<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 27, 2000
American Biogenetic Sciences, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-19041 11-2655906
(Commission File Number) (I.R.S. Employer Identification No.)
1375 Akron Street, Copiague, New York 11726
(516) 789-2600
(Registrant's Telephone Number, Including Area Code)
<PAGE> 2
Item 5. OTHER EVENTS
On January 27, 2000, American Biogenetic Sciences, Inc. (the "Company")
entered into an Exclusive License Agreement with Abbott Laboratories ("Abbott")
under which the Company granted to Abbott an exclusive worldwide license to its
ABS-103 compound, related technology and patent rights. The Exclusive License
Agreement gives Abbott the exclusive rights to develop and market the compound,
which presently is in the pre-clinical stage. In consideration for the license
grant and in addition to customary royalties on sales, Abbott paid the Company
an initial license fee of $500,000 and agreed to pay additional milestone
payments aggregating up to $17 million depending upon successfully reaching
development milestones, generally by indication. There can be no assurance that
these milestones will be achieved.
In connection with the entering into of the Exclusive License
Agreement, the Company and Abbott also entered into a Stock Purchase Agreement
dated January 27, 2000 pursuant to which Abbott purchased $1,500,000 of shares
of the Company's Class A Common Stock, or 2,782,931 shares (the "Shares"),
calculated based upon the arithmetic average of the last sale price of the Class
A Common Stock as reported on the then principal market for such stock for the
20 consecutive trading-day period ending on the second day preceding the closing
of the purchase of the Shares by Abbott.
The Company also entered into a Registration Rights Agreement with
Abbott pursuant to which, among other things, the Company agreed to register the
Shares under the Securities Act of 1933, as amended (the "Act") upon Abbott's
request at any time after the first anniversary of the sale and to include the
Shares in any other registration of the Company's securities under the Act after
that date. All expenses of registration of the Shares are to be borne by the
Company, other than underwriting discounts, selling commissions and fees and
disbursements of counsel for Abbott.
Abbott is an "accredited investor" as defined in Rule 501 of Regulation
D under the Act and acknowledged in the Stock Purchase Agreement that it was
purchasing the Shares for investment for its own account and not with a view
towards distribution. The Company believes the exemption afforded under Section
4(2) of the Act is applicable to the issuance of the Shares.
Copies of the Exclusive License Agreement, the Stock Purchase Agreement
and the Registration Rights Agreement appear as exhibits to this Report and the
foregoing descriptions are qualified in their entirety by reference to such
documents.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS:
Item No. Description
4.1 Registration Rights Agreement, dated as of January
27, 2000, between American Biogenetic Sciences, Inc.
and Abbott Laboratories.
<PAGE> 3
10.1* Exclusive License Agreement, dated as of January 27,
2000, between American Biogenetic Sciences, Inc. and
Abbott Laboratories.
99.1 Stock Purchase Agreement, dated as of January 27,
2000, between American Biogenetic Sciences, Inc. and
Abbott Laboratories.
- ---------------
*Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
confidential portions of Exhibit 10.1 have been deleted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
<PAGE> 4
SIGNATURE
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, thereunto duly authorized.
AMERICAN BIOGENETIC SCIENCES, INC.
(Registrant)
By: /s/ Josef C. Schoell
-----------------------------------
Josef C. Schoell,
Vice President - Finance and
Chief Financial Officer
Dated: March 7, 2000
<PAGE> 5
EXHIBIT INDEX
4.1 Registration Rights Agreement, dated as of January 27, 2000,
between American Biogenetic Sciences, Inc. and Abbott
Laboratories.
10.1* Exclusive License Agreement, dated as of January 27, 2000,
between American Biogenetic Sciences, Inc. and Abbott
Laboratories.
99.1 Stock Purchase Agreement, dated as of January 27, 2000,
between American Biogenetic Sciences, Inc. and Abbott
Laboratories.
- -------------------
*Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
confidential portions of Exhibit 10.1 have been deleted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
<PAGE> 1
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
this day of January, 2000, by and between American Biogenetic Sciences, Inc.,
a Delaware corporation ("ABS"), and Abbott Laboratories, an Illinois corporation
("Abbott").
RECITALS
WHEREAS, ABS and Abbott are parties to an Exclusive License Agreement
(the "License Agreement") and a Stock Purchase Agreement (the "Stock Purchase
Agreement"), both of which are of even date herewith; and;
WHEREAS, the execution and delivery of this Agreement are a condition
to the Share Closing of the Stock Purchase Agreement;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS. All terms not otherwise defined in this Agreement shall
have the same meanings ascribed to them in the Stock Purchase Agreement. For
purposes of this Agreement:
1.1 EXCHANGE ACT. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.2 REGISTER, REGISTERED, AND REGISTRATION. The terms
"register," "registered," and "registration" refer to a registration effected by
preparing and filing a registration statement or similar document in compliance
with the Securities Act, and the declaration or ordering of effectiveness of
such registration statement or document.
1.3 REGISTRABLE SECURITIES. The term "Registrable Securities"
means such portion of the Shares that has not previously been registered or sold
to the public.
1.4 REGISTRATION STATEMENT. The term "Registration Statement"
means a registration statement filed with the SEC under the Securities Act to
register the resale of the Registrable Securities by Abbott.
1.5 RULE 144. The term "Rule 144" shall mean Rule 144
promulgated by the SEC (or its successor rule).
1.6 SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.7 SECURITIES ACT. The term "Securities Act" means the
Securities Act of 1933, as amended.
<PAGE> 2
1.8 SHARES. The term "Shares" means the shares of Class A
common stock of ABS, $.001 par value per share, issued to Abbott pursuant to the
Stock Purchase Agreement and any common stock of ABS issued as a dividend or
other distribution with respect to such common stock.
2. REGISTRATION. ABS covenants and agrees as follows:
2.1 REGISTRATION RIGHTS - GENERALLY. At any time after the
first anniversary of this Agreement, Abbott may request ABS to file a
Registration Statement registering the resale of the Shares. Within forty-five
(45) days following such request, ABS shall prepare and file a Registration
Statement on Form S-3 (or such other short form registration statement as is
then available) and any related qualification or compliance with respect to all
of the Shares so as to permit or facilitate the sale and distribution of all of
the Shares. ABS agrees to use reasonable commercial efforts to cause the
Registration Statement to be declared effective as soon as practicable after
filing, but in any event no later than three (3) business days after any
notification by the SEC of its decision not to review the Registration Statement
or its determination that it has completed its review of the Registration
Statement and will accept an acceleration request. ABS agrees it will not
include any securities of ABS other than the Shares and will not permit any
other person or entity to include any additional securities in the Registration
Statement to be filed pursuant to this SECTION 2.1.
2.2 PIGGYBACK REGISTRATION RIGHTS. If, at any time after the
first anniversary of this Agreement, ABS shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders exercising their respective registration rights, other than (i) a
registration relating solely to employee benefit plans on Form S-8 (or a similar
successor form), or (ii) a registration on Form S-4 (or a similar successor
form) relating solely to a transaction subject to Rule 145 under the Securities
Act, ABS will promptly give Abbott written notice thereof, and subject to the
terms of SECTION 2.3 below, use its reasonable efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all Registrable
Securities specified in a written request to ABS made within fifteen (15)
business days after the receipt of such written notice by Abbott.
2.3 UNDERWRITING.
(a) If the registration of which ABS gives
notice pursuant to SECTION 2.2 is for a
registered offering involving an
underwriting, then Abbott's right to
registration shall be conditioned upon
Abbott's participation in the underwriting
and the inclusion of Abbott's Registrable
Securities in the underwriting to the extent
provided in this Agreement. Abbott (together
with ABS and the holders of other securities
of ABS distributing their securities through
that underwriting (such other holders being
termed the "Other Holders")) shall enter
into an underwriting agreement in customary
-2-
<PAGE> 3
form with the representative of the
underwriter or underwriters selected by ABS.
(b) Notwithstanding any other provision of this
SECTION 2, if the representative of the
underwriters advises ABS in writing that
marketing factors require a limitation on
the number of shares to be underwritten,
then ABS shall so inform Abbott and the
Other Holders. The number of shares of ABS
common stock being sold by ABS for its own
account shall not be reduced by operation of
this SECTION 2.3. The number of shares of
Registrable Securities held by Abbott and
the Other Holder(s) that may be included in
the underwriting (in addition to those being
sold by ABS for its own account) shall be
allocated among Abbott and the Other Holders
in proportion (as nearly as practicable) to
the amount of Registrable Securities owned
by each such holder.
(c) Any holder which does not agree to the terms
of the such underwriting shall be excluded
from that underwriting by written notice
from ABS or the underwriter. Any Registrable
Securities or other securities excluded or
withdrawn from that underwriting shall be
withdrawn from the registration.
2.4 REGISTRATION EXPENSES. ABS shall pay all "registration
expenses" (as defined below) in connection with any registration, qualification
or compliance under this Agreement. Abbott shall pay all "selling expenses" (as
defined below). The term "registration expenses" shall mean all expenses, except
for selling expenses, incurred by ABS in complying with the registration
provisions of this Agreement, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for ABS, accounting fees, blue sky fees and expenses,
and the expense of any attest service incident to or required by any such
registration. The term "selling expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Shares and all fees
and disbursements of counsel for Abbott.
2.5 OBLIGATIONS OF ABS. In the case of a registration effected
by ABS pursuant to this SECTION 2, ABS will use reasonable efforts to:
(a) keep such registration effective until the
earliest of:
(i) such date as all of the Shares have
been sold, or
(ii) if ABS is not then eligible to
effect such registration on Form
S-3 (or a similar successor form),
one hundred and twenty (120) days
after the effective date of the
Registration Statement, or
-3-
<PAGE> 4
(iii) the termination of the registration
rights pursuant to SECTION 2.9
hereof.
(b) prepare and file with the SEC such
amendments and supplements to the
Registration Statement and the prospectus
used in connection with the Registration
Statement as may be necessary to comply with
the provisions of the Securities Act with
respect to the disposition of all securities
covered by the Registration Statement;
(c) furnish such number of prospectuses,
prospectus supplements, and other documents
incident thereto, including any amendment of
or supplement to the prospectus, as Abbott
from time to time may reasonably request;
(d) cause all Shares registered as described
herein to be listed on any securities
exchange or quoted on any quotation service
on which similar securities issued by ABS
are then listed or quoted;
(e) provided a transfer agent and registrar for
all Registrable Securities registered
pursuant to the Registration Statement and a
CUSIP number for all such Shares;
(f) otherwise use reasonable efforts to comply
with all applicable rules and regulations of
the SEC; and
(g) file the documents required of ABS and
otherwise use reasonable efforts to maintain
requisite blue sky clearance in:
(i) all jurisdictions in which any of
the Shares are originally sold; and
(ii) all other states specified in
writing by Abbott, provided as to
this clause (ii), however, that ABS
shall not be required to qualify to
do business or consent to service
of process in any state in which it
is not now so qualified or has not
so consented.
2.6 SELLING PROCEDURES.
(a) In the event Abbott intends to sell Shares
pursuant to a Registration Statement, Abbott
shall give ABS five (5) business days notice
of its intent to sell in reliance on such
Registration Statement (the "Notice of
Sale"). ABS may refuse to permit Abbott to
resell any Shares pursuant to the
Registration Statement; provided, however,
that in order to exercise this right, ABS
must
-4-
<PAGE> 5
deliver a certificate in writing within
three (3) business days following the Notice
of Sale to Abbott to the effect that a sale
pursuant to the Registration Statement in
its then current form could constitute a
violation of the federal securities laws. In
such an event, ABS shall either (i) use
commercially reasonable efforts to promptly
amend the Registration Statement, if
necessary, and take all other actions
necessary to allow such sale under the
federal securities laws, and shall notify
Abbott promptly after it has determined that
such sale has become permissible under the
federal securities laws, or (ii) exercise
its right under paragraph (b) below to delay
the sale.
(b) If in the good faith judgment of the Board
of Directors of ABS, after consultation with
counsel, the filing of a Registration
Statement or an amendment thereto or
prospectus supplement so as permit the
proposed sale without a violation of
securities laws would materially adversely
affect a pending or scheduled public
offering, or an acquisition, merger, or
similar transaction, or negotiations of
either of the foregoing, or would require
the disclosure of another material
development prior to the time it would
otherwise be required to be disclosed in a
manner adverse to the best interests of ABS,
then it may decline to permit the resale of
any Shares pursuant to the Registration
Statement for up to a maximum of ninety (90)
days, provided that it may not exercise this
right more than twice in any twelve (12)
month period. Abbott hereby covenants and
agrees that it will not sell any Shares
pursuant to the Registration Statement
during the periods sales in reliance upon
the Registration Statement are prohibited as
set forth in this SECTION 2.6.
2.7 INFORMATION FROM ABBOTT. It shall be a condition precedent
to the obligations of ABS to take any action pursuant to SECTION 2 of this
Agreement with respect to the Shares that Abbott shall furnish to ABS such
information as ABS may reasonably request, including information regarding
Abbott, the Shares held by it, the intended method of disposition of such
securities, and such other information as required to effect the registration of
the Shares.
2.8 ASSIGNMENT OF REGISTRATION RIGHTS. The right to cause ABS
to register the Shares pursuant to this Agreement may be assigned by Abbott to a
transferee of the Shares only if:
(a) ABS is, prior to such transfer, furnished
with written notice of the name and address
of such transferee and the Shares with
respect to which such registration rights
are being assigned and a copy of a duly
executed written instrument in form
reasonably satisfactory to ABS by which such
transferee assumes all of the obligations
and
-5-
<PAGE> 6
liabilities of its transferor hereunder and
agrees itself to be bound hereby;
(b) immediately following such transfer the
disposition of the Shares by the transferee
is restricted under the Securities Act;
(c) such assignment includes all of the Shares
then held by Abbott; provided, however, that
such share limitation shall not apply to
transfers by Abbott to its affiliates if all
such transferees or assignees agree in
writing to appoint a single representative
as their attorney-in-fact for the purpose of
receiving any notices and exercising their
rights under this Agreement; and
(d) Abbott guarantees the performance of the
transferee of its obligations under this
Agreement.
2.9 TERMINATION OF REGISTRATION RIGHTS. The registration
rights provided in this Agreement shall terminate if Abbott may sell all of the
Shares pursuant to Rule 144 in any three (3) month period. Upon the termination
of registration rights pursuant to this SECTION 2.9, ABS may withdraw the
Registration Statement, or any portion thereof, covering the Shares.
2.10 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to Abbott the benefits of Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit Abbott to sell securities of ABS to the public without registration
or pursuant to a registration on Form S-3, ABS agrees to:
(a) make and keep public information available,
as those terms are understood and defined in
SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all
reports and other documents required of ABS
under the Securities Act and the Exchange
Act; and
(c) furnish to Abbott, so long as Abbott owns
any Shares, forthwith upon request (i) a
written statement by ABS that it has
complied with the reporting requirements of
SEC Rule 144, the Securities Act and the
Exchange Act, or that it qualifies as a
registrant whose securities may be resold
pursuant to Form S-3, (ii) a copy of the
most recent annual or quarterly report of
ABS and such other reports and documents so
filed by ABS, and (iii) such other
information as may be reasonably requested
in availing Abbott of any rule or regulation
of the SEC that permits the selling of any
such securities without registration or
pursuant to such form.
3. INDEMNIFICATION AND CONTRIBUTION
-6-
<PAGE> 7
3.1 INDEMNIFICATION BY ABS. ABS agrees to indemnify and hold
harmless Abbott, each of Abbott's directors, officers and U.S. wholly-owned
subsidiaries, and each person, if any, who controls Abbott within the meaning of
the Securities Act or the Exchange Act, from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
they may become subject (under the Securities Act or otherwise) insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon any untrue statements of a material
fact contained in (or upon the omission of a material fact from) a Registration
Statement delivered or circulated by Abbott in connection with a sale of ABS
securities by Abbott, or arise out of any failure by ABS to fulfill any
undertaking included in the Registration Statement, and ABS will, as incurred
reimburse Abbott and such persons for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that ABS shall not be liable in any such
case to the extent that such loss, claim damage or liability arise out of, or is
based upon (i) an untrue statement made in (or upon the omission of a material
fact from) such Registration Statement in reliance upon and in conformity with
written information furnished to ABS by or on behalf of Abbott specifically for
use in preparation of the Registration Statement, (ii) the failure of Abbott to
comply with the covenants or agreements contained in SECTION 2.6 hereof, or
(iii) any untrue statement or omission in any prospectus that is corrected in
any subsequent prospectus that was delivered to Abbott prior to the pertinent
sale or sales by Abbott.
3.2 INDEMNIFICATION BY ABBOTT. Abbott agrees to indemnify and
hold harmless ABS, each of ABS's directors and officers, and each person, if
any, who controls ABS within the meaning of the Securities Act or the Exchange
Act, from and against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which they may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon: (i) either an untrue statement made in or the omission of a material
fact from such Registration Statement in reliance upon and in conformity with
written information furnished to ABS by or on behalf of Abbott specifically for
use in preparation of the Registration Statement, (ii) the failure of Abbott to
comply with the covenants or agreements contained in SECTION 2.6 hereof, or
(iii) any untrue statement or omission in any prospectus that is corrected in
any subsequent prospectus that was delivered to Abbott prior to the pertinent
sale or sales by Abbott, and Abbott will, as incurred, reimburse ABS and such
persons for any legal or other expenses reasonably incurred in investigating,
defending, or preparing to defend any such action, proceeding, or claim;
provided, however, that Abbott shall not be liable for any amount in excess of
the amount by which the net amount received by Abbott from the sale of the
Shares to which such loss relates minus the amount of any damages which Abbott
has otherwise been required to pay by reason of such untrue or allegedly untrue
statement or omission or alleged omission
3.3 INDEMNIFICATION PROCEDURES. Promptly after receipt by any
indemnified party of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this SECTION 3, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action and, subject to the provisions hereinafter stated, in case any such
action shall be brought against
-7-
<PAGE> 8
an indemnified person and the indemnifying person shall have been notified
thereof, the indemnifying person shall be entitled to participate therein, and,
to the extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof; provided,
however, that if there exists or shall exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the indemnified person for
the same counsel to present both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person.
3.4 CONTRIBUTION. If the indemnification provided for in this
SECTION 3 is unavailable to or insufficient to hold harmless an indemnified
party under SECTION 3.1 or 3.2 above in respect of any losses, claims, damages,
or liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of ABS on one hand and Abbott on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact related to information supplied by ABS on one hand or Abbott on
the other and the parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission. ABS and Abbott
agree that it would not be just and equitable if contribution pursuant to this
SECTION 3.4 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this SECTION 3.4. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this SECTION 3.4 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
3.5 CONTINUING OBLIGATIONS. The obligations of ABS and Abbott
under this SECTION 3 shall survive the completion of the offering of the Shares
pursuant to the Registration Statement and shall be in addition to any liability
that ABS and Abbott may otherwise have.
4. MISCELLANEOUS.
4.1 SURVIVAL OF WARRANTIES. The warranties, representations
and covenants of ABS and Abbott contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement.
-8-
<PAGE> 9
4.2 ENTIRE AGREEMENT, CONTROLLING DOCUMENT. This Agreement
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence, and
understandings between the parties with respect to the subject matter hereof,
whether oral or in writing.
4.3 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.4 DELAY AND WAIVER. No delay on the part of either party in
exercising any right under this Agreement shall operate as a waiver of such
right. The waiver by either party of any other term or condition of this
Agreement shall not be construed as a waiver of a subsequent breach or failure
of the same term or condition or a waiver of any other term or condition
contained in this Agreement.
4.5 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware without regard to conflicts of
law principles.
4.6 NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be sent by
personal delivery, facsimile, overnight courier or mailed by certified or
registered mail, postage prepaid, return receipt requested, to the facsimile
number or address as follows:
ABS: American Biogenetic Sciences, Inc.
1375 Akron Street
Copiague, NY 11726
Telephone: (516) 789-2600
Facsimile: (516) 789-1661
Attention: Chairman
with a copy (which will not constitute notice) to:
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, MA 02111
Telephone: (617) 856-8200
Facsimile: (617) 856-8201
Attention: Mark A. Hofer, Esq.
Abbott: Abbott Laboratories
100 Abbott Park Road
Dept. 309, Bldg. AP30
Abbott Park, IL 60064-3537
Telephone: (847) 938-6863
-9-
<PAGE> 10
Facsimile: (847) 938-5383
Attention: Senior Vice President,
Pharmaceutical Operations
with a copy (which will not constitute notice) to:
Abbott Laboratories
100 Abbott Park Road
Dept. 364, Bldg. AP6D
Abbott Park, Illinois 60064-6049
Telephone: (847) 937 - 8906
Facsimile: (847) 938 - 6277
Attention: Senior Vice President,
Secretary and General Counsel
or to such other facsimile number or address provided to the parties to this
Agreement in accordance with this SECTION 4.6. Such notices or other
communications shall be deemed delivered upon receipt, in the case of overnight
delivery, personal delivery, or facsimile transmission (as evidenced by the
confirmation thereof), or 2 days after deposit in the mails (as determined by
reference to the postmark).
4.7 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.8 EXPENSES. Each party shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, and delivery of this
Agreement.
4.9 ALTERNATIVE DISPUTE RESOLUTION. The parties agree to
effectuate all reasonable efforts to resolve in an amicable manner any and all
disputes between them in connection with this Agreement. The parties agree that
any dispute that arises in connection with this Agreement, which cannot be
amicably resolved informally shall be finally settled as set forth in the
Alternative Dispute Resolution provisions of Exhibit C to the License Agreement.
4.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of ABS and the Abbott.
4.11 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
-10-
<PAGE> 11
4.12 FURTHER ASSURANCES. ABS and Abbott shall do and perform
or cause to be performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments, or documents as
the other party may reasonably request from time to time in order to carry out
the intent and purposes of this Agreement and the consummation of the
transactions contemplated by the Agreement. Neither ABS nor Abbott shall
voluntarily undertake any course of action inconsistent with the satisfaction of
the requirements applicable to them as set forth in this Agreement, and each
shall promptly do all such acts and take all such measures as may be appropriate
to enable them to perform as early as practicable their obligations under this
Agreement.
4.13 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall
create or be deemed to create any rights in any person or entity not a party to
his Agreement.
4.14 MUTUAL DRAFTING. This Agreement is the joint product of
ABS and Abbott and each provision of the Agreement has been subject to
consultation, negotiation and agreement of ABS and Abbott and their respective
legal counsel and advisers and any rule of construction that a document shall be
interpreted or construed against the drafting party shall not apply.
4.15 SEC RULE CHANGES. To the extent necessary to give effect
to the agreements and understandings of the parties set forth in this Agreement,
any reference in this Agreement to any forms, rules, regulations, or procedures
of the SEC or any provision of the Securities Act or the Exchange Act existing
as of the date of this Agreement shall be deemed to refer to any modifying,
supplementing, or succeeding rules, regulations procedures, or provisions as may
exist from time to time after the date of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
AMERICAN BIOGENETIC SCIENCES, INC.
By:
-------------------------------
Alfred J. Roach, Chairman
ABBOTT LABORATORIES
By:
-------------------------------
Its:
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
-11-
<PAGE> 1
Exhibit 10.1
EXCLUSIVE LICENSE AGREEMENT
This Exclusive License Agreement ("Agreement") is made as of this day
of January, 2000 (the "Effective Date") by and between ABBOTT LABORATORIES, a
company organized under the laws of the State of Illinois, with its principal
office at 100 Abbott Park Road, Abbott Park, IL 60064 ("Abbott") and AMERICAN
BIOGENETIC SCIENCES, INC., a company organized under the laws of the State of
Delaware, with its principal office at 1375 Akron Street, Copiague, N.Y. 11726
("ABS").
WITNESSETH
WHEREAS, ABS is the holder of certain patent applications and patents
("Patents," as more fully defined below) relating to Compound (as defined
below);
WHEREAS, ABS also possesses proprietary Know-How (as defined below)
relating to the Compound and/or Product (as defined below);
WHEREAS, Abbott wishes to obtain, and ABS wishes to grant to Abbott and
its Affiliates (as defined below), an exclusive license in the Territory under
the Patents and Know-How for the development and commercialization of Product;
NOW THEREFORE, in consideration of the mutual obligations and promises
as set forth herein, the parties do hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:
1.1 "ABS'S TECHNOLOGY" means the Patents and Know-How, including all
Improvements developed by ABS.
1.2 "AFFILIATE" means any corporation, company, partnership, joint
venture and/or firm which controls, is controlled by, or is under common control
of either party hereto. For purposes of this definition, control shall mean
direct or indirect ownership of at least fifty percent (50%) of the stock or
participating shares entitled to vote for the election of directors.
1.3 "COMBINATION PRODUCT" means a pharmaceutical product that is
comprised in part of Product and in part of one or more other active agents in
any configuration, formulation or combination.
1.4 "COMPOUND" means ABS-103, (***).
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 2
1.5 "CONFIDENTIAL INFORMATION" means any and all information or data
relating to the Compound and/or Product which a party discloses to the other
party, its employees or representatives, or is conceived or reduced to practice
during the Term by either party or by a third party conducting feasibility and
evaluation studies for Abbott, whether in writing, orally or by observation,
including, without limitation, all scientific, clinical, technical, commercial,
financial and business information and Know-How, and other information or data
considered confidential in nature, except any portion thereof which:
(i) is known to the receiving party at the time of
disclosure and documented by written records made
prior to the date of this Agreement;
(ii) is subsequently disclosed to the receiving party
without any obligations of confidence by an
unaffiliated third person who has not obtained it
directly or indirectly from the other party and who
has the right to make such disclosure;
(iii) becomes patented, published or otherwise part of the
public domain as a result of acts by an unaffiliated
third person obtaining such information as a matter
of right;
(iv) is independently developed by or for the receiving
party by person(s) having no knowledge of or access
to such information and without breach of any
confidentiality obligation as evidenced by its
written records; or
(v) is required to be disclosed by legal, regulatory,
statutory or governmental process or authorities,
provided in each case the party disclosing
information promptly informs the other and uses its
best efforts to limit the disclosure and to maintain
confidentiality to the maximum extent possible and
permits the other party to attempt by appropriate
legal means to limit such disclosure.
The parties agree that the contents of and the Exhibits to
this Agreement shall constitute Confidential Information.
1.6 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
the opening paragraph of this Agreement.
1.7 "FDA" means the United States Food and Drug Administration or any
successor entity and its equivalent in other countries of the Territory.
1.8 "FIRST COMMERCIAL SALE" means the first sale of Product in the
Territory by Abbott, its Affiliates (or their sublicensee) to any unaffiliated
third party as evidenced by the selling party's invoice or other relevant
document to such third party. A sale to an unaffiliated third party shall not
include quantities delivered solely for research purposes, for clinical trials
or quantities distributed as samples or promotions.
-2-
<PAGE> 3
1.9 "IMPROVEMENTS" means all additions, developments, modifications,
enhancements and adaptations (i) which directly relate to the Compound, the
Product or any formulation thereof, (ii) which come into existence during the
Term, and (iii) which are conceived or reduced to practice during the Term.
1.10 "IND" means an investigational new drug application filed with the
FDA or an equivalent application in other countries of the Territory, in order
to commence human clinical testing of a drug or biologic. An IND together with
all supplemental filings referencing the initial IND filing shall be deemed one
and the same IND for all purposes of this Agreement.
1.11 "KNOW-HOW" means any proprietary technology (other than the
Patents) owned by or licensed (with a right of sublicense) to ABS during the
Term relating to the Compound and/or Product, including all trade secrets and
any other technical information relating to design, development, use or sale.
1.12 "LIABILITIES" shall have the meaning ascribed to such term in
Section 5.2 of this Agreement.
1.13 "MAJOR MARKET COUNTRY" means (***).
1.14 "NDA" means an application (whether original, supplementary or
abbreviated) to the FDA, or an equivalent application in other countries of the
Territory, for approval by the FDA or the equivalent governmental agencies in
other countries of the Territory, necessary for the commercial sale of a product
in such country. An NDA, together with all supplemental filings referencing the
initial NDA filing shall be deemed one and the same NDA for all purposes of this
Agreement.
1.15 "NET SALES" means gross sales of the Product covered by the claims
of a composition of matter, formulation, therapeutic use or process of
manufacture patent, sold by Abbott, its Affiliates and sub-licensees to
unrelated third parties, in arm's length transactions, including but not limited
to, pharmaceutical wholesalers, pharmacies, hospitals or dispensing physicians,
less any of the following charges or expenses that are incurred in connection
with gross sales of the Product during the term of this Agreement:
(i) discounts, including cash discounts, customary trade
allowances or rebates actually taken, governmental
rebates, charge-backs, and group purchasing
management fees for formulary access;
(ii) credits or allowances given or made for retroactive
price reductions, rejection, recall or return of
previously sold Product actually taken;
(iii) any tax or government charge (including any tax such
as a value added or similar tax or government charge)
levied on the sale, transportation or
-3-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 4
delivery of Product when included on the invoice or
other written document between the parties;
(iv) freight, postage, transportation, insurance and
duties on shipment of Product when included on the
invoice or other written document between the
parties; and
(v) provisions for uncollectible accounts determined in
accordance with generally accepted accounting
principles consistently applied to all products sold
by the seller of Product.
Net Sales shall not include quantities of Product distributed
for research, testing, pre-clinical, clinical, development or as promotional
samples or free goods. With respect to a Combination Product, Net Sales of such
Combination Product shall first be calculated in accordance with Net Sales of
Product above, and then the Net Sales of such Combination Product shall be
determined on a country-by-country basis as follows:
(i) multiply the Net Sales of such Combination Product by
the fraction A/(A+B), where A is the total of the
average selling price of Product which contains the
Compound as its sole active ingredient and B is the
total of the average selling prices in such country
of pharmaceutical product(s) which contain each of
the other active ingredients as their sole active
ingredient; or
(ii) if either the average selling price of the Product
which contains the Compound as its sole active
ingredient or the average selling price of all of the
other pharmaceutical products which contain each of
the other active ingredients in such Combination
Product is not available, multiply the Net Sales of
such Combination Product by a percentage, determined
by mutual agreement of the parties, which represents
the proportionate economic value of the Compound
relative to the economic value contributed by all
other active ingredients in such Combination Product.
If the parties cannot agree, then the alternative
dispute resolution procedure set forth on Exhibit C
shall be used to determine the matter.
1.16 "PATENTS" means the patent applications and patents listed in
Exhibit A hereto and any and all other patents and patent applications,
including foreign equivalents, and any and all substitutions, extensions,
additions, reissues, reexaminations, renewals, divisions, continuations,
continuations-in-part or supplementary protection certificates owned by or
licensed to (with the right to sublicense) ABS during the Term relating to the
Compound and/or the Product.
1.17 "PRODUCT" means any pharmaceutical formulation containing the
Compound as an active ingredient, and any Improvement.
-4-
<PAGE> 5
1.18 "REGULATORY APPROVAL" means all governmental approvals and
authorizations necessary for the manufacture and commercial sale of the Product
in a country of the Territory, including, but not limited to, marketing
authorization, pricing approval and pricing reimbursement, as applicable.
1.19 "ROYALTY PERIOD" shall have the meaning ascribed to such term in
Exhibit F of this Agreement.
1.20 "TERM" means the period commencing on the Effective Date and
terminating as set forth in Article 7 below.
1.21 "TERRITORY" means the entire world.
1.22 "TRADEMARK" means any trademark registered, owned and chosen for
Product by Abbott in any country of the Territory.
2. LICENSE GRANT; DOCUMENTATION; RELATIONSHIP; SUPPLY; EXCLUSIVITY.
2.1 LICENSE GRANT: ABS hereby grants to Abbott and its Affiliates an
exclusive right and license in the Territory and under ABS's Technology, and for
all indications with the right to grant sublicenses, to: (i) research, develop,
apply for and obtain Regulatory Approvals, all as may be required to manufacture
and commercialize Compound and Product; and (ii) make, have made, register, use,
import/export, market, offer to sell and sell Compound and Product. Such license
shall be exclusive to Abbott, its Affiliates and its sublicensees and shall
operate to exclude all others, including ABS, within the Territory.
2.2 DOCUMENTATION AND MATERIALS: Within thirty (30) days following the
Effective Date, ABS shall convey to Abbott all existing information under ABS's
and its Affiliates' control involving the Compound including, but not limited
to, all Know-How in the possession of ABS, its Affiliates and agents, involving:
(a) Results of prior sponsored research or research
performed by ABS outside of this Agreement.
(b) Patents.
(c) Clinical research and development.
(d) Requirements for Regulatory Approval.
Thereafter, and continuing throughout the Term, ABS shall
promptly convey to Abbott all additional Know-How developed and/or acquired by
ABS, its Affiliates and agents,
-5-
<PAGE> 6
and information of a like nature as and when generated by ABS, its Affiliates
and agents in connection with the Compound.
2.3 NON-DISCLOSURE: ABS, on behalf of itself and its Affiliates, hereby
covenants that it shall not, during the Term, disclose Confidential Information
except in furtherance of this Agreement or enter into any discussions for a
business relationship with any third party regarding ABS's Technology which
would conflict with the license granted to Abbott herein, nor take any action,
or commit any omission, which could have the effect of materially diminishing
the value of ABS's Technology.
2.4 SUPPLY OF COMPOUND: At the request of Abbott, ABS shall provide
Abbott with a sufficient supply of Compound, having an optical purity (***)
to enable Abbott to conduct its feasibility and evaluation studies. The
initial schedule of required deliveries is set forth on Exhibit B attached
hereto. The price for such Compound supplied by ABS shall be (***). Except with
respect to the quantities set forth in Exhibit B, nothing contained in this
Section 2.4 shall prevent Abbott from purchasing Compound from a third party
manufacturing source or from manufacturing Compound itself.
2.5 ALTERNATIVE COMPOUNDS: (***).
2.6 EXCLUSIVITY: During the Term, ABS and its Affiliates shall not
undertake any development or commercialization activities related to the use of
any (***). Abbott shall have the exclusive right to work with ABS and its
Affiliates on development or commercialization of (***) during the Term and any
inquiries that ABS or its Affiliates shall receive during the Term with respect
to these fields shall be referred to Abbott. (***). As soon as practicable
following the Effective Date, ABS and its Affiliates shall identify any existing
collaborations with respect
-6-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 7
to the Compound and during the Term, ABS and its Affiliates shall not conduct
any activities with the Compound.
3. EXECUTION FEE, EQUITY INVESTMENT, MILESTONE PAYMENTS AND ROYALTIES.
3.1. EXECUTION FEE: Abbott shall pay to ABS Five Hundred Thousand
Dollars ($500,000) within ten (10) days after the Effective Date.
3.2 EQUITY INVESTMENT: Within ten (10) days after the Effective Date,
Abbott will make an equity investment in ABS of One Million Five Hundred
Thousand Dollars ($1,500,000) by purchasing from ABS unregistered shares of
Class A Common Stock at the average of the closing market prices for the period
measured by the twenty (20) trading days immediately preceding the Effective
Date (but not including the Effective Date itself). Abbott's equity investment
in ABS shall be documented by a Stock Purchase Agreement and a Registration
Rights Agreement executed by the parties of even date herewith and attached to
this Agreement as Exhibits D and E, respectively.
3.3 (***).
3.4 ROYALTIES:
(a) Abbott shall make royalty payments to ABS as set
forth in Exhibit F.
(b) ROYALTY REPORTS AND PAYMENTS. Beginning with the
First Commercial Sale anywhere in the Territory,
within forty-five (45) days after the end of each
calendar quarter, Abbott shall prepare and deliver to
ABS a report detailing the calculation of Net Sales
in (***), on a (***), for such just ended quarter
along with the calculation of royalties due thereon
pursuant to Section 3.4(a) above. Each report shall
be accompanied by full payment in US dollars of the
royalties shown thereon to be due. In the event that
conversion from foreign currency is required in
calculating a royalty payment hereunder, the exchange
rate used shall be the ratio in effect at the end of
the last business day of the applicable quarter for
which royalties are calculated, as reported by the
Wall Street Journal.
(c) BOOKS AND RECORDS/AUDIT RIGHTS. Abbott shall keep
books and records accurately showing all Products
manufactured, used or sold under the terms of this
Agreement. Such books and records shall be open to
inspection by representatives of ABS solely for the
purposes of determining the correctness of the
royalties paid under this Agreement. Such audit,
conducted no more than one time per calendar year,
shall be during normal business hours after
reasonable advance notice and subject
-7-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 8
to suitable confidentiality provisions. In the event
an audit shows a deficiency to be due, Abbott shall
immediately pay such deficiency along with the
reasonable costs and expense of the audit if the
deficiency is more than ten percent (10%) of the
amount due during such audited period. If the audit
shows that an excess was paid, Abbott shall be
entitled to deduct the amount of such excess from the
payment due for the next calendar quarter. Such books
and records shall be preserved for a period of at
least three (3) years after the date of the royalty
payment to which they pertain, and no audit may be
conducted with respect to royalties due in any
calendar year that is more than two (2) years
preceding the calendar year in which the audit is
being conducted. Books and records for a given
calendar year may only be audited once.
(d) WITHHOLDING TAXES ON ROYALTIES. Where any sum due to
be paid to ABS hereunder is subject to any
withholding or similar tax, the parties shall use all
reasonable efforts to do all such acts and things and
to sign all such documents as will enable them to
take advantage of any applicable double taxation
agreement or treaty. In the event there is no
applicable double taxation agreement or treaty, or if
an applicable double taxation agreement or treaty
reduces but does not eliminate such withholding or
similar tax, ABBOTT shall pay such withholding or
similar tax to the appropriate government authority,
deduct the amount paid from the amount due ABS and
secure and send to ABS the best available evidence of
such payment sufficient to enable ABS to obtain a
deduction for such withheld taxes or obtain a refund
thereof.
3.5 For purposes of this Article 3, Abbott means Abbott, its
Affiliates and sublicensees. Abbott shall advise ABS in writing within 30 days
of the occurrence of each Milestone as it is achieved.
4. FEASIBILITY/EVALUATION/MANUFACTURING/MARKETING/OTHER.
4.1 FEASIBILITY/EVALUATION STUDIES: Abbott shall have sole
responsibility for conducting and/or supervising the performance by third
parties of feasibility and evaluation studies on the Compound. Abbott shall
provide ABS with a copy of all such studies related to the Compound and until
the first of the Fourth Milestones is achieved, with semi-annual summary reports
providing a synopsis of any experiments performed and the results obtained
during the 6 months preceding the report and a general description of the
efforts to be undertaken during the following 6 months. ABS and Abbott agree
that Abbott shall, at all times, have the right to undertake feasibility and
evaluation activities relating to compounds similar to the Compound in parallel
with those feasibility and evaluation activities being conducted on the Compound
under this Section 4.1.
-8-
<PAGE> 9
4.2 TERMINATION: If Abbott determines in its reasonable scientific and
commercial judgment that the Compound does not have an acceptable profile or a
reasonable likelihood of commercial success, Abbott shall have the right to
terminate this Agreement upon thirty (30) days written notice, at the end of
which the termination shall be effective.
4.3 MANUFACTURING: Except as provided in Section 2.4 hereof, Abbott and
its Affiliates shall have sole responsibility for manufacturing Product or
having Product manufactured for it by a third party manufacturer.
4.4 MARKETING: Abbott shall have sole responsibility for marketing
Product, including entering into any co-marketing and/or co-promotion
arrangements with third parties, and neither ABS nor its Affiliates shall have
any rights to market and/or co-promote the Product.
4.5 CLINICAL DEVELOPMENT: Abbott shall have sole responsibility for
the clinical development of Product and have final decision making authority
with regard to all clinical development activities conducted with respect to the
Product.
4.6 (***).
5. REPRESENTATIONS/WARRANTY/INDEMNITY.
5.1 REPRESENTATIONS AND WARRANTIES OF ABS: ABS makes the following
representations and warranties with respect to this Agreement and ABS's
Technology:
(a) CORPORATE POWER AND AUTHORIZATION. ABS represents and
warrants that it is duly organized, validly existing
and in good standing under the laws of Delaware, that
it has full corporate power and authority to enter
into this Agreement and to carry out its provisions,
and that there are no outstanding agreements,
assignments or encumbrances in existence that are
inconsistent with the provisions of this Agreement.
ABS further represents and warrants that it is duly
authorized to execute and deliver this Agreement and
to perform its obligations hereunder and that the
execution, delivery and performance of this Agreement
by it does not require the consent, approval or
authorization of or notice, filing or registration
with any governmental or regulatory agency.
(b) TITLE AND VALIDITY OF PATENTS; NO THIRD PARTY RIGHTS.
ABS represents and warrants to Abbott that (i) ABS
either owns and possesses or controls all right,
title and interest in and to ABS's Technology and no
third party owns, has acquired or possesses any
right, title or interest in or to ABS's Technology;
(ii) ABS has valid and complete assignments and/or
license rights from each inventor listed on Patents,
(iii) ABS is the sole and exclusive licensee of all
of (***) and its foreign
-9-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 10
counterparts (included in Patents) pursuant to a
(***); (iv) ABS has provided Abbott with a true,
correct and complete copy of the aforesaid license
agreement; (v) there are no defaults or events which,
with the lapse of time or otherwise would constitute
defaults under the aforesaid license agreement; (vi)
the Patents have not knowingly been obtained through
any act, omission or representation that would limit
or destroy their validity and ABS has no knowledge or
information that would materially impact the validity
and/or enforceability of the Patents; (vii) there are
no actions, threatened or pending before any court or
administrative tribunal or body relating to ABS's
Technology; (viii) ABS has not granted any third
party any rights or license to ABS's Technology and
has no agreement to grant any such rights or license;
(ix) Exhibit A lists all the patents issued and
patent applications filed on or before the Effective
Date that are included in the Patents and all of the
inventors named in said patents and applications have
assigned or are under an obligation to assign or
license all of their right, title and interest
thereto to ABS; and (x) none of the Patents, as of
the Effective Date, has lapsed by reason of
abandonment or non-payment of annuities or other
fees.
(c) WARRANTY ON EXISTENCE OF PRE-CLINICAL/CLINICAL DATA:
ABS represents and warrants that ABS has no knowledge
of the existence of any pre-clinical or clinical data
or information concerning Product which suggests that
there may exist toxicity, safety and/or efficacy
concerns which may materially impair the utility
and/or safety of the Product.
(d) WARRANTY OWNERSHIP OR INTEREST IN OTHER RELEVANT
PATENTS: ABS represents and warrants that the Patents
listed on Exhibit A represent all the patents and
patent applications owned or exclusively licensed by
ABS as of the Effective Date relating to Compound.
ABS also represents and warrants that the Patents
listed on Exhibit A represent all the patents and
patent applications owned or exclusively licensed by
ABS as of the Effective Date in the area of bipolar
disorder, epilepsy and migraine, except for ABS-205.
5.2 INDEMNIFICATION BY ABS: ABS shall indemnify, defend and hold
Abbott, its Affiliates and sublicensees and their directors, officers, employees
and agents harmless from and against any and all liabilities, actions, suits,
claims, demands, prosecutions, damages, costs, expenses or money judgments
(including reasonable legal fees) (the "LIABILITIES") incurred by or instituted
or rendered against Abbott to the extent that such Liabilities result from the
willful misconduct or the negligent acts or omissions of ABS or its Affiliates,
or ABS's breach of the terms of this Agreement; provided, however, that Abbott
shall give ABS notice in writing as
-10-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 11
soon as practicable of any such claim or lawsuit and shall permit ABS to
undertake the defense thereof at ABS's expense. In any such claim or lawsuit:
(a) Abbott will cooperate in the defense by providing
access to witnesses and evidence available to it.
Abbott shall have the right to participate, at its
expense, in any defense to the extent that in its
judgment Abbott may be prejudiced thereby.
(b) With respect to this Agreement, Abbott shall not
settle, offer to settle or admit liability in any
claim or suit in which Abbott intends to seek
indemnification by ABS without the written consent of
a duly authorized officer of ABS, which consent shall
not be unreasonably withheld.
5.3 REPRESENTATIONS AND WARRANTIES OF ABBOTT: Abbott makes the
following representations and warranties with respect to this Agreement:
(a) CORPORATE POWER AND AUTHORIZATION: Abbott represents
and warrants that it is duly organized, validly
existing and in good standing under the laws of
Illinois, that it has full corporate power and
authority to enter into this Agreement and to carry
out its provisions, and that there are no outstanding
agreements, assignments or encumbrances in existence
that are inconsistent with the provisions of this
Agreement. Abbott further represents and warrants
that it is duly authorized to execute and deliver
this Agreement and to perform its obligations
hereunder, and that the execution, delivery and
performance of this Agreement by it does not require
the consent, approval or authorization of or notice,
filing or registration with any governmental or
regulatory agency.
5.4 INDEMNIFICATION BY ABBOTT: Abbott shall indemnify and hold ABS, its
Affiliates and their directors, officers, employees and agents harmless from and
against Liabilities incurred by or instituted or rendered against ABS to the
extent such Liabilities result from the willful misconduct or the negligent acts
or omissions of Abbott or its Affiliates or Abbott's breach of the terms of this
Agreement; provided, however, that ABS shall give Abbott notice in writing as
soon as practicable of any such claim or lawsuit and shall permit Abbott to
undertake the defense thereof at Abbott's expense. In any such claim or lawsuit:
(a) ABS will cooperate in the defense by providing access
to witnesses and evidence available to it. ABS shall
have the right to participate, at its expense, in any
defense to the extent that in its judgment ABS may be
prejudiced thereby.
(b) With respect to this Agreement, ABS shall not settle,
offer to settle or admit liability in any claim or
suit in which ABS intends to seek indemnification by
Abbott without the written consent of a duly
-11-
<PAGE> 12
authorized officer of Abbott, which consent shall not
be unreasonably withheld.
5.5 REPORTABLE OCCURRENCES: Each party warrants that it shall advise
the other promptly of any occurrence which is reported or reportable by it to
the regulatory authorities relating in any way to the Compound or the Product.
5.6 LIMITATION: Except for the express warranties in this Article 5,
neither party makes any warranties, express or implied, in fact or by operation
of law, statutory or otherwise. ABS specifically disclaims any implied warranty
of merchantability or fitness for a particular purpose. NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY HERETO OR TO ANY THIRD PARTY FOR ANY SPECIAL,
CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED
PROFITS RELATING TO THE SAME) ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT,
WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE
POSSIBILITY OR LIKELIHOOD OF SAME.
5.7 TERM OF INDEMNIFICATION: The obligations of the parties set forth
in this Article 5 shall apply during the Term and for a period of seven (7)
years thereafter, after which time they shall terminate, except with respect to
claims notified to the other party prior to the expiration of the seven (7) year
period.
6. CONFIDENTIALITY AND NON-DISCLOSURE.
6.1. Neither party shall use or disclose any Confidential Information
received by it from the other party pursuant to this Agreement without the prior
written consent of the other during the Term. This obligation will continue for
a period of seven (7) years after termination of this Agreement or expiration of
the Term, whichever is earlier.
6.2 Each party shall restrict dissemination of Confidential Information
to those of its employees, agents and sublicensees (if any) who have an actual
need to know and have a legal obligation to protect the confidentiality of such
Confidential Information. All Confidential Information disclosed by one party to
the other shall remain the sole property of the disclosing party and neither
party shall obtain any right of any kind to the Confidential Information
disclosed, except as granted under this Agreement.
6.3 Nothing contained in this Article 6 shall be construed to restrict
the parties from disclosing Confidential Information solely to the extent and
solely as required:
(a) for regulatory, tax or customs reasons;
(b) for audit purposes;
-12-
<PAGE> 13
(c) by court order or other government order or request;
or
(d) from using such Confidential Information as is
reasonably necessary to perform acts permitted by
this Agreement, including disclosure by Abbott to
third parties undertaking feasibility and evaluation
studies, clinical trials and the like on behalf of
Abbott.
6.4 Neither ABS nor its Affiliates shall publish any information
relating to the Compound or the Product during the Term. Abbott may publish
information relating to the Compound or the Product without obtaining ABS's
consent.
7. TERM.
7.1. The term of the license to ABS's Technology shall (***).
7.2. Either party may terminate this Agreement by giving to the other
party prior written notice of not less than thirty (30) days in the event the
other party shall commit a material breach of this Agreement (ten (10) days, in
the case of any payment default), and such breaching party shall fail to cure
such breach during the thirty (30) day period or ten (10) day period, as
applicable. In the case of a non-monetary breach, the cure period may be
extended for such longer period as may reasonably be necessary if cure is not
reasonably possible within the initial thirty (30) day period, provided the
breaching party continues its diligent efforts to cure. No such cancellation and
termination shall release the breaching party from any obligations hereunder
incurred prior thereto. It is understood that in the event of a dispute whether
a material breach has occurred, the existence of material breach shall be
determined using the alternative dispute resolution procedure agreed upon by the
parties as set forth on Exhibit C, and that a party's right to terminate this
Agreement shall only apply if the breaching party fails to cure such breach in
the manner required by the final judgment of the alternative dispute resolution
hearing. In the event that this Agreement is terminated for Abbott's material
breach, ABS shall be entitled to retain for its own use all funds previously
paid by Abbott, together with all studies and information generated hereunder
and Abbott shall return all unused Compound previously supplied by ABS. In the
event that this Agreement is terminated for ABS's material breach, Abbott shall
not be liable for payments not yet due and payable under Article 3 hereof, and
Abbott shall be entitled to retain for its own use all studies and information
generated hereunder and all Compound previously supplied by ABS.
7.3 In lieu of Abbott's exercise of its right to terminate this
Agreement for a material breach by ABS as provided in Section 7.2 above, Abbott
shall have the right to withhold all payments payable under Article 3 until ABS
cures such breach. If Abbott elects to exercise said rights to withhold such
payments, Abbott shall give ABS sixty (60) days' prior written notice of
-13-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 14
its intention to withhold such payments. The notice shall include a detailed
statement describing the nature of the breach. If the breach is capable of being
remedied within the sixty (60) day notice period or is capable of remedy but
only within an additional sixty (60) day period, then Abbott shall not withhold
payment. If the breach is incapable of remedy, or if ABS does not cure the
breach within the original sixty (60) days given if the breach is capable of
remedy within such time, or cure the breach within the additional sixty (60)
days, if applicable, then the withholding of payments shall take effect at the
end of the sixty (60) day notice period or sixty (60) day extension, if
applicable, and shall continue until the breach by ABS is remedied.
7.4 Either party may terminate this Agreement on thirty (30) days
notice if the other party passes a resolution or the court makes an order for
its winding up; or has a receiver or administrator appointed over its business
or any of its assets; or is or becomes bankrupt or insolvent; or takes or
suffers any analogous action on account of debt; or ceases or threatens to cease
to carry on business or the equivalent to any of the above in any jurisdiction.
In the event that this Agreement is terminated under this Section 7.4, the
terminating party shall be entitled to retain for its own use all studies and
information generated hereunder and all Compound previously supplied.
Notwithstanding the bankruptcy or insolvency of ABS or the impairment of
performance by ABS of its obligations under this Agreement as a result of
bankruptcy or insolvency of ABS, Abbott shall be entitled to retain the licenses
granted herein, without any further obligation to ABS other than the royalty
obligations under Section 3.4 and the other payment obligations under Article 3.
7.5 (a) Abbott may terminate this Agreement without cause, (***), upon
three (3) months prior written notice and, upon such termination Abbott shall
pay all payments, milestones or royalties which may have become due prior to the
effective date of such termination. ABS shall be entitled to retain for its own
use (***).
(b) Abbott shall use all commercially reasonable efforts to
develop and commercialize the Product on a country-by-country basis using at
least that level of effort it would use with its own similar compounds. If there
is any material disagreement between the parties concerning whether material
efforts towards commercialization have been made, then the matter shall be
submitted to alternative dispute resolution pursuant to Exhibit C where remedies
for failure to expend such efforts could include a requirement to expend
additional efforts to make up for any failures, damages and/or termination of
the license rights in the applicable country unless Abbott chooses to undertake
such activities and expenses as needed to correct the failure. In determining
whether commercially reasonable efforts have been expended, local market and
regulatory issues shall be considered. Nothing contained herein shall require
Abbott to undertake commercialization where the effect would be to create an
adverse financial impact upon the Product or Abbott.
7.6 Termination of this Agreement shall be without prejudice to any
rights of either party against the other which may have accrued up to the date
such termination becomes effective.
-14-
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 15
7.7 All causes of action accruing to either party under this Agreement
shall survive expiration or termination of this Agreement for any reason.
7.8 Upon any termination or expiration of this Agreement, each party shall
promptly return to the other party all written Confidential Information, and all
copies thereof (retaining one copy of the Confidential Information of the other
in its confidential files for archival purposes only), which is not covered by a
paid-up license or other rights specified herein surviving such termination or
expiration.
8. INFRINGEMENT OF PATENTS BY THIRD PARTY. In the event of an actual or
suspected infringement of a Patent by a third party, the following shall apply:
8.1 NOTICE: Each party shall give the other written notice if one of
them becomes aware of any infringement by a third party of any
Patent. Upon notice of any such infringement, the parties shall
promptly consult with one another with a view toward reaching
agreement on a course of action to be pursued.
8.2 ABBOTT'S RIGHT TO BRING INFRINGEMENT ACTION:
(a) ABBOTT ELECTION: If a third party infringes any patent
included in the Patents in the Territory, Abbott shall have
the first right but not the obligation to institute and
prosecute an action or proceeding to abate such infringement
and to resolve such matter by settlement or otherwise.
(i) Abbott shall notify ABS of its intention to bring an
action or proceeding prior to filing the same and in
sufficient time to allow ABS the opportunity to
discuss with Abbott the choice of counsel for such
matter. Abbott shall keep ABS timely informed of
material developments in the prosecution or
settlement of such action or proceeding. Abbott
shall be responsible for all costs and expenses of
any action or proceeding against infringers which
Abbott initiates, provided, that, Abbott may decrease
the amount of royalties due under Section 3.4 by up
to fifty percent (50%) effective as of the date of
filing an action against third party infringers to
reimburse Abbott for legal expenses and fees of the
action. Notwithstanding the foregoing, Abbott shall
withhold only that portion of such royalties as may
reasonably be necessary to reimburse amounts incurred
in the prosecution of such action in accordance with
the terms of this paragraph. ABS shall cooperate
fully at its expense by joining as a party plaintiff
if required to do so by law to maintain such action
or proceeding and by executing and making available
such documents as Abbott may reasonably request. ABS
may be represented by counsel in any such legal
- 15 -
<PAGE> 16
proceedings, at ABS's own expense, subject to
reimbursement under subparagraph (b) below, acting in
an advisory but not controlling capacity. The
prosecution, settlement, including the granting of
one or more sublicenses, or abandonment of any
infringement action or proceeding brought by Abbott
shall be at Abbott's reasonable discretion provided
that Abbott shall not otherwise have any right to
surrender, limit or adversely affect any of ABS's
rights to the Patents.
(ii) If Abbott elects not to exercise such first right,
ABS shall have the right, at its discretion, to
institute and prosecute an action or proceeding to
abate such infringement and to resolve such matter by
settlement or otherwise. Abbott shall cooperate
fully by joining as a party plaintiff if required to
do so by law to maintain such action and by executing
and making available such documents as ABS may
reasonably request. In such case, ABS shall promptly
reimburse Abbott for its out-of-pocket fees and
expenses incurred in joining the action at ABS's
request. Abbott may be represented by counsel in any
such action at its own expense, provided, if the
amounts recovered by ABS exceed its reasonable third
party out-of-pocket fees and expenses, ABS agrees to
pay Abbott for its out-of-pocket fees and expenses
incurred as a result of electing to join the action.
(b) USE OF PROCEEDS: Except as provided herein, all amounts of
every kind and nature recovered from an action or
proceeding of infringement by Abbott shall belong to
Abbott. If the amount recovered by Abbott exceeds Abbott's
reasonable out-of-pocket fees and expenses of the action,
the excess shall first be applied to reimburse ABS for
withheld royalties and second to reimburse ABS for
out-of-pocket fees and expenses ABS incurred in joining the
action at Abbott's request. The balance of the amounts
recovered by Abbott shall be considered Net Sales under
this Agreement and subject to royalty payments under
Section 3.4.
9. INFRINGEMENT OF THIRD PARTY RIGHTS
9.1 ABBOTT DEFENSE OF SUIT: If ABS, its Affiliates, Abbott, its
Affiliates, sublicensees, distributors or other customers are sued or threatened
with suit in the Territory by a third party alleging infringement in one or more
countries of the Territory of patents or other intellectual property rights that
are alleged to cover the manufacture, use sale, import, export or distribution
of one or more Products, Abbott or ABS, whichever is relevant, will promptly
notify the other in writing and provide a copy of the lawsuit or claim. Abbott
may elect to control the defense in any such claim or suit and withhold up to
fifty percent (50%) of the royalties payable under Section 3.4 related to the
Product(s) affected. Abbott shall use such withheld royalties to
- 16 -
<PAGE> 17
reimburse the legal defense costs, fees and liability incurred in such
infringement suit. Notwithstanding the foregoing, Abbott shall withhold only
that portion of such royalties as may reasonably be necessary to reimburse
amounts incurred in the defense of such action in accordance with the terms of
this paragraph. If Abbott is required to pay a royalty or other amount to a
third party for the manufacture, use, sale, import, export or distribution of
one or more Products in the Territory as a result of a final judgment or
settlement, such amounts may be deducted by Abbott from the royalties payable
under Section 3.4. ABS shall cooperate with Abbott in the defense of any such
action at ABS's expense. Abbott shall have the sole right to settle any such
suit, including the right to grant one or more sublicenses, provided that Abbott
shall not otherwise have the right to surrender, limit or adversely affect any
rights to the Patents. If the royalties deducted by Abbott are sufficient to pay
the costs and fees for the defense of the claim or suit, including any appeals,
the excess shall be paid to ABS with the next reporting period for royalties
under Section 3.4(b). If the royalties deducted by Abbott are insufficient to
pay the costs and fees for the defense of the claim or suit, including any
appeals, Abbott may continue to deduct the amount of the insufficiency against
future royalties until the costs and fees are fully paid.
9.2 INDEMNIFICATION BY ABS: ABS shall indemnify, defend and hold harmless
Abbott, its Affiliates, sublicensees, distributors and customers of the
foregoing and their directors, officers, employees and agents from and against
any and all third party claims, demands, losses, settlement amounts, damages,
penalties, costs and expenses (including fees and costs of attorneys and
witnesses) of any kind or nature, arising from the alleged infringement by
Abbott of (i) patent rights that dominate a claim of the Patent or (ii) patents
or other intellectual property rights that cover the manufacture, use, sale,
import, export or distribution of one or more Products, but only as to the
Compound and not to any other aspect of Product such as delivery vehicle,
stabilizing agents or formulation and further provided, that ABS's liability
under this indemnity shall not exceed the total monies paid to ABS under this
Agreement (including Abbott's equity investment in ABS under Section 3.2
hereof). ABS shall have no obligation to Abbott or its Affiliates, sublicensees,
distributors and other customers with respect to claims, demands, losses,
settlement amounts, damages, penalties, costs and expenses (including fees and
costs of attorneys and witnesses) of any kind or nature, arising out of the
intentional or negligent acts of Abbott or its Affiliates, sublicensees and
distributors or the directors, officers, employees and agents of any of them. If
a claim is made or a suit is brought against Abbott, its Affiliates,
sublicensees, distributors or other customers, Abbott will promptly notify ABS
in writing and provide a copy of the lawsuit or claim. ABS and Abbott shall
promptly meet to discuss the handling of the claim or suit. In the event Abbott
elects not to defend any such claim or suit, ABS shall defend the same in
accordance with its indemnification obligation contained herein. If Abbott
defends the claim or suit, Abbott shall be entitled to withhold that portion of
royalties payable under Section 3.4 with respect to the Product(s) that are the
subject of the claim or suit as may reasonably be necessary to reimburse amounts
incurred by Abbott in the defense of such claim or suit. If ABS defends the
claim or suit, Abbott shall continue to pay royalties for such Product(s) while
defense of the claim or suit is ongoing. The non-defending party agrees to
cooperate with the party defending the claim or suit at the non-defending
party's expense. Upon final resolution of the claim or suit, including any
appeals,
- 17 -
<PAGE> 18
if Abbott defended the claim or suit, Abbott shall resume paying ABS any
royalties payable hereunder, provided that, if Abbott, as a result of the
settlement or final outcome of the claim or suit, becomes obligated to pay
royalties to a third party in order to manufacture, use, sell, import, export or
distribute the Products that were the subject of the claim or suit, one hundred
percent (100%) of such royalties shall be creditable against royalties payable
by Abbott under Section 3.4. In no event shall Abbott be liable for the payment
of royalties previously deducted by Abbott for the defense of the claim or suit
except as to any costs which shall have been reimbursed in connection with the
defense of the claim. If the royalties deducted by Abbott were insufficient to
pay the costs and fees for the defense of the claim or suit, including any
appeals, Abbott may continue to deduct the amount of the insufficiency against
future royalties until the costs and fees are fully paid.
9.3 ABBOTT ENJOINED: If Abbott is enjoined or otherwise prohibited from
making, having made, importing, exporting, using or selling any Product as a
result of alleged infringement of a third party patent in any country of the
Territory, then (i) the royalties for such Product otherwise due and payable
under Section 3.4 shall not be due and payable and Abbott shall not be liable to
ABS for such royalties for the period of time the injunction is in effect,
including any time the injunction may be stayed pending the outcome of any
appeals; and (ii) Abbott shall have the right to delete such country from the
Territory on ten (10) days prior written notice given any time while the
injunction is in effect, including any time the injunction may be stayed pending
the outcome of any appeals.
10. PATENT PROSECUTION AND MAINTENANCE; PATENT COSTS.
10.1 DISCLOSURE OF PATENTS/APPLICATIONS TO ABBOTT: Within ten (10) days
following the Effective Date, ABS shall disclose to Abbott the complete text (a)
of all patent applications included in the Patents filed anywhere in the
Territory; and (b) of all patents included in the Patents as well as all
information in ABS's, its Affiliates and its patent counsel's possession
concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation, nullification or any official
proceeding involving an issued patent included in the Patents anywhere in the
Territory.
10.2 PROSECUTION AND MAINTENANCE: Beginning with the Effective Date,
Abbott shall be solely responsible for the preparation, filing, prosecution and
maintenance of the Patents in ABS's name including oppositions and
interferences. Abbott shall pay 100% of the external Patent costs incurred on
and after the Effective Date but shall have the right to apply such external
Patent costs as a credit against future payments due under Sections 3.3 and 3.4
up to $100,000. ABS shall cooperate and shall use reasonable efforts to cause
its Affiliates, employees and agents to cooperate with Abbott in the
preparation, filing, prosecution and maintenance of the Patents by disclosing
such information as may be necessary for the same and by promptly executing such
documents as Abbott may reasonably request in connection therewith. Within 60
days after the Effective Date, Abbott shall cause its patent counsel to provide
ABS with a list of the countries in which it intends to file applications other
than those listed in Exhibit A. Such
- 18 -
<PAGE> 19
list shall be provided to ABS at least sixty (60) days prior to the expiration
of the relevant priority date to allow ABS time to suggest that additional
countries be added to the list. Abbott shall file applications in the additional
countries requested by ABS unless it otherwise notifies ABS in writing in
sufficient time to allow ABS an opportunity to file prior to the relevant
priority date. If ABS so elects to file in any such countries, such patents
shall not be included in the definition of Patents. ABS shall bear its own costs
in connection with its cooperation with Abbott under this Article. Abbott will
provide ABS copies of all material documents received or prepared by Abbott in
the prosecution and maintenance of the Patents. Abbott shall provide copies in a
timely manner to allow ABS an opportunity to review and comment on Abbott's
proposed patent strategy.
10.3 ABS'S RIGHTS TO PROSECUTE AND MAINTAIN PATENTS: Abbott shall notify
ABS in writing of any country(ies) where it either previously declared its
intention to file under Section 10.2 above and subsequently decided not to file
in such country(ies) or previously filed and decided to abandon the patent
application or issued patent. Such notice shall be given so as to allow ABS a
reasonable time within which to file in countries where Abbott does not now
intend to file or take over the maintenance or prosecution of the relevant
application or patent Abbott intends to abandon. Such patents shall not be
included in the definition of Patents.
10.4 COVENANT RE: PATENTS LICENSED FROM THIRD PARTIES. ABS shall maintain
in good standing all Patents licensed by ABS from third parties and shall,
during the Term, provide Abbott with any and all default notices or other
correspondence of a material nature received by ABS from the third party
licensor(s) of such Patents. Within two (2) weeks following the Effective Date,
ABS shall provide Abbott with an agreement from all licensors of Patents to
provide written notice to Abbott of any alleged defaults under their applicable
license agreements with ABS, providing Abbott with the right to cure such
default within an acceptable time period. In the event Abbott is required to
expend money to cure any such default by ABS, Abbott shall be entitled to deduct
all such amounts paid to the third party licensor from payments due under
Article 3 hereof.
11. TRADEMARK. Abbott may select any Trademark or Trademarks for the
Product in the Territory. All costs related to the selection and maintenance of
the Trademark(s) shall be borne by Abbott. The Trademark(s) shall be owned by
Abbott, and ABS shall have no claims or rights in or to the Trademark(s).
12. IMPROVEMENTS. All Improvements made solely by Abbott and/or its
Affiliates hereunder shall be the sole and exclusive property of Abbott. All
Improvements made solely by ABS and/or its Affiliates shall become part of ABS's
Technology, licensed exclusively to Abbott with all of the rights set forth in
Section 2.1 hereof. All Improvements made jointly by Abbott and ABS (or by their
Affiliates) hereunder shall be the sole and exclusive property of Abbott.
13. MISCELLANEOUS.
- 19 -
<PAGE> 20
13.1 FORCE MAJEURE: If the performance by either party of any of its
obligations under this Agreement shall be prevented by circumstances beyond its
reasonable control which could not have been avoided by the exercise of
reasonable diligence, then such party shall be excused from the performance of
that obligation for the duration of the event. The affected party shall promptly
notify the other party in writing should such circumstances arise, give an
indication of the likely extent and duration thereof, and shall use all
commercially reasonable efforts to resume performance of its obligations as soon
as practicable.
13.2 NOTICES: Any notice required to be given or made under this Agreement
by one of the parties hereto to the other shall be in writing, by personal
delivery, registered U.S. mail or overnight courier, addressed to such other
party at its address indicated below, or to such other address as the addressee
shall have last furnished in writing to the addressor and shall be effective
upon the date of receipt.
If to ABS: American Biogenetic Sciences, Inc.
1375 Akron Street, Copiague
Copiague, NY 11726
Attn: Chairman
With a copy to: Brown, Rudnick, Freed & Gesmer
One Financial Square
Boston, MA 02111
Attn: Mark A. Hofer, Esq.
If to Abbott: Abbott Laboratories
100 Abbott Park Road
Dept. 309; Bldg. AP30
Abbott Park, IL 60064-3537
Attn: Senior Vice President,
Pharmaceutical Operations
With a copy to: Abbott Laboratories
100 Abbott Park Road
Dept. 364; Bldg. AP6D
Abbott Park, IL 60064-6032
Attn: Senior Vice President,
General Counsel and Secretary
13.3 APPLICABLE LAW/COMPLIANCE: This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding its
conflict of laws provision. Each party hereto shall comply with all applicable
laws, rules, ordinances, guidelines, consent decrees and regulations of any
federal, state or other governmental authority.
- 20 -
<PAGE> 21
13.4 ENTIRE AGREEMENT: Except for the Stock Purchase Agreement and the
Registration Rights Agreement entered into between the parties of even date
herewith, this Agreement and the attachments contain the entire understanding of
the parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by both parties hereto.
13.5 COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.6 SEVERABILITY: If any provision of this Agreement is deemed
unenforceable, the remainder of the Agreement will not be affected and, if
appropriate, the parties will attempt to replace the unenforceable provision
with a new provision that, to the extent possible, reflects the parties'
original intent.
13.7 ASSIGNMENT: Neither party may without written approval of the other:
(a) assign this Agreement or transfer its interest or any part
thereof under this Agreement to any third party except that
(i) either party may assign this Agreement to a third party
that acquires all or substantially all of the business to
which this Agreement pertains, or, (ii) in the case of
Abbott, Abbott may assign this Agreement in whole or part
to any Affiliate or sublicensee of Abbott, and Abbott
hereby guarantees the performance by such Affiliates and
sublicensees.
(b) designate or cause any third party to perform all or part of
its activities hereunder, or to have the benefit of all or
part of its non-monetary rights hereunder.
13.8 MISCELLANEOUS: The parties hereto shall attempt to settle any dispute
arising out of or relating to this Agreement in an amicable way. Any
controversy, claim or right of termination for cause which may arise under, out
of, in connection with, or relating to this Agreement, or any breach thereof,
shall be settled according to the Alternative Dispute Resolution provisions
attached hereto as Exhibit C.
13.9 INDEPENDENT CONTRACTOR: It is understood that both parties hereto are
independent contractors and engage in the operation of their own respective
businesses and neither party hereto is to be considered the agent of the other
party for any purpose whatsoever and neither party has any authority to enter
into any contract or assume any obligation for the other party or to make any
warranty or representation on behalf of the other party. Each party shall be
fully responsible for its own employees, servants and agents, and the employees,
- 21 -
<PAGE> 22
servants and agents of one party shall not be deemed to be employees, servants
and agents of the other party for any purpose whatsoever.
13.10 NO IMPLIED OBLIGATIONS OF ABBOTT: Abbott's sole obligation to
exploit the Patents is as set forth in Article 4 and Section 7.5. Nothing in
this Agreement shall be deemed to require Abbott to otherwise exploit the
Patents or prevent Abbott from commercializing products similar to or
competitive with a Product.
13.11 PUBLICITY: Except as otherwise required by law or regulation,
neither party nor their Affiliates shall make any public announcement concerning
this Agreement nor the subject matter thereof without the prior written consent
of the other party. If either party (or such party's Affiliate) determines that
a public announcement is required by law or regulation, such party shall submit
a copy of the proposed announcement to the other party for review. The other
party shall have three (3) days (or 24 hours if urgent) to review such
announcement and provide comments and suggestions. The party issuing such
announcement, subject to legal requirements, shall use all reasonable efforts to
accommodate the other party's comments and suggestions. Both parties agree that
the names of the other party, its officers, employees and agents will not be
used for purposes of any public commercial activity without their prior written
consent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
ABBOTT LABORATORIES AMERICAN BIOGENETIC
SCIENCES, INC.
By: ____________________________ By: _________________________________
Print Name: Arthur J. Higgins Print Name: Alfred J. Roach
Its: Senior Vice President, Its: Chairman
Pharmaceutical Operations
- 22 -
<PAGE> 23
EXHIBIT A
Patents and Patent Applications
(***)
ISSUED PATENTS:
A. (***)
PATENT APPLICATIONS:
B. (***)
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 24
C. (***)
D. (***)
E. (***)
F. (***)
Page 1 of 2
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 25
EXHIBIT B
Delivery Dates
Material Delivery Date
(***) grams of ABS-103 (***) (***)
(***)
(***) grams of ABS-103 (***) (***)
(***)
(***) grams of ABS-103 (***) (***)
A (***) sample of each lot(s) of any material sent to (***) shall be sent in
advance to Abbott for confirmation of analysis. If multiple lots are involved,
they shall be split evenly for shipment to Abbott & to (***) so that each of
these parties is working with the same material. All shipments shall be
accompanied by certificates of analysis.
- -----------
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 26
EXHIBIT C
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that a bona fide dispute as to certain matters may
arise from time to time during the term of this Agreement which relates to
either party's rights and/or obligations. To have such a dispute resolved by
this Alternative Dispute Resolution (ADR) provision, a party must send written
notice of the dispute to the other party for attempted resolution by good faith
negotiations between their respective presidents (or their equivalents) of the
affected subsidiaries, divisions, or business units within twenty-eight (28)
days after such notice is received (all references to "days" in this ADR
provision are to calendar days). If the matter has not been resolved within
twenty-eight (28) days of the notice of the dispute, or if the parties fail to
meet within such twenty-eight (28) days, either party may initiate an ADR
proceeding as provided herein. The parties shall have the right to be
represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14) days after
receipt of such notice, the other party may, by written notice to the party
initiating the ADR, add additional issues to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution (CPR), 366
Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral
pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less than five
(5) candidates within fourteen (14) days after receipt of the request, along
with a Curriculum Vitae for each candidate. No candidate shall be an employee,
director, or shareholder of either party or any of their subsidiaries or
Affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstance likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference) and shall deliver
the list to the CPR within seven (7) days following receipt of the list of
candidates. If a party believes a conflict of interest exists regarding any of
the candidates, the party shall provide a written explanation of the conflict to
the CPR along with its list showing its order of preference for the candidates.
Any party failing to return a list of preferences on time shall be deemed to
have no order of preference.
(d) If the parties collectively have identified fewer than three (3)
candidates deemed to have conflicts, the CPR shall designate as neutral the
candidate for whom the parties
<PAGE> 27
collectively have indicated the greatest preference. If a tie shall result
between two candidates, the CPR may designate either candidate. If the parties
collectively have identified three (3) or more candidates deemed to have
conflicts, the CPR shall review the explanations regarding conflicts, and, in
its sole discretion, may either (i) immediately designate as the neutral the
candidate for whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5) candidates, in
which case the procedures set forth in subparagraphs 2(a) 2(d) shall be
repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after the selection, the neutral shall hold a hearing to resolve each of
the issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the neutral
shall designate a location other than the principle place of business of either
party or any of their subsidiaries or Affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each issue. The proposed
rulings and remedies shall not contain any recitation of the facts or any legal
arguments and shall not exceed one (1) page per issue.
(d) a brief in support of each party's proposed rulings and remedies
provided that the brief shall not exceed twenty (20) pages. This page limitation
shall apply regardless of the number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) 4(d), no discovery
shall be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time
to present its case. The neutral shall determine whether each party has had the
five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or other
evidence, to cross examine witnesses, and to make a closing argument. Cross
examination of witnesses shall occur immediately after their
<PAGE> 28
direct testimony, and cross examination shall be charged against the party
conducting the cross examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues it raised
but also any issues raised by the responding party. The responding party, if it
chooses to make an opening statement, also shall address all issues raised in
the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence.
(d) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.
(e) Settlement negotiations, including any statements made therein,
shall not be admissible under any circumstances. Affidavits prepared for
purposes of the ADR hearing also shall not be admissible. As to all other
matters, the neutral shall have sole discretion regarding the admissibility of
any evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a posthearing brief in support of
its proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the parties on each disputed issue but may
adopt one parties proposed rulings and remedies on some issues and the other
party's proposed rulings and remedies on other issues. The neutral shall not
issue any written opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the fees and
expenses of a court recorder, and any expenses for a hearing room, shall be paid
as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one party on some issues, and
the other party on other issues, the neutral shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the parties. The neutral shall allocate the fees and expenses in a way
that bears a reasonable relationship to the outcome of the ADR, with the party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.
<PAGE> 29
9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be entered as a
final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 and except as to such disclosure
which is required by applicable law or regulation, the existence of the dispute,
any settlement negotiations, the ADR hearing, any submissions (including
exhibits, testimony, proposed rulings, and briefs), and the rulings shall be
deemed Confidential Information. The neutral shall have the authority to impose
sanctions for unauthorized disclosure of Confidential Information.
EXHIBIT D
(Filed as Exhibit 99.1)
EXHIBIT E
(Filed as Exhibit 4.1)
EXHIBIT F
PAYMENTS
MILESTONE PAYMENTS
3.3 Abbott shall make the following milestone payments to ABS within thirty
(30) days after the occurrence of the corresponding named events:
(a) FIRST MILESTONE PAYMENT: (***).
(b) SECOND MILESTONE PAYMENT: (***).
(c) THIRD MILESTONE PAYMENTS: (***).
(d) FOURTH MILESTONE PAYMENTS: (***).
Royalty Payments
(a) ROYALTY RATE AND ROYALTY PERIOD: Beginning with the First
Commercial Sale, Abbott will pay a royalty in accordance with the
following schedule:
ANNUAL NET SALES ROYALTY
---------------- -------
(***) (***)
(***)
***Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.
<PAGE> 1
Exhibit 99.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the ______
day of January, 2000, by and between American Biogenetic Sciences, Inc., a
Delaware corporation ("ABS") and Abbott Laboratories, an Illinois corporation
("Abbott").
WHEREAS, ABS and Abbott have entered into a Registration Rights Agreement
and an Exclusive License Agreement (the "License Agreement"), both of even date
herewith (collectively the "Alliance Agreements"); and
WHEREAS, subject to the terms and conditions of this Agreement and on the
basis of the representations and warranties set forth herein, ABS and Abbott
have agreed to the purchase and sale of shares of ABS's Class A common stock
$0.001 par value per share (the "Class A Common Stock").
NOW THEREFORE, ABS and Abbott agree as follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions of
this Agreement and on the basis of the representations and warranties set forth
herein, ABS shall issue and sell to Abbott and Abbott shall purchase from ABS at
the Share Closing provided for in SECTION 1.3, shares of ABS's Class A Common
Stock (the "Shares") having an aggregate value of One Million Five Hundred
Thousand Dollars ($1,500,000).
1.1 PRICE PER SHARE. The price per share to be paid by Abbott for
each of the Shares (the "Price per Share") shall be equal to the arithmetic
average for the twenty (20) consecutive trading day period ending on the second
day preceding the date of this Agreement of (i) the last sale price, as reported
on the Small Cap Market, of the Class A Common Stock for the days that it was
traded on that market, and (ii) the last sale price reported on the OTC Bulletin
Board, or if no sale is reported that day, the average of the bid and ask price,
of the Class A Common Stock, as reported on the OTC Bulletin Board for the days
when it was primarily traded on that market.
1.2 NUMBER OF SHARES. On the day before the Share Closing, ABS and
Abbott shall determine the number of Shares to be issued, purchased, and sold
pursuant to this Agreement by dividing:
(a) One Million Five Hundred Thousand Dollars
($1,500,000) by
(b) the Price per Share
and then rounding down to the nearest whole number the number obtained by that
division.
1.3 SHARE CLOSING. The closing of the purchase and sale of the
Shares (the "Share Closing") shall be held at the offices of Brown, Rudnick,
Freed & Gesmer, One Financial Center, Boston, MA 02111, within ten (10) business
days following the date of this Agreement, at 10:00 a.m. Eastern time, or at
such other time and place upon which ABS and Abbott shall agree.
1.4 DELIVERY. At the Share Closing, ABS will issue a certificate to
Abbott registered in Abbott's name representing the number of Shares being
purchased by Abbott against payment to ABS of One Million Five Hundred Thousand
Dollars ($1,500,000). Abbott shall pay the purchase price to ABS by wire
transfer to the bank account of ABS:
Name of Bank: Bank of New York
Name of Account: American Biogenetic Sciences, Inc.
Account Number: 041-5206748
ABA #: 021-000018
2. REPRESENTATIONS AND WARRANTIES OF ABS. Except as set forth in the
Schedule of Exceptions attached hereto as EXHIBIT - SECTION 2 (SCHEDULE OF
EXCEPTIONS), ABS hereby represents, warrants, and covenants to Abbott that:
<PAGE> 2
2.1 AUTHORITY.
(a) ABS has full legal right power and authority to execute and
deliver this Agreement and each of the Alliance Agreements and to consummate the
transactions contemplated hereby and thereby.
(b) All corporate action on the part of ABS, its officers,
directors, and stockholders necessary for the execution and delivery of, and the
consummation of the transactions contemplated by, this Agreement and the
Alliance Agreements and the performance of all obligations of ABS hereunder and
thereunder have been taken.
(c) Assuming the due and proper execution and delivery by Abbott,
this Agreement and each of the Alliance Agreements, upon execution and delivery
by ABS, constitute legal, valid and binding obligations of ABS, enforceable in
accordance with their respective terms, except as may be limited by: (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors rights
generally, (ii) the effect of rules of law governing the availability of
equitable remedies, and (iii) the enforceability of the indemnity obligations of
SECTION 3.1 of the Registration Rights Agreement.
(d) The making and performance of this Agreement and the Alliance
Agreements by ABS and the consummation of the transactions contemplated by this
Agreement and the Alliance Agreements will not (i) violate any provision of the
organizational documents of ABS or any of its subsidiaries, (ii) result in the
creation of any lien, charge, security interest or encumbrance upon any assets
of ABS pursuant to the terms or provisions of, and will not conflict with,
result in the breach or violation of, or constitute, (either by itself or upon
notice or the passage of time or both), a default under or give rise to a right
of termination, cancellation, or acceleration of any obligation to, or loss of
benefits under any agreement, mortgage, deed of trust, lease, franchise,
licence, indenture, permit, or other instrument to which ABS or any of its
subsidiaries is a party or by which ABS or any of its subsidiaries or any of
their respective properties may be bound or affected, in each case which would
have a material adverse affect on the condition (financial or otherwise),
properties, business, prospects, or results of operations of ABS and its
subsidiaries taken as a whole (a "Material Adverse Effect") or which would
restrict the power of ABS to perform its obligations as contemplated by this
Agreement or the Alliance Agreements or, (iii) violate, to ABS's knowledge, any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency, or other governmental body
applicable to ABS or any of its subsidiaries or any of their respective
properties.
(e) Except as disclosed on EXHIBIT - SECTION 2 (SCHEDULE OF
EXCEPTIONS) item 1 hereto, the Company does not have or otherwise contribute to
or participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974.
2.2 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) ABS and each of its subsidiaries, has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full power and authority (corporate and
other) to own and lease its properties and conduct its businesses as presently
conducted and as proposed to be conducted. ABS and each of its subsidiaries is
duly qualified to do business and in good standing as a foreign corporation in
each jurisdiction in which the ownership or leasing of properties or the conduct
of its business requires such qualification, except for jurisdictions in which
the failure to so qualify would not have a Material Adverse Effect; and no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail such power and authority or
qualification.
(b) Except as set forth on EXHIBIT - SECTION 2 (SCHEDULE OF
EXCEPTIONS) item 2, ABS has no direct or indirect loans to any partnership,
corporation, joint venture, business association, or other entity, nor does it
own or control, directly or indirectly, any interest in any partnership,
corporation, joint venture, association, or entity which is material to its
business. With respect to any person, the term "subsidiary" means any
corporation more than fifty percent (50%) of whose total interest is, directly
or indirectly, owned by that person. The term
2
<PAGE> 3
"affiliate" when used to indicate a relationship with a specified person, shall
mean a person that directly, or indirectly through one or more intermediaries,
control, or is controlled by, or is under common control with, such specified
person.
(c) ABS has delivered to Abbott complete and correct copies of its
Certificate of Incorporation and Bylaws as amended to the date hereof, and will
furnish to Abbott true and correct copies of any amendments thereto throughout
the term of this Agreement.
2.3 CAPITALIZATION.
(a) The authorized capital stock of ABS consists of 100,000,000
shares of Class A Common Stock, and 3,000,000 shares of Class B common stock
(the "Class B Common Stock"). The Board of Directors has approved the
solicitation of stockholder consents to amend ABS's Certificate of Incorporation
to authorize up to 10,000,000 shares of preferred stock, $.001 par value per
share (the "Preferred Stock"), of which it intends to designate 6,000 as Series
A Preferred Stock.
(b) As of January 14, 2000, there were 36,918,510 shares of Class A
Common Stock issued and outstanding, 3,000,000 shares of Class B Common Stock
issued and outstanding and no shares of Preferred Stock issued and outstanding.
All such issued an outstanding shares have been duly authorized and validly
issued and are fully paid and non-assessable and no issued and outstanding
shares are subject to preemptive rights created by statute, the ABS Certificate
of Incorporation or Bylaws, or any agreement to which ABS is a party or by which
ABS may be bound.
(c) All outstanding shares of ABS's capital stock have been issued
in compliance with applicable federal and state securities laws.
(d) ABS has reserved for issuance an aggregate of approximately
8,248,000 shares of Class A Common Stock for issuance in connection with options
and warrants.
(e) Except (i) as set forth in Section 2.3(d) above and on EXHIBIT -
SECTION 2 (SCHEDULE OF EXCEPTIONS) item 3, and (ii) for the right of Abbott to
acquire the Shares under this Agreement, there are no other options, warrants,
conversion privileges, or other contractual rights presently outstanding or in
existence to purchase or otherwise acquire any authorized but unissued shares of
ABS's capital stock or other securities or the capital stock or other securities
of any subsidiary of ABS.
2.4 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. The
purchase and sale of the Shares pursuant to this Agreement has been approved by
the Board of Directors of ABS prior to the date of this Agreement for the
purposes of Section 203 of the Delaware General Corporation Law ("Section 203")
such that after the date of this Agreement, neither Abbott nor any of its
affiliates will be subject to the restrictions on business combination
transactions set forth in Section 203 with respect to ABS on account of such
purchase.
2.5 VALID ISSUANCE OF CLASS A COMMON STOCK. The Shares have been
duly authorized and, when issued, delivered, and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and Abbott shall have good and marketable title to the Shares
free of any liens or restrictions (unless created by Abbott), other than the
restrictions expressly set forth in this Agreement or the Alliance Agreements or
under applicable state and federal securities laws. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by ABS pursuant to this Agreement.
2.6 GOVERNMENTAL CONSENTS. Other than compliance with the Securities
Act of 1933, as amended (the "Securities Act") and such filings as may be
required to be made with the National Association of Securities Dealers, no
consent, approval order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of ABS is required in connection with the
consummation of the transactions contemplated by this Agreement.
3
<PAGE> 4
2.7 OFFERING. Subject in part to the truth and accuracy of Abbott's
representations set forth in SECTION 3 of this Agreement, the offer, sale, and
issuance of the Class A Common Stock as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither ABS
nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemption.
2.8 LITIGATION. Other than as disclosed in its SEC Documents, there
are no legal or governmental actions, suits or proceedings pending or, to ABS's
knowledge, threatened to which ABS or any of its subsidiaries is or may be a
party or of which property owned or leased by ABS or any of its subsidiaries is
or may be the subject, which actions, suits or proceedings might, individually
or in the aggregate, prevent or adversely affect the transactions contemplated
by this Agreement or result in a Material Adverse Effect. ABS is not a party or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body, administrative agency, or other governmental
body. There are no material legal or governmental actions, suits, or proceedings
pending or, to ABS's knowledge, threatened against any executive officers or
directors of ABS.
2.9 DISCLOSURE. ABS has provided Abbott with all the information
that Abbott has requested for deciding whether to purchase the Class A Common
Stock. Neither this Agreement, nor any other statements or certificates made or
delivered in connection herewith or therewith contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading.
2.10 CHANGES. Since September 30, 1999, except as otherwise
disclosed in the Schedule of Exceptions:
(a) ABS has not incurred any material liabilities or obligations,
indirect, direct or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business;
(b) ABS has not sustained any material loss or interference with its
business or properties from fire, flood, windstorm, accident, or other calamity,
whether or not covered by insurance;
(c) ABS has not paid or declared any dividends or other
distributions with respect to its capital stock and ABS is not in default in the
payment of principal or interest on any outstanding debt obligations;
(d) there has not been any change in the capital stock or, other
than in the ordinary course of business, indebtedness material to ABS; and
(e) there has not been any event, change or development resulting in
or which may reasonably be expected to result in a Material Adverse Event.
2.11 SEC DOCUMENTS.
(a) Since January 1, 1997 ABS has filed each statement, annual,
quarterly, and other report, registration statement and definitive proxy
statement required to be filed (other than preliminary material) by ABS with the
United States Securities and Exchange Commission (the "SEC Documents"). As of
their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Securities Exchange Act") as the case may be, and
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of ABS included in ABS's SEC Documents
fairly present in all material respects in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of ABS as of the
dates thereof and ABS's consolidated results of
4
<PAGE> 5
operations and cash flows for the periods then ended. Except as reflected or
reserved against in the consolidated balance sheet of ABS at September 30, 1999
or the Schedule of Exceptions, ABS has no liabilities of any nature (whether
accrued, absolute, contingent or otherwise), except for liabilities incurred in
the ordinary course of business since that date and liabilities which would not,
individually or in the aggregate, have a Material Adverse Effect.
2.12 USE OF PROCEEDS. ABS will use the proceeds from the sale of the
Shares for research and development and for working capital.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ABBOTT. Abbott hereby
represents, warrants, and covenants to ABS that:
3.1 AUTHORIZATION. Abbott has full power and authority to execute
and deliver, and to consummate the transactions contemplated by the Share
Closing and this Agreement. All corporate action on the part of Abbott necessary
for (i) the execution and delivery of, and the consummation of the transactions
contemplated by, this Agreement; and (ii) as of the Share Closing, the
performance of all obligations of Abbott under this Agreement, has been taken.
Assuming the due and proper execution and delivery by ABS, this Agreement, upon
execution and delivery by Abbott, constitutes a legal, valid and binding
obligation of Abbott, enforceable in accordance with its terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization, or other laws
of general application relating to or affecting the enforcement of creditors
rights generally, and (ii) the effect of rules of law governing the availability
of equitable remedies.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
Abbott in reliance upon Abbott's representation to ABS, which by Abbott's
execution of this Agreement Abbott hereby confirms, that the shares to be
received by Abbott will be acquired for investment for Abbott's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that Abbott has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Abbott further represents that Abbott does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares.
3.3 GOVERNMENTAL CONSENTS. Other than compliance with the Securities
Act, the Securities Exchange Act, and such filings as may be required to be made
with the Securities and Exchange Commission or the National Association of
Securities Dealers, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of Abbott is required
in connection with the consummation of the transactions contemplated by this
Agreement.
3.4 NO CONSENT. No consent, approval, waiver or other action by any
entity under any material contract, agreement, indenture, lease, instrument, or
other document to which Abbott is a party or by which it is bound is required or
necessary for the execution, delivery and performance of, or the consummation of
the transactions contemplated by, this Agreement by Abbott.
3.5 DISCLOSURE OF INFORMATION. Abbott believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Shares. Abbott further represents that it has had an opportunity to
ask questions and receive answers from ABS regarding the terms and conditions of
the offering of the Shares and the business, properties, prospects, and
financial condition of ABS. The foregoing, however, does not limit or modify the
representations and warranties of ABS in SECTION 2 of this Agreement or the
right of Abbott to rely on those representations and warranties.
3.6 INVESTMENT EXPERIENCE. Abbott is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Shares. Abbott has not been organized
for the purpose of acquiring the Shares.
5
<PAGE> 6
3.7 RESTRICTED SECURITIES. Abbott understands that the Shares it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from ABS in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection, Abbott
represents that it is familiar with Securities and Exchange Commission Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
3.8 LEGENDS.
(a) Each certificate or instrument representing Shares shall bear
legends in substantially the following forms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED
UNDER THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED
FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT, OR (II) IN COMPLIANCE WITH RULE 144, OR (III)
PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THESE SECURITIES THAT SUCH REGISTRATION OR COMPLIANCE IS NOT
REQUIRED AS TO SUCH SALE, OFFER OR DISTRIBUTION".
(b) The certificate shall also bear any other legends required by
Delaware law or applicable blue sky or state securities laws.
Except as provided in the Registration Rights Agreement, ABS need not register a
transfer of any of the Shares and may also instruct its transfer agent not to
register a transfer of any Shares, unless the conditions specified in the
foregoing legends are satisfied to the extent applicable.
3.9 ACCREDITED INVESTOR. Abbott is an "accredited investor" within
the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as
now in effect.
4. CONDITIONS OF ABBOTT'S OBLIGATIONS AT SHARE CLOSING. Abbott's
obligations to purchase the Shares at the Share Closing are subject to
fulfillment, on or prior to the Share Closing with respect to the Shares, of
each of the following conditions unless waived by Abbott.
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of ABS contained in SECTION 2 shall be true and correct when made and
at the Share Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Share Closing.
4.2 PERFORMANCE. ABS shall have performed and complied with all
agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Share Closing.
4.3 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement shall be duly obtained and effective as of
the Share Closing.
4.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Share Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Abbott, and it shall have received all such counterpart original
and certified or other copies of such documents as it may reasonably request.
6
<PAGE> 7
4.5 ALLIANCE AGREEMENTS. The parties shall have entered into each of
the Alliance Agreements and the Alliance Agreements remain in full force and
effect.
4.6 OPINION OF COUNSEL TO ABS. Abbott shall have received from
Brown, Rudnick, Freed & Gesmer, counsel to ABS, an opinion addressed to it,
dated as of the date of the Share Closing and in substantially the form of
EXHIBIT 4.6.
4.7 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement or the
Alliance Agreements.
4.8 COMPLIANCE CERTIFICATE. ABS shall have delivered to Abbott a
certificate, in substantially the form of EXHIBIT 4.8, executed on behalf of ABS
by the Chief Executive Officer of ABS, dated as of the date of the Share Closing
and certifying to the fulfillment of the conditions specified in SECTION 4.1.
5. CONDITIONS OF ABS'S OBLIGATIONS AT SHARE CLOSING. ABS's obligations to
issue and sell the Shares at the Share Closing are subject to fulfillment, on or
prior to the Share Closing with respect to the Shares, of each of the following
conditions unless waived by ABS.
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Abbott contained in SECTION 3 shall be true and correct when made
and at the Share Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Share Closing.
5.2 PAYMENT OF PURCHASE PRICE. Abbott shall have delivered the
purchase price for the Shares.
5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement shall be duly obtained and effective as of
the Share Closing for those shares.
5.4 ALLIANCE AGREEMENTS. The parties shall have entered into each of
the Alliance Agreements and the Alliance Agreements remain in full force and
effect.
5.5 OPINION OF COUNSEL TO ABBOTT. ABS shall have received from Brian
J. Smith, Divisional Vice President, Domestic Legal Operations and Assistant
Secretary, an opinion addressed to it, dated as of the date of the Share Closing
and certifying, in substantially the form of EXHIBIT 5.5.
5.6 NO ORDER PENDING. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement or the
Alliance Agreements.
5.7 COMPLIANCE CERTIFICATE. Abbott shall have delivered to ABS a
certificate, in substantially the form of EXHIBIT 5.7, executed on behalf of
Abbott by an officer of Abbott, dated as of the date of the Share Closing and
certifying to the fulfillment of the conditions specified in SECTION 5.1.
6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of ABS and Abbott contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Share Closing
and shall in no way be affected by any investigation of the subject matter
thereof made by or on behalf of Abbott or ABS.
6.2 ENTIRE AGREEMENT; CONTROLLING DOCUMENT. This Agreement and the
Alliance Agreements constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede
7
<PAGE> 8
any and all prior negotiations, correspondence and understandings between the
parties with respect to the subject matter hereof, whether oral or in writing.
6.3 ASSIGNMENT: SUCCESSORS AND ASSIGNS. No provision of this
Agreement may be assigned without the prior written consent of the other party
hereto. Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any of the
Shares). Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
6.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 DELAY AND WAIVER. No delay on the part of either party in
exercising any right under this Agreement shall operate as a waiver of such
right. The waiver by either party of any other term or condition of this
Agreement shall not be construed as a waiver of a subsequent breach or failure
of the same term or condition or a waiver of any other term or condition
contained in this Agreement.
6.6 ASSIGNMENT: SUCCESSORS AND ASSIGNS. No provision of this
Agreement may be assigned without the prior written consent of the other party
hereto. Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.7 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware without regard to conflict of law
principles.
6.8 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by personal delivery,
facsimile, overnight courier or mailed by certified or registered mail, postage
prepaid, return receipt requested, to the facsimile number or address as
follows:
ABS: American Biogenetic Sciences, Inc.
1375 Akron Street
Copiague, NY 11726
Telephone: (516) 789-2600
Facsimile: (516) 789-1661
Attention: Chairman
with a copy (which will not constitute notice) to:
Brown, Rudnick, Freed & Gesmer
One Financial Square
Boston, MA 02111
Telephone: (617) 856-8327
Facsimile: (617) 856-8201
Attention: Mark A. Hofer, Esq.
Abbott: Abbott Laboratories
100 Abbott Park Road
Dept. 309, Bldg. AP30
Abbott Park, IL 60064-3537
8
<PAGE> 9
Telephone: (847) 938-6863
Facsimile: (847) 938-5383
Attention: Senior Vice President, Pharmaceutical
Operations
with a copy (which will not constitute notice) to:
Abbott Laboratories
100 Abbott Park Road
Dept. 364, Bldg. AP6D
Abbott Park, Illinois 60064-6049
Telephone: (847) 937 - 8906
Facsimile: (847) 938 - 6277
Attention: Senior Vice President, Secretary and
General Counsel
or to such other facsimile number or address provided to the parties to this
Agreement in accordance with this SECTION 6.8. Such notices or other
communications shall be deemed delivered upon receipt, in the case of overnight
delivery, personal delivery or facsimile transmission (as evidenced by the
confirmation thereof), or 2 days after deposit in the mails (as determined by
reference to the postmark).
6.9 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.10 EXPENSES. Irrespective of whether either of the Share Closing
is effected, each party shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement.
6.11 ALTERNATIVE DISPUTE RESOLUTION. The parties shall attempt to
resolve amicably disputes arising between them regarding the validity,
construction, enforceability or performance of the terms of this Agreement and
any differences or disputes in the interpretation of the rights, obligations,
liabilities and/or remedies under this Agreement, that have been identified in a
written notice from one party to the other, by good faith settlement discussions
between the Senior Vice President, Pharmaceutical Operations of Abbott and the
Chief Executive Officer of ABS. The parties agree that any dispute that arises
in connection with the Agreement, that cannot be resolved amicably by such
representatives within thirty (30) days after the receipt of such written
notice, shall be resolved by binding Alternative Dispute Resolution in the
manner described in EXHIBIT C to the License Agreement.
6.12 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of ABS and Abbott. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities and ABS.
6.13 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.14 FURTHER ASSURANCES. ABS and Abbott shall do and perform or
cause to be performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments or documents as the
other party may reasonably request from time to time in order to carry out the
intent and purposes of this Agreement and the consummation of the transactions
contemplated by the Agreement. Neither ABS nor Abbott shall voluntarily
undertake any course of action inconsistent with the satisfaction of the
requirements applicable to them as set forth in this Agreement, and each shall
promptly do all such acts and take all such measures as may be appropriate to
enable them to perform as early as practicable their obligations under this
Agreement.
9
<PAGE> 10
6.15 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create
or be deemed to create any rights in any person or entity not a party to his
Agreement.
6.16 MUTUAL DRAFTING. This Agreement is the joint product of ABS and
Abbott and each provision of the Agreement has been subject to consultation,
negotiation and agreement of ABS and Abbott and their respective legal counsel
and advisers and any rule of construction that a document shall be interpreted
or construed against the drafting party shall not apply.
6.17 FINDER'S FEE.
(a) Each party represents that it neither is nor will be obligated
for any finder's fee or commission in connection with this transaction. Abbott
agrees to indemnify and hold harmless ABS from any liability for any commission
or compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which such Abbott or
any of its officers, partners, employees or representatives is responsible.
(b) ABS agrees to indemnify and hold harmless Abbott from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which ABS or any of its officers, employees or representatives is
responsible.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AMERICAN BIOGENETIC SCIENCES, INC.
By: _________________________________
Alfred J. Roach
Chairman
ABBOTT LABORATORIES:
By:: _________________________________
Title: _______________________________
11
