UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): February 18, 1997
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SERAGEN, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-19855 04-2662345
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
97 SOUTH STREET, HOPKINTON, MASSACHUSETTS 01748
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code; (508) 435-2331
Page 1 of 68 pages
Exhibit Index on page 8
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ITEM 5. OTHER EVENTS.
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This report on Form 8-K pertains to the entry by the Registrant
into an agreement to sell its manufacturing and clinical operations facility
(the "Operating Facility") to Boston University ("BU") or its designated
affiliate for $5,000,000.
ASSET PURCHASE AGREEMENT
On February 18, 1997, the Registrant and Trustees of Boston
University ("BU") entered into an Asset Purchase Agreement, to be effective as
of and from February 14, 1997 (the "Purchase Agreement"), providing for the
sale by the Registrant to BU of the Operating Facility. The Operating
Facility does not include (a) any of the capital stock held by the Registrant
in Seragen Technology, Inc. and Seragen Biopharmaceuticals Ltd. or (b) any of
the Registrant's intellectual property. The respective obligations of the
Registrant and BU to consummate the transaction are subject to satisfaction
(or waiver) as of the closing of customary conditions. In addition, the
obligation of the Registrant to consummate the transaction is conditioned
upon: (a) approval of the transaction by a majority of the disinterested
stockholders of the Registrant in attendance, by person or proxy, at a meeting
of stockholders to consider the transaction and (b) BU's having offered, as of
the closing date, employment to specified personnel of the Registrant.
Certain additional conditions to BU's obligation to consummate the transaction
have already been satisfied as of the date of filing of this report. The
closing of the transaction is required to occur on June 2, 1997, or such other
date as the Registrant and BU may agree.
As consideration for the purchase of the Operating Facility, BU
will pay the Registrant $5,000,000 and will assume as of closing all ongoing
liabilities associated with the Operating Facility. The purchase price is
approximately equal to the value reflected on the Registrant's books for the
assets included in the Operating Facility. A $3,500,000 portion of the
purchase price for the Operating Facility was paid by BU to the Registrant as
a deposit simultaneously with the execution and delivery of the Purchase
Agreement. An additional $1,000,000 portion of the purchase price is to be
paid by BU to the Registrant as a further deposit on March 1, 1997. The
balance of the purchase price is payable at closing. The deposited amounts,
together with interest thereon, must be refunded if the transaction fails to
be consummated in a timely manner because of the Registrant's default, the
failure of the Registrant's stockholders to approve the transaction as
described in the foregoing paragraph, or the failure of either the Registrant
or BU to obtain the consent or approval of any third party whose approval is
required pursuant to the terms of the Purchase Agreement. The Registrant has
granted BU a security interest in certain assets included in the Operating
Facility to secure the Registrant's obligation to return the deposit in the
aforesaid circumstances. The Registrant will have access to the funds held on
deposit prior to the closing, and intends to use such funds as necessary to
fund operations.
BU has the option to consummate the transactions contemplated by
the Purchase Agreement through a nominee. In the event that BU's nominee is
an entity that fails to meet certain specified criteria, a subsidiary of BU
with assets sufficient to provide commercially reasonable creditworthiness is
required to execute and deliver at the closing a guarantee of the obligations
of the nominee under the Purchase Agreement.
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Under the terms of the Purchase Agreement, the Registrant has
provided BU with access to the Operating Facility and the services of
specified Registrant employees from and after February 14, 1997, and BU has
undertaken to make when due all payments required under contracts included in
the Operating Facility and to discharge when due all liabilities and
obligations relating to existing claims relating to the Operating Facility.
In addition, BU has undertaken to reimburse the Registrant for the wages and
benefits (including accrued vacation and severance payments) of those
Registrant employees whose services the Registrant has made available to BU.
Payments by BU described in this paragraph are required to be reimbursed by
the Registrant to BU, with interest, in the event that the Registrant breaches
its obligations under the Service Agreement described below or BU exercises
certain rights to terminate the Service Agreement.
SERVICE AGREEMENT
Simultaneously with the execution and delivery of the Purchase
Agreement, the Registrant and BU entered into a Service Agreement, to be
effective as of and from February 14, 1997 (the "Service Agreement"), pursuant
to which BU will provide specified services to the Registrant utilizing the
Operating Facility through January 31, 1999, subject to early termination (a)
if the Purchase Agreement is terminated, (b) at the election of the
non-breaching party, in the event of a breach by the other party or, (c) at
the election of BU in the event that its operating losses with respect to the
Operating Facility exceed specified amounts and its excess losses are not
reimbursed by the Registrant. Should the Registrant require services in
addition to those specified in the Service Agreement, it is required to
purchase them from BU, provided that BU has the capacity to perform them
within the necessary time frame.
The Registrant has two successive options to extend the Service
Agreement for a period of one year at then-prevailing market rates. For each
year that the contract is extended, the Registrant must pay BU that portion of
BU's operating losses, if any, in respect of the Operating Facility for the
year that is equal to the percentage that payments by the Registrant under the
Service Agreement represent of the gross revenues received by BU in respect of
the Operating Facility.
For those services specified in the Service Agreement to be
provided by BU to the Registrant, the Registrant is required to pay BU
$5,521,342 during the first year of the contract and $6,605,651 in the second
year of the contract, prorated for any portion of a year that the contract is
in effect. Any changes in the services to be provided by BU to the Registrant
will give rise to an adjustment in the amount paid by the Registrant to BU,
but in no event will the amount be less than $4,300,000 per year, prorated as
indicated above. For services provided by BU to the Registrant in addition to
those specified in the Service Agreement, the Registrant is required to pay BU
the costs incurred by BU in providing such services, inclusive of overhead,
plus 10%. In addition, the Registrant is required to pay BU a 1% royalty on
the Registrant's net revenues from any product produced under protection of a
patent issued to the Registrant. The royalty rate increases to 2% if
Seragen's obligation to pay royalties under a specified third party license
agreement terminates.
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The Registrant has the right to approve the annual budget for the
Operating Facility. BU has agreed not to enter into any contract with respect
to the Operating Facility that would result in BU's incurring a loss as the
result of the services provided by the Operating Facility to all third
parties. BU has covenanted to make all payments regarding the Operating
Facility in a timely manner; if it does not, the Registrant has the right to
make such payments and offset them against amounts it otherwise owes to BU
under the Service Agreement.
During the term of the Service Agreement, BU may not sell
Operating Facility assets outside the ordinary course of business except in
response to a bona fide third party offer. The Registrant has the right, in
the event of such an offer, to purchase assets that are the subject of the
offer on terms and conditions equivalent to those contained in the offer. BU
may not sell assets in response to a third party offer if the sale would leave
it with insufficient assets to perform its obligations under the Service
Agreement. For four years from the date of the Service Agreement, the
Registrant has the right to repurchase the Operating Facility at a price equal
to (a) $5,000,000, plus interest thereon at 10% per year from the date of the
Service Agreement, plus (b) BU's cumulative net operating losses with respect
to the Operating Facility, plus interest thereon at 10% per year.
BU may delegate its obligations under the Service Agreement to a
nominee designated by BU to consummate the transactions contemplated by the
Purchase Agreement. In the event that BU delegates its obligations under the
Service Agreement to a nominee that fails to meet certain specified criteria,
a subsidiary of BU with assets sufficient to provide commercially reasonable
creditworthiness is required to execute and deliver at the closing a guarantee
of the obligations of the nominee under the Service Agreement.
CERTAIN RELATIONSHIPS BETWEEN THE REGISTRANT AND BU
In August 1987, BU, Nycomed (formerly Nyegaard & Co. AS) and the
Registrant entered into a purchase and sale agreement whereby BU, which then
owned approximately 6% of the Registrant's outstanding common stock, acquired
all of Nycomed's shares of the Registrant's common stock, which represented
approximately 71% of the then-outstanding common stock of the Registrant. As
part of this transaction, BU acquired all of Nycomed's rights to technology,
inventions, patents and other proprietary rights (the "Technology") that were
primarily related to or useful in the development of the Registrant's fusion
protein products and also acquired the world-wide exclusive rights to
manufacture, use, sell and market any products (the "Products") that were
derived from or include the Technology (the "Technology and Marketing
Rights").
In January 1988, pursuant to a Technology Purchase and Royalty
Agreement (the "Technology Agreement") which was contemplated at the time BU
acquired the Technology from Nycomed, BU transferred to the Registrant the
Technology and Marketing Rights obtained from Nycomed in exchange for a
continuing royalty with respect to sales of the Products until the expiration
of all patents relative to the Technology. Thereafter, the Registrant agreed
to pay BU a reduced royalty based on a percentage of net sales for a period of
ten years after the expiration of such patents. The Technology Agreement
provides BU with a security interest in the Technology and Marketing Rights,
whereby upon a default by the Registrant in the terms of the Technology
Agreement, the Technology and Marketing Rights would automatically be
transferred back to BU.
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In June 1995, the Registrant issued warrants to purchase shares of
its common stock immediately exercisable at $4.75 per share and expiring in
2005 to the guarantors of $23.8 million in bank financing obtained by the
Registrant. BU was a lead guarantor of the bank financing and in such
capacity obtained warrants to purchase 1,376,666 shares of the Registrant's
common stock.
In July 1996, the Registrant restructured its arrangement with the
guarantors of the $23.8 million bank financing to release the Registrant from
its liability to the banks involved. The lines of credit were repaid by the
guarantors in exchange for the issuance by the Registrant to the guarantors of
23,800 shares of redeemable convertible Series B Preferred Stock (the "Series
B Shares"). The Series B Shares are convertible into shares of common stock
at a price based on the market price for the Registrant's common stock at the
time of conversion. Holders of Series B Shares are entitled to receive
cumulative cash dividends, payable quarterly; however, dividends do not
accumulate or accrue during any period when royalties are accruing pursuant to
the license agreement, discussed below, between the Registrant and its
subsidiary Seragen Technology, Inc. ("STI"). BU, as a lead guarantor, was
issued 11,800 Series B Shares. In addition, BU, as a lead guarantor, received
warrants to purchase 2,950,000 shares of the Registrant's common stock at an
exercise price of $4.00 per share. The warrants expire on July 1, 2006 and
possess certain anti-dilution rights.
In connection with the issuance of the Series B Shares, the
Registrant transferred all of its patents to STI. In consideration for such
transfer, STI (a) issued to the Registrant 214,220 shares of its Class A
common stock and 23,800 shares of its Class B common stock (the "Class B
Shares"), (b) provided the Registrant with a collateral assignment of patents
in favor of the purchasers of the Series B Shares to secure payment of
dividends in respect of the Class B Shares, and (c) entered into an
irrevocable license agreement with the Registrant providing the Registrant
with the worldwide exclusive right to use the transferred patents. The
irrevocable license agreement specified a royalty equal to the amount of any
dividend which the holders of Series B Shares are entitled to receive on the
last day of the month preceding the royalty payment date but which has not
been paid on or prior to such date. The Class B Shares bear cumulative
dividends equal to the amount of any royalty which STI is entitled to receive
from the Registrant on the dividend payment date pursuant to the irrevocable
license agreement. In the event of any redemption or conversion of the Series
B Shares, STI is required to redeem an equal number of the Class B Shares at a
redemption price of $.01 per share plus any accrued and unpaid dividends. The
Registrant delivered to each purchaser of Series B Shares that number of Class
B Shares equal to the number of Series B Shares issues to the purchaser.
Simultaneously with the issuance of the Series B Shares, the Registrant
delivered into escrow the collateral assignment of patents described above,
together with an instrument reassigning the patents to STI executed by each of
the purchasers of Series B Shares. Under the agreement governing the escrow,
the escrow agent is required to deliver the collateral assignment of patents
to the holders of the Series B Shares in the event that STI fails for 60 days
to pay any dividend due in respect of the Class B Shares and to deliver the
instrument reassigning the patents to the Registrant upon the Registrant's
certification that all of the Class B Shares have been redeemed by STI. BU
continues to beneficially own 11,800 Class B Shares.
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On September 30, 1996, the Registrant raised net proceeds of
approximately $5,000,000 through the issuance to BU of 5,000 shares of
non-voting convertible Series C Preferred Stock (the "Series C Shares") in a
private placement. The Series C Shares are convertible at the option of the
holder into shares of the Registrant's common stock at a conversion price
equal to the lesser of $2.75 or 73 percent of the average closing bid prices
for a five-day period prior to the conversion date. Terms of the Series C
Shares also provide for 8% cumulative dividends payable in shares of the
Registrant's common stock at the time of each conversion. Each Series C Share
has a liquidation preference equal to $1,000 plus an amount equal to any
accrued and unpaid dividends from the date of issuance of the Series C Shares
in the event of liquidation, dissolution or winding up of the Registrant.
Series C Shares that remain outstanding on March 30, 1998, will be
automatically converted into shares of the Registrant's common stock.
As of February 28, 1997, BU beneficially owned 11,800 Series B
Shares, 5,000 Series C Shares, and 8,299,077 shares of the Registrant's issued
and outstanding common stock (constituting approximately 46.1% of the
Registrant's issued and outstanding common stock). In addition, as of such
date, BU beneficially held rights to acquire an additional 18,623,448 shares
of the Registrant's common stock before taking into effect anti-dilution on
the warrants, which includes 9,632,653 shares of common stock issuable upon
conversion of the Series B Shares (assuming a market price for the conversion
of the Series B Shares of $1.23 per share of common stock), 3,360,625 shares
of common stock issuable upon the conversion of the Series C Shares (the
maximum number of shares of common stock that the Series C Shares may convert
into), warrants and an option to purchase 5,630,170 shares of common
stock (together with issued and outstanding shares of common stock owned
beneficially by BU, constituting approximately 43.2% of the Registrant's
common stock on a fully diluted basis).
The following directors of the Registrant are officers or
employees of BU or its affiliates other than the Registrant: John E. Bagalay,
Jr., Ph.D.; Kenneth G. Condon; John R. Murphy, Ph.D.; John R. Silber, Ph.D.
In addition, Dr. Silber is a member of the Board of Trustees of BU.
Item 7. Financial Statements and Exhibits.
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Exhibit Number Description
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99.1 The Registrant's press release dated February 19, 1997
2.1 Asset Purchase Agreement, dated as of February 14, 1997,
between Registrant and Trustees of Boston University
10.68 Service Agreement, dated as of February 14, 1997, between
Registrant and Trustees of Boston University
(Portions of this exhibit have been omitted pursuant to a
request for confidential treatment)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Seragen, Inc.
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(Registrant)
Date: March 5, 1997 /s/ Reed R. Prior
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Reed R. Prior
Chairman and Chief Executive Officer
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<TABLE>
EXHIBIT INDEX
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<CAPTION>
Exhibit Sequential
Number Description Page Number
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<S> <C> <C>
99.1 The Registrant's press release 9
dated February 19, 1997
2.1 Asset Purchase Agreement, dated as 11
of February 14, 1997, between
Registrant and Trustees of Boston
University
10.68 Service Agreement, dated as of 46
February 14, 1997, between Registrant
and Trustees of Boston University
(Portions of this exhibit have been
omitted pursuant to a request for
confidential treatment)
</TABLE>
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Exhibit 99.1
[LOGO OF SERAGEN]
SERAGEN, INC., 97 South Street, Hopkinton, Massachusetts 01748
FOR IMMEDIATE RELEASE
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For more information, contact Investor Relations/Corporate
Communications
Lora Maurer, Manager
phone: 508-435-2331
fax: 508-435-9805
e-mail: [email protected]
SERAGEN AGREES TO SELL MANUFACTURING OPERATIONS
AND CLINICAL TRIAL ADMINISTRATION
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Sale Represents First Step in Company Restructuring
HOPKINTON, Mass., Feb. 19 -- Seragen, Inc. (Nasdaq: SRGN) announced today that
it has entered into an agreement to sell its manufacturing and clinical
operations facilities. Boston University, or a designated affiliate, will
acquire the operations for $5 million.
Under the agreement, the Hopkinton, Massachusetts facility will continue to
manufacture Seragen's products on a contract basis for use in the company's
ongoing clinical trials as well as provide ongoing administration of clinical
and pre-clinical operations. It is expected that a majority of Seragen's
current staff involved in manufacturing and clinical operations will become
employees of the purchasing entity.
"We expect this transaction to be the first of several initiatives to raise
capital, strengthen the company's strategic focus, and reduce operating
costs," said Reed R. Prior, Seragen's new chairman and CEO. "The agreement
preserves our intellectual property rights and enables us to pursue all
current product development activities with no anticipated loss in time or
momentum."
The agreement has been approved by the board of directors of Seragen and the
board of trustees of Boston University. The closing of the transaction is
subject to approval by Seragen's stockholders. Boston University has paid
Seragen a portion of the purchase price as a deposit and will assume
responsibility for the facility's operations immediately. Both the deposit
and the operating costs paid by Boston University are subject to refund in the
event that conditions for closing are not met.
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Seragen's current focus is on cancer and dermatology. The company's most
advanced product, DAB389IL-2, is in Phase III clinical trials for cutaneous
T-cell - lymphoma, in collaboration with Eli Lilly and Company. Seragen is
independently conducting clinical trials of the same product for psoriasis.
The second major product in the company's pipeline, DAB389EGF, is currently in
a clinical trial for non-small cell lung cancer.
Seragen is a biopharmaceutical company developing a proprietary portfolio of
therapeutic products. The company's unique receptor-active proteins consist
of a toxin fragment genetically fused to a hormone, or growth factor, that
targets specific receptors on the surface of disease-causing cells.
Safe Harbor Information
To the extent that any of the statements contained herein relating to the
Company's products and its operations are forward looking, such statements are
based on current expectations that involve a number of uncertainties and
risks. Such uncertainties and risks include, but are not limited to, the
early stage of the Company's product development and lack of product revenues;
the Company's history of operating losses and accumulated deficit; the
Company's limited financial resources and uncertainty as to the availability
of additional capital to fund its development on acceptable terms, if at all;
Boston University's control of the Company; the Company's reliance on fusion
protein technology; the potential development of competing fusion proteins,
products and technologies; the Company's dependence on its collaborative
partner, Eli Lilly and Company, and the lack of assurance that the Company
will receive further funding under this partnership or develop and maintain
other strategic alliances; the lack of assurance regarding patent and other
protection for the Company's proprietary technology; governmental regulation
of the Company's activities, facilities and products; the Company's limited
manufacturing capabilities; the Company's lack of commercial sales and
marketing capabilities; the dependence on key personnel; the development of
competing technologies; uncertainties as to the extent of reimbursement for
the costs of the Company's potential products and related treatment by
government and private health insurers and other organizations; the potential
adverse impact of government-directed health care reform; the risk of product
liability claims; and general economic conditions. As a result, the Company's
future development efforts involve a high degree of risk. For further
information, refer to the risk factors included in the Company's Registration
Statement on Form S-3, Registration No. 333-12613, relating to the resale of
shares of Common Stock, as filed with the Securities and Exchange Commission.
Actual results may differ materially from such expectations.
####
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
this 14th day of February, 1997 by and between Seragen, Inc., a Delaware
corporation having a usual place of business at 97 South Street, Hopkinton,
Massachusetts (the "Seller"), and Trustees of Boston University, a
Massachusetts not-for-profit corporation having a usual place of business at
881 Commonwealth Avenue, Boston, Massachusetts (the "Buyer").
WHEREAS, the Seller is in the business of biotechnical research,
development, design, manufacture, sale and distribution of pharmaceutical and
health care and related products; and
WHEREAS, the Seller conducts its business in leased premises located in
Hopkinton, Massachusetts, as more particularly described herein; and
WHEREAS, the Seller is the owner of all of the right, title and interest
in various physical assets and equipment which it utilizes in the conduct of
its business; and
WHEREAS, the Seller is the lessee of various other physical assets and
equipment which it utilizes in the conduct of its business; and
WHEREAS, the above-described physical assets are primarily utilized in
product manufacturing, clinical trials, and research and development
activities; and
WHEREAS, the Buyer desires to purchase and acquire from the Seller, and
the Seller desires to sell and transfer to the Buyer, all of the physical
assets (except for those assets specifically excluded) owned by the Seller and
used in the conduct of the Seller's business, on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, the Buyer desires to take an assignment of the Seller's
equipment leases and the Seller's real estate leases, on the terms and subject
to the conditions set forth in this Agreement; and
WHEREAS, in connection with all of the foregoing, the Buyer desires to
utilize the physical assets so acquired and the equipment and real estate
leases so assigned to operate the product manufacturing, clinical trial and
research and development facilities currently operated by the Seller, both as
a research and development facility for its own use and as a commercial
contract product manufacturing, clinical trial and research and development
facility to third parties, including the Seller (such facility being referred
to herein as the "Biotech Incubator Facility");
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 are hereby acknowledged,
the parties hereby agree as follows.
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ARTICLE I
PURCHASE AND SALE OF ASSETS
SECTION 1.01 Transfer of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter
defined) the Seller shall transfer to the Buyer, free and clear of all claims,
charges, liens, contracts, rights, options, security interests, mortgages,
encumbrances and restrictions whatsoever (collectively, "Claims"), all of the
tangible physical assets and personal property, including, without limitation,
inventory, raw materials, machines, machinery, warehouse equipment, furniture,
fixtures, vehicles, supplies, packaging and shipping materials, software
(including, without limitation, source codes, object codes and documentation),
property, equipment, licenses and permits pertaining to the foregoing physical
assets, know-how pertaining to the operation of the foregoing physical assets,
computers and computer equipment, that are currently owned by the Seller free
and clear of any Claims and used by Seller in its business (collectively, the
"Unencumbered Assets"). The Unencumbered Assets are more particularly
described in Schedule 1.01U attached hereto and incorporated by reference
herein. In addition, at the Closing (as hereinafter defined) the Seller
shall transfer to the Buyer, subject only to Claims existing as of the date
hereof, all of the tangible physical assets and personal property including,
without limitation, inventory, raw materials, machines, machinery, warehouse
equipment, furniture, fixtures, vehicles, supplies, packaging and shipping
materials, software (including, without limitation, source codes, object codes
and documentation), property, equipment, licenses and permits pertaining to
the foregoing physical assets, know-how pertaining to the operation of the
foregoing physical assets, computers and computer equipment, that are owned by
the Seller subject to Claims existing as of the date hereof and used by Seller
in its business (collectively, the "Encumbered Assets"). The Encumbered
Assets are more particularly described in Schedule 1.01E attached hereto and
incorporated by reference herein. The Unencumbered Assets, the Encumbered
Assets and the Contracts (as hereinafter defined) are collectively referred to
herein as "the Transferred Assets". Notwithstanding any of the foregoing, the
Transferred Assets shall not include those assets designated as "Excluded
Assets" on Schedule 1.01X attached hereto and incorporated by reference
herein. Without limiting the generality of the foregoing, all tangible assets
and physical property of the Seller located at the facilities listed in
Schedule 1.03, other than Excluded Assets, shall be included in the
Transferred Assets.
The Seller shall transfer the Transferred Assets to the Buyer pursuant
to a bill of sale substantially in the form of Exhibit 1.01 attached hereto
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(the "Bill of Sale") and such other documents and instruments as the Buyer, or
its counsel, may reasonably request.
SECTION 1.02 Consideration for the Transferred Assets. In
consideration for the conveyance of the Transferred Assets, upon the terms and
subject to the conditions set forth in this Agreement, on the Closing Date,
the Buyer, in addition to assuming the Assumed Liabilities, will pay to the
Seller an aggregate consideration of Five Million and 00/100 Dollars
($5,000,000.00) (the "Purchase Price"). Upon the execution of this Agreement,
the Buyer shall deposit the sum of Three Million Five Hundred Thousand and
00/100 Dollars ($3,500,000.00) with the Seller (the "Signing Deposit"). On
March 1, 1997, the Buyer shall deposit the further sum of One Million and
00/100 Dollars ($1,000,000.00) with the Seller (the "Additional Deposit").
The Signing Deposit and the Additional Deposit are herein collectively
referred to as the "Deposit." The Deposit shall be secured as provided in
Section 1.08 hereof. The balance of the Purchase Price shall be paid at
Closing. The total consideration paid by the Buyer to the Seller for the
Transferred Assets shall be allocated among the Transferred Assets pursuant to
a written allocation mutually agreed to between the Buyer and the Seller prior
to the Closing. The Buyer and the Seller shall file all information returns,
income tax returns and other similar documents with appropriate taxing
authorities, including the Asset Acquisition Statement on Form 8594 required
by Section 1060 of the Internal Revenue Code of 1986, as amended, in a manner
consistent with such written allocation.
SECTION 1.03 Assignment of Contracts. At the Closing, the Seller shall
assign to the Buyer all of its right, title and interest in and to, and the
Buyer shall take an assignment of and assume the obligations of the Seller
under, those certain equipment leases more particularly described in Schedule
1.03E attached hereto and incorporated by reference herein, those certain real
estate leases more particularly described in Schedule 1.03R attached hereto
and incorporated by reference herein, those certain licenses and permits
described on Schedules 1.01U and 1.01E, and the Service Agreements (as
hereinafter defined) (such equipment leases, real estate leases and Service
Agreements being collectively called the "Contracts"). Notwithstanding the
foregoing, this Agreement shall not constitute an agreement to assign any
Contract if an attempted assignment thereof, without the consent of another
party thereto or any governmental authority, would constitute a breach of any
such Contract or in any way affect the rights of the Seller thereunder or the
Buyer as assignee thereunder. The Seller shall use all reasonable efforts and
the Buyer shall cooperate in all reasonable respects with the Seller to obtain
all consents and waivers and to resolve all impracticalities of assignments or
transfers necessary to assign and convey the Contracts to the Buyer. If any
such consent or waiver are not obtained, or if an attempted assignment would
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be ineffective, the Seller shall use all reasonable efforts to provide the
Buyer with the benefits of any such Contract, and the Seller shall promptly
pay to the Buyer when received all moneys received by the Seller under any
such Contract and, to the extent the Buyer is provided with the benefits of
any such Contract, the Buyer shall perform or discharge on behalf of the
Seller all obligations and liabilities under each such Contract in accordance
with the provisions hereof, as fully and effectually as if such Contract was
assigned hereunder.
SECTION 1.04 Assumption of Liabilities. At the Closing, the Buyer
shall assume, and shall thereafter pay, perform and discharge as and when due,
the following liabilities and obligations (collectively, the "Assumed
Liabilities"):
(a) Claims. All liabilities and obligations relating to the Claims
against the Encumbered Assets, as such Claims exist as of the date hereof;
(b) Contracts. All liabilities and obligations of the Seller under the
Contracts to the extent that such liabilities and obligations arise, accrue or
are otherwise properly attributable to the period commencing on or after the
Closing Date, provided that such Contracts are assigned to the Buyer as of the
Closing Date or the Buyer is receiving the benefits of such Contracts;
(c) Post-Closing Operation. All obligations, liabilities and claims
which arise out of the Buyer's ownership, operation, use, possession or sale
of the Transferred Assets on and after the Closing Date;
(d) Accrued Vacation; Severance. All liabilities and obligations of
the Seller for accrued vacation and severance expense existing as of the
Closing Date with respect to such of the Seller's employees set forth on
Schedule 2.11 as are employed by the Buyer as of the Closing Date; and
(e) Certain Other Liabilities. Those additional liabilities and
obligations of the Seller set forth on Schedule 1.04.
There shall be no material default of any contract or other arrangement giving
rise to such obligations and liabilities as of the Closing Date. The Seller
shall duly provide to the satisfaction of the Buyer for the payment of all of
its liabilities due and owing as of the Closing, except for the Assumed
Liabilities, to the extent that the Buyer reasonably determines that failure
to satisfy such liabilities could result in the imposition of liens on any of
the Transferred Assets. Except for the Assumed Liabilities in the amount and
to the extent provided in this Section, the Buyer shall not assume, nor be
responsible for, any liabilities or obligations which relate in any manner to
the Seller or the operation of its business or any of its equipment, property
or real estate.
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SECTION 1.05 Closing. Subject to the satisfaction or waiver of each of
the conditions set forth in Articles VI an VII of this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Boston University, 881 Commonwealth Avenue, Boston,
Massachusetts at 10 o'clock a.m., on June 2, 1997, or such other location,
date and time as the Buyer and the Seller shall agree upon in writing (such
date and time being called the "Closing Date"). Time is of the essence
hereof. At the Closing:
A. The Seller shall deliver or cause to be delivered to the Buyer the
following:
(i) The Bill of Sale conveying the Transferred Assets to the Buyer;
(ii) The certificates required by Sections 6.02 and 6.03;
(iii) A copy of resolutions of the board of directors and shareholders
of the Seller, certified by its Secretary or Assistant 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 the Seller in carrying out
the terms and provisions hereof; and
(iv) Such written consents and written approvals of third parties, real
estate lessors, equipment lessors, and their respective
mortgagees, lenders and secured parties as shall be required under
any leases or financing documents so as to permit the transfer of
all material Transferred Assets and the assignment of all material
Contracts in connection with the transactions contemplated hereby.
B. The Buyer shall deliver or cause to be delivered to the Seller the
following:
(i) A copy of the resolutions of the board of directors or other
governing board of the Buyer (or its Nominee pursuant to Section
1.06 hereof) certified by its Secretary or Clerk, authorizing and
approving the performance of this Agreement and the transactions
contemplated hereby and the acts of the officers and employees of
the Buyer (or its Nominee) in carrying out the terms and
provisions hereof;
(ii) The UCC-3 Termination Statements contemplated by Section 1.03
hereof; and
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(iii) The balance of the Purchase Price by wire transfer of immediately
available funds to such bank account as the Seller shall
designate.
C. The Buyer and the Seller shall deliver, or cause to be delivered,
as appropriate:
(i) An Instrument of Assumption of Liabilities substantially in the
form of Exhibit 1.05(C)(i) attached hereto, pursuant to which the
Buyer shall assume the Assumed Liabilities;
(ii) An Assignment of Leases in form and substance satisfactory to the
Buyer assigning all right, title and interest of the Seller in and
to those certain Leases for real property set forth in Schedule
1.03R hereof, together with the consents of the lessors of such
premises and any mortgagees or secured parties of such lessors
required hereunder, and pursuant to which Assignment the Buyer
shall assume all obligations of the tenant thereunder.
(iii) An Assignment of Equipment Leases in form and substance
satisfactory to the Buyer assigning all right, title and interest
of the Seller in and to all material equipment leases set forth in
Schedule 1.03E hereof, together with the consents of the lessors
of all material equipment and any mortgagees or secured parties of
such lessors required hereunder, and pursuant to which Assignment
the Buyer shall assume all obligations of the Seller thereunder;
(iv) A Sublease in form and substance satisfactory to the Seller and
the Buyer pursuant to which the Buyer shall Sublease to the Seller
the premises described in Schedule 1.05 hereof for the Seller's
general office purposes, all on such terms and conditions and at
the rents (pro rated as necessary on the basis of square footage)
as are applicable to the Buyer under its lease(s) for such space,
subject to any consent or approval of any lessor(s) or mortgagee
or secured party of such lessor(s) required to effectuate such
Sublease;
(v) Such further documents, resolutions, certificates and instruments
as any party or its counsel reasonably requests to facilitate the
consummation of the transactions contemplated hereby.
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SECTION 1.06 Nomination by the Buyer. Notwithstanding any other
provision hereof to the contrary, it is understood and agreed that the Buyer
shall have the option at all times of consummating the transactions
contemplated hereby by and through a corporation, limited liability company or
other entity of its choosing, which is created by and wholly owned, directly
or indirectly, by the Buyer as of the Closing Date (as the context requires, a
or the "Nominee"). If the Buyer shall elect to consummate the transactions
contemplated hereby through a Nominee, the Buyer shall give written notice to
the Seller of such nomination and designation not less than seven (7) days
prior to the Closing Date hereunder, and the Nominee shall, at such time,
deliver to the Seller an instrument assuming all of the Buyer's obligations
and liabilities hereunder, such instrument to be in form and substance
reasonably satisfactory to the Seller. Upon such nomination, this Agreement
shall be deemed to be assigned to the Nominee, and the Nominee shall be deemed
to be the Buyer hereunder for all purposes, completely and effectively as if
the Nominee were the Buyer named herein. In the event that such Nominee shall
be an entity whose sole assets are or will be the Transferred Assets or that
otherwise has insufficient net assets to provide commercially reasonable
credit-worthiness for its obligations set forth herein, a subsidiary of the
Buyer with assets sufficient to provide commercially reasonable
credit-worthiness shall execute and deliver at the Closing a guarantee of the
Nominee's obligations hereunder, such guarantee to be in form and substance
reasonably satisfactory to the Buyer and the Seller.
SECTION 1.07 Further Assurances. At any time and from time to time
after the Closing Date, at the request of the Buyer and without further
consideration, the Seller will execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation as may be requested in
order to more effectively transfer, convey and assign to the Buyer and to
confirm the Buyer's title to the Transferred Assets and the assignment of the
equipment leases and real estate leases hereunder. At any time and from time
to time after the Closing Date, at the request of the Seller and without
further consideration, the Buyer shall execute and deliver such other
instruments of assumption as may be requested in order to more effectively
confirm the Buyer's assumption of, and obligation to fulfill and discharge,
the Assumed Liabilities.
SECTION 1.08 Deposit. At the Closing, the Deposit (or so much thereof
as has been paid by the Buyer) shall be applied to the payment of the Purchase
Price. In the event that the transactions contemplated hereby are not
consummated on or before the Closing Date, time being of the essence, as a
result of (i) material default by the Seller of its obligations hereunder or
any of its covenants or agreements hereunder or material breach by the Seller
of any of its representations or warranties hereunder; or (ii) the failure of
the Office of the Attorney General of the Commonwealth of Massachusetts,
Public Charities Division, to approve the transactions contemplated by this
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Agreement; or (iii) the failure of a majority of the disinterested
stockholders of the Seller in attendance, in person or by proxy, at a meeting
of stockholders of the Seller to consider the transactions contemplated by
this Agreement to approve the transactions contemplated by this Agreement; or
(iv) the failure of any third party, lessor, mortgagee, secured party, or
other person or entity whose approval or consent is required pursuant to the
terms hereof as a condition to the obligation of the parties hereunder to
consummate the transactions contemplated hereby to so approve or consent to
the transactions contemplated hereby; then, in any such event, the Deposit (or
so much thereof as has been paid by the Buyer) shall be forthwith refunded by
the Seller to the Buyer. The foregoing shall not be deemed to be in
limitation of any right or remedy otherwise available to the Buyer, at law or
in equity, in the event of a default by the Seller hereunder.
To secure the Seller's obligation to return the Deposit in the event
that the transactions contemplated hereby are not consummated in a timely
manner for any of the reasons set forth in the foregoing provisions of this
Section 1.08, the Seller does hereby grant to the Buyer a security interest in
and to all of the Unencumbered Assets, together with all proceeds from and
substitutions therefor, with all of the rights of a secured party under the
Massachusetts Uniform Commercial Code. In connection therewith, the Seller
shall, contemporaneously with the execution of this Agreement, execute and
deliver so-called UCC-1 Financing Statements for filing in the appropriate
state and local offices. In the event that the Deposit is returned by the
Seller to the Buyer in accordance with the provisions of this Section 1.08, or
upon the Closing hereunder, the Buyer shall promptly execute and deliver
so-called UCC-3 Termination Statements acknowledging its release of the
security interests created hereby.
In the event that the Buyer shall be entitled to a return of the Deposit
hereunder, said Deposit shall be refunded together with
interest thereon at the annual rate of ten percent (10%). In the event that
the Deposit is applied to the Purchase Price hereunder, the Buyer shall not be
entitled to the payment of or any credit for interest on the Deposit.
SECTION 1.09 Prorations. Utility charges, rent with respect to real or
personal property, personal property taxes, and other similar proratable items
which are attributable to the Transferred Assets shall be apportioned between
the Buyer and the Seller as of the Closing Date. Any such item which relates
to the period on or prior to the Closing Date shall be apportioned to the
Seller and any such item which relates to the period after the Closing Date
shall be apportioned to the Buyer.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, the Seller hereby represents
and warrants to the Buyer as follows:
SECTION 2.01 Organization and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Seller has the corporate power and
authority to own and hold its properties and to carry on its business as
currently conducted.
SECTION 2.02 Corporate Power and Authority. The Seller 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 the Seller's Board of
Directors, subject to approval of Seller's stockholders as contemplated
herein. Subject only to such stockholder approval, this Agreement, and each
of the other agreements, documents and instruments to be executed and
delivered by the Seller have been duly executed and delivered by, and
constitute the valid and binding obligation of the Seller, enforceable against
the Seller in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
similar laws now or hereafter in effect, as well as limitations imposed by
general principles of equity upon the specific enforceability of any of the
remedies, covenants or other provisions and the availability of injunctive
relief or other equitable remedies.
SECTION 2.03 Validity, Etc. Subject in all respects to the approval of
the Seller's stockholders as contemplated hereby, 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, except as
set forth on Schedule 2.03, (i) conflict with or result in any breach of any
trust agreement, articles of organization or by-law of the Seller, (ii)
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, (iii) result in a
breach of or default (or give rise to any right of termination, cancellation
or acceleration) under any law, rule or regulation or any judgment, decree,
order, governmental permit (other than permits set forth in a Schedule hereto
which are not transferable), license or order or any of the terms, conditions
or provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation to which the Seller is a party or by which the Seller
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or its property is bound, or (iv) result in the creation of any Claim upon the
Transferred Assets.
SECTION 2.04 Absence of Undisclosed Liabilities. Except as and to the
extent specifically reflected in Schedule 1.01E or Schedule 1.04, or, with
respect to the Contracts, except as specifically set forth on the face
thereof, the Transferred Assets are not encumbered by any liabilities,
obligations or Claims and there are no liabilities, obligations or Claims with
respect thereto.
SECTION 2.05 Taxes. Except as set forth on Schedule 2.05, all Federal,
state, local and foreign tax returns and tax reports required to be filed by
the Seller or its affiliates on or before the date hereof have been timely
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed and all amounts shown as
owing thereon have been paid. All taxes (including, without limitation,
income, accumulated earnings, property, sales, use, franchise, value added,
fuel, employees' income withholding and social security taxes) which have
become due or payable or required to be collected by the Seller or its
affiliates or as otherwise attributable to any periods ending on or before the
date hereof and the Closing Date and all interest and penalties thereon,
whether disputed or not, have been paid or will be paid in full on or prior to
the Closing Date, except where the Seller has a reasonable basis for
determining that the taxes are not then due and payable. All deposits
required by law to be made by the Seller or its affiliates with respect to
employees' withholding taxes have been duly made, and, as of the Closing Date,
all such deposits will have been made. The Seller is not, on the date hereof,
and will not, on the Closing Date, be liable for the payment of any taxes, and
the Buyer shall have no liability for any taxes related to the ownership or
operation of the Transferred Assets or the Biotech Incubator Facility prior to
the Closing Date. The Seller is not presently under, has not received notice
of an, nor to the Seller's knowledge is there any contemplated, investigation
or audit by the Internal Revenue Service or any state tax agency. The Seller
has not taken or failed to take any action which could create any tax lien on
any of the Transferred Assets.
SECTION 2.06 Litigation. Except as set forth on Schedule 2.06, there
is no action, suit, claim, proceeding, arbitration proceeding or investigation
with respect to which the Seller has received notice pending or, to the
Seller's knowledge, threatened against or materially affecting the Seller
(whether or not the Seller is a party or a prospective party), 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. The Seller has not received any written opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed, from a legal
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standpoint, to any liability or disadvantage to the business, prospects,
financial condition, operations, property or affairs of the Biotech Incubator
Facility. There are no outstanding orders, writs, injunctions or decrees of
any court, governmental agency or arbitration tribunal against, or materially
affecting, the Seller of which the Seller has received notice, and to the
Seller's knowledge, there are no facts or circumstances which could reasonably
be expected to result in institution of any action, suit, claim or legal,
administrative or arbitration proceeding or investigation against, involving
or affecting the Seller or the transactions contemplated hereby. The Seller
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.
SECTION 2.07 Certain Practices. The Seller has not, directly or
indirectly, given or agreed to give any significant rebate, gift or similar
benefit to any supplier, customer, governmental employee or other person who
was, is or may be in a position to help or hinder the Seller (or assist in
connection with any actual or proposed transaction) which (i) could subject
the Seller or the Buyer to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (ii) if not continued in the future,
could have a material adverse effect on the Biotech Incubator Facility.
SECTION 2.08 Compliance with Law. The Seller is not subject to any
judgment, order, writ, injunction, or decree that adversely affects,
individually or in the aggregate, the Biotech Incubator Facility, or its
operations, properties, assets or condition (financial or otherwise). The
Seller has complied with all laws, rules, regulations and orders applicable to
it in relation to its ownership and operation of the Biotech Incubator
Facility. The Seller is not aware of any existing law, rule, regulation or
order, or of any proposed law, rule, regulation or order currently pending
before any governmental body or agency, whether Federal or state, which would
prohibit or restrict the Buyer from, or otherwise adversely affect the Buyer
in, owning and operating the Biotech Incubator Facility as presently owned and
operated by the Seller.
SECTION 2.09 Licenses and Permits. Schedule 2.09 lists all licenses,
permits, pending applications, consents, approvals and authorizations held by
the Seller of or from any public or governmental agency, used or useable in or
otherwise necessary to the operation of the Biotech Incubator Facility
(collectively, the "Permits"). Except as noted on Schedule 2.09, the Permits
will be duly and validly transferred to the Buyer. The Seller has complied
with all conditions and requirements imposed by the Permits and the Seller has
not received any notice, and has no reason to believe, that any appropriate
authority intends to cancel or terminate any of the Permits or that valid
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grounds for such cancellation or termination exist. Except as set forth on
Schedule 2.09, to the Seller's knowledge no other permits are necessary to
operate the Biotech Incubator Facility. The Seller owns or has the right to
use the Permits in accordance with the terms thereof without any conflict or
alleged conflict or infringement with the rights of others and subject to no
Claim, and each Permit is in full force and effect. Except as noted on
Schedule 2.09, no Permit will be terminated or adversely affected by the
transactions contemplated hereby.
SECTION 2.10 Labor and Employee Relations. The Seller is not a party
to or bound by any collective bargaining agreement with any labor
organization, group or association covering any of its employees, and the
Seller has no knowledge of any attempt to organize any of its employees by any
person, unit or group seeking to act as their bargaining agent. Except as set
forth on Schedule 2.06, there are no pending or, to the Seller's knowledge,
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 the Seller. No union representation
elections relating to employees of the Seller have been scheduled by any
governmental agency or authority, no organizational effort is being made with
respect to any of such employees, and there is no investigation of the
Seller's employment policies or practices by any governmental agency or
authority pending or, to the Seller's knowledge, threatened. The Seller 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 of the Seller's employees. The Seller has not experienced any
work stoppages during the last three years, and to the Seller's knowledge, no
work stoppage has been threatened or is planned.
SECTION 2.11 Certain Employees. Set forth on Schedule 2.11 is a list
of the names of the Seller's employees and consultants as of the date hereof
involved in the management and operation of the Biotech Incubator Facility,
together with the title or job classification of each such person and the
total compensation (with wages and bonuses, if any, separately detailed) paid
in 1996 and the current rate of pay for each such person on the Closing Date.
None of such persons has an employment agreement or understanding, whether
oral or written, with the Seller which is not terminable on notice by the
Seller without cost or other liability to the Seller. As of the date hereof,
no person listed on Schedule 2.11 has indicated to the Seller that he or she
intends to terminate his or her employment with the Seller or seek a material
change in his or her duties or status.
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SECTION 2.12 Employee Benefits. Set forth on Schedule 2.12 is a list
of all pension, profit sharing, retirement, deferred compensation, stock
purchase, stock option, incentive, vacation, severance, disability,
hospitalization, medical insurance, life insurance, fringe benefit, welfare
and other employee benefit plans, programs or arrangements to which employees
of the Seller may be entitled.
The Seller will maintain the benefits listed on Schedule 2.12 in full
force and effect through the Closing Date, and, except as noted on Schedule
2.12, thereafter with respect to events occurring on or prior to the Closing.
Except as otherwise expressly set forth herein, the Buyer shall not have any
obligation of any kind or nature for any compensation or benefits of any kind
or nature to the employees or consultants of the Seller for services rendered
prior to the Closing Date.
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 the Seller subject to the
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") complies with all requirements for continuation coverage under group
health benefit plans under COBRA and there are no claims against the Seller
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 2.13 Tangible Properties. Schedule 1.01E and Schedule 1.01U
set forth a true and complete list of all tangible personal property owned by
the Seller with an original purchase price in excess of $1,500.00 and used or
useable in the Biotech Incubator Facility. The tangible personal property
included in the Transferred Assets will be, at the Closing, all of the
tangible personal property currently owned by the Seller and used or useable
in the Biotech Incubator Facility. The Seller is the owner of all of the
right, title and interest in and to, and has good and marketable title, free
and clear of all Claims, to the Unencumbered Assets listed on Schedule 1.01U.
The Seller is the owner of all of the right, title and interest in and to, and
has good and marketable title to, the Encumbered Assets, subject only to those
Claims described in Schedule 1.01E. Schedule 1.03E sets forth a true and
complete list of all tangible personal property leased by the Seller as lessee
and used or useable in the Biotech Incubator Facility. With respect to such
equipment leased by the Seller, all leases, conditional sale contracts,
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franchises or licenses pursuant to which the Seller may hold or use (or permit
others to hold or use) such equipment or 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. The Seller's possession and use of such
property has not been disturbed and no claim has been asserted against the
Seller adverse to its rights in such leasehold interests. All Transferred
Assets, equipment and property being sold, transferred or assigned hereunder
is adequate and usable for the purposes for which it is currently used and is
in good operating condition and repair, ordinary wear and tear excepted.
SECTION 2.14 Premises. Schedule 1.03R sets forth a true and complete
list and description of each parcel of real property leased by the Seller and
used in the Biotech Incubator Facility (the "Leased Premises"). Each lease
covering a Leased Premises is in full force and effect (there existing no
default under any such 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 the
Seller. The Seller has the right to use the Leased Premises in accordance
with the terms of such leases free and clear of all Claims or other interests
or rights of third parties, except those which do not or would not have an
adverse effect on the Leased Premises as used in the operation of the Biotech
Incubator Facility. Seller has not received notice of any pending or
threatened condemnation or similar proceedings or assessments affecting any of
the Leased Premises, nor to the Seller's knowledge is any such condemnation or
assessment contemplated by any governmental authority.
SECTION 2.15 Insurance. Schedule 2.15 correctly describes (by type,
carrier, policy number, limits, premium, and expiration date) the insurance
coverages carried by the Seller.
SECTION 2.16 Outstanding Commitments. Schedule 2.16 sets forth a
description of all existing material contracts, agreements, commitments,
licenses and franchises (other than those which can be canceled upon not more
than 30 days notice without penalty to the Seller), whether written or oral,
relating to the ownership or operation of the Biotech Incubator Facility
(collectively "Service Agreements"). The Seller has delivered or made
available to the Buyer true, correct and complete copies of all of the Service
Agreements specified on Schedule 2.16 which are in writing, and Schedule 2.16
contains an accurate and complete description of all Service Agreements which
are not in writing. Except as otherwise disclosed on Schedule 2.16, the
Seller has paid in full all amounts due as of the date hereof under each
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Service Agreement identified on Schedule 2.16 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. All of the Service
Agreements described on Schedule 2.16 are in full force and effect. The
Seller and each other party thereto have substantially performed all the
obligations required to be performed by them under such Agreements to date,
performance of which has not been waived, have received no notice of default
and are not in default (with due notice or lapse of time or both) under any
such Agreement. The Seller has no present expectation or intention of not
fully performing all its obligations under each Agreement, and the Seller has
no knowledge of any breach or anticipated breach by the other party to any
contract or commitment to which the Seller is a party. None of such Service
Agreements has been terminated, no notice has been given by any party thereto
of any alleged default by any party thereunder, and the Seller is not aware of
any intention or right of any party to default another party to any such
Service Agreement. There exists no actual or, to the knowledge of the
Seller, threatened termination, cancellation or limitation of the business
relationship of the Seller with any party to any such Service Agreement.
SECTION 2.17 Proprietary Information of Third Parties. No third party
has claimed or, to the Seller's knowledge, has reason to claim that any person
employed by or affiliated with the Seller in connection with its ownership and
operation of the Biotech Incubator Facility has (a) violated or may be
violating any of the terms or conditions of 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 the Seller which suggests that such a claim
might be contemplated. To the Seller's knowledge, no person employed by or
affiliated with the Seller in connection with the operation of the Biotech
Incubator Facility 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 the Seller in connection with the operation of
the Biotech Incubator Facility 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 Biotech
Incubator Facility, and the Seller has no reason to believe there will be any
such employment or violation.
SECTION 2.18 Governmental Approvals. No registration or filing with,
or consent or approval of or other action by, any Federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by the Seller of this Agreement.
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SECTION 2.19 Environmental Liability.
(a) Environmental Substance Liability. To the Seller's knowledge, no
event has occurred or condition exists or operating practice is being employed
that could give rise to material liability on the part of the Seller under
existing law for any losses, liabilities, damages (whether consequential or
otherwise), settlements, penalties, interest and expenses, 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 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 Biotech
Incubator Facility, by the Seller or any owner of any property
used or owned by the Seller;
(ii) the handling, storage, use, transportation or disposal of
any Substances by the Seller which Substances were a product,
by-product or otherwise resulted from the operations conducted by or
on behalf of the Seller;
(iii) any intentional or unintentional emission, discharge or
release of any Substances in, from or near facilities or plants
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, from or near the
Biotech Incubator Facility; or
(iv) the presence of any toxic or hazardous building materials
(including but not limited to asbestos or similar substances) in
the Biotech Incubator 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
building structures.
As used in this Section 2.19, 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.
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(b) Environmental Permits. To the Seller's knowledge it 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 Biotech Incubator
Facility or the generation, treatment, storage, transportation or disposal of
any such Substances. Such Environmental Permits, which are described in
Schedule 2.19, are currently effective and sufficient for the ownership and
operation of the plants and facilities as currently conducted, used or owned
by the Seller.
SECTION 2.20 Disclosure. Neither this Agreement, nor any Schedule or
Exhibit to this Agreement contains any untrue statement of a material fact,
taken together with all other statements made in this Agreement or any
Schedule or Exhibit to this Agreement, or omits a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Seller as follows:
SECTION 3.01 Organization. Buyer is duly incorporated, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts.
SECTION 3.02 Buyer Power and Authority. Buyer 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 the Buyer, subject only to final approval by
the Oversight Committee referred to in Section 6.04 hereof. This Agreement,
and each of the other agreements, documents and instruments to be executed and
delivered by the Buyer have been duly executed and delivered by, and
constitute the valid and binding obligation of the Buyer enforceable against
the Buyer in accordance with their terms subject to the effect of bankruptcy,
insolvency, reorganization, arrangements, moratorium, and other similar laws
now or hereafter in effect, as well as limitations imposed by general
principles of equity upon the specific enforceability of any of the remedies,
covenants or other provisions, and the availability of injunctive relief or
other equitable remedies.
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SECTION 3.03 Validity, Etc. Except for the consent or approval of the
Office of the Attorney General of the Commonwealth of Massachusetts, Public
Charities Division, none of the execution and delivery of this Agreement and
the other documents and instruments contemplated hereby, the consummation of
the transactions contemplated hereby or thereby, or the performance of this
Agreement and such other agreements in compliance with the terms and
conditions hereof and thereof will (i) conflict with or result in any breach
of any trust agreement, articles of organization, by-law, judgment, decree,
order, statute or regulation applicable to the Buyer (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (iii) result in a breach of or default
(or give rise to any right of termination, cancellation or acceleration) under
any law, rule or regulation or any judgment, decree, order, governmental
permit, license or order or any of the terms, conditions or provisions of any
mortgage, indenture, note, license, agreement or other instrument to which the
Buyer is a party by which the Buyer or its property is bound, or (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Buyer.
SECTION 3.04 No Violation of Laws or Contracts. Provided that the
Office of the Attorney General of the Commonwealth of Massachusetts, Public
Charities Division, consents or approves the transactions contemplated hereby,
neither the execution and performance of this Agreement or the other
agreements executed by the Buyer in accordance with the terms hereof, nor the
consummation of the transactions contemplated hereby and thereby, will violate
any provisions of law, any order of any court or other agency or government,
or any ordinance, indenture or agreement to which the Buyer is a party, or by
which the Buyer or its property is bound, which would materially impair the
Buyer's ability to consummate the transactions contemplated hereby, nor is the
Buyer aware of any existing law, rule, regulation or order, or proposed law,
rule, regulation or order currently pending before any governmental body or
agency, whether Federal or state, which would prohibit or restrict the Buyer
from, or otherwise adversely affect the Buyer in, owning and operating the
Biotech Incubator Facility as presently owned and operated by the Seller.
SECTION 3.05 Governmental Approvals. Except for the consent or
approval of the Office of the Attorney General of the Commonwealth of
Massachusetts, Public Charities Division, of the transactions contemplated
hereby, no registration or filing with, or consent or approval of or other
action by, any Federal, state or other governmental agency or instrumentality
is or will be necessary for the valid execution, delivery and performance by
the Buyer of this Agreement.
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SECTION 3.06 Buyer's Nominee. Any Nominee designated by the Buyer
shall be deemed to have made the representations and warranties set forth in
this Article III, with such changes as the context shall require in the event
that the Nominee is an entity other than a corporation (e.g., a limited
liability company); provided, however, that if the Nominee is other than a
corporation, it shall be deemed to represent and warrant that it is duly
organized, validly existing and with the appropriate power and authority to
consummate the transactions contemplated hereby, all as set forth in this
Article III, but subject to all of the express limitations set forth in this
Article III.
ARTICLE IV
COVENANTS OF SELLER
The Seller covenants and agrees with the Buyer as follows:
SECTION 4.01 Cooperation. The Seller shall use its commercially
reasonable efforts 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, the Seller shall give the
Buyer, its attorneys, accountants and other authorized representatives
reasonable access, upon reasonable notice and at reasonable times, to the
Biotech Incubator Facility and suppliers, employees, products, technology,
business and financial records, contracts, business plans, budgets and
projections, agreements and commitments relating to the operation of the
Biotech Incubator Facility. The Buyer agrees that, prior to the Closing, it
shall not contact or otherwise communicate with the Seller's customers,
suppliers or other third parties with whom the Seller has a relationship in
connection with the Seller's operation of the Biotech Incubator Facility,
without in each case obtaining the prior approval of the Seller, which
approval shall not be unreasonably withheld, delayed or conditioned.
SECTION 4.03 Insurance. The Seller shall maintain its existing
insurance policies relating to the ownership and operation of the Biotech
Incubator Facility through the Closing.
SECTION 4.04 Compliance with Laws. The Seller shall operate the
Biotech Incubator Facility in compliance with all applicable laws, rules,
regulations and orders, except for minor failures to be in compliance with
applicable laws, rules, regulation and orders that would not, individually or
in the aggregate, have a material adverse effect on the Transferred Assets or
the operation or condition (financial or otherwise) or prospects of the
Biotech Incubator Facility.
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SECTION 4.05 Keeping of Books and Records. The Seller shall continue
to keep adequate records and books of account, in which complete entries will
be made in accordance with its existing accounting principles consistently
applied, reflecting all financial transactions and in which all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its ownership and operation of the
Biotech Incubator Facility.
SECTION 4.06 Actions Prior to Closing. The Seller shall operate the
Biotech Incubator Facility, pending the Closing, only in the ordinary and
usual course of its usual business. Without limiting the generality of the
foregoing, the Seller will not, except in the ordinary and usual course of
business, without the prior written consent of the Buyer, (i) make any
disposition of any Transferred Asset, (ii) enter into any contract or release
or relinquish any contract or other right with respect to the ownership or
operation of the Biotech Incubator Facility, 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 involved in the operation of the Biotech Incubator Facility.
SECTION 4.07 Litigation. The Seller will promptly notify the Buyer of
any lawsuits, claims, proceedings or investigations which are commenced or, to
the Seller's knowledge, threatened against the Seller, or against any
employee, consultant or director of the Seller, involving in any way the
ownership or operation of the Biotech Incubator Facility or which may threaten
the consummation by Seller of the transactions contemplated hereby.
SECTION 4.08 Continued Effectiveness of Representations and Warranties.
From the date hereof up to and including the Closing Date, (i) the Seller will
continue to operate the Biotech Incubator Facility in such manner 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 none of which
would have a material adverse effect on the Transferred Assets or the
operation or condition (financial or otherwise) or prospects of the Biotech
Incubator Facility; and (ii) the Seller will advise the Buyer promptly in
writing of any condition or circumstance occurring from the date hereof up to
and including the Closing Date which could cause any representation or
warranty of the Seller to become untrue in any material respect.
SECTION 4.09 Tax Returns. The Seller shall cause to be prepared and
timely filed all of its required tax returns for all periods up to and
including the Closing Date.
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ARTICLE V
COVENANTS OF BUYER
The Buyer covenants and agrees with the Seller as follows:
SECTION 5.01 Cooperation. The Buyer shall use its commercially
reasonable efforts 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 Litigation. The Buyer will promptly notify the Seller of
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against the Buyer, or against any employee, consultant or director
of the Buyer, involving in any way the ability of the Buyer to purchase, own
or operate the Biotech Incubator Facility or which may threaten the
consummation by the Buyer of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of the Buyer to pay the Purchase Price on the Closing
Date 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 the Buyer in its sole discretion:
SECTION 6.01 Consents. All requisite governmental approvals and
consents of third parties identified as required to be received to prevent any
material lease, license, permit or agreement relating to the ownership and
operation of the Biotech Incubator Facility from terminating prior to its
scheduled termination, as a result of the consummation of the transactions
contemplated hereby, shall have been obtained, or the Seller shall have
provided the Buyer with the benefit of any such material lease, license,
permit or agreement to which such approvals or consents have not been obtained
as contemplated by Section 1.03 hereof.
SECTION 6.02 Representations and Warranties True. All of the
representations and warranties of the Seller 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, the Seller shall have executed and
delivered to the Buyer a certificate, in form and substance satisfactory to
the Buyer and its counsel, to such effect.
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SECTION 6.03 Performance. The Seller shall have performed and complied
in all material respects with all covenants and agreements contained herein
required to be performed or complied with by it prior to or at the Closing
Date. The Seller shall have executed and delivered to the Buyer a
certificate, in form and substance satisfactory to the Buyer 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 6.04 Approval of Oversight Committee. The Oversight Committee,
a committee of the Board of Trustees of Buyer, shall have approved the
transactions contemplated hereby.
SECTION 6.05 Approval of Attorney General. The Office of the Attorney
General of the Commonwealth of Massachusetts, Public Charities Division, shall
have approved the transactions contemplated hereby to the satisfaction of the
Buyer and its counsel.
SECTION 6.06 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, other than the Buyer or its
affiliates, 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 in respect of, this
Agreement or the consummation of the transactions contemplated hereby, or (ii)
which has had or may have an adverse effect on the condition (financial or
other) or prospects of the Seller. 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 the Seller
shall be pending, and the Seller shall not have taken any action in
contemplation of, or which would constitute the basis for, the institution of
any such proceedings.
SECTION 6.07 Closing Documents. The Seller shall have delivered all of
the resolutions, certificates, documents and instruments required by this
Agreement.
SECTION 6.08 Approval of the Buyer and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by,
or at the behest or direction of, the Seller hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to the Buyer and its counsel.
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ARTICLE VII
CONDITIONS TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to transfer the Transferred Assets to the
Buyer 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 the Seller in its sole discretion:
SECTION 7.01 Representations and Warranties to be True and Correct.
The representations and warranties of the Buyer contained in this Agreement or
any Schedule or other document referred to herein, or delivered pursuant
hereto in connection with the transactions contemplated hereby, shall be true,
complete and correct, on and as of the date hereof and as of the Closing Date,
as if made on and as of such date. On the Closing Date, the Buyer shall have
delivered to the Seller a certificate, in form and substance satisfactory to
the Seller and its counsel, to such effect.
SECTION 7.02 Performance. The Buyer shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Buyer shall have delivered a
certificate to the Seller, in form and substance satisfactory to the Seller
and its counsel to such effect.
SECTION 7.03 Stockholder Approval. The Seller shall have received the
approval of the transactions contemplated hereby by a majority of the
disinterested stockholders of the Seller in attendance, by person or proxy, at
a meeting of stockholders to consider the transactions contemplated by this
Agreement.
SECTION 7.04 Closing Documents. The Buyer shall have delivered the
Purchase Price and shall have made any other payment required to be made by
the Buyer hereunder or under any other agreement, instrument or document
executed and delivered in connection herewith, including, without limitation,
the Facility Service Agreement (hereafter defined), and the Buyer shall have
executed and delivered all of the resolutions, certificates, documents and
instruments required by this Agreement.
SECTION 7.05 Approval of the Seller and Its Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by,
or at the behest or direction of, the Buyer hereunder or incident to its
performance hereunder, and all other related matters, shall be reasonably
satisfactory as to form and substance to the Seller and its counsel.
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SECTION 7.06 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, other than the Seller, 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 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 the Buyer or
any Nominee shall be pending, and neither the Buyer nor any Nominee shall have
taken any action in contemplation of, or which would constitute the basis for,
the institution of any such proceedings.
SECTION 7.07 Guaranty. In the event that the Buyer shall nominate a
Nominee hereunder, and shall have assigned its interest in the Facility
Service Agreement (as hereafter defined) to such Nominee, and delegated its
duties and responsibilities under the Facility Service Agreement to such
Nominee, the Nominee shall deliver the guaranty contemplated by Section 1.06
hereof. Such guaranty shall include a guaranty of the Nominee's obligations
under the Facility Service Agreement.
SECTION 7.08 Buyer's Offer to Employ Seller's Employees. As of the
Closing Date, and effective thereon, the Buyer shall have offered employment
to such of the Seller's employees listed on Schedule 2.11 hereto who are then
employed by Seller. In connection therewith, it is understood and agreed that
Buyer shall not assume, as a part of the Assumed Liabilities, any liability
for accrued vacation or severance with respect to any of such employees who
choose to decline employment with the Buyer from and after the Closing Date.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 Survival. All representations and warranties by the
Seller and the Buyer in this Agreement, or in any instrument or document
furnished in connection with this Agreement or the transactions contemplated
hereby, shall survive the Closing and any investigation at any time made by or
on behalf of any party for a period of one (1) year. All such representations
and warranties shall expire on the first anniversary of the Closing Date,
except that claims, if any, asserted in writing prior to such first
anniversary identified as a claim for indemnification pursuant to this Article
VIII shall survive until finally resolved and satisfied in full.
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SECTION 8.02 Indemnification.
(a) The Seller shall indemnify, defend, and hold the Buyer and its
officers, directors, employees, and their successors and assigns harmless
from, against and with respect to any claim, liability, obligation, loss,
damage, assessment, judgment, cost and expense (including, without limitation,
reasonable attorneys' and accountants' fees and costs and expenses reasonably
incurred in investigating, preparing, defending against or prosecuting any
litigation or claim, action, suit, proceeding or demand) of any kind or
character asserted or made by a party or parties other than the Buyer or the
Seller (the "Damages") against the Buyer, arising out of or in any manner
incident, relating or attributable to:
(i) Any inaccuracy in any representation or breach of warranty of the
Seller contained in this Agreement or in any certificate,
instrument of transfer or other document or agreement executed by
the Seller in connection with this Agreement;
(ii) Any failure by the Seller or its affiliates to perform or observe,
or to have performed or observed, in full, any covenant, agreement
or condition to be performed or observed by them under this
Agreement or under any certificates or other documents or
agreements executed by the Seller or its affiliates in connection
with this Agreement, except for those expressly waived by the
Buyer; and
(iii) Liabilities or obligations of, or claims against, the Buyer
(whether absolute, accrued, contingent or otherwise) relating to,
or arising out of, the operation of the Biotech Incubator Facility
prior to the Closing Date which are not expressly assumed by the
Buyer pursuant to this Agreement.
(b) The Buyer shall indemnify, defend, and hold the Seller and its
officers, directors, employees, and their successors and assigns harmless
from, against and with respect to any Damages against the Seller arising out
of or in any manner incident, relating or attributable to:
(i) Any inaccuracy in any representation or breach of warranty of the
Buyer contained in this Agreement or in any certificate,
instrument of transfer or other document or agreement executed by
the Buyer in connection with this Agreement;
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(ii) Any failure by the Buyer or its affiliates to perform or observe,
or to have performed or observed, in full, any covenant, agreement
or condition to be performed or observed by them under this
Agreement or under any certificates or other documents or
agreements executed by the Buyer or its affiliates in connection
with this Agreement, except for those expressly waived by the
Seller; and
(iii) Liabilities or obligations of, or claims against, the Seller
(whether absolute, accrued, contingent or otherwise) relating to,
or arising out of, the operation of the Biotech Incubator Facility
after the Closing Date which are not expressly assumed by the
Seller pursuant to this Agreement.
SECTION 8.03 Limitations on Liability. Notwithstanding the foregoing
provisions of this Article VIII, neither party shall be liable to the other
party for any breach of its representations or warranties hereunder, nor shall
either party be liable under its indemnity to the other party, unless and
until the cumulative amount of any party's claims in respect of the foregoing
shall exceed the sum of $50,000 in the aggregate, and then only to the extent
of the cumulative excess of such claims and Damages over the sum of $50,000.
SECTION 8.04 Notice and Defense of Claims.
(a) Notice of Claims. Any party entitled to indemnification
under this Article VIII or otherwise under this Agreement (the
"Indemnified Party") shall give the party from whom indemnification is
sought (the "Indemnifying Party") prompt written notice of the claim
and, when known, the facts constituting the basis for such claim. In
the event of any claim for indemnification made hereunder resulting from
or in connection with any claim or legal proceedings by a person or
party who is not a party to this Agreement, the notice to the
Indemnifying Party shall specify, if known, the amount or an estimate of
the amount of the liability arising therefrom. Except as provided in
Section 8.04(c) hereof, the Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the
Indemnifying Party, unless suit shall have been instituted against it
and the Indemnifying Party shall not have taken control of such suit
after notification thereof as provided in Section 8.04(b) hereof.
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(b) Defense of Claims. In connection with any claim giving rise
to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person or party who is not a party to this
Agreement, the Indemnifying Party at its sole cost and expense may (but
shall not be required to), upon written notice to the Indemnified Party,
assume the defense of any such claim or legal proceeding if it
acknowledges to the Indemnified Party in writing its obligation to
indemnify the Indemnified Party with respect to such claim. The
Indemnified Party shall be entitled to participate in (but not control)
the defense of any such action, with its own counsel and at its own
expense. If the Indemnifying Party does not assume the defense of any
such claim or litigation resulting therefrom, (i) the Indemnified Party
may defend against such claim or litigation, in such manner as it may
deem appropriate, including, but not limited to, settling such claim or
litigation (after giving notice of the same to the Indemnifying Party)
on such terms as the Indemnified Party may deem appropriate, and (ii)
the Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with its own counsel and at its own
expense.
(c) Restrictions on Indemnifying Party's Defense of Claims.
Anything in this Section 8.04 to the contrary notwithstanding, (i) if
there is a substantial probability in the Indemnified Party's reasonable
judgment that a claim may materially and adversely affect the
Indemnified Party or its subsidiaries, affiliates, directors, officers
or employees against whom such claim is asserted, other than as a result
of money damages or other money payments, the Indemnified Party shall
have the right (A) to defend or co-defend such claim and (B) to
compromise or settle such claim with the Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld,
conditioned or delayed, and (ii) if the Indemnified Party has notified
the Indemnifying Party that the Indemnified Party is invoking its rights
under this Section 8.04(c) with regard to a claim, the Indemnifying
Party shall not, without the prior written consent of the Indemnified
Party, settle or compromise any such claim or consent to entry of any
judgment relating to any such claim, which settlement, compromise or
judgment does not include as an unconditional term thereof the giving by
the claimant to the Indemnified Party, or its subsidiaries, affiliates,
directors, officers or employees against whom such claim is asserted, a
release from all liability in respect of such claim.
(d) Access to Records. The Indemnifying Party and the
Indemnified Party shall each provide the other with access to all
records and documents in their possession relating to any claim
indemnifiable hereunder.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01 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 the Buyer:
Trustees of Boston University
881 Commonwealth Avenue
Boston, MA 02215
Attn: Kenneth G. Condon, Treasurer
With copies to:
Stephen A. Williams, Esq.
Office of the General Counsel
Boston University
125 Bay State Road
Boston, MA 02215
and
Richard D. Dionne, Esq.
Dionne & Gass
73 Tremont Street
Boston, MA 02108
If to the Seller:
Seragen, Inc.
97 South Street
Hopkinton, MA 01748
Attention: Chief Financial Officer
With a copy to:
Edward C. Britton, Esq.
Covington & Burling
1201 Pennsylvania Avenue, N.W.
Washington, DC 20044-7566
All notices, requests, consents and other communications hereunder shall be
deemed to have been received (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 5th business day following the day such mailing is
made.
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SECTION 9.02 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. 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
expressed terms and provisions of this Agreement.
SECTION 9.03 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 9.04 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 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 9.05 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. Notwithstanding the foregoing, the
Buyer shall have the right to designate a Nominee in accordance with the
provisions of Section 1.06 hereof.
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SECTION 9.06 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, expressed 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 9.07 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 9.08 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 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 11.01 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 11.08 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 9.09 Severability. In the event that any court of competent
jurisdiction shall finally determine that any provision, 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.
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SECTION 9.10 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 favor of or against any
party, regardless of which party was generally responsible for the preparation
of this Agreement.
SECTION 9.11 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 9.12 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 9.13 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 or other document attached hereto or referred to herein or
delivered by such other party or pursuant to this Agreement.
SECTION 9.14 Expenses. Each of the parties hereto shall pay its own
fees and expenses (including the fees of any attorneys, accountants 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 9.15 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
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transactions contemplated hereby in such a way as to create any liability on
the other, except that the Buyer has previously disclosed to the Seller that
it will be liable to a certain third party for a finder's fee in connection
with the consummation of this transaction. 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 9.16 Confidentiality. Each party acknowledges and agrees that
any information or data it has acquired from the other party, not otherwise
properly in the public domain, was received in confidence. Each party hereto
agrees not to divulge, communicate or disclose, except as may be required by
law or for the performance of this Agreement (including obtaining financing
and conducting due diligence), or use to the detriment of the disclosing party
or for the benefit of any other person or persons, or misuse in any way, any
confidential information of the disclosing party concerning the subject matter
hereof, including any trade or business secrets of the disclosing party and
any technical or business materials that are treated by the disclosing party
as confidential or proprietary, including without limitation information
(whether in written, oral or machine-readable form) concerning: general
business operations; methods of doing business, servicing clients, client
relations, and of pricing and making charge for services and products;
financial information, including costs, profits and sales; marketing
strategies; business forms developed by or for the disclosing party; names of
suppliers, personnel, customers, clients and potential clients; negotiations
or other business contacts with suppliers, personnel, customers, clients and
potential clients; form and content of bids, proposals and contracts; the
disclosing party's internal reporting methods; technical and business data,
documentation and drawings; software programs, however embodied; manufacturing
processes; inventions; and information obtained by or given to the disclosing
party about or belonging to third parties.
SECTION 9.17 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.
ARTICLE X
PRE-CLOSING OPERATION OF BIOTECH INCUBATOR FACILITY
SECTION 10.1 Facility Service Agreement. Contemporaneously with the
execution and delivery of this Agreement, the parties hereto have executed and
delivered that certain Service Agreement (the "Facility Service Agreement")
pursuant to which the Buyer has agreed to perform and provide services to the
Seller at the Biotech Incubator Facility, all for the payments by the Seller
and other consideration and on the terms and conditions more particularly set
forth therein.
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SECTION 10.2 Access to Facilities. In order to permit the Buyer to
perform its obligations under the Facility Service Agreement from and after
the date of the execution of this Agreement, the Seller shall, and does hereby
grant to the Buyer, full access to, and possession and use of the Transferred
Assets, including, without limitation, the real property leased by the Seller
and described in Schedule 1.03R hereof (except the premises described in
Schedule 1.05 hereof) and the equipment leased by the Seller and described in
Schedule 1.03E hereof, all as fully and effectively as if the Closing
hereunder had occurred on the date of the execution of this Agreement. In
connection therewith, the Seller shall provide the services of those employees
of the Seller listed on Schedule 2.11 hereof.
SECTION 10.3 Payments by the Buyer. In connection with the foregoing
provisions of this Article X, the Buyer shall pay, for or on behalf of the
Seller, all of the payments required under Contracts and all liabilities and
obligations relating to the Claims against the Encumbered Assets (as such
Claims exist as of the date hereof), when and as the same become due and
payable. Such payments shall be made, where possible and practicable,
directly by the Buyer to the applicable lessor, vendor or other party entitled
to such payments for the account of and on behalf of the Seller. Where such
direct payments to lessors, vendors or such other parties are not possible
possible or practicable, the Seller shall make such payments and the Buyer
shall reimburse the Seller therefor. In addition to the foregoing, the Buyer
shall reimburse the Seller for the wages and benefits (including accrued
vacation and severance payments, as applicable) of those employees listed on
Schedule 2.11 hereof whose services are provided by the Seller to the Buyer
pursuant to Section 10.02 hereof. Reimbursement by the Buyer for items paid
by the Seller shall commence on the fourteenth (14th) day after the date of
execution of this Agreement and shall be made each fourteenth (14th) day
thereafter, with a final reimbursement payment to be made at the Closing.
Each such reimbursement payment shall be made in respect of the period ending
seven (7) days prior to the date on which the payment is to be made. Not less
than three (3) days prior to each such reimbursement payment date, the Seller
shall provide the Buyer with a statement setting forth the amount due to be
paid by the Buyer to the Seller as reimbursement hereunder and setting forth
in reasonable detail the calculation of such amount. The Seller shall keep
books and records adequate to establish the amount of any reimbursement
payments hereunder and shall make the same available for inspection and audit
by the Buyer or its representatives at all reasonable times.
SECTION 10.04 Termination. In the event that, prior to the Closing
hereunder, the Facility Services Agreement shall be terminated by the Buyer as
a result of (i) breach by the Seller of covenants and obligations thereunder,
or (ii) exercise by the Buyer of its option to terminate pursuant to Section
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7.03 thereof, then, in such event, this Agreement shall automatically
terminate and, in addition to return of the Deposit pursuant to Section 1.08
hereof, the Seller shall reimburse the Buyer for all payments made by the
Buyer under this Article X, together with interest on any and all such
payments at the annual rate of ten percent (10%).
IN WITNESS WHEREOF, the Buyer and the Seller have executed this
Agreement as an instrument under seal on this 14th day of February, all as of
the day and year first above written.
SERAGEN, INC.
By: /s/ Reed R. Prior
--------------------------------
Reed R. Prior, Chairman and CEO
TRUSTEES OF BOSTON UNIVERSITY
By: /s/ Kenneth G. Condon
------------------------------
Kenneth G. Condon, Treasurer
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ASSET PURCHASE AGREEMENT
dated as of February 14, 1997,
between
Seragen, Inc.
and
Trustees of Boston University
EXHIBITS AND SCHEDULES
[Omitted pursuant to Item 601(b)(2) of Reg. S-K. The Registrant undertakes to
furnish supplementally a copy of any omitted schedule to the Commission upon
request.]
Exhibit 1.01 Form of bill of sale
Exhibit 1.05(C)(i) Form of instrument of assumption of liabilities
Schedule 1.01E Encumbered assets to be transferred
Schedule 1.01U Unencumbered assets to be transferred
Schedule 1.01X Assets excluded from the transaction
Schedule 1.03E Equipment leases
Schedule 1.03R Real estate leases
Schedule 1.04 Claims against encumbered assets
Schedule 1.05 Area to be subleased by the Registrant from the buyer
Schedule 2.03 Exceptions to representation regarding absence of
conflicts
Schedule 2.05 Exceptions to representation regarding tax matters
Schedule 2.06 Exceptions to representation regarding litigation
Schedule 2.09 Licenses and permits
Schedule 2.11 Employees involved in operation of the facilities
to be transferred to buyer
Schedule 2.12 Employee benefits
Schedule 2.15 Insurance
Schedule 2.16 Contracts to be transferred to buyer
Schedule 2.19 Environmental permits
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SERVICE AGREEMENT
THIS SERVICE AGREEMENT, made and entered into this 14th day of February,
1997, by and among
SERAGEN, INC., a corporation organized and existing under the laws
of Delaware, having its principal place of business at 97 South
Street, Hopkinton, Massachusetts 01748 (hereinafter referred to as
"Seragen"), and
TRUSTEES OF BOSTON UNIVERSITY, a corporation organized and
existing under the laws of Massachusetts, having its principal
place of business at 881 Commonwealth Avenue, Boston, MA 02215
(hereinafter referred to as "Service Provider").
W I T N E S S E T H :
WHEREAS, Seragen desires to purchase from Service Provider, and Service
Provider desires to provide, certain services relating to product research,
development, manufacturing, clinical trials, quality control and quality
assurance, all subject to the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
INTERPRETATION AND APPLICATION
1.01 Defined Terms. In addition to terms otherwise defined herein, the
following terms shall have the following meanings for purposes of this
Agreement:
"Agreement" shall mean this Service Agreement entered into by and
between Seragen and Service Provider, as amended or modified from time
to time.
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"Asset Purchase Agreement" means that certain Asset Purchase
Agreement, dated as of the date hereof, by and between Seragen and
Service Provider, as it may be amended from time to time.
"Contract Year" shall mean the period commencing on the date
hereof and terminating on January 31, 1998, and each annual period
thereafter commencing on February 1 and terminating on the following
January 31 occurring during the term of this Agreement.
"Developments" shall include any ideas, products, concepts,
techniques, methods, formulae, trade secrets, systems, inventions,
processes, works of authorship, knowhow or improvements made by Service
Provider or under Service Provider's direction or by the employees,
consultants or agents (including subcontractors) of Service Provider in
connection with the Technology Services or the Additional Services.
"Information" shall include processes, methods, techniques,
systems, formulae, trade secrets, drawings, photographs, machine
readable records, computer software and programs (including source
codes), database technologies, patterns, models, devices, compilations,
supplier, customer and dealer data, market information, internal
financial information, or any other information that Seragen treats as
confidential or proprietary and that is not freely available to the
public, transmitted to or acquired by Service Provider or any Service
Provider employees, consultants or agents in the course of Service
Provider's performance of its obligations hereunder, but shall not
include information that is a matter of public knowledge or information
that Service Provider is required to disclose under law.
"Operating Losses" with respect to any Contract Year or portion
thereof shall mean the difference between (a) all cash actually expended
by Service Provider during such period (whether the same would be
capitalized or expensed in accordance with U.S. generally accepted
accounting principles), exclusive of the $5.0 million purchase price
paid by Service Provider for the Purchased Assets in the first Contract
Year, less (b) all cash revenues actually received by Service Provider
during such period.
"Purchased Assets" means those certain assets to be sold by
Seragen to Service Provider pursuant to and subject to the terms and
conditions contained in the Asset Purchase Agreement.
"Third Party" means any individual, corporation, partnership,
limited partnership, limited liability company, limited liability
partnership, joint venture, association, trust, unincorporated
organization, government or governmental agency, or other legal entity,
other than the parties hereto.
1.02 Other Rules of Construction. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." The headings inserted in this Agreement are for
reference purposes only and shall in no way affect the construction of this
Agreement. All references to "party" and "parties" shall be deemed references
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to the parties to this Agreement and to a party's successor in title unless
the context shall otherwise require. All references to articles, sections and
paragraphs shall be deemed references to articles, sections and paragraphs of
this Agreement, unless the context shall otherwise require. All references
herein to schedules shall be deemed to be references to the schedules attached
to this Agreement. The terms "this Agreement," "hereof," "hereunder," and
similar expressions refer to this Agreement as a whole and not to any
particular article, section or other portion of this Agreement and include any
agreement supplemental hereto. The conjunction "or" shall be understood in
its inclusive sense.
ARTICLE II
SERVICES
2.01 Technology Services. Seragen has developed and provided Schedule
1 to Service Provider. Those services and products which are reflected on
Schedule 1 (collectively, the "Technology Services") represent services and
products which are required in order to continue Seragen's current research
projects. Service Provider, under Seragen's direction, agrees to provide and
deliver the Technology Services to Seragen, upon the terms set forth herein
and on Schedule 1. Service Provider and Seragen from time to time shall in
good faith negotiate amendments (including appropriate price reductions) to
Schedule 1 in the event that Seragen's research and development requirements
change and, as a result thereof, Seragen determines that any services or
products described on Schedule 1 are no longer required or that the standards
or requirements with respect to any described services or products needs to be
changed.
2.02 Additional Services. If Seragen shall require any research and
development services during the Term (as defined in Section 6.01) in addition
to the Technology Services ("Additional Services"), Seragen shall be required
to purchase such Additional Services from Service Provider, provided that
Service Provider has the capacity (including, without limitation, the ability
to make material suitable for the applicable phase of clinical trials or
market manufacture as defined by applicable regulations as promulgated by the
U.S. Food and Drug Administration ("FDA") and interpreted by Seragen) to
perform such Additional Services within the timeframe in which Seragen
reasonably requires the delivery of such Additional Services and in accordance
with any standards reasonably required by Seragen, including those set forth
in Article III. Seragen shall provide written notice (the "Additional Service
Request") to Service Provider if it requires any Additional Services,
specifying the Additional Services required and the reasonable time frame in
which Seragen expects such Additional Services to be performed. Service
Provider shall provide notice to Seragen on or prior to the twentieth (20th)
day following Service Provider's receipt of the Additional Service Request as
to whether it cannot perform the requested Additional Services; provided,
however, that if Service Provider shall fail to provide such notice within
such twenty (20) day period, Service Provider shall be deemed to have agreed
to provide the Additional Services upon the terms set forth in the Additional
Service Request. Service Provider shall be obligated to, and shall, accept
any Additional Service Offer if, and only if, it has the ability and resources
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to timely perform, in accordance with the terms set forth herein, the
Additional Services being requested.
2.03 Facilities; Staffing; Supplies; Equipment. Service Provider, at
all times during the term, shall provide the Technology Services and
Additional Services from its facilities located at 97 South Street, 99 South
Street and 116-120 South Street, all in Hopkinton, Massachusetts (the
"Premises"). Service Provider shall maintain at all times such staffing,
supplies and equipment as is sufficient to ensure that it has the ability to
perform the Technology Services (as well as any Additional Services that it
has become obligated to provide pursuant to the provisions of Section 2.02) in
accordance with the terms hereof. The Chief Executive Officer of Service
Provider shall be subject to Seragen's prior written approval, which will not
be unreasonably withheld. (All Service Provider personnel and consultants
providing research and development services in connection with the Technology
Services or any Additional Services are referred to herein collectively as
"Employees".)
2.04 Subcontracting. Without Seragen's prior written consent, which
shall not be unreasonably withheld, Service Provider shall not enter into any
subcontract with any Third Party for the provision of Technology Services or
Additional Services.
2.05 Access. During normal business hours and on reasonable notice,
Service Provider shall permit Seragen (and its respective representatives and
consultants) to have access to Service Provider's Premises, equipment,
officers and employees and to all books and records (as described in Section
2.09), Legal Records (as defined in Section 3.02), and other technical
information and data in Service Provider's possession relating to this
Agreement or the services provided hereunder; provided, however, that Service
Provider shall not be obligated to provide Seragen with access to that portion
of its Premises, equipment, officers and employees which, at the time of any
request for access, are being utilized in the performance of services of a
proprietary or confidential nature for a Third Party. Seragen shall have the
right to make copies of the books and records, Legal Records and other
information and data relating to this Agreement and the services provided
hereunder. Without limiting the foregoing, Service Provider shall provide all
reasonable cooperation in order that Seragen, among other things, may from
time to time confirm Service Provider's compliance with the provisions of
Article III hereof, including Service Provider's due and reasonable care in
the storage of biological materials and Service Provider's full compliance
with all applicable regulations and legal requirements.
2.06 Manufacturing Process. Under Seragen's direction, Service
Provider shall at all times perform the Technology Services and Additional
Services in accordance with Seragen's manufacturing and quality control
specifications. Unless Seragen directs Service Provider to do so, Service
Provider shall not change its manufacturing processes, equipment or vendors
relating to this Agreement or the services performed by Service Provider
hereunder.
2.07 Third Party Service Agreements. Service Provider shall not enter
into any service agreement with a Third Party to the extent that Service
Provider's provision of services under such agreement would in any way
compromise, impair, or delay the ability of Service Provider to perform the
services required to be performed by it hereunder. In addition, without
Seragen's prior written approval, Service Provider shall not enter into any
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service agreement with a Third Party if the aggregate expenses incurred by
Service Provider in connection therewith in any Contract Year, when aggregated
with all other expenses incurred by Service Provider during such Contract Year
under other service agreements with Third Parties, would exceed the revenues
received by Service Provider under all such contracts during such Contract
Year.
2.08 Approval of Annual Budget and Incurrence of Expenses. Within
thirty (30) days following the execution hereof, and within sixty (60) days
prior to the end of each Contract Year thereafter, Service Provider shall
propose to Seragen an annual projected budget for the upcoming Contract Year.
Such budget shall be subject to the approval of Seragen, which shall not be
unreasonably withheld. Service Provider hereby covenants and agrees that it
shall reasonably endeavor to reasonably limit the expenses incurred by Service
Provider during each Contract Year. Service Provider agrees that it shall
fulfill all of its monetary obligations to third parties in a timely manner,
including its obligations to make payments on the leases for the Premises. If
Service Provider fails to make any such payments in a timely manner, Seragen
shall have the right, but no obligation, to make such payments on Service
Provider's behalf and, in addition to any other remedies it may have at law or
in equity, to set off any such payment against the amounts payable to Service
Provider pursuant hereto.
2.09 Maintenance of Books and Records. Service Provider shall keep
complete and accurate books and records in accordance with generally accepted
accounting principles, consistently applied. Such books and records shall
contain all particulars which may be necessary for the purpose of ascertaining
the Additional Service Fees payable pursuant to Section 4.02 hereof during the
term of this Agreement and any Operating Losses incurred hereunder. Such
books and records shall be kept by Service Provider for not less than three
(3) years following the expiration of the Term. Such records shall be kept at
Service Provider's principal place of business.
ARTICLE III
STANDARDS OF CARE AND COMPLIANCE WITH LAW
3.01 General. Service Provider, under Seragen's direction, shall
supply the Technology Services and Additional Services in accordance with
current scientific, professional, commercial and regulatory standards
prevailing in the biopharmaceutical industry. Without limiting the foregoing,
Service Provider, under Seragen's direction, shall exercise all due and
reasonable care with regard to any biological raw materials, work-in-process,
clinical products or finished products in its custody, including any
DAB389IL-2, DAB389EGF and DAB486IL2 delivered by Seragen to Service Provider
hereunder.
3.02 Compliance with Applicable Law. Service Provider, under Seragen's
direction, shall comply with all applicable laws (including the Food, Drug and
Cosmetic Act), requirements, rules, regulations and standards prescribed by
public authorities in providing the Technology Services and Additional
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Services, and shall maintain all necessary records to so comply (the "Legal
Records"). Without limiting the foregoing, Service Provider, under Seragen's
direction, shall comply with all applicable requirements relating to current
good laboratory practice, current good clinical practice, and current good
manufacturing practice.
3.03 FDA Documents and Reports. Service Provider shall cooperate fully
with Seragen in promptly filing all documents and reports required or
requested by the FDA in a form acceptable to Seragen, and shall provide
Seragen with such information and assistance as Seragen may require with
regard to such filings, including all reports, authorizations, certificates,
methodologies, specifications and other documentation in the possession of or
under the control of Service Provider, and shall ensure that the content of
all such submissions is suitable for regulatory filings. Without limiting the
foregoing, Service Provider, with regard to any drug or biopharmaceutical
product to be manufactured by Service Provider pursuant to this Agreement,
shall (a) cooperate fully with Seragen and use best efforts in promptly filing
a Biologic License Application, or in promptly filing an Establishment License
Application and a Product License Application, with respect to any such
product, in each case as may be required under FDA regulations, and in each
case in form and substance satisfactory to Seragen; (b) take all actions that
may be required in order to ensure that any Biologic License, or Establishment
License and Product License, as applicable, with respect to any such product
will be issued in the name of Seragen, rather than Service Provider; and (c)
take all actions required to maintain in full force and effect any Biologic
License, Establishment License or Product License issued with respect to any
such product. Seragen, as the Product Licensee for FDA purposes, shall have
the right to exercise full functional control as described in this Service
Agreement and as required by all applicable regulations.
3.04 Debarment. Service Provider agrees to inform Seragen in writing
immediately if it or any person who is performing services hereunder is
debarred or is the subject of a debarment investigation or proceeding under
section 306 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 335a, or
any successor thereto, or is the subject of a conviction described therein.
3.05 Serious Adverse Event Notification. Service Provider shall notify
Seragen as soon as is reasonably possible following the receipt of any
information, reports or complaints concerning side effects, injury, toxicity
or sensitivity reaction associated with any product developed, produced,
manufactured or tested by Service Provider hereunder (an "Adverse Event"),
shall cooperate fully with Seragen to investigate any such Adverse Event, and
shall provide such information or assistance as is requested by Seragen in
order to support Seragen's compliance with all applicable laws, requirements,
rules, regulations and standards prescribed by public authorities with regard
to any such Adverse Event. The parties shall exchange reports on the
resolution of Adverse Events monthly, or more frequently if requested by
Seragen.
3.06 Notification of Potential Liability. Service Provider shall
notify Seragen in writing as soon as is reasonably possible following any
event, including the receipt of any notice, warning, citation, finding, report
or service of process or the occurrence of any release, spill, upset or
discharge of hazardous wastes or substances, related to the Technology
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Services or Additional Services that may give rise to liability on the part of
Seragen under any law, requirement, rule, regulation or standard prescribed by
a public authority.
3.07 Governmental Communications and Inspections. Service Provider
shall as soon as is reasonably possible notify Seragen of any communications
from or inspections by the FDA or any other governmental agency, state or
federal, including, without limitation, any communication or directive from
the FDA or any other governmental agency, state or federal, commencing or
threatening seizure of any manufactured product or other removal from the
market of a manufactured product. If a written communication, Service
Provider shall attach a copy; otherwise, Service Provider shall provide a
reasonable description to Seragen of any such communication or inspection.
Seragen shall have the right to be present at any such inspection and to
review in advance and approve any response to such communication or
investigation submitted by Service Provider. If the written communication is
in regard to any product or any manufacturing process or regulatory filing for
which Seragen is the license holder, Seragen will be the respondent. Service
Provider will have the right to review such communication. Service Provider
will cooperate fully in providing the information needed for the
communication.
3.08 Disclaimer of Warranties. The parties hereto acknowledge and
agree that all Technology Services and Additional Services provided hereunder
shall be performed by Service Provider at the direction and under the
supervision of Seragen, and Service Provider disclaims any and all warranties,
express or implied, with respect to any products delivered hereunder,
including without limitation, warranties of fitness for a particular purpose
and merchantability.
ARTICLE IV
SERVICE FEES
4.01 Technology Service Fees. In consideration of Service Provider's
providing the Technology Services set forth on Schedule 1 (but no Additional
Services), Seragen agrees to pay Service Provider $5,521,342 in the first
Contract Year and $6,605,651 in the second Contract Year (which such amounts
shall be prorated to the extent that this Agreement is in effect for any
portion of any Contract Year, based on the number of days in which this
Agreement is in effect divided by 365) (collectively, the "Technology Service
Fees"). In the event Service Provider and Seragen agree in accordance with
Section 2.01 to amend the scope of the Technology Services to be provided with
respect to any Contract Year, the parties, in connection with such agreement,
shall agree upon appropriate adjustments to the Technology Service Fees
payable with respect to such Contract Year; provided, however, that in no
event shall the Technology Service Fees payable with respect to any Contract
Year be reduced to less than $4,300,000 (subject to proration in the event
that this Agreement is in effect for any portion of any Contract Year). The
Technology Service Fees shall be payable in equal monthly installments, in
advance, on or prior to the tenth (10th) day of each month occurring during
the Term.
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4.02 Additional Service Fees. (a) Should Service Provider provide any
Additional Services hereunder, the fees (the "Additional Service Fees")
payable with respect to such Additional Services shall equal the direct costs
(inclusive of overhead) incurred by Service Provider in providing such
Additional Services (including costs associated with employees, consultants,
Premises and equipment), multiplied by 1.10. Any costs incurred by Service
Provider shall be appropriately prorated between Seragen and other parties
based upon the percentage of total time spent on providing the Additional
Services to Seragen.
(b) Payments required to be made pursuant to this Section 4.02 shall be
invoiced by Service Provider to Seragen monthly, within thirty (30) days of
the end of each month, and shall be paid by Seragen within ten (10) days of
its receipt of Service Provider's invoice, unless Seragen in writing disputes
the invoice, in which case Seragen shall pay so much of the invoice as is not
in dispute. Service Provider shall, with each invoice for amounts to be paid
hereunder, break down the invoice total by appropriate categories, and for
each such category shall show in reasonable detail the financial data
underlying the amount invoiced. Invoices that are not disputed in writing by
Seragen within six (6) months of the date of their issue shall be deemed
correct and not subject to further audit or dispute. Service Provider shall
provide reasonable assistance and cooperation to Seragen with respect to
Seragen's preparation of invoices to be delivered to Eli Lilly and Company
pursuant to that certain Strategic Alliance between Seragen and Eli Lilly and
Company dated August 3, 1994.
(c) During the Term and for a period of one (1) year thereafter,
Seragen shall, at its own cost, be entitled to have its own representatives
and accountants review Service Provider's books and records with respect to
the Additional Services and all receipts with respect thereto (which books and
records shall include all information required to verify the invoices
described in Section 4.02(b)), upon reasonable notice to Service Provider,
during business hours, and subject to the limitations set forth in Section
2.05 hereof. Service Provider or Seragen, as applicable, shall promptly pay
to the other any over or underpayment of Additional Service Fees discovered
and agreed upon in connection with any such review.
4.03 Royalties. Seragen shall pay Service Provider a royalty of one
percent (1.0%) of the net revenues received by Seragen from the sale of any
products produced under protection of a patent issued to Seragen; provided,
that, such revenues are received by Seragen with respect to sales of the
product occurring following the issuance of, and prior to the termination of,
the patent. The applicable royalty rate set forth in the preceding sentence
shall increase from 1% to 2% if, and only if, and effective as of and after
the date that, Seragen's obligation to pay royalties under that certain
License Agreement, dated December 13, 1994, between Ajinomoto Co., Inc. and
Seragen shall terminate. Notwithstanding any other provision hereof to the
contrary, Seragen shall not be obligated to pay any royalties to Service
Provider on product sales occurring at any time following the date, if any,
that both (a) this Agreement is terminated pursuant to Section 6.04 hereof and
(b) Seragen has paid to Service Provider all amounts which are owing from
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Seragen to Service Provider in accordance with the terms of the Asset Purchase
Agreement as a result of such termination.
ARTICLE V
CONFIDENTIALITY OF INFORMATION
AND OWNERSHIP OF DEVELOPMENTS
5.01 Confidentiality of Information. Service Provider agrees for
itself and on behalf of the Employees and any other Service Provider
employees, consultants or agents to at all times during the Term and
thereafter hold in confidence all Information at any time in Service
Provider's possession or control and not to use, disclose, reproduce or
dispose of any such Information in any manner except as necessary to carry out
the Technology Services and Additional Services. Without limiting the
foregoing, Service Provider agrees, for itself and on behalf of the Employees
and its other employees, consultants, and agents, to hold in confidence all
Information, if any, developed pursuant to the Technology Services or the
Additional Services. All Information, including Information developed by
Service Provider or its employees, consultants or subcontractors while
performing the Technology Services or the Additional Services (including any
copies) shall remain the property of Seragen. Promptly upon the termination
of this Agreement or, if earlier, upon Seragen's request, Service Provider
shall return to Seragen all Information, Developments and biological raw
materials, work-in-process, clinical products or finished products in its
custody, which are owned by, or produced by Service Provider for, Seragen (any
such delivery of biological materials to be made with due care and in
accordance with the standards referenced in Section 3.01).
5.02 Injunctive Relief. Service Provider recognizes that the
disclosure of Information will cause irreparable harm to Seragen, inadequately
compensable in damages. In the event of any breach of this Article VI,
Service Provider agrees that, in addition to its other remedies and
notwithstanding Section 8.03, Seragen shall be authorized and entitled to
obtain from any court of competent jurisdiction injunctive relief, whether
preliminary or permanent.
5.03 Ownership of Developments. Service Provider agrees that any
Developments shall be the sole and complete property of Seragen and that any
patents or copyrights resulting from the same shall belong solely and
completely to Seragen. For purposes of the copyright laws of all relevant
jurisdictions, any such Developments shall be considered "works made for
hire." Service Provider agrees that during and after the term hereof, Service
Provider will execute, and will cause its employees, consultants and agents
(including subcontractors) to execute, any assignments or other documents
necessary to vest full title in any such Developments in Seragen.
5.04 Agreements by Personnel. Except for employees to be transferred
from Seragen to Service Provider pursuant to the Asset Purchase Agreement (for
which it shall be the responsibility of Seragen to obtain appropriate
confidentiality and related agreements), Service Provider agrees to cause each
of the Employees and any other employee, consultant or agent (including any
subcontractor) of Service Provider involved in the Technology Services or
Additional Services or receiving or having access to Information to enter into
an agreement with Service Provider, which shall be in form and substance
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reasonably acceptable to Seragen, pursuant to which the employee, consultant
or agent agrees, in his individual capacity, (a) to be bound by the provisions
of Sections 5.01, 5.02 and 5.03 and (b) to the extent allowable under law,
that Seragen shall be an intended third party beneficiary of such agreement,
with the right to enforce the provisions of such agreement without the need to
join Service Provider as a party.
ARTICLE VI
TERM AND TERMINATION
6.01 Term. This Agreement shall commence on the date hereof and
continue in full force and effect through January 31, 1999, subject to earlier
termination pursuant to the provisions of section 6.02, 6.03, or 6.04 (the
"Term").
6.02 Termination for Breach. Upon any material breach of or default
under this Agreement by either party (the "Breaching Party"), the other party
(the "Non-Breaching Party") shall have the right to serve notice upon (a
"Preliminary Termination Notice") the Breaching Party of the Non-Breaching
Party's intention to terminate this Agreement if the breach is not cured
within thirty (30) days following the Breaching Party's receipt of the
Preliminary Termination Notice. The Preliminary Notice shall state the cause
for the Non-Breaching Party's intention to terminate this Agreement. If the
Breaching Party does not remedy such breach or default within such thirty (30)
day period, the Non-Breaching Party shall have the right to terminate this
Agreement effective immediately upon provision of further notice (the "Final
Termination Notice") to the Breaching Party, and following the provision of
such Final Termination Notice, this Agreement and all rights, privileges and
licenses granted hereunder shall automatically terminate and neither party
shall have any further rights, duties or obligations hereunder except as may
have then accrued under this Agreement before such termination or except as
otherwise provided herein. If, at any time prior to receipt of the Final
Termination Notice the Breaching Party shall have remedied such default, this
Agreement shall continue in full force and effect as it would have done if
such notice had not been given.
6.03 Termination By Service Provider. In the event Service Provider's
Operating Losses at any time during any Contract Year exceed $9.0 million and
will not decrease during the remainder of the Contract Year, Service Provider
shall have the right at any time thereafter and prior to expiration of the
Term (excluding any extension thereof) to serve notice upon Seragen of Service
Provider's intention to terminate this Agreement. Such notice shall include a
detailed computation of Service Provider's Operating Losses during the
applicable portion of the Contract Year and the projected additional Operating
Losses for the remainder of the Contract Year, as well as all financial
information necessary in order to determine the amount of the Operating
Losses. If Seragen does not pay an amount to Service Provider equal to the
difference between the amount of the Operating Losses incurred and $9.0
million within thirty (30) days of its receipt of the notice of termination
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from Service Provider and does not also agree in writing to pay all additional
Operating Losses incurred during the remainder of such Contract Year, this
Agreement and all rights, privileges and licenses granted hereunder shall
automatically terminate upon the thirtieth (30th) day following Seragen's
receipt of the notice and neither party shall have any further rights, duties
or obligations hereunder except as may have then accrued under this Agreement
before such termination or except as otherwise provided herein. If, during
the thirty (30) day period Seragen shall have made the required payment and
also shall have agreed in writing to pay all additional Operating Losses
incurred during the remainder of such Contract Year, this Agreement shall
continue in full force and effect as it would have done if such notice had not
been given. Seragen shall, at its own cost, be entitled to have its own
representatives and accountants review Service Provider's books and records
with respect to the Operating Losses (which books and records shall include
all information required to verify the amount of the Operating Losses) at all
times during the Term and, if this Agreement shall have terminated, for a
period of one year thereafter. Service Provider or Seragen, as applicable,
shall promptly pay to the other any over or underpayment made under this
Section 6.03 which is discovered and agreed upon in connection with any such
review.
6.04 Termination upon Cancellation of Asset Purchase. If the Asset
Purchase Agreement terminates and the transactions contemplated thereby are
not consummated, this Agreement automatically and without further action of
the parties shall terminate as of the date of termination of the Asset
Purchase Agreement.
6.05 Consequences of Termination. Except as set forth in last sentence
of this Section 6.05, nothing herein shall be construed to release either
party from any obligation which matured or any breach of this Agreement which
occurred prior to the effective date of termination. Without limiting the
foregoing, the provisions of Article V and Sections 7.01, 7.02, 7.03, 8.03,
and 8.14 shall survive any termination of this Agreement. In addition, except
to the extent provided therein, the provisions of Section 4.03 shall survive
any termination of this Agreement. In the event, and only in the event, that
this Agreement is terminated in accordance with Section 6.04 hereof, Service
Provider shall be obligated to reimburse to Seragen any amounts paid by
Seragen to Service Provider under Article IV hereof on or prior to the date of
such termination; provided, however, that Service Provider shall have the
right to set-off against any such amounts any amounts which Seragen owes to
Service Provider under Section 1.08 or Article X of the Asset Purchase
Agreement.
6.06 Term Extension. (a) Unless this Agreement has been terminated in
accordance with Section 6.02, 6.03 or 6.04 hereof prior to January 31, 1999,
Seragen shall have two successive options to extend the term of this Agreement
each for a period of one year at then prevailing competitive market rates
(i.e., if, and only if, Seragen exercises the option to extend the term for an
additional year, it will have an option at the end of such year to extend the
term for a second year); provided, that, in connection with any such
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extension, Seragen, at the end of each Contract Year of the term extension,
and within thirty (30) days of receiving notice from Service Provider of the
amount payable, shall pay to Service Provider, in addition to any other fees
which Seragen is obligated to pay to Service Provider, an amount equal to the
Operating Losses (if any) incurred by Service Provider during such Contract
Year, multiplied by a ratio equal to the gross revenues paid by Seragen to
Service Provider during such Contract Year divided by the total gross revenues
received by Service Provider during such Contract Year. If Seragen desires to
extend this Agreement, it shall provide written notice to Service Provider not
less than one hundred and twenty (120) nor more than one hundred and fifty
(150) days prior to the termination of the Agreement.
ARTICLE VII
PURCHASE RIGHTS
7.01 Right of First Refusal. (a) Service Provider shall not, during
the Term, sell, transfer, convey or otherwise dispose of any of the assets
used by Service Provider to provide services to Seragen hereunder outside of
the ordinary course of business otherwise than pursuant to a bona fide offer
to buy such assets from a Third Party that is not an affiliate of Service
Provider and after having complied with the provisions of this Section 7.01
(provided, that, the foregoing shall not limit Service Provider from
terminating any employees or consultants during the Term, provided that,
following such terminations, Service Provider possesses the assets necessary
in order for it to fully and timely perform all of its obligations hereunder).
(b) If Service Provider at any time during the Term receives a
bona fide offer from a Third Party to buy any of its assets outside of the
ordinary course of business and desires to accept said offer, Service Provider
shall first make an offer (the "Offer") to sell such assets (the "Offered
Assets") to Seragen in accordance with the procedure set forth in this Section
7.01. Such Offer shall be at the same price and upon the same terms and
conditions as the offer from the Third Party or, if the Third Party provides
for a type of consideration or sets forth other terms and conditions that are
not practically attainable by Seragen, for consideration and on terms and
conditions substantially equivalent to those contained in the Third Party
offer. Service Provider shall send written notice of the Offer (the "Service
Provider Notice") to Seragen, which shall describe the Offered Assets and any
liabilities to be assumed in detail, the price and the other terms and
conditions of the Offer and the name of the prospective purchaser (together
with a copy of all writings between such party and Service Provider necessary
to establish the terms of any such offer).
(c) Notwithstanding any provision hereof to the contrary, Service
Provider shall not pursue or entertain any Third Party offer, and the Third
Party offer shall not be deemed to be "bona-fide," if, following the sale of
the Offered Assets, Service Provider would not possess the assets necessary in
order for it to fully and timely perform all of its obligations hereunder (in
accordance with Section 8.02 hereof, Service Provider shall not have the right
to assign this Agreement to the Third Party without Seragen's prior written
consent, which may be withheld by Seragen in its sole discretion). In
addition, Service Provider shall not pursue or entertain any Third Party
offer, and the Third Party offer shall not be deemed to be "bona fide," if (i)
the Third Party purchaser does not have the financial capability to pay the
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consideration for the Offered Assets, unless the Third Party purchaser has
obtained financing commitments of a type customary for transactions similar to
the proposed transaction; (ii) any condition to the closing of the proposed
transfer that is not within the control of the parties is not reasonably
likely to be satisfied within a reasonable period; (iii) the closing of the
proposed transfer is subject to due diligence or other conditions the conduct
and satisfaction of which are solely within the control of the Third Party
purchaser; (iv) the Third Party is not an affiliate of Service Provider; or
(v) for any other reason the offer would not be reasonably regarded as bona
fide.
(d) In the event of a bona fide Third Party offer, Seragen shall
have the right to purchase all (but not less than all) of the Offered Assets,
which right shall be exercisable by written notice to Service Provider given
within fifteen (15) business days after receipt of the Service Provider
Notice. If Seragen shall fail to respond within that period, such failure
shall be regarded as a rejection by Seragen of the Offer.
(e) Unless Seragen elects to purchase all of the Offered Assets,
Service Provider may sell all (but not less than all) of the Offered Assets to
the Third Party on the same terms and conditions as the Offer described in the
Service Provider Notice to Seragen, provided that such sale is bona fide (as
set forth in Section 7.01(c)) and made within ninety (90) days from the date
of the Service Provider Notice. If such sale is not consummated within such
90-day period, the restrictions provided for herein shall again become
effective, and no sale, transfer, or assignment of such Service Provider's
assets outside of the ordinary course may be made thereafter without the prior
written consent of Seragen or without again offering the same to Seragen in
accordance with this Agreement.
(f) The closing of any purchase by Seragen of Offered Assets
shall be held at the principal office of Seragen at 11:00 A.M. local time on
the ninetieth (90th) day after the receipt of the Service Provider Notice, or
at such other time and place as the parties to the transaction may agree upon.
At such closing, Service Provider shall deliver such instruments of sale and
assignment as Seragen shall reasonably require, accompanied by all requisite
transfer taxes, and the Offered Assets to be transferred shall be free and
clear of any liens, claims, options, charges, encumbrances, or rights of
others (except for any liens, claims, options, charges, encumbrances, or
rights of others assumed by Service Provider from Seragen in connection with
the transactions contemplated by the Asset Purchase Agreement) and Service
Provider shall so represent and warrant, and further represent and warrant
that it is the holder of all right, title and interest in the Offered Assets.
Seragen shall deliver at such closing, by certified or official bank check, so
much of the purchase price as is payable in cash. Both parties to the
transaction shall execute such additional documents as are otherwise
appropriate. Service Provider shall fully cooperate in obtaining all third
party consents required, and in taking all other actions reasonably requested
by Seragen, in connection with the sale.
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7.02 Purchase Option. (a) Seragen shall have the right, exercisable in
its discretion at any time during the four (4) year period following the date
of this Agreement, to purchase all (but not less than all) of Service
Provider's assets at a purchase price in cash equal to the "Purchase Price"
(as determined in accordance with Section 7.03). If Seragen desires to
exercise its purchase right, it shall do so by providing written notice to
Service Provider on or prior to the fourth anniversary of the date hereof.
(b) The closing of any such purchase by Seragen shall be held at
the principal office of Seragen at 11:00 A.M. local time on the ninetieth
(90th) day after the receipt by Service Provider of Seragen's election to
exercise its purchase option, or at such other time and place as the parties
to the transaction may agree. At such closing, Service Provider shall deliver
such instruments of sale and assignment as Seragen shall reasonably require,
accompanied by all requisite transfer taxes, and the assets to be transferred
shall be free and clear of any liabilities, obligations, liens, claims,
options, charges, encumbrances, or rights of others (except for any liens,
claims, options, charges, encumbrances, or rights of others assumed by Service
Provider from Seragen in connection with the transactions contemplated by the
Asset Purchase Agreement) and Service Provider shall so represent and warrant,
and further represent and warrant that it is the holder of all right, title
and interest in the assets being transferred. Seragen shall deliver at such
closing, by certified or official bank check, the purchase price for the
assets. Both parties to the transaction shall execute such additional
documents as are otherwise appropriate. Seragen shall not be required to
assume any liabilities with respect to the purchased assets, except for
liabilities arising after the closing date under written contracts assumed by
Seragen and for any liens, claims, options, charges, encumbrances, or rights
of others assumed by Service Provider from Seragen in connection with the
transactions contemplated by the Asset Purchase Agreement. Service Provider
shall fully cooperate in obtaining all third party consents required, and in
taking all other actions reasonably requested by Seragen, in connection with
the transaction.
7.03 Determination of Purchase Price. "Purchase Price" shall equal:
(a) $5.0 million, plus interest accrued thereon from the date
hereof to the date of payment at the rate of 10% per annum; plus
(b) the greater of (i) the sum of the Operating Losses incurred
by Service Provider during each month or portion thereof occurring during the
Term, with interest accrued on the Operating Losses incurred in any such month
at a rate of 10% per annum from the final day of such month, compounded
quarterly (if Operating Losses in any month are negative (i.e., Service
Provider has an operating profit in any month), the amount of such operating
profit shall be subtracted from the Operating Losses incurred with respect to
other months occurring during the Term) and (ii) zero.
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ARTICLE IX
MISCELLANEOUS
8.01 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given when delivered by registered or certified mail, return receipt
requested, postage prepaid, by facsimile transmission or in hand, addressed as
follows:
If to Seragen:
Seragen, Inc.
97 South Street
Hopkinton, Massachusetts 01748
Facsimile: 508-435-9805
Attention: Chief Executive Officer
If to Service Provider:
Trustees of Boston University
881 Commonwealth Avenue
Boston, MA 02215
Attention: Kenneth G. Condon
8.02 Assignment. No Party hereto shall assign any of its rights or
delegate any of its obligations hereunder to any Third Party without the
express prior written consent of the other party hereto. Notwithstanding any
other provision hereof to the contrary, it is understood and agreed that the
Service Provider may assign this Agreement, and all of its rights, benefits,
duties and obligations hereunder, to a corporation, limited liability company
or other entity which is created by and wholly owned, directly or indirectly,
by Service Provider and which acts or will act as the "Nominee" to purchase
the Purchased Assets pursuant to Section 1.06 of the Asset Purchase Agreement
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(the "Nominee"). If Service Provider shall elect to consummate the
transactions contemplated by the Asset Purchase Agreement through a Nominee
and therefor assign this Agreement to the Nominee, the Service Provider shall
give written notice to Seragen of such nomination and designation not less
than seven (7) days prior to the Closing Date (as defined in the Asset
Purchase Agreement), and the Nominee shall, at such time, deliver to Seragen
an instrument assuming all of Service Provider's obligations and liabilities
hereunder, such instrument to be in form and substance reasonably satisfactory
to Seragen. Upon such nomination, this Agreement shall be deemed to be
assigned to the Nominee, and the Nominee shall be deemed to be the Service
Provider hereunder for all purposes, completely and effectively as if the
Nominee were the Service Provider named herein. In the event that such
Nominee shall be an entity whose sole assets are or will be the Purchased
Assets or that otherwise has insufficient assets to provide commercially
reasonable credit-worthiness for its obligations set forth herein, a
subsidiary of Trustees of Boston University with assets sufficient to provide
commercially reasonably credit-worthiness shall execute and deliver as a
condition to the assignment to Nominee a guarantee of the Nominee's
obligations under this Service Agreement, such guarantee to be in form and
substance reasonably satisfactory to Service Provider and Seragen.
8.03 Arbitration. (a) Subject to paragraph (b) of this Section 8.03,
any dispute arising out of or in connection with this Agreement, including any
question regarding its existence, validity or termination, shall be referred
to final and binding arbitration, to the exclusion of any other court, forum
or jurisdiction. Such arbitration shall be conducted under the commercial
arbitration rules of the American Arbitration Association in effect from time
to time, which rules are deemed to be incorporated by reference into this
clause. The tribunal shall consist of three arbitrators. Each party shall
appoint one arbitrator, and the two party-appointed arbitrators shall select a
third arbitrator, who shall act as chairman. If the party-appointed
arbitrators cannot agree on a chairman, the chairman shall be appointed by the
American Arbitration Association. The place of arbitration shall be Boston,
Massachusetts. Unless the arbitral tribunal shall determine otherwise, the
costs of the arbitration shall be borne by the parties equally and each party
shall bear its other legal costs, including the fees of its attorneys.
(b) In the event that Seragen at any time proposes adjustment to
invoices submitted by Service Provider pursuant to Section 4.02(b), Seragen
and Service Provider shall in good faith attempt to resolve such dispute by
negotiation. If Seragen and Service Provider are unable to resolve any
dispute within fourteen (14) days after the date on which Service Provider
receives notice of such dispute, Seragen and Service Provider shall promptly
submit the dispute for resolution to a qualified accountant selected by the
head of the audit department at the Boston, Massachusetts office of Coopers &
Lybrand (such accountant, the "Accountant"). Within thirty (30) days after
the Accountant is so selected, Seragen and Service Provider each shall submit
to him their respective proposals with respect to resolution of the dispute,
together with such supporting documentation as they deem necessary of as the
Accountant requests. Within thirty (30) days after receiving such proposals
and supporting documentation, the Accountant shall render his findings with
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respect to the dispute (including an equitable allocation of the fees and
expenses of the Accountant based upon the relative merits of the positions
asserted by the parties), which finding shall be final and binding upon the
parties. Within seven (7) days after the Accountant renders his findings,
Seragen or Service Provider, as the case may be, shall pay any amount owing to
the other.
8.04 Injunctive Relief. Service Provider agrees that a breach of this
Agreement during the Term will cause irreparable harm to Seragen, inadequately
compensable in damages. In the event of any breach of this Agreement during
the Term, Service Provider agrees that, in addition to its other remedies and
notwithstanding Section 8.03, Seragen shall be authorized and entitled to
obtain from any court of competent jurisdiction injunctive relief, whether
preliminary or permanent.
8.05 Further Assurances. Each party hereto covenants and agrees that
it will promptly, during the Term and upon the request of the other party,
execute, acknowledge and deliver or otherwise properly authenticate, as may be
required by law, all documents, instruments or applications, assignments,
registrations, or other legal papers which may be necessary to carry into
effect the provisions of this Agreement.
8.06 Effects. This Agreement shall be binding upon, and shall redound
to the benefit of, the parties hereto and their respective successors and
permitted assigns. Except as otherwise expressly provided herein, this
Agreement shall not create or confer, or be construed as creating or
conferring, any right, remedy, claim or benefit upon any Third Party, other
than the respective successors and permitted assigns of the parties hereto.
8.07 Waivers and Amendments. Any amendment or supplementation of this
Agreement or any waiver of any term or condition thereof shall be effective
only if in writing. A waiver of any breach of any of the terms or conditions
of this Agreement shall not in any way be construed as a waiver of any
subsequent breach.
8.08 Severability. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Agreement shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
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8.09 Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
instrument.
8.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts, without
regard to the conflict-of-laws rules thereof.
8.11 Entire Agreement. This Agreement, and the schedules attached
hereto, contains the entire agreement between Seragen and Service Provider in
respect of the transactions contemplated by this Agreement and supersedes all
prior arrangements or understandings with respect thereto.
8.12 Force Majeure. No liability under this Agreement shall result to
a party from delay in performance caused by force majeure, that is,
circumstances beyond the reasonable control of the party affected thereby,
including acts of God, fire, flood, war, changes in government regulations,
labor unrest, or shortage of or an inability to obtain material or equipment.
8.13 Employee Matters. Service Provider acknowledges that Seragen has
the right to make an offer of employment at any time during the Term to any
Employee listed on Schedule 2, and Service Provider agrees not to enter into
any contract or arrangement with any such Employee which would impair that
Employee's ability to accept any such offer from Seragen. In addition,
Service Provider acknowledges and agrees that Seragen shall have the right to
employ, on a part time basis, the Employees listed on Schedule 3, and that,
during the term in which such persons are employed on a part time basis by
Seragen, Service Provider shall continue to employ such persons for the
remainder of their business time and to provide full benefits (medical,
dental, 401(K) and any other benefits generally applicable to Service Provider
full-time employees) to such persons. As partial reimbursement for Service
Provider providing full benefits to such part time employees, Seragen shall
pay to Service Provider within 10 days of the close of each month occurring
during the term in which any such employee is employed by Seragen on a part
time basis, an amount equal to 30% of the salary paid by Seragen to such part
time employee with respect to such month.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
SERAGEN, INC.
By: /s/ Reed R. Prior
-----------------
Name: Reed R. Prior
Title: Chairman and CEO
TRUSTEES OF BOSTON UNIVERSITY
By: /s/ Kenneth G. Condon
---------------------
Name: Kenneth G. Condon
Title: Treasurer
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SERVICE AGREEMENT
Schedule 1
Services to be performed by Service Provider for Seragen in 1997:
Manufacturing of Batches - 1997:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Manufacturing Fill of Batches - 1997:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Quality Control and Release Testing of Batches - 1997:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Quality Assurance - 1997:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Product Development - 1997
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes labor and direct materials
Clinical/ Pre Clinical/ Regulatory Studies - 1997
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes clinical trial site fees, labs, pathology fees, supplies and
overhead, clinical assays
Clinical/ Pre Clinical/ Regulatory Studies and Other- 1997
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Price for services rendered in 1997- $5,521,342
* - Confidential treatment requested
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<PAGE>
Services to be performed by Service Provider for Seragen in 1998:
Manufacturing of Batches - 1998:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Manufacturing Fill of Batches - 1998:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Quality Control and Release Testing of Batches - 1998:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Quality Assurance - 1998:
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Product Development - 1998
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes labor and direct materials
Clinical/ Pre Clinical/ Regulatory Studies - 1998
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Includes clinical trial site fees, labs, pathology fees, supplies and
overhead, clinical assays
Clinical/ Pre Clinical/ Regulatory Studies and Other- 1998
Service Specifications Estimated Completion Date
- ------- -------------- -------------------------
*
Price for services rendered in 1998 = $6,605,651
* - Confidential treatment requested
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<PAGE>
SERVICE AGREEMENT
Schedule 2
Employees Subject to Rehiring by Seragen
*
* - Confidential treatment requested
-22-
<PAGE>
SERVICE AGREEMENT
Schedule 3
Part-Time Employees
Time to Service
Provider
---------------
*
* - Confidential treatment requested
-23-
<PAGE>
