activities under the R & D Program.
3.3 ADDITIONAL R&D PAYMENTS.
-----------------------
WYETH-AYERST will make additional research payments to CHEMGENICS within 30
days of the determination (as set forth in
<PAGE> 35
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Section 3.5) of the achievement of certain research goals as set forth below. If
any goal is achieved during the term of this Agreement, the payment for such
goal will be absolutely due and payable.
Goal Payment
- - ---- -------
***** *****
*****
***** *****
*****
*****
***** *****
*****
*****
*****
***** *****
*****
*****
*****
*****
*****
*****
]
<PAGE> 36
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
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3.4 MILESTONE PAYMENTS.
------------------
WYETH-AYERST will make payments to CHEMGENICS within thirty (30) days after
the determination (as set forth in Section 3.5) of the achievement of each of
the milestones set forth below for each of the Activity Profiles to be pursued
under the R & D Program. If any milestone is achieved during the term of this
Agreement, the payment for such milestone will be absolutely due and payable.
Milestone Payment
- - --------- -------
***** *****
****
***** *****
*****
***** *****
***
***** *****
***
]
<PAGE> 37
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
*******
*******
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3.5 DETERMINATION THAT GOALS AND MILESTONES ARE ACHIEVED.
----------------------------------------------------
In the event that CHEMGENICS believes any research goal or milestone has
been achieved, it shall so notify the JSC in writing and shall provide to the
JSC the data and information demonstrating that the research goal or milestone
has been achieved. Within thirty (30) days, the JSC shall review the data and
information and shall certify in writing whether or not the research goal or
milestone has been achieved. Any negative determination shall be accompanied by
a detailed explanation of the reasons therefor. If the JSC does not take action
within such thirty (30) day period, the research goal or milestone shall be
deemed to have been achieved.
3.6 RESEARCH AND DEVELOPMENT TAX CREDITS.
------------------------------------
Each party shall be entitled to seek the benefit of any research and
development tax credits arising out of any research paid for by such party or
its Affiliates. CHEMGENICS acknowledges that, to the extent appropriate,
research payments made hereunder, including Sections 3.2, 3.3 and 3.4, are made
in furtherance of research, and may entitle WYETH-AYERST to seek research tax
credits.
<PAGE> 38
4. OTHER TECHNOLOGY
----------------
4.1 OTHER TECHNOLOGY.
----------------
The parties hereto acknowledge that WYETH-AYERST may engage in development
and commercialization of antibacterial products, through internal research
efforts and in collaboration with others, and that both WYETH-AYERST and
CHEMGENICS may engage in discussions or may enter into agreements with other
parties relative to development and commercialization of other pharmaceutical
products. Accordingly, nothing contained in this Agreement shall be construed as
limiting the right of either party to engage in any such discussions or third
party agreements, and any benefits or obligations arising from such independent
transactions shall inure solely to the party participating therein.
Notwithstanding the foregoing, but subject to Section 2.2.1, it is
contemplated hereunder that WYETH-AYERST may elect, at its sole discretion, to
place other technologies at its disposal into the collaboration hereunder to the
extent it is permitted to do so. If WYETH-AYERST makes such an election, it will
in no way affect the rights and obligations of the parties hereto except as
expressly set forth herein without the prior written consent of CHEMGENICS,
which consent shall not be unreasonably withheld.
<PAGE> 39
5. TREATMENT OF CONFIDENTIAL INFORMATION
-------------------------------------
5.1 CONFIDENTIALITY.
---------------
5.1.1 General.
-------
CHEMGENICS and WYETH-AYERST each recognize that the other party's
Confidential Information constitutes highly valuable and proprietary
confidential information. Subject to the terms and conditions of Section 8,
CHEMGENICS and WYETH-AYERST each agree that during the R & D Program and the
License Term and for five (5) years thereafter, it will keep confidential, and
will cause its employees, consultants, Affiliates and licensees and sublicensees
to keep confidential, all Confidential Information of the other party that is
disclosed to it, or to any of its employees, consultants, Affiliates and
licensees and sublicensees, pursuant to or in connection with this Agreement.
Neither CHEMGENICS nor WYETH-AYERST nor any of their respective employees,
consultants, Affiliates and licensees and sublicensees shall use Confidential
Information of the other party for any purpose whatsoever except as expressly
permitted in this Agreement. Notwithstanding the foregoing, WYETH-AYERST will
reasonably cooperate with CHEMGENICS in the making of reasonable, confidential
disclosures of Confidential Information to investment bankers, investors and
potential investors of CHEMGENICS.
5.1.2 Restricted Access.
-----------------
CHEMGENICS and WYETH-AYERST each agree that any disclosure of the other
party's Confidential Information to any of its officers, employees, consultants
or agents or those of any of its
<PAGE> 40
Affiliates and licensees and sublicensees shall be made only if and to the
extent necessary to carry out its rights and responsibilities under this
Agreement with respect to the Field, shall be limited to the maximum extent
possible consistent with such rights and responsibilities and shall only be made
to persons who are bound by written confidentiality agreements to maintain the
confidentiality thereof and not to use such Confidential Information except as
expressly permitted by this Agreement. CHEMGENICS and WYETH-AYERST, for
themselves and their Affiliates, each agree not to disclose the other party's
Confidential Information to any third parties under any circumstance without
prior written approval from the other party, except as required in any patent
application or patent prosecution, in any application for regulatory approval
for testing, manufacture or sale of an Antibacterial Product subject to this
Agreement, or as otherwise required by law, and except as otherwise reasonably
required to exercise such party's rights under this Agreement. However, before
disclosing the other party's Confidential Information in connection with a
patent application, patent prosecution or regulatory application or as otherwise
required by law, the disclosing party shall provide a copy of such intended
disclosure to the other party. If the other party so requests and where
permitted by law or regulation, the disclosing party shall redact such portion
of the intended disclosure as reasonably requested. Each party shall take such
action, and shall cause its Affiliates and licensees and sublicensees to take
such action, to preserve the confidentiality
<PAGE> 41
of each other's Confidential Information as it would customarily take to
preserve the confidentiality of its own Confidential Information, and in no
event, less than reasonable care. Each party, upon the other's request, will
return all the Confidential Information disclosed to it by the other party
pursuant to this Agreement, including all copies and extracts of documents,
within sixty (60) days of the request following the termination of this
Agreement; provided that a party may retain Confidential Information of the
other party relating to any license or right to use Technology which survives
such termination and one copy of all other Confidential Information may be
retained in confidential and inactive archives solely for the purpose of
establishing the contents thereof.
5.1.3 Employee Confidentiality Agreements.
-----------------------------------
CHEMGENICS and WYETH-AYERST each represents that all of its employees and
all of the employees of its Affiliates, and any consultants to such party or its
Affiliates, participating in the R & D Program who shall have access to
Confidential Information of the other party are bound by written agreements to
maintain such information in confidence and not to use such information except
as expressly permitted herein. Each party agrees to enforce confidentiality
obligations to which its employees and consultants (and those of its Affiliates)
are obligated.
<PAGE> 42
5.2 PUBLICITY.
---------
Neither party may disclose the existence or terms of this Agreement without
the prior written consent of the other party; provided, however, that either
party may make such a disclosure to the extent required by law, subject to the
provisions of redaction set forth in 5.1.2 hereof, and that CHEMGENICS may make
a disclosure of the existence and terms of this Agreement to investors,
prospective investors, lenders and other financing sources, or for products for
which rights in the Field are granted to CHEMGENICS hereunder, and subject to
the provisions of redaction set forth in 5.1.2 hereof. The parties, upon the
execution of this Agreement and from time to time thereafter, will agree to news
releases for publication in general circulation periodicals and newswires. Once
any written statement is approved for disclosure by both parties, either party
may make subsequent public disclosure of the contents of such statement without
the further approval of the other party.
5.3 PUBLICATION.
-----------
It is expected that each party may wish to publish the results of its
research under this Agreement. In order to safeguard intellectual property
rights, the party wishing to publish or otherwise publicly disclose the results
of its research hereunder shall first submit a draft of the proposed scientific
manuscripts, abstracts or other proposed public presentations, to the JSC for
review, comment and consideration of appropriate patent action at least four (4)
weeks prior to any submission for publication or other public disclosure. Within
<PAGE> 43
twenty (20) days of receipt of the prepublication materials, the JSC will advise
the party seeking publication as to whether a patent application will be
prepared and filed or whether trade secret protection should be pursued and, if
so, the JSC will, in cooperation with both parties, determine the appropriate
timing and content of any such publications.
5.4 PROHIBITION ON HIRING.
---------------------
Neither WYETH-AYERST nor its Affiliates shall, without CHEMGENICS' prior
written approval, during the R & D Program, but in any event for at least five
(5) years from the Effective Date, solicit (directly or indirectly) or hire any
person who was employed by CHEMGENICS or its Affiliates, whether such person is
hired as an employee, investigator, independent contractor or otherwise, without
the express written consent of CHEMGENICS. This restriction shall not apply to
any CHEMGENICS employee who did not participate in the R&D Program and who
actively seeks employment with WYETH-AYERST and initiates contact with WYETH-
AYERST regarding same.
6. INTELLECTUAL PROPERTY RIGHTS
----------------------------
6.1 DISCLOSURE OF INVENTIONS.
------------------------
Each party shall promptly inform the other and the JSC about all inventions
in the Field that are conceived, made or developed in the course of carrying out
the R & D Program by employees or consultants of either of them or their
Affiliates alone or jointly with employees or consultants of the other party or
its
<PAGE> 44
Affiliates. The following provisions shall apply to rights in the intellectual
property developed by CHEMGENICS or WYETH-AYERST, or both, during the course of
carrying out the R & D Program.
6.2 OWNERSHIP.
---------
6.2.1 CHEMGENICS Intellectual Property Rights.
---------------------------------------
CHEMGENICS shall have sole and exclusive ownership of all right, title and
interest on a worldwide basis in and to any Technology developed solely by
CHEMGENICS (collectively, the "CHEMGENICS Owned Technology"), with full rights
to license or sublicense, subject to WYETH-AYERST's rights hereunder. Without
limiting the foregoing, subject to the licenses granted in Section 8 hereof and
WYETH-AYERST's rights under Section 8.6 hereof, CHEMGENICS shall be the sole
owner of all Patent Rights, all trade secret rights and any other intellectual
property rights in the CHEMGENICS Owned Technology, including the sole and
exclusive right to exclude others from making, using, selling, offering for sale
or importing the CHEMGENICS Owned Technology or any products based on or derived
from the CHEMGENICS Compounds or any other CHEMGENICS Owned Technology.
6.2.2 WYETH-AYERST Intellectual Property Rights.
-----------------------------------------
WYETH-AYERST shall have sole and exclusive ownership of all right, title
and interest on a worldwide basis in and to any Technology developed solely by
WYETH-AYERST without use of CHEMGENICS Technology, including any compounds
obtained by WYETH-AYERST other than as a result of the R&D Program
("WYETH-AYERST Owned Technology"), with full rights to license or sublicense,
<PAGE> 45
subject to CHEMGENICS' rights hereunder. Without limiting the foregoing, subject
to the licenses granted hereunder and CHEMGENICS' rights under Section 8.6
hereof, WYETH-AYERST shall be the sole owner of all Patent Rights, all trade
secret rights and any other intellectual property rights in the WYETH-AYERST
Owned Technology, including the sole and exclusive right to exclude others from
making, using, selling, offering for sale or importing the WYETH-AYERST Owned
Technology or any products based on or derived from the WYETH-AYERST Compounds
or any other WYETH-AYERST Owned Technology.
6.2.3 Joint Technology.
----------------
WYETH-AYERST and CHEMGENICS shall jointly own (a) all Technology jointly
invented by both CHEMGENICS and WYETH-AYERST in the R & D Program without the
use of CHEMGENICS Technology and (b) all Technology developed by WYETH-AYERST
with the use of CHEMGENICS Technology (the "Joint Technology") and shall jointly
own all Joint Patent Rights. Each party shall have rights to use Joint
Technology and Joint Patent Rights outside the Field, subject to the provisions
of Article 2.5 hereof.
6.2.4 Rights Outside the Field.
------------------------
Except as specifically set forth herein, each party shall have the sole and
exclusive right, including rights under its own interests in any Joint
Technology and any Patent Rights thereon and rights to grant sublicenses
thereunder, to develop, have developed, make, have made, use, distribute for
sale, sell, offer for sale and import any products which are derived from its
<PAGE> 46
Compounds other than Antibacterial Products listed on Schedule I for all uses
outside the Field.
6.3 PATENT COORDINATORS.
-------------------
CHEMGENICS and WYETH-AYERST shall each appoint a Patent Coordinator who
shall serve as such party's primary liaison with the other party on matters
relating to patent filing, prosecution, maintenance and enforcement. Each party
may replace its Patent Coordinator at any time by notice in writing to the other
party. The initial Patent Coordinators shall be designated by the parties upon
execution of this Agreement.
6.4 INVENTORSHIP.
------------
In case of dispute between CHEMGENICS and WYETH-AYERST over inventorship,
the JSC, with the advice of the parties and mutually acceptable outside patent
counsel, shall make the determination of the inventor(s) by application of the
standards contained in United States patent law. The JSC, with the advice of the
Patent Coordinators and mutually acceptable outside patent counsel, shall also,
in the case of dispute, make the determination as to whether an invention is
Joint Technology.
6.5 TRADEMARKS.
----------
WYETH-AYERST, its Affiliates, distributors, assignees, licensees and
sublicensees, shall have the absolute right to use, and in its sole discretion,
register any trademarks, tradenames and/or tradedress WYETH-AYERST may choose,
in connection with the Antibacterial Products licensed to it hereunder provided
that the label for any such Antibacterial Product shall contain the words
<PAGE> 47
"Manufactured under license from ChemGenics Pharmaceuticals Inc." in reasonably
prominent type, consistent with applicable regulatory and labeling requirements.
Except as provided by Section 8.7.3(b)(i) hereof, CHEMGENICS shall have no
right, title, or interest in or to any trademark, tradenames or tradedress which
WYETH-AYERST, its Affiliates, distributors, assignees, licensees or sublicensees
may use on or in connection with Antibacterial Products, or the packaging,
advertising, promotion, labeling, marketing or selling thereof. Further, and for
so long as WYETH-AYERST, its Affiliates, distributors, assignees, licensees or
sublicensees shall have any interest in or to any such trademarks, tradenames,
or tradedress whether as proprietor, owner, licensee, or licensor, in the
Territory or any part thereof, CHEMGENICS shall not adopt, use, apply for
registration, register, own or acquire such trademark, tradename or tradedress,
or any mark, name or tradedress confusingly similar thereto.
7. PROVISIONS CONCERNING THE FILING, PROSECUTION
---------------------------------------------
AND MAINTENANCE OF PATENT RIGHTS
--------------------------------
The following provisions relate to the filing, prosecution and maintenance
of Patent Rights during the term of this Agreement:
7.1 FILING OF PATENTS.
-----------------
In consultation with the Patent Coordinators, the JSC will coordinate the
determination of what patents will be filed on Technology developed under the R
& D Program. Each party will be responsible for the filing and prosecution
(including the defense
<PAGE> 48
of interferences and similar proceedings) of any such patents for which it is
the sole inventor, provided that the other party will have the opportunity to
provide substantive review and comment on any such filing and prosecution.
Responsibility for filing and prosecution of patents (including the defense of
interferences and similar proceedings) on Joint Technology will be agreed upon
by the parties on a case-by-case basis and handled by mutually acceptable
outside patent counsel charged with the duty to act in the best interests of
both parties. Each party shall also promptly give notice to the other of the
grant, lapse, revocation, surrender, invalidation or abandonment of any Patent
Rights for which it has responsibility. If at any time, either party wishes to
discontinue the prosecution of any such patent(s) owned solely by it, such party
shall promptly give notice of such intention to the other party. The party
receiving such notice shall have the right, but not the obligation, to assume
responsibility for the prosecution of any such patent(s) by giving notice to the
party wishing to discontinue such prosecution of such intention within thirty
(30) days and such patents shall thereafter be exclusively licensed to the party
assuming the responsibility for prosecution or maintenance of the Patent Right
under this Agreement, in accordance with the license grant of Section 8 hereof.
7.2 EXPENSES.
--------
CHEMGENICS will bear the costs of the prosecution and maintenance of all
patents for which it has prosecution and
<PAGE> 49
maintenance responsibilities pursuant to Section 7.1 hereof in the territories
of the United States, countries covered by the European Patent Office and Japan.
WYETH-AYERST will determine the countries in which patent applications will be
filed and shall bear the costs of the prosecution and maintenance of all patents
filed pursuant to this Agreement except as set forth in the preceding sentence
or the following sentence. If CHEMGENICS wishes to file a patent application on
CHEMGENICS Technology in a country not selected by WYETH-AYERST, CHEMGENICS may
do so at its own expense. The parties shall cooperate with each other in gaining
patent term restoration or similar extensions or continuations of rights under
Patent Rights.
8. LICENSE RIGHTS
--------------
8.1 LICENSE GRANTS.
--------------
(a) CHEMGENICS hereby grants to WYETH-AYERST a license under Technology,
Confidential Information, and Patent Rights and CHEMGENICS' interests in Joint
Technology and Joint Patent Rights, co-exclusive with CHEMGENICS, to research,
discover, develop, and make Compounds and to use Accepted Targets solely to
discover and develop Antibacterial Products for use in the Field in accordance
with the R&D Program and during the R&D Term.
(b) During the Commercial License Term, as to each Antibacterial Product
listed on Schedule I hereto pursuant to the provisions of Section 2.4.2 hereof
which is derived from either a CHEMGENICS Compound or a WYETH-AYERST Compound,
CHEMGENICS hereby grants to WYETH-AYERST an exclusive license in the Territory
<PAGE> 50
including the right to grant sublicenses, to develop, have developed, make, have
made, use, distribute for sale, offer for sale, sell and import such
Antibacterial Product for use in the Field under any and all Patent Rights,
Confidential Information, and Technology covering such Antibacterial Product
owned by or licensed (with the right to grant sublicenses) to CHEMGENICS
(including CHEMGENICS' interests in Joint Technology and Joint Patent Rights).
Upon the expiration of the Commercial License Term for each Antibacterial
Product, WYETH-AYERST shall have a paid up royalty free license to any and all
Patent Rights, Confidential Information and Technology covering such
Antibacterial Product for purposes of the manufacture, use, sale or import
thereof.
(c) For the avoidance of doubt, it is acknowledged that, pursuant to the
terms of this Agreement (i) WYETH-AYERST shall have no license from CHEMGENICS
under, access to or right to use, any Patent Rights or Technology owned by or
licensed to CHEMGENICS, for any purpose other than those expressly set forth in
the preceding paragraphs (a) and (b) hereof, including diagnostic purposes, and
(ii) CHEMGENICS shall have no license from WYETH-AYERST under, access to or
right to use, any Patent Rights or Technology owned by or licensed to
WYETH-AYERST, for any purpose other than those expressly set forth herein,
including diagnostic purposes.
<PAGE> 51
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
8.2 TERM OF COMMERCIAL LICENSE.
--------------------------
The Commercial License Term as to each Antibacterial Product shall commence
upon the issuance of an Antibacterial Product Designation pursuant to Section
2.4.2 with respect to the Antibacterial Product. The Commercial License Term for
each Antibacterial Product shall continue on a country-by-country and
product-by-product basis until the last to expire of the CHEMGENICS Patent
Rights, WYETH-AYERST Patent Rights or Joint Patent Rights in any country in the
Territory to which the license pertains, having at least one composition, method
of manufacture, or therapeutic use Valid Claim that covers such composition,
method of manufacture or therapeutic use, or until the expiration of [*******]
from the First Commercial Sale in such country by WYETH-AYERST or its
Affiliates, licensees or sublicensees of each Antibacterial Product, whichever
is later. The license for each such Antibacterial Product shall be deemed a
license separate and severable from licenses to other Antibacterial Products.
8.3 LICENSES AND SUBLICENSES TO THIRD PARTIES.
-----------------------------------------
If WYETH-AYERST grants a license or sublicense to a third party,
WYETH-AYERST shall guarantee that such licensee or sublicensee will fulfill all
of WYETH-AYERST's obligations under this Agreement; provided, however, that
WYETH-AYERST shall not be relieved of its obligations pursuant to this Agreement
as a result of such license or sublicense.
<PAGE> 52
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
8.4 PAYMENT OF ROYALTIES, ROYALTY RATES, ACCOUNTING FOR
---------------------------------------------------
ROYALTIES AND RECORDS.
---------------------
8.4.1 Payment of Royalties to CHEMGENICS
----------------------------------
The payment of royalties by WYETH-AYERST is in consideration of the
provision of and licenses to Patents, Technology and Confidential Information
granted hereunder, and for lead time provided for the acceleration of
identifying novel compounds as potential products. WYETH-AYERST shall pay
CHEMGENICS a royalty based on the Net Sales of Antibacterial Products in each
country during the Commercial License Term for each such Antibacterial Product.
For each Antibacterial Product, the royalty shall be calculated as follows:
For Annual Net Sales between: Marginal Royalty:
******* **
******* **
******* **
Such royalty shall be determined based on total annual Net Sales of WYETH-AYERST
and its Affiliates, licensees and sublicensees of each Antibacterial Product in
each Fiscal Year.
8.4.2 Credits and Offsets.
-------------------
Notwithstanding the foregoing, for all Net Sales by WYETH-AYERST or its
Affiliates, licensees or sublicensees in the Territory of each particular
Antibacterial Product, the royalty payments due to CHEMGENICS as specified above
are subject to a credit equal to [*****] of any Milestone Payments made by
WYETH-AYERST on such Antibacterial Product pursuant to the
<PAGE> 53
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
provisions of Section 3.4 hereof; provided that such credits shall not reduce
the royalty payable on any Antibacterial Product in any year by more than [***]
of the amount otherwise payable. Such [***] of Milestone Payments will be
carried forward until credited in full against royalty payments on such
Antibacterial Product.
8.4.3 Reductions.
----------
In the event that Cost of Goods, plus, if applicable, royalty paid to a
third party for use of an Accepted Target licensed from the third party, plus
royalty payable to CHEMGENICS for any Antibacterial product, exceeds the
maximum percentage of Net Sales set forth below, then the royalty for the year
in which such excess occurs, after applying any credit pursuant to Section
8.4.2 hereof, will be further reduced by **********************************
provided that such reduction, together with the credits set forth in the
preceding paragraph, shall not reduce the royalty on any Antibacterial Product
in any year by more than of the amount otherwise payable.
Costs of Goods Plus
For annual Net Sales between: Royalty (%)
******* ***
******* ***
******* ***
8.4.4 Outside Technology.
------------------
If, solely as a result of the incorporation of any Outside Technology in
the R & D Program as envisioned in Section 4.1, after application of the credits
and reductions set forth in 8.4.2 and 8.4.3 above, the commercialization of any
Antibacterial
<PAGE> 54
Product hereunder becomes infeasible because of the overall level of royalties
payable thereon, the parties will in good faith discuss the modification of the
economic terms hereof in order to attempt to mitigate such circumstances.
8.4.5 Payment Dates and Reports.
-------------------------
Royalties shall be paid by WYETH-AYERST on Net Sales within thirty (30)
days after the end of each Fiscal Quarter in the Fiscal Year in which such Net
Sales are made. Such payments shall be accompanied by a report showing the
quantity and Net Sales of each Antibacterial Product sold by WYETH-AYERST or any
Affiliate, licensee or sublicensee in each country, the applicable royalty rate
for such Antibacterial Product, any credits or offsets to be applied, and a
calculation of the amount of royalty due.
8.4.6 Accounting.
----------
The Net Sales used for computing the royalties payable to CHEMGENICS
hereunder shall be computed, and royalties shall be paid, in U.S. dollars. For
purposes of determining the amount of royalties due, the amount of Net Sales in
any foreign currency shall be computed by converting such amount into U.S.
dollars at the prevailing commercial rate of exchange for purchasing dollars
with such foreign currency as reported in The Wall Street Journal on the last
business day of the period to which a royalty payment relates.
CHEMGENICS agrees that any tax burden levied by any countries foreign to
the United States covered by this Agreement on receipt by CHEMGENICS of
royalties from WYETH-AYERST under
<PAGE> 55
this Agreement shall be borne by CHEMGENICS. In the event that such tax is
required to be withheld by WYETH-AYERST, its Affiliates, licensees or
sublicensees, it shall deliver to CHEMGENICS a statement including the amount of
tax withheld and justification therefor, and such other information as may be
necessary for United States foreign tax credit purposes.
8.4.7 Records.
-------
WYETH-AYERST, its Affiliates, licensees and sublicensees shall keep for
five (5) years from the date of each payment of royalties complete and accurate
records of sales by WYETH-AYERST and its Affiliates, licensees and sublicensees
of each Antibacterial Product in sufficient detail to allow the accruing
royalties to be determined accurately. CHEMGENICS shall have the right for a
period of five (5) years after receiving any report or statement with respect to
royalties due and payable to appoint an independent certified public accountant
reasonably acceptable to WYETH-AYERST to inspect the relevant records of
WYETH-AYERST and its Affiliates, licensees and sublicensees to verify such
report or statement. WYETH-AYERST and its Affiliates, licensees and sublicensees
shall make its records available for inspection by such independent certified
public accountant during regular business hours at such place or places where
such records are customarily kept, upon reasonable notice from CHEMGENICS,
solely to verify the accuracy of the reports and payments. Such inspection right
shall not be exercised more than once in any Fiscal Year nor more than once with
respect to sales of any
<PAGE> 56
Antibacterial Product in any given payment period. CHEMGENICS agrees, and will
require that any such certified public accountant shall agree, to hold in strict
confidence all information concerning royalty payments and reports, and all
information learned in the course of any audit or inspection, except to the
extent necessary for CHEMGENICS to reveal such information in order to enforce
its rights under this Agreement or if disclosure is required by law. The results
of each inspection, if any, shall be binding on both parties. CHEMGENICS shall
pay for such inspections, except that in the event there is any upward
adjustment in aggregate royalties payable for any Fiscal Year of the inspected
party shown by such inspection of more than five percent (5%) of the amount
paid, WYETH-AYERST shall pay for such inspection.
8.4.8 Overdue Royalties.
-----------------
Royalties not paid within the time period set forth in Section 8.4.5 shall
bear interest at a rate per month equal to one-twelfth of the annual prime rate
as published in the Wall Street Journal Eastern Edition on the date the payment
was due from such due date until paid in full.
8.5 MANUFACTURING.
-------------
Each party will have the right to manufacture or have manufactured for
itself and its Affiliates and sublicensees all Products to which it has rights
under this Agreement. WYETH- AYERST will have sole right to manufacture or have
manufactured
<PAGE> 57
Antibacterial Products to which it has rights hereunder for use in the Field.
8.6 LEGAL ACTION.
------------
8.6.1 Actual or Threatened Infringement.
---------------------------------
(a) In the event either party becomes aware of any possible infringement or
unauthorized possession, knowledge or use in the Field of any patent or other
intellectual property which is the subject matter of this Agreement
(collectively, an "Infringement"), that party shall promptly notify the other
party and provide it with full details.
WYETH-AYERST shall be responsible for the prosecution, prevention or
termination of any Infringement at WYETH-AYERST's expense and with the sharing
of recoveries as specified below. If WYETH-AYERST does not commence an action to
prosecute, or otherwise take steps to prevent or terminate an Infringement
within one hundred and twenty (120) days from such notice, then with respect to
CHEMGENICS Owned Technology and Patent Rights and Joint Technology and Joint
Patent Rights, or with respect to any WYETH-AYERST Patent Rights or Technology
licensed to CHEMGENICS hereunder, CHEMGENICS shall have the right and option to
take such reasonable action as CHEMGENICS considers appropriate to prosecute,
prevent or terminate such Infringement. If either party determines that it is
necessary or desirable for the other to join any such suit, action or
proceeding, the second party shall execute all papers and perform such other
acts as may be reasonably required in the circumstances.
<PAGE> 58
Each party shall, unless otherwise mutually agreed, bear the cost of any
proceeding or suit under this Section 8.6.1(a) brought by it. In each case, the
party bringing suit shall have the right first to reimburse itself out of any
sums recovered in such suit or in its settlement for all reasonable costs and
expenses, including reasonable attorney's fees, related to such suit or
settlement. The remainder is next to be used to reimburse the other party for
its costs and expenses so incurred. Any remaining amounts, and including as
appropriate any non-monetary recovery or award, shall be divided on an equitable
basis by the parties, to compensate the non-selling party for lost royalties, if
any, and to compensate the party selling the product affected by the
Infringement for its lost profits and market penetration. Each party shall
always have the right to be represented by counsel of its own selection and at
its own expense in any suit instituted under this Section by the other party for
Infringement. If WYETH-AYERST lacks standing and CHEMGENICS has standing to
bring any such suit, action or proceeding, then CHEMGENICS shall do so at the
request of WYETH-AYERST and at WYETH-AYERST's expense.
(b) In the event either party becomes aware of any possible infringement or
unauthorized possession, knowledge or use outside the Field of any patent right
or other intellectual property of CHEMGENICS which is the subject matter of this
Agreement, that party shall promptly notify the other party and provide it with
full details. CHEMGENICS shall have the right
<PAGE> 59
and option at its own expense to take such action as may be reasonably necessary
to prosecute, prevent or terminate such infringement. If CHEMGENICS reasonably
determines that it is necessary for WYETH-AYERST to join any such action, suit
or proceeding, WYETH-AYERST shall execute all papers and perform such other acts
as may be reasonably required in the circumstances and CHEMGENICS shall
reimburse WYETH-AYERST for any reasonable costs incurred in connection
therewith. CHEMGENICS shall have sole right to all sums recovered in such suit
or its settlement unless the parties hereto have agreed otherwise in writing.
(c) In any action under this Section 8.6, the parties shall fully cooperate
with and assist each other. No suit under Section 8.6.1(a) or Section 8.6.1(b)
regarding CHEMGENICS' patents or intellectual property may be settled by
WYETH-AYERST without CHEMGENICS' consent. No suit under Section 8.6.1(a)
regarding WYETH-AYERST's patents or intellectual property licensed to CHEMGENICS
hereunder may be settled by CHEMGENICS without WYETH-AYERST's consent.
8.6.2 Defense of Claims by WYETH-AYERST.
---------------------------------
Notwithstanding anything to the contrary in this Agreement, in the event
that any action, suit or proceeding is brought against CHEMGENICS or
WYETH-AYERST or any Affiliate, licensee or sublicensee of WYETH-AYERST alleging
the infringement of the intellectual property rights of a third party by reason
of the discovery, development, manufacture, use, sale, importation or offer for
sale of a Antibacterial Product by WYETH-AYERST or its
<PAGE> 60
Affiliates, licensees or sublicensees, WYETH-AYERST will have the obligation to
defend CHEMGENICS in such action, suit or proceeding at WYETH-AYERST's expense.
CHEMGENICS shall have the right to separate counsel at its own expense in any
such action or proceeding. The parties will cooperate with each other in the
defense of any such suit, action or proceeding. The parties will give each other
prompt written notice of the commencement of any such suit, action or proceeding
or claim of infringement and will furnish each other a copy of each
communication relating to the alleged infringement. WYETH-AYERST shall not
compromise, litigate, settle or otherwise dispose of any such suit, action or
proceeding which involves the use of CHEMGENICS Owned Technology, Joint
Technology, CHEMGENICS Patent Rights or Joint Patent Rights without CHEMGENICS'
advice and prior consent, provided that CHEMGENICS shall not unreasonably
withhold its consent to any settlement which does not have a material adverse
effect on CHEMGENICS or CHEMGENICS' business.
8.7 TERMINATION AND DISENGAGEMENT.
-----------------------------
8.7.1 Events of Termination.
---------------------
The events which permit a party to terminate the R & D Program as set forth
in Sections 2.3.3(a) (taking into account the applicable cure periods) and
2.3.3(b) hereof with respect to the R&D Program shall also permit such party to
terminate all of the licenses granted by such party hereunder ("Events of
Termination"). The breach by either party of its obligation to pay any amount
due hereunder with respect to a particular Antibacterial Product or the breach
by either party of any other
<PAGE> 61
material obligation or condition with respect to a particular Antibacterial
Product, including without limitation a breach by WYETH-AYERST of its guarantee
under Section 12.11, shall constitute a "License Termination Event" hereunder
with respect to the breaching party solely with respect to the license hereunder
for such particular Antibacterial Product.
8.7.2 Termination.
-----------
Upon the occurrence of any Event of Termination, the terminating party may,
by written notice to the other party, terminate this Agreement or any or all of
the licenses provided under this Agreement subject to the same periods of cure
and other conditions as detailed in Section 2.3.3(a), (b), (d) and (e), said
Sections incorporated herein mutatis mutandis. Upon the occurrence of any
License Termination Event with respect to a particular Antibacterial Product,
the terminating party may terminate the license with respect to the
Antibacterial Product involved in such License Termination Event, effective
thirty (30) days after giving written notice of such termination in the case of
a payment breach and ninety (90) days after giving written notice of such
termination in case of any other material breach, which notice shall describe
the License Termination Event in reasonable detail. The foregoing
notwithstanding, (i) if the License Termination Event is cured or shown to be
non-existent within the aforesaid thirty (30) day or ninety (90) day period, the
notice of termination shall be deemed automatically withdrawn and of no effect,
and (ii) as to an alleged breach expressly set forth with reasonable detail to
be the subject of a good faith
<PAGE> 62
dispute as to whether or not such payment is due and owing or whether a breach
of another material obligation or condition has occurred within the aforesaid
thirty (30) day or ninety (90) day period, the running of the remainder of the
thirty (30) day or ninety (90) day period shall be tolled until the dispute is
resolved. A License Termination Event which relates solely to any given license
shall not be grounds for terminating this Agreement in its entirety or
terminating any other license for any other Antibacterial Product.
8.7.3 Effect of Termination.
---------------------
(a) EFFECT OF TERMINATION ON LICENSE FROM CHEMGENICS. Upon termination by
CHEMGENICS under Section 2.3.3(a), 2.3.3(b) or Section 8.7.2 hereof of any
licenses granted to WYETH-AYERST hereunder with respect to any Antibacterial
Product, all rights to the Antibacterial Product covered by such terminated
license granted by CHEMGENICS to WYETH-AYERST hereunder under such terminated
licenses shall immediately and automatically revert to CHEMGENICS. Without
limiting the generality of the foregoing, all licenses and sublicenses granted
by CHEMGENICS to WYETH-AYERST hereunder to the Antibacterial Product shall
terminate automatically and WYETH-AYERST shall promptly transfer to CHEMGENICS
all documents, instruments, and records embodying CHEMGENICS Technology and
Joint Technology in its possession with respect to such Antibacterial Product
without retaining any copies thereof. In such case, CHEMGENICS shall have the
option to grant a direct license to any sublicensee of WYETH-AYERST with respect
to such Antibacterial Product.
<PAGE> 63
(b) LICENSE FROM WYETH-AYERST AND TRANSFER OF REGULATORY APPLICATIONS. Upon
termination by CHEMGENICS under Section 2.3.3(a), 2.3.3(b), or 8.7.2 of any
license granted to WYETH-AYERST hereunder with respect to any Antibacterial
Product and in the event that WYETH-AYERST is not developing or commercializing
another Antibacterial Product in the same Activity Profile, WYETH-AYERST shall
(i) grant CHEMGENICS an exclusive license under all of WYETH-AYERST's
rights and interests in all Patent Rights, Joint Patents, Technology, and
Joint Technology, and in all trademarks used uniquely and solely by
WYETH-AYERST with respect to such Antibacterial Product, to develop, make,
have made, use, offer for sale, distribute for sale, sell and import such
Antibacterial Product in the Territory, or, in WYETH AYERST'S sole
discretion and in lieu of such exclusive licenses, assign to CHEMGENICS any
and all of its right, title, and interest in and to all or a portion of
such Patents, Technology, or trademarks. In either event, CHEMGENICS shall
assume all subsequent costs associated with searching, filing, prosecuting
and maintenance of any such Patents, Technology or trademarks.
Further, and provided to do so would not be in conflict with any legal
or regulatory duties of WYETH-AYERST or its Affiliates, WYETH-AYERST shall:
(ii) grant CHEMGENICS the right to use applicable WYETH-AYERST
regulatory submissions, registrations, and approvals, or, where permissible
by law or regulation in the
<PAGE> 64
particular country in question, assign to CHEMGENICS any such regulatory
submission, registration, or approval in lieu of such grant of a right to
use.
(c) DOCUMENTATION. At the request of CHEMGENICS, WYETH-AYERST shall
execute and deliver such bills of sale, assignments and licenses and other
documents as may be necessary to fully vest in CHEMGENICS all right, title and
interest to which it is entitled as aforesaid pursuant to this Section 8.7.3.
8.7.4 Surviving Provisions.
--------------------
Termination of this Agreement for any reason shall be without prejudice to:
(a) the rights and obligations of the parties provided in Sections 2.8,
3.1, 3.3, 3.4, 3.5, 5.1, 5.2, 5.3, 5.4, 6.2, 8.8, 8.9, 10.1, 10.2, 11.1 and
Section 12, all of which shall survive such termination;
(b) CHEMGENICS' right to receive all research goal, milestone, royalty and
other payments earned and/or accrued prior to termination hereunder; and
(c) any other rights or remedies which either party may otherwise have
against the other.
8.8 WARRANTY DISCLAIMER.
-------------------
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR
OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING.
<PAGE> 65
8.9 LIMITED LIABILITY.
-----------------
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, NEITHER
CHEMGENICS NOR WYETH-AYERST WILL BE LIABLE TO THE OTHER WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF
SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
9. REPRESENTATIONS AND WARRANTIES
------------------------------
9.1 MUTUAL REPRESENTATIONS.
----------------------
CHEMGENICS and WYETH-AYERST each represents and warrants as follows:
9.1.1 Organization.
------------
It is a corporation duly organized, validly existing and is in good
standing under the laws of the State of Delaware, and it and its Affiliates are
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the performance of its obligations hereunder requires
such qualification and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.
9.1.2 Authorization.
-------------
The execution, delivery and performance by it of this Agreement have been
duly authorized by all necessary corporate action and do not and will not (a)
require any consent or approval of its stockholders or (b) violate any provision
of any
<PAGE> 66
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to it or any provision of its
charter documents.
9.1.3 Binding Agreement.
-----------------
This Agreement is a legal, valid and binding obligation of it enforceable
against it in accordance with its terms and conditions.
9.1.4 No Inconsistent Obligation.
--------------------------
It is not under any obligation to any person, or entity, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.
9.1.5 Governmental Consents.
---------------------
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority is required on the part of either party in
connection with the valid execution, delivery and performance of this Agreement
and the Stock Purchase Agreement of even date herewith, except for any filings
under any applicable securities laws and except for any filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.. The filings
under securities laws, if any, will be affected by CHEMGENICS at its cost within
the applicable stipulated statutory period. Any filings under the Hart-Scott-
Rodino Antitrust Improvements Act, if any, will be effected by the parties
hereto within twenty-one (21) days after the Effective Date. If a
Hart-Scott-Rodino filing is effected by the
<PAGE> 67
parties, the costs attendant thereto shall be borne equally by the parties. If
this Agreement is enjoined under Hart-Scott- Rodino, then this Agreement and the
Stock Purchase Agreement shall be null and void and the initial equity payment
under Section 3.1.1 and the initial research funding under Section 3.2 shall be
returned to WYETH-AYERST and WYETH-AYERST shall return the certificate for the
shares purchased pursuant to the Stock Purchase Agreement to CHEMGENICS.
9.1.6 Intellectual Property.
---------------------
It (a) owns or is the licensee in good standing of all Patent Rights, trade
secrets and other intellectual property to be used by it in connection with this
Agreement; (b) has received no notice of infringement or misappropriation of any
alleged rights asserted by any third party in relation to any technology to be
used by it in connection herewith; (c) is not in default with respect to any
license agreement related hereto; and (d) is not aware of any patent, trade
secret or other right of any third party which could materially adversely affect
its ability to carry out its responsibilities hereunder, or the other party's
ability to exercise or exploit any license granted to it under this Agreement.
Such party agrees to immediately notify the other party in writing in the event
such party hereafter receives a notice of the type referred to in (b) above,
becomes in default under any license agreement referred to in (c) above, or
becomes aware of any patent, trade secret or other right of the nature referred
to in (d) above.
9.1.7. Litigation.
----------
<PAGE> 68
There is no action, suit, proceeding or investigation pending or currently
threatened against it which questions the validity of this Agreement or the
right to enter into such instrument or to consummate the transactions
contemplated hereby.
10. INDEMNIFICATION
---------------
10.1 INDEMNIFICATION OF CHEMGENICS BY WYETH-AYERST.
---------------------------------------------
WYETH-AYERST shall indemnify, defend and hold harmless CHEMGENICS, its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "CHEMGENICS Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the CHEMGENICS
Indemnitees, or any of them, in connection with any claims, suits, actions,
demands or judgments of third parties, including without limitation personal
injury and product liability matters (except in cases where such claims, suits,
actions, demands or judgments result from a willful material breach of this
Agreement, gross negligence or willful misconduct on the part of CHEMGENICS)
arising directly out of any actions of WYETH-AYERST in the performance of the R
& D Program or arising out of the development, testing, production, manufacture,
promotion, import, sale or use by any person of any Antibacterial Product
manufactured or sold by WYETH-AYERST or by an Affiliate, licensee, sublicensee,
distributor or agent of WYETH-AYERST.
10.2 INDEMNIFICATION OF WYETH-AYERST BY CHEMGENICS.
---------------------------------------------
<PAGE> 69
CHEMGENICS shall indemnify, defend and hold harmless WYETH- AYERST, its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "WYETH-AYERST Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the WYETH- AYERST
Indemnitees, or any one of them, in connection with any claims, suits, actions,
demands or judgments of third parties, (except in cases where such claims,
suits, actions, demands or judgments result from a willful material breach of
this Agreement, gross negligence or willful misconduct on the part of
WYETH-AYERST), arising directly out of any actions of CHEMGENICS in the
performance of the R & D Program or arising out of the development, testing,
production, manufacture, promotion, import, sale or use by any person of any
Antibacterial Product manufactured or sold by CHEMGENICS or by an Affiliate,
licensee, sublicensee, distributor or agent of CHEMGENICS.
11. DISPUTE RESOLUTION
------------------
11.1 SENIOR OFFICIALS.
----------------
The parties recognize that a bona fide dispute as to certain matters may
from time to time arise during the term of this Agreement which relates to
either party's rights and/or obligations hereunder. In the event of the
occurrence of such a dispute, either party may, by notice to the other party,
have such dispute referred to their respective senior officials designated below
or their successors, for attempted resolution by good faith negotiations within
thirty (30) days after such notice
<PAGE> 70
is received. Said senior officials shall be designated by the parties upon
execution of this Agreement.
12. MISCELLANEOUS
-------------
12.1 PAYMENT METHOD.
--------------
Each payment to CHEMGENICS under this Agreement shall be paid by
WYETH-AYERST in U.S. currency by wire transfer of funds to an account of
CHEMGENICS in accordance with instructions provided by CHEMGENICS.
12.2 NOTICES.
-------
All notices shall be in writing mailed via certified mail, return receipt
requested, courier providing evidence of delivery, or facsimile transmission
with confirmation of receipt requested, addressed as follows, or to such other
address as may be designated by notice so given from time to time:
If to WYETH-AYERST: WYETH-AYERST LABORATORIES
555 East Lancaster Avenue
St. Davids, Pennsylvania 19087
Attention: Senior Vice President
Global Business Development
With a copy to: Associate General Counsel
Patents and Trademarks
AMERICAN HOME PRODUCTS CORPORATION
Five Giralda Farms
Madison, New Jersey 07940
If to CHEMGENICS: CHEMGENICS Pharmaceuticals Inc.
One Kendall Square, Building 300
Cambridge, MA 02139
Attention: Chief Executive Officer
With a copy to: Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, MA 02111
<PAGE> 71
If to the JSC: To the Chair and Co-Chair at their
respective addresses furnished in
writing to the parties
If to the Patent
Coordinators: To the two Patent Coordinators at their
respective addresses furnished in
writing to the parties
Notices shall be deemed given as of the date received as evidenced by
confirmation of receipt.
12.3 GOVERNING LAW AND JURISDICTION.
------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the state of New Jersey, U.S.A., without regard to the application of
principles of conflicts of law, except with regard to issues of patent law,
which shall be determined with reference to the substantive laws of the country
in question.
<PAGE> 72
12.4 BINDING EFFECT.
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective legal representatives, successors and permitted
assigns.
12.5 HEADINGS.
--------
Section and subsection headings are inserted for convenience of reference
only and do not form a part of this Agreement.
12.6 COUNTERPARTS.
------------
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
12.7 AMENDMENT; WAIVER.
-----------------
This Agreement may be amended, modified, superseded or canceled, and any of
the terms may be waived, only by a written instrument executed by each party or,
in the case of waiver, by the party or parties waiving compliance. The delay or
failure of any party at any time or times to require performance of any
provisions shall in no manner affect the rights at a later time to enforce the
same. No waiver by any party of any condition or of the breach of any term
contained in this Agreement, whether by conduct, or otherwise, in any one or
more instances, shall be deemed to be, or considered as, a further or continuing
waiver of any such condition or of the breach of such term or any other term of
this Agreement.
<PAGE> 73
12.8 NO THIRD PARTY BENEFICIARIES.
----------------------------
Except as set forth in Section 10, no third party, including any employee
of any party to this Agreement, shall have or acquire any rights by reason of
this Agreement.
12.9 NO AGENCY OR PARTNERSHIP.
------------------------
Nothing contained in this Agreement shall give either party the right to
bind the other, or be deemed to constitute the parties as agents for the other
or as partners with each other or any third party.
12.10 ASSIGNMENT AND SUCCESSORS.
-------------------------
This Agreement may not be assigned by either party without the consent of
the other, which consent shall not be unreasonably withheld, except that each
party may, without such consent, assign this Agreement and the rights,
obligations and interests of such party, in whole or in part, to any of its
Affiliates, to any purchaser of all or substantially all of its assets to which
the subject matter of the Agreement relates, or to any successor corporation
resulting from any merger or consolidation of such party with or into such
corporation.
12.11 AFFILIATE AGREEMENTS.
--------------------
WYETH-AYERST may, from time to time after Pre-Project Status has been
granted to an Antibacterial Product, request and CHEMGENICS agrees to execute
separate license agreements for such Antibacterial Product under Section 8.1(b)
hereof in mutually satisfactory form ("Affiliate Agreements") separately
granting to American Home Products Corporation, or separately granting directly
to any Affiliate, equivalent rights as granted to WYETH-
<PAGE> 74
AYERST in Section 8.1(b) hereof, in any country or countries other than the
United States within the Territory. Any such Affiliate Agreement entering into
force under this Section shall be prepared by WYETH-AYERST, subject to review
and approval by CHEMGENICS, and shall contain terms and conditions consistent
with those of this Agreement, subject only to such modifications as may be
required by the laws or regulations of the country or countries having
jurisdiction over any such Affiliate Agreement, including, but not limited to,
governmentally required changes in the rate of payment, restrictions against the
remittance thereof and limitations upon the term or duration of any such
Affiliate Agreement. If the terms of any such Affiliate Agreement are varied
from the terms of this Agreement because of local law or regulation,
WYETH-AYERST shall enter into an amendment hereof requiring WYETH-AYERST to
fully compensate CHEMGENICS according to the terms hereof, including, without
limitation, compensation for any additional tax imposed on CHEMGENICS.
WYETH-AYERST hereby fully guarantees performance of each Affiliate under any
such Affiliate Agreement. In those countries in which any such Affiliate
Agreement requires prior government approval or registration, such Affiliate
Agreement shall not be binding or have any force or effect until the required
government approval or registration has been granted. All Affiliate Agreements
shall be deemed to be severable and independent with respect to this Agreement
and to each other except that CHEMGENICS shall have the right to terminate all
Affiliate Agreements upon termination of this Agreement. The parties agree that
it is their mutual
<PAGE> 75
understanding that CHEMGENICS shall not incur any additional cost or economic
detriment as a result of any Affiliate Agreement.
12.12 FORCE MAJEURE.
-------------
Neither WYETH-AYERST nor CHEMGENICS shall be liable for failure of or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of WYETH-AYERST or
CHEMGENICS. In event of such force majeure, the party affected thereby shall use
reasonable efforts to cure or overcome the same and resume performance of its
obligations hereunder. If such force majeure continues for a period longer than
one (1) year, the party not affected thereby may, for purposes of termination of
this Agreement or any license hereunder, treat the failure or delay as if it
were not caused by force majeure but the party affected by the force majeure
shall nonetheless have no other liability for such failure or delay.
12.13 INTERPRETATION.
--------------
The parties hereto acknowledge and agree that: (i) each party and its
counsel reviewed and negotiated the terms and provisions of this Agreement and
have contributed to its revision; (ii) the rule of construction to the effect
that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in a favor of or against any
<PAGE> 76
party, regardless of which party was generally responsible for the preparation
of this Agreement.
12.14 INTEGRATION; SEVERABILITY.
-------------------------
This Agreement is the sole agreement with respect to the subject matter
hereof and supersedes all other agreements and understandings between the
parties with respect to same, including but not limited to the Confidentiality
Agreement between CHEMGENICS and WYETH-AYERST dated April 24, 1996 (the
"Superseded Confidentiality Agreement"). If any provision of this Agreement is
or becomes invalid or is ruled invalid by any court of competent jurisdiction or
is deemed unenforceable, it is the intention of the parties that the remainder
of this Agreement shall not be affected.
12.15 EXPORT CONTROLS.
---------------
This Agreement is made subject to any restrictions concerning the export of
Antibacterial Products, Confidential Information, or Technology from the United
States which may be imposed upon or related to either party to this Agreement
from time to time by the Government of the United States. Neither party will
export, directly or indirectly, any Confidential Information, Technology or any
Antibacterial Products utilizing such Confidential Information or Technology to
any countries for which the United States Government or any agency thereof at
the time of export requires an export license or other governmental approval,
without first obtaining the written consent to do so from the Department of
Commerce or other agency of the United
<PAGE> 77
States Government when required by applicable statute or regulation.
12.16 SECTION 365(n) OF THE BANKRUPTCY CODE.
-------------------------------------
All rights and licenses granted under or pursuant to any section of this
Agreement are, and shall otherwise be, deemed to be, for purposes of Section
365(n) of the Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code. The Parties shall retain
and may fully exercise all of their respective rights and elections under the
Bankruptcy Code. Upon the bankruptcy of either Party, the non-bankrupt Party
shall further be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property, and such, if not already in its
possession, shall be promptly delivered to the non-bankrupt Party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
AMERICAN HOME PRODUCTS CORPORATION
REPRESENTED BY ITS
WYETH-AYERST LABORATORIES DIVISION
By: /s/ Fred Hasse
-------------------------
Title: EVP, AHP
-------------------------
Date: 11-27-96
-------------------------
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry Berkowitz
-------------------------
Title: Chief Executive Officer
-------------------------
Date: 11/27/96
-------------------------
<PAGE> 78
SCHEDULE I
Antibacterial Products
----------------------
<PAGE> 79
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
EXHIBIT 1
ACTIVITY PROFILES
-----------------
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<PAGE> 1
EXHIBIT 10.43
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
LICENSE AGREEMENT
LICENSE AGREEMENT (this "AGREEMENT"), dated as of June 28, 1996,
between PERSEPTIVE BIOSYSTEMS, INC., a Delaware corporation, and its wholly
owned subsidiaries, PERSEPTIVE TECHNOLOGIES II CORPORATION ("PTC-II"), a
Delaware corporation, and VESTEC CORPORATION, a Texas corporation ("VESTEC"),
(collectively, "PERSEPTIVE"), and CHEMGENICS PHARMACEUTICALS INC., a Delaware
corporation ("CHEMGENICS"). All capitalized terms shall have the respective
meanings set forth in Section 1 hereof and Schedule A hereto.
R E C I T A L S :
A. PerSeptive and ChemGenics are parties to a Master Agreement dated as
of May __, 1996 (the "MASTER AGREEMENT").
B. PerSeptive is the owner or licensee of rights in certain Technology
and certain patent rights relating thereto.
C. PerSeptive is willing to grant to ChemGenics and ChemGenics desires
to acquire from PerSeptive, a non-exclusive worldwide license within the Field,
under such Technology and patent rights for the purpose of allowing ChemGenics
to discover drugs and develop, market, sell, import and/or deliver, certain
Products and Services.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce each other
to enter into the Master Agreement, PerSeptive and ChemGenics hereby agree as
follows:
1. DEFINITIONS.
1.1. DEFINITIONS. As used herein, capitalized terms shall have
the respective meanings set forth below and in Schedule A attached hereto, which
is incorporated by this reference as though fully set forth herein.
1.2. SINGULAR AND PLURAL. Singular and plural forms, as the
case may be, of terms defined herein shall have correlative meanings.
2. GRANT OF LICENSES.
2.1. GRANT OF LICENSE TO CHEMGENICS.
2.1.1. PERSEPTIVE PATENT RIGHTS AND ASSOCIATED
TECHNOLOGY.
(a) Subject to the terms and conditions of this Agreement, PerSeptive hereby
grants to ChemGenics a non-exclusive, irrevocable, worldwide, royalty-free fully
paid right and
<PAGE> 2
- 2 -
license, terminable only as set forth in Sections 9.2, 9.3 or 9.4, solely within
the Field, to (a) develop, make, have made, use, offer to sell, sell and import
any Products and/or to provide any Services the use, manufacture, sale or
provision of which is Covered By one or more claims of the PerSeptive Patent
Rights and (b) develop, make, have made, use, offer to sell, sell and import any
Products and/or provide any Services incorporating, utilizing, manufactured
using, based upon, arising out of, or derived from the Associated Technology. In
addition, to the extent that ChemGenics acquires, or acquires the right to use,
any PerSeptive products (including any prototypes or "beta-test" products)
pursuant to this Agreement, the Master Agreement any other agreement executed in
connection therewith, ChemGenics shall have all rights which ChemGenics would
have under PerSeptive's standard User Licenses to use such products as if
ChemGenics were a customer of PerSeptive or a purchaser in the market of such
PerSeptive products. Notwithstanding the foregoing or any other provision of
this Agreement, neither ChemGenics nor any Partner shall have any right or
license to the Licensed Technology which is PerSeptive Patent Rights or
Confidential Information of PerSeptive to develop, make, have made, offer to
sell, sell or otherwise distribute Products that are Tools which are Covered By
PerSeptive Patent Rights or which are based upon, arise out of, use or are
derived from Licensed Technology which is Confidential Information of
PerSeptive; and ChemGenics shall not have the right to grant sublicenses of the
Licensed Technology except to the extent necessary to permit any Partner of
ChemGenics to conduct research and/or development within the Field on such
Partner's premises pursuant to the terms of such Partner's agreement with
ChemGenics or to manufacture and sell any drugs developed in conjunction with
ChemGenics pursuant to such agreement and subject to the confidentiality and
non-use obligations of Section 5.3 hereof; provided that no such Partner shall
thereby have any right or license to (i) make, have made, offer to sell, sell,
license or otherwise distribute any products or to deliver any services to any
Person the use of which is Covered By the PerSeptive Patent Rights or which
incorporates, utilizes, is manufactured using, is based upon, arises out of, or
is derived from the Associated Technology except for drugs developed in
conjunction with ChemGenics; or (ii) practice the Licensed Technology on or in
connection with the making, use or operation of any Tools unless such right has
been acquired from PerSeptive outside of this Agreement.
(b) Subject to the terms and conditions of this Agreement, PerSeptive
further grants to ChemGenics an exclusive, irrevocable, worldwide, royalty free
fully paid right and license, terminable only as set forth in Section 9.3, to
all PerSeptive Patent Rights and Associated Technology, that (i) arise out of
the research projects listed on Schedule D which were part of the Drug Discovery
Program (as defined in the Master Agreement), and (ii) specifically relate to
the potential drugs, drug candidates and drug targets which were the subject of
those research projects (the foregoing PerSeptive Patent Rights and Associated
Technology being called the "Discovery Program Technology"), to develop, make,
have made, use, offer to sell, sell and import such drugs, drug candidates or
drug targets. PerSeptive expressly reserves all rights (subject to the license
in the Field granted in Section 2.1.1(a)) to the Discovery Program Technology
for all uses other than as drugs, drug candidates, or drug targets; provided,
however, that PerSeptive shall not offer for sale, sell or distribute (or
license any Person to do so) any compound or molecule which is part of the
Discovery Program Technology for any use which would interfere with or adversely
affect (i) ChemGenics' ability to market a compound or molecule which is part of
the Discovery
<PAGE> 3
- 3 -
Program Technology as a drug, drug candidate, or drug target or (ii) ChemGenics'
profitability from such marketing; provided, further, that the restriction in
the preceding clause shall not restrict PerSeptive's rights in the PerSeptive
Field.
(c) For the avoidance of doubt, it is acknowledged and agreed that the
foregoing rights and licenses include the right to (i) develop, make, have made,
use, offer to sell, sell and import Products which are diagnostic analytes or
reagents or targets which are not Covered By PerSeptive Patent Rights or which
are not Licensed Technology which is Confidential Information for specific
diseases or patient conditions and Products for diagnostic use which incorporate
such analytes or reagents or targets, and (ii) grant rights to Partners to do
so.
2.1.2. RESTRICTIONS ON FUTURE LICENSES. PerSeptive
agrees that, without the prior consent of ChemGenics, it shall not (a) utilize
the Licensed Technology in the Field or (b) grant a license or other right to
any third party to do the same, provided, however, that, without ChemGenics'
consent, PerSeptive may grant to purchasers of its products restricted or
unrestricted User Licenses within or outside the Field and may provide and
perform and permit others to perform pre- and post-sale service, consistent with
PerSeptive's current practice, related to such products within or outside the
Field. Except for the licenses and rights granted by Section 2.1.1 hereof and
the restrictions contained in the preceding sentence, PerSeptive reserves the
exclusive (against ChemGenics and all other Persons) worldwide right to develop
and use, and to license to any Person and authorize further sublicenses with
respect to, the Associated Technology and the PerSeptive Patent Rights and to
develop, make, have made, use, offer to sell, sell and import products and/or
provide services utilizing or Covered By the Licensed Technology within or
outside of the Field.
2.1.3. THIRD-PARTY TRANSFERS OF RIGHTS TO PERSEPTIVE.
In the event that PerSeptive has licensed from a third party any of the Licensed
Technology licensed to ChemGenics pursuant to Section 2.1.1 hereof, PerSeptive
hereby grants to ChemGenics a non-exclusive license of such Licensed Technology
to the extent that, and for as long as, PerSeptive can provide such rights and
subject to any royalty obligations as hereinafter provided. With respect to any
patent rights or Technology granted or assigned to PerSeptive in the future
pursuant to an agreement with any Person other than ChemGenics, the license
granted to ChemGenics hereunder shall be no greater in scope than the rights
that PerSeptive has a right to grant under such agreement and shall be otherwise
subject to any obligations assumed by PerSeptive in consideration of the grant
or assignment of such rights to PerSeptive which are to be sublicensed to
ChemGenics. PerSeptive agrees that in negotiating any such agreement with a
Person other than ChemGenics, it will use reasonable efforts to obtain the right
to fully license ChemGenics hereunder for all such patent rights or Technology
in the Field. In the event of any conflict or inconsistency between any
provision of any such sublicense to ChemGenics and any provisions of Sections
5.3, 5.4, 7, 8 or 13 of this Agreement, the said provisions of this Agreement
shall prevail. ChemGenics shall not take any action, or fail to take any action
within its control, that would constitute or give rise to a breach or other
violation by PerSeptive of any such agreement. Without limiting the foregoing,
to the extent that the sale or other action by ChemGenics or its permitted
<PAGE> 4
- 4 -
sublicensees of Products would give rise to a royalty or other payment
obligation under any such agreement, ChemGenics shall pay and require its
sublicensees to pay such amount. In the event that PerSeptive acquires for value
from a Person other than ChemGenics after the date hereof during the period this
Agreement is in effect patent rights or Technology useful in development of
Products or Services in the Field, nothing in this Agreement or any other
agreement between the parties, other than Section 2.1.2 hereof, shall be
construed to prohibit or restrict PerSeptive from continuing to manufacture and
sell any product so acquired or from selling, licensing, or developing the
acquired patent rights or Technology and any successor product or improved
product so developed, and any such patent rights or Technology acquired after
the date of this Agreement shall be licensed non-exclusively to ChemGenics in
the Field subject to the terms of Sections 2.1.1 and 2.1.2 and this Section
2.1.3.
2.2. NO RESTRICTIONS ON PERSEPTIVE'S OTHER BUSINESSES. Nothing
in this Agreement shall be interpreted to preclude PerSeptive or any of its
Affiliates or licensees or sublicensees from engaging in its current business of
designing, manufacturing, marketing, selling and licensing products and
instrumentation systems for the purification, synthesis, sequencing or analysis
of biomolecules and providing tools to the life sciences industry, or from
making, selling or licensing, to any Person and for any purpose within or
outside the Field, instruments, equipment, machinery, apparatus, devices, media,
reagents, compounds, resins, activators, linkers, particles, supports and other
materials and substances (including, without limitation, oligomers, peptides and
other molecules), tools or other products (and systems comprising the foregoing)
or from providing any services outside the Field or any pre- and post-sale
services, consistent with PerSeptive's current practice, related to the sale or
license of the foregoing within the Field for or capable of, biomolecular
purification, diagnosis, synthesis, sequencing or analysis incorporating,
utilizing, manufactured using, based upon, arising out of, or derived from any
Licensed Technology, including without limitation POROS(R) media, chromatography
columns, separation devices, computer workstations, mass spectrometers,
synthesizers, sequencers and other instruments and equipment.
2.3 NO RESTRICTIONS ON CHEMGENICS DRUG COMMERCIALIZATION.
Nothing in this Agreement shall prevent ChemGenics or its Partners from
developing, making, having made, selling, licensing or otherwise commercializing
and distributing (i) any drugs or drug candidates discovered by ChemGenics or
its Partners with or without the use of the Licensed Technology, and (ii) any
Tools which are not Covered By PerSeptive Patent Rights or which do not
incorporate, utilize or arise out of and are not manufactured, using and are not
based upon or derived from Associated Technology which is Confidential
Information. The foregoing shall not relieve ChemGenics from its obligations
under the Non-Competition Agreement (as defined in the Master Agreement).
2.4. RIGHTS TO JOINTLY DEVELOPED INVENTIONS.
2.4.1. JOINT INVENTIONS JOINTLY OWNED. All right,
title and interest to any inventions or improvements within or outside the Field
developed jointly by the Parties shall be the joint property of the Parties.
Joint inventorship shall be determined in
<PAGE> 5
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
- 5 -
accordance with United States Patent Law; provided however, that for the
avoidance of doubt, it is acknowledged and agreed that the use or incorporation
by ChemGenics of Licensed Technology in the making of an invention or
improvement will not, by itself, make such invention or improvement jointly
owned.
2.4.2. JOINT INVENTIONS IN THE FIELD. If ChemGenics
shall determine that any joint inventions or improvements made within five (5)
years from the date hereof shall be primarily and significantly useful in the
Field, it shall so notify PerSeptive in writing and, PerSeptive shall be
precluded from selling, licensing or otherwise distributing any Tools (i) which
are Covered By patents or patent applications claiming or, (ii) incorporating,
manufactured using, based upon, using, arising out of or derived from, such
invention or improvement to any third party for a period of [*******]
following the date that the invention or improvement was made. If PerSeptive
shall object to such determination in writing within thirty (30) days after such
notice, the Parties shall negotiate in good faith to resolve whether such
invention or improvement is primarily and significantly useful in the Field and
if they cannot, the matter shall be referred to and determined by arbitration
in accordance with Section 15 hereof.
2.4.3. RESTRICTIONS ON LICENSING JOINT INVENTIONS.
Without the prior written consent of PerSeptive, ChemGenics shall not grant a
license or other right to any third party to develop, make, have made, use,
offer to sell, sell, import, license or otherwise distribute any Tools in the
PerSeptive Field Covered By, using, arising out of or derived from any invention
or improvement jointly owned by the Parties. Without the prior written consent
of ChemGenics, PerSeptive shall not grant a license or other right to any third
party to use or practice any invention or improvement jointly owned by the
Parties, or to develop, make, have made, use, offer to sell, sell, import or
otherwise distribute any products or deliver any services, in the Field Covered
By, using, arising out of or derived from any such joint invention or
improvement; provided, however, pursuant to Section 2.4.2 hereof, PerSeptive
shall have the right to grant restricted or unrestricted User Licenses and
provide and perform and permit others to perform pre- and post-sale services,
consistent with PerSeptive's current practice, to purchasers of or related to
Tools that may be Covered By, use, arise out of or be derived from any such
joint invention or improvement.
2.4.4. JOINT INVENTIONS WHICH ARE DRUGS. In the event
that any joint invention is a drug or drug candidate, PerSeptive hereby grants
to ChemGenics an exclusive, irrevocable, worldwide, royalty free, fully paid
right and license, terminable only as set forth in Section 9.3, to the Licensed
Technology to the extent necessary to further develop, and to make, have made,
use, offer to sell, sell and import such drug or drug candidate.
<PAGE> 6
- 6 -
3. PAYMENT.
The consideration delivered to PerSeptive on the Closing Date in
accordance with the Master Agreement, by ChemGenics (excluding the Earnout
Shares, as defined therein) shall constitute the consideration for PerSeptive's
entering into this Agreement. The Parties agree that no future performance is
required by PerSeptive during the term of this Agreement or otherwise in order
to earn the consideration described in this Section 3.
4. REPRESENTATIONS AND WARRANTIES.
4.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PERSEPTIVE.
PerSeptive PTC-II and Vestec represent, warrant and covenant to ChemGenics as
follows:
4.1.1. Each of PerSeptive Biosystems, Inc., PTC-II
and Vestec is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation with corporate powers
adequate for executing and delivering, and performing its obligations under,
this Agreement;
4.1.2. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of PerSeptive Biosystems, Inc., PTC-II and Vestec;
4.1.3. This Agreement has been duly executed and
delivered by PerSeptive and PTC-II and is a legal, valid and binding obligation
of each of PerSeptive Biosystems, Inc., PTC-II and Vestec, enforceable against
each of them in accordance with its terms;
4.1.4. The execution, delivery and performance of
this Agreement do not and will not conflict with or contravene any provision of
the charter documents or by-laws of PerSeptive Biosystems, Inc., PTC-II or
Vestec or any agreement, document, instrument, indenture or other obligation of
PerSeptive Biosystems, Inc., PTC-II or Vestec; and
4.1.5. Neither PerSeptive Biosystems, Inc., PTC-II
nor Vestec shall enter into any agreement, make any commitment, take any action
or fail to take any action that would contravene any material provision of, or
materially derogate or restrict any of the rights and licenses granted to
ChemGenics under, this Agreement.
4.1.6. PerSeptive shall grant ChemGenics reasonable
access to any prototype systems, instruments or other equipment (including any
reagents or media relating thereto) relevant to the Field, at such time as
PerSeptive shall reasonably deem access by third parties to such prototype is
appropriate, and subject to reasonable terms and conditions. In the event that
PerSeptive wishes to "beta test" any such system, instrument, equipment,
reagents or media on the premises of one or more of its customers, PerSeptive
shall give ChemGenics the opportunity, if ChemGenics so chooses, to be one of
the first such beta-test sites, subject to reasonable terms and conditions.
<PAGE> 7
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4.1.7. Schedule B sets forth a list of all patents
and patent applications currently owned or exclusively licensed by PerSeptive,
including all patents and patent applications used in the Drug Discovery Program
(as defined in the Master Agreement). To the best of PerSeptive's knowledge, all
patents listed in Schedule B are valid and in full force and all applications
listed therein as pending have been prosecuted in good faith as required by law
and are in good standing. To the best of PerSeptive's knowledge, there has been
no infringement by PerSeptive or its Affiliates with respect to any patent
rights of others in the conduct or operation of the Drug Discovery Program.
Except as disclosed in Schedule B, none of the patents or patent applications
listed or described in Schedule B is involved in any interference or opposition
proceeding, and there has been no written notice received by the Seller or any
of its affiliates or any other indication that any such proceeding will
hereafter be commenced. Also, included in Schedule B is a list of all exclusive
licenses and license agreements, and the patents and patent applications covered
thereby, relating to Licensed Technology that have been of significant use by
PerSeptive in the Drug Discovery Program during the two year period ending on
April 30, 1996. To the best of PerSeptive's knowledge, all of the licenses
listed or described in Schedule B are legally valid and binding and in full
force and effect. PerSeptive is not in default under any such license and, to
the best of PerSeptive's knowledge, there are no defaults by any other party to
any such license. None of PerSeptive's rights thereunder will be impaired by the
consummation of the transactions contemplated hereby. Except as described in
Schedule B, PerSeptive has not granted any person or entity any exclusive right
to use any of the patents or patent applications listed therein for any purpose.
4.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CHEMGENICS.
ChemGenics represents, warrants and covenants to PerSeptive as follows:
4.2.1. ChemGenics is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with corporate powers adequate for executing and delivering, and performing its
obligations under, this Agreement;
4.2.2. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action on
the part of ChemGenics;
4.2.3. This Agreement has been duly executed and
delivered by ChemGenics and is a legal, valid and binding obligation of
ChemGenics, enforceable against ChemGenics in accordance with its terms;
4.2.4. The execution, delivery and performance of
this Agreement do not and will not conflict with or contravene any provision of
the charter documents or by-laws of ChemGenics or any agreement, document,
instrument, indenture or other obligation of ChemGenics; and
4.2.5. ChemGenics shall not enter into any agreement,
make any commitment, take any action or fail to take any action that would
contravene any material provisions of, or materially derogate or restrict any of
the rights and licenses granted to, PerSeptive under this Agreement.
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5. DISCLOSURE OF LICENSED TECHNOLOGY.
5.1. DOCUMENTATION AND ACCESS. Upon request by ChemGenics from
time to time, PerSeptive shall, within a reasonable time thereafter, deliver to
ChemGenics copies of reasonable then-existing documentation describing the
Licensed Technology which is reasonably related to the scope of ChemGenics's
activities within the Field. PerSeptive shall give access to and use reasonable
efforts to keep ChemGenics apprised of all ongoing and future Licensed
Technology created by PerSeptive and its Affiliates which is or may be useful in
the Field, and shall reasonably cooperate with and provide advice to ChemGenics
with respect to the implementation of new Technology which is Licensed
Technology in the Field subject to the terms of this Agreement, it being
understood that the level of effort required by this Section is less than the
level of effort required by the Consulting and Interim Services Agreement (as
defined in the Master Agreement). PerSeptive further agrees, at the request of
ChemGenics, to provide reasonable additional consulting services to ChemGenics
in return for commercially reasonable compensation. PerSeptive shall at all
times during the term of this Agreement provide ChemGenics with access to
PerSeptive's patent applications and notify ChemGenics when any patents issue
thereon subject to Sections 9.2, 9.3 and 9.4 hereof. In the event the ChemGenics
shall have reason to believe that PerSeptive has not complied with the
requirements of this Section 5.1, it shall so notify PerSeptive and PerSeptive
shall be given a reasonable opportunity to cure such non-compliance.
5.2. PATENTS.
5.2.1. PATENT PROSECUTION. PerSeptive shall have the
exclusive right, at its expense, to prepare, prosecute and maintain patent
applications, and to maintain and enforce patents comprising the PerSeptive
Patent Rights and, except as expressly otherwise set forth herein, otherwise
deal in and with and enforce rights associated with the Licensed Technology. In
the event that PerSeptive elects not to prepare, prosecute or maintain any
patent application or any patent rights constituting PerSeptive Patent Rights,
PerSeptive shall promptly notify ChemGenics, and ChemGenics shall have the right
to prepare, prosecute and maintain any such application or right at ChemGenics's
expense.
5.2.2. COOPERATION. ChemGenics agrees to cause each
of its employees and agents to take all actions and to execute, acknowledge and
deliver all instruments or agreements reasonably requested by PerSeptive, and
necessary for the perfection, maintenance, enforcement or defense of that
PerSeptive's rights as set forth above.
5.2.3. IDENTIFICATION OF PATENT RIGHTS. ChemGenics
shall include in the packaging or documentation for any Products or Services, as
the case may be, adequate notice of the PerSeptive Patent Rights therein.
5.3. CONFIDENTIAL INFORMATION. Any Party receiving
Confidential Information shall use commercially reasonable efforts to: (i)
maintain the confidential and proprietary status of such Confidential
Information; (ii) keep such Confidential Information and each part thereof
within its possession or under its control sufficient to prevent any
<PAGE> 9
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activity with respect to the Confidential Information that is not specifically
authorized by this Agreement; (iii) prevent the disclosure of any Confidential
Information to any other Person; and (iv) ensure that such Confidential
Information is used only for those purposes specifically authorized herein;
provided, however, that such restriction shall not apply to any Confidential
Information which is (a) independently developed by the receiving Party without
reference to Confidential Information, (b) in the public domain at the time of
its receipt or thereafter becomes part of the public domain through no fault of
the receiving Party, (c) received without an obligation of confidentiality from
a third party having the right to disclose such information, (d) released from
the restrictions of this Section 5.3 by the express written consent of the
disclosing Party, (e) disclosed to any actual or prospective permitted Partner,
assignee, sublicensee or subcontractor of either PerSeptive or ChemGenics
hereunder or under the Master Agreement (if such actual or prospective Partner,
assignee, sublicense or subcontractor is subject to the provisions of this
Section 5.3 or comparable provisions of such other documents), or (f) required
by law, statute, rule or court order to be disclosed (the disclosing party
shall, however, use commercially reasonable efforts to obtain confidential
treatment of any such disclosure) and shall notify the other party in writing of
the request or requirement as soon as feasible so that such other party may make
timely effort to protect or limit the conditions of disclosure of its
Confidential Information. Notwithstanding clause (e), ChemGenics shall not have
the right to disclose Confidential Information of PerSeptive to a prospective
Partner, assignee, licensee or subcontractor which is a PerSeptive Competitor
unless and until such Person becomes an actual Partner, assignee, licensee or
subcontractor. Without limiting the generality of the foregoing, PerSeptive and
ChemGenics each shall use its commercially reasonable efforts to obtain
confidentiality agreements from its respective Partners, employees and agents,
similar in scope to this Section 5.3, to protect the Confidential Information,
including in the case of ChemGenics, commercially reasonable efforts to obtain
the agreement of Partners who are PerSeptive Competitors to not give access to
Confidential Information of PerSeptive to persons who are engaged in the
portions of the Partner's business which competes with the business of
PerSeptive in the PerSeptive Field. ChemGenics shall not use PerSeptive's
Confidential Information for any purpose outside the Field.
5.4. PERMITTED DISCLOSURES. Notwithstanding the provisions of
Section 5.3 hereof, PerSeptive and ChemGenics may, to the extent necessary,
disclose and use Confidential Information (other than Confidential Information
furnished to a Party by a third party or which a Party has an obligation to a
third party not to disclose), consistent with the rights of PerSeptive and
ChemGenics otherwise granted hereunder (a) for the purpose of securing
institutional or government approval to clinically test or market any Product,
or (b) for the purpose of securing patent protection for an invention within the
scope of the PerSeptive Patent Rights or any invention jointly owned by the
parties or owned solely by ChemGenics; provided, however, that in each such
instance (i) the other Party hereto shall have been notified of the permitted
disclosure and (ii) except in the case of disclosures to government entities in
which the party makes commercially reasonable efforts to protect the
confidentiality thereof to the extent permitted by applicable law, any such
disclosure shall be made to Persons which either have agreed to be bound by or
are already subject to a duty of confidentiality, for the benefit of a Party
hereto, substantially to the same effect as that set forth in Section 5.3
hereof.
<PAGE> 10
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6. INFRINGEMENT.
6.1. NOTIFICATION OF INFRINGEMENT. ChemGenics shall notify
PerSeptive of any infringement or misappropriation known to ChemGenics by any
Person of any Licensed Technology rights and shall provide PerSeptive with the
available evidence, if any, of such infringement. If ChemGenics has actual
notice of infringement by any Person of Licensed Technology rights, the
respective officers of PerSeptive and ChemGenics shall confer to determine in
good faith an appropriate course of action to enforce the Licensed Technology
rights or otherwise abate the infringement thereof. All amounts recovered in any
action to enforce Licensed Technology rights undertaken by PerSeptive and
ChemGenics, whether by judgment or settlement, shall be retained by PerSeptive
and ChemGenics pro rata according to the respective percentages of expenses
borne by them in enforcing such rights.
6.2. ENFORCEMENT OF LICENSED TECHNOLOGY RIGHTS. If PerSeptive
determines that enforcement of the Licensed Technology rights is appropriate,
PerSeptive shall have the right, but not the obligation, at its own expense, to
take appropriate action to enforce such rights; provided, however, that, if
PerSeptive elects to so act, ChemGenics shall have the right to participate in
the enforcement of such rights by agreeing to bear a percentage of the costs of
such enforcement in such amount as the parties shall determine. All amounts
recovered in any action to enforce Licensed Technology rights undertaken by
ChemGenics and PerSeptive, whether by judgment or settlement, shall be retained
by ChemGenics and PerSeptive pro rata according to the respective percentages of
expenses borne by them in enforcing such Licensed Technology rights. If, within
six (6) months after notice of infringement, PerSeptive has not commenced action
to enforce such rights or thereafter ceases to diligently pursue such action,
ChemGenics shall have the right, at its expense, to take appropriate action to
enforce such rights as its sole remedy hereunder. All amounts recovered in any
action to enforce Licensed Technology rights undertaken by ChemGenics solely at
its expense, whether by judgment or settlement, shall be retained by ChemGenics.
PerSeptive and ChemGenics shall fully cooperate with each other in the planning
and execution of any action to enforce rights. Neither PerSeptive nor ChemGenics
shall enter into any settlement that includes the grant of a license under,
agreement not to enforce, or any statement prejudicial to the validity or
enforceability of any Licensed Technology rights without the consent of the
other, which consent shall not be unreasonably withheld or delayed.
6.3. DISCLAIMER OF WARRANTY; CONSEQUENTIAL DAMAGES.
6.3.1. Reference is made to certain representations
made by PerSeptive in Section 4.1 hereof concerning its intellectual property
rights. Nothing in this Agreement shall be construed as a representation made or
warranty given by PerSeptive that any patents will issue based on pending
applications within the PerSeptive Patent Rights, or that any such patents which
do issue will be valid. Except for the express representations and warranties
set forth herein, PERSEPTIVE EXPRESSLY DISCLAIMS AND CHEMGENICS HEREBY WAIVES,
RELEASES AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LICENSED TECHNOLOGY, INCLUDING,
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WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
6.3.2. NEITHER PARTY TO THIS AGREEMENT SHALL BE
ENTITLED TO RECOVER FROM THE OTHER ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL,
MULTIPLE OR PUNITIVE DAMAGES.
7. CHEMGENICS' RIGHT TO INDEMNIFICATION.
PerSeptive shall indemnify the ChemGenics Indemnitees, pay on demand
and protect, defend, save and hold harmless each ChemGenics Indemnitee from and
against, on an after-tax basis, any and all Claims incurred by or asserted
against any ChemGenics Indemnitee of whatever kind or nature, including, without
limitation, any claim or liability based upon negligence, warranty, strict
liability, violation of government regulation or infringement of patent or other
proprietary rights, arising from or occurring as a result of (a) the use of the
Licensed Technology by PerSeptive or any Affiliate, agent or sublicensee of
PerSeptive (other than ChemGenics) or (b) subject to Section 6.3.2, any breach
of this Agreement by PerSeptive, except to the extent that any Claims shall have
arisen from the negligence or willful misconduct of any ChemGenics Indemnitee.
Such ChemGenics Indemnitee shall promptly notify PerSeptive of any Claim with
respect to which such ChemGenics Indemnitee is seeking indemnification
hereunder, upon becoming aware thereof, and permit PerSeptive at PerSeptive's
cost to defend against such Claim and shall cooperate in the defense thereof.
Neither PerSeptive nor such ChemGenics Indemnitee shall enter into, or permit,
any settlement of any such Claim without the express written consent of the
other Party which consent shall not be unreasonably withheld or delayed. Such
ChemGenics Indemnitee may, at its option and expense, have its own counsel
participate in any proceeding which is under the direction of PerSeptive and
will cooperate with PerSeptive or its insurer in the disposition of any such
matter; provided, however, that if PerSeptive shall not defend such Claim, such
ChemGenics Indemnitee shall have the right to defend such Claim itself and
recover from PerSeptive all reasonable attorneys' fees and expenses incurred by
it during the course of such defense.
8. PERSEPTIVE RIGHT TO INDEMNIFICATION.
ChemGenics shall indemnify the PerSeptive Indemnitees, pay on demand
and protect, defend, save and hold harmless each PerSeptive Indemnitee from and
against, on an after-tax basis, any and all Claims incurred by or asserted
against any PerSeptive Indemnitee of whatever kind or nature, including, without
limitation, any claim or liability based upon negligence, warranty, strict
liability, violation of government regulation or infringement of patent or other
proprietary rights, arising from or occurring as a result of (a) the use of any
Licensed Technology by ChemGenics or any permitted sublicensee of ChemGenics
(other than PerSeptive) or (b) subject to Section 6.3.2, any breach of this
Agreement by ChemGenics, except to the extent that any Claims shall have arisen
from the negligence or willful misconduct of any PerSeptive Indemnitee. Such
PerSeptive Indemnitee shall promptly notify ChemGenics of any Claim with respect
to which such PerSeptive Indemnitee is seeking indemnification hereunder, upon
becoming aware thereof, and permit ChemGenics at
<PAGE> 12
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ChemGenics's cost to defend against such Claim and shall cooperate in the
defense thereof, provided, however, that PerSeptive shall have the right, but
not the obligation, to control the defense, at its expense, of any such Claims
involving PerSeptive Patent Rights. Neither such PerSeptive Indemnitee nor
ChemGenics shall enter into, or permit, any settlement of any such Claim without
the express written consent of the other Party, which shall not unreasonably be
withheld or delayed. Such PerSeptive Indemnitee may, at its option and expense,
have its own counsel participate in any proceeding which is under direction of
ChemGenics and will cooperate with ChemGenics and its insurer in the disposition
of any such matter; provided, however, that if ChemGenics shall not defend such
Claim, such PerSeptive Indemnitee shall have the right to defend such Claim
itself and recover from ChemGenics all reasonable attorneys' fees and expenses
incurred by it during the course of such defense.
9. TERM AND TERMINATION.
9.1. TERM. This Agreement shall be effective as of the Closing
Date and shall continue in full force and effect indefinitely, unless terminated
in part as provided in Sections 9.2, 9.3 or 9.4 hereof.
9.2. TERMINATION UPON BANKRUPTCY, ETC.. Either Party shall
have the right to terminate this Agreement (except for the license granted by
Section 2.1.1(b)), effective immediately upon written notice of termination to
the other Party in the event that:
9.2.1. The other Party shall (i) seek the
liquidation, reorganization, dissolution or winding-up of itself or the
composition or readjustment of its debts, (ii) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its assets, (iii)
make a general assignment for the benefit of its creditors, (iv) commence a
voluntary case under the federal Bankruptcy Code, (v) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or readjustment of debts, or (vi)
adopt any resolution of its Board of Directors or stockholders for the purpose
of effecting any of the foregoing; or
9.2.2. A proceeding or case shall be commenced
without the application or consent of the other Party and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the following shall be entered and continue unstayed and in
effect, for a period of forty-five (45) days from and after the date service of
process is effected upon the other Party, seeking (i) the other Party's
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the other Party or of all or any
substantial part of its assets, or (iii) similar relief in respect of the other
Party under any law relating to bankruptcy, insolvency, reorganization,
winding-up or the composition or readjustment of debts.
<PAGE> 13
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9.3 TERMINATION OF MASTER AGREEMENT. If the Master Agreement
shall terminate or the transactions contemplated therein are rescinded or
unwound for any reason, all licenses granted under Section 2.1 hereof and the
obligations of PerSeptive under Sections 4.1.6, 5.1, 6.1, 6.2 and 14 hereof
shall terminate and all other provisions of the Agreement shall survive,
provided, however, that, to the extent that a continuing license shall be
necessary for ChemGenics to practice, exploit or commercialize any invention
made by ChemGenics prior to the rescission of the Master Agreement, then (i) if
the invention is a drug or drug candidate or drug target, PerSeptive shall grant
to ChemGenics a worldwide non-exclusive, perpetual, royalty-free license under
the Licensed Technology to the extent necessary to make, use or sell such drug,
drug candidate or drug target and (ii) if the invention is not a drug, drug
candidate or drug target, (a) if such continuing license is no broader than a
User License that PerSeptive makes generally available to its customers,
PerSeptive will provide such User License by ChemGenics from PerSeptive on terms
no less favorable than those offered to its other customers and (b) if
ChemGenics requires a broader license than is currently available in connection
with the purchase of products under any User License then PerSeptive shall grant
an additional worldwide, non-exclusive, perpetual, royalty-free license under
the Licensed Technology solely to the extent necessary for ChemGenics to
practice, exploit and commercialize such invention in the Field; provided that
ChemGenics shall purchase the PerSeptive products necessary to obtain such User
License. In addition, in the event the Master Agreement shall terminate or the
transactions contemplated therein are rescinded or unwound for any reason,
ChemGenics shall grant to PerSeptive a worldwide, non-exclusive, perpetual,
royalty-free license in the PerSeptive Field to any improvement to the Licensed
Technology made by ChemGenics between the date hereof and the date of such
rescission.
9.4 ACQUISITION OF CHEMGENICS BY PERSEPTIVE COMPETITOR. In the
event that ChemGenics shall consolidate or merge with another Person that is a
PerSeptive Competitor, or convey, sell or lease to a PerSeptive Competitor all
or substantially all of the stock, assets or business of ChemGenics and its
subsidiaries, taken as a whole, or suffer a Change of Control in which a
PerSeptive Competitor shall come to control ChemGenics, then PerSeptive may, in
its sole discretion within twenty (20) days after receipt of the notice required
by Section 14 hereof, give notice that it will terminate all licenses granted
under Section 2.1 (except Section 2.1.1(b)) hereof and the obligations of
PerSeptive under Sections 4.1.6, 5.1, 6.1, 6.2, 13 and 14 hereof effective on
the closing of the relevant transaction, and upon such closing all such licenses
and obligations under Sections 2.1 (except Section 2.1.1(b)), 4.1.6, 5.1, 6.1,
6.2, 13 and 14 hereof shall terminate, provided, however, that all other
provisions of this Agreement shall survive.
9.5 INDEMNIFICATION. Notwithstanding the foregoing, the
indemnification provisions of Section 8 hereof shall survive termination or
expiration of this Agreement, but only with respect to Claims which arose from
acts or circumstances which occurred prior to termination.
<PAGE> 14
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10. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE.
No failure on the part of PerSeptive or ChemGenics to exercise and no
delay in exercising any right, power, remedy or privilege under this Agreement,
or provided by statute or at law or in equity or otherwise, including, without
limitation, the right or power to terminate this Agreement, shall impair,
prejudice or constitute a waiver of any such right, power, remedy or privilege
or be construed as a waiver of any breach of this Agreement or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.
11. FORCE MAJEURE.
PerSeptive and ChemGenics shall each be excused for any failure or
delay in performing any of its respective obligations under this Agreement,
other than the obligations of ChemGenics to make certain payments to PerSeptive
as described in Section 3 hereof, if such failure or delay is caused by Force
Majeure.
12. NOTICES.
All notices, requests and other communications to PerSeptive or
ChemGenics hereunder shall be in writing (including telecopy or similar
electronic transmissions), shall refer specifically to this Agreement and shall
be personally delivered or sent by telecopy or other electronic facsimile
transmission, by registered mail or certified mail, return receipt requested,
postage prepaid or by reliable overnight courier service providing evidence of
receipt, in each case to the respective address specified below (or to such
address as may be specified in writing to the other party hereto):
PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: President
Facsimile: (508) 383-7852
With a copy to:
Rufus C. King, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, MA 02110
Facsimile: (617) 248-7100
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ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
Attn: President
Facsimile: (617) 225-2997
With a copy to:
Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Facsimile: (617) 542-2241
Any notice or communication given in conformity with this Section 12 shall be
deemed to be effective: (i) when received by the addressee, if delivered by hand
or electronic facsimile; (ii) three (3) days after mailing, if mailed; and (iii)
one (1) business day after delivery to a reliable overnight courier service
providing evidence of receipt.
13. FURTHER ASSURANCES.
Each of PerSeptive and ChemGenics agrees to duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and to do
and cause to be done such further acts and things, that may be necessary or as
the other Party hereto may at any time and from time to time reasonably request
to carry out more effectively the provisions, or to better assure and confirm
unto such other Party, its rights under this Agreement.
14. SUCCESSORS AND ASSIGNS.
The terms and provisions of this Agreement shall inure to the benefit
of, and be binding upon, PerSeptive, ChemGenics, and their respective successors
and assigns, subject to the terms of Section 9.4 hereof and the remainder of
this Section 14; provided, however, that ChemGenics may not assign or otherwise
transfer this Agreement or any of its rights and interests, nor delegate any of
its obligations, hereunder, except to a direct or indirect 100% parent or direct
or indirect wholly owned subsidiary which becomes a party to the Non-Competition
Agreement (as defined in the Master Agreement) and that agrees in writing to be
bound by this Agreement (and in such case ChemGenics shall remain bound) without
the prior written consent of PerSeptive, except pursuant to a merger or
consolidation, or sale of all or substantially all of the stock, assets or
business of ChemGenics and its subsidiaries taken as a whole as provided below.
In the event that either Party shall consolidate or merge with another Person
(other than an acquisition by such Party of another Person where the
stockholders of such Party (or any subsidiary thereof) after such transaction
directly or indirectly own at least a majority of the voting stock of the
combined or acquired Person); or convey, sell or lease to another Person all or
substantially all of the stock, assets or business
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of such Party and its subsidiaries, taken as a whole, or if there shall be a
Change of Control of such Party, then (i) if such transaction is negotiated by
such Party, such Party shall give the other Party written notice identifying the
acquiring Person and the material terms of the transaction at least thirty (30)
days prior to the closing thereof and (ii) the Parties shall negotiate in good
faith to determine whether any changes shall be appropriate in this Agreement
and/or in the consideration due to PerSeptive for the licenses granted herein as
a result of the proposed transaction and the changed relationship of the Parties
resulting therefrom, subject to PerSeptive's right to terminate the licenses
granted herein pursuant to Section 9.4 hereof. If the Parties are unable to
agree that any such changes should be made prior to the closing of the proposed
transaction, then the licenses granted herein shall continue unaffected thereby
upon the consummation of the transaction, subject to PerSeptive's right to
terminate such licenses pursuant to Section 9.4. Any attempt to assign or
delegate any portion of this Agreement in violation of this Section 14 shall be
null and void. Subject to the foregoing, any reference to PerSeptive and
ChemGenics hereunder shall be deemed to include the permitted successors thereto
and assigns thereof.
15. AMENDMENTS.
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor any consent to any departure by PerSeptive or
ChemGenics therefrom, shall in any event be effective unless the same shall be
in writing specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by PerSeptive
and ChemGenics, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by PerSeptive and ChemGenics.
16. ARBITRATION
(a) The Parties shall attempt to resolve any dispute or controversy
arising under or relating to the interpretation or meaning of this Agreement by
good faith negotiations. Any matter that cannot be resolved by such good faith
negotiation shall be resolved by final and binding arbitration conducted by
three (3) arbitrators in Boston, Massachusetts, in accordance with the
then-current American Arbitration Association ("AAA") Commercial Arbitration
Rules (the "AAA Rules") as modified by this Section 16.
(b) The arbitrators shall be selected by mutual agreement of the
parties or, failing such agreement, in accordance with the aforesaid AAA Rules.
At least one (1) of the arbitration panel shall be reasonably familiar with the
biotechnology industry. The Parties shall bear the costs of the arbitrators
equally. No arbitrator may be affiliated in any way with either Party.
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(c) The Parties shall have the right of limited pre-hearing discovery,
in accordance with the U.S. Federal Rules of Civil Procedure, as then in effect,
for a period not to exceed sixty (60) days.
(d) As soon as the discovery is concluded, but in any event with thirty
(30) days thereafter, the arbitrators shall hold a hearing in accordance with
the AAA Rules. Thereafter, the arbitrators shall promptly render a written
decision, together with a written opinion setting forth in reasonable detail the
grounds for such a decision.
(e) Judgment may be entered in any court of competent jurisdiction to
enforce the award entered by the arbitrators.
(f) The duty of the Parties to arbitrate any dispute hereunder shall
survive expiration or termination of this Agreement for any reason.
17. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
18. SEVERABILITY.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, PerSeptive and ChemGenics hereby waive any
provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
19. HEADINGS.
Headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
20. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, taken together, shall constitute one
and the same instrument.
21. ENTIRE AGREEMENT.
<PAGE> 18
- 18 -
This Agreement, together with any agreements referenced herein,
constitutes, on and as of the date hereof, the entire agreement of PerSeptive
and ChemGenics with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
PerSeptive and ChemGenics with respect to such subject matter are hereby
superseded in their entirety.
IN WITNESS WHEREOF, the parties hereto have caused this License
Agreement to be duly executed under seal and delivered as of the date first
above written.
PERSEPTIVE BIOSYSTEMS, INC.
By:_____________________________________
Title:__________________________________
PERSEPTIVE TECHNOLOGIES II
CORPORATION
By:_____________________________________
Title:__________________________________
VESTEC CORPORATION
By:_____________________________________
Title:__________________________________
CHEMGENICS PHARMACEUTICALS INC.
By:_____________________________________
Title:__________________________________
<PAGE> 19
LICENSE AGREEMENT
SCHEDULE A
DEFINITIONS
"AFFILIATE" of a Person shall mean a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person. "Control" (and, with correlative
meanings, the terms "controlled by" and "under common control with") shall mean
the possession of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting stock, by
contract or otherwise. In the case of a corporation, "control" shall mean, among
other things, the direct or indirect ownership of more than fifty percent (50%)
of its outstanding voting stock. Notwithstanding the forgoing, ChemGenics and
PerSeptive shall not be deemed to be Affiliates for the purpose of this
Agreement.
"ASSOCIATED TECHNOLOGY" shall mean all Technology (including, without
limitation, Technology licensed to PerSeptive, subject to Section 2.1.3 hereof)
relating to or useful in the Field, other than PerSeptive Patent Rights, (i)
owned or controlled by or licensed to, PerSeptive as of the date hereof, or
acquired by PerSeptive hereafter that relates to and is useful in researching,
developing or manufacturing Products or in the delivery of Services. "Owned or
controlled" shall include Technology which PerSeptive owns, or under which
PerSeptive is licensed and has the right to grant sublicenses and/or grant
immunity from suit.
"CHANGE IN CONTROL" means with respect to either Party any transaction
or any event as a result of which any one or more Persons (other than a
stockholder of the Party on the Closing Date) acquires or for the first time
controls or is able to vote (directly or through nominees or beneficial
ownership) after the Closing Date fifty percent (50%) or more of the capital
stock of the Company outstanding at the time having power ordinarily to vote for
directors of the Company.
"CHEMGENICS" shall mean ChemGenics Pharmaceuticals Inc., a Delaware
corporation.
"CHEMGENICS INDEMNITEE" shall mean ChemGenics, its successors and
assigns, and the directors, officers, employees, agents and counsel thereof.
"CLAIM" shall mean any and all liabilities, damages, losses,
settlements, claims, actions, suits, penalties, fines, costs or expenses
(including, without limitation, reasonable attorneys' fees).
"CLOSING DATE" shall mean _____ __, 1996.
A-1
<PAGE> 20
"CONFIDENTIAL INFORMATION" shall mean all proprietary confidential
Technology owned or controlled by PerSeptive or ChemGenics, respectively, and
disclosed by PerSeptive to ChemGenics or by ChemGenics to PerSeptive during the
term of this Agreement.
"COVERED BY" shall mean, with respect to any act, an act that would, in
the absence of a license provided hereunder, constitute an infringement of a
claim of a pending patent application, if issued as a patent, or a patent which
has not been held invalid or unenforceable by a court of competent jurisdiction
in a decision which is unappealable or the appeal period for which has expired
without an appeal being taken.
"DRUG DISCOVERY PROGRAM" shall have the meaning assigned to that term
in the recitals to the Master Agreement.
"FIELD" shall mean all applications of the Licensed Technology for (i)
drug discovery and (ii) the development, synthesis and manufacture of drugs and
drug candidates discovered by ChemGenics or its Partners.
"FORCE MAJEURE" shall mean any act of God, any accident, explosion,
fire, storm, earthquake, flood, drought, peril of the sea, riot, embargo, war or
foreign, federal, state or municipal order of general application, seizure,
requisition or allocation, any failure or delay of transportation, shortage of
or inability to obtain supplies, equipment, fuel or labor or any other
circumstances or event beyond the reasonable control of the party relying upon
such circumstance or event.
"LICENSED TECHNOLOGY" shall mean, collectively, the PerSeptive Patent
Rights and the Associated Technology.
"PARTIES" means PerSeptive and ChemGenics.
"PARTNER" shall mean any Person with whom ChemGenics shall have a
written research and/or development agreement or other collaborative arrangement
whereby ChemGenics receives either (i) ownership rights or license rights in
products of such research and/or development or (ii) royalty payments based on
the sales of such products.
"PARTY" means PerSeptive or ChemGenics.
"PERSEPTIVE" shall mean, unless the context otherwise requires,
PerSeptive Biosystems, Inc., a Delaware corporation, PTC-II and Vestec,
collectively.
"PERSEPTIVE COMPETITOR" shall mean the Persons listed in Schedule C
hereto. PerSeptive may modify or supplement Schedule C from time to time to add
Persons who materially compete with PerSeptive in the PerSeptive Field and shall
modify Schedule C to delete Persons who do not materially compete with
PerSeptive in the PerSeptive Field, subject to ChemGenics' right to reasonably
object to any such modification or supplement or failure to modify Schedule C.
If ChemGenics does not object in writing to such modification or supplement
within twenty (20) days after receipt in writing of a modified or supplemented
A-2
<PAGE> 21
schedule, or if ChemGenics shall object and the Parties are able to resolve such
objection after good faith negotiation within five days after PerSeptive's
receipt of such written objection, then such modification or supplement shall
become part of this Agreement. If the Parties are unable to resolve such
objection, the matter shall be referred to arbitration in accordance with
Section 16, provided that if the list is modified or supplemented the date of
such modification or supplement shall be the date the original modified or
supplemented list was first delivered to ChemGenics.
"PERSEPTIVE FIELD" shall mean the research, development, design,
manufacture, importation, marketing, sales, licensing and distribution of Tools
and providing Tools to the life science industry.
"PERSEPTIVE INDEMNITEE" shall mean PerSeptive, its successors and
assigns, and the directors, officers, employees, agents and counsel thereof.
"PERSEPTIVE PATENT RIGHTS" shall mean rights (including, without
limitation, rights as licensee) now owned or hereafter acquired, subject to
Section 2.1.3 hereof, by PerSeptive under (i) issued U.S. and foreign patents,
(ii) U.S. or foreign patent applications, including any patent application
constituting an equivalent, counterpart, reissue, extension or continuation of
any of the foregoing applications (including, without limitation, a continuation
in part or division), or (iii) any patent issued or issuing upon any of the
foregoing applications. A list of PerSeptive's issued patents and patent
applications as of the date of this Agreement is attached hereto as Schedule B.
"PERSEPTIVE USER LICENSE" shall mean a license or right to use or
practice the Licensed Technology that is granted or conveyed in connection with
the sale, license or other transfer of PerSeptive's products.
"PERSON" shall mean any individual, partnership, limited liability
company, corporation, firm, association, unincorporated organization, joint
venture, trust or other entity.
"PRODUCTS" shall mean a product or system developed by incorporating,
utilizing, manufactured using, based upon, arising out of, or derived from the
Licensed Technology.
"PTC-II" shall mean PerSeptive Technologies II Corporation, a Delaware
corporation, and a wholly owned subsidiary of PerSeptive Biosystems, Inc.
"SERVICES" shall mean a method, process or procedure incorporating,
utilizing, based upon, arising out of or derived from the Licensed Technology.
"TECHNOLOGY" shall mean public and nonpublic technical or other
information, trade secrets, know-how, processes, formulations, concepts, ideas,
preclinical, clinical, pharmacological or other data and testing results,
experimental methods, or results, assays, descriptions, business or scientific
plans, depictions, customer lists and any other written, printed or
electronically stored materials, any natural or man-made biological materials
and
A-3
<PAGE> 22
any and all other intellectual property, including licenses, patents and patent
applications, of any nature whatsoever.
"TOOLS" shall mean instruments, equipment, machinery, apparatus,
devices, media, reagents, compounds, resins, activators, linkers, particles,
supports and other materials and substances (including, without limitation,
oligomers, peptides and other molecules), tools or other products (and systems
comprising the foregoing) for biomolecular purification, diagnosis, synthesis,
sequencing or analysis.
"VESTEC" shall mean Vestec Corporation, a Texas corporation, and a
wholly owned subsidiary of PerSeptive Biosystems, Inc.
A-4
<PAGE> 23
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
SCHEDULE B
CONFIDENTIAL
PERSEPTIVE BIOSYSTEMS, INC.
ISSUED U.S. & FOREIGN PATENTS
Pages B-1 through B-7 contain
confidential materials which have
been omitted and filed separately
with the Securities and Exchange Commission.
B-1
<PAGE> 24
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Page 1
CONFIDENTIAL
Attorney-Client
Privileged Information
PERSEPTIVE BIOSYSTEMS, INC.
---------------------------
Pending Patent Applications
Pages B2-1 through B-2 contain
Contain confidential materials which have
been omitted and filed separately
with the Securities and Exchange Commission.
<PAGE> 25
LICENSE AGREEMENT
SCHEDULE C
PERSEPTIVE COMPETITORS
Perkin Elmer
Hewlett Packard
Waters
Beckman
Bio Rad
E. Merck
Shimadzu
Hitachi
Thermo Electron
Pharmacia & Upjohn
Amersham
Tosoh
Sepracor
W.R. Grace
and all Persons meeting the definition of an Affiliate of
any of the foregoing if the 50% standard therein were changed to 20%.
B-8
<PAGE> 26
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote such omissions.
Confidential, Proprietary Information
EXHIBIT D
to
License Agreement
between
PerSeptive Biosystems, Inc.
and
ChemGenics Pharmaceuticals, Inc.
--------------------------------
Drug Discovery Program Research Projects.
Identification of patents or patent applications which, in the opinion of
PerSeptive's management, are particularly relevant to the Project (excluding
patents or patent applications relating to instruments and other Tools (as
defined in the License Agreement)
and
Potential Drugs, Drug Targets and Drug Candidate Which are Subjects of Drug
Discovery Program Research Projects
- - --------------------------------------------------------------------------------
[Key: "No D.T.C." means No Potential Drugs, Drug Targets or Drug Candidates]
Pages D-1 through D-2 contain
confidential materials which have been
omitted and filed separately
with the Securities and Exchange Commission
<PAGE> 1
EXHIBIT 10.44
MASTER AGREEMENT
between
ChemGenics Pharmaceuticals
a d/b/a of
Myco Pharmaceuticals Inc.
and
PerSeptive Biosystems, Inc.
__________________
May 7, 1996
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I.................................................................... 1
PURCHASE AND SALE OF ASSETS ...................... 1
SECTION 1.01 Transfer of Assets.................................... 1
SECTION 1.02 Assumption of Liabilities............................. 3
SECTION 1.03 Closing............................................... 3
ARTICLE II................................................................... 6
REPRESENTATIONS AND WARRANTIES OF PERSEPTIVE................................. 6
SECTION 2.01 Organization and Qualification........................ 6
SECTION 2.02 Corporate Power and Authority......................... 6
SECTION 2.03 Validity, Etc......................................... 7
SECTION 2.04 No Governmental Consent............................... 7
SECTION 2.05 Financial Statements.................................. 8
SECTION 2.06 Absence of Undisclosed Liabilities.................... 8
SECTION 2.07 Absence of Adverse Change; Conduct of Drug
Discovery Program................................................. 8
SECTION 2.08 Taxes................................................. 8
SECTION 2.09 Litigation............................................ 9
SECTION 2.10 Compliance with Law................................... 9
SECTION 2.11 Labor and Employee Relations.......................... 10
SECTION 2.12 Certain Employees..................................... 10
SECTION 2.13 Employee Benefits..................................... 11
SECTION 2.14 Tangible Properties................................... 11
SECTION 2.15 Acquisition by PerSeptive of Transferred
Assets from PerSeptive Technologies II Corporation
("PTC-II")........................................................ 12
SECTION 2.16 Leased Premises....................................... 12
SECTION 2.17 Environmental Matters................................. 13
SECTION 2.18 Insurance............................................. 16
SECTION 2.19 Outstanding Commitments............................... 16
SECTION 2.20 Intellectual Property................................. 17
SECTION 2.21 Proprietary Information of Third Parties.............. 17
SECTION 2.22 Disclosure............................................ 17
SECTION 2.23 Purchase For Investment............................... 18
ARTICLE III.................................................................. 18
REPRESENTATIONS AND WARRANTIES OF CHEMGENICS................................. 18
SECTION 3.01 Organization.......................................... 18
SECTION 3.02 Corporate Power and Authority......................... 19
SECTION 3.03 Validity, Etc......................................... 19
SECTION 3.04 No Governmental Consent............................... 19
SECTION 3.05 Litigation............................................ 20
SECTION 3.06 Financial Statements.................................. 20
i
<PAGE> 3
SECTION 3.07 Absence of Undisclosed Liabilities.................... 21
SECTION 3.08 Transactions with Affiliates.......................... 21
SECTION 3.09 Investments in Other Persons.......................... 21
SECTION 3.10 Absence of Adverse Change............................. 21
SECTION 3.11 Disclosure............................................ 22
SECTION 3.12 Capitalization; Status of Capital Stock............... 22
SECTION 3.13 Absence of Certain Developments....................... 23
SECTION 3.14 Certain Agreements of Officers and
Employees......................................................... 23
SECTION 3.15 Compliance............................................ 23
SECTION 3.16 Title to Assets, Patents.............................. 24
SECTION 3.17 Environmental and Safety Laws......................... 24
SECTION 3.18 Insurance............................................. 25
SECTION 3.19 Certain Agreements.................................... 25
ARTICLE IV................................................................... 25
COVENANTS OF PERSEPTIVE...................................................... 25
SECTION 4.01 Best Efforts Cooperation.............................. 25
SECTION 4.02 Access................................................ 25
SECTION 4.03 Properties, Business, Insurance....................... 26
SECTION 4.04 Compliance with Laws.................................. 26
SECTION 4.05 Actions Prior to Closing.............................. 26
SECTION 4.06 Litigation............................................ 26
SECTION 4.07 Continued Effectiveness of Representations
and Warranties.................................................... 26
SECTION 4.08 No Negotiations....................................... 27
SECTION 4.09 Confidentiality and Non-Competition................... 27
ARTICLE V.................................................................... 27
COVENANTS OF CHEMGENICS...................................................... 27
SECTION 5.01 Cooperation........................................... 27
SECTION 5.02 Access................................................ 27
SECTION 5.03 Litigation............................................ 28
SECTION 5.04 Continued Effectiveness of Representations
and Warranties.................................................... 28
SECTION 5.05 No Amendments......................................... 28
SECTION 5.06 Right of First Refusal; Percentage
Maintenance....................................................... 28
SECTION 5.07 Confidentiality and Non-Competition................... 31
ARTICLE VI................................................................... 31
CONDITIONS TO CHEMGENICS' OBLIGATIONS........................................ 31
SECTION 6.01 No Material Adverse Economic Event.................... 32
SECTION 6.02 Consents.............................................. 32
SECTION 6.03 Representations and Warranties True................... 32
SECTION 6.04 Performance........................................... 32
SECTION 6.05 No Adverse Change..................................... 32
SECTION 6.06 Opinion of Counsel.................................... 32
SECTION 6.07 No Actions, Suits or Proceedings...................... 33
ii
<PAGE> 4
SECTION 6.08 Investigation Satisfactory. ......................... 33
SECTION 6.09 Closing Documents..................................... 33
SECTION 6.10 Approval of ChemGenics' Stockholders and
Preferred Stockholders............................................ 33
SECTION 6.11 Approval of ChemGenics and Its Counsel................ 33
ARTICLE VII.................................................................. 34
CONDITIONS TO PERSEPTIVE'S OBLIGATIONS....................................... 34
SECTION 7.01 No Material Adverse Economic Event.................... 34
SECTION 7.02 Consents.............................................. 34
SECTION 7.03 Representations and Warranties True................... 34
SECTION 7.04 Performance........................................... 34
SECTION 7.05 No Adverse Change..................................... 34
SECTION 7.06 Opinion of ChemGenics' Counsel........................ 35
SECTION 7.07 No Actions, Suits or Proceedings...................... 35
SECTION 7.08 Investigation Satisfactory............................ 35
SECTION 7.09 Closing Documents..................................... 35
SECTION 7.10 Approval of PerSeptive and Its Counsel................ 35
SECTION 7.11 No Change of Control. ................................ 35
SECTION 7.12 Name Change. ......................................... 36
SECTION 7.13 Chairman of the Board. ............................... 36
ARTICLE VIII................................................................. 36
POST-CLOSING COVENANTS....................................................... 36
SECTION 8.01 Employee Matters...................................... 36
SECTION 8.02 Consulting and Interim Services....................... 37
SECTION 8.03 Sub-Lease............................................. 37
SECTION 8.04 Standstill; Registration Rights....................... 37
SECTION 8.05 Further Assurances.................................... 38
SECTION 8.06 Public Offering....................................... 38
SECTION 8.07 Further Negotiations on Certain
Conditions.......................................................... 38
ARTICLE IX................................................................... 39
TERMINATION.................................................................. 39
SECTION 9.01 Termination........................................... 39
SECTION 9.02 Effect of Termination................................. 41
ARTICLE X.................................................................... 41
MISCELLANEOUS................................................................ 41
SECTION 10.01 Notices.............................................. 41
SECTION 10.02 Entire Agreement..................................... 42
SECTION 10.03 Modifications and Amendments......................... 42
SECTION 10.04 Waivers and Consents................................. 42
SECTION 10.05 Assignment........................................... 43
SECTION 10.06 Parties in Interest.................................. 43
SECTION 10.07 Governing Law........................................ 43
SECTION 10.08 Arbitration.......................................... 43
iii
<PAGE> 5
SECTION 10.09 Jurisdiction and Service of Process.................. 44
SECTION 10.10 Severability......................................... 44
SECTION 10.11 Interpretation....................................... 45
SECTION 10.12 Headings and Captions................................ 45
SECTION 10.13 Enforcement.......................................... 45
SECTION 10.14 Reliance............................................. 45
SECTION 10.15 Survival, Etc........................................ 46
SECTION 10.16 Expenses............................................. 46
SECTION 10.17 No Broker or Finder.................................. 46
SECTION 10.18 Publicity............................................ 46
SECTION 10.19 Counterparts......................................... 46
iv
<PAGE> 6
INDEX TO EXHIBITS
EXHIBIT 1.03(A)(ii) - Form of License Agreement
EXHIBIT 1.03(C)(i) - Terms of Consulting and Interim Services
Agreement
EXHIBIT 1.03(C)(ii) - Terms of Sub-Lease Agreement
EXHIBIT 1.03(C)(iii) - Terms of Confidentiality and
Non-Competition Agreement
EXHIBIT 1.03(C)(iv) - Terms of Standstill and Registration
Rights Agreement
EXHIBIT 1.03(C)(v) - Terms of Voting Agreement
EXHIBIT 4.02 - Confidentiality Agreement (Pre-Closing)
EXHIBIT 6.06 - Form of Opinion of PerSeptive's Counsel
EXHIBIT 7.06 - Form of Opinion of ChemGenics' Counsel
v
<PAGE> 7
INDEX TO SCHEDULES
SCHEDULE 1.01(b) - Drug Discovery Program Assets
SCHEDULE 1.02 - Assumed Liabilities
SCHEDULE 2.06 - Drug Discovery Program Liabilities
SCHEDULE 2.07 - Absence of Adverse Change
SCHEDULE 2.09 - Litigation
SCHEDULE 2.12 - Certain Employees
SCHEDULE 2.13 - Employee Benefits
SCHEDULE 2.17 - Environmental Compliance
SCHEDULE 2.19 - Outstanding Commitments
SCHEDULE 3.06 - Financial Statements
SCHEDULE 3.08 - Transactions with Affiliates
SCHEDULE 3.12 - Capitalization
SCHEDULE 3.17 - Environmental Permits
SCHEDULE 3.19 - Certain Agreements
vi
<PAGE> 8
MASTER AGREEMENT
This Master Agreement (this "Agreement") is entered into this ____ day
of May, 1996 by and among Myco Pharmaceuticals Inc. d/b/a ChemGenics
Pharmaceuticals, a Delaware corporation, ("ChemGenics"), and PerSeptive
Biosystems, Inc., a Delaware corporation ("PerSeptive").
WHEREAS, PerSeptive is engaged in the business of developing technology
and equipment used and useful in the making, measuring, processing and delivery
of biomolecules, including in the area of drug discovery;
WHEREAS, ChemGenics is a drug research and development company engaged
in the business of discovering, developing and commercializing novel treatments
for diseases, primarily through its expertise in drug discovery;
WHEREAS, PerSeptive desires to enter into a license and sell, license
or otherwise transfer to ChemGenics certain assets, projects and activities of
PerSeptive relating to drug discovery activities and efforts (the "Drug
Discovery Program") and to allow certain employees of PerSeptive who have worked
principally in the Drug Discovery Program to dedicate their full business time
to ChemGenics (the "Employees"); and, as set forth herein, to become employed by
ChemGenics under certain circumstances; and
WHEREAS, ChemGenics desires to acquire substantially all of the assets,
projects and activities of PerSeptive relating principally to the Drug Discovery
Program (other than administrative and financial aspects thereof) and to utilize
the services of the Employees, subject to the terms and conditions provided in
this Agreement and the Exhibits hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
SECTION 1.01 Transfer of Assets. (A) Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing PerSeptive shall sell,
license, assign or transfer, as the case may be, to ChemGenics, and ChemGenics
will purchase and accept from PerSeptive, free and clear of all claims, charges,
liens, contracts, rights, options, security interests, mortgages, encumbrances
and restrictions whatsoever (collectively, "Claims"),
1
<PAGE> 9
except as otherwise expressly set forth herein, all of the following assets,
projects and activities of PerSeptive (hereinafter, the "Transferred Assets"):
(a) a world-wide, royalty-free, irrevocable, non-exclusive license
to PerSeptive's and its affiliates' presently existing and
future patented and unpatented technology, including access to
prototype equipment, in each case for use in drug discovery
only as set forth in the License Agreement (defined below);
(b) the equipment, supplies and other assets of the Drug Discovery
Program set forth on Schedule 1.01(b); the equipment set forth
on Schedule 1.01(b) shall be subject to certain restrictions
contained in the Consulting and Interim Services Agreement
(defined below); and
(c) up to $500,000 of supplies of a type manufactured by
PerSeptive or of which PerSeptive is a distributor during
the three year period following the Closing; such
supplies shall be valued based upon PerSeptive's actual
cost of acquisition or fully burdened cost of manufacture
and shall be delivered to ChemGenics from time to time in
accordance with the Consulting and Interim Services
Agreement (defined below).
PerSeptive shall transfer the Transferred Assets to ChemGenics pursuant
to those documents and instruments set forth in Sections 1.03(A) and 1.03(C)
below, and such other documents and instruments as ChemGenics or its counsel may
reasonably request.
B. Consideration for the Transferred Assets. In consideration
for the License Agreement and the transfer of the Transferred Assets,
upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, ChemGenics shall issue to PerSeptive an
aggregate of 9,792,679 shares (the "Shares") of ChemGenics' common
stock, $.001 par value per share (the "Common Stock"). Of such Shares,
979,268 shares shall be issued to PerSeptive as an earnout payment (the
"Earnout Shares") for services, equipment use, supplies and other
PerSeptive assets for a period of three (3) years following the Closing
Date, as more fully set forth in the Consulting and Interim Services
Agreement. If any of the services, equipment, supplies and other
PerSeptive assets are not provided during such three-year period in
accordance with the terms of the Consulting and Interim Services
Agreement, PerSeptive shall forfeit certain of the Earnout Shares in
accordance with the formula set forth in the Consulting and Interim
Services Agreement. PerSeptive shall be deemed to have earned the
Earnout Shares unless ChemGenics provides to PerSeptive a written
notice of failure to provide required services, equipment, supplies or
other assets, and PerSeptive
2
<PAGE> 10
fails to cure such failure within such period of time following the
notice, as more fully set forth in the Consulting and Interim Services
Agreement. The number of Earnout Shares subject to forfeiture shall
decrease by one-third (1/3) on each anniversary of the Closing Date, in
accordance with the following schedule:
PERIOD SHARES SUBJECT TO FORFEITURE
From the Closing Date until
the 1st Anniversary Date 979,268
From 1st Anniversary Date
to 2nd Anniversary Date 652,844
From 2nd Anniversary Date
to 3rd Anniversary Date 326,422
After 3rd Anniversary Date 0
In further consideration for the transfer of the Transferred Assets,
PerSeptive shall receive a warrant (the "Warrant"), to purchase
4,896,335 shares of Common Stock at a price of $5.00 per share. The
Warrant will be for a term of four years from the Closing and will
adjust for stock splits, stock dividends and similar capital
transactions and shall contain other customary terms and conditions
satisfactory to the parties.
PerSeptive may cause the Shares, the Warrant or the Common Stock issued
upon exercise of the Warrant to be transferred to one of its wholly-owned
subsidiaries, provided that PerSeptive shall retain 100% of the ownership and
voting control of such subsidiary as long as such subsidiary holds the Shares,
the Warrant or shares of Common Stock issued upon exercise thereof.
SECTION 1.02 Assumption of Liabilities. The only obligations and
liabilities to be assumed by ChemGenics in connection with its acquisition of
the Transferred Assets (the "Assumed Liabilities") are the obligations and
liabilities specifically listed on Schedule 1.02. Except for the Assumed
Liabilities in the amount and to the extent provided in this Section ,
ChemGenics shall not assume or be responsible for any liabilities or obligations
to the extent they arise from the operation of the Drug Discovery Program or to
the utilization of the Transferred Assets prior to the Closing, and PerSeptive
shall indemnify, defend, and hold ChemGenics harmless from all of such
obligations and liabilities. PerSeptive shall not assume any obligations and
liabilities of ChemGenics whatsoever.
SECTION 1.03 Closing. Subject to the satisfaction or waiver of each of
the conditions set forth in Articles VI and VII of this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Mintz,
3
<PAGE> 11
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston,
Massachusetts at 10 o'clock a.m. (Boston, Massachusetts time), three business
days following the termination of the waiting period for the HSR Act (as defined
below), or if later, the date on which all closing conditions are satisfied or
waived, or such other location, date and time as may be agreed upon by the
parties (such date and time being called the "Closing Date"). At the Closing:
A. PerSeptive shall deliver or cause to be delivered to
ChemGenics, at the Closing or at such other location as ChemGenics
shall specify, the following:
(i) The Bill of Sale, transferring certain of
the Transferred Assets to ChemGenics, in the
form reasonably satisfactory to the parties;
(ii) The License Agreement, licensing
PerSeptive's drug discovery technology and
future developments to ChemGenics, in the
form attached hereto as Exhibit 1.03(A)(ii);
(iii) The certificates required by Sections 6.03
and 6.04;
(iv) The opinion of counsel required by Section
6.06;
(v) A copy of the resolutions of PerSeptive
certified by its Secretary, authorizing and
approving the execution, delivery and
performance of this Agreement and the
transactions contemplated hereby and the
acts of the officers and employees of
PerSeptive in carrying out the terms and
provisions hereof;
(vi) All of the books, data, documents,
instruments and other records relating
principally to the Transferred Assets or
Drug Discovery Program (the "Documents") (or
access thereto in the case of financial and
other documents which PerSeptive is required
to retain) including without limitation
copies, if requested by ChemGenics, of the
licenses, patents, patent applications and
permits identified in the Schedules to this
Agreement and the License Agreement and
originals of all laboratory notebooks and
other notes and records relating principally
to PerSeptive's drug discovery- related
intellectual property, provided, that the
Documents shall be delivered to ChemGenics
on the Closing either at ChemGenics' address
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specified in Section 10.01 or at the
Facility (as defined below); and
(vii) Executed copies of the ancillary documents
listed in Section 1.03(C) below.
B. ChemGenics shall deliver or cause to be delivered to
PerSeptive, at the Closing or at such other location as PerSeptive
shall specify, the following:
(i) The Shares;
(ii) The Warrant;
(iii) The Assumption Agreement, in the form
reasonably satisfactory to the parties;
(iv) The certificates required by Sections 7.03
and 7.04;
(v) The opinion of counsel required by Section
7.06;
(vi) A copy of the resolutions of ChemGenics
certified by its Secretary, authorizing and
approving the execution, delivery and
performance of this Agreement, the exhibits
hereto and the transactions contemplated
hereby and the acts of the officers and
employees of ChemGenics in carrying out the
terms and provisions hereof; and
(vii) Executed copies of the ancillary documents
listed in Section 1.03(C) below.
C. The parties shall deliver or cause to be delivered:
(i) The Consulting and Interim Services
Agreement, certain terms of which are
attached hereto as Exhibit 1.03(C)(i), and
as described in Section 8.02;
(ii) The Sub-Lease Agreement for a portion of
PerSeptive's Framingham facility, certain
terms of which are attached hereto as
Exhibit 1.03(C)(ii), and as described in
Section 8.03, subject to obtaining the
landlord's consent; or, in lieu thereof,
evidence satisfactory to ChemGenics that it
will have satisfactory use of such premises
or equivalent premises on equivalent terms
for up to five employees of ChemGenics
(other than the Employees) through
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the date of the IPO referred to in Section
8.08 or the earlier termination or
rescission of this Agreement pursuant to the
terms hereof;
(iii) The Confidentiality and Non-Competition
Agreement, certain terms of which are
attached hereto as Exhibit 1.03(C)(iii), and
as described in Section 4.09;
(iv) The Standstill and Registration Rights
Agreement, certain terms of which are
attached hereto as Exhibit 1.03(C)(iv), and
as described in Section 8.04;
(v) The PBIO Voting Agreement, certain terms of
which are attached hereto as Exhibit
1.03(C)(v), pursuant to which nominees of
PerSeptive are to be elected to the Board of
Directors of ChemGenics; and
(vi) Such further documents, resolutions,
certificates and instruments as any party or
its counsel reasonably requests to
facilitate the consummation of the
transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PERSEPTIVE
As an inducement to ChemGenics to enter into this Agreement and to
consummate the transactions contemplated hereby, PerSeptive hereby represents
and warrants to ChemGenics as follows:
SECTION 2.01 Organization and Qualification. PerSeptive is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing in the Commonwealth of
Massachusetts being the only jurisdiction in which the nature of the Drug
Discovery Program or the character of the properties owned or leased by
PerSeptive and used principally in the Drug Discovery Program requires such
qualification and in which the failure to so qualify would have a material
adverse effect on PerSeptive.
SECTION 2.02 Corporate Power and Authority. PerSeptive has the
corporate power and authority to own and hold its properties and to carry on its
business. PerSeptive has the corporate power and authority to execute, deliver
and perform this Agreement and the other documents and instruments contemplated
hereby. The execution, delivery and performance of this Agreement and the
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<PAGE> 14
documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by
PerSeptive. This Agreement, and each of the other agreements, documents and
instruments to be executed and delivered by PerSeptive have been duly executed
and delivered by, and constitute the legal, valid and binding obligation of,
PerSeptive enforceable against PerSeptive in accordance with their terms,
subject to bankruptcy and other laws of general application affecting the rights
and remedies of creditors and subject to general principles of equity which may
limit the availability of remedies.
SECTION 2.03 Validity, Etc. Neither the execution and delivery of this
Agreement and the other documents and instruments contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement and such other agreements in compliance with the
terms and conditions hereof and thereof will (i) conflict with PerSeptive's
certificate of incorporation or bylaws, (ii) violate or conflict with any
judgment, decree, order, statute or regulation applicable to PerSeptive, (iii)
violate, conflict with or result in a breach, default or termination or give
rise to any right of termination, cancellation or acceleration of the maturity
of any payment date of any of the obligations of PerSeptive or increase or
otherwise affect the obligations of PerSeptive under any law, rule, regulation
or any judgment, decree, order, governmental permit, license or order or any of
the terms, conditions or provisions of any mortgage, indenture, note, trust
agreement, license agreement or other instrument or obligation related to the
Transferred Assets or to PerSeptive's ability to consummate the transactions
contemplated hereby or thereby, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained in writing and provided to ChemGenics, (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
PerSeptive or (v) result in the creation of any Claim upon the Transferred
Assets.
SECTION 2.04 No Governmental Consent. Except for the filing of any
notice prior or subsequent to the Closing that may be required under applicable
state and/or federal securities laws (which, if required of PerSeptive, shall be
filed on a timely basis by PerSeptive), and except for any consent or approval
which may be required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act"), no authorization, consent, approval, license, exemption of
or filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the execution and delivery by PerSeptive
of this Agreement, for the delivery of the Transferred Assets, or for the
performance by PerSeptive of its obligations under this Agreement and the other
agreements and instruments contemplated hereby.
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SECTION 2.05 Financial Statements. PerSeptive has previously furnished
or made available to ChemGenics its (i) Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 (the "Form 10-K"), (ii) all proxy
statements relating to PerSeptive's meetings of stockholders held or to be held
since September 30, 1995 and (iii) all other reports filed by PerSeptive with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended (the Exchange Act") since September 30, 1995. As of their
respective dates, such reports complied in all material respects with applicable
SEC requirements and did not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading.
SECTION 2.06 Absence of Undisclosed Liabilities. Except as and to the
extent of the amounts specifically reflected or reserved against in the balance
sheet dated September 30, 1995 (or the notes thereto) included in the Form 10-K
(the "PerSeptive Balance Sheet") and listed on Schedule 2.06 (the "Drug
Discovery Program Liabilities") PerSeptive does not have any material
liabilities or obligations relating to the Drug Discovery Program of any nature
whatsoever, due or to become due, accrued, absolute, contingent or otherwise,
except for liabilities and obligations incurred in the ordinary course of
business and consistent with past practice. PerSeptive does not know of, and has
no reason to know of, any basis for the assertion against PerSeptive of any
material liability or obligation relating to the Drug Discovery Program other
than the Drug Discovery Program Liabilities or incurred in the ordinary course
of business and consistent with past practice since the date of PerSeptive
Balance Sheet.
SECTION 2.07 Absence of Adverse Change; Conduct of Drug Discovery
Program. Since September 30, 1995, there has been no material adverse change in
the Drug Discovery Program, the assets utilized therein, or the personnel
conducting of such Drug Discovery Program, and there is no condition or
development or contingency of any kind existing or in prospect which, so far as
reasonably can be foreseen by PerSeptive, may result in any such material
adverse change. Without limiting the foregoing, except as disclosed on Schedule
2.07, since September 30, 1995 there has not been, occurred or arisen: (i) any
damage, destruction or loss to any Transferred Asset (whether or not covered by
insurance) that, individually or in the aggregate, would have a material adverse
effect on the Drug Discovery Program or prospects of the Drug Discovery Program;
(ii) any general increase in any compensation or benefits payable to the
Employees other than normal merit increases; or (iii) any commitment (contingent
or otherwise) to do any of the foregoing.
SECTION 2.08 Taxes. ChemGenics shall have no liability for
any taxes of any kind or nature related to the ownership or
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operation of the Transferred Assets or the ownership or operation of the Drug
Discovery Program prior to the Closing Date. PerSeptive has not taken or failed
to take any action which could create any tax lien on any of the Transferred
Assets.
SECTION 2.09 Litigation. Except as set forth on Schedule 2.09, there is
no (a) action, suit, claim, proceeding or investigation pending or, to the best
of PerSeptive's knowledge, threatened against or affecting PerSeptive (whether
or not PerSeptive is a party or prospective party thereto), at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (b)
arbitration proceeding relating to PerSeptive or (c) governmental inquiry
pending or, to the best of PerSeptive's knowledge, threatened against or
involving PerSeptive, (i) relating to the Transferred Assets, the Drug Discovery
Program or the transactions contemplated hereby or (ii) in which a decision
adverse to PerSeptive would materially adversely affect the value of the
Transferred Assets as contemplated hereby and, to the best of PerSeptive's
knowledge, there is no basis for any of the foregoing. PerSeptive has not
received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to the Transferred Assets, the Drug Discovery
Program or the transactions contemplated hereby. There are no outstanding
orders, writs, judgments, injunctions or decrees of any court, governmental
agency or arbitration tribunal against, involving or affecting the Transferred
Assets, the Drug Discovery Program or the transactions contemplated hereby, and
there are no facts or circumstances which may result in institution of any
action, suit, claim or legal, administrative or arbitration proceeding or
investigation against, involving or affecting the Transferred Assets, the Drug
Discovery Program or the transactions contemplated hereby. PerSeptive is not in
default with respect to any order, writ, injunction or decree known to or served
upon it from any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which might relate to the Transferred Assets, the Drug Discovery
Program or the transactions contemplated hereby. There is no action or suit by
PerSeptive or its affiliates pending or threatened against others relating to
the Transferred Assets, the Drug Discovery Program or the transactions
contemplated hereby.
SECTION 2.10 Compliance with Law. PerSeptive is not subject to any
judgment, order, writ, injunction, or decree that materially adversely affects,
individually or in the aggregate, the businesses, operations, properties, assets
or condition (financial or otherwise) of the Drug Discovery Program. PerSeptive
has complied with and is not in material default under, all laws, ordinances,
legal requirements, rules, regulations and orders applicable to the Drug
Discovery Program, or the operations,
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<PAGE> 17
properties, assets, products and services of the Drug Discovery Program. There
is no existing law, rule, regulation or order, and PerSeptive is not aware of
any proposed law, rule, regulation or order, whether federal or state, which
would prohibit or materially restrict ChemGenics from, or otherwise materially
adversely affect ChemGenics in, conducting the Drug Discovery Program in the
manner previously conducted.
SECTION 2.11 Labor and Employee Relations. PerSeptive is not a party to
or bound by any collective bargaining agreement with any labor organization,
group or association covering the Employees or any other Employee of PerSeptive
located at the Facility, and PerSeptive has no knowledge of any attempt to
organize the Employees or any other Employee of PerSeptive located at the
Facility by any person, unit or group seeking to act as their bargaining agent.
There are no pending or threatened charges (by Employees, their representatives
or governmental authorities) of unfair labor practices or of employment
discrimination or of any other wrongful action with respect to any aspect of
employment of any person employed or formerly employed by PerSeptive in the Drug
Discovery Program. No union representation elections relating to Employees or
any other Employee of PerSeptive located at the Facility have been scheduled by
any governmental agency or authority, no organizational effort is being made
with respect to any of such Employees or any other Employee of PerSeptive
located at the Facility, and there is no investigation of PerSeptive's
employment policies or practices by any governmental agency or authority pending
or, to the best of PerSeptive's knowledge, threatened. PerSeptive is not
currently, and has not within the last three years been, involved in labor
negotiations with any unit or group seeking to become the bargaining unit for
any Employees or any other Employee of PerSeptive located at the Facility.
PerSeptive has not experienced any work stoppages during the last three years
and, to the best of PerSeptive's knowledge, no work stoppage is planned.
SECTION 2.12 Certain Employees. Set forth in Schedule 2.12 is a list of
the names of PerSeptive's employees and consultants principally engaged in the
technical aspects of the Drug Discovery Program which PerSeptive will make
available to ChemGenics pursuant to the Consulting and Interim Services
Agreement and to which ChemGenics will make offers of employment pursuant to
Section 8.01 hereof, together with the title or job classification of each such
person and the base annual and the total compensation paid to each such person
by PerSeptive in fiscal year 1995 and anticipated to be paid in fiscal year
1996. None of such persons has an employment agreement or understanding, whether
oral or written, with PerSeptive which is not terminable on notice by PerSeptive
without cost or other liability to PerSeptive or ChemGenics. No person listed on
Schedule 2.12 has indicated that he or she intends to terminate his or her
employment with PerSeptive or seek a material change in his or her duties or
status.
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SECTION 2.13 Employee Benefits. Set forth on Schedule 2.13 is a list of
all pension, profit sharing, retirement, deferred compensation, stock purchase,
stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance, life insurance, fringe benefit, welfare and
other employee benefit plans, programs or arrangements to which Employees may be
entitled. Such benefits are the same benefits afforded other employees of
PerSeptive at similar levels of experience.
PerSeptive will maintain the benefits listed on Schedule 2.13 (as such
benefits may change generally for PerSeptive's employees) in full force and
effect through the Closing Date, and thereafter with respect to events occurring
while the Employees were employed by PerSeptive. ChemGenics shall have no
obligation of any kind or nature for any compensation or benefits of any kind or
nature of the employees or consultants of PerSeptive for service rendered while
such Employees or consultants were employed by PerSeptive, including, without
limitation, vacation or sick time for which PerSeptive will compensate
ChemGenics or the Employees, as appropriate.
Each "Employee Welfare Benefit Plan" (as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) covering
any present or former employee of PerSeptive who has worked in the Drug
Discovery Program subject to the requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") has complied with all requirements for
continuation coverage under group health benefit plans under COBRA and there are
no claims against PerSeptive for a failure or alleged failure to comply with the
COBRA continuation requirements.
Each employee plan which is subject to ERISA conforms to, and its
operation and administration are in compliance with, all applicable requirements
of ERISA. There are no actions, suits or claims pending (other than routine
claims for benefits) or threatened against any employee plan or against the
assets of any employee plan.
SECTION 2.14 Tangible Properties. Schedule 1.01(b) contains a true and
complete list of all tangible personal property owned by or leased to PerSeptive
and used principally in the Drug Discovery Program (the "Tangible Personal
Property") which is being transferred to ChemGenics pursuant to this Agreement.
Such Tangible Personal Property constitutes all of the instruments and other
assets having an original estimated list value in excess of $10,000, and
substantially all of the other Tangible Personal Property used by PerSeptive
principally in the Drug Discovery Program (including, without limitation, all of
the tangible assets utilized by the Employees in the Drug Discovery Program).
Except as shown on Schedule 1.01(b), PerSeptive has good and marketable title
free and clear of all Claims to the Tangible Personal
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Property listed as owned by PerSeptive. With respect to Tangible Personal
Property leased by PerSeptive as lessee, all leases, conditional sale contracts,
franchises or licenses pursuant to which PerSeptive may hold or use (or permit
others to hold or use) such Tangible Personal Property are valid and in full
force and effect, and there is not under any of such instruments any existing
default or event of default or event which with notice or lapse of time or both
would constitute such a default, and the transfer of PerSeptive's interest in
any Tangible Personal Property hereunder shall not constitute an event of
default or default or an event which with notice or lapse of time or both would
constitute such a default under such leases, conditional sale contracts,
franchises or licenses, except for the requirement of consents set forth in
Schedule 1.01(b), and except where such an actual or potential default has been
consented to or waived. PerSeptive's possession and use of such property has not
been disturbed and no claim has been asserted against PerSeptive adverse to its
rights in such leasehold interests.
Each item of Tangible Personal Property, whether owned or leased, is in
good operating condition and repair and has been reasonably maintained in
accordance with industry practices. The only liability of PerSeptive for failure
of the representation in the preceding sentence shall be the repair or
replacement of the affected item of Tangible Personal Property.
SECTION 2.15 Acquisition by PerSeptive of Transferred Assets from
PerSeptive Technologies II Corporation ("PTC-II"). PTC-II has no and never had
any material tangible assets. The License Agreement conveys to ChemGenics the
right to use all intellectual property rights utilized by PTC-II in connection
with the Drug Discovery Program. PerSeptive shall indemnify ChemGenics with
respect to any claim, action, judgment, damage, fee or expense arising out of
the formation and operation of PTC-II and the offer and sale of securities of
PTC-II, the acquisitions of the units of PTC-II through the exchange offer set
forth in the Proxy Statement/Prospectus dated February 8, 1996, including,
without limitation, the acquisition of PTC-II Property as a result of such
exchange offer, and the transfer of the PTC-II Property hereunder. This
provision shall be in addition to, and in no way limit, any other representation
or warranty hereunder which might relate to PTC-II.
SECTION 2.16 Leased Premises. The Drug Discovery Program has been
principally conducted at the facility at 500 Old Connecticut Path, Framingham,
Massachusetts (the "Facility"). The lease covering the Facility is in full force
and effect (there existing no default under the lease which, with the lapse of
time or notice or otherwise, would entitle the lessor to terminate the same),
conveys the leased real estate purported to be conveyed thereunder and is
enforceable by PerSeptive. PerSeptive has the right to use the Facility in
accordance with the terms of such lease free and
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clear of all Claims or other interests or rights of third parties, except those
which do not or would not have a material adverse effect on the Facility as used
in the Drug Discovery Program. To the best of PerSeptive's knowledge, the
Facility is structurally sound, adequately maintained and is in good condition
and repair (except for immaterial matters) consistent with the uses to which it
is presently being put or intended to be put, and the Facility's structure,
improvements, fixtures and uses conform to any and all applicable federal, state
and local laws, building, health and safety and other ordinances, laws, rules
and regulations, except where nonconformance would not materially restrict the
conduct of the Drug Discovery Program as presently conducted. There is no
violation of any material covenant, restriction or other agreement or
understanding, oral or written, affecting or relating to title or use of the
Facility. There are no pending condemnation or similar proceedings or
assessments affecting the Facility, nor to PerSeptive's best knowledge is any
such condemnation or assessment contemplated by any governmental authority. No
real estate owned by PerSeptive is used in the Drug Discovery Program.
SECTION 2.17 Environmental Matters.
(a) Environmental Substance Liability. To the best of
PerSeptive's knowledge, no event has occurred or condition exists or
operating practice is being employed that could give rise to material
liability with respect to the Facility or the Drug Discovery Program,
either at the present time or in the future, for any losses,
liabilities, damages (whether consequential or otherwise), settlements,
penalties, interest and expenses (including any such liability on
account of the right of any governmental or private entity or person,
and including closure expenses, costs of assessment, containment, or
removal (other than transportation or disposal of materials required to
be transported or disposed of in the ordinary course of business,
remedial work, or monitoring) arising under any presently enacted
federal, state, or local statute, or any regulation that has been
promulgated pursuant thereto, or common law, as a result of or in
connection with, or alleged to be as a result of or in connection with,
the following:
(i) the handling, storage, use, transportation
or disposal of any Substances (as
hereinafter defined) in or near or from the
Facility, by PerSeptive or its predecessors;
(ii) the handling, storage, use, transportation
or disposal of any Substances by PerSeptive
or its predecessors which Substances were a
product, by-product or otherwise resulted
from the operation of the Drug Discovery
Program
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conducted by or on behalf of PerSeptive or
its predecessors;
(iii) any intentional or unintentional emission,
discharge or release of any Substances in or
near or from the Facility into or upon the
air, surface water, ground water or land or
any disposal, handling, manufacturing,
processing, distribution, use, treatment, or
transport of such Substances in or near or
from the Facility by or on behalf of
PerSeptive or its predecessors; or
(iv) the presence of any toxic or hazardous
building materials (including but not
limited to asbestos or similar substances)
in the Facility, including but not limited
to the inclusion of such materials in the
exterior and interior walls, floors,
ceilings, tile, insulation or any other
portion of the Facility.
As used in this Section 2.17, the term "Substances" shall mean any
pollutant, hazardous substance, hazardous material, hazardous waste or toxic
waste, as defined in any presently enacted federal, state or local statute or
any regulation that has been promulgated pursuant thereto.
(b) Environmental Permits. To the best of PerSeptive's
knowledge after due investigation, PerSeptive has obtained and holds
all registrations, permits, licenses, and approvals issued by or on
behalf of any federal, state or local government body or agency
("Environmental Permits"), that are required in connection with the
discharge or emission of Substances (as hereinabove defined) from the
Drug Discovery Program at the Facility or the generation, treatment,
storage, transportation, or disposal of any such Substances. Such
Environmental Permits, which are described in Schedule 2.17 in
connection with the operation of the Drug Discovery Program, are
currently effective and sufficient for the ownership and operation of
the Drug Discovery Program as currently conducted, the failure to have
would have a material adverse effect on the Drug Discovery Program.
PerSeptive represents, covenants and warrants to and agrees with
ChemGenics, as of the date of this Agreement and as of the time of Closing, as
follows:
(i) To the best of PerSeptive's knowledge after
due investigation, PerSeptive and the
operation of the Drug Discovery Program at
the Facility are, and at the time of Closing
shall
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be, in compliance with all applicable laws,
rules, regulations, orders, ordinances,
judgments and decrees of all governmental
authorities (federal, state, and local).
Except as set forth in Schedule 2.17,
PerSeptive is not aware of, nor has
PerSeptive received notice of, any past,
present or future events, conditions,
circumstances, activities, practices,
incidents, actions or plans of PerSeptive or
PerSeptive's predecessors, either
collectively, individually or severally,
which may interfere with or prevent
continued compliance, or which may give rise
to any common law or legal liability, or
otherwise form the basis of any claim,
action, suit, proceeding, hearing, or
investigation, based on or related to the
disposal, storage, handling, manufacture,
processing, distribution, use, treatment, or
transport, or the emission, discharge,
release or threatened release into the
environment, of any Pollutant.
(ii) The Facility has not been listed or proposed
for listing on the National Priorities List
established by the United States
Environmental Protection Agency, the List of
Confirmed Disposal Sites and Locations To Be
Investigated established by the Commonwealth
of Massachusetts Department of Environmental
Quality Engineering, or any other such list.
(iii) PerSeptive has obtained all material
permits, licenses and other authorizations
which are required with respect to operation
of the Drug Discovery Program at the
Facility under federal, state and local laws
or otherwise relating to pollution or
protection of the environment. Except as set
forth in Schedule 2.17, PerSeptive is in
full compliance with all terms and
conditions of such required permits,
licenses and authorizations, and is also in
full compliance with all other limitations,
restrictions, conditions, standards,
prohibitions, requirements, obligations,
schedules, and timetables contained in those
laws or provisions or contained in any
regulation, code, plan, order, decree,
judgment, notice or demand letter issued,
entered, promulgated or approved thereunder
and applicable to the
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operation of the Drug Discovery Program at
the Facility.
SECTION 2.18 Insurance. PerSeptive is, and will be through the Closing
and during the Consulting and Interim Services Agreement, adequately insured
with responsible insurers in respect of its properties, assets and businesses
against risks normally insured against by companies in similar lines of business
under similar circumstances.
SECTION 2.19 Outstanding Commitments. Schedule 2.19 sets forth a
description of all existing contracts, agreements, commitments, licenses and
franchises which involve more than $10,000 in consideration over the remaining
term of the contract, agreement, commitment, license or franchise, other than
agreements which relate only incidentally to the Drug Discovery Program and
which are not reasonably required in the ongoing conduct of the Drug Discovery
Program (collectively "Agreements"), whether written or oral, relating to the
Drug Discovery Program. PerSeptive has delivered or made available to ChemGenics
true, correct and complete copies of all of the Agreements specified on Schedule
2.19 which are in writing, and Schedule 2.19 contains an accurate and complete
description of all Agreements which are not in writing. PerSeptive has paid in
full all amounts due as of the date hereof under each Agreement identified in
Schedule 2.19 and as of the Closing Date will have satisfied in full all of its
liabilities and obligations thereunder due in the ordinary course of business
prior to the Closing (it being understood that this representation shall not
prevent PerSeptive from withholding payment in good faith based on a dispute
with respect to its obligation to make payment, provided that the foregoing
shall not be deemed to imply that ChemGenics shall have any liability therefore,
and provided such nonpayment does not materially adversely affect the
Transferred Assets or the Drug Discovery Program). All of the Agreements
described in Schedule 2.19 are in full force and effect. PerSeptive and each
other party thereto have performed all the obligations required to be performed
by them to date, have received no notice of default and are not in default (with
due notice or lapse of time or both) under any Agreement. PerSeptive has no
present expectation or intention of not fully performing all its obligations
under each Agreement, and PerSeptive has no knowledge of any breach or
anticipated breach by the other party to any contract or commitment to which
PerSeptive is a party. None of such Agreements has been terminated, no notice
has been given by any party thereto of any alleged default by any party
thereunder, and PerSeptive is not aware of any intention or right of any party
to default another party to any such Agreement. There exists no actual or, to
the knowledge of PerSeptive, threatened termination, cancellation or limitation
of the business relationship of PerSeptive with any party to any such Agreement.
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SECTION 2.20 Intellectual Property. The representations of PerSeptive
in Section 4.1.7 of the form of License Agreement attached hereto as Exhibit
1.03(A)(ii) are hereby incorporated by reference as if set forth fully herein.
PerSeptive has the right to utilize the intellectual property rights it has
utilized in the conduct of the Drug Discovery Program, all of which will be duly
and validly transferred or licensed to ChemGenics pursuant to this Agreement or
the License Agreement, as the case may be, without violation of any agreement to
which PerSeptive is a party or is bound, except such rights which are not
material to the Drug Discovery Program and which are licensed to PerSeptive and
which PerSeptive is prohibited from licensing to ChemGenics.
SECTION 2.21 Proprietary Information of Third Parties. No third party
has claimed or, to the best knowledge of PerSeptive, has reason to claim that
PerSeptive or any person employed by or affiliated with PerSeptive has in
connection with the Drug Discovery Program (a) violated or may be violating any
of the terms or conditions of PerSeptive's or such person's employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party, or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees. No third party has requested
information from PerSeptive which suggests that such a claim might be
contemplated. To PerSeptive's best knowledge, no person employed by or
affiliated with PerSeptive has employed or proposes to employ any trade secret
or any information or documentation proprietary to any former employer and, no
person employed by or affiliated with PerSeptive has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Drug Discovery
Program, and PerSeptive has no reason to believe there will be any such
employment or violation. To the best of PerSeptive's knowledge, none of the
execution or delivery of this Agreement, or the carrying on of the Drug
Discovery Program as officers, employees or agents by any officer, director,
employee or consultant of the Drug Discovery Program, or the conduct or proposed
conduct of the Drug Discovery Program, will conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument under which any such person is obligated.
SECTION 2.22 Disclosure. All documents and schedules delivered or to be
delivered by or on behalf of PerSeptive in connection with this Agreement and
the transactions contemplated hereby are true, complete and correct in all
material respects. Neither this Agreement, nor any Schedule or Exhibit to this
Agreement contains any untrue statement of a material fact or omits
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a material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which made, not misleading.
SECTION 2.23 Purchase For Investment. PerSeptive is acquiring the
Shares, the Warrant and Common Stock issuable upon exercise of the Warrant, and
the Earnout Shares, if any, for investment for its own account and not with a
view to the distribution or public offering thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). PerSeptive
understands that the Shares, the Warrant and Common Stock issuable upon exercise
of the Warrant, have not been registered under the Securities Act or any state
securities or "blue sky" laws and may not be sold or transferred without such
registration or an exemption therefrom. PerSeptive consents to the placement of
a legend on its certificate for the Shares and on the Warrant stating that such
securities have not been registered and setting forth the restrictions on
transfer contemplated hereby and by the Standstill and Registration Rights
Agreement. PerSeptive is sufficiently experienced in financial and business
matters to be capable of evaluating the risk of investment in the Shares and the
Warrant, and to make an informed decision relating thereto. PerSeptive has the
financial capability for making the investment, can afford a complete loss of
the investment, and the investment is a suitable one for PerSeptive. PerSeptive
is an Accredited Investor as defined in Regulation D under the Securities Act.
Prior to the execution and delivery of this Agreement, PerSeptive has been
furnished with all information which it deems necessary to evaluate the merits
and risks of the Shares and the Warrant and has had the opportunity to ask
questions of and receive answers from representatives of ChemGenics regarding
ChemGenics, the Shares and the Warrant.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHEMGENICS
As an inducement to PerSeptive to enter into this Agreement and to
consummate the transactions contemplated hereby, ChemGenics hereby represents
and warrants to PerSeptive as follows:
SECTION 3.01 Organization. ChemGenics is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified to transact business as a foreign
corporation and is in good standing in the Commonwealth of Massachusetts, such
jurisdiction being the only jurisdiction in which the character of the
properties owned or leased by ChemGenics requires such qualification and in
which the failure to so qualify would have a material adverse effect on
ChemGenics.
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SECTION 3.02 Corporate Power and Authority. ChemGenics has the
corporate power and authority to own and hold its properties and to carry on its
business. ChemGenics has the corporate power and authority to execute, deliver
and perform this Agreement and the other documents and instruments contemplated
hereby. The execution, delivery and performance of this Agreement and the
documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by
ChemGenics. This Agreement, and each of the other agreements, documents and
instruments to be executed and delivered by ChemGenics have been duly executed
and delivered by, and constitute the legal, valid and binding obligation of,
ChemGenics enforceable against ChemGenics in accordance with their terms,
subject to bankruptcy and other laws of general application affecting the rights
and remedies of creditors and subject to general principles of equity which may
limit the availability of remedies.
SECTION 3.03 Validity, Etc. Neither the execution and delivery of this
Agreement and the other documents and instruments contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement and such other agreements in compliance with the
terms and conditions hereof and thereof will (i) conflict with ChemGenics'
certificate of incorporation or bylaw, (ii) violate or conflict with any
judgment, decree, order, statute or regulation applicable to ChemGenics, (iii)
violate, conflict with or result in a breach, default or termination or give
rise to any right of termination, cancellation or acceleration of the maturity
of any payment date of any of the obligations of ChemGenics or increase or
otherwise affect the obligations of ChemGenics under any law, rule, regulation
or any judgment, decree, order, governmental permit, license or order or any of
the terms, conditions or provisions of any mortgage, indenture, note, trust
agreement, license agreement or other instrument or obligation related to
ChemGenics or to ChemGenics' ability to consummate the transactions contemplated
hereby or thereby, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained in writing and provided to PerSeptive or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to ChemGenics.
SECTION 3.04 No Governmental Consent. Except for the filing of any
notice prior or subsequent to the Closing that may be required under applicable
state and/or federal securities laws (which, if required, shall be filed on a
timely basis), and except for any consent or approval which may be required
under the HSR Act, no authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the execution and delivery by ChemGenics
of this Agreement, for the
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offer, issue, sale, execution or delivery of the Shares, and the Warrant, or for
the performance by ChemGenics of its obligations under this Agreement and the
other agreements and instruments contemplated hereby.
SECTION 3.05 Litigation. There is no (a) action, suit, claim,
proceeding or investigation pending or, to the best of ChemGenics' knowledge,
threatened against or affecting ChemGenics (whether or not ChemGenics is a party
or prospective party thereto), at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, (b) arbitration proceeding
relating to ChemGenics or (c) governmental inquiry pending or, to the best of
ChemGenics' knowledge, threatened against or involving ChemGenics in which a
decision adverse to ChemGenics would materially adversely affect ChemGenics and,
to the best of ChemGenics' knowledge, there is no basis for any of the
foregoing. There are no outstanding orders, writs, judgments, injunctions or
decrees of any court, governmental agency or arbitration tribunal, and there are
no facts or circumstances which may result in institution of any action, suit,
claim or legal, administrative or arbitration proceeding or investigation which
might prevent ChemGenics from entering into and performing this Agreement and
the other documents and instruments contemplated hereby. ChemGenics is not in
default with respect to any order, writ, injunction or decree known to or served
upon it from any court or of any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign which might prevent ChemGenics from entering into and performing this
Agreement and the other documents and instruments contemplated hereby.
SECTION 3.06 Financial Statements. ChemGenics has previously furnished
to PerSeptive, and attached hereto as Schedule 3.06 are audited financial
statements of ChemGenics from the years ended December 31, 1994 and 1995. All
such financial statements (the "ChemGenics Financial Statements") have been
prepared in accordance with generally accepted accounting principles
consistently applied and were prepared from the books and records of ChemGenics,
which books and records are complete and correct in all material respects.
ChemGenics Financial Statements fairly present the financial position of
ChemGenics as of the dates thereof and the results of its operations and cash
flows for the periods ended on the dates thereof. ChemGenics Financial
Statements reflect reserves appropriate and adequate for all known material
liabilities and reasonably anticipated losses as required by generally accepted
accounting principles. Since the date of ChemGenics Balance Sheet (defined
below), (a) there has been no change in the assets, liabilities or financial
condition of the assets of ChemGenics from that reflected in ChemGenics Balance
Sheet except for changes in the ordinary course of business consistent with past
practice and which have not been materially
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adverse and (b) none of the business, prospects, financial condition,
operations, property or affairs of ChemGenics has been materially adversely
affected by any occurrence or development, individually or in the aggregate,
whether or not insured against. ChemGenics has disclosed to PerSeptive all
material facts relating to the preparation of ChemGenics Financial Statements,
including the basis of accounting for affiliated transactions.
SECTION 3.07 Absence of Undisclosed Liabilities. Except as and to the
extent of the amounts specifically reflected or reserved against in the balance
sheet dated December 31, 1995 (or the notes thereto) included in ChemGenics
Financial Statements (the "ChemGenics Balance Sheet") ChemGenics does not have
any material liabilities or obligations of any nature whatsoever, due or to
become due, accrued, absolute, contingent or otherwise, except for material
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice. ChemGenics does not know of any basis for the
assertion against ChemGenics of any material liability or obligation not fully
reflected or reserved against in ChemGenics Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the date
thereof.
SECTION 3.08 Transactions with Affiliates. Except as set forth in
Schedule 3.08 there are no loans, leases, royalty agreements or other continuing
transactions between (a) ChemGenics or, to ChemGenics' knowledge, any of its
customers or suppliers, and (b) any officer, employee, consultant or director of
ChemGenics or any Person owning five percent (5%) or more of the capital stock
of ChemGenics, or to ChemGenics' knowledge, any member of the immediate family
of such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee, consultant,
director or stockholder, or a member of the immediate family of such officer,
employee, consultant, director or stockholder.
SECTION 3.09 Investments in Other Persons. ChemGenics has not made any
loans or advances in excess of $100,000 in the aggregate to any Person which is
outstanding on the date of this Agreement, nor is it committed or obligated to
make any such loan or advance, nor does ChemGenics own any capital stock, assets
comprising the business of, obligations of, or any interest in, any Person.
ChemGenics does not have, and has not since its incorporation had, any
Subsidiaries.
SECTION 3.10 Absence of Adverse Change. Since December 31, 1995, there
has been no material adverse change in the business, financial condition,
operations or assets of ChemGenics. Since December 31, 1995 ChemGenics has
conducted its business in the ordinary course.
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SECTION 3.11 Disclosure. All documents and schedules delivered or to be
delivered by or on behalf of ChemGenics in connection with this Agreement and
the transactions contemplated hereby are true, complete and correct in all
material respects. Neither this Agreement, nor any Schedule or Exhibit to this
Agreement contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which made, not misleading.
SECTION 3.12 Capitalization; Status of Capital Stock. ChemGenics has a
total authorized capitalization consisting of (i) 16,000,000 shares of Common
Stock, $.001 par value and (ii) 11,275,000 shares of preferred stock, $.01 par
value ("Preferred Stock"), of which 6,400,000 shares are designated as Series A
Convertible Preferred Stock, $.01 par value ("Series A Preferred Stock"),
1,100,000 shares are designated as Series B Convertible Preferred Stock, $.01
par value ("Series B Preferred Stock"), 775,000 shares are designated as Series
C Convertible Preferred Stock, $.01 par value ("Series C Preferred Stock"), and
3,000,000 shares are designated as Series D Preferred Stock, $.01 par value
("Series D Preferred Stock;" the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock are collectively
the "Preferred Stock"). 1,523,700 shares of Common Stock are issued and
outstanding, 6,150,732 shares of Series A Preferred Stock are issued and
outstanding, 1,063,366 shares of Series B Preferred Stock are issued and
outstanding, 767,739 shares of Series C Preferred Stock are issued and
outstanding and 3,000,000 shares of Series D Preferred Stock are issued and
outstanding. Each outstanding share of Preferred Stock is on the date hereof
convertible into one share of Common Stock. All the outstanding shares of
capital stock of ChemGenics have been duly authorized, and are validly issued,
fully paid and non-assessable. The Shares when issued and delivered in
accordance with the terms thereof, are duly authorized, validly issued,
fully-paid and non-assessable. The shares of Common Stock underlying the
Warrant, when issued and delivered in accordance with the terms of the Warrant,
are duly authorized, validly issued, and, assuming payment therefor in
accordance with the terms hereof, fully-paid and non-assessable. Except for
2,006,400 shares of Common Stock that have been reserved for issuance upon
exercise of stock options, 177,083 shares of Series A Preferred Stock that have
been reserved for issuance upon exercise of warrants issued or to be issued to
Comdisco, Inc. (the "Comdisco Leasing Warrants"), the shares of Common Stock
reserved for issuance upon the conversion of the currently outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and upon the conversion of the shares of Series A
Preferred Stock which may be issued upon exercise of the Comdisco Leasing
Warrants, no options, warrants, subscriptions or purchase rights of any nature
to acquire from ChemGenics, or commitments of ChemGenics to issue, shares of
capital stock or other securities
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are authorized, issued or outstanding, nor is ChemGenics obligated in any other
manner to issue shares or rights to acquire any of its capital stock or other
securities except as contemplated by this Agreement. None of ChemGenics'
outstanding securities or authorized capital stock are subject to any rights of
redemption, repurchase, rights of first refusal, preemptive rights or other
similar rights, whether contractual, statutory or otherwise, for the benefit of
ChemGenics, or to ChemGenics' knowledge, any stockholder, or any other Person,
except pursuant hereto or as set forth on Schedule 3.12, and to the knowledge of
ChemGenics, except as set forth on Schedule 3.12, there are no voting agreements
regarding its securities. Except as set forth in Schedule 3.12, there are no
restrictions on the transfer of shares of capital stock of ChemGenics other than
those imposed by relevant federal and state securities laws and as otherwise
contemplated by this Agreement.
SECTION 3.13 Absence of Certain Developments. ChemGenics is not a party
to any written or material oral contract or instrument or other corporate
restriction which individually or in the aggregate is reasonably likely to
adversely affect the business, prospects, financial condition, operations,
Intellectual Property Rights, property or affairs of ChemGenics.
SECTION 3.14 Certain Agreements of Officers and Employees. To
ChemGenics' knowledge, no officer, employee or consultant of ChemGenics is, or
is now or will be at the Closing, in violation of any material term of any
employment contract, patent disclosure agreement, proprietary information
agreement, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or agreement or any
restrictive covenant, relating to the right of any such officer, employee, or
consultant to be employed or engaged by ChemGenics because of the nature of the
business conducted or to be conducted by ChemGenics or relating to the use of
trade secrets or proprietary information of others which is reasonably likely to
have a material adverse effect on ChemGenics.
SECTION 3.15 Compliance. ChemGenics is in compliance in all material
respects with the terms and provisions of its Restated Certificate of
Incorporation and By-laws, each as amended and/or restated to date, and with the
terms and provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its properties or
assets are subject where noncompliance would have a material adverse affect on
the business, assets, operations, or financial condition of ChemGenics.
ChemGenics is in compliance in all respects with, and has not defaulted under,
all judgments, decrees, governmental orders, laws, statutes, rules or
regulations by which it is bound or to which it or any of its properties or
assets are subject where noncompliance or default would have a material adverse
affect on
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the business, assets, operations, or financial condition of ChemGenics.
SECTION 3.16 Title to Assets, Patents. ChemGenics has good and
merchantable title to its tangible assets. ChemGenics enjoys peaceful and
undisturbed possession under all leases under which it is operating, and all
said leases are valid and subsisting and in full force and effect in all
material respects.
ChemGenics owns or has a valid right to use the intellectual property
rights being used to conduct its business; and to ChemGenics' knowledge the
conduct of its business does not conflict with or infringe upon the intellectual
property rights of others in any manner which is reasonably anticipated to have
a material adverse effect on ChemGenics. No claim is pending or to ChemGenics'
knowledge threatened against ChemGenics and/or, to ChemGenics' knowledge, its
officers, employees and consultants to the effect that any such right owned or
licensed by ChemGenics is invalid or subject to any claim of infringement.
Within 15 days of the date hereof, ChemGenics will provide PerSeptive with a
list of its patents and patent applications.
ChemGenics has taken reasonable measures to protect and preserve the
security, confidentiality and value of its intellectual property rights. All
employees and consultants of ChemGenics involved in the design, review,
evaluation or development of intellectual property rights have executed
nondisclosure and assignment of inventions agreements. ChemGenics has not
received notice of, and to the best of ChemGenics' knowledge after reasonable
investigation, there are no claims that ChemGenics' intellectual property rights
or the use or ownership thereof by ChemGenics infringes, violates or conflicts
with any such right of any third party.
SECTION 3.17 Environmental and Safety Laws. To the best of ChemGenics'
knowledge after due investigation, it is not in violation of any applicable
statute, law or regulation relating to the environment or occupational safety
and health which would have a material adverse effect on ChemGenics.
To the best of ChemGenics' knowledge after due investigation,
ChemGenics has obtained and holds all registrations, permits, licenses, and
approvals issued by or on behalf of any federal, state or local government body
or agency ("Environmental Permits"), that are required in connection with the
discharge or emission of Substances at its premises or the generation,
treatment, storage, transportation, or disposal of any such Substances or
otherwise for the operation of ChemGenics' business. Such Environmental Permits,
which are described in Schedule 3.17, are currently effective and sufficient for
the ownership and operation of its business as currently conducted, the failure
to have would have a material adverse effect on ChemGenics.
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SECTION 3.18 Insurance. ChemGenics is insured with responsible insurers
in respect of its properties, assets and businesses against risks normally
insured against by companies in similar lines of business under similar
circumstances.
SECTION 3.19 Certain Agreements. Within fifteen days from the date
hereof Chemgenics will provide PerSeptive with a list of all existing contracts,
agreements, commitments, licenses and franchises which are material to the
operation of ChemGenics business. ChemGenics has previously delivered or made
available to PerSeptive true, correct and complete copies of all such
agreements.
ChemGenics is not a party to any agreement which would prevent its
execution, delivery or performance of this Agreement. Except as set forth in
Schedule 3.19, ChemGenics is not a party to any agreement the terms of which
require ChemGenics to disclose to the other party thereto the proprietary
information transferred to ChemGenics pursuant to this Agreement, or to
sublicense, assign or otherwise grant any license or other rights which
ChemGenics will obtain pursuant to this Agreement.
ARTICLE IV
COVENANTS OF PERSEPTIVE
PerSeptive covenants and agrees with ChemGenics as follows:
SECTION 4.01 Best Efforts Cooperation. PerSeptive shall use its
reasonable best efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder, to the end that the
transactions contemplated hereby will be fully and timely consummated.
SECTION 4.02 Access. Until the Closing, PerSeptive shall give
ChemGenics, its attorneys, accountants and other authorized representatives
complete access, upon reasonable notice and at reasonable times, to PerSeptive's
offices, properties, employees, products, technology, business and financial
records, contracts, business plans, budgets and projections, agreements and
commitments and other documents and information concerning the Drug Discovery
Program and persons employed by or doing business with PerSeptive in connection
with the Drug Discovery Program. For three (3) years following the Closing,
PerSeptive shall provide ChemGenics with reasonable access to any and all
records relating to the Drug Discovery Program which remain in the possession of
accountants, attorneys and other parties. In order that ChemGenics may have full
opportunity to make such examination and investigation as it may desire of the
business and affairs of PerSeptive in connection with the Drug Discovery
Program, PerSeptive will furnish ChemGenics and its representatives during such
period with all such information as such representatives may reasonably request
and
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cause the respective officers, employees, consultants, agents, accountants and
attorneys of PerSeptive to cooperate fully with the representatives of
ChemGenics in connection with such review and examination and to make full
disclosure to ChemGenics of all material facts affecting PerSeptive's financial
condition, business operations, properties and prospects as each relate to the
Drug Discovery Program; provided, however, that ChemGenics will hold the
documents and information concerning PerSeptive and the Drug Discovery Program
confidential in accordance with the Confidentiality Agreement, as amended April
23, 1996 in the form of Exhibit 4.02 between PerSeptive and ChemGenics dated
October 25, 1996 (the "Confidentiality Agreement"), as amended as of April 23,
1996.
SECTION 4.03 Properties, Business, Insurance. Until the Closing and
during the term of the Consulting and Interim Services Agreement, PerSeptive
shall maintain with financially sound and reputable insurers, insurance against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated.
SECTION 4.04 Compliance with Laws. PerSeptive shall conduct the Drug
Discovery Program in all material respects in compliance with all applicable
laws, rules, regulations and orders.
SECTION 4.05 Actions Prior to Closing. PerSeptive shall conduct the
Drug Discovery Program pending the Closing in a manner consistent with past
practice. Without limiting the generality of the foregoing, PerSeptive will not,
except in the ordinary and usual course of business, without the prior written
consent of ChemGenics do any of the following regarding the Transferred Assets
or the Drug Discovery Program: (i) make any acquisition or disposition of
assets, (ii) enter into any contract or release or relinquish any contract or
other right, or (iii) enter into or renew any employment agreement with any
employees or consultants or grant any increases in the compensation or benefits
to, or agree to pay any bonus, severance or termination payment or other special
compensation to any employees or consultants.
SECTION 4.06 Litigation. PerSeptive will promptly notify ChemGenics of
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against or by PerSeptive or its affiliates, or against any employee,
consultant or director of PerSeptive (i) relating to the Transferred Assets, the
Drug Discovery Program or the transactions contemplated hereby or (ii) in which
a decision adverse to PerSeptive would adversely affect the value of the
Transferred Assets or the Drug Discovery Program.
SECTION 4.07 Continued Effectiveness of Representations and Warranties.
From the date hereof up to and including the Closing Date, (i) PerSeptive will
conduct the Drug Discovery Program in a manner such that the representations and
warranties contained
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herein shall continue to be true and correct on and as of the Closing Date as if
made on and as of the Closing Date, except for changes and the consequences of
events arising in the ordinary and usual course of business after the date
hereof and none of which would have an adverse effect on the properties, assets,
operations or condition (financial or otherwise) or prospects of the Drug
Discovery Program; and (ii) PerSeptive will advise ChemGenics promptly in
writing of any condition or circumstance occurring from the date hereof up to
and including the Closing Date which could cause any representations or warranty
of PerSeptive to become untrue in any material respect.
SECTION 4.08 No Negotiations. Until July 1, 1996, or the earlier
termination of this Agreement in accordance with its terms, neither PerSeptive
nor any of its affiliates, advisors, agents or investment bankers shall,
directly or indirectly, initiate discussions with, engage in negotiations with,
or provide any information to any corporation, partnership, person or other
entity or group involving the possible sale, directly or indirectly, transfer or
joint venture of any part of the Transferred Assets or the Drug Discovery
Program to any person or entity other than ChemGenics.
SECTION 4.09 Confidentiality and Non-Competition. At the Closing
PerSeptive will enter into a Confidentiality and Non- Competition Agreement (the
"Confidentiality and Non-Competition Agreement") containing the terms set forth
in Exhibit 4.09, and such other terms and conditions and otherwise in form and
substance satisfactory to each party.
ARTICLE V
COVENANTS OF CHEMGENICS
SECTION 5.01 Cooperation. ChemGenics shall use its reasonable best
efforts in good faith to perform and fulfill all conditions and obligations to
be fulfilled or performed by it hereunder to the end that the transactions
contemplated hereby will be fully and timely consummated.
SECTION 5.02 Access. Until the Closing, ChemGenics shall give
PerSeptive, its attorneys, accountants and other authorized representatives
complete access, upon reasonable notice and at reasonable times, to ChemGenics'
offices, properties, employees, products, technology, business and financial
records, contracts, business plans, budgets and projections, agreements and
commitments and other documents and information concerning ChemGenics and
persons employed by or doing business with ChemGenics. In order that PerSeptive
may have full opportunity to make such examination and investigation as it may
desire of the business and affairs of ChemGenics, ChemGenics will furnish
PerSeptive and its representatives during such period with all such information
as
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such representatives may reasonably request and cause the respective officers,
employees, consultants, agents, accountants and attorneys of ChemGenics to
cooperate fully with the representatives of ChemGenics in connection with such
review and examination and to make full disclosure to PerSeptive of all material
facts affecting ChemGenics' financial condition, business operations, properties
and prospects; provided, however, that PerSeptive will hold the documents and
information concerning ChemGenics confidential in accordance with the
Confidentiality Agreement.
SECTION 5.03 Litigation. ChemGenics will promptly notify PerSeptive of
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against or by ChemGenics or its affiliates, or against any employee,
consultant or director of ChemGenics.
SECTION 5.04 Continued Effectiveness of Representations and Warranties.
From the date hereof up to and including the Closing Date, (i) ChemGenics will
conduct its business in the ordinary course and a manner such that the
representations and warranties contained herein shall continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date,
except for changes and the consequences of events arising in the ordinary and
usual course of business after the date hereof and none of which would have an
adverse effect on the properties, assets, operations or condition (financial or
otherwise) or prospects of the business of ChemGenics; and (ii) ChemGenics will
advise PerSeptive promptly in writing of any condition or circumstance occurring
from the date hereof up to and including the Closing Date which could cause any
representations or warranty of ChemGenics to become untrue in any material
respect.
SECTION 5.05 No Amendments. Except as contemplated by this Agreement
(including amendments to increase the number of shares of authorized Common
Stock of ChemGenics and to change ChemGenics' corporate name), from the date
hereof up to and including the Closing Date, ChemGenics will not amend its
Restated Certificate of Incorporation or By-laws, effect any recapitalization,
enter into any merger agreement, or sell or enter into any agreement regarding
the sale of, all or substantially all of its assets.
SECTION 5.06 Right of First Refusal; Percentage Maintenance.
(a) Right of First Refusal. From and after the Closing, before
ChemGenics shall issue, sell or exchange, agree or obligate itself to
issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, any (i) shares of Common Stock, (ii) any other equity
security of ChemGenics, including without limitation, shares of
preferred stock, (iii) any convertible debt security of ChemGenics,
including without limitation, any debt security which by its terms is
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convertible into or exchangeable for any equity security of ChemGenics,
(iv) any security of ChemGenics that is a combination of debt and
equity, or (v) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any interest relating to such equity or
debt security of ChemGenics, ChemGenics shall, in each case, first
offer to sell such securities (the "Offered Securities") to PerSeptive
that portion of the Offered Securities as the number of shares of
Common Stock then held by PerSeptive bears to the total number of
outstanding shares of capital stock of ChemGenics on a fully diluted
basis, at a price and on such other terms as shall have been specified
by ChemGenics in writing delivered to PerSeptive (the "Offer"), which
Offer by its terms shall remain open and irrevocable for a period of
twenty (20) days from receipt of the Offer.
(b) Notice of Acceptance. Notice of PerSeptive's intention to accept
any Offer made pursuant to Section 5.06(a) shall be evidenced by a
writing signed by PerSeptive and delivered to ChemGenics prior to the
end of the 20-day period of such offer (the "Notice of Acceptance").
(c) Conditions to Acceptance and Purchase.
(i) Permitted Sales of Refused Securities. In the event that a
Notice of Acceptance is not given by PerSeptive in respect of
all of the Offered Securities, ChemGenics shall have ninety
(90) days from the end of said 20-day period to sell any such
Offered Securities as to which a Notice of Acceptance has not
been given by PerSeptive (the "Refused Securities") to the
person or persons specified in the Offer or to any other
person who has a right of first refusal to purchase
ChemGenics' securities, but only upon terms and conditions,
including, without limitation, unit price and interest rates,
which are no more favorable, in the aggregate, to such other
person or persons or less favorable to ChemGenics than those
set forth in the Offer.
(ii) Reduction in Amount of Offered Securities. In the event
ChemGenics shall propose to sell less than all of the Refused
Securities (any such sale to be in the manner and on the terms
specified in Section 5.06(c)(i) above), then PerSeptive shall
reduce the number of shares or other units of the Offered
Securities specified in its Notice of Acceptance to an amount
which shall be not less than the amount of the Offered
Securities which PerSeptive elected to purchase pursuant to
Section 5.06(b) multiplied by a fraction, (I) the numerator of
which shall be the amount of Offered Securities which
ChemGenics actually proposes to sell, and (II) the denominator
of which shall be the amount of
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all Offered Securities. In the event that PerSeptive so elects
to reduce the number or amount of Offered Securities specified
in its Notice of Acceptance, ChemGenics may not sell or
otherwise dispose of more than the reduced amount of the
Offered Securities until such securities have again been
offered to PerSeptive in accordance with Section 5.06(a).
(iii) Closing. Upon the closing, which shall include full
payment to ChemGenics, of the sale to such other person or
persons of all or less than all the Refused Securities,
PerSeptive shall purchase from ChemGenics, and ChemGenics
shall sell to PerSeptive, the number of Offered Securities
specified in the Notice of Acceptance, as reduced pursuant to
Section 5.06(c)(ii) upon the terms and conditions specified in
the Offer. The purchase by PerSeptive of any Offered
Securities is subject in all cases to the preparation,
execution and delivery by ChemGenics and PerSeptive of a
purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to ChemGenics
and PerSeptive.
(d) Further Sale. In each case, any Offered Securities not purchased by
PerSeptive or other person or persons in accordance with Section
5.06(c) may not be sold or otherwise disposed of until they are again
offered to PerSeptive under the procedures specified in Sections
5.06(a)-(c).
(e) Termination of Right of First Refusal. The rights of PerSeptive
under this Section 5.06 shall terminate immediately prior to the
effectiveness of, and shall not apply to shares issued pursuant to, a
registration statement filed by ChemGenics with respect to an offering
of its securities, but expressly conditioned on the consummation of
such offering.
(f) Exceptions. The rights of PerSeptive under this Section
5.06 shall not apply to:
(i) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares
of Common Stock;
(ii) Preferred Stock issued as a dividend to holders of
Preferred Stock upon any subdivision or combination of shares
of Preferred Stock, provided that the number of shares of
Common Stock issuable upon conversion of the preferred stock
as a percentage of the total equity of ChemGenics shall remain
the same;
(iii) the issuance of Common Stock upon exercise of the
Warrant;
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(iv) the issuance of Common Stock upon conversion of any
Preferred Stock or any other convertible securities of
ChemGenics outstanding as of the date hereof or issued in
accordance with this Section 5.06;
(v) up to 3,000,000 shares of Common Stock, or options or
warrants exercisable therefor (including 2,006,400 options
granted prior to and outstanding on the date hereof pursuant
to ChemGenics' 1992 Stock Option Plan), issued on or after the
date hereof to directors, officers, employees or consultants
of ChemGenics and any subsidiary (including members of
ChemGenics' Scientific Advisory Board) pursuant to any
qualified or non-qualified stock option plan or agreement,
employee stock ownership plan, employee benefit plan, stock
purchase agreement, stock plan, stock restriction agreement,
or consulting agreement or such other options, warrants,
equity arrangements, agreements or plans in each case approved
by two-thirds of the members of the Board of Directors of
ChemGenics;
(v) up to 177,083 shares of Series A Preferred Stock issued
pursuant to the Comdisco Leasing Warrants, and shares of
Common Stock issued upon conversion of such shares;
(vi) shares of capital stock or options or warrants therefor,
to be issued to equipment leasing organizations in connection
with any equipment leasing arrangements to which ChemGenics is
a party and which have been approved by the Board of
Directors; or
(vii) shares of capital stock issued in connection with a
merger or acquisition approved by the Board of Directors.
Each of the foregoing numbers shall be subject to equitable adjustment
in the event of any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification or other similar
event.
SECTION 5.07 Confidentiality and Non-Competition. At the Closing
ChemGenics will enter into the Confidentiality and Non-Competition Agreement.
ARTICLE VI
CONDITIONS TO CHEMGENICS' OBLIGATIONS
The obligation of ChemGenics to issue and transfer the Shares on the
Closing Date and to consummate the other transactions contemplated hereby is
subject to the satisfaction, on or before
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<PAGE> 39
the Closing Date, of the following conditions each of which may be waived by
ChemGenics in its sole discretion:
SECTION 6.01 No Material Adverse Economic Event. There shall not have
occurred (i) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or (iii) any material
limitation (whether or not mandatory) by any governmental authority on, or any
other event which might affect the extension of credit by, lending institutions,
or (iv) in the case of any of the foregoing existing on the Closing Date a
material acceleration or worsening thereof.
SECTION 6.02 Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license, permit
or agreement material to the Drug Discovery Program from terminating prior to
its scheduled termination, as a result of the consummation of the transactions
contemplated hereby, shall have been obtained, including, without limitation,
the expiration of any waiting period or the receipt of any consent or approval
which may be required under the HSR Act.
SECTION 6.03 Representations and Warranties True. All of the
representations and warranties of PerSeptive contained in this Agreement or in
any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all material respects on and as of
the date hereof and on and as of the Closing Date, as if made on and as of the
Closing Date. On the Closing Date, PerSeptive shall have executed and delivered
to ChemGenics a certificate, in form and substance satisfactory to ChemGenics
and its counsel, to such effect.
SECTION 6.04 Performance. PerSeptive shall have performed and complied
with all covenants and agreements contained herein required to be performed or
complied with by it prior to or at the Closing Date. PerSeptive shall have
executed and delivered to ChemGenics a certificate, in form and substance
satisfactory to ChemGenics and its counsel, in writing to such effect and to the
further effect that all of the conditions set forth in this Article VI have been
satisfied.
SECTION 6.05 No Adverse Change. No change shall have occurred or be
threatened in the condition, properties, assets or liabilities of the Drug
Discovery Program, which has or is or is reasonably likely to frustrate the
essential purposes of this transaction.
SECTION 6.06 Opinion of Counsel. ChemGenics shall have received the
opinion of Samuel P. Hunt III, Esq., in substantially the form attached hereto
as Exhibit 6.06.
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SECTION 6.07 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body (i)
to restrain, prohibit, restrict or delay, or to obtain damages or a discovery
order in respect of this Agreement or the consummation of the transactions
contemplated hereby, or (ii) which has had or may have a materially adverse
effect on the condition, financial or otherwise, or prospects of the Drug
Discovery Program. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation, bankruptcy,
receivership, reorganization, dissolution or arrangement with creditors,
voluntary or involuntary, affecting PerSeptive shall be pending, and PerSeptive
shall not have taken any action in contemplation of, or which would constitute
the basis for, the institution of any such proceedings.
SECTION 6.08 Investigation Satisfactory. ChemGenics shall have reviewed
all of the Schedules, and shall be satisfied that (i) none of the information on
any Schedule (as they may be supplemented prior to the Closing) frustrates the
essential business purpose of the transaction contemplated hereby and (ii) that
the representations and warranties of PerSeptive are true and correct in all
material respects.
SECTION 6.09 Closing Documents. PerSeptive shall have delivered all of
the resolutions, certificates, documents, ancillary agreements and instruments
required by this Agreement.
SECTION 6.10 Approval of ChemGenics' Stockholders and Preferred
Stockholders. The stockholders of ChemGenics shall have approved the requisite
amendments to ChemGenics' Certificate of Incorporation and the holders of
ChemGenics' Preferred Stock shall have consented to the transactions
contemplated hereby as required under the terms of the Preferred Stock and
agreements executed in connection with the issuance thereof. ChemGenics will
seek to obtain such approvals and consents promptly following the execution of
this Agreement and will use best efforts to obtain such approval and consent on
or before May 10, 1996.
SECTION 6.11 Approval of ChemGenics and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, PerSeptive hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to ChemGenics and its counsel.
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<PAGE> 41
ARTICLE VII
CONDITIONS TO PERSEPTIVE'S OBLIGATIONS
The obligation of PerSeptive to transfer the Transferred Assets to
ChemGenics and to consummate the other transactions contemplated hereby is
subject to the satisfaction, on or before the Closing Date, of the following
conditions, each of which may be waived by PerSeptive in its sole discretion:
SECTION 7.01 No Material Adverse Economic Event. There shall not have
occurred (i) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on the New York Stock
Exchange, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or (iii) any material
limitation (whether or not mandatory) by any governmental authority on, or any
other event which might affect the extension of credit by, lending institutions,
or (iv) in the case of any of the foregoing existing on the Closing Date a
material acceleration or worsening thereof.
SECTION 7.02 Consents. All requisite governmental approvals and
consents of third parties required to be received to prevent any license, permit
or agreement material to the Drug Discovery Program from terminating prior to
its scheduled termination, as a result of the consummation of the transactions
contemplated hereby, shall have been obtained, including, without limitation,
the expiration of any waiting period or the receipt of any consent or approval
which may be required under the HSR Act.
SECTION 7.03 Representations and Warranties True. All of the
representations and warranties of ChemGenics contained in this Agreement or in
any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all material respects on and as of
the date hereof and on and as of the Closing Date, as if made on and as of the
Closing Date. On the Closing Date, ChemGenics shall have executed and delivered
to ChemGenics a certificate, in form and substance satisfactory to ChemGenics
and its counsel, to such effect.
SECTION 7.04 Performance. ChemGenics shall have performed and complied
in all material respects with all agreements contained herein required to be
performed or complied with by it prior to or at the Closing Date, and ChemGenics
shall have delivered a certificate to PerSeptive, in form and substance
satisfactory to PerSeptive and its counsel to such effect and to the further
effect that all of the conditions set forth in this Article VII have been
satisfied.
SECTION 7.05 No Adverse Change. No change shall have occurred or be
threatened in the condition (financial or other) of ChemGenics, the results of
its operations, properties, assets,
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liabilities or businesses which has been or is or is reasonably likely to be
materially adverse to its operations, properties, prospects, assets or condition
(financial or other).
SECTION 7.06 Opinion of ChemGenics' Counsel. PerSeptive shall have
received from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., an opinion
dated the Closing Date, in substantially the form attached hereto as Exhibit
7.06.
SECTION 7.07 No Actions, Suits or Proceedings. As of the Closing Date,
no action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body to
restrain, prohibit, restrict or delay, or to obtain damages or a discovery order
in respect of this Agreement or the consummation of the transactions
contemplated hereby. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding of any character including without limitation, bankruptcy,
receivership, reorganization, dissolution or arrangement with creditors,
voluntary or involuntary, affecting ChemGenics shall be pending, and ChemGenics
shall not have taken any action in contemplation of, or which would constitute
the basis for, the institution of any such proceedings.
SECTION 7.08 Investigation Satisfactory. PerSeptive shall have reviewed
all of the Schedules, and shall be satisfied that (i) none of the information on
any Schedule (as they may be supplemented prior to the Closing) frustrates the
essential business purpose of the transaction contemplated hereby and (ii) that
the representations and warranties of ChemGenics are true and correct in all
material respects.
SECTION 7.09 Closing Documents. ChemGenics shall have delivered the
Shares and all of the resolutions, certificates, documents, ancillary agreements
and instruments required by this Agreement.
SECTION 7.10 Approval of PerSeptive and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, ChemGenics hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to PerSeptive and its counsel.
SECTION 7.11 No Change of Control. There shall not have occurred
between the date hereof and the Closing a transfer of all or substantially all
of the outstanding shares of capital stock of ChemGenics to parties other than
ChemGenics' existing stockholders or their affiliates.
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SECTION 7.12 Name Change. Myco Pharmaceuticals Inc. shall have changed
its name to ChemGenics Pharmaceuticals Inc., or such other name as PerSeptive
shall approve.
SECTION 7.13 Chairman of the Board. Noubar B. Afeyan shall have been
elected to serve as Chairman of the Board of ChemGenics and he or his designee
as a member of its Scientific Advisory Board.
ARTICLE VIII
POST-CLOSING COVENANTS
SECTION 8.01 Employee Matters.
(a) Immediately after the execution of this Agreement, PerSeptive shall
make available to ChemGenics each of the Employees, who will dedicate
his or her full business time to the Drug Discovery Program of
ChemGenics and perform the services reasonably requested by ChemGenics.
The Employees shall remain employees of PerSeptive until and subject to
the Closing and ChemGenics shall have no responsibility or obligation
therefor and nothing contained herein shall give the Employees any
rights to employment by ChemGenics. Upon the Closing ChemGenics shall
reimburse PerSeptive for the salary, costs of benefits and
reimbursements for expenses incurred by such employees between the date
hereof and the Closing.
(b) Upon the Closing, ChemGenics will offer employment to each of the
Employees listed in Schedule 2.12, or any other person employed by
PerSeptive who may have been substituted for one of the Employees after
the date hereof with the consent of ChemGenics (a "Substitute
Employee") at a salary level not less than that in effect on the date
hereof and with benefits comparable to ChemGenics' employees similarly
situated, and PerSeptive shall use its reasonable best efforts to cause
such persons to enter into employment or consulting arrangements or
agreements with ChemGenics (as ChemGenics shall designate), and
ChemGenics agrees to negotiate in good faith such arrangements or
agreements; provided that, anything herein to the contrary
notwithstanding, no provision of this Section 8.01 shall create any
third-party beneficiary rights in any person or organization,
including, without limitation, employees or former employees (including
any beneficiary or dependent thereof) of PerSeptive or any of its
affiliates, trustees, administrators, participants or beneficiaries of
any employee benefit plan, and no provision of this Section 8.01 shall
create such third-party beneficiary rights in any such person or
organization in respect of any benefits that might be provided,
directly or indirectly, under any employee benefit plan or arrangement,
including the currently existing
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plans of PerSeptive. PerSeptive and ChemGenics each agree to (a) use
its reasonable best efforts to effect the transfer of the designated
Employees so as to prevent the creation of any severance or termination
penalties or benefits in respect of such transfer and (b) cooperate
with the filings, calculations and other actions necessary to effect
the transactions contemplated by this Section 8.01 and in obtaining any
governmental approvals required hereunder.
SECTION 8.02 Consulting and Interim Services. The parties shall perform
their respective obligations under the Consulting and Interim Services
Agreement. In addition to the services of Employees set forth in Section 8.01,
PerSeptive shall provide to ChemGenics (i) from time to time for a period of
three years after the Closing Date up to $500,000 of supplies distributed or
manufactured by PerSeptive valued at fully burdened manufactured or actual
acquired cost, (ii) the use and ownership (subject to Schedule 1.01(b)) of all
equipment transferred pursuant to Section 1.01 or listed on Schedule 1.01(b) and
(iii) senior management consultations, in each case as more fully set forth in
the Consulting and Interim Services Agreement.
SECTION 8.03 Sub-Lease. PerSeptive shall, pursuant to and in accordance
with the terms and conditions of the Sub-Lease, subject to obtaining the
landlord's consent, lease the Premises (as defined in the Sub-Lease) to
ChemGenics. ChemGenics shall, pursuant to and in accordance with the terms and
conditions of the Sub-Lease, not be obligated to pay rent until the completion
of the Public Offering; thereafter, ChemGenics shall pay the monthly rent
provided for in the Sub-Lease to PerSeptive. Notwithstanding the foregoing, in
the event PerSeptive's landlord does not consent to the Sublease on a timely
basis, PerSeptive shall provide ChemGenics with satisfactory use of such
premises or equivalent premises on terms equivalent to those set forth in the
Sub-Lease. If the Public Offering does not occur and the asset purchase and
other agreements and instruments set forth herein are rescinded and unwound (as
described below), ChemGenics and PerSeptive agree to negotiate in good faith
regarding the terms and conditions of continuation or termination of the
Sub-Lease, subject to the other terms and provisions thereof.
SECTION 8.04 Standstill; Registration Rights. Except pursuant to the
Warrant, (i) for a period of ten years after the Closing Date, PerSeptive will
not purchase any Common Stock of ChemGenics (subject to PerSeptive's right to
maintain its pro rata percentage ownership of ChemGenics' capital stock, as more
fully set forth in Section 5.06), (ii) for a period of three (3) years after the
Closing Date, PerSeptive will not sell or agree to sell any capital stock of
ChemGenics, during the fourth year will not sell or agree to sell more than
979,268 shares plus up to 10% of the shares actually acquired by PerSeptive upon
exercise of the Warrant, during the fifth year will not sell or agree to sell
more
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than 1,958,536 shares plus (a) such number of shares permitted to be sold in the
prior year and not sold and (b) up to an additional 20% of the shares actually
acquired by PerSeptive upon exercise of the Warrant, or in any year thereafter
more than 3,427,438 shares plus up to 35% of the shares actually acquired by
PerSeptive upon exercise of the Warrant, provided, that PerSeptive shall be
allowed to transfer shares to subsidiaries or for accounting purposes as set
forth in Exhibit 1.03(C)(iv), (iii) ChemGenics shall provide PerSeptive with
limited "piggy back" and Form S-3 Registration Rights, and (iv) PerSeptive will
enter into the other agreements regarding the capital stock of ChemGenics, in
each case as set forth in the Standstill and Registration Rights Agreement.
SECTION 8.05 Further Assurances. At any time and from time to time
after the Closing Date, at the request of ChemGenics and without further
consideration, PerSeptive will execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation as may be reasonably
requested in order to more effectively transfer, convey and assign to ChemGenics
and to confirm ChemGenics' title to the Transferred Assets.
SECTION 8.06 Public Offering. Within a period of 180 days after the
Closing, ChemGenics will use commercially reasonable efforts to accomplish an
underwritten initial public offering of its Common Stock, in which offering
ChemGenics will attempt to raise between $20 and $30 million (the "Public
Offering"), net to ChemGenics. ChemGenics will seek PerSeptive's consent with
respect to the choice of lead managing underwriter, which consent shall not be
unreasonably withheld. If the Public Offering is not consummated within such
180-day period, the parties may extend the period by mutual agreement. If at the
end of the initial 180-day period, ChemGenics has a registration statement on
file with the SEC, and in ChemGenics' reasonable judgement, there does not
appear to be any material impediment to the successful completion of the Public
Offering, then the period for completing the Public Offering hereunder shall be
automatically extended for an additional 90 days (such 180-day or 270-day
period, as the case may be, is hereinafter collectively referred to as the
"Public Offering Period"). PerSeptive shall at its own cost assist and cooperate
with ChemGenics as ChemGenics may reasonably request in effecting the Public
Offering in a timely manner.
SECTION 8.07 Further Negotiations on Certain Conditions. If (a) the
Public Offering Period shall lapse without the successful completion of the
Public Offering, and ChemGenics and PerSeptive shall not have extended the
period by mutual agreement, or (b) if Noubar Afeyan ceases to be available to
consult with ChemGenics pursuant to the Consulting and Interim Services
Agreement prior to completion of the Public Offering, then during the thirty
(30) day period following either such event, the parties shall confer and
negotiate in good faith to seek to agree upon alternate financing arrangements,
or additional agreements and/or modified terms to
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this Agreement and/or the other documents executed in connection herewith, to
accommodate each party's respective interests. In the event that the parties do
not agree to such alternate arrangements or additional or modified terms within
such thirty (30) day period, with respect to (a) ChemGenics or PerSeptive and,
with respect to (b), ChemGenics, shall have the right, each in its sole
discretion, by giving written notice to the other party within ninety (90) days
following the expiration of the foregoing thirty (30) day period, to rescind
this Agreement, the other agreements, documents and instruments entered into in
connection herewith, and to unwind the collaboration established by such
agreements and other documents such that: (i) ChemGenics shall return the
Transferred Assets to PerSeptive in the same condition as the Transferred Assets
were delivered, subject to reasonable wear and tear and consumption of supplies,
(ii) PerSeptive shall return the Shares and the Warrant and any securities
issued to PerSeptive pursuant to Section 5.06 (subject to return of the purchase
price paid therefore) to ChemGenics, (iii) ChemGenics and PerSeptive shall take
such other actions as may be necessary or desirable to restore the respective
rights, obligations and liabilities of ChemGenics and PerSeptive as nearly as
possible to the status quo which existed prior to Closing, subject to the
specific provisions of certain of the Exhibits hereto which provide for the
continuation of certain rights and obligations of the parties after the
rescission in certain circumstances, and (iv) return written manifestations of
confidential information (except for such information as is associated with the
rights granted pursuant to Section 9.3 of the License Agreement).
ARTICLE IX
TERMINATION
SECTION 9.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
A. By mutual written consent duly authorized by the Boards of
Directors of ChemGenics and PerSeptive.
B. By ChemGenics or PerSeptive if:
(i) the Closing has not occurred on or prior to
June 15, 1996 for any reason other than the
breach of any provision of this Agreement by
the party terminating this Agreement;
(ii) the other party materially breaches any of
its representations, warranties or covenants
attached hereto; or
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(iii) either party is unable in good faith to
agree to any unagreed to material term of
one of the other agreements contemplated
hereby.
C. By ChemGenics if:
(i) Any of the conditions set forth in Article
VI hereof has not been satisfied on or
before June 15, 1996 or shall have become
incapable of fulfillment and shall not have
been waived by ChemGenics for any reason
other than a breach by ChemGenics hereunder;
or
(ii) If in ChemGenics' good faith judgment there
is any material inaccuracy in any
representations or breach of any warranty
contained herein, or any material failure by
PerSeptive to perform any commitment,
covenant or condition contained in this
Agreement, or there exists any error,
misstatement or omission with regard to any
of the Exhibits, Schedules or other
documents referred to herein, or ChemGenics
in its sole judgment believes that the
contents of any of the Exhibits, Schedules,
information or other documents, or the
business and condition (financial or
otherwise) of the Drug Discovery Program,
frustrates the essential business purpose of
the transaction contemplated herein.
D. By PerSeptive if:
(i) any of the conditions set forth in Article
VII hereof has not been satisfied on or
before June 15, 1996 or shall have become
incapable of fulfillment and shall not have
been waived by PerSeptive for any reason
other than a breach by PerSeptive hereunder;
(ii) If in PerSeptive's good faith judgment there
is any material inaccuracy in any
representations or breach of any warranty
contained herein, or any material failure by
ChemGenics to perform any commitment,
covenant or condition contained in this
Agreement, or there exists any error,
misstatement or omission with regard to any
of the Exhibits, Schedules or other
documents referred to herein, or PerSeptive
in its sole judgment believes that the
contents of any of the Exhibits, Schedules,
information or other documents, or the
business and condition
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(financial or otherwise) of ChemGenics,
frustrates the essential business purpose of
the transaction contemplated herein.
Upon the occurrence of any of the events specified in this Section 9.01 (other
than paragraph A hereof), written notice of such event shall forthwith be given
to the other party to this Agreement, whereupon this Agreement shall terminate.
SECTION 9.02 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.01, this Agreement, except
for the provisions of Articles IX and X, shall forthwith become void and be of
no effect, without any liability on the part of any party or its directors,
officers or shareholders. Nothing in this Section 9.02 shall relieve any party
to this Agreement of liability for breach of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid.
If to ChemGenics:
Myco Pharmaceuticals Inc.
d/b/a ChemGenics Pharmaceuticals
One Kendall Square, Building 300
Cambridge, MA 02139
Attn: Barry A. Berkowitz
With a copy to:
Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
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If to PerSeptive:
PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: Noubar B. Afeyan
With a copy to:
Rufus C. King, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
All notices, requests, consents and other communications hereunder shall be
deemed to have been delivered (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the fifth business day following the day such mailing is
made.
SECTION 10.02 Entire Agreement. This Agreement together with the
Exhibits and Schedules hereto and the other documents executed in connection
herewith (together, the "Documents") embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof except for the Confidentiality Agreement,
which shall remain in effect in accordance with its terms. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in the Documents shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
SECTION 10.03 Modifications and Amendments. The terms and provisions of
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
SECTION 10.04 Waivers and Consents. No failure or delay by a party
hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any
such right, power or remedy of the party. No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy
42
<PAGE> 50
hereunder. The election of any remedy by a party hereto shall not constitute a
waiver of the right of such party to pursue other available remedies. No notice
to or demand on a party not expressly required under this Agreement shall
entitle the party receiving such notice or demand to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the party giving such notice or demand to any other or further action in any
circumstances without such notice or demand. The terms and provisions of this
Agreement may be waived, or consent for the departure therefrom granted, only by
written document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
SECTION 10.05 Assignment. Neither this Agreement, nor any right
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties.
SECTION 10.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties hereto,
and no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
SECTION 10.07 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the Commonwealth of Massachusetts, without
giving effect to the conflict of law principles thereof.
SECTION 10.08 Arbitration.
(a) The Parties shall attempt to resolve any dispute or controversy
arising under or relating to the interpretation or meaning of this Agreement by
good faith negotiations. Any matter that cannot be resolved by such good faith
negotiation shall be resolved by final and binding arbitration conducted by
three (3) arbitrators in Boston, Massachusetts, in accordance with the
then-current American Arbitration Association ("AAA") Commercial Arbitration
Rules (the "AAA Rules") as modified by this Section 10.08
(b) The arbitrators shall be selected by mutual agreement of the
parties or, failing such agreement, in accordance with the
43
<PAGE> 51
aforesaid AAA Rules. At least one (1) of the arbitration panel shall be
reasonably familiar with the biotechnology industry. The parties shall bear the
costs of the arbitrators equally. No arbitrator may be affiliated in any way
with either party.
(c) The parties shall have the right of limited pre-hearing discovery,
in accordance with the U.S. Federal Rules of Civil Procedure, as then in effect,
for a period not to exceed sixty (60) days.
(d) As soon as the discovery is concluded, but in any event with thirty
(30) days thereafter, the arbitrators shall hold a hearing in accordance with
the AAA Rules. Thereafter, the arbitrators shall promptly render a written
decision, together with a written opinion setting forth in reasonable detail the
grounds for such a decision.
(e) Judgment may be entered in any court of competent jurisdiction to
enforce the award entered by the arbitrator.
(f) The duty of the parties to arbitrate any dispute hereunder shall
survive expiration or termination of this Agreement for any reason.
SECTION 10.09 Jurisdiction and Service of Process. Subject to the terms
of Section 10.08, any legal action or proceeding with respect to this Agreement
may be brought in the courts of the Commonwealth of Massachusetts or of the
United States of America for the District of Massachusetts. By execution and
delivery of this Agreement, each of the parties hereto accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereby irrevocably waive any objection or defense
that they may now or hereafter have to the assertion of personal jurisdiction by
any such court in any such action or to the laying of the venue of any such
action in any such court, and hereby waive, to the extent not prohibited by law,
and agree not to assert, by way of motion, as a defense, or otherwise, in any
such proceeding, any claim that it is not subject to the jurisdiction of the
above-named courts for such proceedings. Each of the parties hereto irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered mail,
postage prepaid, to the party at its address set forth in Section 10.01 hereof
and irrevocably waive any objection or defense that it may now or hereafter have
to the sufficiency of any such service of process in any such action. Nothing in
this Section 10.08 shall affect the rights of the parties to commence any such
action in any other forum or to serve process in any such action in any other
manner permitted by law.
SECTION 10.10 Severability. In the event that any court of competent
jurisdiction shall finally determine that any provision,
44
<PAGE> 52
or any portion thereof, contained in this Agreement shall be void or
unenforceable in any respect, then such provision shall be deemed limited to the
extent that such court determines it enforceable, and as so limited shall remain
in full force and effect. In the event that such court shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and effect.
SECTION 10.11 Interpretation. The parties hereto acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the disclosure schedules
regarding the Drug Discovery Program which are the sole responsibility of
PerSeptive) and have contributed to its revision; (ii) the rule of construction
to the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
SECTION 10.12 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 10.13 Enforcement. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court to
which the parties have agreed hereunder to submit to jurisdiction.
SECTION 10.14 Reliance. The parties hereto agree that, notwithstanding
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and on the accuracy of any Schedule,
Exhibit or other document attached hereto or referred to herein or delivered by
such other party or pursuant to this Agreement.
45
<PAGE> 53
SECTION 10.15 Survival, Etc. All of the representations and warranties
set forth in this Agreement shall survive the Closing and shall terminate as of
the earliest of (i) the recision of this Agreement in accordance with Section
8.08, (ii) the effective date of the registration statement with respect to the
Public Offering described in Section 8.07, and (iii) one year after the date
hereof. No claim shall be made based upon such representations and warranties on
or after such date. The sole remedy for breach of any of the representations and
warranties shall be compensation for damages actually and reasonably incurred by
the party harmed by the breach thereof. In no event shall either party be liable
to the other for any consequential damages as a result of the breach of any
representation or warranty set forth in this Agreement.
SECTION 10.16 Expenses. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 10.17 No Broker or Finder. Each of the parties hereto
represents and warrants to the other that no broker, finder or other financial
consultant has acted on its behalf in connection with this Agreement or the
transactions contemplated hereby in such a way as to create any liability on the
other. Each of the parties hereto agrees to indemnify and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party and to bear the cost of legal expenses
incurred in defending against any such claim.
SECTION 10.18 Publicity. No party shall issue any press release or
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other party, except as may be required by law. Prior to making any public
disclosure required by the rules and regulations of the Securities and Exchange
Commission, the disclosing party shall give the other parties a copy of the
proposed disclosure and reasonable opportunity to comment on the same.
SECTION 10.19 Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[REMAINDER OF PAGE BLANK; SIGNATURE PAGE FOLLOWS]
46
<PAGE> 54
IN WITNESS WHEREOF, ChemGenics and PerSeptive have executed this
Agreement as of the day and year first above written.
ATTEST: MYCO PHARMACEUTICALS INC., d/b/a
CHEMGENICS PHARMACEUTICALS
By: /s/ Barry A. Berkowitz
- - ----------------------------- ------------------------------
Barry A. Berkowitz
President
ATTEST: PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
- - ----------------------------- ------------------------------
Noubar B. Afeyan
President
47
<PAGE> 55
EXHIBITS TO MASTER AGREEMENT
EXHIBIT 1.03(A)(ii) - LICENSE AGREEMENT (ATTACHED HERETO)
EXHIBIT 1.03(C)(i) - CERTAIN TERMS OF CONSULTING AND
INTERIM SERVICES AGREEMENT
- - - PerSeptive shall make the employees listed on Schedule 2.12 (the
"Employees") available to ChemGenics for the period between the signing
of the Master Agreement and the Closing to perform such services as
ChemGenics shall reasonably request.
- - - On the Closing Date, ChemGenics shall offer employment to the Employees
and shall reimburse PerSeptive for the salary, costs of benefits and
reimbursement of expenses of the Employees during the period between
the signing of the Master Agreement and the Closing.
- - - In the event the transaction is unwound pursuant to Section 8.08 of the
Master Agreement, ChemGenics will be responsible for severance pay
calculated in accordance with ChemGenics customary severance policies
(but not to exceed two weeks per year of service (including service
with PerSeptive), with a minimum of three weeks and a maximum of ten
weeks) ("Severance Pay") up to an amount equal to the value of the
portion of the premises utilized by ChemGenics employees (other than
the Employees) during the period between the date hereof and the date
of unwinding of the transaction (the "Space Value") calculated by
multiplying (i) a fraction of which (a) the numerator is the number of
such ChemGenics personnel working full-time at the Facility and (b) the
denominator is the total number of personnel in the drug discovery
program (currently anticipated as 5/15) multiplied by (ii) the mutually
agreed to value of such space, provided, PerSeptive will pay or
reimburse ChemGenics for all Severance Pay and other related costs for
one employee identified by ChemGenics, and all other Severance Pay and
other severance related costs for the Employees in excess of the Space
Value.
- - - For a period of five years after the Closing, PerSeptive shall provide
reasonable senior management consultation to ChemGenics. "Senior
Management" shall include Noubar Afeyan and Fred Regnier, or such other
person(s) as may be PerSeptive's CEO and Chief Technical Officer,
respectively.
- - - PerSeptive shall make Noubar Afeyan (or such other person as may be
PerSeptive's CEO) available to serve as the Chairman of the Board of
and a member of the Scientific Advisory Board of ChemGenics. Two
PerSeptive designees shall be members of the Scientific Advisory Board
if ChemGenics so requests.
<PAGE> 56
- - - For a period of three years following the Closing, Perseptive shall
provide up to $500,000 of supplies, manufactured by PerSeptive or of
which PerSeptive is a distributor, valued at fully burdened
manufactured or actual acquired cost.
- - - For a period of three years following the Closing, PerSeptive shall
loan to ChemGenics reasonable amounts and kinds of equipment or
instruments manufactured by PerSeptive or of which PerSeptive is a
distributor and which are reasonably available to PerSeptive and
reasonably necessary for ChemGenics to pursue effectively the Drug
Discovery Program as outlined in its initial business plan approved by
ChemGenics' Board of Directors or in the IPO prospectus. Such loans of
equipment shall be for a period of two years from the date of the loan
and shall be free of charge. After the termination of the loan period
of each piece of equipment, the equipment may be returned to PerSeptive
(with reasonable wear and tear) or purchased at the lesser of
depreciated book value or fair market value. To the extent such
equipment can be purchased or leased or compensation otherwise received
therefor as a part of a contract or arrangement with a partner or other
party and charged to the contract or arrangement, then such purchase
would be at fair market value. ChemGenics will use reasonable efforts
to include equipment purchase requirements or, if not feasible, lease
or other compensation mechanisms in its third party contracts and other
arrangements.
- - - In the event equipment, supplies or personnel are not provided during
the three-year period following the Closing, ChemGenics shall provide
notice of such failure and if PerSeptive fails to cure such failure
within a reasonable period of time, PerSeptive shall forfeit shares in
accordance with the Schedule contained in Section 1.01B.
- - - This Agreement will terminate if and when the License Agreement
terminates.
- - - Appropriate insurance provisions.
EXHIBIT 1.03(C)(ii) - CERTAIN TERMS OF SUBLEASE
- - - PerSeptive will Sublease an agreed upon portion of the space at the
Facility to ChemGenics for a period to be negotiated, at no charge
through the date of the IPO referred to in Section 8.08 and at the
mutually agreed upon fully burdened cost thereof to PerSeptive
thereafter.
- - - Appropriate insurance provisions.
EXHIBIT 1.03(C)(iii) - CERTAIN TERMS OF NON-COMPETITION AGREEMENT
- - - As long as the License Agreement remains in effect, ChemGenics will not
offer to sell, sell or distribute, except to Partners (as defined in
the License Agreement) in connection with and pursuant to an agreement
principally for drug discovery between
<PAGE> 57
ChemGenics and the Partner, any instruments, equipment, machinery,
apparatus, devices, media, reagents, compounds, resins, activators,
linkers, particles, supports or other materials or substances
(including without limitation oligomers, peptides and other molecules),
tools or other products or systems comprising the foregoing for the
purification, analysis, sequencing or synthesis of molecules (provided
that the foregoing shall not be construed to override the prohibition
in the License Agreement against utilizing the Licensed Technology (as
defined therein) to offer to sell, sell or distribute Tools (as defined
therein), even to Partners).
- - - As long as the License Agreement remains in effect, PerSeptive will not
engage in drug discovery or enter into a written research and/or
development agreement or other collaborative arrangement with a third
party for drug discovery whereby PerSeptive receives either (i)
ownership rights or license rights in products of such research and/or
development or collaborative arrangement, (ii) royalty payments based
on sales of the products of such research and/or development or
collaborative arrangement or (iii) cash or other compensation as fees
or milestone payments based on the conduct or success of research
efforts by PerSeptive, provided that the foregoing shall not be deemed
to prevent PerSeptive from providing and performing and permitting
others to perform pre- and post-sale services consistent with
PerSeptive's current practice, related to products developed, made,
manufactured, offered for sale, sold or distributed by PerSeptive.
- - - PerSeptive will maintain in confidence all confidential information
particular to or principally relating to the particular drug discovery
projects in the Drug Discovery Program which have been transferred to
ChemGenics.
- - - The parties will agree not to solicit the other's employees.
- - - Provisions to allow ChemGenics to have access for drug discovery to
technology created by off balance sheet financing vehicle, including
PerSeptive's agreement to use reasonable efforts to negotiate to permit
ChemGenics to have rights in drug discovery as part of such financings.
- - - This Agreement will terminate if and when the License Agreement
terminates.
EXHIBIT 1.03(C)(iv) - CERTAIN TERMS OF STANDSTILL AND
REGISTRATION RIGHTS AGREEMENT
- - - PerSeptive will not purchase any ChemGenics Common Stock or any
ChemGenics derivative securities for a period of ten years following
the Closing (except pursuant to the warrant or Section 5.06 of the
Master Agreement).
- - - PerSeptive will not sell any ChemGenics Common Stock or any ChemGenics
derivative securities for a period of three years following the Closing
and thereafter as set forth in Section 8.04, provided that (i)
PerSeptive may transfer shares to a wholly
<PAGE> 58
owned subsidiary subject to all of the terms and conditions of the
Standstill Agreement provided that PerSeptive maintains 100% ownership
and voting control of such subsidiary and (ii) following the closing of
ChemGenics first public offering of common stock pursuant to a
registration statement declared effective by the SEC during the three
year period following the Closing. If, notwithstanding the foregoing,
in the written opinion of PerSeptive's independent public accountants
PerSeptive must consolidate or include ChemGenics profits and losses in
its profit and loss statements unless PerSeptive reduces its ownership
to 20% or less of ChemGenics' Common Stock, and the aggregate amount of
losses to be consolidated may reasonably exceed $[100,000] in order to
avoid such consolidation or inclusion, PerSeptive shall be permitted to
dispose of such minimum number of shares as is required to reduce
PerSeptive's ownership to the maximum percentage ownership, currently
19.99%, or such lesser amount as may be required in the opinion of such
accountants, which would avoid such consolidation or inclusion, and
(iii) PerSeptive may sell its shares pursuant to a tender offer for all
outstanding shares of ChemGenics Common Stock approved by ChemGenics'
Board of Directors.
- - - For a period of ten years after the Closing, Perseptive will not
directly or indirectly solicit proxies or become a participant in an
election contest; initiate or propose a stockholder proposal; seek to
place any representative on the Board of Directors (except pursuant to
the PBIO Voting Agreement); deposit securities in a voting trust; seek
to control, alone or with others, the management, Board of Directors,
policies or affairs of ChemGenics or seek to effect negotiations with
respect to any business combination or other extraordinary transaction
involving ChemGenics except to the extent of actions by its
representatives on the ChemGenics Board of Directors acting in their
capacity as such; create or join in any "group" with respect to
ChemGenics; or make any tender offer or exchange offer for ChemGenics'
securities.
- - - As long as PerSeptive (alone or with its affiliates) owns at least 20%
of the capital stock of ChemGenics, PerSeptive will vote its shares of
ChemGenics on all matters in accordance with the recommendation of
ChemGenics' Board of Directors, or in the absence of such a
recommendation, in the same proportion as the other outstanding shares
of ChemGenics are voted. If PerSeptive (alone or with its affiliates)
holds less than 20% and more than 10% of ChemGenics' voting stock,
PerSeptive will vote in favor of (and take no actions in opposition to)
any merger, sale of assets, consolidation or the like involving
ChemGenics and recommended by ChemGenics' Board of Directors, and shall
sell its shares, vote in favor of and not oppose any proposed merger or
sale of all or substantially all of the outstanding shares of
ChemGenics if recommended by ChemGenics' Board of Directors. If
PerSeptive (alone or with its affiliates) holds less 10% of ChemGenics'
voting stock, PerSeptive will have no voting restrictions.
- - - Except as explicitly contemplated by the Voting Agreement, PerSeptive
will not attempt to elect any person to or affect the size or
composition of ChemGenics' Board of Directors.
<PAGE> 59
- - - PerSeptive will receive piggyback registration rights subordinate to
the current outstanding piggyback registration rights granted by
ChemGenics, and registration rights for up to four Form S-3
registrations, each registration to cover of up to the lesser of (i)
25% and (ii) the amount permitted to be sold under the Standstill and
Registration Rights Agreement, of the ChemGenics shares currently held
(including Warrant Shares) by PerSeptive (and not less than $1,000,000
in market value of shares), such registrations to be required not
sooner than three years after the Closing, not more than once in any
year, to be effective for up to a ninety day period and to permit
delays in filings and "blackouts" related to premature disclosure and
interruptions in ChemGenics' business, and to terminate when
PerSeptive's shares are permitted to be sold pursuant to Rule 144(k).
- - - The registration rights contained in the agreement will include
customary cross-indemnification and lockup provisions. Registration
rights shall not be transferable.
- - - ChemGenics will pay the reasonable cost of preparing and filing the
registration statements, and PerSeptive will pay its own costs in
connection with such registration statements.
EXHIBIT 1.03(C)(v) - CERTAIN TERMS OF VOTING AGREEMENT
- - - The number of persons constituting the entire Board of Directors of
ChemGenics will be fixed at not less than 6 nor more than 9.
- - - As long as PerSeptive owns at least 20% of the capital stock of
ChemGenics, ChemGenics will nominate two persons designated by
PerSeptive and reasonably acceptable to ChemGenics to serve on the
Board of Directors of ChemGenics. As long as Ed Kania remains on
ChemGenics' Board of Directors, he shall be one of such persons. As
long as Noubar Afeyan remains an officer or director of PerSeptive he
shall be the other such person.
- - - As long as PerSeptive owns at least 20% of the capital stock of
ChemGenics, if the number of persons comprising ChemGenics' Board of
Directors is increased to eight persons or more, ChemGenics shall cause
a third person designated by PerSeptive and reasonably acceptable to
ChemGenics to be nominated to serve on ChemGenics' Board.
- - - As long as PerSeptive owns less than 20% but at least 10% of the
capital stock of ChemGenics, ChemGenics will nominate one person
acceptable to PerSeptive to serve on the Board of Directors of
ChemGenics.
- - - If the ChemGenics Board of Directors is classified, PerSeptive's
representatives shall be divided among the classes.
<PAGE> 60
- - - As long as PerSeptive has the right to designate nominees to
ChemGenics' Board of Directors, at least one PerSeptive representative
will serve on the Executive Committee (if any).
- - - ChemGenics will not limit indemnification available to members of its
Board of Directors and following the registration of its securities
under the 1934 Act will use reasonable efforts to obtain Directors and
Officers Liability Insurance if commercially available at reasonable
cost.
EXHIBITS 6.06 AND 7.06 - FORMS OF LEGAL OPINIONS
Customary opinions in form and substance to be agreed.
<PAGE> 1
Exhibit 10.45
ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
November 22, 1996
PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Gentlemen:
Reference is made to the Master Agreement dated May 7, 1996 and to the
Warrant (the "Warrant") for the purchase for 4,896,335 shares of Common Stock of
ChemGenics Pharmaceuticals Inc. ("ChemGenics") issued to PerSeptive Biosystems,
Inc. ("PerSeptive") on June 28, 1996. ChemGenics has described to PerSeptive a
proposed transaction between ChemGenics and American Home Products Corporation,
represented by its Wyeth-Ayerst Laboratories Division ("Wyeth-Ayerst") in which
ChemGenics and Wyeth-Ayerst will enter into a Collaborative Research and License
Agreement, Stock Purchase Agreement and Standstill Agreement (collectively, the
"Wyeth-Ayerst Transaction"). For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, PerSeptive and ChemGenics have
agreed as follows:
1. Contingent upon the closing of the Wyeth-Ayerst Transaction, ChemGenics
and PerSeptive agree to modify and amend Section 8.07 of the Master
Agreement to terminate PerSeptive's rights under the second sentence
thereof with the effect that PerSeptive shall not, after the closing of
the Wyeth-Ayerst Transaction, have the right to rescind the Master
<PAGE> 2
Agreement and the other agreements, documents and instruments entered
into in connection therewith or to unwind the collaboration established
by such agreements and other documents.
2. PerSeptive agrees that, notwithstanding the terms of the Warrant, or
any other document or agreement entered into in connection therewith,
PerSeptive will at no time exercise the Warrant in a manner which would
cause the shares of Common Stock owned by PerSeptive to be more than
49.9% of all outstanding equity securities of ChemGenics (treating any
convertible securities issued by ChemGenics as having been converted).
ChemGenics agrees that, in the event the foregoing restriction prevents
PerSeptive from exercising any or all of the Warrant at the time of its
expiration on June 28, 2000, the expiration date of the portion of the
Warrant which cannot be exercised shall be extended for a six-month
period through December 28, 2000; and if such restriction prevents the
exercise of all or part of the Warrant at that extended date, the
execution date of the portion which cannot be exercised shall be
continued for an additional six months, which opportunity to extend the
exercise date of the Warrant shall continue in increments of six months
until such time as the foregoing restriction no longer prevents the
full exercise of the Warrant.
- 2 -
<PAGE> 3
If the foregoing accurately sets forth our understanding, please so
signify by signing and returning a duplicate copy of this letter, whereupon it
will take effect as an amendment to both the Master Agreement and the Warrant in
accordance with the terms thereof.
Very truly yours,
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
-----------------------
Chief Executive Officer
ACCEPTED AND AGREED:
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
-----------------------
Chairman and
Chief Executive Officer
- 3 -
<PAGE> 1
EXHIBIT 10.46
OMNIBUS AMENDMENT AGREEMENT
This Omnibus Amendment Agreement (the "Amendment") is entered into this
18th day of December, 1996, by and between ChemGenics Pharmaceuticals Inc.
(formerly known as Myco Pharmaceuticals Inc.), a Delaware corporation
("ChemGenics") and PerSeptive Biosystems, Inc., a Delaware corporation
("PerSeptive" or "PBIO").
WHEREAS, ChemGenics and PerSeptive are parties to a Master Agreement dated
May 7, 1996 (the "Master Agreement");
WHEREAS, at the Closing under the Master Agreement, the parties executed
and delivered among other documents the various documents listed in Section 1.03
of the Master Agreement (the "Ancillary Agreements"), including without
limitation the Consulting and Interim Services Agreement, the Standstill and
Registration Rights Agreement and the Warrant (as such terms are defined in the
Master Agreement) and stock certificates for the Shares (as defined in the
Master Agreement); and
WHEREAS, ChemGenics and PerSeptive have agreed upon modifications to the
terms of the transaction reflected in the Master Agreement and the Ancillary
Agreements, and wish to set forth such modifications herein, to be effective
retroactively to the Closing Date (as defined in the Master Agreement), as if
initially set forth in the Master Agreement and the Ancillary Agreements.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained in the Master Agreement, the Ancillary Agreements and this Amendment,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. Definitions.
-----------
1.1 Terms which are defined in the Master Agreement and the Ancillary
Agreements are used herein as so defined.
2. Amendments to the Master Agreement.
----------------------------------
The Master Agreement is hereby amended as follows:
<PAGE> 2
2.01 The first seven lines of Section 1.01.B are deleted from the Master
Agreement, and the following is inserted in lieu thereof:
"In consideration for the License Agreement and the transfer of
the Transferred Assets, upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date,
ChemGenics shall issue to PerSeptive an aggregate of 6,792,679
shares (the "Shares") of ChemGenics' Common Stock, $.001 par
value per share (the "Common Stock") and shall deliver to
PerSeptive a Promissory Note in the principal amount of
$3,000,000, such Note to be in the form of Exhibit 1.03(B). Of
such shares, 662,500"
Section 1.01(B) is further amended by deleting the numbers "979,268,
652,844 and 326,422" from the chart on page 3, and inserting, in lieu
thereof, the numbers "662,500, 441,667 and 220,833".
2.02 Section 8.04 is amended by deleting clause (ii) thereof, and inserting
in lieu thereof the following:
"(ii) PerSeptive will agree to restrictions on its sale or
transfer of Capital Stock of ChemGenics,"
2.03 Section 8.06 is amended by deleting the text thereof in its entirety,
and replacing it with the following:
"ChemGenics will use commercially reasonable efforts to
accomplish an underwritten registered initial public offering of
its Common Stock (a "Public Offering"), in which ChemGenics will
seek to raise at least $15,000,000 in gross proceeds on or before
June 30, 1997. If a Public Offering is not consummated by June
30, 1997, then PerSeptive will deliver to ChemGenics a
certificate for 2,000,000 of the Shares delivered to PerSeptive
hereunder, leaving PerSeptive with an aggregate of
- 2 -
<PAGE> 3
4,792,679 Shares, and ChemGenics will deliver to PerSeptive a
Promissory Note in the principal amount of $2,000,000 in the form
of Exhibit 8.06. PerSeptive shall at its own cost, assist and
cooperate with ChemGenics as ChemGenics may reasonably request in
effecting the Public Offering in a timely manner."
2.04 Section 8.07 is deleted from the Master Agreement.
2.05 It is understood and agreed that the terms of Exhibits 1.03(C)(i),
1.03(C)(ii), 1.03(C)(iii), 1.03(C)(iv) and Exhibit 1.03(C)(v) are
superseded in their entirety by the agreements executed at the Closing
as amended by this Agreement.
2.06 The last sentence of Section 8.03 and clause (i) of Section 10.15 of
the Master Agreement are hereby deleted from the Master Agreement.
3. AMENDMENT OF CONSULTING AND INTERIM SERVICES AGREEMENT. The Consulting and
Interim Services Agreement is hereby amended as follows:
3.01 Section 3 is amended by adding the following sentence immediately
after the first sentence thereof:
"The Supplies will be provided free of charge until the later of
(i) March 31, 1997 or (ii) the closing of the first Public
Offering (as defined in the Master Agreement), and thereafter
will be supplied for the balance of the three-year period at a
price equal to (a) fully-burdened manufacturing cost for Supplies
manufactured by PBIO, and (b) and the actual cost of acquisition
for Supplies distributed by PBIO."
3.02 Section 4.A is amended by deleting the words "During the three year
period commencing on the date hereof, PBIO shall loan to ChemGenics"
at the beginning thereof, and replacing them with the words:
- 3 -
<PAGE> 4
"Until the earlier of (i) June 30, 1997 or (ii) the closing of
the first Public Offering (as defined in the Master Agreement),
PBIO shall loan to ChemGenics, and thereafter through June 27,
1999, shall sell to ChemGenics at fully-burdened manufacturing
cost for Equipment manufactured by PBIO and the actual cost of
acquisition for Equipment distributed by PBIO"
Section 4.A is further amended by adding the phrase "or sold as
provided above" following the word "loaned" in the twelfth line on
page 4.
3.03 Section 5 is amended by deleting the numbers "979,268, 652,844 and
326,422" from the chart on page 7, and inserting, in lieu thereof, the
numbers "662,500, 441,667 and 220,833".
3.04 Section 9 is amended by deleting the third sentence thereof and
inserting the following:
"PBIO will on demand pay or reimburse ChemGenics for the payment
of all Severance Pay and other severance related costs in excess
of the Space Value for Drug Discovery Program Employees
terminated on or before the earlier of the closing of the Public
Offering or March 31, 1997."
and by adding the following to the last sentence of the first
paragraph thereof:
", provided the employment of such employee is terminated on or
before the earlier of the closing of the Public Offering or March
31, 1997."
4. AMENDMENT OF STANDSTILL AND REGISTRATION RIGHTS AGREEMENT. The Standstill
and Registration Rights Agreement is hereby amended as follows:
4.01 The number 9,792,679 in the first "whereas" clause is replaced with
the number 6,792,679.
- 4 -
<PAGE> 5
4.02 Section 2.02 is amended by deleting the first paragraph thereof, but
not subparagraphs (a), (b), (c) and (d), and replacing it with the
following:
"A. PBIO agrees that until the Initial Release Date (which shall
be the earlier of (i) twelve months following the Closing of the
Company's first Public Offering ("IPO") or (ii) December 30,
1998), it will not, nor will it permit any of its affiliates or
associates, to (x) distribute to its shareholders, or (y) sell,
solicit an offer to sell, agree to sell, offer or propose to sell
(collectively, "Sell") any Voting Securities of the Company or
derivative securities relating thereto ("Company Securities").
After such period:
(1) (a) during the period from the Initial Release Date until six
(6) months thereafter, PBIO may distribute to the shareholders of
PBIO (i) up to one-third of the number of shares of ChemGenics
Common Stock held by PBIO as of the earlier of the closing of the
IPO or December 30, 1998, excluding for this purpose any shares
of ChemGenics Common Stock issued upon exercise of the Warrant
(the "Non-Warrant Shares") and/or (ii) up to one-third of the
number of shares of Common Stock issuable to PBIO upon exercise
of the Warrant ("Warrant Shares"), but only to the extent PBIO
has exercised the Warrant and acquired Warrant Shares ("Exercised
Warrant Shares"), (b) in the next two succeeding six-month
periods thereafter, PBIO may distribute to its shareholders (i)
up to one-third of the Non-Warrant Shares and/or (ii) up to
one-third of the Exercised Warrant Shares and/or (iii) the
Non-Warrant Shares and the Exercised Warrant Shares permitted
to be
- 5 -
<PAGE> 6
but not distributed by PBIO in the prior six-month period and (c)
thereafter, subject to the following clause 3 of this paragraph,
Section 3.09 and applicable securities laws, PBIO shall be
permitted to distribute any or all of its Non-Warrant Shares and
Exercised Warrant Shares to its shareholders;
(2) (a) during the six-month period beginning on the earlier of
(i) 18 months from the closing of the Company's IPO or (ii)
December 30, 1998, PBIO may Sell up to one-third of PBIO's
Non-Warrant Shares and/or up to one-third of PBIO's Exercised
Warrant Shares and (b) in the next two succeeding six-month
periods thereafter, PBIO may Sell an additional one-third of
PBIO's Non-Warrant Shares and/or up to one-third of PBIO's
Exercised Warrant Shares and/or PBIO's Non-Warrant Shares and
Exercised Warrant Shares permitted to be but not sold by PBIO in
the prior six-month period and (c) thereafter, subject to the
following clause 3 of this paragraph, Section 3.09 and applicable
securities laws, PBIO shall be permitted to Sell any or all of
its Non-Warrant Shares and Exercised Warrant Shares; and
(3) In addition to the restrictions and limitations set forth in
the preceding clauses, in any six (6) month period ending on (i)
twenty four (24) months after the closing of the IPO, if the IPO
closes on or before June 30, 1997 or (ii) until the later of
twelve months after the closing of the IPO or June 30, 1999 if
the IPO closes after June 30, 1997, PBIO shall not distribute or
Sell more than a total of one-third of the Non-Warrant Shares and
one-third of the Exercised Warrant
- 6 -
<PAGE> 7
Shares. As used herein, "Public Offering" shall mean an
underwritten public offering of ChemGenics Common Stock
registered with the SEC. Notwithstanding the foregoing:"
4.03 Section 3.01 is amended by deleting the words commencing immediately
following the words "PROVIDED, HOWEVER," where appearing in the first
sentence thereof and ending with the word "Shares" at the beginning of
the fifth line on page 6 and inserting the following words: "that the
Company shall not be required to include in any such registration
statement any Registrable Shares which PBIO is not permitted to Sell
pursuant to the initial paragraph of Section 2.02 and provided further
that as a condition to including any shares issued or issuable upon
exercise of the Warrant ("Warrant Shares")
4.04 Sections 3.01 and 3.02 are amended by deleting the words "at any time
after the third anniversary of this Agreement" from the first sentence
thereof and replacing them with the words "at any time when PBIO is
permitted to Sell Company Securities pursuant to the initial paragraph
of Section 2.02,".
4.05 Section 3.09 is amended by inserting after the words "held by it"
where appearing in the first sentence thereof, the following words:
"for such period of time, and on such other terms, as shall be agreed
to among the Company, the underwriters and a majority of the venture
capital partnerships that hold Company Securities as of the IPO, nor
will PBIO permit any of its affiliates to do any of the foregoing" and
deleting the remainder of the first sentence. Section 3.09 is further
amended by deleting the words "180-day" where appearing in the last
sentence thereof and inserting the words "agreed-upon."
- 7 -
<PAGE> 8
5. Exchange of Warrants.
--------------------
5.01 Contemporaneously with the execution hereof, PerSeptive will deliver
to ChemGenics the Warrant as delivered at the Closing, and ChemGenics
shall deliver to PerSeptive a new Warrant in the form attached hereto.
The new Warrant shall, for all purposes, be deemed to be the "Warrant"
under the Master Agreement and the Ancillary Agreements.
6. EXCHANGE OF STOCK CERTIFICATES. Contemporaneously with the execution
hereof, PerSeptive shall deliver to ChemGenics certificates numbered
C0028-31 for 8,813,411, 326,423, 326,423 and 326,422 shares of Common Stock
of ChemGenics and ChemGenics shall deliver to PerSeptive certificates for
4,130,179, 2,000,000, 220,833, 220,833 and 220,834 shares of Common Stock
of ChemGenics.
7. NO OTHER CHANGES. In all other respects, the Master Agreement and the
Ancillary Agreements shall not be affected hereby, and shall remain in
force and effect as initially executed and delivered.
IN WITNESS WHEREOF, ChemGenics and PerSeptive have executed this Amendment
as of the day and year first above written.
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry Berkowitz
------------------------------------
Barry Berkowitz
President
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
------------------------------------
Noubar B. Afeyan
President
- 8 -
<PAGE> 1
EXHIBIT 10.47
CONSULTING AND INTERIM SERVICES AGREEMENT
This CONSULTING AND INTERIM SERVICES AGREEMENT (this "Agreement"), is
dated this 28th day of June, 1996, by and between ChemGenics Pharmaceuticals
Inc., a Delaware corporation ("ChemGenics"), and PerSeptive Biosystems, Inc., a
Delaware corporation ("PBIO").
WITNESSETH
WHEREAS, ChemGenics and PBIO have entered into a Master Agreement dated
as of May 7, 1996 (the "Master Agreement"), pursuant to which ChemGenics has
acquired from PBIO and its affiliates assets, projects and activities relating
to drug discovery activities and efforts (the "Drug Discovery Program");
WHEREAS, in connection with the execution of the Master Agreement, PBIO
has provided certain consulting services through its employees who have worked
in the Drug Discovery Program and ChemGenics has agreed to compensate PBIO for
such services;
WHEREAS, in connection with the pursuit of drug discovery, ChemGenics
has requested and PBIO is willing to provide on the terms set forth herein,
certain equipment, supplies and other assets following the closing of the
transactions contemplated by the Master Agreement; and
WHEREAS, PBIO has agreed to provide certain consulting services to
ChemGenics as set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises set forth herein and in the Master Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Interim Period Compensation. Upon execution of this Agreement,
ChemGenics shall pay PBIO the sum of One Hundred Thirteen Thousand Seven Hundred
Ninety Dollars ($113,790) which amount is equal to the amount paid by PBIO for
salary and benefits for the individuals listed on Exhibit A hereto (the "Drug
Discovery Program Employees") from and including May 8, 1996 through the date
hereof. PBIO shall invoice ChemGenics separately for, and ChemGenics shall
promptly reimburse PBIO for, expenses reimbursed to the Drug Discovery Program
Employees for out-of-pocket expenses incurred during such period in accordance
with PBIO's normal business practices.
<PAGE> 2
2. PBIO Services to be Provided. During the five year period commencing
on the date hereof PBIO shall provide reasonable strategic technical
consultation to ChemGenics as ChemGenics may reasonably request from time to
time, such consultation to include principally the services of Noubar Afeyan and
Fred Regnier, or such other person(s) as may be PBIO's Chief Executive Officer
("CEO") and Chief Technical Officer, respectively during such period, and other
senior PBIO technical staff members as PBIO may deem appropriate. The scope of
such consultation shall be providing strategic technical advice relevant to the
implementation and utilization of (i) technology licensed to ChemGenics pursuant
to the License Agreement (as defined in the Master Agreement), (ii) prototype
systems, instruments and other equipment to which ChemGenics has access pursuant
to the License Agreement and (iii) equipment provided to ChemGenics pursuant to
this Agreement. It is understood and agreed that such consultation (a) shall be
provided at times and under circumstances reasonably convenient to the provider,
giving due regard to the provider's other priorities, and (b) shall not require
Dr. Afeyan, Dr. Regnier or any other person to interfere with or compromise
their primary responsibilities as officers or employees of PBIO.
In addition, during such five year period, PBIO shall make (a) Noubar
Afeyan (or such other person as may be PBIO's CEO) available to serve as the
Chairman of the Board of and a member of the Scientific Advisory Board of
ChemGenics, and (b) Fred Regnier or another Senior PBIO employee reasonably
acceptable to ChemGenics available to serve as a member of ChemGenics Scientific
Advisory Board if ChemGenics so requests.
3. Supplies To Be Provided BY PBIO. During the three year period
commencing on the date hereof, from time to time at ChemGenics' reasonable
request made in advance in accordance with PBIO's customary ordering
requirements and practices, or in accordance with such other procedure as may be
agreed upon by the parties, PBIO shall provide ChemGenics with supplies in
quantities and with specifications reasonably designated by ChemGenics and which
are either manufactured by PBIO or of which PBIO is a distributor ("Supplies"),
provided that PBIO shall not be obligated to provide more than $500,000 of such
Supplies valued at fully burdened manufactured cost for Supplies manufactured by
PBIO and the actual cost of acquisition for Supplies distributed by PBIO.
ChemGenics agrees that it will provide PBIO with as much advance notice of its
requirements for such Supplies as is reasonably practicable. PBIO agrees that it
will utilize its reasonable best efforts to meet ChemGenics requirements for
Supplies and delivery times, and to provide ChemGenics with written notice of
its inability to meet such delivery dates and the date on which delivery is
projected to be actually made. PBIO further agrees that it will treat ChemGenics
with respect to such Supplies on a
- 2 -
<PAGE> 3
reasonable parity with PBIO's other customers, provided that ChemGenics gives
PBIO commercially reasonable advance notice to permit PBIO to accommodate its
customer's requirements and ChemGenics' requests. PBIO will provide ChemGenics
with written reports not less than semi-annually if requested by ChemGenics
detailing the Supplies provided and the cost thereof. The term "fully burdened
manufactured cost" shall mean the direct manufactured cost of an item as shown
on PBIO's books and records plus a fair allocation of all absorbed and
unabsorbed overhead manufacturing costs whether included or excluded from the
overhead pool for inventory valuation purposes, in each case as certified in
writing on an annual basis by PBIO's Chief Financial Officer to fairly represent
the fully burdened manufacturing costs. ChemGenics shall have the right on an
annual basis to inspect, review and/or audit PBIO's books and records, including
work papers, utilized to determine fully burdened manufactured costs. In the
event any such inspection, review or audit results in a determination that PBIO
has overcharged ChemGenics by more than 10%, PBIO shall reimburse ChemGenics'
costs of such inspection, review or audit.
4. Equipment To Be Provided By PBIO. A. During the three year period
commencing on the date hereof, PBIO shall loan to ChemGenics reasonable amounts
and kinds of equipment and instruments ("Equipment") manufactured by PBIO or of
which PBIO is a distributor and which are reasonably available to PBIO and
reasonably necessary for ChemGenics to pursue effectively the Drug Discovery
Program as outlined in its initial business plan (the "Business Plan") approved
by ChemGenics' Board of Directors or in a prospectus contained in a registration
statement filed by ChemGenics with the Securities and Exchange Commission with
respect to ChemGenics' initial public offering of securities. ChemGenics agrees
that it will provide PBIO with as much advance notice of its requirements for
such Equipment as is reasonably practicable. PBIO agrees that it will utilize
its reasonable best efforts to meet ChemGenics requirements for Equipment and
delivery times, and to provide ChemGenics with written notice of its inability
to meet such delivery dates and the date on which delivery is projected to be
actually be made. PBIO further agrees that it will treat ChemGenics with respect
to such Equipment on a reasonable parity with PBIO's other customers, provided
that ChemGenics gives PBIO commercially reasonable advance notice to permit PBIO
to accommodate its customer's requirements and ChemGenics' requests. Each such
Equipment loan shall be for a period of two years from the date the Equipment is
delivered to ChemGenics, and shall be free of rent or other fees, provided that
notwithstanding the foregoing, no period of loan of any Equipment shall extend
beyond the date which is four years from the date hereof, no matter when the
period of the loan begins. After the termination of the loan period of each
piece of Equipment, the Equipment shall be returned
- 3 -
<PAGE> 4
to PBIO in the same condition as received (subject only to reasonable wear and
tear and casualty loss) or purchased by ChemGenics at the lesser of depreciated
book value (based on actual cost and depreciation or amortization schedules
utilized by PBIO in the ordinary course of its business) or fair market value
(as agreed by the parties or in the absence of such agreement by an appraiser
selected by the parties, the cost of which shall be shared equally by the
parties). To the extent such Equipment can be purchased or leased or
compensation otherwise received therefor by ChemGenics as a part of a contract
or arrangement with a partner or other party and charged to the contract or
arrangement, then such Equipment shall not be loaned to ChemGenics by PBIO but
shall be purchased by ChemGenics if reasonable under the circumstances and the
terms of its arrangement with the third party. The payment amount shall be the
greater of (i) if ChemGenics sells the Equipment to the customer, the amount
paid by the customer and (ii) the price PBIO in its reasonable discretion would
charge a favored customer therefor. In case of a dispute the price will be the
average price of the lowest 3 of the last 10 sales (or such fewer number as sold
in the prior year) of comparable items of Equipment sold to PBIO's retail
customers, excluding distributors. ChemGenics will use reasonable efforts to
include Equipment purchase requirements or, if not feasible, lease or other
compensation mechanisms in its third party contracts and other arrangements.
ChemGenics will insure such Equipment with replacement cost insurance pursuant
to an insurance policy reasonably satisfactory to PBIO, and shall include PBIO
as an additional insured, will provide customary maintenance and repair, and, if
destroyed shall pay PBIO the replacement cost thereof.
PBIO shall not be required to loan to ChemGenics any Equipment that is
the same, substantially similar or functionally equivalent to Equipment which
had been the subject of a loan during the six month period prior to the date of
any loan request, unless such Equipment was destroyed by casualty, ChemGenics is
still utilizing such Equipment and can reasonably utilize the additional
Equipment in accordance with the Business Plan or elects to purchase from PBIO
the Equipment which was subject to such prior loan.
ChemGenics will provide PBIO with written reports not less than
semi-annually if requested by PBIO detailing the location, use and status of
each piece of Equipment loaned to ChemGenics pursuant to this Agreement, and
containing such other information as PBIO may reasonably request.
In the event that ChemGenics receives from third parties rental, fees
or other direct payments for the rental or use of Equipment, ChemGenics shall
remit to PBIO 90% of the amount received by ChemGenics which is directly related
to the use of the Equipment (including rent) within 30 days from the date of
receipt
- 4 -
<PAGE> 5
by ChemGenics (but without duplication of amounts referred to above), and such
amount shall be credited toward any amount payable for the purchase of such
Equipment, if ChemGenics elects to purchase rather than return same. In the
event ChemGenics elects to return rather than purchase any such Equipment, PBIO
shall retain any amounts paid or payable to it by ChemGenics with respect to
such Equipment.
Without PBIO's express written consent, no Equipment loaned to
ChemGenics pursuant to this Agreement shall be furnished to any Partner or any
other third party, or otherwise removed from ChemGenics' facility, unless it has
been purchased or leased from ChemGenics for fair consideration as described
above, provided that nothing contained herein shall prevent ChemGenics from
utilizing such Equipment in the ordinary course of its business with any
Partner.
ChemGenics shall be responsible, and PBIO shall have no obligation, for
the maintenance and repair of Equipment loaned or otherwise provided to
ChemGenics pursuant to this Agreement, except for such maintenance and repair as
PBIO agrees in writing to provide. PBIO shall afford ChemGenics the opportunity
to enter into service and maintenance agreements relating to Equipment on terms
and conditions which PBIO makes available to its customers generally.
B. So long as ChemGenics occupies space on the third floor of the
Framingham Facility pursuant to the Sublease, PBIO and ChemGenics agree to
permit the other to use certain instruments as set forth on the last page of the
Inventory List which constitutes a part of Schedule 1.01(b) of the Master
Agreement.
C. During such period as ChemGenics occupies at least 500 square feet
of space used principally for laboratory purposes at PBIO's facility at 500 Old
Connecticut Path, Framingham, Massachusetts, or any replacement facility in
which a substantial part of PBIO's business is also located, in the event that
ChemGenics or PBIO would benefit from and requests the use of an instrument or
item of equipment which is owned or otherwise controlled by the other and as to
which a like instrument is not otherwise available to the requesting party for
the use intended, and such use would not violate any law, rule or regulation, or
any agreement to which either ChemGenics or PBIO is bound, or, in the opinion of
the party owning or controlling the use thereof, disclose any trade secret or
other confidential information which such party does not wish disclosed, and
such instrument or item of equipment is not required at the time requested for
any reason in the sole discretion of the party owning or otherwise controlling
the use of such instrument or equipment and can be made available for use on
terms and conditions acceptable to the party owning or
- 5 -
<PAGE> 6
controlling the use of same in its sole discretion, the other party may use such
instrument or item of equipment upon reasonable advance notice and at such times
and on such terms and conditions as the party owning or controlling the use of
such instrument or equipment may impose, but without the payment of a rental or
other fee, and without liability of any kind or nature by the lending party for
any damage of any kind or nature arising out of the use thereof. It is expressly
understood and agreed that the party owning or otherwise controlling the use of
any such instrument or equipment shall retain absolute priority as to its use
and shall have sole discretion as to the terms and conditions of use. It is
further expressly understood and agreed that the provisions set forth in this
paragraph are in addition to and in no way modify PBIO's obligation to provide
ChemGenics' use of equipment as set forth in Schedule 1.01(b) of the Master
Agreement and Section 4.1.6 of the License Agreement.
D. All consulting, supplies, instruments and other services and goods
provided or supplied to ChemGenics pursuant to this Agreement shall be provided
subject to all limitations and conditions pursuant to which such services or
goods are provided to customers of PBIO. ChemGenics shall use any such services,
supplies, instruments or other products solely at its own risk and without
recourse to PBIO or the provider thereof, except (i) as to Claims of
intellectual property infringement in connection with the use by ChemGenics of
Equipment or Supplies, as otherwise set forth in Exhibit B hereto, subject to
the limitations set forth therein, and (ii) as to Claims arising from PBIO's
negligence, as to which PBIO shall be liable to the extent of its negligence. In
any event, and notwithstanding anything contained in this Agreement or any other
agreement to the contrary, PBIO's sole obligation, and ChemGenics' sole and
exclusive remedy, with respect to any consulting or other services or supplies,
instruments or other goods which do not meet any actual or implied warranty,
representation or standard, or any warranty, representation or standard which
may be agreed to by PBIO or which may be imposed by any statute or law, or as to
which PBIO breached or is claimed to have breached any agreement, covenant or
commitment of any kind, will be to perform such service or repair or replace, at
its discretion, such supplied product, instrument or other good.
NOTWITHSTANDING THE FORGOING, OR ANYTHING CONTAINED HEREIN TO THE CONTRARY, IN
NO EVENT SHALL PBIO BE LIABLE, WHETHER IN CONTRACT, IN TORT, WARRANTY, OR UNDER
ANY STATUTE (INCLUDING WITHOUT LIMITATION ANY TRADE PRACTICE, UNFAIR COMPETITION
OR OTHER STATUTE OF SIMILAR IMPORT) OR ON ANY OTHER BASIS, FOR INDIRECT,
PUNITIVE, MULTIPLE, INCIDENTAL, STATUTORY CONSEQUENTIAL OR SPECIAL DAMAGES
SUSTAINED BY CHEMGENICS OR ANY OTHER PERSON, NO MATTER HOW ARISING WHETHER OR
NOT FORESEEABLE AND WHETHER OR NOT PERSEPTIVE IS ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE, INCLUDING, WITHOUT LIMITATION, DAMAGES
- 6 -
<PAGE> 7
ARISING FROM OR RELATED TO LOSS OF USE, LOSS OF DATA, FAILURE OR INTERRUPTION IN
THE OPERATION OF ANY EQUIPMENT OR SOFTWARE, DELAY IN REPAIR OR REPLACEMENT, OR
FOR LOSS OF REVENUE OR PROFITS, LOSS OF GOODWILL OR LOSS OF BUSINESS.
Indemnification. To the fullest extent permitted by law, ChemGenics
agrees to indemnify and hold PerSeptive harmless from and against any and all
claims, demands, obligations, costs, expenses (including reasonable attorney's
fees and expenses) and liabilities (collectively, "Claims") including, without
limitation, those arising from violations of local, state, or federal food and
drug, environmental, health and safety and other laws, codes and regulations,
arising from or relating to ChemGenics use of Equipment, Supplies and other
products hereunder, except to the extent of Claims resulting from the breach by
PBIO of its obligations hereunder or PBIO's negligence, as to which PBIO shall
indemnify and hold ChemGenics harmless from any such Claims.
5. Certain Consequences of Noncompliance. In the event PBIO does not
provide the Equipment and Supplies required by Sections 3 and 4 of this
Agreement, or the Consulting Services required by Section 2 of this Agreement,
ChemGenics shall provide written notice of such failure to PBIO. If PBIO fails
to cure such failure within thirty (30) days following receipt of the first such
notice, twenty (20) days following receipt of the second such notice or ten (10)
days following receipt of any further notice, or if such failure is not curable
in such period PBIO fails to commence to cure same within such period and
thereafter diligently continue to prosecute such cure and in any event fails to
cure such failure within an additional twenty (20) days, ChemGenics shall have
the option for a period of ninety (90) days following the termination of the
grace period following such notice to purchase from PBIO and PBIO shall be
obligated to sell to ChemGenics at an aggregate price of $1.00, all or any part
of the number of the Earnout Shares (the "Shares") set forth below (the
"Repurchase Option").
<TABLE>
<CAPTION>
Date of Default* Number of Shares
---------------- ----------------
<S> <C>
July 1, 1996 - June 30, 1997 979,268
July 1, 1997 - June 30, 1998 652,844
July 1, 1998 - June 30, 1999 326,422
Thereafter 0
</TABLE>
*The applicable number of shares shall be determined by the period in which the
date of default, set forth in the relevant default notice, occurs.
In the event ChemGenics shall be entitled to and shall elect to
exercise the Repurchase Option, it shall give PBIO written notice specifying the
number of Shares which ChemGenics elects to
- 7 -
<PAGE> 8
purchase and specifying a date for closing hereunder, which date shall be not
more than thirty (30) calendar days after the giving of such notice. The closing
shall take place at ChemGenics' principal offices or such other location in the
greater Boston, Massachusetts area as ChemGenics may reasonably designate in
such notice. At the closing, PBIO shall deliver the Shares being purchased
against the simultaneous delivery of the purchase price by ChemGenics.
If PBIO notifies ChemGenics that it disagrees with ChemGenics assertion
that there is a default, and notifies ChemGenics of the same within fifteen (15)
calendar days after PBIO's receipt of notice thereof, the matter will be
referred to and determined by arbitration pursuant to Section 10.8 of the Master
Agreement.
In the event that PBIO fails to deliver the Shares as required by this
Agreement, ChemGenics may elect (a) to establish a segregated account to receive
the payment of $1.00, such account to be turned over to PBIO upon delivery of
the certificates representing such Shares, and (b) immediately to take such
action as is appropriate to transfer record title of such Shares from PBIO to
ChemGenics and to treat PBIO and such Shares in all respects as if delivery of
the certificates representing such Shares had been made as required by this
Agreement. PBIO hereby irrevocably grants ChemGenics a power of attorney for the
purpose of effectuating the foregoing.
If ChemGenics shall pay a stock dividend or declare a stock split on or
with respect to any of its Common Stock, or otherwise distribute securities of
ChemGenics to the holders of its Common Stock, the number of shares of stock or
other securities of ChemGenics issued with respect to the Shares then subject to
the Repurchase Option shall be added to the Shares then subject to the
Repurchase Option without any change in the aggregate purchase price. If
ChemGenics shall distribute to its stockholders shares of stock of another
corporation, the shares of stock of such other corporation distributed with
respect to the Shares then subject to the Repurchase Option shall be added to
the Shares covered by the Repurchase Option without any change in the aggregate
purchase price.
If the outstanding shares of ChemGenics' Common Stock shall be
subdivided into a greater number of shares or combined into a smaller number of
shares, or in the event of a reclassification of the outstanding shares of
Common Stock of ChemGenics, or if ChemGenics shall be a party to any capital
reorganization, there shall be substituted for the Shares then covered by the
Repurchase Option such amount and kind of securities as are issued in such
subdivision, combination, reclassification, or capital reorganization in respect
of the Shares subject to the Repurchase
- 8 -
<PAGE> 9
Option immediately prior thereto, without any change in the aggregate purchase
price.
6. ChemGenics and PBIO also agree to the terms and conditions set forth
on Exhibit A to this Agreement, relating to services to be provided by PBIO to
ChemGenics during such time as ChemGenics occupies space on the third floor of
Building A of PerSeptive's Framingham Facility.
7. Confidentiality. In connection with the Services to be provided
hereunder, each party may have access to certain confidential information of the
other. Such confidential information shall be maintained in confidence and
access to and use of shall be restricted in accordance with the terms of the
Non-Competition and Confidentiality Agreement of even date herewith.
8. Termination. This Agreement shall continue until June 30, 2001,
provided, however, that this Agreement shall terminate immediately upon a
rescission of the Master Agreement pursuant to Section 8.07 thereof. In the
event of any such termination, ChemGenics shall promptly return to PBIO all
Equipment in as good a condition as received, reasonable wear and tear excepted
(other than any Equipment purchased by ChemGenics in accordance with Section 4)
and unused Supplies.
9. Certain Termination Costs. On the date hereof, ChemGenics shall
offer employment to each of the Drug Discovery Program Employees at a salary no
less than their current salary with PBIO. In the event ChemGenics terminates the
employment of any of the Drug Discovery Program Employees, ChemGenics will
provide severance pay to such individuals, calculated in accordance with
ChemGenics customary severance policies, such calculation (i) not to exceed two
weeks per year of service, (ii) to include the service of such individual with
PBIO as set forth in PBIO's books [for severance certification purposes only],
and (iii) to be not less than three weeks or more than ten weeks for any
individual ("Severance Pay"). PBIO will on demand pay or reimburse ChemGenics
for the payment of all Severance Pay and other severance related costs for the
Drug Discovery Program Employees in excess of the Space Value. PBIO shall remain
responsible for and indemnify ChemGenics against all claims of any Drug
Discovery Program Employee to the extent arising out of any act or omission of
PBIO or violation of any law, rule or regulation by PBIO prior to their being
employees of ChemGenics. Except as set forth above, ChemGenics shall be
responsible for and shall indemnify PBIO against claims of any Drug Discovery
Program Employee to the extent arising out of any act or omission or violation
of any law, rule or regulation by ChemGenics on or after the date such employee
became an employee of ChemGenics. PBIO will also on demand pay or reimburse
ChemGenics for the payment of all Severance Pay and other
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<PAGE> 10
out of pocket severance related costs for one Drug Discovery Program Employee
identified by ChemGenics.
Space Value shall mean 45% of the value of the portion of the premises
on the third floor of Building A of PBIO's Framingham facility to be first
occupied by ChemGenics pursuant to the Sublease (the "ChemGenics Space"), during
the period between the date hereof and the date of termination of this Agreement
in accordance with the proviso in Section 8 above, it being understood and
agreed that 45% percent of the ChemGenics Space represents the portion of
ChemGenics Space that was not used by the Drug Discovery Program prior to the
date of execution of the Master Agreement. The value of the ChemGenics Space
shall be $12.50 (Twelve Dollars and Fifty Cents) per square foot per year, or
$0.03427 per square foot per day. The ChemGenics Space occupies 6,278 square
feet. Accordingly, the Space Value shall be calculated by multiplying $0.03427
times 0.45 times 6,278 square feet times the number of days from and including
May 7, 1996 to and including the date the transactions contemplated by the
Master Agreement are rescinded and unwound, or such later date as ChemGenics'
occupancy of the ChemGenics Space without the payment of Fixed Rent (as defined
in the Sublease) terminates (the later of such dates being herein called the
"ChemGenics Space Termination Date"). For example, if the duration of the period
between May 7, 1996 and ChemGenics Space Termination Date was six months, the
Space Value would be $17,415.
10. Miscellaneous.
(a) Entire Agreement. This Agreement, including the Exhibit attached
hereto, sets forth the entire agreement and understanding of the parties hereto
and supersedes all prior oral or written agreements and understandings relating
to the subject matter hereof.
(b) Assignment. Except as set forth in paragraph 10(c) no right,
benefit or interest hereunder shall be subject to assignment, transfer,
anticipation, alienation, sale, encumbrance, charge, pledge, hypothecation or
set-off in respect of any claim, debt or obligation or to execution, attachment,
levy or similar process.
(c) Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, PBIO, ChemGenics, and their
respective successors and assigns; provided, however, that ChemGenics and PBIO
may not assign or otherwise transfer this Agreement or any rights and interests,
nor delegate any obligations, hereunder, except to a direct or indirect 100%
parent or direct or indirect wholly-owned subsidiary which becomes a party to
the Non-Competition Agreement (as defined in the Master Agreement) and that
agrees in writing to be bound by this Agreement
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<PAGE> 11
(and in such case ChemGenics and PBIO shall remain bound) without the prior
written consent of the other party to this Agreement, except pursuant to a
merger or consolidation, or sale of all or substantially all of the stock,
assets or business of PBIO or ChemGenics and their respective subsidiaries taken
as a whole as provided below, if the new owner or successor becomes a party to
the Noncompetition Agreement, and except that without PBIO's consent ChemGenics
rights under this Agreement may not be so assigned or otherwise transferred in a
transaction that would give PBIO the right to terminate the License Agreement
pursuant to Section 9.4 thereof. In the event that either PBIO or ChemGenics
shall (i) consolidate or merge with another entity (other than an acquisition by
such party of another entity where the stockholders of PBIO or ChemGenics (or
any subsidiary of PBIO or ChemGenics), after such transaction directly or
indirectly own at least a majority of the voting stock of the combined or
acquired entity); or (ii) convey, sell or lease to another entity all or
substantially all of its stock, assets or business and its subsidiaries, taken
as a whole; or (iii) if there shall be a change of control of either PBIO or
ChemGenics, then (A) if such transaction is negotiated by PBIO or ChemGenics,
such party shall give the other party written notice identifying the acquiring
entity and the material terms of the transaction at least thirty (30) days prior
to the closing thereof and (B) the parties shall negotiate in good faith to
determine whether any changes shall be appropriate in this Agreement. Any
attempt to assign or delegate any portion of this Agreement in violation of this
Section 9(c) shall be null and void. Subject to the foregoing, any reference to
PBIO and ChemGenics hereunder shall be deemed to include the permitted
successors thereto and assigns thereof.
(d) Amendment. This Agreement may not be amended, modified or canceled
except by written agreement of the parties hereto.
(e) Severability. In the event that any court of competent jurisdiction
shall determine that any provision contained in this Agreement shall be
unenforceable in any respect, then such provision shall be deemed limited to the
extent that such court deems it enforceable, and as so limited shall remain in
full force and effect. In the event that such court shall deem any provision
wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
(f) Applicable Law. This Agreement has been made in and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of law principles thereof.
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<PAGE> 12
(g) Survival. The provisions contained in Section 8 of this Agreement
shall survive the expiration or earlier termination of this Agreement.
(h) Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by a written
document executed by the party entitled to the benefits of such terms or
provisions. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
(i) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex,
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by certified mail, return receipt requested, postage prepaid:
If to ChemGenics: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300
Cambridge, MA 02139
Attn: President
If to PBIO: PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: President
CC: General Counsel
All notices, requests, consents and other communications hereunder
shall be deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set forth
above, (ii) if made by telex, telecopy or facsimile transmission, at the time
that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the next business day
following the day such mailing is made, or (iv) if sent by certified mail, on
the 5th business day following the day such mailing is made.
(j) Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 13
IN WITNESS WHEREOF, the undersigned parties have duly executed and
delivered this Agreement under seal as of the day and year first above written.
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
-------------------------------
Barry A. Berkowitz, President
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
-------------------------------
Noubar B. Afeyan, President
Consulting and Interim
Services Agreement
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<PAGE> 1
EXHIBIT 10.48
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (this "Agreement")
is made and entered into as of the 28th day of June, 1996 by and between
ChemGenics Pharmaceuticals Inc., a Delaware corporation ("ChemGenics"), and
PerSeptive Biosystems, Inc., a Delaware corporation ("PBIO"). Capitalized terms
not defined herein shall have the meaning ascribed to them in the Master
Agreement (as hereinafter defined).
WHEREAS, ChemGenics and PBIO have entered into a Master Agreement dated
as of May 7, 1996 (the "Master Agreement"), which provides for the sale, license
or transfer by PBIO to ChemGenics of certain of PBIO's assets, projects and
activities principally related to drug discovery activities and efforts
(collectively, the "Drug Discovery Program");
WHEREAS, ChemGenics and PBIO have entered into a License Agreement of
even date (the "License Agreement"), which provides for the license by PBIO to
ChemGenics of certain PBIO technology for drug discovery purposes;
WHEREAS, one of the conditions precedent to the consummation by the
parties of the transactions contemplated by the Master Agreement is that the
parties shall have entered into this Agreement.
NOW THEREFORE, in consideration of the preceding recitals, the
covenants, conditions and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. PBIO Non-Competition Covenants.
(a) PBIO hereby covenants and agrees that, as long as the
License Agreement remains in effect, and except as otherwise provided in the
License Agreement or in that certain Consulting and Interim Services Agreement
of even date herewith between PBIO and ChemGenics (the "Consulting Agreement"),
neither PBIO nor any of its affiliates (other than ChemGenics) shall:
(i) engage in drug discovery or enter into any research and/or
development agreement or other collaborative arrangement with a third
party anywhere in the world for drug discovery whereby PBIO receives
either (i) ownership rights or license rights in products of such
research and/or development or collaborative arrangement, (ii) royalty
payments based on sales of the products of such research and/or
development or collaborative arrangement or (iii) cash or other
compensation as fees or milestone payments based on the conduct or
success of research efforts under such agreement or
<PAGE> 2
arrangement, provided that the foregoing shall not be deemed to prevent
PBIO from providing and performing, and permitting others to provide
and perform, pre-sale and post-sale services consistent with PBIO's
current practice related to products developed, made, manufactured,
offered for sale, sold or distributed by PBIO; or
(ii) for themselves or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any employees of or consultants to
ChemGenics or its affiliates to terminate his or her employment with,
consultancy to, or otherwise cease his or her relationship with
ChemGenics or its affiliates for any reason.
(b) Reasonableness of Restrictions. PBIO recognizes and agrees
that the specific but broad geographical scope of the foregoing provisions is
reasonable, legitimate and fair in view of ChemGenics' present strategy and its
future needs to market its products in a large geographic area in order to have
a sufficient customer base to make ChemGenics' business profitable, and in view
of the consideration received by PBIO pursuant to the Master Agreement.
2. ChemGenics Non-Competition Covenants.
(a) ChemGenics hereby covenants and agrees that, as long as
the License Agreement remains in effect, and except as otherwise provided in the
License Agreement or Consulting Agreement, neither ChemGenics nor any of its
affiliates (other than PBIO) shall:
(i) offer to sell, sell or distribute anywhere in the world,
except to Partners (as defined in the License Agreement) in connection
with and pursuant to an agreement principally for drug discovery
between ChemGenics and the Partner, any instruments, equipment,
machinery, apparatus, devices, media, reagents, compounds, resins,
activators, linkers, particles, supports or other materials or
substances (including without limitation oligomers, peptides and other
molecules), tools or other products or systems comprising the foregoing
for the purification, analysis, sequencing or synthesis of molecules;
provided that the foregoing shall not be construed to override the
prohibition in Section 2.1.1 of the License Agreement against utilizing
the Licensed Technology (as defined therein) to offer to sell, sell or
distribute Tools (as defined therein), even to Partners; or
(ii) for themselves or on behalf of or through any third
party, directly or indirectly, solicit, entice or persuade or attempt
to solicit, entice or persuade any employees of or consultants to PBIO
or its affiliates to terminate his or her employment with, consultancy
to, or otherwise cease his or her relationship with PBIO or its
affiliates for any reason.
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<PAGE> 3
(b) Reasonableness of Restrictions. ChemGenics recognizes and
agrees that the specific but broad geographical scope of the foregoing
provisions is reasonable, legitimate and fair in view of PBIO's present strategy
and its future needs to market its products in a large geographic area in order
to have a sufficient customer base to make PBIO's business profitable.
3. Protected Information. In addition to and without limiting the
confidentiality obligations set forth in the Confidentiality Agreement or the
License Agreement, PBIO shall at all times maintain in confidence and shall not,
without the prior written consent of ChemGenics use, disclose or give to others
any confidential information particular to or relating to the particular drug
discovery projects of the Drug Discovery Program.
PBIO and ChemGenics acknowledge that during the term of this Agreement
each may have access to confidential and proprietary information of the other,
including tangible manifestations of technology (including, without limitation,
organisms (or parts thereof), cell lines, cultures, plasmids, clones, vectors,
reagents and DNA and progeny, reproductions and derivatives of any of them),
information, data, formulae, methods, processes, procedures, patents and ideas
and the like ("Proprietary Information"), provided that Proprietary Information
shall not include any item of tangible property, information, data, formula,
method, process, procedures, patents or ideas which:
(a) is within the public domain prior to the time of disclosure to the
other or thereafter comes within the public domain, other than as a result of
disclosure by the recipient or any of its representatives in violation of this
Agreement;
(b) was, on or before the date of disclosure to the recipient in the
possession of the recipient as evidenced by written records of the recipient; or
(c) is acquired by the Recipient from a third party not under an
obligation of confidentiality to the disclosing party.
The Parties shall use the Proprietary Information only as permitted by
the License Agreement or in connection with the transactions contemplated by the
Master Agreement.
The Parties shall limit access to all Proprietary Information to their
employees, consultants and subcontractors who shall reasonably require access to
the Proprietary Information for the permitted use thereof.
In the event that a party or anyone to whom it transmits the
Proprietary Information pursuant to this Agreement becomes legally required to
disclose any such Proprietary Information, such party shall provide the other
with prompt notice so that it may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Agreement. In the
event that such protective order or other remedy is not obtained, or that such
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<PAGE> 4
party waives compliance with the provisions of this Agreement, the recipient
shall furnish only that portion of the Proprietary Information which is legally
required in the opinion of recipient's counsel.
4. ChemGenics' Access to Technology of PBIO-Related Entities. As long
as the License Agreement remains in effect, PBIO shall use its reasonable
efforts to negotiate provisions in any entity, partnership, joint venture or
other off-balance-sheet financing vehicle in which PBIO owns or has the right to
acquire more than a de-minimus interest or to which PBIO is a party, either
directly or through any Affiliate (as defined in the License Agreement), to
afford ChemGenics access and rights for drug discovery purposes to technology
developed or acquired by any such entity, partnership, joint venture or other
off-balance-sheet financing vehicle, and PBIO agrees that PBIO's (and such
Affiliate's) rights in and to any such technology shall be included in the
Licensed Technology under the License Agreement to the extent permitted by any
such provisions.
5. Severability Provision. If any term or provision of this Agreement
is held to be invalid or unenforceable under applicable law, such provision
shall be ineffective only to the extent of such invalidity or unenforceability,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement. In furtherance of and not in limitation of the foregoing,
PBIO and ChemGenics expressly agree that if the duration of or geographical
extent of, or any of the business activities covered by, the non-competition
provisions of Sections 1 and 2 hereof are determined to be in excess of that
which is valid or enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent or activities that may validly or
enforceably be covered. PBIO and ChemGenics acknowledge the uncertainty of the
law in this respect and expressly stipulate that this Agreement shall be
construed in a manner that renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
6. Remedies. PBIO and ChemGenics acknowledge and agree that any breach
by PBIO, ChemGenics or their respective affiliates of the provisions of Sections
1 through 4 of this Agreement could cause irreparable damage. Accordingly, in
the event of any actual or threatened breach by PBIO, ChemGenics or their
respective affiliates of such provisions, the non-breaching party shall (in
addition to any other remedies that it may have) be entitled to a temporary
and/or permanent injunction or other equitable relief to enforce such
provisions. PBIO, ChemGenics or their respective affiliates hereby waive any
adequacy of remedy at law defense which such party may now or hereafter have in
the event of any breach by such party or its affiliates of the provisions of
Sections 1 through 4 of this Agreement.
7. No Waiver of Rights, Powers and Remedies. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a
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<PAGE> 5
party hereto, nor any abandonment or discontinuance of steps to enforce any such
right, power or remedy, shall preclude such party from any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The election of any remedy by a party hereto shall not constitute a waiver of
the right of such party to pursue other available remedies. No notice to or
demand on a party not expressly required under this Agreement shall entitle the
party receiving such notice or demand to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
party giving such notice or demand to any other or further action in any
circumstances without such notice or demand.
8. Miscellaneous.
(a) Amendment and Waiver. This Agreement may be amended, and any term
or provision of this Agreement may be waived, only by written agreement of the
parties hereto.
(b) Assignment. This Agreement shall be assignable only to any party to
whom the License Agreement is assigned, in accordance with the terms contained
therein.
(c) Termination. This Agreement (other than Section 3) shall terminate
when and if the License Agreement terminates.
(d) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the laws
of the Commonwealth of Massachusetts, without giving effect to the conflict of
law principles thereof.
(e) Jurisdiction and Service of Process. Any legal action or proceeding
with respect to this Agreement may be brought in the courts of the Commonwealth
of Massachusetts or of the United States of America for the District of
Massachusetts. By execution and delivery of this Agreement, each of the parties
to this Agreement hereto accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
parties hereby irrevocably waive any objection or defense that they may now or
hereafter have to the assertion of personal jurisdiction by any such court in
any such action or to the laying of the venue of any such action in any such
court, and hereby waive, to the extent not prohibited by law, and agree not to
assert, by way of motion, as a defense, or otherwise, in any such proceeding,
any claim that is not subject to the jurisdiction of the above-named courts for
such proceedings. Each of the parties hereto irrevocably consents to the service
of process of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered mail, postage prepaid, to any
party at its address set forth below and irrevocably waives any objection or
defense that it may now have or hereafter have to the sufficiency of any such
service of process in any such action.
(f) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other
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<PAGE> 6
address as a party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii)
sent by recognized overnight courier, or (iv) sent by registered or certified
mail, return receipt requested, postage prepaid.
If to ChemGenics: ChemGenics Pharmaceuticals Inc.
One Kendall Square
Building 300 - Third Floor
Cambridge, MA 02139
Attn: President
With a copy to: Jeffrey M. Wiesen, Esquire
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Fax: (617) 542-2241
If to PBIO: PerSeptive Biosystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Attn: President
With a copy to: Rufus C. King, Esquire
Testa, Hurwitz and Thibeault, L.L.P.
125 High Street
Boston, MA 02110
Fax: (617) 248-7100
All notices, requests, consents and other communications hereunder shall be
deemed to have been (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if made by
telex, telecopy or facsimile transmission, at the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
(g) Headings. The headings in the Sections and the paragraphs of this
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement.
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<PAGE> 7
(h) Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
---------------------------------
Barry A. Berkowitz, President
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
---------------------------------
Noubar B. Afeyan, President
Confidentiality and
Non-Competition Agreement
- 8 -
<PAGE> 1
Exhibit 10.49
STANDARD FORM COMMERCIAL LEASE
215 FIRST STREET
CAMBRIDGE, MA 02142
1. PARTIES OLD CAMBRIDGE REALTY TRUST
(fill in) LESSOR, which expression shall include its heirs,
successors, and assigns where the context so admits,
does hereby lease to CHEMGENICS PHARMACEUTICALS, INC.
LESSEE, which expression shall include its
successors, executors, administrators, and assigns
where the context so admits, and the LESSEE hereby
leases the following described premises:
2. PREMISES approximately one thousand and thirty-four (1,034)
(fill in and include, rentable square feet of office space on the second
if applicable, suite floor of Building 300 in the complex known as One
number, floor Kendall Square in Cambridge, Massachusetts and
number, and square further described on the attached Exhibit A: "the
feet) Leased Premises" together with the right to use in
common with others entitled thereto, the hallways,
stairways, and elevators, necessary for access to
said leased premises, and lavatories nearest thereto.
3. TERM The term of this lease shall be for SIX (6) Months
(fill in) commencing on July 1, 1996 and ending on December 31,
1996.
4. RENT The LESSEE shall pay to the LESSOR fixed rent at the
(fill in) rate of $20,680.00 dollars per year, payable in
advance in monthly installments of 1723.33 subject to
proration in the case of any partial calendar month.
All rent shall be payable without offset or
deduction.
<PAGE> 2
7. UTILITIES The LESSEE shall pay, as they become due, all
bills for electricity and other utilities (whether
they are used for furnishing heat or other
*delete "air conditioning" purposes) that are furnished to the leased
if not applicable premises and presently separately metered and all
bills for fuel furnished to a separate tank
servicing the leased premises exclusively. The
LESSOR agrees to provide all other utility service
and to furnish reasonably hot and cold water and
reasonable heat and air conditioning* (except to
the extent that the same are furnished through
separately metered utilities or separate fuel
tanks as set forth above) to the leased premises,
the hallways, stairways, elevators, and lavatories
during normal business hours on regular business
days of the heating and air conditioning* seasons
of each year, to furnish elevator service and to
light passageways and stairways during business
hours, and to furnish each cleaning service as is
customary in similar buildings in said city or
town, all subject to interruption due to any
accident, to the making of repairs, alterations,
or improvements, to labor difficulties, to trouble
in obtaining fuel, electricity, service, or
supplies from the sources from which they are
usually obtained for said building, or to any
cause beyond the LESSOR's control.
*or billed on a pro-rata basis by Lessor.
LESSOR shall have no obligation to provide
utilities or equipment other than the utilities
and equipment within the premises as of the
commencement date of this lease. In the event
LESSEE requires additional utilities or equipment,
the installation and maintenance thereof shall be
the LESSEE's sole obligation, provided that such
installation shall be subject to the written
consent of the LESSOR.
8. USE OF LEASED The LESSEE shall use the leased premises only for
PREMISES the purpose of office use in connection with its
(fill in) biotechnology and research operations.
9. COMPLIANCE The LESSEE acknowledges that no trade or
WITH LAWS occupation shall be conducted in the leased
premises or use made thereof which will be
unlawful, improper, noisy or offensive, or
contrary to any law or any municipal by-law or
ordinance in force in the city or town in which
the premises are situated. Without limiting the
generality of the foregoing (a) the LESSEE shall
not bring or permit to be brought or kept in or on
the leased premises or elsewhere on the LESSOR's
property any hazardous, toxic, inflammable,
combustible or explosive fluid, material, chemical
or substance, including without limitation any
item defined as hazardous pursuant to Chapter 21E
of the Massachusetts General Laws; and (b) the
LESSEE shall be responsible for compliance with
requirements imposed by the Americans with
Disabilities Act relative to the layout of the
leased premises and any work performed by the
LESSEE therein.
10. FIRE INSURANCE The LESSEE shall not permit any use of the leased
premises which will make voidable any insurance on
the property of which the leased premises are a
part, or on the contents of said property or which
shall be contrary to any law or regulation from
time to time established by the New England Fire
Insurance Rating Association, or any similar body
succeeding to its powers. The LESSEE shall on
demand reimburse the LESSOR, and all other
tenants, all extra insurance premiums caused by
the LESSEE's use of the premises.
11. MAINTENANCE The LESSEE agrees to maintain the leased premises
in good condition, damage by fire and other
A. LESSEE'S casualty only excepted, and whenever necessary,
OBLIGATIONS to replace plate glass and other glass therein,
acknowledging that the leased premises are now in
good order and the glass whole. The LESSEE shall
not permit the leased premises to be overloaded,
damaged, stripped, or defaced, nor suffer any
waste. LESSEE shall obtain written consent of
LESSOR before erecting any sign on the premises.
B. LESSOR'S The LESSOR agrees to maintain the structure of the
OBLIGATIONS building of which the leased premises are a part
in the same condition as it is at the commencement
of the term or as it may be put in during the term
of this lease, reasonable wear and tear, damage by
fire and other casualty only excepted, unless such
maintenance is required because of the LESSEE or
those for whose conduct the LESSEE is legally
responsible.
12. ALTERATIONS -- The LESSEE shall not make structural alterations
ADDITIONS or additions to the leased premises, but may make
non-structural alterations provided the LESSOR
consents thereto in writing, which consent shall
not be unreasonably withheld or delayed. All such
allowed alterations shall be at LESSEE's expense
and shall be in quality at least equal to the
present construction. LESSEE shall not permit any
mechanics' liens, or similar liens, to remain upon
the leased premises for labor and material
furnished to LESSEE or claimed to have been
furnished to LESSEE in connection with work of
any character performed or claimed to have been
performed at the direction of LESSEE and shall
cause any such lien to be released of record
forthwith without cost to LESSOR. Any alterations
or improvements made by the LESSEE shall become
the property of the LESSOR at the termination of
the occupancy as provided herein.
13. ASSIGNMENT -- The LESSEE shall not assign or sublet the whole or
SUBLEASING any part of the leased premises without LESSOR's
prior written consent. Notwithstanding such
consent, LESSEE shall remain liable to LESSOR for
the payment of all rent and for the full
performance of the covenants and conditions of
this lease.
<PAGE> 3
14. SUBORDINATION This lease shall be subject and subordinate to any and
all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter,
a lien or liens on the property of which the leased
premises are a part and the LESSEE shall, when
requested, promptly execute and deliver such written
instruments as shall be necessary to show the
subordination of this lease to said mortgages, deeds of
trust or other such instruments in the nature of a
mortgage.
15. LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable
ACCESS times, enter to view the leased premises and may remove
placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR
should elect to do and may show the leased premises to
others, and at any time within three (3) months before
the expiration of the term, may affix to any suitable
part of the leased premises a notice for letting or
selling the leased premises or property of which the
leased premises are a part and keep the same so affixed
without hindrance or molestation.
16. INDEMNIFICATION The LESSEE shall save the LESSOR harmless from all loss
AND LIABILITY and damage occasioned by anything occurring on the
(fill in) leased premises unless caused by the negligence or
misconduct of the LESSOR, and from all loss and damage
wherever occurring occasioned by any omission, fault,
neglect or other misconduct of the LESSEE. The removal
of snow and ice from the sidewalks bordering upon the
leased premises shall be LESSOR's responsibility.
17. LESSEE'S The LESSEE shall maintain with respect to the leased
LIABILITY premises and the property of which the leased premises
INSURANCE are a part comprehensive public liability insurance in
(fill in) the amount of $1,000,000 with property damage insurance
in limits of $500,000 in responsible companies qualified
to do business in Massachusetts and in good standing
therein insuring the LESSOR as well as LESSEE against
injury to persons or damage to property as provided. The
LESSEE shall deposit with the LESSOR certificates for
such insurance at or prior to the commencement of the
term, and thereafter within thirty (30) days prior to
the expiration of any such policies. All such insurance
certificates shall provide that such policies shall not
be cancelled without at least ten (10) days prior
written notice to each assured named therein.
18. FIRE, Should a substantial portion of the leased premises, or
CASUALTY -- of the property of which they are a part, be
EMINENT substantially damaged by fire or other casualty, or be
DOMAIN taken by eminent domain, the LESSOR may elect to
terminate this lease. When such fire, casualty, or
taking renders the leased premises substantially
unsuitable for their intended use, a just and
proportionate abatement of rent shall be made, and the
LESSEE may elect to terminate this lease if:
(a) The LESSOR fails to give written notice
within thirty (30) days of intention to
restore leased premises, or
(b) The LESSOR fails to restore the leased
premises to a condition substantially
suitable for their intended use within
ninety (90) days of said fire, casualty or
taking.
The LESSOR reserves, and the LESSEE grants to the
LESSOR, all rights which the LESSEE may have for damages
or injury to the leased premises for any taking by
eminent domain, except for damage to the LESSEE's
fixtures, property, or equipment.
19. DEFAULT In the event that:
AND
BANKRUPTCY (a) The LESSEE shall default in the payment of
(fill in) any installment of rent or other sum herein
specified and such default shall continue
for ten (10) days after written notice
thereof; or
(b) The LESSEE shall default in the observance
or performance of any other of the LESSEE's
covenants, agreements, or obligations
hereunder and such default shall not be
corrected within thirty (30) days after
written notice thereof; or
(c) The LESSEE shall be declared bankrupt or
insolvent according to law, or, if any
assignment shall be made of LESSEE's
property for the benefit of creditors,
then the LESSOR shall have the right thereafter, while
such default continues, to re-enter and take complete
possession of the leased premises, to declare the term
of this lease ended, and remove the LESSEE's effects,
without prejudice to any remedies which might be
otherwise used for arrears of rent or other default. The
LESSEE shall indemnify the LESSOR against all loss of
rent and other payments which the LESSOR may incur by
reason of such termination during the residue of the
term. If the LESSEE shall default, after reasonable
notice thereof, in the observance or performance of any
conditions or covenants on LESSEE's part to be observed
or performed under or by virtue of any of the provisions
in any article of this lease, the LESSOR, without being
under any obligation to do so and without thereby
waiving such default, may remedy such default for the
account and at the expense of the LESSEE. If the LESSOR
makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but
not limited to, reasonable attorney's fees in
instituting, prosecuting or defending any action or
proceeding, such sums paid or obligations insured, with
interest at the rate of 12 percent per annum and costs,
shall be paid to the LESSOR by the LESSEE as additional
rent.
20. NOTICE Any notice from the LESSOR to the LESSEE relating to the
(fill in) leased premises or to the occupancy thereof, shall be
deemed duly served, if left at the leased premises
addressed to the LESSEE, or if mailed to the leased
premises, registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSEE. Any
notice from the LESSEE to the LESSOR relating to the
leased premises or to the occupancy thereof, shall be
deemed duly served, if mailed to the LESSOR by
registered or certified mail, return receipt requested,
postage prepaid, addressed to the LESSOR at such address
as the LESSOR may from time to time advise in writing.
All rent notices shall be paid and sent to the LESSOR at
Old Cambridge Realty Trust c/o The Athenaeum Group, 215
First St., Camb. MA 02142.
21. SURRENDER The LESSEE shall at the expiration or other termination
of this lease remove all LESSEE's goods and effects from
the leased premises, (including, without hereby limiting
the generality of the foregoing, all signs and lettering
affixed or painted by the LESSEE, either inside or
outside the leased premises). LESSEE shall deliver to
the LESSOR the leased premises and all keys, locks
thereto, and other fixtures connected therewith and all
alterations and additions made to or upon the leased
premises, in good conditions, damage by fire or other
casualty only excepted. In the event of the LESSEE's
failure to remove any of LESSEE's property from the
premises, LESSOR is hereby authorized, without liability
to LESSEE for loss or damage thereto, and at the sole
risk of LESSEE to remove and store any of the property
at LESSEE's expense, or to retain same
<PAGE> 4
to apply the net proceeds of such sale to the payment of
any sum due hereunder, or to destroy such property.
22. BROKERAGE
(fill in or delete)
23. CONDITION OF Except as may be otherwise expressly set forth herein,
PREMISES the LESSEE shall accept the leased premises "as is" in
their condition as of the commencement of the term of
this lease, and the LESSOR shall be obligated to perform
no work whatsoever in order to prepare the leased
premises for occupancy by the LESSEE.
24. FORCE In the event that the LESSOR is prevented or delayed
MAJEURE from making any repairs or performing any other covenant
hereunder by reason of any cause reasonably beyond the
control of the LESSOR, the LESSOR shall not be liable to
the LESSEE therefor nor, except as expressly otherwise
provided in case of casualty or taking, shall the LESSEE
be entitled to any abatement or reduction of rent by
reason thereof, nor shall the same give rise to a claim
by the LESSEE that such failure constitutes actual or
constructive eviction from the leased premises or any
part thereof.
25. LATE If rent or any other sum payable hereunder remains
CHARGE outstanding for a period of ten (10) days, the LESSEE
shall pay to the LESSOR a late charge equal to one and
one-half percent (1.5%) of the amount due for each month
or portion thereof during which the arrearage continues.
26. LIABILITY No owner of the property of which the leased premises
OF OWNER are a part shall be liable hereunder except for breaches
of the LESSOR's obligations occurring during the period
of such ownership. The obligations of the LESSOR shall
be binding upon the LESSOR's interest in said property,
but not upon other assets of the LESSOR, and no
individual partner, agent, trustee, stockholder,
officer, director, employee or beneficiary of the LESSOR
shall be personally liable for performance of the
LESSOR's obligations hereunder.
27. OTHER It is also understood and agreed that
PROVISIONS
1. Lessee will have two (2) six (6) month options to
renew this lease with two (2) month written notice
to Landlord. The Base Rent for the first six-month
option will be $21,714.00 per annum. The Base Rent
for the second six (6) month option will be
$22,748.00 per annum.
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals this
__________________ day of JUNE 1996.
CHEMGENICS PHARMACEUTICALS, INC. OLD CAMBRIDGE REALTY TRUST
[SIG]
- - ----------------------------------- -------------------------------------
LESSEE (DULY AUTHORIZED) ROBERT A. JONES, TRUSTEE
LESSOR
/s/ KIM LARSON
- - ----------------------------------- -------------------------------------
WITNESS WITNESS
--------------------------------
BROKER(S)
<PAGE> 5
EXHIBIT A
"LEASED PREMISES"
<TABLE>
<CAPTION>
Suite # Use Area
<S> <C> <C>
201 OF 5889
202 OF 1810
203 OF 654
204 OF 432
205 SIG 195
206 SIG 84
207 OF 1034
208 OF 940
</TABLE>
[FLOORPLAN ILLUSTRATION]
Rev.
[LOGO] ONE KENDALL SQUARE BUILDING 300 SECOND FLOOR March 16, 1994
<PAGE> 6
STANDARD FORM COMMERCIAL LEASE
1. PARTIES OLD CAMBRIDGE REALTY TRUST
(fill in) LESSOR, which expression shall include its heirs,
successors, and assigns where the context so admits,
does hereby lease to MYCO PHARMACEUTICALS, INC.
LESSEE, which expression shall include its
successors, executors, administrators, and assigns
where the context so admits, and the LESSEE hereby
leases the following described premises:
2. PREMISES approximately nine hundred and fourteen (914)
(fill in and include, rentable square feet of office space on the ground
if applicable, suite (basement) floor of Building 300 in the office
number, floor complex known as One Kendall Square in Cambridge,
number, and square Massachusetts and further described on the attached
feet) Exhibit A: "LEASED PREMISES" together with the right
to use in common, with others entitled thereto, the
hallways, stairways, and elevators, necessary for
access to said leased premises, and lavatories
nearest thereto.
3. TERM The term of this lease shall be for One (1) Year
(fill in) commencing on August 1, 1995* and ending on July 31,
1996.**
4. RENT The LESSEE shall pay to the LESSOR rent at the rate
(fill in) of $8,226.00 dollars per year, payable in advance
in monthly installments of $685.50.
* or upon occupancy, whichever is earlier. If early
occupancy occurs, rent will be due on a pro-rata,
daily basis.
** and continuing thereafter until either party gives
the other three (3) months notice.
<PAGE> 7
7. UTILITIES The LESSEE shall pay, as they become due, all
bills for electricity and other utilities (whether
they are used for furnishing heat or other
*delete "air conditioning" purposes) that are furnished to the leased
if not applicable premises and presently separately metered,* and
all bills for fuel furnished to a separate tank
servicing the leased premises exclusively. The
LESSOR agrees to provide all other utility service
and to furnish reasonably hot and cold water and
reasonable heat and air conditioning* (except to
the extent that the same are furnished through
separately metered utilities or separate fuel
tanks as set forth above) to the leased premises,
the hallways, stairways, elevators, and lavatories
during normal business hours on regular business
days of the heating and air conditioning* seasons
of each year, to furnish elevator service and to
light passageways and stairways during business
hours, and to furnish such cleaning service as is
customary in similar buildings in said city or
town, all subject to interruption due to any
accident, to the making of repairs, alterations,
or improvements, to labor difficulties, to trouble
in obtaining fuel, electricity, service, or
supplies from the sources from which they are
usually obtained for said building, or to any
cause beyond the LESSOR's control.
*or, if not separately metered, as billed by
Lessor on a pro-rata basis.
LESSOR shall have no obligation to provide
utilities or equipment other than the utilities
and equipment within the premises as of the
commencement date of this lease. In the event
LESSEE requires additional utilities or equipment,
the installation and maintenance thereof shall be
the LESSEE's sole obligation, provided that such
installation shall be subject to the written
consent of the LESSOR.
8. USE OF LEASED The LESSEE shall use the leased premises only for
PREMISES the purpose of general offices and storage.
(fill in)
9. COMPLIANCE The LESSEE acknowledges that no trade or
WITH LAWS occupation shall be conducted in the leased
premises or use made thereof which will be
unlawful, improper, noisy or offensive, or
contrary to any law or any municipal by-law or
ordinance in force in the city or town in which
the premises are situated.
10. FIRE INSURANCE The LESSEE shall not permit any use of the leased
premises which will make voidable any insurance on
the property of which the leased premises are a
part, or on the contents of said property or which
shall be contrary to any law or regulation from
time to time established by the New England Fire
Insurance Rating Association, or any similar body
succeeding to its powers. The LESSEE shall on
demand reimburse the LESSOR, and all other
tenants, all extra insurance premiums caused by
the LESSEE's use of the premises.
11. MAINTENANCE The LESSEE agrees to maintain the leased premises
in good condition, damage by fire and other
A. LESSEE'S casualty only excepted, and whenever necessary,
OBLIGATIONS to replace plate glass and other glass therein,
acknowledging that the leased premises are now in
good order and the glass whole. The LESSEE shall
not permit the leased premises to be overloaded,
damaged, stripped, or defaced, nor suffer any
waste. LESSEE shall obtain written consent of
LESSOR before erecting any sign on the premises.
B. LESSOR'S The LESSOR agrees to maintain the structure of the
OBLIGATIONS building of which the leased premises are a part
in the same condition as it is at the commencement
of the term or as it may be put in during the term
of this lease, reasonable wear and tear, damage by
fire and other casualty only excepted, unless such
maintenance is required because of the LESSEE or
those for whose conduct the LESSEE is legally
responsible.
12. ALTERATIONS -- The LESSEE shall not make structural alterations
ADDITIONS or additions to the leased premises, but may make
non-structural alterations provided the LESSOR
consents thereto in writing, which consent shall
not be unreasonably withheld or delayed. All such
allowed alterations shall be at LESSEE's expense
and shall be in quality at least equal to the
present construction. LESSEE shall not permit any
mechanics' liens, or similar liens, to remain upon
the leased premises for labor and material
furnished to LESSEE or claimed to have been
furnished to LESSEE in connection with work of
any character performed or claimed to have been
performed at the direction of LESSEE and shall
cause any such lien to be released of record
forthwith without cost to LESSOR. Any alterations
or improvements made by the LESSEE shall become
the property of the LESSOR at the termination of
the occupancy as provided herein.
13. ASSIGNMENT -- The LESSEE shall not assign or sublet the whole or
SUBLEASING any part of the leased premises without LESSOR's
prior written consent. Notwithstanding such
consent, LESSEE shall remain liable to LESSOR for
the payment of all rent and for the full
performance of the covenants and conditions of
this lease.
<PAGE> 8
14. SUBORDINATION This lease shall be subject and subordinate to any and
all mortgages, deeds of trust and other instruments in
the nature of a mortgage, now or at any time hereafter,
a lien or liens on the property of which the leased
premises are a part and the LESSEE shall, when
requested, promptly execute and deliver such written
instruments as shall be necessary to show the
subordination of this lease to said mortgages, deeds of
trust or other such instruments in the nature of a
mortgage.
15. LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable
ACCESS times, enter to view the leased premises and may remove
placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR
should elect to do and may show the leased premises to
others, and at any time within three (3) months before
the expiration of the term, may affix to any suitable
part of the leased premises a notice for letting or
selling the leased premises or property of which the
leased premises are a part and keep the same so affixed
without hindrance or molestation.
16. INDEMNIFICATION The LESSEE shall save the LESSOR harmless from all loss
AND LIABILITY and damage occasioned by the use or escape of water or
by the bursting of pipes, as well as from any claim or
damage resulting from neglect in not removing snow and
ice from the roof of the building or from the sidewalks
bordering upon the premises so leased, or by any
nuisance made or suffered on the leased premises, unless
such loss is caused by the neglect of the LESSOR. The
removal of snow and ice from the sidewalks bordering
upon the leased premises shall be LESSOR's
responsibility.
17. LESSEE'S The LESSEE shall maintain with respect to the leased
LIABILITY premises and the property of which the leased premises
INSURANCE are a part comprehensive public liability insurance in
(fill in) the amount of $1,000,000 with property damage insurance
in limits of $100,000 in responsible companies qualified
to do business in Massachusetts and in good standing
therein insuring the LESSOR as well as LESSEE against
injury to persons or damage to property as provided. The
LESSEE shall deposit with the LESSOR certificates for
such insurance at or prior to the commencement of the
term, and thereafter within thirty (30) days prior to
the expiration of any such policies. All such insurance
certificates shall provide that such policies shall not
be cancelled without at least ten (10) days prior
written notice to each assured named therein.
18. FIRE, Should a substantial portion of the leased premises, or
CASUALTY -- of the property of which they are a part, be
EMINENT substantially damaged by fire or other casualty, or be
DOMAIN taken by eminent domain, the LESSOR may elect to
terminate this lease. When such fire, casualty, or
taking renders the leased premises substantially
unsuitable for their intended use, a just and
proportionate abatement of rent shall be made, and the
LESSEE may elect to terminate this lease if:
(a) The LESSOR fails to give written notice
within thirty (30) days of intention to
restore leased premises, or
(b) The LESSOR fails to restore the leased
premises to a condition substantially
suitable for their intended use within
ninety (90) days of said fire, casualty or
taking.
The LESSOR reserves, and the LESSEE grants to the
LESSOR, all rights which the LESSEE may have for damages
or injury to the leased premises for any taking by
eminent domain, except for damage to the LESSEE's
fixtures, property, or equipment.
19. DEFAULT In the event that:
AND
BANKRUPTCY (a) The LESSEE shall default in the payment of
(fill in) any installment of rent or other sum herein
specified and such default shall continue
for ten (10) days after written notice
thereof; or
(b) The LESSEE shall default in the observance
or performance of any other of the LESSEE's
covenants, agreements, or obligations
hereunder and such default shall not be
corrected within thirty (30) days after
written notice thereof; or
(c) The LESSEE shall be declared bankrupt or
insolvent according to law, or, if any
assignment shall be made of LESSEE's
property for the benefit of creditors,
then the LESSOR shall have the right thereafter, while
such default continues, to re-enter and take complete
possession of the leased premises, to declare the term
of this lease ended, and remove the LESSEE's effects,
without prejudice to any remedies which might be
otherwise used for arrears of rent or other default. The
LESSEE shall indemnify the LESSOR against all loss of
rent and other payments which the LESSOR may incur by
reason of such termination during the residue of the
term. If the LESSEE shall default, after reasonable
notice thereof, in the observance or performance of any
conditions or covenants on LESSEE's part to be observed
or performed under or by virtue of any of the provisions
in any article of this lease, the LESSOR, without being
under any obligation to do so and without thereby
waiving such default, may remedy such default for the
account and at the expense of the LESSEE. If the LESSOR
makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but
not limited to, reasonable attorney's fees in
instituting, prosecuting or defending any action or
proceeding, such sums paid or obligations insured, with
interest at the rate of 12 percent per annum and costs,
shall be paid to the LESSOR by the LESSEE as additional
rent.
20. NOTICE Any notice from the LESSOR to the LESSEE relating to the
(fill in) leased premises or to the occupancy thereof, shall be
deemed duly served, if left at the leased premises
addressed to the LESSEE, or if mailed to the leased
premises, registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSEE. Any
notice from the LESSEE to the LESSOR relating to the
leased premises or to the occupancy thereof, shall be
deemed duly served, if mailed to the LESSOR by
registered or certified mail, return receipt requested,
postage prepaid, addressed to the LESSOR at such address
as the LESSOR may from time to time advise in writing.
All rent notices shall be paid and sent to the LESSOR at
Old Cambridge Realty Trust c/o The Athenaeum Group, 215
First St., Camb. MA 02142.
<PAGE> 9
21. SURRENDER The LESSEE shall at the expiration or other termination
of this lease remove all LESSEE's goods and effects from
the leased premises, (including, without hereby limiting
the generality of the foregoing, all signs and lettering
affixed or painted by the LESSEE, either inside or
outside the leased premises), LESSEE shall deliver to
the LESSOR the leased premises and all keys, locks
thereto, and other fixtures connected therewith and all
alterations and additions made to or upon the leased
premises, in good condition, damage by fire or other
casualty only excepted. In the event of the LESSEE's
failure to remove any of LESSEE's property from the
premises, LESSOR is hereby authorized, without liability
to LESSEE for loss or damage thereto, and at the sole
risk of LESSEE, to remove and store any of the property
at LESSEE's expense, or to retain same under LESSOR's
control or to sell at public or private sale, without
notice any or all of the property not so removed and to
apply the net proceeds of such sale to the payment of
any sum due hereunder, or to destroy such property.
22. BROKERAGE [Deleted]
(fill in or delete)
23. OTHER It is also understood and agreed that
PROVISIONS
1. THE LEASED PREMISES WILL BE ACCEPTED AND DELIVERED
IN THEIR CURRENT "AS IS" CONFIGURATION AND
CONDITION, WITH THE LESSOR RESPONSIBLE FOR A GENERAL
CLEANING AND CHANGING OF THE LOCK AND KEY.
2. LESSEE SHALL BE RESPONSIBLE FOR ITS PRO-RATA SHARE
OF REAL ESTATE TAXES AND COMMON AREA MAINTENANCE
(CAM) CHARGES, AS BILLED BY THE LESSOR ON A PRO-RATA
BASIS. UPON WRITTEN REQUEST, LESSEE MAY REVIEW
LESSOR'S ACCOUNTING AND BILLING FOR REASONABLENESS.
3. LESSEE SHALL HAVE THE RIGHT TO LEASE TWO (2)
ADDITIONAL PARKING SPACES IN THE OKS GARAGE AT THE
RATE OF $115. PER VEHICLE MONTHLY FOR THE TERM OF
THE LEASE.
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals this
__________________ day of __________________ , 1995.
MYCO PHARMACEUTICALS, INC. OLD CAMBRIDGE REALTY TRUST
/s/ BARRY BERKOWITZ
- - ----------------------------------- -------------------------------------
LESSEE (DULY AUTHORIZED) ROBERT A. JONES, TRUSTEE
LESSOR
[SIG]
- - ----------------------------------- -------------------------------------
WITNESS WITNESS
<PAGE> 10
EXHIBIT A
"LEASED PREMISES"
<TABLE>
<CAPTION>
Suite # Use Area Suite # Use Area
<S> <C> <C> <C> <C> <C>
001 RE 914 010 SIG 638
002 LAB 2349 011 SIG 515
003 RE 3154
005 SIG 365
006 SIG 208
007 SIG 120
008 SIG 215
009 SIG 215
</TABLE>
[FLOORPLAN ILLUSTRATION]
Rev.
[LOGO] ONE KENDALL SQUARE BUILDING 300 LOWER LEVEL July 29, 1993
<PAGE> 1
EXHIBIT 10.50
SUBLEASE
SUBLEASE made as of the 28th day of June, 1996 ("the Sublease") between
PERSEPTIVE BIOSYSTEMS, INC., a Delaware corporation, as sublessor ("Landlord"),
having an address at 500 Old Connecticut Path, Framingham, MA 01701 and
CHEMGENICS PHARMACEUTICALS INC., a Delaware corporation, as sublessee
("Tenant"), having an address at One Kendall Square, Building 300, Cambridge,
Massachusetts 02139.
Pursuant to a Lease dated as of May 24, 1994 (the "Overlease") between 500
Old Connecticut Path Limited Partnership, a Delaware Limited Partnership (the
"Overlandlord") and Landlord, the Overlandlord leased to Landlord certain
premises (the "Premises") more fully described in the Overlease as Buildings A
and B (the "Buildings") known as and located at 500 Old Connecticut Path,
Framingham, Massachusetts (the "Property"). The Overlease is attached hereto as
Exhibit A.
Landlord desires to sublease a certain part of the Premises located in
Building A to Tenant, and Tenant desires to sublease the same from Landlord, for
the term and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for One Dollar and other good and valuable consideration,
and in consideration of the mutual covenants set forth herein, the parties
hereby agree as follows:
ARTICLE 1. DEFINITIONS:
Section 1.1. "Commencement Date" shall mean the later of June 28, 1996 or
the Overlandlord Consent Date.
Section 1.2. "Demised Premises" shall mean (a) during the Initial Term,
that portion of the Premises, which the parties hereto agree contains
approximately 4870 square feet of Rentable Floor Area (as defined in the
Overlease) on the third floor of Building A, shown cross-hatched on Exhibit B
attached hereto (the "Third Floor Premises") and (b) in substitution therefor
during the Extended Term, that portion of the Premises which the parties hereto
agree contains approximately 20,000 square feet of Rentable Floor Area on the
second floor of Building A, shown as "expansion", and consisting of two such
areas on Exhibit B and such additional offices in between or adjoining such
areas, comprising up to approximately 10,000 square feet, as the parties may
agree to include ("Second Floor Premises"), such Second Floor Premises to be
definitively determined as provided in Section 5.2 hereinbelow.
Section 1.3. "Extended Term" shall mean the period from the Rent
Commencement Date--Third Floor through the Termination Date.
<PAGE> 2
Section 1.4. "Initial Term" shall mean the period from the Commencement
Date to the Rent Commencement Date--Third Floor.
Section 1.5. "Landlord" and all pronouns referring thereto shall mean the
Landlord named herein and the successors, legal representatives and assigns of
such Landlord collectively.
Section 1.6. "Rent Commencement Date--Third Floor" shall mean the date of
closing of the IPO as hereafter defined. "Rent Commencement Date--Second
Floor" shall mean three months after the date of the closing on the initial
Public Offering ("IPO") of the stock of the Tenant, as the IPO is defined in
Section 8.06 of the Master Agreement.
Section 1.7. "Sublease" shall mean this instrument and any provisions of
the Overlease incorporated herein by reference.
Section 1.8. "Tenant" and all pronouns referring thereto shall mean the
Tenant named herein and the successors, legal representatives and assigns of
such Tenant collectively.
Section 1.9. "Tenant's pro rata share of common areas" shall mean during
the Initial Term 1408 square feet and during the Extended Term the Rentable
Square Feet of the Demised Premises divided by 186,060 Rentable Square Feet
times 21,000 [the common areas Tenant has access to during the Extended Term]
square feet.
Section 1.10. "Termination Date" shall mean the earlier of June 27, 2001
or the Early Termination Date as described in Section 3.2, unless sooner
terminated, as provided herein or such other date as to which Landlord and
Tenant may agree as set forth in Section 5.2.
Section 1.11. "Permitted Use" shall be use in connection with Tenant's
drug discovery business as a laboratory, research and development facilities and
office uses and other lawful uses included within the definition of "Permitted
Uses" in Exhibit A of the Overlease which are necessary or incidental to
Tenant's drug discovery business in compliance with all laws, regulations,
permits and the like, and, except to the extent otherwise agreed to in writing
by Landlord, such use shall be substantially similar to Landlord's drug
discovery business previously conducted in the Buildings.
Section 1.12. "Overlandlord Consent Date" shall mean the date when the
consent of the Overlandlord to this Sublease has been obtained, pursuant to
Section 17.3 hereof.
ARTICLE 2. DEMISE:
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Section 2.1. Landlord hereby subleases the Demised Premises to Tenant, and
Tenant hereby subleases the Demised Premises from Landlord, for the Permitted
Use upon the terms, provisions and conditions in this Sublease contained, and
except as otherwise expressly provided in this Sublease, subject to the terms,
provisions and conditions of the Overlease.
During the Initial Term Tenant shall have, as appurtenant to the Demised
Premises, the non-exclusive right to use in common with Landlord and others
entitled thereto, subject to Landlord's reasonable rules relating thereto, the
areas marked with an "X" or an arrow on Exhibit B. During the Extended Term,
Tenant shall have such rights to all such areas except those on the third floor
and the stairwell and elevator to the third floor.
Section 2.2. The Tenant covenants and agrees that it will not enter any
other portion of the Premises at the Buildings at any time for any purpose
without Landlord's express consent, that it will not in any way interfere with
Landlord's business operations or Landlord's use and occupancy of the Premises,
nor will it permit any such interference, and that it will comply with all of
Landlord's security and/or confidentiality measures and procedures, health and
safety procedures and any other reasonable rules and regulations of Landlord
regarding the use and occupancy of the Demised Premises, the Premises and the
Property Common Areas described in the Overlease. The foregoing shall not be
deemed to impose a duty upon Landlord with respect to such matters, it being
understood that Tenant shall remain solely responsible for its own security,
confidentiality, health and safety and that of its property, employees and
invitees. Tenant will install locks on the laboratories contained within the
Demised Premises and shall be solely responsible for its personal property and
security as to the Demised Premises and its contents, including personal and
other property, but not the balance of the Premises or the contents thereof.
ARTICLE 3. TERM OF SUBLEASE:
Section 3.1. The term of this Sublease (the "Term") shall begin on the
Commencement Date and shall expire at midnight on the Termination Date, unless
such Term shall sooner cease and expire as hereinafter provided. As of the date
of execution of this Sublease, Landlord agrees to allow Tenant access to the
Demised Premises prior to the Commencement Date to begin (in accordance with the
provisions of Section 5.1 of this Sublease) preparing the Demised Premises for
Tenant's occupancy. Tenant shall have no obligation hereunder to pay rent or
other charges at any time prior to the Commencement Date, except as otherwise
agreed in writing by Tenant.
Section 3.2. Landlord shall be entitled to terminate this Sublease upon 30
days written notice in the event of the
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rescission pursuant to Section 8.07 of the Master Agreement between Landlord and
Tenant dated May 7, 1996. The effective date of termination, which shall be set
out in Landlord's notice, shall be referred to as the "Early Termination Date".
ARTICLE 4. FIXED RENT AND ADDITIONAL RENT:
Section 4.1. Tenant covenants and agrees to pay to Landlord, as Fixed Rent
for the Demised Premises as follows:
A. From the Commencement Date until the Rent Commencement
Date--Third Floor, the sum of $1.00,
B. From the Rent Commencement Date--Third Floor through 5/23/99, the sum
of $5.75 per Rentable Square Foot of Demised Premises plus $5.75 times
Tenant's pro rata share of common areas per year, payable in equal monthly
installments of 1/12 of said sum in advance on the first day of each and
every calendar month during the Term, and pro rata for any fraction of a
month,
C. From 5/24/99 through the Termination Date, the sum of $7.00 per
Rentable Square Foot of Demised Premises plus $7.00 times Tenant's pro
rata share of common areas per year, payable in equal monthly installments
of 1/12 of said sum in advance on the first day of each and every calendar
month during the Term, and pro rata for any fraction of a month.
D. Fixed Rent is intended to equal the total of (1) a pro rata share of
Landlord's Fixed Rent under the Overlease, i.e., (the Fixed Rent per Rentable
Square Foot ("RSF") x (the RSF of the Second Floor Premises (approx. 20,000 -
30,000 sq. ft.)) plus (2) Tenant's pro rata share of the Fixed Rent attributable
to the Tenant's use of the common areas, i.e., (20,000 - 30,000 RSF/186,060 RSF)
x [COMMON AREAS TO WHICH TENANT HAS ACCESS] x (Fixed Rent per RSF).
For example: Assume that the second floor space is 20,000 RSF, the total
common areas shared by Landlord and Tenant is 21,000 RSF, the Fixed Rent
per RSF is $5.75, and the Buildings are 186,060 RSF. Thus, Tenant is
subleasing 10.7% of the total Landlord's Rentable Square Feet. The Fixed
Rent starting with the Rent Commencement Date--Second Floor would be a
total of (a) $5.75 x 20,000 = $115,000 plus (b) 10.7% x $5.75 x 21,000 =
$12,920 or $127,920.
Notwithstanding anything to the contrary herein contained, the Fixed Rent listed
in subsections B, C and D of the preceding sentence is to be exactly equal to
the Fixed Rent per square foot of Rentable Floor Area paid by Landlord under the
Overlease, as
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reduced by any abatements in the Overlease or otherwise, if applicable to the
Demised Premises.
Section 4.2. Commencing on the Rent Commencement Date--Third Floor Tenant
shall also pay directly to Landlord, on the first day of each and every month
during the Term, or, at Landlord's option, within 10 business days of demand, as
Additional Rent, its pro rata share ("Tenant's Share") of all Real Estate Taxes
which Landlord is obligated to pay under Section 3.2 of the Overlease. "Tenant's
Share" shall be computed from time to time on the basis of a fraction whose
numerator is the number of square feet of Rentable Floor Area in the Demised
Premises plus Tenant's pro rata share of common areas and whose denominator is
the total number of square feet of Rentable Floor Area leased by Landlord under
the Overlease.
Section 4.3. Commencing on the Rent Commencement Date--Third Floor,
Tenant shall also pay directly to Landlord, on the first day of each and every
month during the Term, or, at Landlord's option, within 10 business days of
demand, as Additional Rent, Tenant's Share of all Operating Expenses and other
charges which Landlord is obligated to pay under Sections 3.3 through 3.6 of the
Overlease.
Section 4.4. Commencing on the Rent Commencement Date--Third Floor,
Tenant shall also pay directly to Landlord, on the first day of each and every
month during the Term, or, at Landlord's option, within ten (10) business days
of demand, and as Additional Rent, Tenant's Share of all other charges payable
now or in the future under the Overlease (as it may be amended, so long as such
amendment as it affects Tenant's obligations hereunder directly benefits the
Demised Premises or the common areas shared by Tenant) by Landlord, as tenant
under the Overlease, excluding any late fees or penalties and any amounts owing
as a result of a default by Landlord as tenant under the Overlease unless
resulting from a default by Tenant hereunder plus Tenant's Share of third party
costs paid by Landlord which in Landlord's reasonable determination, directly
benefit the Demised Premises or the common areas shared by Tenant.
Section 4.5. Tenant shall have the right to use Tenant's Share of the
parking spaces leased by Landlord under the Overlease.
Section 4.6. Tenant covenants and agrees that the Fixed Rent and all
Additional Rents, charges and adjustments hereunder shall be paid to Landlord in
legal tender of the United States of America, at Landlord's address set forth
above, Attention: Accounting Manager or at such other place or to such other
person's attention as Landlord may from time to time designate by notice in
writing.
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Section 4.7. It is intended by the Landlord and Tenant that Tenant pay
Tenant's Share of the Fixed Rent and Additional Rent and other sums due the
Overlandlord pursuant to Sections 3.3 - 3.6 of the Overlease but that there be
no profit to Landlord in connection with any payments hereunder.
ARTICLE 5. ACCEPTANCE OF DEMISED PREMISES; TENANT'S IMPROVEMENTS:
Section 5.1. Tenant agrees to accept and does accept possession of the
Demised Premises on the Commencement Date "as is" in the same condition as they
are on the date hereof, free of any other tenants. The Tenant has had the
opportunity to conduct its own investigations with respect to the Demised
Premises and the Buildings to otherwise satisfy itself that the Demised
Premises, the Buildings and the Property (as defined in the Overlease) are
suitable for the conduct of Tenant's business. The Tenant acknowledges that
except as set forth expressly in this Sublease, there have been and are no
representations or warranties made by or on behalf of the Landlord with respect
to the Demised Premises, the Building or the Property, or with respect to the
suitability of any of them for the conduct of the Tenant's business. Landlord
shall have no obligation to perform any work or construction with respect to the
Demised Premises as a condition to or subsequent to the commencement of this
Sublease, including any telephone and computer cabling, which shall be Tenant's
responsibility. Tenant shall not in any way make any alterations, additions or
changes to the Demised Premises without having first secured the written
permission of Landlord and, if required by the Overlease, by Overlandlord in
accordance with the Overlease. Any work shall be done in accordance with the
plans and specifications submitted to and approved by Landlord and if required
by the Overlease, Overlandlord and in all other respects in accordance with
Article 4 of the Overlease.
Any alterations made by or for Tenant shall be done at Tenant's sole cost
and expense in a good and workmanlike manner using new materials of first-class
quality consistent with the style and finish of the Demised Premises. Tenant
shall secure all necessary permits in advance of commencement of any work and
shall keep the Demised Premises free of any mechanics' or other liens and shall
hold Landlord and Overlandlord harmless from any loss, cost or damage arising
out of any work done by or for Tenant or by its agents or contractors. Landlord
shall have the right to remove unpermitted alterations at Tenant's cost. All
contractors working for Tenant in the Demised Premises shall be properly
insured, with such insurance as is required under Article 4 of the Overlease and
shall provide certificates of insurance naming Landlord and Overlandlord as
additional named insureds prior to commencement of any work. Tenant, at the
expiration of the Term or earlier termination of this Sublease,
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shall deliver the Demised Premises to Landlord in the same condition as they
were on the Commencement Date, reasonable wear and tear and damage by fire or
other casualty only excepted and Tenant shall remove all personal goods and
effects of Tenant leaving the Demised Premises neat, clean and in first-class
rentable condition and shall remove any alterations if and as required under the
Overlease and as requested by Landlord prior to the time of their installation
and repairing damage arising therefrom.
Section 5.2. On or before the day which is 1 month after the date of the
closing of the IPO, Tenant shall notify Landlord in writing whether it elects to
proceed with occupancy and buildout of the Second Floor Premises or to terminate
this Sublease. If Tenant elects to proceed, Landlord and Tenant shall negotiate
in good faith the exact areas, length of term, time of access for buildout,
recognition of Tenant by Overlandlord and any mortgagee(s) of Overlandlord and
other matters affecting the Second Floor Premises. Further, if such election to
proceed is made, Tenant agrees to prepare drawings, plans and specifications for
improvements to the Second Floor Premises for Tenant's use and occupancy thereof
for the Permitted Use either prior to or promptly after the closing of the IPO
and to use reasonable efforts to obtain any necessary licenses, permits and
approvals and the approval of the Overlandlord and Landlord thereto, Landlord's
consent not to be unreasonably withheld or delayed. Thereafter, Tenant shall
proceed diligently to construct its improvements and relocate its operations
from the Third Floor Premises to the Second Floor Premises. In the event that
all such matters have not been agreed to and this Sublease modified to
accommodate such matters and as modified, executed and delivered by both parties
on or before three months after the date of the closing of the IPO, either party
shall have the right to terminate this Sublease upon 120 days written notice to
the other.
In the event that, despite Tenant's efforts, it has not obtained
Overlandlord's consent to such plans and, to the extent required, any
modification to this Sublease arising out of the good faith negotiations
pursuant to this Section 5.2, within 4 months of the date of the closing of the
IPO, then Tenant or Landlord may terminate this Sublease by written notice to
the other setting forth an effective date of termination not less than 90 days
following the date of such notice. This right of termination shall terminate in
the event such Overlandlord's consent is obtained prior to the date any such
notification is given.
If Tenant has notified Landlord that it elects to proceed as set forth in
the first paragraph of this Section 5.2, Tenant shall have six months after
closing of the IPO to obtain all permits and complete its buildout plus an
additional six months
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so long as construction is in process six months after the date of the closing
of the IPO, plus such further time as Tenant is delayed, day for day, due to
force majeure, up to a maximum of a further six months. If Tenant has not
completed its buildout by such time, Landlord shall have the right to terminate
this Sublease. If Tenant determines it cannot obtain all necessary permits and
approvals, including without limitation, a wastewater discharge permit, within
six months from closing of the IPO it shall so notify Landlord, whereupon either
Landlord or Tenant may within 30 days terminate this Sublease effective 90 days
from the date of the termination notice.
If Tenant has elected to proceed under this section, Fixed Rent and
Additional Rent for the Second Floor Premises shall be payable commencing on the
Rent Commencement Date--Second Floor and no Fixed Rent or Additional Rent
hereunder shall be due for the Third Floor Premises. Tenant shall vacate the
Third Floor Premises upon occupancy by Tenant of the Second Floor Premises.
If Tenant elects not to proceed with occupancy and buildout of the Second
Floor Premises, each party shall have the right by 90 days written notice to
terminate this Sublease effective no earlier than 210 days after the date of
closing of the IPO.
Within a period of 180 days after the execution of this Sublease, Tenant
will use commercially reasonable efforts to accomplish an underwritten initial
public offering of its Common Stock, in which offering Tenant will attempt to
raise between $20 and $30 million (the "IPO"), net to Tenant. Landlord or Tenant
shall be entitled to terminate this Sublease upon 180 days written notice to the
other if the IPO is not consummated on or before January 1, 1997, or, if on
December 31, 1996 Tenant has a registration statement on file with the SEC, and
in Tenant's reasonable judgment, there does not appear to be any material
impediment to the successful completion of the IPO, on or before March 31, 1997.
ARTICLE 6. OVERLEASE:
Section 6.1. This Sublease is subject and subordinate to the terms and
conditions of the Overlease. Except as otherwise specifically provided in this
Sublease, Landlord shall be deemed to be landlord under the Overlease, Tenant
shall be deemed to be tenant under the Overlease, and all of the provisions of
the Overlease contained in Exhibit A hereto are incorporated herein by reference
with the same force and effect as if they were fully set forth herein, except
that Tenant shall not have any Expansion Options or Right of First Offer,
Extension Options or right of self-help, and except, further, that the
provisions regarding general and environmental indemnity and the provisions of
Sections 2.6 - 2.12, Section 5.3 (relating to a rent abatement),
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Section 6.8, Section 11.11, Section 11.8 and Exhibit C shall not apply. Landlord
represents and warrants that the attached document is a true, accurate and
complete copy of the Overlease and any amendments or instruments or documents
materially adversely affecting Tenant's occupancy of the Demised Premises
related thereto. Except as otherwise specifically provided in this Sublease,
Tenant agrees from and after the date hereof fully to comply with all of the
terms, conditions and obligations of Landlord as tenant under the Overlease
applicable to the Demised Premises as if Tenant were the tenant thereunder. The
Tenant shall comply with all federal, state and local (including zoning) laws,
regulations, ordinances, executive orders, federal guidelines and similar
requirements in effect from time to time with respect to Tenant's use and
occupancy of the Demised Premises. Tenant shall comply with all conditions of
any and all permits, licenses and other governmental or regulatory approvals
(collectively, "Permits") required for Tenant's use of the Demised Premises,
including, without limitation, the discharge or emission of regulated materials
or wastes. Prior to occupancy of the Second Floor Premises Tenant shall obtain,
and provide a copy to Landlord of, all Permits required for Tenant's business
operations and its use of the Demised Premises and shall consult with Landlord
concerning, and obtain its prior written approval (not to be unreasonably
withheld or delayed) of, any Permits. The Tenant may use the Demised Premises,
and any portion of the Building only for the Permitted use. During the Initial
Term, Tenant shall not conduct any activities nor take any actions, nor permit
any actions to be taken which would require any license, permit or approval not
obtained by Tenant. Without limiting the generality of the foregoing, during the
Initial Term Tenant, unless it obtains all necessary licenses, permits and
approvals, shall not store any flammable or other hazardous materials (which
shall not preclude Tenant from having small quantities of such materials for
normal use in compliance with applicable legal requirements), nor store or
dispose of hazardous waste.
Tenant shall not cause, nor permit, a default under the Overlease. If the
Overlease terminates before the end of its Term for any reason whatsoever,
including Landlord's default, this Sublease shall also terminate and Landlord
shall have no liability to Tenant arising out of or in connection with such
termination, including without limitation, any damages.
Landlord represents that as of the date hereof, no material default has
occurred under the Overlease outstanding past applicable cure periods. Landlord
agrees promptly to provide Tenant with a copy of any default notice received by
Landlord from Overlandlord. Landlord, as landlord under this Sublease, shall
have the benefit of all rights, remedies and limitations of liability enjoyed by
Overlandlord as the landlord under the Overlease, but (i) Landlord shall have no
obligations under this Sublease to perform any obligations of Overlandlord, as
landlord,
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under the Overlease (including without limitation any obligations to provide
services, maintain insurance or to perform the Overlandlord's obligations under
Sections 5.1, 5.3, 5.5, 6.2, 10.1 (relating to non-disturbance agreements), 12.1
or 12.5 of the Overlease, (ii) Landlord shall not be bound by any
representations or warranties of Overlandlord as landlord under the Overlease;
(iii) in any case where the consent of Overlandlord is required under the terms
of the Overlease, the consent of Landlord and Overlandlord shall be required and
(iv) Landlord shall not be liable to Tenant for any failure or delay in
Overlandlord's performance of its obligations as landlord under the Overlease.
Section 6.2. Notwithstanding any contrary provision of this Sublease, (i)
in any instances where Overlandlord, as landlord under the Overlease, has a
certain period of time in which to notify Landlord, as tenant under the
Overlease, whether Overlandlord will or will not take some action, Landlord, as
landlord under this Sublease, shall have an additional ten-day period after
receiving such notice in which to notify Tenant, (ii) in any instance where
Landlord, as tenant under the Overlease, has a certain period of time in which
to notify Overlandlord, as landlord under the Overlease, whether Landlord will
or will not take some action, Tenant, as tenant under this Sublease, must notify
Landlord, as landlord under this Sublease, at least five business days before
the end of such period, but in no event shall Tenant have a period of less than
five days in which so to notify Landlord unless the period under the Overlease
is five days or less, in which case the period under this Sublease shall be two
days less than the period provided to Landlord as Tenant under the Overlease,
and (iii) in any instance where a specific grace or cure period is granted to
Landlord, as tenant under the Overlease, Tenant, as tenant under this Sublease,
shall be deemed to have a grace or cure period, as applicable, which is ten days
less than Landlord, but in no event shall any grace or cure period be reduced to
less than five days unless the period under the Overlease is five days or less,
in which case the period under this Sublease shall be two days less than the
period provided to landlord under the Overlease.
ARTICLE 7. TENANT'S COVENANTS AND INDEMNITY:
Section 7.1. Tenant covenants and agrees that Tenant will not do or permit
anything which would constitute or could cause a default under the provisions of
the Overlease or omit to do or permit the omission of anything which Tenant is
obligated to do under the terms of this Sublease which would constitute or could
cause a default under the Overlease. Tenant's use of the Common Areas shall be
at its own risk.
Section 7.2. To the maximum extent this agreement may be made effective
according to law, the Tenant agrees to indemnify
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and save harmless the Landlord from and against all claims, loss, or damage of
whatever nature to the extent arising from any breach by the Tenant of any
obligation of the Tenant under this Sublease or any negligence or willful
misconduct of the Tenant, or the Tenant's contractors, licensees, invitees,
agents, servants or employees, or arising from any accident, injury or damage
whatsoever caused to any person or property, occurring after the date that
possession of the Demised Premises is first delivered to the Tenant and until
the end of the Term and thereafter, so long as the Tenant is in occupancy of any
part of the Demised Premises, in or about the Demised Premises or arising from
any accident, injury or damage occurring outside the Demised Premises but in or
on the Property, or any other areas within the Buildings or, on the Land (as
defined in the Overlease), to the extent such accident, injury or damage
results, or is claimed to have resulted, from the negligent act or omission or
wilful misconduct on the part of the Tenant or the Tenant's agents or
contractors, licensees, invitees, servants or employees, provided that the
foregoing indemnity shall not include any cost or damage to the extent arising
from any negligent or willful act or omission of the Landlord, or the Landlord's
contractors, licensees, invitees, agents, servants or employees. This indemnity
and hold harmless agreement shall include indemnity against reasonable
attorneys' fees and all other costs, expenses and liabilities incurred or in
connection with any such claim or proceeding brought thereon, and the defense
thereof and shall survive termination or expiration of this Sublease.
In the event of a default by Tenant in the full and timely payment and
performance of its obligations and covenants under this Sublease, Landlord shall
have all of the rights and remedies in the Overlease with respect to defaults by
the tenant under the Overlease, including without limitation the rights and
remedies set forth in Article 9 of the Overlease. Neither Landlord nor Tenant
shall be responsible for indirect or consequential damages suffered by the
other, regardless of the cause. Tenant shall perform all of its obligations and
agreements under the Master Agreement and a rescission pursuant to Section 8.07
of the Master Agreement shall be deemed to be an Event of Default hereunder.
ARTICLE 8. LANDLORD'S COVENANTS AND INDEMNITY:
Section 8.1. Landlord covenants and agrees that Landlord shall not enter
into any modification or other agreement with respect to the Overlease which
would prevent the use by Tenant of the Demised Premises in accordance with the
terms of this Sublease, or which would increase the obligations of Tenant or
increase the Fixed Rent or Additional Rent required to be paid by Tenant under
the terms of this Sublease unless in either case in Landlord's reasonable
opinion, such an amendment to the Overlease will benefit Tenant as well as
Landlord.
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Section 8.2. To the maximum extent this agreement may be made effective
according to law, the Landlord agrees to indemnify and save harmless the Tenant
from and against all claims, loss, or damage of whatever nature to the extent
arising from any breach by the Landlord or any obligation of the Landlord under
this Sublease or any negligence or willful misconduct of the Landlord, or the
Landlord's contractors, licensees, invitees, agents, servants or employees, or
arising from any accident, injury or damage occurring after the date that
possession of the Demised premises is first delivered to the Tenant and until
the end of the Term and thereafter, so long as the Tenant is in occupancy of any
part of the Demised Premises, in or about the Demised Premises or arising from
any accident, injury or damage occurring outside the Demised Premises but in or
on the Property, or any other areas within the Buildings or, on the Land (as
defined in the Overlease), to the extent such accident, injury or damage
results, or is claimed to have resulted, from the negligent act or omission or
wilful misconduct on the part of the Landlord or the Landlord's agents or
contractors, licensees, invitees, servants or employees, provided that the
foregoing indemnity shall not include any cost or damage to the extent arising
from any negligent or willful act or omission of the Tenant, or the Tenant's
contractors, licensees, invitees, agents, servants or employees. This indemnity
and hold harmless agreement shall include indemnity against reasonable
attorneys' fees and all other costs, expenses and liabilities incurred or in
connection with any such claim or proceeding brought thereon, and the defense
thereof and shall survive termination or expiration of this Sublease.
ARTICLE 9. PERFORMANCE BY OVERLANDLORD:
Section 9.1. It is understood and agreed that Landlord shall at all times
use reasonable efforts to seek to obtain compliance by Overlandlord with all of
its Obligations under the Overlease that affect Tenant.
ARTICLE 10. BROKERAGE REPRESENTATIONS:
Section 10.1. Landlord represents to Tenant that it has engaged no broker
in consummating the transaction contemplated by this Sublease. Tenant represents
to Landlord that it has engaged no broker in consummating the transaction
contemplated by this Sublease. Landlord and Tenant each agree to indemnify and
hold the other harmless from and against any and all loss, cost, damage or
expense (including without limitation reasonable attorneys' fees) arising out of
or incurred in connection with any breach or claimed breach of its
representation contained in the two preceding sentences.
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ARTICLE 11. NOTICES:
Section 11.1. Any bill or notice by Landlord to Tenant shall be deemed
sufficiently given if such bill or notice is in writing and is delivered to
Tenant's authorized agent Attn: President at the Demised Premises with copies to
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center,
Boston, Massachusetts 02111, Attention: Joel R. Bloom or deemed given when first
refused or when delivered by registered or certified United States mail, return
receipt requested, addressed to Tenant at the Demised Premises, or at such other
address as Tenant shall specify to Landlord.
Section 11.2. Any notice by Tenant to Landlord shall be deemed sufficient
given if such notice is in writing and is delivered to Landlord at the Building
Attention: General Counsel, with copies to: Testa, Hurwitz & Thibeault, 125 High
Street, Boston, Massachusetts, 02100, Attention: Margaret W. Brill or deemed
given when first refused or when delivered by registered or certified United
States mail, return receipt requested, addressed to Landlord at the Buildings,
or in each case at such other address as Landlord shall specify to Tenant.
ARTICLE 12. FURTHER SUBLEASE OR ASSIGNMENT:
Section 12.1. Tenant covenants and agrees that neither this Lease nor the
term and estate hereby granted, nor any interest herein or therein, will be
assigned, sublet, mortgaged, pledged, encumbered or otherwise transferred,
voluntarily or by operation of law or otherwise, without the prior written
consent of Landlord which may be withheld, granted or conditioned in its sole
discretion, and, if required under the Overlease, Overlandlord. An acquisition
of Tenant by a PerSeptive Competitor, or a Change of Control in which a
PerSeptive Competitor shall come to control Tenant, as such terms are defined in
and as further described in Section 9.4 of the License Agreement, shall be
deemed to be an assignment of this Sublease requiring Landlord's consent in its
sole discretion as described in the preceding sentence. A merger or
consolidation, or a sale of all or substantially all of the stock, assets or
business of Tenant and its subsidiaries taken as a whole, shall also be deemed
to be an assignment of this Sublease but Landlord's consent in such case shall
not be unreasonably withheld or delayed. Reasonable consent shall be determined
consistent with the provisions of Section 6.8 of the Overlease, but excluding
its provisions concerning recapture and sharing of profits.
ARTICLE 13. ACCESS:
Section 13.1. Landlord and Overlandlord shall have the right to enter and
examine the Demised Premises in accordance with and for the purposes set out in
Section 6.5 of the Overlease
- 13 -
<PAGE> 14
and also, to remove, at Tenant's expense, any changes and additions installed by
Tenant and not consented to by Landlord and, if required, Overlandlord, in
writing. Landlord shall also have the right to enter the Demised Premises for
purposes contemplated by the Consulting and Services Agreement between Landlord
and Tenant, and any other Related Agreement, and, in any event, if Tenant has
given its consent thereto. In addition, during the last six (6) months prior to
the end of the then Term and at any time Tenant is in default under the terms of
this Sublease beyond applicable notice and cure periods, Landlord and Landlord's
representatives may enter the Premises to show the Premises to prospective
subtenants, provided that Landlord shall use reasonable efforts to minimize
disruption to Tenant's business operations. Landlord agrees to give Tenant a
list of the names of all persons authorized by Landlord to show the Premises to
prospective subtenants, and, subject to the Overlandlord's rights under the
Overlease, shall comply with all of Tenant's reasonable security and/or
confidentiality measures and procedures.
ARTICLE 14. SIGNAGE:
Section 14.1. Tenant shall be entitled, at Tenant's cost and in compliance
with all codes, ordinances and regulations, to install signs in and on the
Premises and Building with Landlord's consent, not to be unreasonably withheld
or delayed, subject to Overlandlord's consent.
ARTICLE 15. DEFAULT:
Section 15.1. Without limiting the generality of Section 6.1, Article 9 of
the Overlease is incorporated as though set forth herein, subject to
modification by the terms of Section 6.2 hereof.
- 14 -
<PAGE> 15
ARTICLE 16. ESTOPPEL CERTIFICATE:
Section 16.1. Provided that the following conditions and facts are
determined by the Tenant to be true, Tenant agrees from time to time hereafter,
upon not less than ten (10) days' prior written request by Landlord or
Overlandlord, to execute, acknowledge and deliver to Landlord or Overlandlord a
statement in writing certifying that this Sublease is unmodified and in full
force and effect; that Tenant has no defenses, offsets or counterclaims against
its obligations to pay the Fixed Rent, Additional Rent and other amounts due
hereunder and to perform its other covenants under this Sublease; that there are
no uncured defaults of Landlord or Tenant under this Sublease (or, if there are
any modifications, defenses, offsets, counterclaims, or defaults, setting them
forth in reasonable detail); and the dates to which the Fixed Rent, Additional
Rent and other charges have been paid. Any such statements delivered pursuant to
this Section may be relied upon by Landlord and any other party to whom the
statement, at Landlord's or Overlandlord's request, is addressed.
ARTICLE 17. MISCELLANEOUS PROVISIONS:
Section 17.1. During the Sublease term, Tenant shall maintain insurance of
such types, in such policies, with such endorsements and coverages, and in such
amounts as are set forth in Article 7 of the Overlease, and such additional
insurance as may be required by Landlord, in Landlord's reasonable discretion.
All insurance policies shall name Overlandlord and Landlord as additional
insureds and loss payees and shall contain an endorsement that such policies may
not be modified or canceled without 30 days prior written notice to Overlandlord
and Landlord. Tenant shall promptly pay all insurance premiums and shall provide
Overlandlord and Landlord with policies or certificates evidencing such
insurance.
Section 17.2. This Sublease may be amended or modified only by written
instruments executed by both Landlord and Tenant.
Section 17.3. This Sublease, and the rights and obligations of Landlord
and Tenant under this Sublease, are subject to the condition that Overlandlord
consent to this Sublease, and this Sublease shall be effective only upon the
receipt by Landlord and Tenant of such consent (the "Overlandlord Consent
Date"). In the event the Overlandlord Consent Date shall not have occurred on or
before August 15, 1996, then, Landlord and Tenant shall each have the option to
terminate this Sublease by 30 days written notice thereof to the other.
Section 17.4. Except to the extent caused by the negligence, wilful
misconduct or failure of Landlord to comply with its obligations and covenants
set forth in this Sublease or
- 15 -
<PAGE> 16
in any other agreement between Landlord and Tenant, the Tenant shall indemnify
and hold the Landlord, and its agents, servants, employees, officers, directors,
partners, beneficiaries and trustees, harmless from and against any and all
actions, petitions, orders, claims or demands made, brought or instituted by any
and all private parties and/or any and all public agencies or authorities,
together with any and all reasonable expenses, including reasonable attorney's
fees, costs, losses, demands, liabilities, fines or penalties assessed against
or incurred by any of them, including, without limitation, any of the foregoing
arising under CERCLA, similar state laws, other statutes or common law cause of
action imposing liability without regard to fault arising out of or in any way
connected with any loss or damage to persons or property resulting from the
introduction, generation, storage, disposal, seepage, leakage or release of
Hazardous Material (as defined in the Overlease) into the Demised Premises by
the Tenant, its agents, servants, employees or contractors, or from the improper
release of Hazardous Materials anywhere on the Property by, for or on behalf of
the Tenant.
Section 17.5. Except to the extent caused by the negligence, wilful
misconduct or failure of Tenant to comply with its obligations and covenants set
forth in this Sublease or in any other agreement between Landlord and Tenant the
Landlord shall indemnify and hold the Tenant, and its agents, servants,
employees, officers, directors, partners, beneficiaries and trustees, harmless
from and against any and all actions, petitions, orders, claims or demands made,
brought or instituted by any and all private parties and/or any and all public
agencies or authorities, together with any and all reasonable expenses,
including reasonable attorney's fees, costs, losses, demands, liabilities, fines
or penalties assessed against or incurred by any of them, including, without
limitation, any of the foregoing arising under CERCLA, similar state laws, other
statutes or common law cause of action imposing liability without regard to
fault arising out of or in any way connected with any loss or damage to persons
or property resulting from the introduction, generation, storage, disposal,
seepage, leakage or release of Hazardous Material (as defined in the Overlease)
into the Demised Premises by the Landlord, its agents, servants, employees or
contractors, or from the improper release of Hazardous Materials anywhere on the
Property by, for or on behalf of the Landlord.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
duly executed under seal as of the day and year first above written.
PERSEPTIVE BIOSYSTEMS, INC.
BY: /s/ Noubar Afeyan
-----------------------------------
CHEMGENICS PHARMACEUTICALS INC.
BY: /s/ Barry Berkowitz
-----------------------------------
- 17 -
<PAGE> 18
EXHIBIT A
The Lease dated May 24, 1994 between 500 Old Connecticut Path Limited
Partnership as Landlord and PerSeptive Biosystems, Inc. as Tenant is attached
hereto and incorporated herein by reference.
- 18 -
<PAGE> 19
EXHIBIT B
PLANS OF DEMISED PREMISES
AND DESCRIPTION OF COMMON AREAS
(ATTACHED)
- 19 -
<PAGE> 1
Exhibit 10.51
AMENDMENT, CONSENT AND WAIVER
-----------------------------
This Amendment, Consent and Waiver (this "Waiver"), dated as of January 18,
1997, by and among American Home Products Corporation Acting Through Its
Wyeth-Ayerst Laboratories Division ("Wyeth-Ayerst"), ChemGenics Pharmaceuticals
Inc., a Delaware corporation (the "Company") and Millennium Pharmaceuticals,
Inc., a Delaware corporation ("Millennium").
WHEREAS, Wyeth-Ayerst and the Company have entered into that certain
Collaborative Research and License Agreement dated November 1, 1996 (the
"License Agreement");
WHEREAS, Wyeth-Ayerst is a party to that certain Series E Preferred Stock
Purchase Agreement dated November 27, 1996 by and among Wyeth-Ayerst, the
Company and certain other stockholders of the Company party thereto (the
"Purchase Agreement");
WHEREAS, Wyeth-Ayerst is a party to that certain Standstill Agreement dated
November 27, 1996 by and among Wyeth-Ayerst and the Company (the "Standstill
Agreement");
WHEREAS, Wyeth-Ayerst has been advised that the Company intends to execute
and deliver an Agreement and Plan of Merger (the "Merger Agreement") by and
among the Company, Millennium and CPI Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Millennium ("Sub"), pursuant to which, among
other things, Sub would be merged (the "Merger") with and into the Company and
the stockholders of the Company would receive, in the aggregate, approximately
4,800,000 shares of common stock, par value $.001 per share, of Millennium in
exchange for their capital stock of the Company ("Millennium Merger Shares");
WHEREAS, the Merger would constitute an "Acquisition" for purposes of, and
as such term is defined in, Section 2.3.3(c) of the License Agreement;
WHEREAS, the Stock Purchase Agreement provides that, unless the License
Agreement has been terminated, Wyeth-Ayerst may become obligated to purchase
additional shares of capital stock of the Company; and
WHEREAS, the Standstill Agreement contains certain limitations and
restrictions on the actions of Wyeth-Ayerst with respect to the Company and the
capital stock of the Company;
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1
<PAGE> 2
Section 1. CONSENT TO ACQUISITION. Wyeth-Ayerst hereby consents to the
Merger and, to the extent that the Merger constitutes an "Acquisition" for
purposes of, and as such term is defined in, Section 2.3.3(c) of the License
Agreement, WyethAyerst hereby waives its right to terminate the R & D Program
(as such term is defined in the License Agreement) solely by virtue of the
Merger and Millennium hereby guarantees the performance by the Company of its
obligations under the R & D Program pursuant to the terms of the License
Agreement.
Section 2. AMENDMENT OF ADDITIONAL EQUITY SALES. Upon and subject to the
occurrence of the Effective Time (as defined in the Merger Agreement), the
parties agree to make modifications to Sections 1.03, 2.03 and 2.04 of the
Purchase Agreement including, but not limited to, the following:
(i) at the Second Closing (as defined in the Purchase Agreement),
subject to the condition set forth in Section 2.03 of the Purchase
Agreement, Millennium would be obligated to issue and sell to
WyethAyerst, and Wyeth-Ayerst would be obligated to purchase from
Millennium, for a purchase price of $3,000,000, a number of shares of
common stock, par value $.001, of Millennium ("Millennium Common
Stock"), such number of shares to be determined by dividing (i)
$3,000,000 by (ii) 100% of the Market Price (as defined in the
Purchase Agreement) of the Millennium Common Stock on the date of the
Second Closing (the "Post-Merger Shares"); and
(ii) the rights and obligations of the parties with respect to the
Third Closing (as defined in the Purchase Agreement) will be
terminated.
Section 3. MANDATORY CONVERSION. Wyeth-Ayerst approves the mandatory
conversion of the outstanding shares of preferred stock, $.01 par value per
share, of the Company into shares of common stock of the Company, $.001 par
value per share, pursuant to Section 5(e)(i) of ARTICLE FOURTH of the Company's
Amended and Restated Certificate of Incorporation (the "Mandatory Conversion"),
such Mandatory Conversion to be effective immediately prior to, and subject to
occurrence of, the Effective Time (as defined in the Merger Agreement), and
agrees to (i) vote (or consent by written action as to) all shares of Capital
Stock of the Company that are beneficially owned by it, or as to which it has
voting authority, in favor of the Mandatory Conversion, and (ii) otherwise use
its reasonable efforts to ensure that the Mandatory Conversion is approved by
the requisite vote (or written consent) of stockholders of the Company, such
Mandatory Conversion to be effective immediately prior to, and subject to
occurrence of, the Effective Time.
Section 4. REGISTRATION RIGHTS. Effective immediately prior to, and subject
to the occurrence of, the Effective Time, Wyeth-Ayerst agrees that, with respect
to the securities of the Company owned of record by it as of the Effective Time
(the
2
<PAGE> 3
"Pre-Merger Shares"), all of its registration rights and similar rights
requiring the Company to register such Pre-Merger Shares on behalf of the
undersigned shall be terminated in their entirety and be of no further force or
effect and specifically acknowledges and agrees that such rights shall be
inapplicable to the Merger Shares delivered to the undersigned in the Merger.
Upon issuance of the Post-Merger Shares in accordance with Subsection 2(i)
above, Millennium hereby agrees to grant to Wyeth-Ayerst registration rights
with respect to such Post-Merger Shares on terms that are no less favorable than
the registration rights that the Company previously granted to Wyeth-Ayerst in
the Purchase Agreement.
Section 5. "ACCREDITED INVESTOR" REPRESENTATION. Wyeth-Ayerst represents
that it is an "accredited investor" as defined in Rule 501 of Regulation D of
the Securities and Exchange Commission. Wyeth-Ayerst agrees to execute and
deliver such documents and instruments (including an Investor Questionnaire) and
to make such representations as shall be reasonably requested by Millennium to
ensure that the issuance and delivery of the Merger Shares in connection with
the Merger is exempt from the registration requirements of the Securities Act of
1933, as amended.
Section 6. LOCK-UP AGREEMENT. Wyeth-Ayerst agrees that, with respect to (i)
100% of the Millennium Merger Shares issued and delivered to it pursuant to the
Merger for the period commencing on the Effective Time and ending on the date
that the Registration Statement on Form S-3 to be filed by the Buyer is
effective with respect to the sale of the Millennium Merger Shares (the "Date of
Effectiveness"), (ii) as to 50% of such Millennium Merger Shares with respect to
the period commencing on the Date of the Effectiveness and ending on July 31,
1997, and (iii) as to 25% of such Millennium Merger Shares with respect to the
period commencing on August 1, 1997 and ending on September 30, 1997, it shall
not sell, exchange, transfer, assign, pledge, dispose of or engage in any other
transaction with respect to the foregoing amounts of the Millennium Merger
Shares, including a transaction or arrangement that reduces the risk of loss by
short sale, hedging or otherwise.
Section 7. STANDSTILL AGREEMENT. The parties hereby agree and acknowledge
that the Standstill Agreement shall remain in full force and effect following
the Effective Time, with all references therein to the "Company" being deemed to
refer to Millennium, and all reference to "Voting Securities" being deemed to
refer to shares of Common Stock of Millennium or any other securities
convertible into, exchangeable for or exercisable for Common Stock of
Millennium.
Section 8. FURTHER ASSURANCES. Each party hereby agrees, at any time and
from time to time after the date hereof, at the reasonable request of the other
party, to execute and deliver such other agreements, certificates or instruments
as may be reasonably requested in order to more effectively evidence the
foregoing agreements.
3
<PAGE> 4
Section 9. EFFECT OF WAIVER. The parties hereby ratify and confirm all of
the provisions of the License Agreement and the Purchase Agreement, as modified
hereby, and agree and acknowledge that each of the License Agreement and the
Purchase Agreement, as so modified, remains in full force and effect.
Section 10. COUNTERPARTS. This Waiver may be executed in any number of
Counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Remainder of page intentionally left blank.]
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the day and year first above written.
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
----------------------------
Barry A. Berkowitz
President
AMERICAN HOME PRODUCTS
CORPORATION
ACTING THROUGH ITS
WYETH-AYERST LABORATORIES
DIVISION
By: /s/ Charles N. Ross
----------------------------
Name: Charles N. Ross
--------------------------
Title: Assistant Treasury
-------------------------
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Mark J. Levin
----------------------------
Name: Mark J. Levin
--------------------------
Title: President
-------------------------
5
<PAGE> 1
Exhibit 10.52
CHEMGENICS PHARMACEUTICALS, INC.
One Kendall Square
Building 300
Cambridge, MA 02139
MILLENNIUM PHARMACEUTICALS, INC.
640 Memorial Drive
Cambridge, MA 02139
January 17, 1997
Pfizer, Inc.
235 East 42nd Street
New York, NY 10017
Gentlemen:
ChemGenics Pharmaceuticals, Inc. ("ChemGenics") proposes to enter into an
Agreement and Plan of Merger (the "Merger Agreement") with Millennium
Pharmaceuticals, Inc., a Delaware corporation ("Millennium") and CPI Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Millennium
("CPI"), pursuant to which, among other things, CPI will be merged with and into
ChemGenics and ChemGenics will become a wholly-owned subsidiary of Millennium
(the "Merger"). Effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (the "Effective Time") shares of
common stock $.001 par value, of ChemGenics ("ChemGenics Common Stock")
immediately prior to the Merger will be converted into the right to receive
shares of Common Stock, $.001 par value of Millennium ("Millennium Common
Stock") in accordance with the terms of the Merger Agreement.
Reference is hereby made to the Standstill Agreement dated as of February
9, 1995 by and between ChemGenics and Pfizer, Inc. ("Pfizer") (the "Standstill
Agreement"), pursuant to which certain limitations and restrictions have been
imposed on the actions of Pfizer with respect to ChemGenics and the capital
stock of ChemGenics.
Now therefore, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the undersigned parties hereto agree as follows:
<PAGE> 2
Pfizer, Inc.
January 17, 1997
Page 2
1. The undersigned hereby agree and acknowledge that the Standstill
Agreement shall remain in full force and effect following the Effective Time,
with all references therein to the "Company" being deemed to refer to
Millennium, and all references to "Voting Securities" being deemed to refer to
shares of Millennium Common Stock or any other securities convertible into,
exchangeable for or exercisable for Common Stock of Millennium.
2. Each party hereby agrees, at any time and from time to time after the
date hereof, at the reasonable request of the other party, to execute and
deliver such other agreements, certificates or instruments as may be reasonably
requested in order to more effectively evidence the foregoing agreement.
3. The parties hereby ratify and confirm all of the provisions of the
Standstill Agreement, as modified hereby, and agree and acknowledge that the
Standstill Agreement, as so modified, remains in full force and effect.
4. This Letter Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement
as of the date first written above.
CHEMGENICS PHARMACEUTICALS, INC.
By: /s/ Barry Berkowitz
-----------------------------
Title: President
PFIZER, INC.
By: /s/
-----------------------------
Title: Vice President
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Mark J. Levin
-----------------------------
Title: President
<PAGE> 1
Exhibit 10.53
CHEMGENICS PHARMACEUTICALS, INC.
One Kendall Square
Building 300
Cambridge, MA 02139
MILLENNIUM PHARMACEUTICALS, INC.
640 Memorial Drive
Cambridge, MA 02139
January 18, 1997
PerSeptive BioSystems, Inc.
500 Old Connecticut Path
Framingham, MA 01701
Gentlemen:
ChemGenics Pharmaceuticals, Inc. ("ChemGenics") proposes to enter into an
Agreement and Plan of Merger substantially in the form of the draft dated
January 17, 1997 which was delivered to you (the "Merger Agreement") with
Millennium Pharmaceuticals, Inc., a Delaware corporation ("Millennium") and CPI
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Millennium ("CPI"), pursuant to which, among other things, CPI will be merged
with and into ChemGenics and ChemGenics will become a wholly-owned subsidiary of
Millennium (the "Merger"). Effective upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware (the "Effective
Time") shares of common stock $.001 par value, of ChemGenics ("ChemGenics Common
Stock") immediately prior to the Merger will be converted into the right to
receive shares ("Merger Shares") of Common Stock, $.001 par value of Millennium
("Millennium Common Stock") in accordance with the terms of the Merger
Agreement.
Reference is hereby made to:
i. the Warrant for the Purchase of Shares of Common Stock of
ChemGenics, registered in the name of PerSeptive BioSystems,
Inc. ("PBIO") and representing the right to purchase up to
4,896,335 shares of ChemGenics Common Stock, at an exercise
price of $5.00 per share (the "Warrant");
<PAGE> 2
PerSeptive BioSystems, Inc.
January 18, 1997
Page 2
ii. the Promissory Note dated December 18, 1996 made in favor of
PBIO by ChemGenics in the principal amount of $3,000,000 (the
"Note");
iii. the Master Agreement dated May 7, 1996 between ChemGenics and
PBIO, as amended by a Letter Agreement dated November 22, 1996
and as further amended by the Omnibus Amendment Agreement dated
December 18, 1996 (collectively, the "Master Agreement");
iv. the License Agreement dated as of June 28, 1996 by and among
ChemGenics, PBIO and PBIO's wholly-owned subsidiary, PerSeptive
Technologies II Corporation, a Delaware corporation ("PTC-II")
and Vestec Corporation, a Texas corporation which was
subsequently merged with and into PBIO (the "License
Agreement");
v. the Consulting and Interim Services Agreement dated June 28,
1996 by and between ChemGenics and PBIO, as amended by the
Omnibus Amendment Agreement (the "Consulting and Services
Agreement");
vi. the Standstill and Registration Rights Agreement dated as of
June 28, 1996 by and between ChemGenics and PBIO, as amended by
the Omnibus Amendment Agreement (the "Standstill and
Registration Agreement");
vii. the Confidentiality and Non-Competition Agreement dated as of
June 28, 1996 by and between ChemGenics and PBIO (the
"Confidentiality Agreement"); and
viii. the Sublease Agreement dated June 28, 1996 by and between
ChemGenics and PBIO (the "Sub-lease").
Now therefore, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the undersigned parties hereto agree as follows:
A. WARRANT
-------
1. The undersigned hereby acknowledge and agree that:
<PAGE> 3
PerSeptive BioSystems, Inc.
January 18, 1997
Page 3
i. at the Effective Time, PBIO shall surrender the Warrant to
ChemGenics and shall receive as consideration for such surrender
a payment by either Millennium or ChemGenics of $1,000,000 by
wire transfer;
ii. from the date hereof until the Effective Time, PBIO shall not
exercise its right under the Warrant to acquire shares of
ChemGenics Common Stock, to the extent such Warrant is presently
exercisable, or transfer, assign, pledge or hypothecate the
Warrant in any way;
iii. the provisions of Section 9 of the Warrant shall not apply to
the Merger described herein; and
iv. from and after the Effective Time, the Warrant shall be of no
further force and effect and shall be cancelled by ChemGenics.
B. NOTE
----
1. In accordance with Section 1 of the Note, PBIO hereby acknowledges that
upon the Merger the Note is payable in full and, accordingly, at the Effective
Time, PBIO shall surrender the Note to ChemGenics for cancellation and shall
receive from either Millennium or ChemGenics by wire transfer the sum of
$3,000,000 plus all accrued interest under the Note in full satisfaction and
discharge of ChemGenics' obligations under the Note.
C. MASTER AGREEMENT
----------------
1. The undersigned hereby confirm and acknowledge that any remaining
executory provisions of the Master Agreement shall continue in full force and
effect after the Merger except as follows:
i. PBIO's right of first refusal set forth in Section 5.06 shall
terminate as of the Effective Time;
ii. the post-closing covenants set forth in Sections 8.02, 8.03 and
8.04, having been superseded by the Consulting and Service
Agreement, the Sublease Agreement and the Standstill and
Registration Agreement, and Section 8.06 will terminate as of
the Effective Time;
<PAGE> 4
PerSeptive BioSystems, Inc.
January 18, 1997
Page 4
iii. Section 10.05 is deleted in its entirety and a new Section 10.05
is inserted in lieu thereof which shall read as follows:
"10.05 ASSIGNMENT. Neither this Agreement nor any right
hereunder, may be assigned by any of the parties hereto
without the prior written consent of the other parties;
PROVIDED, HOWEVER that ChemGenics may, upon written notice
to PerSeptive, assign this Agreement to any Control
Affiliate (as such term is defined in the License
Agreement, as amended) which agrees to be bound by the
terms of this Master Agreement and any other applicable
agreement."
iv. Notwithstanding Section 10.15 of the Agreement, all of the
representations and warranties set forth in the Agreement shall
terminate as of the Effective Time; and
v. Provisions of the Master Agreement which pertain to specific
provisions included in subsequent agreements executed by the
applicable parties (such as, by way of example, Section 1.01(B)
of the Master Agreement) shall be terminated or modified to the
extent terminated or modified in such subsequent agreements.
D. LICENSE AGREEMENT
-----------------
1. The undersigned hereby acknowledge and confirm that the License
Agreement will remain in full force and effect after the Merger except as
follows:
i. Section 2.1.1 is amended such that a new Section 2.1.1(d) is
added which reads as follows:
"(d) Upon written notice to PerSeptive, ChemGenics will
have the right to grant sublicenses under the licenses
granted pursuant to Section 2.1.1(a) and Section 2.1.1(b)
above to any direct or indirect 100% parent or direct or
indirect wholly-owned subsidiary of ChemGenics or its
parent (a "Control Affiliate") which agrees in writing with
PerSeptive to be bound by the Non-Competition Agreement, as
amended (as defined in the Master Agreement); PROVIDED THAT
any sublicense granted by ChemGenics under this Agreement
shall be subject and
<PAGE> 5
PerSeptive BioSystems, Inc.
January 18, 1997
Page 5
subordinate to, and consistent with, the terms and
conditions of this Agreement.
ii. Section 2.1.2 is deleted in its entirety and a new Section 2.1.2
is inserted in lieu thereof which reads as follows:
"2.1.2. RESTRICTIONS ON FUTURE LICENSES. Except for the
licenses and rights granted by Section 2.1.1 hereof,
PerSeptive reserves the exclusive (against ChemGenics and
all other Persons) worldwide right to develop and use, and
to license to any Person and authorize future sublicenses
with respect to, the Associated Technology and the
PerSeptive Patent Rights and to develop, make, have made,
use, offer to sell, sell and import products and/or provide
services utilizing or Covered By the Licensed Technology
within or outside of the Field."
iii. Section 2.1.3 of the License Agreement is amended such that the
words "other than Section 2.1.2 hereof" shall be deleted from
the sixth line on page 4 of the License Agreement, and the words
"and 2.1.2" shall be deleted from the second to last line.
iv. Section 14 is deleted in its entirety and a new Section 14 is
inserted in lieu thereof which shall read as follows:
"14. SUCCESSORS AND ASSIGNS.
The terms and provisions of this agreement shall inure
to the benefit of, and be binding upon, PerSeptive,
ChemGenics, and their respective successors and assigns,
subject to the terms of Section 9.4 hereof and the
remainder of this Section 14; PROVIDED, HOWEVER, ChemGenics
may not assign or otherwise transfer this Agreement and any
of its rights and interests, or delegate any of its
obligations hereunder, except to a Control Affiliate, which
Control Affiliate agrees in writing to be bound by this
Agreement and the Non-Competition Agreement as amended (as
defined in the Master Agreement). In the event that either
Party shall consolidate or merge with another Person (other
than an acquisition by such Party of another Person where
the
<PAGE> 6
PerSeptive BioSystems, Inc.
January 18, 1997
Page 6
stockholders of such Party (or any subsidiary thereof)
after such transaction directly or indirectly own at least
a majority of the voting stock of the combined or acquired
Person and, in the case of ChemGenics, other than a Person
which is a Control Affiliate of ChemGenics); or convey,
sell or lease to another Person (other than, in the case of
ChemGenics, a Person which is a Control Affiliate) all or
substantially all of the stock, assets or business of such
Party and its subsidiaries, taken as a whole, or if there
shall be a Change of Control of such Party (other than, in
the case of ChemGenics, a Change in Control involving only
ChemGenics and a Control Affiliate of ChemGenics), then (i)
if such transaction is negotiated by such Party, such Party
shall give the other Party written notice identifying the
acquiring person and the material terms of the transaction
at least thirty (30) days prior to the closing thereof and
(ii) the Parties shall negotiate in good faith to determine
whether any changes shall be appropriate in this Agreement
and/or in the consideration due to PerSeptive for the
licenses granted herein as a result of the proposed
transaction and the changed relationship of the Parties
resulting therefrom, subject to PerSeptive's right to
terminate the licenses granted herein pursuant to Section
9.4 hereof. If the Parties are unable to agree that any
such changes should be made prior to the closing of the
proposed transaction, then the licenses granted herein
shall continue unaffected thereby upon the consummation of
the transaction, subject to PerSeptive's right to terminate
such licenses pursuant to Section 9.4. Any attempt to
assign or delegate any portion of this Agreement in
violation of this Section 14 shall be null and void.
Subject to the foregoing, any reference to PerSeptive and
ChemGenics hereunder shall be deemed to include the
permitted successors thereto and assigns thereof."
2. PBIO and PTC hereby acknowledge and confirm that Millennium does not
constitute a "PerSeptive Competitor", as such term is defined in the License
Agreement.
3. PBIO and PTC hereby waive their rights to thirty (30) days' prior
<PAGE> 7
PerSeptive BioSystems, Inc.
January 18, 1997
Page 7
written notice of the identity of the acquiror and the material terms of the
Merger as set forth in Section 14 of the License Agreement.
4. PBIO and PTC hereby consent to the Merger and acknowledge and agree that
the Merger does not constitute an assignment or transfer of the License
Agreement by ChemGenics.
5. The undersigned hereby agree that as soon as practicable after the
Effective Time they will negotiate to amend the License Agreement to allow
ChemGenics to also grant sublicenses under, or assign, the License Agreement to
Affiliates (as such term is defined in the License Agreement), under terms and
conditions that accommodate PerSeptive's business interests.
E. CONSULTING AND SERVICES AGREEMENT
---------------------------------
1. PBIO hereby acknowledges and agrees that the consummation of the Merger
shall not constitute an assignment of the Consulting and Services Agreement by
ChemGenics and that on or after the Effective Date, the Consulting and Services
Agreement shall remain in full force and effect.
2. The sixth paragraph of Section 4 of the Consulting and Services
Agreement is hereby deleted and a new paragraph is inserted in lieu thereof
which reads as follows:
"Without PBIO's express written consent, no Equipment loaned to
ChemGenics pursuant to this Agreement shall be furnished to any Partner or
any other third party, or otherwise removed from ChemGenics' facility,
unless it has been purchased or leased from ChemGenics for fair
consideration as described above, provided that nothing contained herein
shall prevent ChemGenics form utilizing such Equipment in the ordinary
course of its business with any Partner, and FURTHER PROVIDED, that
ChemGenics may, without PBIO's express written consent, furnish Equipment
to any corporation, or unincorporated organization or other entity that
directly or indirectly controls, is controlled by or is under common
control with ChemGenics."
3. PBIO hereby waives any rights to thirty (30) days' prior notice of the
identity of the acquiror and the material terms of the Merger as set forth in
Section 10(c) of the Consulting and Services Agreement.
<PAGE> 8
PerSeptive BioSystems, Inc.
January 18, 1997
Page 8
4. PBIO hereby acknowledges that, pursuant to the terms of the Merger
Agreement, from and after the Effective Date, each one share of ChemGenics
Common Stock held of record by PBIO immediately prior to the Effective Date
shall be converted into the right to receive such number of shares of Millennium
Common Stock as is determined pursuant to the terms of the Merger Agreement (the
"Merger Shares"). The Merger Shares shall continue to be subject to the
repurchase option set forth in Section 5 of the Consulting and Services
Agreement and, furthermore, Section 5 be and hereby is amended such that it
reads in its entirety as follows:
<TABLE>
"5. CERTAIN CONSEQUENCES OF NONCOMPLIANCE. In the event PBIO does not
provide the Equipment and Supplies required by Sections 3 and 4 of this
Agreement, or the Consulting Services required by Section 2 of this
Agreement, ChemGenics shall provide written notice of such failure to PBIO.
If PBIO fails to cure such failure within thirty (30) days following
receipt of the first such notice, twenty (20) days following receipt of the
second such notice or ten (10) days following receipt of any further
notice, or if such failure is not curable in such period PBIO fails to
commence to cure same within such period and thereafter diligently continue
to prosecute such cure and in any event fails to cure such failure within
an additional twenty (20) days, Millennium Pharmaceuticals , Inc. (the
parent corporation of ChemGenics) ("Millennium") shall have the option for
a period of ninety (90) days following the termination of the grace period
following such notice to purchase from PBIO and PBIO shall be obligated to
sell to Millennium at an aggregate price of $1.00, all or any part of the
number of the Earnout Shares (the "Shares") set forth below (the
"Repurchase Option").
<CAPTION>
Date of Default* Number of Shares**
--------------- ----------------
<S> <C>
July 1, 1996 - June 30, 1997 662,500
July 1, 1997 - June 30, 1998 441,667
July 1, 1998 - June 30, 1999 220,833
Thereafter 0
</TABLE>
* The applicable number of shares shall be determined by the period in
which the date of default, set forth in the relevant default notice,
occurs.
** ChemGenics has entered into an Agreement and Plan of Merger dated
January __, 1997 (the "Merger Agreement") with Millennium and a
wholly-owned subsidiary of Millennium pursuant to which ChemGenics
will become a wholly-owned subsidiary of Millennium (the "Merger").
Effective upon the filing of the Certificate of Merger with the
<PAGE> 9
PerSeptive BioSystems, Inc.
January 18, 1997
Page 9
Secretary of State of the State of Delaware (the "Effective Time")
shares of common stock $.001 par value, of ChemGenics ("ChemGenics
Common Stock") immediately prior to the Merger will be converted into
the right to receive shares of Common Stock, $.001 par value of
Millennium ("Millennium Common Stock") in accordance with the terms of
the Merger Agreement. The Earnout Shares in the foregoing table
consist of shares of ChemGenics Common Stock. Upon the occurrence of
the Effective Time, the number of Earnout Shares listed in such table
shall be replaced by the number of shares of Millennium Common Stock
received by ChemGenics in the Merger, calculated in accordance with
the Exchange Ratio (as such term is defined in the Merger Agreement)
set forth in the Merger Agreement.
In the event Millennium shall be entitled to and shall elect to
exercise the Repurchase Option, it shall give PBIO written notice
specifying the number of Shares which Millennium elects to purchase and
specifying a date for closing hereunder, which date shall be not more than
thirty (30) calendar days after the giving of such notice. The closing
shall take place at Millennium's principal offices or such other location
in the greater Boston, Massachusetts areas as Millennium may reasonably
designate in such notice. At the closing, PBIO shall deliver the Shares
being purchased against the simultaneous delivery of the purchase price by
Millennium.
If PBIO notifies Millennium that it disagrees with Millennium's
assertion that there is a default, and notifies Millennium of the same
within fifteen (15) calendar days after PBIO's receipt of notice thereof,
the matter will be referred to and determined by arbitration pursuant to
Section 10.8 of the Master Agreement.
In the event that PBIO fails to deliver the Shares as required by this
Agreement, Millennium may elect (a) to establish a segregated account to
receive the payment of the repurchase price, such account to be turned over
to PBIO upon delivery of the certificates representing such Shares, and (b)
immediately to take such action as is appropriate to transfer record title
of such Shares from PBIO to Millennium and to treat PBIO and such Shares in
all respects as if delivery of the certificates representing such Shares
had been made as required by this Agreement. PBIO hereby irrevocably grants
Millennium a power of attorney for the purpose of effectuating the
foregoing.
If Millennium shall pay a stock dividend or declare a stock split on
or with respect to any of its Common Stock, or otherwise distribute
securities of
<PAGE> 10
PerSeptive BioSystems, Inc.
January 18, 1997
Page 10
Millennium to the holders of its Common Stock, the number of shares of
stock or other securities of Millennium issued with respect to the Shares
then subject to the Repurchase Option shall be added to the Shares then
subject to the Repurchase Option without any change in the aggregate
purchase price. If Millennium shall distribute to its stockholders shares
of stock of another corporation, the shares of stock of such other
corporation distributed with respect to the Shares then subject to the
Repurchase Option shall be added to the Shares covered by the Repurchase
Option without any change in the aggregate purchase price.
If the outstanding shares of Millennium Common Stock shall be
subdivided into a greater number of shares or combined into a smaller
number of shares, or in the event of a reclassification of the outstanding
shares of Common Stock of Millennium, or if Millennium shall be a part to
any capital reorganization, there shall be substituted for the Shares then
covered by the Repurchase Option such amount and kind of securities as are
issued in such subdivision, combination, reclassification, or capital
reorganization in respect of the Shares subject to the Repurchase Option
immediately prior thereto, without any change in the aggregate purchase
price."
F. STANDSTILL AND REGISTRATION AGREEMENT
-------------------------------------
1. The undersigned hereby acknowledge that the Standstill and Registration
Agreement shall remain in full force and effect, PROVIDED, HOWEVER, that
Sections 2.02 and 2.03 and Article III shall be deleted in their entirety.
G. CONFIDENTIALITY AGREEMENT
-------------------------
1. The undersigned hereby agree that the Merger does not constitute an
assignment of the Confidentiality Agreement and that such Confidentiality
Agreement shall remain in full force and effect, PROVIDED, HOWEVER, that
Sections 1 and 2 shall be deleted from the Confidentiality Agreement in their
entirety.
H. SUBLEASE
--------
1. In accordance with Article 12 of the Sublease, PBIO hereby consents to
the Merger, to the extent that the Merger constitutes as "assignment" under the
provisions of Article 12.
2. PBIO agrees to use its best efforts to obtain any consents or waivers of
<PAGE> 11
PerSeptive BioSystems, Inc.
January 18, 1997
Page 11
the Overlandlord (as defined in the Sublease) to the extent required to
accommodate the change and control of ChemGenics resulting from the Merger.
3. Upon and subject to the occurrence of the Effective Time, the
undersigned agree to negotiate in good faith any such amendments or
modifications of the Sublease which the parties may deem appropriate to account
for the Merger.
I. APPROVAL OF MERGER
------------------
1. PBIO agrees to (a) vote (or consent by written action) as to all shares
of ChemGenics Common Stock that are beneficially owned by the undersigned, or as
to which the undersigned has voting authority, in favor of the adoption of the
Merger Agreement and the approval of the Merger and (b) otherwise use the
undersigned's best effort to assure that the Merger Agreement is adopted and the
Merger is approved by the requisite vote (or written consent) of stockholders of
ChemGenics, in each case subject to the satisfaction of the other conditions
precedent to ChemGenics' obligation to consummate the Merger.
J. "ACCREDITED INVESTOR" REPRESENTATION
------------------------------------
1. PBIO represents that it is an "accredited investor" as defined in Rule
501 of Regulation D of the Securities and Exchange Commission. PBIO agrees to
execute and deliver such documents and instruments (including an Investor
Questionnaire) and to make such representations as shall be reasonably requested
by Millennium to ensure that the issuance and delivery of the Merger Shares in
connection with the Merger is exempt from the registration requirements of the
Securities Act of 1933, as amended.
K. LOCK-UP AGREEMENT
-----------------
1. PBIO agrees that, with respect to (i) 100% of the Merger Shares issued
and delivered to it pursuant to the Merger for the period commencing on the
Effective Time and ending on the date that the Registration Statement on Form
S-3 to be filed by Millennium is effective with respect to the sale of the
Merger Shares (the "Date of Effectiveness"), (ii) as to 50% of such Merger
Shares with respect to the period commencing on the Date of the Effectiveness
and ending on July 31, 1997, and (iii) as to 25% of such Merger Shares with
respect to the period commencing on August 1, 1997 and ending on September 30,
1997, PBIO shall not sell, exchange, transfer, assign, pledge, dispose of or
engage in any other transaction with respect to the foregoing amounts of the
Merger Shares, including a transaction or arrangement that reduces the risk of
loss by short sale, hedging or otherwise.
<PAGE> 12
PerSeptive BioSystems, Inc.
January 18, 1997
Page 12
L. TAX REPRESENTATIONS
-------------------
1. PBIO shall make customary, reasonable and appropriate representations to
tax counsel to Millennium and ChemGenics to enable such firms to render opinions
as to the tax-free nature of the Merger.
M. MISCELLANEOUS
-------------
1. From and after the Effective Date, notices required to be given to
ChemGenics under any of the agreements set forth herein shall be sent to:
ChemGenics Pharmaceuticals, Inc.
c/o Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, MA 02139
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Steven D. Singer, Esq.
2. To the extent that the amendment or modification of any agreement
hereunder amends or modifies the terms and conditions of any other agreement
hereunder, such other agreement shall be deemed to be so amended or modified.
3. The undersigned hereby agree that, if the Effective Time does not occur
by August 31, 1997 or if the Merger Agreement shall be terminated in accordance
with the provisions of Section 6.1 thereof, then this Letter Agreement shall
terminate and be of no further force or effect and all obligations of the
undersigned hereunder shall become null and void.
4. This Letter Agreement shall be governed by and construed in accordance
with the internal law (and not the law of conflicts) of the State of Delaware.
5. This Letter Agreement may be executed in any number of counterparts, and
each such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
<PAGE> 13
PerSeptive BioSystems, Inc.
January 18, 1997
Page 13
IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement
as of the date first written above.
CHEMGENICS PHARMACEUTICALS, INC.
By: /s/ Barry Berkowitz
-----------------------------
Title: President
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar Afeyan
-----------------------------
Title: President
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Mark J. Levin
-----------------------------
Title: President
PERSEPTIVE TECHNOLOGIES II
CORPORATION
By: /s/ Noubar Afeyan
-----------------------------
Title: President
<PAGE> 1
Exhibit 10.54
AMENDMENT TO COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
---------------------------------------------------------
This Amendment ("Amendment") dated March 20, 1997, by and among American
Home Products Corporation, a Delaware corporation, represented by its
Wyeth-Ayerst Laboratories Division ("Wyeth-Ayerst") and ChemGenics
Pharmaceuticals Inc., a Delaware corporation (the "Company") amends that certain
Collaborative Research and License Agreement dated November 1, 1996 by and
between Wyeth-Ayerst and the Company (the "License Agreement").
WHEREAS Wyeth-Ayerst has been advised that the Company has executed an
Agreement and Plan of Merger dated January 20, 1997 by and among the Company,
Millennium Pharmaceuticals, Inc., a Delaware corporation ("Millennium") and CPI
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Millennium ("CPI") pursuant to which, among other things, CPI will be merged
(the "Merger") with and into the Company and the Company will become a
wholly-owned subsidiary of Millennium.
WHEREAS, Wyeth-Ayerst is a party to that certain Series E Preferred Stock
Purchase Agreement dated November 27, 1996 by and among Wyeth-Ayerst, the
Company and certain other stockholders a party thereto (the "Purchase
Agreement");
WHEREAS, the License Agreement and the Purchase Agreement provide that,
unless the License Agreement has been terminated, Wyeth-Ayerst may become
obligated to purchase additional shares of capital stock of the Company (the
"Additional Equity Investments").
WHEREAS, in connection with the Merger, Wyeth-Ayerst, the Company and
Millennium have heretofore entered into an Amendment, Consent and Waiver dated
as of January 18, 1997 pursuant to which the parties have agreed to modify the
terms and conditions of the Additional Equity Investments set forth in the
License Agreement and Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Section 3.1 of the License Agreement is deleted in its entirety and a
new Section 3.1 is inserted in lieu thereof which reads as follows:
<PAGE> 2
"3.1 Equity Investments
------------------
WYETH-AYERST will make two equity investments in CHEMGENICS in
accordance with the terms of a Series E Preferred Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement"):
1. $5 million on the Effective Date of this Agreement.
2. $3 million as set forth in Section 1.03 (b) of the Stock Purchase
Agreement."
2. The Agreement, as supplemented and modified by this Amendment, together
with the other writings referred to in the Agreement or delivered pursuant
thereto which form a part thereof, contains the entire Agreement among the
parties with respect to the subject matter thereof and amends, restates and
supersedes all prior and contemporaneous arrangements or understandings with
respect thereto.
3. From and after the effective date of this Amendment, each reference in
the Agreement to "this agreement," "hereunder," "hereof," "herein" or words of
like import, and each reference to the other documents entered into in
connection with the Agreement shall mean and be a reference to the Agreement as
amended hereby. Except as specifically amended above, the Agreement shall remain
in full force and effect and is hereby ratified and confirmed.
4. This Amendment shall be governed by and construed in accordance with the
laws of the State of New Jersey, U.S.A., without regard to the application of
principles of conflicts of law.
5. This Amendment may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Collaborative Research and License Agreement on the date first written above.
CHEMGENICS PHARMACEUTICALS INC.
By: /s/ Barry A. Berkowitz
----------------------------
Barry A. Berkowitz
President
-2-
<PAGE> 3
AMERICAN HOME PRODUCTS
CORPORATION
ACTING THROUGH ITS
WYETH-AYERST LABORATORIES
DIVISION
By: /s/ Gerald A. Jibilian
----------------------------
Name: Gerald A. Jibilian
--------------------------
Title: Vice President
-------------------------
The undersigned hereby agrees to and acknowledges the foregoing as of the
date first written above:
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Steven H. Holtzman
--------------------------------
Name: Steven H. Holtzman
------------------------------
Title: Chief Business Officer
-----------------------------
-3-
<PAGE> 1
EXHIBIT 11.1
Statement Regarding Computation of Per Share Earnings
Millennium Pharmaceuticals, Inc.
<TABLE>
Year Ended December 31
1996 1995
---------------------------
<S> <C> <C>
Average common stock outstanding 22,286,711 3,161,814
Assumed conversion of Convertible Preferred Stock 12,109,721
Common stock equivalents 3,879,160
----------- -----------
Total 22,286,711 19,150,695
Net income(loss) $(8,767,991) $ 1,284,366
Net income (loss) per share $ (0.39) $ 0.07
</TABLE>
<PAGE> 1
EXHIBIT 13
----------
Millennium Pharmaceuticals, Inc.
1996 Annual Report to Stockholders
<PAGE> 2
MILLENNIUM PHARMACEUTICALS, INC.
Selected Financial Data
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 1994 1995 1996
- - ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
(in thousands, except per share data)
Revenue under strategic alliances $ -- $ 7,963 $22,880 $ 31,764
Costs and expenses:
Research and development 2,859 10,990 17,838 34,803
General and administrative 1,530 3,240 3,292 7,973
- - ---------------------------------------------------------------------------------------------
4,389 14,230 21,130 42,776
- - ---------------------------------------------------------------------------------------------
Income (loss) from operations (4,389) (6,267) 1,750 (11,012)
Interest income (expense), net 101 (105) (466) 2,244
- - ---------------------------------------------------------------------------------------------
Net income (loss) $(4,288) $ (6,372) $ 1,284 $ (8,768)
=============================================================================================
Pro forma net income (loss) per share $ 0.07 $ (0.39)
=============================================================================================
Shares used in computing pro forma
net income (loss) per share 19,151 22,287
<CAPTION>
- - ---------------------------------------------------------------------------------------------
DECEMBER 31, 1993 1994 1995 1996
- - ---------------------------------------------------------------------------------------------
BALANCE SHEET DATA:
(in thousands)
Cash, cash equivalents and
marketable securities $ 4,629 $ 6,105 $17,847 $ 63,848
Working capital 3,517 3,151 10,498 60,273
Total assets 6,156 10,101 25,105 87,744
Long-term debt, net of current portion -- 3,067 1,467 --
Capital lease obligations, net of
current portion 826 2,359 2,499 9,308
Accumulated deficit (4,288) (10,660) (9,376) (18,144)
Total stockholders' equity $ 4,164 $ 1,559 $13,096 $ 66,639
</TABLE>
25
<PAGE> 3
MILLENNIUM PHARMACEUTICALS, INC.
Management's Discussion and Analysis of
Financial condition and Results of Operations
OVERVIEW
The Company was incorporated in January of 1993 and has devoted substantially
all of its resources to the development and application of genetics, genomics
and bioinformatics technology used to identify the genes responsible for major
diseases, as well as comprehensive technologies to elucidate the role of these
genes in disease initiation and progression. To date, all of the Company's
revenue has resulted from payments from strategic partners and the Company has
not received any revenue from the sale of products or services.
The Company has entered into several strategic alliances: in March 1994 with
Hoffmann-La Roche Inc. ("Roche") in obesity and type II diabetes; in October
1995 and March 1996 with Eli Lilly and Company ("Lilly") in atherosclerosis and
select areas of oncology, respectively; in December 1995 with Astra AB ("Astra")
in inflammatory respiratory diseases; and in July 1996 with American Home
Products ("AHP") in certain disorders of the central nervous system. These
agreements have provided the Company with various combinations of equity
investments, up-front and follow-on fees and research funding and may provide
certain additional payments upon the attainment of research and regulatory
milestones and royalty and/or profit sharing payments based on sales of any
products resulting from the collaborations. Revenue recognized under the
collaborations through December 31, 1996 has aggregated approximately
$62,607,000.
Although the Company intends to enter into additional strategic alliances, it
also expects to incur increasing expenses and additional losses for at least the
next several years, primarily due to expansion of its research and development
programs. Payments under strategic alliance and licensing arrangements will be
subject to significant fluctuation in both timing and amounts resulting in
periods of profitability and periods of losses; therefore, the Company's results
of operations for any period may not be comparable to the results of operations
for any other period.
RESULTS OF OPERATIONS
Years Ended December 31, 1996 and December 31, 1995
Revenue under strategic alliances increased to $31,764,000 for the year ended
December 31, 1996 (the "1996 Period") from $22,880,000 for the year ended
December 31, 1995 (the "1995 Period"). During the 1996 Period, the Company
recognized strategic alliance revenue from four partners--Roche, Lilly, Astra,
and AHP. During the 1995 Period, strategic alliance revenue was primarily
received from Roche, however in the fourth quarter of 1995, the Company received
license fees on new collaborations with Lilly and Astra. The 1996 Period also
included an up-front license fee from AHP and various research milestone
payments. Effective March 1996, Lilly exercised its option to enter into a
strategic alliance in select areas of oncology. In connection with the execution
of this agreement, the Company recognized $2,750,000 of revenue that had been
previously deferred.
Research and Development expenses increased to $34,803,000 for the 1996 Period
from $17,838,000 for the 1995 Period. The increase was primarily attributable to
increased payroll and personnel expenses as the Company hired additional
research and development personnel, increased purchase of laboratory supplies,
increased equipment depreciation and facilities expenses in connection with the
expansion of the Company's research efforts and increased costs associated with
the collection of patient information and DNA samples. The Company expects
research and development expenses to continue to increase as personnel and
research and development facilities are expanded to accommodate the Company's
existing strategic alliances. Such expenses will also increase to the extent
that the Company enters into additional strategic alliances with third parties.
General and administrative expenses increased to $7,973,000 for the 1996 Period
from $3,292,000 for the 1995 Period. The increase was primarily attributable to
increased payroll and personnel expenses as the
<PAGE> 4
Company hired additional management and administrative personnel, and
professional fees in connection with the overall scale-up of the Company's
operations and business development efforts. It is anticipated that general and
administrative expenses will continue to increase as the Company continues to
expand its operations.
The Company had net interest income of $2,244,000 for the 1996 Period and net
interest expense of $466,000 for the 1995 Period. The transition to net interest
income was due to increased interest income earned on higher balances of cash
and investment securities.
On February 10, 1997, the Company acquired ChemGenics Pharmaceuticals Inc.
(ChemGenics) in exchange for approximately 4,800,000 shares of common stock. In
addition, a principal shareholder of ChemGenics received $4,000,000 in
settlement of a promissory note and repurchase of warrants previously issued by
ChemGenics. Under purchase accounting, the Company expects that a substantial
portion of the purchase value of ChemGenics will be charged to 1997 operating
results as acquired in-process research and development.
Years Ended December 31, 1995
and December 31, 1994
Revenue under strategic alliances increased to $22,880,000 for the year ended
December 31, 1995 (the "1995 Period") from $7,963,000 for the year ended
December 31, 1994 (the "1994 Period"). The increase for the 1995 Period was due
to the inclusion of a full year of research funding and a research milestone
payment from Roche, up-front fees from Lilly and Astra, and research funding
from Lilly.
Research and development expenses increased to $17,838,000 for the 1995 Period
from $10,990,000 for the 1994 Period. The increase was primarily attributable to
increased payroll and personnel expenses as the Company hired additional
research and development personnel, increased purchase of laboratory supplies,
increased equipment depreciation and facilities expenses in connection with the
expansion of the Company's research efforts, and increased costs associated with
the collection of patient information and DNA samples.
General and administrative expenses were relatively unchanged at $3,292,000 for
the 1995 Period as compared with $3,240,000 for the 1994 Period.
Net interest expense increased to $466,000 for the 1995 Period from $105,000 for
the 1994 Period. This increase was due to increased interest expense incurred on
capital lease obligations and debt, both entered into in 1995, partially offset
by increased interest income earned on higher balances of cash and marketable
securities.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
strategic alliances, private placement of equity securities, issuance of debt
and capital leases. In May 1996, the Company completed an initial public
offering of common stock resulting in proceeds, net of underwriting discounts
and offering costs, of $57,103,000. Through December 31, 1996, the Company
recognized approximately $62,607,000 of revenue under strategic alliances. The
private placement of equity securities has provided the Company with aggregate
gross proceeds of approximately $25,950,000. The Company has obtained $4,000,000
in long-term debt, $16,400,000 in capital lease financings, and $1,100,000 to
finance the build-out of an 8,000 square foot in-house animal facility. As of
December 31, 1996, the Company had approximately $63,848,000 in cash, cash
equivalents and marketable securities.
Although the Company had no material commitments for capital expenditures at
December 31, 1996, the Company expects capital expenditures to continue to be
significant over the next several years as facilities are expanded and equipment
is acquired to support increased research and development efforts.
As of December 31, 1996, the Company had net operating loss carryforwards of
approximately $16,596,000 to offset future federal and state taxable income
through 2011. Due to the degree of uncertainty related to the ultimate
realization of such prior losses, no benefit has been recognized as of December
31, 1996. Moreover, utilization of such losses in future years may be limited
under the change of stock ownership rules of the Internal Revenue Service.
The Company believes that existing cash and marketable securities and
anticipated cash flow from its current strategic alliances will be sufficient to
support the Company's operations for at least the next 24 months. The Company's
forecast of the period of time through which its financial resources will be
adequate to support its operations is forward-looking information, and, as such,
actual results may vary.
27
<PAGE> 5
Factors that may cause actual results to vary include those set forth below
under the heading "Factors Affecting Future Operating Results."
FACTORS AFFECTING FUTURE OPERATING RESULTS
This Annual Report to Stockholders contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends,"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. These factors include, without limitation, those set forth below and
elsewhere in this Annual Report to Stockholders and in the Section titled
"Business Factors which May Affect Results" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, as filed with the Securities and
Exchange Commission, which Section is incorporated herein by reference.
The Company is at an early stage of development. To date, the Company has not
developed or commercialized any products based on its technological approaches.
There can be no assurance that these approaches will enable the Company to
successfully identify and characterize genes that predispose individuals to the
diseases that are the principal focus of its disease research programs or to use
any resulting information to develop molecular targets of utility for
pharmaceutical product development. Even if the Company is successful in
identifying genes associated with specific diseases, there can be no assurance
that its gene discoveries will lead to the development of therapeutic and
diagnostic products. In addition, the Company faces intense competition from
commercial and academic organizations, many of which are larger and better
financed.
The Company has a substantial accumulated deficit. The Company expects to incur
losses for at least the next several years and that such losses will increase as
the Company expands its research and development activities. The Company will
require substantial additional funds for its research and product development
programs, operating expenses, the pursuit of regulatory approvals and expansion
of its production, sales and marketing capabilities. Adequate funds for these
purposes, whether through equity or debt financings, collaborative or other
arrangements with corporate partners or from other sources, may not be available
when needed or on terms acceptable to the Company. Insufficient funds could
require the Company to delay, scale back or eliminate certain of its research
and product development programs or to license to third parties to commercialize
products or technologies that the Company would otherwise develop or
commercialize itself.
The Company's strategy for development and commercialization of diagnostic and
therapeutic products based upon its gene discoveries depends upon the formation
of various strategic alliances and licensing arrangements. There can be no
assurance that current or any future strategic alliances or licensing
arrangements ultimately will be successful. If any of the Company's strategic
partners were to breach or terminate its agreement with the Company or otherwise
fail to conduct its collaborative activities successfully in a timely manner,
such delay or termination could have a material adverse effect on the Company's
business, financial condition and results of operations.
Proprietary rights relating to the products, methods and services of the Company
will be protected from unauthorized use by third parties only to the extent that
they are covered by valid and enforceable patents or are maintained in
confidence as trade secrets. There can be no assurance that any pending patent
applications relating to the products, methods and services of the Company will
result in patents being issued or that any such patents will afford protection
against competitors with similar technology. There may be pending or issued
third-party patents relating to the methods and services of the Company and the
Company may need to acquire licenses to, or to contest the validity of, any such
patents.
<PAGE> 6
It is likely that significant funds would be required to defend any claim that
the Company infringes a third-party patent. There can be no assurance that any
license required under any such patent would be made available.
The Company recently has significantly increased the scale of its operations to
support the expansion of its disease research programs and its strategic
alliances, including the acquisition of ChemGenics Pharmaceuticals Inc. in
February 1997. The resulting growth in personnel and facilities could place
significant strains on the Company's management, operations and systems.
Other factors that may affect the Company's future operating results include the
inherent risk of product liability claims which may result from testing,
marketing and sale of pharmaceutical products, the Company's fluctuations in
quarterly operating results, the Company's ability to continue to attract and
retain qualified management and scientific staff, and its ability to obtain on a
timely basis regulatory approvals for marketing and sale of its products and to
compete successfully in the market.
<PAGE> 7
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Millennium Pharmaceuticals, Inc.
We have audited the accompanying balance sheets of Millennium Pharmaceuticals,
Inc. as of December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Millennium Pharmaceuticals,
Inc. at December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
January 31, 1997, except for Note 11,
as to which the date is February 10, 1997
<PAGE> 8
<TABLE>
MILLENNIUM PHARMACEUTICALS, INC.
Balance Sheets
<CAPTION>
- - --------------------------------------------------------------------------------------
DECEMBER 31, 1996 1995
- - --------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 10,088,302 $10,586,260
Marketable securities 53,759,671 7,260,284
Due from strategic partners 5,709,870 --
Prepaid expenses and other current assets 2,512,670 694,763
- - --------------------------------------------------------------------------------------
Total current assets 72,070,513 18,541,307
Property and equipment, net 15,191,277 4,905,528
Due from strategic partners -- 1,463,333
Deposits and other assets 482,660 194,682
- - --------------------------------------------------------------------------------------
Total assets $ 87,744,450 $25,104,850
======================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,262,458 $ 1,122,446
Accrued expenses 1,283,782 567,611
Deferred revenue 3,543,002 3,110,000
Current portion of long-term debt 1,466,667 1,600,000
Current portion of capital lease obligations 3,241,507 1,643,168
- - --------------------------------------------------------------------------------------
Total current liabilities 11,797,416 8,043,225
Long-term debt, net of current portion -- 1,466,667
Capital lease obligations, net of current portion 9,308,272 2,499,088
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.001 par value; 5,000,000
shares in 1996 and 14,000,000 shares in 1995
authorized:
Series A convertible preferred stock; 8,450,000
shares issued and outstanding in 1995 -- 8,450
Series B convertible preferred stock; 2,000,000
shares issued and outstanding in 1995 -- 2,000
Series C convertible preferred stock; 1,333,333
shares issued and outstanding in 1995 -- 1,333
Common Stock, $0.001 par value; 100,000,000 shares
in 1996 and 25,000,000 shares in 1995 authorized;
23,914,151 shares in 1996 and 4,211,926 shares in
1995 issued and outstanding 23,914 4,212
Additional paid-in capital 87,789,956 22,722,267
Deferred compensation (2,767,846) --
Notes receivable from officers (245,242) (266,681)
Unrealized loss on marketable securities (18,318) --
Accumulated deficit (18,143,702) (9,375,711)
- - --------------------------------------------------------------------------------------
Total stockholders' equity 66,638,762 13,095,870
- - --------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 87,744,450 $25,104,850
======================================================================================
</TABLE>
31
<PAGE> 9
<TABLE>
MILLENNIUM PHARMACEUTICALS, INC.
Statements of Operations
<CAPTION>
- - --------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 1995 1994
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue under strategic alliances $ 31,763,625 $22,880,000 $ 7,962,500
Costs and expenses:
Research and development 34,803,256 17,838,260 10,989,679
General and administrative 7,972,754 3,291,634 3,240,118
- - --------------------------------------------------------------------------------------------
42,776,010 21,129,894 14,229,797
- - --------------------------------------------------------------------------------------------
Income (loss) from operations (11,012,385) 1,750,106 (6,267,297)
Interest income 3,131,590 358,635 125,599
Interest expense (887,196) (824,375) (230,756)
- - --------------------------------------------------------------------------------------------
Net income (loss) $ (8,767,991) $ 1,284,366 $(6,372,454)
============================================================================================
Pro forma net income (loss) per share $ (0.39) $ 0.07
============================================================================================
Shares used in computing pro forma net income
(loss) per share 22,286,711 19,150,695
</TABLE>
<PAGE> 10
<TABLE>
MILLENNIUM PHARMACEUTICALS, INC.
Statements of Cash Flows
<CAPTION>
- - --------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 1995 1994
- - --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (8,767,991) $ 1,284,366 $(6,372,454)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:
Depreciation and amortization 3,866,698 1,726,074 763,165
Loss on asset disposal 199,028 -- --
Amortized interest income (280,002) -- --
Stock compensation 794,717 -- --
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (1,817,907) (532,722) (108,280)
Due from strategic partners (3,966,535) (1,463,333) --
Deposits and other assets (287,978) (17,784) (68,890)
Accounts payable and accrued expenses 1,856,183 441,480 304,010
Deferred revenue 433,002 3,110,000 --
- - --------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (7,970,785) 4,548,081 (5,482,449)
INVESTING ACTIVITIES
Purchase of property and equipment (3,209,644) (760,245) (39,763)
Sale of marketable securities 52,595,227 1,171,729 989,517
Purchase of marketable securities (99,112,932) (8,432,013) --
- - --------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (49,727,349) (8,020,529) 949,754
FINANCING ACTIVITIES
Proceeds from sale of Common Stock and warrants 57,402,597 109,741 16,977
Proceeds from sale of Preferred Stock 3,499,992 10,250,000 3,750,000
Proceeds from employee stock purchases 656,649 -- --
Repurchase of Common Stock (3,688) (332) (96)
Loan to officer (21,066) -- --
Proceeds from long-term debt -- -- 4,000,000
Payments on long-term debt (1,600,000) (933,333) --
Payments of capital lease obligations (2,734,308) (1,472,836) (768,025)
- - --------------------------------------------------------------------------------------------------
Net cash provided by
financing activities 57,200,176 7,953,240 6,998,856
- - --------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (497,958) 4,480,792 2,466,161
- - --------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 10,586,260 6,105,468 3,639,307
- - --------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 10,088,302 $10,586,260 $ 6,105,468
==================================================================================================
Non-cash investing and financing activities:
Equipment acquired under capital leases $ 11,141,831 $ 2,215,180 $ 3,014,148
==================================================================================================
</TABLE>
33
<PAGE> 11
<TABLE>
MILLENNIUM PHARMACEUTICALS, INC.
Statements of Stockholders' Equity
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK COMMON STOCK ADDITIONAL
PAID-IN CAPITAL
SHARES AMOUNT SHARES AMOUNT
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994 8,450,000 $ 8,450 1,963,250 $ 1,963 $ 8,441,550
Issuance of Series B
Convertible Preferred Stock 1,250,000 1,250 3,748,750
Issuance of Common Stock 1,095,632 1,096 15,881
Repurchase of Common Stock (95,602) (96)
Net loss
- - -----------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 9,700,000 9,700 2,963,280 2,963 12,206,181
Issuance of Series B
Convertible Preferred Stock 750,000 750 2,249,250
Issuance of Series C
Convertible Preferred Stock 1,333,333 1,333 7,998,667
Issuance of Common Stock in
exchange for note from officer 533,364 533 159,476
Issuance of Common Stock 1,047,543 1,048 108,693
Repurchase of Common Stock (332,261) (332)
Net income
- - -----------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 11,783,333 11,783 4,211,926 4,212 22,722,267
Issuance of Series D
Convertible Preferred Stock 388,888 389 3,499,603
Conversion of Convertible Preferred
Stock to Common Stock (12,172,221) (12,172) 12,172,221 12,172
Issuance of Common Stock 5,175,000 5,175 57,097,422
Repurchase of Common Stock (342,818) (343) (3,345)
Exercise of stock warrants 300,000 300 299,700
Employee stock purchases 2,343,197 2,343 654,306
Issuance of Common Stock in
exchange for note from officer 54,625 55 32,720
Forgiveness of notes
from officers
Deferred stock compensation 3,487,283
Stock compensation earned
Unrealized loss on
marketable securities
Net loss
===========================================================================================================
Balance at December 31, 1996 -- $ -- 23,914,151 $23,914 $87,789,956
===========================================================================================================
</TABLE>
<PAGE> 12
<TABLE>
MILLENNIUM PHARMACEUTICALS, INC.
Statements of Stockholders' Equity
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------
DEFERRED NOTES UNREALIZED ACCUMULATED TOTAL
COMPENSATION RECEIVABLE LOSS ON DEFICIT STOCKHOLDERS'
FROM MARKETABLE EQUITY
SHARES OFFICERS SECURITIES
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994 $ (4,287,623) $ 4,164,340
Issuance of Series B
Convertible Preferred Stock 3,750,000
Issuance of Common Stock 16,977
Repurchase of Common Stock (96)
Net loss (6,372,454) (6,372,454)
- - --------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 (10,660,077) 1,558,767
Issuance of Series B
Convertible Preferred Stock 2,250,000
Issuance of Series C
Convertible Preferred Stock 8,000,000
Issuance of Common Stock in
exchange for note from officer $(266,681) (106,672)
Issuance of Common Stock 109,741
Repurchase of Common Stock (332)
Net income 1,284,366 1,284,366
- - --------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 (266,681) (9,375,711) 13,095,870
Issuance of Series D
Convertible Preferred Stock 3,499,992
Conversion of Convertible Preferred
Stock to Common Stock
Issuance of Common Stock 57,102,597
Repurchase of Common Stock (3,688)
Exercise of stock warrants 300,000
Employee stock purchases 656,649
Issuance of Common Stock in
exchange for note from officer (53,841) (21,066)
Forgiveness of notes
from officers 75,280 75,280
Deferred stock compensation $(3,487,283)
Stock compensation earned 719,437 719,437
Unrealized loss on
marketable securities $(18,318) (18,318)
Net loss (8,767,991) (8,767,991)
====================================================================================================================
Balance at December 31, 1996 $(2,767,846) $(245,242) $(18,318) $(18,143,702) $66,638,762
====================================================================================================================
</TABLE>
35
<PAGE> 13
MILLENNIUM PHARMACEUTICALS, INC.
Notes to Financial Statements
December 31, 1996
[1] BASIS OF PRESENTATION
The Company
The Company was incorporated in January 1993, and has devoted substantially all
of its resources to the development and application of genetics, genomics and
bioinformatics technologies used to identify the genes responsible for major
diseases, as well as comprehensive technologies to elucidate the role of these
genes in disease initiation and progression.
Risks and Uncertainties
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
[2] SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents and Marketable Securities
Cash equivalents consist principally of money market funds and corporate bonds
with original maturities of three months or less at the date of purchase. Cash
equivalents and marketable securities at December 31, 1996 and 1995 are
classified as available-for-sale. The estimated fair value of cash equivalents
is equal to the cost of the securities and, due to the nature of these
securities, there are no unrealized gains or losses at the balance sheet date.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash equivalents and marketable securities.
The Company's cash equivalents and marketable securities are held by high-credit
quality financial institutions. By policy, the Company limits the credit
exposure to any one financial institution. At December 31, 1996, the Company had
no significant concentrations of credit risk.
Property and Equipment
Equipment consists principally of assets held under capitalized leases and is
stated at the present value of future minimum lease obligations. Depreciation is
recorded over the shorter of the estimated useful life or the term of the lease
using the straight-line method. Leasehold improvements are stated at cost and
are amortized over the remaining life of the building lease.
Revenue Recognition
The Company recognizes revenue under strategic alliances as reimbursable
expenses are incurred, certain milestones are achieved or license fees are
earned.
Stock-Based Compensation
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) in accounting for its
stock-based compensation plans, rather than the alternative fair value
accounting method provided for under Financial Accounting Standards Board
Statement No. 123, "Accounting for Stock-Based Compensation," as this
alternative requires the use of option valuation models that were not developed
for use in valuing employee stock options. Under APB 25, when the exercise price
of options granted under these plans equals the market price of the underlying
stock on the date of grant, no compensation expense is required.
Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which establishes criteria
for the recognition and measurement of impairment loss associated with
long-lived assets. The Company adopted Statement No. 121 in the first quarter of
1996. The adoption of this Statement had no impact on the financial position or
results of operations of the Company as no indicators of impairment currently
exist.
<PAGE> 14
Income Taxes
The liability method is used to account for income taxes. Deferred tax assets
and liabilities are determined based on differences between financial reporting
and income tax bases of assets and liabilities, as well as net operating loss
carryforwards and are measured using the enacted tax rates and laws that will be
in effect when the differences reverse. Deferred tax assets may be reduced by a
valuation allowance to reflect the uncertainty associated with their ultimate
realization.
Pro Forma Net Income Per Share
Pro forma net income per share is computed using the weighted-average number of
outstanding shares of Common Stock and Common Stock equivalents, assuming
conversion of Series A, B, C and D Convertible Preferred Stock into Common Stock
(as of their original date of issuance), which occurred upon completion of the
Company's initial public offering in May 1996 and the exercise of stock options
and warrants (using the treasury stock method). Common Stock equivalents are
excluded from the computation when their effect is anti-dilutive; however,
pursuant to the requirements of the Securities and Exchange Commission, Common
Stock equivalent shares relating to stock options and warrants (using the
treasury stock method and an initial public offering price of $12.00 per share)
and Convertible Preferred Stock issued during the twelve-month period prior to
the initial public offering are included for all periods prior to the initial
public offering whether or not they are anti-dilutive. Historical earnings per
share have not been presented because such amounts are not meaningful due to the
significant change in the Company's capital structure that occurred in
connection with the Company's initial public offering.
[3] MARKETABLE SECURITIES
Marketable securities consist of high-grade corporate bonds, which are carried
at fair value, with the unrealized gains and losses reported in a separate
component of stockholders' equity. At December 31, 1995, the estimated fair
value of these securities were equal to their cost and all such securities had a
maturity of less than one year. At December 31, 1996 these securities had a cost
of $53,777,989, and an estimated fair value of $53,759,671, resulting in gross
unrealized gains of $11,666 and gross unrealized losses of $29,984. There have
been no realized gains or losses on sales of any securities in 1996, 1995, or
1994.
The amortized cost and estimated fair value of debt securities at December 31,
1996, by contractual maturity, are shown below.
<TABLE>
- - -------------------------------------------------------------
<CAPTION>
COST ESTIMATED
FAIR VALUE
- - -------------------------------------------------------------
<S> <C> <C>
Due in one year or less $43,636,511 $43,639,049
Due in one year to two years 10,141,478 10,120,622
- - -------------------------------------------------------------
$53,777,989 $53,759,671
=============================================================
</TABLE>
[4] DUE FROM STRATEGIC PARTNERS
Included in Due from Strategic Partners is a $2,000,000 noninterest-bearing
receivable, due no later than December 31, 1997, in consideration for certain
rights granted under a licensing arrangement with Astra AB (see Note 9). Using
the Company's long-term borrowing rate, the receivable has been recorded net of
$560,000 of deferred interest income. Interest is being amortized using the
effective interest rate method.
[5] PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------
1996 1995
- - -----------------------------------------------------------
<S> <C> <C>
Equipment $18,826,846 $7,239,113
Leasehold improvements 2,468,688 254,131
- - -----------------------------------------------------------
21,295,534 7,493,244
Less accumulated depreciation
and amortization 6,104,257 2,587,716
- - -----------------------------------------------------------
$15,191,277 $4,905,528
===========================================================
</TABLE>
37
<PAGE> 15
[6] LONG-TERM DEBT
On December 1, 1994, the Company borrowed $4,000,000 from a corporate lender
secured by all owned assets of the Company. Interest accrues at 16.05%. Monthly
principal payments of $133,333 commenced on June 30, 1995 and are due through
November 30, 1997. Accordingly, principal payments of $1,466,667 are due in
1997. The fair value of long-term debt approximates its carrying value based
upon current interest rates as compared to rates in effect at the time of the
borrowing.
[7] LEASES
The Company conducts the majority of its operations in leased facilities with
leased equipment. At December 31, 1996 and 1995, respectively, the Company has
capitalized leased equipment totaling $17,325,151 and $6,469,921 and related
accumulated amortization of $5,955,465 and $2,538,860.
The Company leases its laboratory and office space under an operating lease
agreement with a fixed term of ten years and a five-year renewal option. In
addition to the minimum lease commitments, the agreement requires payment of the
Company's pro rata share of property taxes and building operating expenses.
In 1996, the Company entered into a two-year lease, effective March 1, 1997, for
additional laboratory space with annual rent of approximately $1,594,000
exclusive of occupancy expenses.
At December 31, 1996, future minimum commitments under leases with noncancelable
terms of more than one year are as follows:
<TABLE>
- - -------------------------------------------------------------------------
<CAPTION>
YEAR CAPITAL OPERATING
LEASES LEASES
- - -------------------------------------------------------------------------
<S> <C> <C>
1997 $ 4,160,000 $ 3,236,000
1998 3,573,000 3,696,000
1999 3,196,000 2,271,000
2000 2,182,000 2,005,000
2001 1,598,000 2,005,000
Thereafter -- 4,011,000
- - -------------------------------------------------------------------------
Total $14,709,000 $17,224,000
=========================================================================
Less amount representing interest 2,159,000
- - -------------------------------------------------------------------------
Present value of minimum lease payments 12,550,000
Less current portion of capital
lease obligations 3,242,000
- - -------------------------------------------------------------------------
Capital lease obligations $9,308,000
=========================================================================
</TABLE>
Total rent expense was $2,415,000 in 1996, $1,453,000 in 1995 and $1,591,000 in
1994. Sublease rental income in the amounts of $391,000 and $228,000 was
recorded in 1995 and 1994, respectively. Interest paid under all financing and
leasing arrangements during 1996, 1995 and 1994 approximated interest expense.
[8] STOCKHOLDERS' EQUITY
Preferred Stock
On February 1, 1996, the Company issued 388,888 shares of Series D Convertible
Preferred Stock at $9.00 per share and received net proceeds of $3.5 million.
The rights and privileges of the Series D stock were substantially consistent
with previously issued convertible preferred stock series.
In connection with the Company's initial public offering in May 1996, all shares
of Series A, B, C, and D Convertible Preferred Stock outstanding as of March 1,
1996 were automatically converted into 12,172,221 shares of Common Stock
reserved for such conversion. Subsequently, the Board of Directors authorized an
aggregate of 5,000,000 shares of Preferred Stock, $0.001 par value, issuable in
one or more series, each of such series to have such rights and preferences,
including
<PAGE> 16
voting rights, dividend rights, conversion rights, redemption privileges and
liquidation preferences, as shall be determined by the Board of Directors.
Common Stock
Common Stockholders have full voting rights. Dividends and liquidation rights of
Common Stock are subordinated to those of all series of Preferred Stock. On
March 14, 1996, the Board of Directors voted to increase the number of
authorized shares of Common Stock to 100,000,000.
In May 1996, the Company completed an initial public offering of 5,175,000
shares of Common Stock at $12.00 per share. The Company received proceeds, net
of underwriting discounts and offering costs, of approximately $57,103,000. The
proceeds of the offering are being used for research and development, working
capital and general corporate purposes.
In connection with the issuance of Common Stock to certain consultants, the
Company has entered into stock purchase agreements that provide that, in the
event of the voluntary or involuntary termination of the consultants' services,
the Company has an irrevocable, exclusive option during the 90-day period
following termination to repurchase, at the original purchase price, all or any
portion of the shares which have not been released from escrow. In March 1996,
the Company repurchased 327,946 shares of common stock, at their original issue
price of $0.001 per share, pursuant to an amendment to a stock purchase
agreement with one of its consultants. At December 31, 1996, 130,299 shares of
Common Stock remain in escrow and are subject to the Company's repurchase
option.
Common Stock Warrants
<TABLE>
At December 31, 1996, the Company has outstanding warrants to purchase shares of
Common Stock as follows:
<CAPTION>
- - -------------------------------------------
SHARES EXERCISE EXPIRATION
PRICE
- - -------------------------------------------
<S> <C> <C>
117,500 $1.00 2003
90,604 $2.98 2004
233,333 $3.00 2004
35,416 $5.62 2002
44,000 $6.00 2003
-------
520,853
-------
</TABLE>
All warrants are exercisable at December 31, 1996.
Stock Option Plans
The 1993 Incentive Stock Plan (the 1993 Plan) allows for the granting of
incentive and nonstatutory options to purchase up to 5,400,000 shares of Common
Stock. Incentive options granted to employees generally vest over a four-year
period. Nonstatutory options granted to consultants and other nonemployees
generally vest over the period of service to the Company.
In December 1995, the Company amended the terms of outstanding option agreements
to allow option holders the right to immediately exercise outstanding options,
with the subsequent share issuances being subject to a repurchase option by the
Company under certain conditions according to the original vesting schedule and
exercise price. At December 31, 1996, 1,655,327 shares issued under the 1993
Plan are subject to the Company's repurchase option.
On March 14, 1996, the Board of Directors adopted the 1996 Equity Incentive Plan
(the 1996 Plan) to effectively succeed the 1993 Plan. The terms and conditions
of the 1996 Plan are substantially consistent with those of the 1993 Plan and
provide for the granting of options to purchase 2,100,000 shares of Common
Stock.
On March 14, 1996, the 1996 Director Option Plan (the Director Plan) and the
1996 Employee Stock Purchase Plan (the Stock Purchase Plan) were also adopted by
the Board of Directors. The Director Plan provided that each then eligible
non-employee director be granted a nonstatutory option to purchase 20,000 shares
of Common Stock. Thereafter, each new non-employee director will be granted a
nonstatutory option to purchase 30,000 shares of Common Stock upon election to
the Board of Directors. Upon completion of the vesting of each option grant
under the Director Plan, each non-employee director will be granted a new
nonstatutory option to purchase 20,000 shares of Common Stock. All options will
be issued at the then fair market value of the Common Stock, vest ratably over
four years and expire ten years after date of grant. A total of 250,000 shares
of Common Stock have been reserved for issuance under the Director Plan. During
1996, options to purchase 100,000 shares of Common Stock were granted under the
Director Plan at $19.25 per share, 14,600 of which were exercisable at December
31, 1996.
39
<PAGE> 17
Under the Stock Purchase Plan, eligible employees may purchase Common Stock at a
price per share equal to 85% of the lower of the fair market value of the Common
Stock at the beginning or end of each offering period. Participation in the
offering is limited to 10% of the employee's compensation or $25,000 in any
calendar year. The first offering period commenced on October 1, 1996. A total
of 350,000 shares of Common Stock have been reserved for issuance under the
Purchase Plan. At December 31, 1996, subscriptions were outstanding for an
estimated 21,000 shares at $16.68 per share.
Upon employment in 1994, the chief executive officer was granted an option to
purchase 533,364 shares of Common Stock for $0.30 per share. In connection
therewith, the Company agreed to loan the officer up to $266,681 at 7% per
annum, upon exercise of the option. In November 1995, the officer exercised this
option and was issued the Common Stock, subject to a repurchase option by the
Company that lapses over four years. The resulting loan, secured by a pledge of
all shares issued under the option, and related interest, will be forgiven
ratably over 48 months subject to the officer's continued employment.
During 1995 and 1996, the Company granted options to purchase 1,580,682 shares
of Common Stock at exercise prices below the deemed fair value for accounting
purposes of the stock options at the date of grant. The Company recorded an
increase to additional paid-in capital and a corresponding charge to deferred
compensation in the amount of approximately $3,500,000 to recognize the
aggregate difference between such deemed fair value and the exercise price. The
deferred compensation is being amortized over the option vesting period of four
years.
<TABLE>
The following table presents the combined activity of the three plans for the
years ended December 31, 1996, 1995, and 1994:
<CAPTION>
- - -------------------------------------------------------------------------------------------------------
1996 1995 1994
------------------- ------------------ ----------------------
SHARES EXERCISE SHARES EXERCISE SHARES EXERCISE
PRICE(A) PRICE(A) PRICE(A)
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1 2,724,261 $ .24 3,134,529 $.14 567,269 $.001-.10
Granted 2,497,958 10.23 1,349,974 36 2,804,542
Exercised (2,398,265) 29 (1,580,907) 17 (190,433)
Canceled (61,798) 2.42 (179,335) 10 (46,849)
- - -------------------------------------------------------------------------------------------------------
Outstanding at December 31 2,762,156 $ 9.19 2,724,261 $.24 3,134,529 $.001-.30
Options exercisable at December 31 1,251,982 $ 1.78 2,148,851 $.24
=======================================================================================================
</TABLE>
(a)The exercise prices for 1996 and 1995 activity are weighted average prices;
the exercise prices for 1994 acitivity are ranges of actual prices. The weighted
average per share fair value of options granted during 1996 and 1995 was $6.01
and $0.16, respectively.
<TABLE>
The following table presents weighted average price and life information about
significant option groups outstanding at December 31, 1996:
<CAPTION>
- - --------------------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- - --------------------------------------------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE EXERCISE
EXERCISE PRICES NUMBER LIFE(YRS) PRICE NUMBER PRICE
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 001-$.30 496,841 7.94 $ .21 496,841 $ .21
$ 45-$3.60 693,253 9.10 $ 1.76 692,334 $ 1.75
$ 6.00-$10.00 264,092 9.29 $ 7.43 20,477 $ 7.89
$12.00-$15.75 484,940 9.62 $15.10 19,425 $15.68
$16.50-$18.75 608,855 9.87 $17.39 5,794 $17.73
$19.00-$22.13 214,175 9.55 $19.53 17,111 $19.64
--------- ---------
2,762,156 9.20 $ 9.19 1,251,982 $ 1.78
</TABLE>
<PAGE> 18
At December 31, 1996, 4,109,383 shares of Common Stock were reserved for
issuance upon exercise of stock options and warrants.
FAS 123 Disclosures
The Company has adopted the disclosure provisions only of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-based Compensation ("FAS
123") for employees and Directors, and will continue to account for its stock
option and purchase plans in accordance with the provisions of APB 25,
Accounting for Stock Issued to Employees.
<TABLE>
Pursuant to the requirements of FAS 123, the following are the pro forma net
income (loss) and net income (loss) per share for 1996 and 1995 as if the
compensation cost for the stock option and stock purchase plans had been
determined based on the fair value at the grant date for grants in 1996 and
1995:
<CAPTION>
- - --------------------------------------------------------------------------------
1996 1995
---------------------------- ----------------------
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $(8,767,991) $(12,096,249) $1,284,366 $1,250,260
Net income (loss)
per share $ (0.39) $ (0.54) $ 0.07 $ 0.07
</TABLE>
<TABLE>
The fair value of stock options and common shares issued pursuant to the Stock
Purchase Plan at the date of grant were estimated using the Black-Scholes model
with the following weighted average assumptions:
<CAPTION>
- - ------------------------------------------------------------
OPTIONS STOCK PURCHASE PLAN
---------------- -------------------
1996 1995 1996 1995
- - ------------------------------------------------------------
<S> <C> <C> <C> <C>
Expected life 3.7 2.4 5 n/a
(years)
Interest rate 5.94% 6.19% 6.14% n/a
Volatility .7 .7 .7 n/a
</TABLE>
The Company has never declared dividends on any of its capital stock and does
not expect to do so in the foreseeable future.
The effects on 1995 and 1996 pro forma net income (loss) and net income (loss)
per share of expensing the estimated fair value of stock options and common
shares issued pursuant to the Stock Purchase Plan are not necessarily
representative of the effects on reported results of operations for future years
as the periods presented include only one and two years, respectively, of option
grants under the Company's plans.
[9] STRATEGIC ALLIANCES
In July 1996, the Company entered into a strategic alliance with American Home
Products Corporation ("AHP") to discover and develop targets and assays to
identify and develop small molecule drugs and vaccines for treatment and
prevention of disorders of the central nervous system. The alliance became
effective August 1, 1996. Payments by AHP to the Company for up-front fees and
research funding could total up to approximately $90.0 million if the research
program continues for its full seven year period and the Company achieves
specified research objectives. In the event that specified research, product
development and associated regulatory milestones are achieved, AHP will be
obligated to make milestone payments to the Company. If certain specified
research objectives are not met, AHP may terminate the agreement after three
years or five years.
In December 1995, the Company entered into a strategic alliance with Astra AB in
the field of inflammatory respiratory diseases. After three years, Astra has the
option to continue the strategic alliance through the fifth year, or extend the
agreement through seven years. Under the terms of the strategic alliance, Astra
has agreed to provide up to approximately $53.3 million in up-front, follow-on
and research payments over a five-year period, as well as additional payments
upon the achievement of specific research and product development milestones.
Astra received a license to manufacture, use and sell agreed-upon licensed
products in exchange for royalty payments to the Company.
In October 1995, the Company entered into a strategic alliance with Eli Lilly
and Company ("Lilly") in the field of atherosclerosis. Under the terms of the
agreement, Lilly purchased $8 million of Series C Convertible Preferred Stock,
subsequently converted into 1,333,333 shares of Common Stock. As of December 31,
1995, the Company had deferred a $2.75 million payment Lilly made for an option
to fund research in other fields. Effective March 1996, Lilly exercised this
option to enter
41
<PAGE> 19
into a strategic alliance in select areas of oncology and the Company recognized
$2.75 million of revenue that had previously been deferred. Under the combined
terms of these strategic alliances, Lilly has agreed to provide up to
approximately $53.0 million in the form of up-front fees and research payments
over a five-year period, as well as additional payments upon the achievement of
specific research and product development milestones. Lilly received a license
to manufacture, use and sell agreed-upon licensed products in exchange for
royalty payments to the Company. If certain specified research objectives are
not met, Lilly may terminate the agreements after three years. Moreover, the
agreements may be voluntarily terminated by Lilly at any time after three years.
In March 1994, the Company entered into a strategic alliance with Hoffmann-La
Roche Inc. ("Roche") in the fields of obesity and type II diabetes. Under the
terms of a related stock purchase agreement, an affiliate of Roche purchased $6
million of Series B Convertible Preferred Stock, subsequently converted into
2,000,000 shares of Common Stock. Under the terms of the strategic alliance,
Roche has agreed to provide up to approximately $44.5 million in the form of
up-front fees and research payments over a five-year period, as well as
additional payments upon the achievement of specific research and product
development milestones. Roche received a license to manufacture, use and sell
agreed-upon licensed products in exchange for royalty and/or profit-sharing
payments to the Company.
[10] INCOME TAXES
In 1996 and 1994, the Company incurred net losses and, due to the degree of
uncertainty related to the ultimate use of the loss carryforwards, fully
reserved this tax benefit. In 1995, the Company utilized $515,000 of the 1994
tax benefit to offset that year's tax provision.
At December 31, 1996, the Company has unused net operating loss carryforwards of
approximately $16,596,000 available to reduce federal and state taxable income,
and research and development tax credits of approximately $2,342,000 available
to offset federal income taxes, both which expire through 2011.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
<TABLE>
Significant components of the Company's deferred tax assets as of December 31
are as follows:
<CAPTION>
- - ----------------------------------------------------------------
1996 1995
- - ----------------------------------------------------------------
<S> <C> <C>
Net operating loss carryforward $ 6,709,000 $ 3,750,000
Research and development tax
credit carryforward 2,342,000 1,673,000
Other 598,000 569,000
- - ----------------------------------------------------------------
Total deferred tax assets 9,649,000 5,992,000
Valuation allowance $(9,649,000) $(5,992,000)
- - ----------------------------------------------------------------
Net deferred tax assets $ -- $ --
================================================================
</TABLE>
The valuation allowance increased by $3,657,000 and $965,000 during 1996 and
1995, respectively, due primarily to the increase in net operating losses and
research and development tax credits.
[11] SUBSEQUENT EVENT
On February 10, 1997, the Company completed a merger with ChemGenics
Pharmaceuticals Inc. (ChemGenics). The transaction will be recorded as a
purchase for accounting purposes. The Company issued approximately 4,800,000
shares of Common Stock in exchange for all outstanding shares of common stock of
ChemGenics. In addition, a principal shareholder of ChemGenics received
$4,000,000 in settlement of a promissory note and repurchase of warrants
previously issued by ChemGenics.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF MILLENNIUM PHARMACEUTICALS, INC.
Name of Subsidiary Jurisdiction of Organization
------------------ ----------------------------
ChemGenics Pharmaceuticals Inc. Delaware
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG, LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Millennium Pharmaceuticals, Inc. of our report dated January 31, 1997, except
for Note 11, as to which the date is February 10, 1997, included in the 1996
Annual Report to Shareholders of Millennium Pharmaceuticals, Inc.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-15355), pertaining to the 1993 Incentive Stock Option Plan,
(Form S-8 No. 333-15353), pertaining to the 1996 Equity Incentive Plan, (Form
S-8 No. 333-15349), pertaining to the 1996 Director Option Plan and (Form S-8
No. 333-15357), pertaining to the 1996 Employee Stock Purchase Plan of
Millennium Pharmaceuticals, Inc. of our report dated January 31, 1997, except
for Note 11, as to which the date is February 10, 1997, with respect to the
financial statements of Millennium Pharmaceuticals, Inc. incorporated herein by
reference in the Annual Report (Form 10-K) for the year ended December 31, 1996.
/s/ Ernst & Young LLP
----------------------
Ernst & Young LLP
Boston, Massachusetts
March 25, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 10,088,302
<SECURITIES> 53,759,671
<RECEIVABLES> 5,709,870
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 72,070,513
<PP&E> 21,295,534
<DEPRECIATION> 6,104,257
<TOTAL-ASSETS> 87,744,450
<CURRENT-LIABILITIES> 11,797,416
<BONDS> 0
0
0
<COMMON> 23,914
<OTHER-SE> 66,614,848
<TOTAL-LIABILITY-AND-EQUITY> 87,744,450
<SALES> 0
<TOTAL-REVENUES> 31,763,625
<CGS> 0
<TOTAL-COSTS> 42,776,010
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 887,196
<INCOME-PRETAX> (8,767,991)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,767,991)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,767,991)
<EPS-PRIMARY> (0.39)
<EPS-DILUTED> (0.39)
</TABLE>
