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EXHIBIT 10.4
August 9, 2000
Re: Memorandum of Understanding Regarding Greenwich Holding's West
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Greenwich, RI Biopharmaceutical Facility
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Greenwich Holdings Inc. ("Greenwich"), a wholly-owned subsidiary of American
Home Products Corporation ("AHPC"), entered into a definitive Asset Purchase
Agreement (the "Purchase Agreement") with Glaxo Wellcome Biopharmaceuticals Inc.
("GWBI"), a wholly-owned subsidiary of Glaxo Wellcome Inc. ("GW") dated as of
August 23, 1999, to purchase all the real property and biological manufacturing
facility located at 40 Technology Way, West Greenwich, Rhode Island, also known
as the "Wel Gen" facility (the "Facility") from GWBI. On September 24, 1999,
Greenwich consummated the purchase of the Facility pursuant to the terms of the
Purchase Agreement.
Greenwich/AHPC and Immunex Corporation, together with its Affiliates (as defined
below) ("Immunex"), by combining the strengths and competencies of each party,
intend to retrofit "Suites A and D" of the Facility (hereinafter referred to
solely as "Suite A") by mid-2001 to accommodate the commercial manufacture of
ENBREL(R) (etanercept), to perform the initial validation runs for ENBREL and to
commence commercial production of ENBREL. Greenwich/AHPC and Immunex are
exploring the potential of installing equipment and capital improvements in
"Suite B" of the Facility ("Phase A-3") to accommodate future commercial
manufacturing needs for ENBREL. Immunex is exploring the potential of building
additional biotechnology manufacturing capacity on vacant land located at the
Facility outside the footprint of the existing Suites ("Phase B") in a manner
which will not impact the most aggressive accelerated schedule for the retrofit
of Suites A and B (i.e., Phase A-3) of the Facility.
AHPC intends to build a biopharmaceutical manufacturing facility at an affiliate
site of AHPC located in Ireland ("BIOS") for the eventual manufacture of ENBREL,
together with other biotechnology products, and it is anticipated that such site
would be completed in approximately 2004.
Greenwich/AHPC and Immunex have agreed to enter into a Definitive Agreement (as
defined below) regarding the purchase and sale of all of the outstanding capital
stock of Greenwich (the "Greenwich Shares") to Immunex, pursuant to the terms
set forth herein and to be included in the Definitive Agreement. This memorandum
of understanding ("MOU") sets forth the mutual commitments of Greenwich/AHPC and
Immunex with regard to such purchase and sale of the Greenwich Shares, and with
regard to the terms and conditions that will govern the parties' management of
the Facility during the retrofit of Suites A and B (i.e., Phase A-3) of the
Facility.
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August 9, 2000
1. PARTIES: Immunex
Greenwich/AHPC
2. PURCHASE OF Immunex shall purchase or acquire the Greenwich
GREENWICH Shares from Greenwich/AHPC, and Greenwich/AHPC
SHARES: shall sell or transfer the Greenwich Shares to
Immunex pursuant to the terms and conditions contained
in the Definitive Agreement. By owning the Greenwich
Shares at the closing of the Definitive Agreement,
which shall occur in accordance with the timing for
Greenwich/AHPC's transfer of operational control of the
Facility to Immunex set forth in Paragraph 4 below (the
"Closing"), Immunex will own all right, title and
interest in and to the Facility and all improvements
thereto since September 24, 1999.
Immunex's obligation to purchase the Greenwich Shares
is not subject to any financing contingencies.
3. PURCHASE PRICE: The purchase price for the Greenwich Shares is sixty
million dollars ($60,000,000), plus one hundred percent
(100%) of any costs incurred by Greenwich/AHPC related
to readying the Facility for approval by the FDA and/or
EMEA, including but not limited to capital
expenditures, supplies, personnel costs, operating
costs (including training), utilities and taxes
("Facility Costs") (together, the "Purchase Price"),
payable as follows:
(a) At the signing of the Definitive Agreement
(the "Signing"), Immunex shall pay
Greenwich/AHPC fifty percent (50%) of any
Facility Costs incurred after September 24,
1999 and through the end of the calendar
quarter just prior to the Signing. Within a
reasonable time prior to the Signing,
Greenwich/AHPC shall provide Immunex an
invoice detailing such Facility Costs
incurred
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August 9, 2000
during such period that will be payable at
the Signing, and as soon as practicable
thereafter, Greenwich/AHPC shall provide
Immunex an invoice detailing any remaining
Facility Costs incurred by Greenwich/AHPC at
the end of the calendar quarter prior to
Signing that had not been reimbursed by
Immunex at the Signing, which invoice will be
payable by Immunex within thirty (30) days.
(b) Immunex shall pay Greenwich/AHPC fifty
percent (50%) of Facility Costs incurred
during each calendar quarter on and after the
Signing within thirty (30) days after
Greenwich/AHPC provides Immunex an invoice
detailing such costs during such calendar
quarter.
(c) At the Closing, Immunex shall pay
Greenwich/AHPC sixty million dollars
($60,000,000), together with all Facility
Costs incurred on or after the Signing that
have not previously been reimbursed by
Immunex pursuant to Paragraph 3(a) or
Paragraph 3(b) above. Within a reasonable
time prior to the Closing, Greenwich/AHPC
shall provide Immunex an invoice detailing
such costs incurred during such period that
will be payable at the Closing, and as soon
as practicable thereafter, Greenwich/AHPC
shall provide Immunex an invoice detailing
any remaining Facility Costs incurred by
Greenwich/AHPC prior to Closing that had not
been reimbursed by Immunex at the Closing,
which invoice will be payable by Immunex
within thirty (30) days.
Immunex shall have the right to audit any invoice
provided by Greenwich/AHPC hereunder against original
records. Such audit will be allowed within thirty (30)
days of an Immunex request.
Greenwich/AHPC shall not charge or otherwise pass-
through to Immunex any cost of capital for any portion
of the Purchase Price.
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August 9, 2000
4. TIMING: The parties shall enter into a mutually acceptable
definitive agreement (the "Definitive Agreement"),
which the parties shall use diligent efforts to prepare
for execution promptly after the execution and delivery
of this MOU by all parties. The Definitive Agreement
and the Collaboration Agreement contemplated by the
Memorandum of Understanding Regarding Allocation of
ENBREL Supplies that was entered into the same date as
this MOU shall be executed and delivered by the parties
simultaneously.
Greenwich/AHPC shall sell or transfer all of the
Greenwich Shares to Immunex, and transfer operational
control of the Facility to Immunex at the Closing,
which shall be completed upon the latest to occur of
the following: (a) September 30, 2002, (b) such time as
at least one hundred (100) kilograms of ENBREL have
been successfully manufactured at the Facility, or (c)
either the FDA or the EMEA has approved the Facility
for commercial production. Successful manufacture of
ENBREL means production of bulk drug substance meeting
all applicable ENBREL bulk drug substance
specifications and FDA regulatory requirements.
After the Closing, a reasonable number of AHPC's and
its Affiliates' personnel shall be entitled to remain
at the Facility as provided for in Paragraph 5 below to
facilitate AHPC's and its Affiliates' knowledge and
understanding of manufacturing commercial quantities of
ENBREL. An "Affiliate" shall mean any corporation or
business entity of which a party hereto owns directly
or indirectly, fifty percent (50%) or more of the
assets or outstanding stock, or any corporation which a
party directly or indirectly controls, or any parent
corporation that owns, directly or indirectly, fifty
percent (50%) or more of the assets or outstanding
stock of a party or directly or indirectly controls a
party. For purposes of this Agreement, Immunex shall
not be deemed to be an Affiliate of Greenwich/AHPC.
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5. PROJECT SCOPE: The retrofit of Suites A and B (i.e., Phase A-3) of the
Facility is a joint project between Greenwich/AHPC and
Immunex managed by Greenwich/AHPC (the "Project"),
until the Closing. The Project is a cooperative effort,
overseen by the Steering Committee (formed as discussed
below), that recognizes and utilizes the strengths and
competencies of each party. The Steering Committee
shall approve an annual budget for the Facility,
including a capital budget. In addition, the Steering
Committee shall approve any third party or
Greenwich/AHPC capital expenditures associated with the
fill and finish of bulk drug substance ENBREL
manufactured at the Facility.
A six (6)-member Steering Committee shall be formed to
oversee the Project during the period of
Greenwich/AHPC's ownership of the Greenwich Shares,
with Immunex and Greenwich/AHPC each having three (3)
representatives. The Steering Committee shall meet on
at least a quarterly basis or more frequently as
necessary, and decisions of the Steering Committee
shall be made by consensus. The Steering Committee
shall be disbanded upon Immunex's purchase of the
Greenwich Shares.
The Steering Committee shall endeavor to reach a
consensus on all matters within its purview which are
in dispute within a period of ten (10) days after
receiving notification that such dispute has been
referred to the Steering Committee for resolution. If
such a resolution cannot be reached in that time period
(or earlier at the election of either party), the
matter shall be referred to the Chief Operating Officer
of Immunex and the President of Wyeth-Ayerst, or their
designees, to resolve in a period of ten (10) days
through good faith discussions, or if still unresolved,
to endeavor in good faith to promptly agree upon a
binding third party dispute resolution mechanism
intended to promptly and fairly resolve the matter in
dispute.
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During the period of Greenwich/AHPC ownership of the
Greenwich Shares, and thereafter for such transition
period as agreed by the parties (which period shall in
no event be more than 24 months), a reasonable number
of Immunex and Greenwich/AHPC personnel will be
involved in all aspects of start-up and operation of
the Facility as are agreed by the parties, and will
also have access to all engineering, manufacturing,
quality assurance, regulatory, and all other
documentation related to the Facility and the ENBREL
product(s) manufactured at the Facility, it being
understood that during the term of either party's
ownership of the Greenwich Shares, and consistent with
the terms hereunder, such party will have ultimate
decision making authority with respect to day-to-day
operations of the Facility.
Greenwich/AHPC shall allow Immunex to (a) review and
approve each contract involving capital improvements to
the Facility which would result in payments greater
than three million dollars ($3,000,000) in the
aggregate, (b) review and consult with Greenwich/AHPC
on all contracts involving the Facility and its
operation of duration greater than one (1) year and in
an amount greater than two hundred fifty thousand
dollars ($250,000) in the aggregate and (c) review and
approve each contract involving the fill and finish of
ENBREL produced at the Facility. Immunex shall be a
party to each such contract under clause (c) above, and
to the extent practicable, Greenwich/AHPC shall name
Immunex a third party beneficiary under each such
contract under clause (a) and (b) above.
6. IMMUNEX To the extent that Greenwich/AHPC requests or
PERSONNEL otherwise receives technical assistance related to the
COSTS Facility from Immunex employees, such technical
assistance will be reimbursed at cost by Greenwich/AHPC
to Immunex on a quarterly basis. Greenwich/AHPC shall
pay Immunex such costs within thirty (30) days after
Immunex provides Greenwich/AHPC an invoice detailing
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August 9, 2000
such costs during a calendar quarter in which such
technical assistance was rendered. Greenwich/AHPC's
reimbursement costs under this Paragraph 6 shall be
included in the Purchase Price and paid by Immunex in
accordance with the provisions of Paragraph 3 above.
7. STAFFING: During the period of Greenwich/AHPC's ownership of the
Greenwich Shares, the parties shall consult in good
faith on all major hires at or relating to the
Facility, defined as manager and above.
With the exception of existing Immunex employees,
employees employed at the Facility are currently
Greenwich/AHPC employees. At the Closing, a still
undetermined number of such Greenwich/AHPC employees
will be offered employment by Immunex. Specific
provisions relating to severance liabilities will be
included in the Definitive Agreement.
The parties shall agree on a maximum number and the job
titles of personnel at the Facility before and after
the Closing as candidates for transfer to BIOS to
ensure continuity of operations at the Facility and the
successful construction, start-up and operation of
BIOS. Such number shall not exceed a reasonably small
percentage of such personnel, currently estimated to be
in the ten percent (10%) to fifteen percent (15%) range
of the total workforce at the Facility, which number
shall be agreed upon in the Definitive Agreement.
Greenwich/AHPC shall, except in extenuating
circumstances with Immunex's approval, such approval
not to be unreasonably withheld, provide at least nine
(9) months' prior notice to Immunex of those personnel
at the Facility who will be transferred to an AHPC
Affiliate such as BIOS to allow sufficient time to
recruit and to train replacement personnel at the
Facility.
8. FACILITY USE: Immunex will have complete access to the entire
Facility during the time of Greenwich/AHPC's
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August 9, 2000
ownership of the Greenwich Shares, subject to standard
safety and security procedures, to facilitate Immunex's
participation in the Project. As between the parties,
Immunex has the final authority with respect to
decisions related to Phase B, including general
timelines relating thereto, and with respect to
conceptual design, basic engineering and detailed
engineering. Such general timelines for Phase B shall
be conducted in a manner which does not impact the most
aggressive accelerated schedule for the retrofit of
Suites A and B (i.e., Phase A-3) of the Facility.
Greenwich/AHPC shall lease land to Immunex for Phase B
at nominal rent (i.e., $1.00 total per year) on a
triple net basis.
9. DUE DILIGENCE: Prior to the Closing, each party will have complete
access to all records, documents and any other
materials made available or otherwise furnished to the
other party relating to the Facility.
10. LEGAL EFFECT: This MOU is binding. It is anticipated that the
Definitive Agreement will contain representations,
warranties and indemnities substantially identical to
those received by Greenwich/AHPC from GW/GWBI in the
Purchase Agreement, with such revisions and
modifications as are appropriate under these
circumstances.
11. EXPENSES: Except as set forth herein or as otherwise agreed among
the parties, each party shall be solely responsible for
all of its own costs and expenses, including the
expenses of legal counsel, accountants and other
advisors and representatives, incurred at any time in
connection with pursuing the Purchase Agreement, the
Definitive Agreement and the Project.
12. BROKERS: Each of Greenwich/AHPC and Immunex agree that no broker
or finder was or is involved with the Purchase
Agreement, the Definitive
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Agreement or the Project, and each of Greenwich/AHPC
and Immunex agree to hold each other harmless to the
extent that any commission or finder's fees or claims
may become due relating to the Purchase Agreement, the
Definitive Agreement or the Project.
13. SPECIFIC The parties agree that irreparable damage would
PERFORMANCE: occur in the event any provision of this MOU was not
performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance
of the terms of this MOU, in addition to any other
remedy at law or equity.
14. SEVERABILITY: If any provision of this MOU is held to be invalid or
unenforceable by a court of competent jurisdiction, all
other provisions shall continue in full force and
effect.
15. WAIVER: Any term or condition of this MOU may be waived or
qualified at any time by the party entitled to the
benefit thereof by a written instrument that
specifically identifies this MOU and the term or
condition to be waived or qualified and is executed by
a duly authorized officer of such party. No delay or
failure on the part of any party in exercising any
rights hereunder, and no partial or single exercise
thereof, shall constitute a waiver of such rights or of
any other rights hereunder.
16. SUCCESSORS AND The terms and provisions of this MOU shall inure
ASSIGNS: to the benefit of, and be binding upon, each party
hereto and their respective successors and assigns. Any
reference to Immunex, Greenwich, AHPC or Greenwich/AHPC
hereunder shall be deemed to include the successors and
assigns thereof.
17. HSR ACT: If required, prior to the Closing the parties will
prepare and make appropriate filings under Title II of
the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules promulgated thereunder
(16 C.F.R 801.1 et seq.) ("the Act") as soon as
reasonably practicable. The parties agree to co-operate
in the antitrust clearance process and to furnish
promptly to the FTC and the Antitrust Division of the
Department
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August 9, 2000
of Justice any additional information reasonably
requested by them in connection with such filings. The
purchase and sale of the Greenwich Shares shall not
occur until the earlier of (i) the waiting period
provided by the Act shall have terminated or shall have
expired without any action by any government agency or
challenge to the termination, or (ii) a determination
has been made by the parties that a filing under the
Act is not necessary.
If this MOU accurately sets forth our mutual understanding with respect to the
foregoing, please sign this MOU in the spaces provided below and return an
original to our attention.
Very truly yours,
IMMUNEX CORPORATION
By: /s/ Edward V. Fritzky
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Name: Edward V. Fritzky
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Title: Chief Executive Officer
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Acknowledged and agreed to:
AMERICAN HOME PRODUCTS
CORPORATION
By: /s/ Kenneth J. Martin
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Name: Kenneth J. Martin
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Title: Senior Vice President
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Acknowledged and agreed to:
GREENWICH HOLDINGS INC.
By: /s/ Jeffrey S. Sherman
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Name: Jeffrey S. Sherman
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Title: Vice President
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