ACCORD AND SATISFACTION AGREEMENT
by and among
Seragen, Inc.
Seragen Technology, Inc.
and
Trustees of Boston University
Seragen LLC
Marathon Biopharmaceuticals, LLC
United States Surgical Corporation
Xxxx X. Xxxxxx
Turi Xxxxxxxx
Xxxxxx X. X. and Xxxxxxx X. Xxxxxxx
Reed R. Prior
Xxxx X. Xxxxxxx, Ph.D.
Xxxxxxxxx X. Xxxx
Xxxxxx X. Xxxxx
Shoreline Pacific Institutional Finance
Xxxxxx Brothers Inc.
000 Xxxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Corp.
660 Corporation
Dated as of May 11, 1998
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . 3
CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Series B Shares . . . . . . . . . . . . . . . . . . . . . 4
Series C Shares . . . . . . . . . . . . . . . . . . . . . 5
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 6
Service Agreement . . . . . . . . . . . . . . . . . . . . 7
USSC Evaluation License . . . . . . . . . . . . . . . . . 8
Executive Compensation . . . . . . . . . . . . . . . . . . 8
Shoreline . . . . . . . . . . . . . . . . . . . . . . . .10
Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 1 -- SATISFACTION OF CLAIMS . . . . . . . . . . . . . . . .11
1.1 Satisfaction of Claims Related to Series B Stock . . . . .11
1.2 Satisfaction of Claims Related to Series C Stock . . . . .11
1.3 Satisfaction of Warrant Claims . . . . . . . . . . . . . .12
1.4 Satisfaction of Technology Agreement Claims . . . . . . .12
1.5 Satisfaction of Service Agreement Claims . . . . . . . . .12
1.6 Satisfaction of USSC Evaluation License Claims . . . . . .13
1.7 Satisfaction of Executive Compensation Claims . . . . . .13
1.8 Satisfaction of Shoreline Claims . . . . . . . . . . . . .13
1.9 Satisfaction of Xxxxxx Claims . . . . . . . . . . . . . .14
SECTION 2 -- RELEASE . . . . . . . . . . . . . . . . . . . . . . . .14
2.1 Release of Seragen and STI . . . . . . . . . . . . . . . .14
2.2 Effectiveness of Release . . . . . . . . . . . . . . . . .15
2.3 Survival of Release . . . . . . . . . . . . . . . . . . .15
SECTION 3 -- TERM . . . . . . . . . . . . . . . . . . . . . . . . .15
3.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.2 Termination . . . . . . . . . . . . . . . . . . . . . . .15
3.3 Effect of Termination . . . . . . . . . . . . . . . . . .15
SECTION 4 -- FORBEARANCE . . . . . . . . . . . . . . . . . . . . . .16
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SECTION 5 -- REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . .16
5.1 Mutual Representations and Warranties . . . . . . . . . .16
5.2 Representations and Warranties of Seragen and STI . . . .17
5.3 Representations and Warranties of Boston University,
BU Holding, Marathon, USSC, Shoreline and Xxxxxx . . . . .18
5.4 Representations and Warranties of Hirsch,
Josefsen, the Cassidys, Prior, Xxxxxxx, Chen and Crane . .19
SECTION 6 -- CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . .20
6.1 Non-Interference . . . . . . . . . . . . . . . . . . . . .20
6.2 Amendments to Merger Agreement . . . . . . . . . . . . . .20
6.3 Assignments of Claims . . . . . . . . . . . . . . . . . .20
SECTION 7 -- NO ADMISSION . . . . . . . . . . . . . . . . . . . . .21
SECTION 8 -- COMPLIANCE WITH AGREEMENTS. . . . . . . . . . . . . . .21
8.1 Representations and Warranties in Marathon Agreement . . .21
8.2 Compliance with Marathon Agreement . . . . . . . . . . . .21
SECTION 9 -- INDEMNIFICATION OF MARATHON, 520 COMMONWEALTH
AND 660 CORP . . . . . . . . . . . . . . . . . . . . . .21
SECTION 10 -- ARBITRATION . . . . . . . . . . . . . . . . . . . . .22
10.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . .22
10.2 Injunctive Relief . . . . . . . . . . . . . . . . . . . .22
SECTION 11 -- FURTHER ASSURANCES . . . . . . . . . . . . . . . . . .22
SECTION 12 -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . .23
12.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . .23
12.2 Modification . . . . . . . . . . . . . . . . . . . . . . .23
12.3 Governing Law . . . . . . . . . . . . . . . . . . . . . .23
12.4 Delay of No Effect . . . . . . . . . . . . . . . . . . . .23
12.5 Attorneys Fees and Other Costs . . . . . . . . . . . . . .23
12.6 No Third-Party Beneficiary . . . . . . . . . . . . . . . .23
12.7 Binding Effect . . . . . . . . . . . . . . . . . . . . . .23
12.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . .24
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12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . .24
12.10 Signatures . . . . . . . . . . . . . . . . . . . . .24
12.11 Headings . . . . . . . . . . . . . . . . . . . . . .24
12.12 Inconsistent Provisions . . . . . . . . . . . . . . .24
12.13 No Party Deemed Drafter . . . . . . . . . . . . . . .24
12.14 Notices . . . . . . . . . . . . . . . . . . . . . . .24
12.15 Incorporation of Recitals . . . . . . . . . . . . . . . .29
ACCORD AND SATISFACTION AGREEMENT
This Accord and Satisfaction Agreement (the "Agreement") is made and
entered into as of May 11, 1998 by and among
SERAGEN, INC. ("Seragen") and SERAGEN TECHNOLOGY, INC., ("STI"), as parties of
the first part,
TRUSTEES OF BOSTON UNIVERSITY ("Boston University"); SERAGEN LLC ("BU
Holding"); MARATHON BIOPHARMACEUTICALS, LLC ("Marathon"); UNITED STATES
SURGICAL CORPORATION ("USSC"); XXXX X. XXXXXX ("Xxxxxx"); XXXX XXXXXXXX
("Xxxxxxxx"); XXXXXX X.X. AND XXXXXXX X. XXXXXXX (the "Cassidys"); REED R.
PRIOR ("Prior"); XXXX X. XXXXXXX, PH.D. ("Xxxxxxx"); XXXXXXXXX X. XXXX
("Xxxx"); XXXXXX X. XXXXX ("Xxxxx"); SHORELINE PACIFIC INSTITUTIONAL FINANCE
("Shoreline"); and XXXXXX BROTHERS INC. ("Lehman"; Boston University, BU
Holding, Marathon, USSC, Hirsch, Josefsen, the Cassidys, Prior, Nichols, Chen,
Crane, Shoreline and Xxxxxx, collectively, the "Third Parties"), as parties of
the second part, and
000 XXXXXXXXXXXX XXXXXX XXXX XXXXXX CORP. ("520 Commonwealth") and 660
CORPORATION ("660 Corp"), as parties of the third part.
The Seragen, STI, the Third Parties, 520 Commonwealth, and 660 Corp are
hereinafter referred to collectively as the "parties."
RECITALS
PARTIES
A. Seragen is a Delaware corporation with a principal place of
business at 00 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000. STI is a
Delaware corporation with a principal place of business at 00 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and is a subsidiary of Seragen.
B. Boston University is a Massachusetts not-for-profit
corporation having a principal place of business at 000 Xxxxxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000.
C. BU Holding is a Massachusetts limited liability company
having a principal place of business at 000 Xxx Xxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000. BU Holding is an indirect wholly-owned subsidiary of
Boston University.
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D. Marathon is a Massachusetts limited liability company having
a principal place of business at 00 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx
00000. Marathon is an indirect wholly-owned subsidiary of Boston University.
E. USSC is a Delaware corporation having a principal place of
business at 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000.
X. Xxxxxx is an individual having an address at c/o United
States Surgical Corporation, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000.
X. Xxxxxxxx is an individual having an address at c/o United
States Surgical Corporation, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000.
H. The Cassidys are individuals having an address at 000 00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
I. Prior is an individual having an address at c/o Seragen,
Inc., 00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
X. Xxxxxxx is an individual having an address at c/o Seragen,
Inc., 00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
X. Xxxx is an individual having an address at c/o Seragen, Inc.,
00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
X. Xxxxx is an individual having an address at c/o Seragen,
Inc., 00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
M. Shoreline is a California sole proprietorship having a
principal place of business at 0 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxxxx 00000.
X. Xxxxxx is a Delaware corporation having a principal place of
business at 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
O. 520 Commonwealth is a Massachusetts corporation having a
principal place of business at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000.
P. 660 Corp is a Massachusetts corporation having a principal
place of business at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
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THE MERGER AGREEMENT
Q. Seragen and LIGAND PHARMACEUTICALS INCORPORATED, a Delaware
corporation with a principal place of business at 00000 Xxxxxxx Xxxxxx Xxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000 ("Ligand") have negotiated an agreement, of even
date herewith (the "Merger Agreement"), providing for the merger of Seragen
with and into KNIGHT ACQUISITION CORPORATION, a Delaware corporation having a
principal place of business at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000 ("Merger Sub"), on the terms and for the consideration and
under the conditions set forth in the Merger Agreement (the "Merger
Transaction"). The Merger Agreement provides for the payment of certain
"Closing Consideration" (as defined in the Merger Agreement) and "Milestone
Consideration" (as defined in the Merger Agreement; the Closing Consideration
and the Milestone Consideration, together, the "Merger Consideration"). The
Merger Agreement is attached to this Agreement as Exhibit A.
R. Marathon, 520 Commonwealth, and 660 Corp (collectively, the
"BU Parties") and Ligand have negotiated an agreement, of even date herewith
(the "Marathon Agreement"), providing for the purchase by Ligand of
substantially all of the assets of Marathon. Each of the BU Parties is
wholly-owned, directly or indirectly, by Boston University.
S. The obligation of Ligand to consummate the transactions
contemplated by the Merger Agreement is conditioned on those representations
and warranties made by the BU Parties pursuant to the Marathon Agreement being
true and correct as of the Closing Date (as defined in the Merger Agreement)
with the same effect as thought such representations and warranties had been
made on and as of such date and on the BU Parties having performed, as of the
Closing Date, all of those covenants set forth in the Marathon Agreement
required to be performed by the BU Parties on or prior to the Closing Date.
Seragen is unwilling to enter into the Merger Agreement without assurance that
the aforesaid conditions to Ligand's obligations to consummate the
transactions contemplated by the Merger Agreement will be fulfilled at the
Closing Date. In order to induce Seragen to enter into the Merger Agreement,
the BU Parties are willing to provide such assurance.
T. The BU Parties are unwilling to enter into the Marathon
Agreement without certain indemnities from the Third Parties with respect to
the representations and warranties to be given by the BU Parties pursuant to
the Merger Agreement.
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CLAIMS
Series B Shares
U. BU Holding owns 11,800 shares of Series B preferred stock,
par value $.01 per share, of Seragen (the "Series B Stock"), with a
liquidation preference of $1,000 per share plus accrued and unpaid dividends
from the date of issuance and which are convertible by their terms into common
stock, par value $.01 per share, of Seragen (the "Common Stock"). As of
December 31, 1997, accrued and unpaid dividends on the Series B Stock owned by
BU Holding were $1,459,201. The Series B Stock is entitled to receive a
cumulative cash dividend payable quarterly in arrears on the last day of
March, June, September, and December of each year at an annual rate equal to
the prime rate plus 1 1/2% through June 1999 and at an increasing percentage
rate thereafter up to a maximum rate of the prime rate plus 5% in July 2003.
X. Xxxxxx owns 7,000 shares of Series B Stock. As of December
31, 1997, accrued and unpaid dividends on the Series B Stock owned by Xxxxxx
were $865,628. The Series B Stock is entitled to receive a cumulative cash
dividend payable quarterly in arrears on the last day of March, June,
September, and December of each year at an annual rate equal to the prime rate
plus 1 1/2% through June 1999 and at an increasing percentage rate thereafter
up to a maximum rate of the prime rate plus 5% in July 2003.
X. Xxxxxxxx owns 3,000 shares of Series B Stock. As of December
31, 1997, accrued and unpaid dividends on the Series B Stock owned by Josefsen
were $370,983. The Series B Stock is entitled to receive a cumulative cash
dividend payable quarterly in arrears on the last day of March, June,
September, and December of each year at an annual rate equal to the prime rate
plus 1 1/2% through June 1999 and at an increasing percentage rate thereafter
up to a maximum rate of the prime rate plus 5% in July 2003.
X. The Cassidys own 2,000 shares of Series B Stock. As of
December 31, 1997, accrued and unpaid dividends on the Series B Stock owned by
Cassidys were $247,322. The Series B Stock is entitled to receive a
cumulative cash dividend payable quarterly in arrears on the last day of
March, June, September, and December of each year at an annual rate equal to
the prime rate plus 1 1/2% through June 1999 and at an increasing percentage
rate thereafter up to a maximum rate of the prime rate plus 5% in July 2003.
Y. BU Holding owns 11,800 shares of the Class B common stock,
par value $.01 per share, of STI (the "STI Class B Common Stock").
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X. Xxxxxx owns 7,000 shares of STI Class B Common Stock.
AA. Josefsen owns 3,000 shares of STI Class B Common Stock.
BB. The Cassidys own 2,000 shares of STI Class B Common Stock.
CC. On June 28, 1996, Seragen transferred all of its existing and
future United States patents and patent applications (the "Patents") to STI in
exchange for shares of the Class A common stock, par value $.01 per share, of
STI.
DD. Shares of the STI Class B Common Stock are entitled to
cumulative dividends equal to any royalty payable to STI under the Irrevocable
License Agreement between Seragen and STI, dated June 28, 1996 (the
"Irrevocable License Agreement"). The STI Class B Common Stock is required to
be redeemed upon the redemption or conversion of shares of Series B Stock in a
number equal to the number of shares of Series B Stock redeemed or converted.
EE. Under the terms of the Irrevocable License Agreement, Seragen
is obligated to pay quarterly dividends to STI in an amount equal to the
amount of any dividends that the holders of shares of the Series B Stock are
entitled to receive but have not received by the royalty due date (which is
one day after each quarterly dividend payment date for the Series B Stock).
FF. On July 1, 1996, STI executed a collateral assignment of the
Patents (the "Collateral Assignment of Patents") in favor of the holders of
the STI Class B Common Stock. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. (the "Escrow Agent") holds the Collateral Assignment of Patents under an
escrow agreement dated July 1, 1996 (the "Escrow Agreement"). The Escrow
Agent is required to deliver the Collateral Assignment of Patents to the
holders of the STI Class B Common Stock if dividends on the STI Class B Common
Stock are in arrears and STI fails, for 60 days, after the receipt of notice
from the holders of the STI Class B Common Stock, to pay the dividends due.
GG. The holders of the STI Class B Common Stock executed a
reassignment of the Patents (the "Reassignment of Patents") to STI, which also
is being held by the Escrow Agent. The Escrow Agent is obligated to deliver
the Reassignment of Patents to STI upon the redemption by STI of all of the
STI Class B Common Stock.
Series C Shares
HH. BU Holding owned 5,000 shares of Series C preferred stock, par
value $.01 per share, of Seragen (the "Series C Stock"), which
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converted automatically by their terms into 3,360,625 shares of Common Stock
(the "Conversion Shares"), the maximum number of shares of Common Stock into
which the Series C Stock could convert by its terms, on March 30, 1998. BU
Holding is as of the date hereof the record owner of the Conversion Shares.
Under the terms of the Certificate of Designation for the Series C Stock,
Seragen was obligated to pay BU Holding $1,150 per share for each share of
Series C Stock that Boston University was unable to convert as a result of
this limitation. As of the date hereof, Seragen has not paid this amount and
is therefore obligated to pay to BU Holding $4,530,461 (the "Series C Debt
Amount").
Warrants
II. On May 31, 1995, Seragen issued to BU Holding warrants to
purchase 1,376,666 shares of Common Stock at a purchase price of $4.75 per
share. On June 28, 1996, Seragen issued to Boston University warrants to
purchase 2,950,000 shares of Common Stock at a purchase price of $4.00 per
share, subject to anti-dilution provisions. As of December 31, 1997, BU
Holding had received warrants to purchase an additional 4,354,008 shares of
Common Stock related to the anti-dilution provisions. All warrants held by BU
Holding for the purchase of capital stock of Seragen, whether outstanding as
of the date hereof or issued after the date hereof, are referred to as the
"Boston University Warrants."
JJ. On May 31, 1995, Seragen issued to Xxxxxx warrants to
purchase 816,666 shares of Common Stock at a purchase price of $4.75 per
share. On June 28, 1996, Seragen issued to Xxxxxx warrants to purchase
1,750,000 shares of Common Stock at a purchase price of $4.00 per share,
subject to anti-dilution provisions. As of December 31, 1997, Xxxxxx had
received warrants to purchase an additional 2,582,886 shares of Common Stock
related to the anti-dilution provisions. All warrants held by Xxxxxx for the
purchase of capital stock of Seragen, whether outstanding as of the date
hereof or issued after the date hereof, are referred to as the "Xxxxxx
Warrants."
KK. On May 31, 1995, Seragen issued to Josefsen warrants to
purchase 350,000 shares of Common Stock at a purchase price of $4.75 per
share. On June 28, 1996, Seragen issued to Josefsen warrants to purchase
750,000 shares of Common Stock at a purchase price of $4.00 per share, subject
to anti-dilution provisions. As of December 31, 1997, Josefsen had received
warrants to purchase an additional 1,106,951 shares of Common Stock related to
the anti-dilution provisions. All warrants held by Josefsen for the purchase
of capital stock of Seragen, whether outstanding as of the date hereof or
issued after the date hereof, are referred to as the "Josefsen Warrants."
LL. On May 31, 1995, Seragen issued to the Cassidys warrants to
purchase 233,332 shares of Common Stock at a purchase price of $4.75
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per share. On June 28, 1996, Seragen issued to the Cassidys warrants to
purchase 500,000 shares of Common Stock at a purchase price of $4.00 per
share, subject to anti-dilution provisions. As of December 31, 1997, the
Cassidys had received warrants to purchase an additional 737,967 shares of
Common Stock related to the anti-dilution provisions. All warrants held by
the Cassidys for the purchase of capital stock of Seragen, whether outstanding
as of the date hereof or issued after the date hereof, are referred to as the
"Xxxxxxx Warrants."
MM. On July 31, 1997, Seragen issued to USSC warrants to
purchase 500,000 shares of Common Stock at a purchase price of $0.5625 per
share. All warrants held by USSC for the purchase of capital stock of
Seragen, whether outstanding as of the date hereof or issued after the date
hereof, are referred to as the "USSC Warrants."
Technology Purchase and Royalty Agreement
NN. Boston University and Seragen are parties to a Technology
Purchase and Royalty Agreement, dated January 28, 1998 (the "Technology
Agreement"), pursuant to which Seragen has agreed to pay Boston University
certain royalties and granted Boston University a security interest in the
Technology (as defined in the Technology Agreement) transferred by Boston
University to Seragen pursuant to the Technology Agreement.
Service Agreement
OO. Boston University and Seragen are parties to a Service
Agreement, dated as of February 14, 1997 (the "Service Agreement"). Effective
December 31, 0000, Xxxxxx Xxxxxxxxxx, as permitted by the terms of the Service
Agreement, assigned the Service Agreement to Marathon, and Marathon assumed
Boston University's obligations under the Service Agreement as of such date.
Under the terms of the Service Agreement, Boston University or its assignee is
required to provide certain specified research, development, clinical trial,
and manufacturing services to Seragen in exchange for "Technology Service
Fees" of $5,521,342 during the first twelve months of the Service Agreement
and $6,605,651 during the second twelve months of the Service Agreement,
subject to proration for partial years of services. As of the date hereof,
Seragen is obligated to pay to Boston University $4,840,629 for accrued but
unpaid Technology Service Fees relating to the period February 14, 1997,
through December 31, 1997, and to Marathon $1,561,137 for accrued but unpaid
Technology Service Fees for the period January 1, 1998, through March 31,
1998, and additional Technology Service Fees for the period April 1, 1998,
through the date hereof.
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USSC Evaluation License
PP. Seragen and USSC are parties to an Evaluation License and
Option Agreement, dated as of July 31, 1997 (the "Evaluation License").
Pursuant to the Evaluation License, Seragen granted to USSC an option to
obtain exclusive worldwide rights to Seragen's DAB389EGF molecule (the "USSC
Technology"), together with the USSC Warrants, in exchange for a payment by
USSC to Seragen of $5,000,000. In the event USSC chooses not to acquire the
license, Seragen will be obligated to issue to USSC $5,000,000 worth of Common
Stock (the "USSC Shares").
Executive Compensation
QQ. Seragen and Prior are parties to an employment agreement
dated as of November 6, 1997, as amended December 18, 1996, January 6, 1997,
January 31, 1997, March 28, 1997, April 30, 1997, September 30, 1997 (two
amendments of this date), and February 5, 1998 (the "Prior Employment
Agreement").
RR. As of December 31, 1997, Seragen had granted to Prior
options to purchase 11,996,208 shares of Common Stock. Pursuant to the
anti-dilution provisions of the Prior Employment Agreement, Prior may be
entitled to receive additional options. Certain options (the "Prior ISOs")
granted by Seragen to Prior qualify or will qualify as incentive stock options
for purposes of the Internal Revenue Code. All options held by Prior for the
purchase of capital stock of Seragen, whether outstanding as of the date
hereof or issued after the date hereof, are referred to as the "Prior
Options."
SS. The Prior Employment Agreement provides for payment to Prior
of an asset value realization bonus in the event of a change in ownership of
Seragen, as defined, in an amount equal to 8.5% of the net proceeds from the
change in ownership transaction. Under the Prior Employment Agreement, the
Prior Asset Value Realization Bonus is to be reduced by the amount of gain, if
any, recognized by Prior as a result of exercise of the Prior Options. That
portion of the asset value realization bonus payable by Seragen to Prior
pursuant to the Prior Employment Agreement that is in excess of the amount of
gain recognized by Prior as a result of the exercise of the Prior ISOs is
referred to herein as the "Prior Asset Value Realization Bonus."
TT. Seragen and Xxxxxxx are parties to an amended and restated
employment agreement dated as of September 22, 1997, as amended February 23,
1998 (the "Xxxxxxx Employment Agreement").
UU. As of December 31, 1997, Seragen had granted to Xxxxxxx
options to purchase 2,850,098 shares of Common Stock. Pursuant to the
anti-dilution provisions of the Xxxxxxx Employment Agreement, Xxxxxxx may
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be entitled to receive additional options. Certain options (the "Xxxxxxx
ISOs") granted by Seragen to Xxxxxxx qualify or will qualify as incentive
stock options for purposes of the Internal Revenue Code. All options held by
Xxxxxxx for the purchase of capital stock of Seragen, whether outstanding as
of the date hereof or issued after the date hereof, are referred to as the
"Xxxxxxx Options."
VV. The Xxxxxxx Employment Agreement provides for payment to
Xxxxxxx of an asset value realization bonus in the event of a change in
ownership of Seragen, as defined, in an amount equal to 2.75% of the net
proceeds from the change in ownership transaction. In the event of a change in
ownership after which the purchaser makes Xxxxxxx a bona fide employment
offer, as defined in the Xxxxxxx Employment Agreement, the asset value
realization bonus will be payable to her as follows: 25% on the closing of
the change in ownership, 25% two months after closing, 25% four months after
closing, and 25% six months after closing, the obligation of Seragen to make
each such payment in respect of the asset value realization bonus being
subject to Xxxxxxx' continued employment with the purchaser at the time the
payment falls due. If the purchaser terminates Xxxxxxx' employment without
just cause, as defined in the Xxxxxxx Employment Agreement, or if Xxxxxxx
terminates her employment with the purchaser for good reason, as defined in
the Xxxxxxx Employment Agreement, Xxxxxxx is entitled to receive the entire
unpaid balance of the asset value realization bonus as a lump sum payment.
Under the Xxxxxxx Employment Agreement, the asset value realization bonus is
to be reduced by the amount of gain, if any, recognized by Xxxxxxx as a result
of exercise of the Xxxxxxx Options. That portion of the asset value
realization bonus payable by Seragen to Xxxxxxx pursuant to the Xxxxxxx
Employment Agreement that is in excess of the amount of gain recognized by
Xxxxxxx as a result of the exercise of the Xxxxxxx ISOs is referred to herein
as the "Xxxxxxx Asset Value Realization Bonus."
WW. Seragen and Chen are parties to an employment agreement (the
"Chen Employment Agreement") dated as of January 15, 1997, as amended March
28, 1997, September 3, 1997, September 30, 1997, and February 17, 1998.
XX. As of December 31, 1997, Seragen had granted to Chen options
to purchase 2,894,174 shares of Common Stock. Pursuant to the anti-dilution
provisions of the Chen Employment Agreement, Chen may be entitled to receive
additional options. Certain options (the "Chen ISOs") granted by Seragen to
Chen qualify or will qualify as incentive stock options for purposes of the
Internal Revenue Code. All options held by Chen for the purchase of capital
stock of Seragen, whether outstanding as of the date hereof or issued after
the date hereof, are referred to as the "Chen Options."
YY. The Chen Employment Agreement provides for payment to Chen
of an asset value realization bonus in the event of a change in ownership of
Seragen, as defined, in an amount equal to 2.0% of the net
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proceeds from the change in ownership transaction. Under the Chen Employment
Agreement, the Chen Asset Value Realization Bonus is to be reduced by the
amount of gain, if any, recognized by Chen as a result of exercise of the Chen
Options. That portion of the asset value realization bonus payable by Seragen
to Chen pursuant to the Chen Employment Agreement that is in excess of the
amount of gain recognized by Chen as a result of the exercise of the Chen ISOs
is referred to herein as the "Chen Asset Value Realization Bonus."
ZZ. Seragen and Crane are parties to an employment agreement (the
"Crane Employment Agreement") dated as of April 30, 1998.
AAA. As of the date hereof, Seragen has granted to Crane options
to purchase 3,690,962 shares of Common Stock (the "Crane Options"). Pursuant
to the anti-dilution provisions of the Crane Employment Agreement, Crane may
be entitled to receive additional options. Certain options (the "Crane ISOs")
granted by Seragen to Crane qualify or will qualify as incentive stock options
for purposes of the Internal Revenue Code. All options held by Crane for the
purchase of capital stock of Seragen, whether outstanding as of the date
hereof or issued after the date hereof, are referred to as the "Crane
Options."
BBB. The Crane Employment Agreement provides for payment to
Crane of an asset value realization bonus in the event of a change in
ownership of Seragen, as defined, in an amount equal to 2.75% of the net
proceeds from the change in ownership transaction. Under the Crane Employment
Agreement, the Crane Asset Value Realization Bonus is to be reduced by the
amount of gain, if any, recognized by Crane as a result of exercise of
options. That portion of the asset value realization bonus payable by Seragen
to Crane pursuant to the Crane Employment Agreement that is in excess of the
amount of gain recognized by Crane as a result of the exercise of the Crane
ISOs is referred to herein as the "Crane Asset Value Realization Bonus."
Shoreline
CCC. Seragen and Shoreline entered into an engagement letter,
dated as of October 1, 1997 (the "Shoreline Engagement Letter"), relating to a
proposed financing transaction. Pursuant to the Shoreline Engagement Letter,
Seragen is obligated to pay to Shoreline a fee of 1% of the aggregate purchase
price paid in any establishment of a strategic investment transaction, as
defined in the Shoreline Engagement Letter. The Shoreline Engagement Letter
also provides that Seragen pay Shoreline a fee of $100,000 on October 1, 1998,
in the event that no other fees are due to Shoreline under the terms of the
Shoreline Engagement Letter.
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Xxxxxx
DDD. Seragen and Xxxxxx entered into a letter agreement, dated as
of April 30, 1998 (the "Xxxxxx Letter Agreement"), engaging Xxxxxx to provide
certain financial advisory services to Seragen. Pursuant to the Xxxxxx Letter
Agreement, Seragen is obligated to pay to Xxxxxx a fee of 2% of the
consideration involved in a sale of Seragen, as defined in the Xxxxxx Letter
Agreement.
NOW, THEREFORE, for and in consideration of the foregoing premises
and the mutual covenants and promises of the parties to this Agreement, and
for other good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, the parties to this Agreement agree as follows:
SECTION 1 -- SATISFACTION OF CLAIMS
1.1 Satisfaction of Claims Related to Series B Stock. BU
Holding, Xxxxxx, Josefsen and the Cassidys hereby agree to accept the right to
receive the Merger Consideration allocated to them in the Merger Agreement as
full and complete satisfaction for any and all Claims that they may have as of
the Closing Date (as defined in the Merger Agreement) against Seragen and STI
with respect to or arising under the Series B Stock, the STI Class B Common
Stock and the Collateral Assignment of Patents. BU Holding, Hirsch, Josefsen,
and the Cassidys agree that, at the Effective Time, all shares of Series B
Stock and STI Class B Common Stock held by them shall be extinguished,
terminated, and of no further force and effect, without any further action on
the part of any person. Each of BU Holding, Hirsch, Josefsen, and the
Cassidys agrees to deliver and relinquish to Seragen at the Closing (as
defined in the Merger Agreement) certificates evidencing all shares of Series
B Stock and STI Class B Common Stock then held by them. Each such certificate
shall be duly endorsed in blank for transfer or accompanied by a duly executed
stock power in blank, with signatures guaranteed by a national banking
association or a member of the New York Stock Exchange. BU Holding, Hirsch,
Josefsen, and the Cassidys hereby agree that, at the Effective Time, they
shall be deemed for all purposes to have released any and all rights held by
them in or pursuant to the Collateral Assignment of Patents. BU Holding,
Xxxxxx, Xxxxxxxx and the Cassidys shall, and hereby do, instruct the Escrow
Agent to deliver the Reassignment of Patents to STI at the Effective Time.
1.2 Satisfaction of Claims Related to Series C Stock. BU
Holding hereby agrees to accept the right to receive the Merger Consideration
allocated to it in the Merger Agreement as full and complete satisfaction of
Seragen's obligation to pay to BU Holding the Series C Debt Amount. In
addition, BU Holding agrees to surrender to Seragen for
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cancellation, immediately prior to the Effective Time and without any
additional consideration, that number of shares of Common Stock that is equal
to the number of Conversion Shares delivered by Seragen to BU Holding in
connection with the conversion of the Series C Stock.
1.3 Satisfaction of Warrant Claims. BU Holding, Hirsch,
Josefsen, the Cassidys, and USSC hereby agree to accept the right to receive
the Merger Consideration allocated to them in the Merger Agreement as full and
complete satisfaction for any and all Claims that they may have as of the
Closing Date against Seragen and STI with respect to or arising under,
respectively, the Boston University Warrants, the Xxxxxx Warrants, the
Josefsen Warrants, the Xxxxxxx Warrants, and the USSC Warrants. BU Holding,
Hirsch, Josefsen, the Cassidys, and USSC agree that, at the Effective Time,
all Boston University Warrants, Xxxxxx Warrants, Josefsen Warrants, Xxxxxxx
Warrants, and USSC Warrants shall be extinguished, terminated and of no
further force or effect, without any further action on the part of any person.
Each of BU Holding, Hirsch, Josefsen, the Cassidys, and USSC shall at the
Closing relinquish and surrender unexercised to Seragen all, respectively,
Boston University Warrants, Xxxxxx Warrants, Josefsen Warrants, Xxxxxxx
Warrants and USSC Warrants.
1.4 Satisfaction of Technology Agreement Claims. Boston
University hereby agrees to accept the right to receive the Merger
Consideration allocated to it in the Merger Agreement as full and complete
satisfaction for any Claims it may have against Seragen with respect to or
arising under the Technology Agreement, including, without limitation,
Seragen's obligation to pay to it royalties pursuant to the Technology
Agreement, and agrees that, as of the Effective Time, the Technology
Agreement, including, without limitation, Seragen's obligations to pay
royalties pursuant thereto, whether arising on or prior to such time, and the
security interest granted by Seragen pursuant thereto, shall be terminated.
1.5 Satisfaction of Service Agreement Claims.
1.5.1 Boston University hereby agrees to accept the right
to receive the Closing Consideration allocated to it in the Merger Agreement
as full and complete satisfaction of Seragen's obligation to pay to it any and
all Technology Service Fees, Additional Service Fees, royalties, or any other
amounts whatsoever that are payable under the terms of the Service Agreement
for the period from February 14, 1997, through December 31, 1997.
1.5.2 Marathon hereby agrees to accept the right to receive
the Closing Consideration allocated to it in the Merger Agreement as full and
complete satisfaction of Seragen's obligation to pay to it any and all
Technology Service Fees, Additional Service Fees, royalties, or
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any other amounts whatsoever that are payable under the terms of the Service
Agreement for the period from January 1, 1998, through the Closing Date.
1.6 Satisfaction of USSC Evaluation License Claims. USSC hereby
agrees to accept the right to receive the Closing Consideration allocated to
it in the Merger Agreement as full and complete satisfaction for any and all
Claims that it may have against Seragen with respect to or arising under the
Evaluation License and agrees that, as of the Effective Time, the Evaluation
License, including, without limitation, any right that USSC may have to
receive shares of Common Stock, shall be terminated.
1.7 Satisfaction of Executive Compensation Claims.
1.7.1 Prior, Nichols, Chen, and Crane hereby agree to
accept the right to receive the Merger Consideration allocated to them in the
Merger Agreement as full and complete satisfaction of Seragen's obligations to
them in connection with, respectively, the Prior Asset Value Realization
Bonus, the Xxxxxxx Asset Value Realization Bonus, the Chen Asset Value
Realization Bonus, and the Crane Asset Value Realization Bonus (collectively,
the "Asset Value Realization Bonuses") and, respectively, the Prior Options
other than the Prior ISOs, Xxxxxxx Options other than the Xxxxxxx ISOs, Chen
Options other than the Chen ISOs, and Crane Options other than the Crane ISOs
(collectively, the "Executive Options").
1.7.2 Any reduction pursuant to the terms hereof from the
amounts that Prior, Xxxxxxx, Xxxx and Xxxxx would have been entitled to
receive under their respective employment agreement in respect of the Asset
Value Realization Bonuses and the Executive Options shall be deemed to be a
reduction first in amounts to which each such person was entitled in respect
of his Asset Value Realization Bonus and thereafter, to the extent of any
further reduction, a reduction in amounts to which such person was entitled in
respect of his Executive Options.
1.7.3 Prior, Xxxxxxx, Chen and Crane hereby agree that at
the Effective Time each of the, respectively, Prior ISOs, Xxxxxxx ISOs, Xxxx
ISOs, and Crane ISOs shall, to the extent not exercised at or prior to such
time, be deemed for all purposes to have been relinquished and surrendered
unexercised to Seragen and shall thereafter be deemed terminated,
extinguished, and of no further force or effect.
1.7.4 Nothing in this Section 1.6 shall be construed to
limit the right of Seragen to pay any Merger Consideration allocated to
Xxxxxxx in the Merger Agreement in accordance with and subject to the
provisions of Section 3.7 of the Xxxxxxx Employment Agreement.
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1.8 Satisfaction of Shoreline Claims. Shoreline hereby agrees
to accept the right to receive the Merger Consideration allocated to it in the
Merger Agreement as full and complete satisfaction of Seragen's obligations
pursuant to the Shoreline Engagement Letter to pay fees to Shoreline and to
reimburse Shoreline for its out-of-pocket expenses.
1.9 Satisfaction of Xxxxxx Claims. Xxxxxx hereby agrees to
accept the right to receive the Merger Consideration allocated to it in the
Merger Agreement as full and complete satisfaction of Seragen's obligations
pursuant to the Xxxxxx Letter Agreement to pay fees to Xxxxxx; provided,
however, that on or prior to Closing Date Seragen shall reimburse Xxxxxx in
cash for its reasonable out-of-pocket expenses incurred by Xxxxxx in
connection with the engagement contemplated by the Xxxxxx Letter Agreement.
SECTION 2 -- RELEASE
2.1 Release of Seragen and STI.
2.1.1 Release. Each of the Third Parties hereby releases
Seragen and STI and their current and past directors, officers, employees,
agents, representatives, successors and assigns from any and all Claims
relating to any act, omission or circumstance whatsoever from the beginning of
time to the date of this Agreement to the extent the same relates in any
manner whatsoever, directly or indirectly, to the operations of Seragen and
STI or the conduct of their business, including, without limitation, financing
and other transactions entered into by Seragen and STI or to which Seragen or
STI was a party, sales of assets by Seragen and STI, licensing by Seragen and
STI of their patents, trademarks, trade secrets and other intellectual
property, transactions between Seragen and STI and directors, officers or
shareholders, and affiliates thereof, of Seragen or STI, and any and all
issuances by Seragen and STI of securities. Without limiting the foregoing,
each of the Third Parties hereby releases Seragen and STI and their current
and past directors, officers, employees, agents, representatives, successors
and assigns from any and all Claims that any such Third Party may have in
respect of or relating to such Third Party's subscription for or purchase of
securities issued by Seragen or STI, including, without limitation, Claims
relating to any alleged fraud or misrepresentation to which any such party may
have been a party in connection with the issuance or sale of securities by
Seragen or STI.
2.1.2 Limitations on Release. The provisions of Section
2.1.1 shall not apply, or effect any release of, any Claim by any Third Party
(a) to enforce the terms of this Agreement or the Merger Agreement, (b) for
indemnification from Seragen or STI to which such Third Party may be entitled
as a consequence of such Third Party having served
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as an director, officer, employee or agent of Seragen or STI, whether such
right to indemnification arises pursuant to any provision of the charter or
bylaws of Seragen or STI, any provision of any employment agreement or other
contract to which such Third Party may be a party with Seragen or STI, any
provision of law, or otherwise, or (c) any Claim by any Third Party in respect
of unpaid salary, unpaid reimbursable commuting or living expenses, unpaid
severance, accrued vacation rights, or other employee benefits, and unpaid
reimbursable business expenses. The provisions of Section 2.1.1 are not
intended to, and shall not, effect the termination of any agreement or
contract between any Third Party and Seragen or STI, including, without
limitation, the Service Agreement, as the terms of the same apply following
the Effective Time. The provisions of this Section 2.1.2 are without
prejudice to the provisions of Section 1 hereof.
2.1.3 Definition. For purposes of this Agreement, "Claims"
means all actions, causes of action, suits, debts, liens, sums of money,
guarantees, warranties, demands, expenses, costs, attorneys' fees, judgments,
or other rights of any nature whatsoever, liquidated or unliquidated, fixed or
contingent, and whether or not matured.
2.2 Effectiveness of Release. The release for which provisions
is made in this Section 2 shall become effective on, and only on, the
occurrence of the Effective Time, failing which each such release shall be
deemed never to have occurred.
2.3 Survival of Release. Each of the parties expressly
acknowledges that it may hereafter discover Claims presently unknown or
unsuspected or facts different from or in addition to those which it now knows
or believes to be true with respect to the Claims released in this Agreement,
and each of the parties to this Agreement agrees that, notwithstanding the
discovery of such different or additional facts and/or Claims, the releases
set forth in this Section 2 shall survive the Effective Time and shall
continue in full force and effect.
SECTION 3 -- TERM
3.1 Term. This Agreement shall enter into effect as of the date
first set forth above and shall continue in full force and effect subject to
termination in accordance with the provisions of Section 3.2.
3.2 Termination. In the event that the Merger Agreement is
terminated by any party thereto in accordance with its terms, this Agreement
shall terminate. If this Agreement is terminated in accordance with this
Section 3.2, the effective date of termination shall be the "Termination
Date."
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3.3 Effect of Termination. Nothing in this Agreement shall be
construed to release any party from any obligation that matured under this
Agreement prior to the Termination Date or any breach of this Agreement that
occurred prior to the Termination Date.
SECTION 4 -- FORBEARANCE
All parties to this Agreement agree, until the earlier of the
Closing Date or the Termination Date, (a) to forbear from exercising any right
or remedy that they may now or in the future have with respect to any right or
claim that is the subject of the provisions of Section 1 hereof or is to be
released at the Effective Time pursuant to Section 2.1 hereof and (b) to
forbear from exercising any warrant or stock option or exercising any right or
remedy that they may now or in the future have under or pursuant to any
warrant agreement or stock option agreement.
SECTION 5 -- REPRESENTATIONS AND WARRANTIES
5.1 Mutual Representations and Warranties. As part of the
consideration for this Agreement and the undertakings of the parties to this
Agreement, each of the parties expressly represents and warrants to each other
party as follows:
5.1.1 Consideration. The consideration received and to be
received by it as set forth in this Agreement is full, sufficient, adequate,
and fair in all respects.
5.1.2 Title to Claims. It has not heretofore assigned,
sold, transferred, pledged or encumbered, or purported to assign, sell,
transfer, pledge or encumber, either in writing or otherwise, any right,
title, or interest it has or may have in any Claims it is settling, resolving,
or releasing pursuant to this Agreement. It has not heretofore created any
lien, encumbrance, or other right by which any other party may claim all or
any part of the claim(s) it is releasing under this Agreement. Without
limiting the foregoing, as of the date hereof, it is the sole owner,
beneficially and of record, of those securities, options and warrants of which
it is stated to be the owner in the recitals to this Agreement and it has not
assigned, transferred or encumbered any right under, pursuant to, or in
connection with any agreement identified in the recitals hereto to which it is
a party. Notwithstanding anything to the contrary contained in any other
section of this Agreement, it shall indemnify, defend, and hold harmless each
of the other parties to this Agreement from and against any Claims based on or
arising in connection with any such prior assignment, sale, transfer, lien,
encumbrance, or right, or any such purported assignment, sale, transfer, lien,
encumbrance, or right.
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5.1.3 Full Information. Before executing this Agreement,
it has been fully informed and has satisfied itself of the terms, contents,
conditions, and effects of this Agreement and any documents to be executed in
connection with this Agreement, and, before entering into this Agreement, it
has had and has taken full and complete advantage of the benefit and advice of
counsel of its own choosing; in connection therewith, it has relied solely and
completely on its own judgment and the judgment and advice of its own counsel
in entering into this Agreement.
5.1.4 No Additional Payments. No party to this Agreement
or anyone acting on behalf of any party to his Agreement has made any promise
or representation of any kind, nature, or character in connection with the
matters relating to this Agreement, on which any other party is relying in
entering into this Agreement, except as expressly stated or otherwise
contemplated in this Agreement. This Section 5.1.4 shall not negate the
effect of any representations, denominated as such, set forth in this
Agreement, including any such representation contained in the Recitals.
5.2 Representations and Warranties of Seragen and STI. Seragen
and STI each hereby represents and warrants to the Third Parties as follows:
5.2.1 Organization and Standing. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power and authority to
enter into, deliver and perform its obligations and undertakings under this
Agreement.
5.2.2 Validity. The execution, delivery and performance by
it of this Agreement have been duly authorized and approved by all necessary
corporate action. This Agreement has been duly executed and delivered by it.
This Agreement constitutes its valid and binding obligation, enforceable
against it in accordance with its terms, subject to laws of general
application affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
5.2.3 No Conflicts. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, by it do not and will not
(a) conflict with, or result in a breach of any of the
terms of, or constitute a default under, its certificate of incorporation,
statute of organization, or by-laws;
(b) conflict with or result in a breach of any of the
terms of, or constitute a default under, any agreement, instrument, covenant
or other restriction to which it is a party or by which any of its properties
or assets are bound, or
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(c) conflict with any law, rule, regulation, order or
decree applicable to it or by which it is bound;
except, in each instance, for such conflicts, breaches or defaults as would
not, individually or in the aggregate, adversely affect its ability to
consummate the transactions contemplated hereby or thereby or materially and
adversely affect its financial condition, business or assets.
5.2.4 Governmental Consents. Except for filings, consents,
permits, approvals, registrations, qualifications and authorizations which
have been made or obtained by it, no filing, consent, approval, registration,
qualification or authorization with or of any governmental authority is
required under existing laws, rules and regulations in connection with its
execution and delivery of this Agreement. Except as set forth or contemplated
in the Merger Agreement, no filing, consent, approval, registration,
qualification or authorization with or of any governmental authority is
required to be made by it under existing laws, rules or regulations in
connection with its consummation of the transactions contemplated hereby to be
consummated at or prior to the Effective Time.
5.3 Representations and Warranties of Boston University, BU
Holding, Marathon, USSC, Shoreline, Xxxxxx, 520 Commonwealth and 660 Corp.
Each of Boston University, BU Holding, Marathon, USSC, Shoreline, Xxxxxx, 520
Commonwealth and 660 Corp represents and warrants to the other parties as
follows:
5.3.1 Organization and Standing. It is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or other organization and
has the corporate or other power and authority to enter into, deliver and
perform its obligations and undertakings under this Agreement.
5.3.2 Validity. The execution, delivery and performance by
it of this Agreement have been duly authorized and approved by all necessary
corporate or other entity action. This Agreement has been duly executed and
delivered by it. This Agreement constitutes its valid and binding obligation,
enforceable against it in accordance with its terms, subject to laws of
general application affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
5.3.3 No Conflicts. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, by it do not and will not
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(a) conflict with, or result in a breach of any of the
terms of, or constitute a default under, its certificate of incorporation,
statute of organization, or by-laws;
(b) conflict with or result in a breach of any of the
terms of, or constitute a default under, any agreement, instrument, covenant
or other restriction to which it is a party or by which any of its properties
or assets are bound, or
(c) conflict with any law, rule, regulation, order or
decree applicable to it or by which it is bound;
except, in each instance, for such conflicts, breaches or defaults as would
not, individually or in the aggregate, adversely affect its ability to
consummate the transactions contemplated hereby or thereby or materially and
adversely affect its financial condition, business or assets.
5.3.4 Governmental Consents. Except for filings, consents,
permits, approvals, registrations, qualifications and authorizations which
have been made or obtained by it, no filing, consent, approval, registration,
qualification or authorization with or of any governmental authority is
required under existing laws, rules and regulations in connection with its
execution and delivery of this Agreement. Except as set forth or contemplated
in the Merger Agreement, no filing, consent, approval, registration,
qualification or authorization with or of any governmental authority is
required to be made by it under existing laws, rules or regulations in
connection with its consummation of the transactions contemplated hereby to be
consummated at or prior to the Effective Time.
5.4 Representations and Warranties of Hirsch, Josefsen, the
Cassidys, Prior, Xxxxxxx, Xxxx and Xxxxx. Each of Hirsch, Josefsen, the
Cassidys, Prior, Xxxxxxx, Chen and Crane represents and warrants to the other
parties as follows:
5.4.1 Validity. He has duly executed and delivered this
Agreement. This Agreement constitutes his valid and binding obligation,
enforceable against him in accordance with its terms, subject to laws of
general application affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
5.4.2 No Conflicts. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, by him do not and will not
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(a) conflict with or result in a breach of any of the
terms of, or constitute a default under, any agreement, instrument, covenant
or other restriction to which he is a party or by which any of his properties
or assets are bound, or
(c) conflict with any law, rule, regulation, order or
decree applicable to him or by which he is bound;
except, in each instance, for such conflicts, breaches or defaults as would
not, individually or in the aggregate, adversely affect his ability to
consummate the transactions contemplated hereby or thereby or materially and
adversely affect his financial condition, business or assets.
5.4.3 Governmental Consents. Except for filings, consents,
permits, approvals, registrations, qualifications and authorizations which
have been made or obtained by it, no filing, consent, approval, registration,
qualification or authorization with or of any governmental authority is
required under existing laws, rules and regulations in connection with his
execution and delivery of this Agreement. Except as set forth or contemplated
in the Merger Agreement, no filing, consent, approval, registration,
qualification or authorization with or of any governmental authority is
required to be made by him under existing laws, rules or regulations in
connection with his consummation of the transactions contemplated hereby to be
consummated at or prior to the Effective Time.
SECTION 6 -- CERTAIN COVENANTS
6.1 Non-Interference. No party shall take any action that would
interfere with the performance of this Agreement by any other party or that
would adversely affect any of the rights provided for in this Agreement.
6.2 Amendments to Merger Agreement. Seragen shall not, without
the written consent of all Third Parties, enter into any amendment to the
Merger Agreement that would alter the amount, kind or timing of Merger
Consideration payable to any Third Party. Without limiting the provisions of
the foregoing sentence, Seragen shall not, without the written consent of the
affected Third Party, enter into any amendment to the Merger Agreement that
would or could reasonably be expected to adversely affect the rights of any
Third Party.
6.3 Assignments of Claims. Except as contemplated hereby or in
the Merger Agreement, no Third Party shall assign, sell, transfer, pledge or
encumber, either in writing or otherwise, any right, title, or interest it has
or may have in any Claims it is settling, resolving, or releasing pursuant to
this Agreement, any of its right, title or interest
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in or to shares of Series B Stock, shares of STI Class B Common Stock,
Conversion Shares, or options or warrants issued by Seragen, or any right
under, pursuant to, or in connection with any agreement to which it and
Seragen or STI are parties. Notwithstanding anything to the contrary
contained in any other section of this Agreement, each Third Party shall
indemnify, defend, and hold harmless each of the other parties to this
Agreement from and against any Claims based on or arising in connection with
any such assignment, sale, transfer, lien, encumbrance, or right, or any such
purported assignment, sale, transfer, lien, encumbrance, or right, in
violation of the provisions of this Section 6.3.
SECTION 7 -- NO ADMISSION
In the event that this Agreement does not become fully effective in
accordance with its terms or becomes null and void for any reason whatsoever,
the parties agree that nothing contained in this Agreement and in any
settlement discussions, communications, and writings among the parties shall
be admissible or otherwise used in any subsequent litigation (including any
arbitration proceeding) among the parties, except in respect of any claim for
breach, or seeking enforcement, of the terms of this Agreement. No party, by
entering into this Agreement, admits or acknowledges the existence of any
liability or wrongdoing, all such liability and wrongdoing being expressly
denied by the parties.
SECTION 8 -- COMPLIANCE WITH AGREEMENTS
8.1 Representations and Warranties in Marathon Agreement. The
BU Parties represent and warrant to Seragen that each of the representations
and warranties of the BU Parties or any of them set forth in the Marathon
Agreement is true and correct in all respects. The provisions of this Section
8.1 are subject to the provisions of Section 9 hereof and shall not effect the
nature or extent of the indemnification provided by the Indemnifying Parties
(as hereinafter defined) pursuant thereto.
8.2 Compliance with Marathon Agreement. Marathon, 520
Commonwealth, and 660 Corp agree to comply fully and faithfully, until the
earlier of the Closing Date and the termination of the Marathon Agreement in
accordance with its terms, with each and every one of their obligations set
forth in the Marathon Agreement.
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SECTION 9 -- INDEMNIFICATION OF MARATHON, 520 COMMONWEALTH
AND 660 CORP
Each of the Third Parties other than Xxxxxx and Shoreline (the
"Indemnifying Parties") hereby agrees, severally and not jointly, to indemnify
Marathon, 520 Commonwealth and 660 Corp and hold them harmless from and
against that fraction of any Claims that may arise under or in respect of the
representations and warranties made by Marathon, 520 Commonwealth and 660 Corp
pursuant to Section 4.1 of the Marathon Agreement, but only to the extent that
such Claims arise as a result of or relate to matters not known to Xxxxxxx X.
Xxxxxx or other officers of Boston University and its direct and indirect
wholly-owned subsidiaries other than Marathon, that is equal to the portion of
the Remaining Milestone Consideration allocable to such Indemnifying Party
divided by the aggregate amount of the Remaining Milestone Consideration
allocated to all Indemnifying Parties; provided, however, that in no event
shall the liability of any Indemnifying Party pursuant to the provisions of
this Section 9 exceed a fraction of $1,000,000 that is equal to the portion of
the Remaining Milestone Consideration allocable to such Indemnifying Party
divided by the aggregate amount of the Remaining Milestone Consideration
allocated to all Indemnifying Parties.
SECTION 10 -- ARBITRATION
10.1 Arbitration. Any controversy or claim arising out of or
relating to this contract, or the breach thereof, shall be settled by
arbitration in New York, New York in accordance with the commercial
arbitration rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrators(s) may be entered in any court having
jurisdiction thereof.
10.2 Injunctive Relief. Any party hereto may seek specific
performance of the obligations of any other party hereunder, and the parties
hereby agree that the failure of any party hereto fully and faithfully to
perform its obligations hereunder would result in irreparable injury to the
other parties hereto for which damages would be an inadequate remedy.
Arbitrators acting pursuant to Section 8.1 shall have the right to grant
injunctive relief to any party hereto.
10.3 Fees and Costs. In any arbitration brought pursuant to
Section 8.1 hereof, the arbitrators shall allocate all reasonable fees and
costs incurred by the parties to such arbitration (including, without
limitation, the reasonable fees and disbursements to counsel to the parties)
in accordance with the degree, as determined by the arbitrators, to which the
initial position of each party to the arbitration has been sustained by the
decision of the arbitrators.
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SECTION 11 -- FURTHER ASSURANCES
Each of the parties to this Agreement covenants with each other
party to this Agreement to do any and all things and to execute and deliver
any and all acknowledgments, instruments, or other documents whatsoever, at
any time or from time to time after the date of this Agreement on the request
of any party to this Agreement, that may be necessary or desirable in order
more fully and effectively to carry into effect and consummate the provisions
of this Agreement and the transactions contemplated by this Agreement.
SECTION 12 -- MISCELLANEOUS
12.1 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes and cancels any previous agreement, negotiations,
commitments and writings in respect to the subject matter of this Agreement.
12.2 Modification. Any modification of this Agreement must be
in writing and signed by the duly authorized representative of each party.
12.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
12.4 Delay of No Effect. No failure or delay on the part of any
party in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, and no single or partial exercise of any power,
right or remedy shall preclude any other exercise thereof or the exercise of
any other power, right or remedy.
12.5 Attorneys Fees and Other Costs. Each party to this
Agreement shall bear its own attorney fees and other costs incurred in
connection with the negotiation, drafting and consideration of this Agreement.
12.6 Third-Party Beneficiaries.
12.6.1 Limits on Third Party Beneficiaries. Other than as
set forth in Section 12.6.1, nothing contained in this Agreement shall be
construed to confer upon any other party, other than the parties to this
Agreement, the rights of a third-party beneficiary.
12.6.2 Third Party Beneficiary. Ligand, its successors and
assigns are an intended beneficiary of the terms and provisions of
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this Agreement. Ligand shall have the right independently to enforce its
rights in respect thereof without the need to join any party hereto or any
other person in any arbitration or action for the enforcement of the same.
12.7 Binding Effect. This Agreement shall inure to the benefit
of, and be binding upon, the parties and to their respective successors and
permitted assigns. This Agreement shall be binding to the fullest extent
allowed by law on the parties to this Agreement and their respective heirs,
successors in interest, and assigns, whether by operation of law or otherwise.
12.8 Assignment. The rights and obligations under this
Agreement may not be assigned by any party to this Agreement without the prior
written consent of the other parties. For the avoidance of doubt, however,
the parties acknowledge and agree that Seragen may consummate the Merger
Transaction as contemplated by the Merger Agreement and in connection
therewith convey by way of the Merger Transaction all of its rights and
obligations hereunder to the Surviving Corporation (as defined in the Merger
Agreement).
12.9 Counterparts. This Agreement may be executed in any number
of counterparts (including by facsimile transmission), each of which shall be
an original and all of which, when taken together, shall constitute one
agreement.
12.10 Signatures. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
12.11 Headings. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of, any of the terms
or provisions of this Agreement.
12.12 Inconsistent Provisions. Unless otherwise agreed by the
parties to this Agreement, if any of the provisions of any documents or
agreements executed in connection with this Agreement are inconsistent with
the provisions of this Agreement, the provisions of this Agreement shall
control, and any such inconsistent provisions of such other documents or
agreements shall be disregarded and overridden.
12.13 No Party Deemed Drafter. No party shall be deemed the
drafter of this Agreement, and this Agreement should not be construed against
any party as the drafter.
12.14 Notices. Any notice or other communication required or
permitted to be given under this Agreement shall be in writing and
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shall be given by prepaid first-class mail, by facsimile or other means of
electronic communication, or by delivery as provided below.
12.14.1 Any such notice or other communication, if mailed
by prepaid first-class mail at any time other than during a general
discontinuance of postal service due to strike, lockout or otherwise, shall be
deemed to have been received on the third Business Day after the post-marked
date of the notice or communication, or if sent by facsimile or other means of
electronic communication or by nationally recognized overnight courier
service, shall be deemed to have been received on the Business Day following
the sending, or if delivered by hand shall be deemed to have been received at
the time it is delivered to the applicable address noted below either to the
individual designated below or to an individual at such address having
apparent authority to accept deliveries on behalf of the addressee.
12.14.2 In the event of a general discontinuance of postal
service due to strike, lockout or otherwise, notices or other communications
shall be delivered by hand or sent by facsimile or other means of electronic
communication and shall be deemed to have been received in accordance with the
guidelines set forth above.
12.14.3 Notice of change of address shall also be governed
by this Section 12.14.
12.14.4 Notwithstanding the foregoing, any notice or other
communication required or permitted to be given by any party pursuant to or in
connection with any arbitration procedures contemplated by this Agreement may
only be delivered by hand.
12.14.5 For purposes of this Section 10.14, "Business Day"
means any day other than a Saturday, Sunday or day on which banks are required
or permitted to close in the Commonwealth of Massachusetts.
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12.14.6 Notices and other communications shall be addressed
as follows:
If to Seragen:
Seragen, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopier number: (000) 000-0000
with a copy to Seragen's counsel at:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
X.X. Xxx 0000
Xxxxxxxxxx X.X. 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier number: (000) 000-0000
If to STI:
Seragen Technology, Inc.
c/o Seragen, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopier number: (000) 000-0000
with a copy to Seragen's counsel at:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
X.X. Xxx 0000
Xxxxxxxxxx X.X. 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier number: (000) 000-0000
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If to Boston University:
Boston University
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier number: (000) 000-0000
If to BU Holding:
Seragen LLC
000 Xxx Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier number: (000) 000-0000
If to Marathon:
Marathon Biopharmaceuticals, LLC
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxx
Telecopier number: (000) 000-0000
If to USSC:
United States Surgical Corporation
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier number: (000) 000-0000
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If to Xxxxxx:
Xxxx X. Xxxxxx
c/o United States Surgical Corporation
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopier number: (000) 000-0000
If to Josefsen:
Xxxx Xxxxxxxx
c/o United States Surgical Corporation
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopier number: (000) 000-0000
If to the Cassidys:
Xxxxxx X.X. and Xxxxxxx X. Xxxxxxx
c/o Cassidy and Associates, Inc.
000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telecopier number: (000) 000-0000
If to Prior:
Reed R. Prior
c/o Seragen Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier number: (000) 000-0000
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If to Xxxxxxx:
Xxxx X. Xxxxxxx, Ph. D.
c/o Seragen Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier number: (000) 000-0000
If to Chen:
Xxxxxxxxx X. Xxxx
c/o Seragen Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier number: (000) 000-0000
If to Crane:
Xxxxxx X. Xxxxx
c/o Seragen Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier number: (000) 000-0000
If to Shoreline:
Shoreline Pacific
0 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telecopier number: (000) 000-0000
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If to Xxxxxx:
Xxxxxx Brothers, Inc.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx
Telecopier number: (000) 000-0000
12.15 Incorporation of Recitals. The recitals hereto form an
integral part of this Agreement and are hereby incorporated by reference as
fully as if they were herein fully set forth.
[The balance of this page was intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
SERAGEN, INC.
By: /s/ Reed R. Prior
-----------------------
Name: Reed R. Prior
Title: Chairman and CEO
SERAGEN TECHNOLOGY, INC.
By: /s/ Reed R. Prior
-----------------------
Name: Reed R. Prior
Title: Chairman and CEO
TRUSTEES OF BOSTON UNIVERSITY
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Treasurer
SERAGEN LLC
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Treasurer
MARATHON BIOPHARMACEUTICALS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Manager
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UNITED STATES SURGICAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
and General Counsel
/s/ Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
/s/ Xxxx Xxxxxxxx
------------------------
Xxxx Xxxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------
Xxxxxx X. X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx
/s/ Reed R. Prior
------------------------
Reed R. Prior
/s/ Xxxx X. Xxxxxxx, Ph.D.
------------------------
Xxxx X. Xxxxxxx, Ph.D.
/s/ Xxxxxxxxx X. Xxxx
------------------------
Xxxxxxxxx X. Xxxx
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/s/ Xxxxxx X. Xxxxx
------------------------
Xxxxxx X. Xxxxx
SHORELINE PACIFIC INSTITUTIONAL
FINANCE
By: /s/ Xxxxxx X. Xxxxxxx
------------------------
Xxxxxx X. Xxxxxxx
President
XXXXXX BROTHERS INC.
By: /s/ Xxxx Xxxxx
------------------------
Name: Xxxx Xxxxx
Title: Vice Chairman
000 XXXXXXXXXXXX XXXXXX XXXX XXXXXX
CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
660 CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Treasurer
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LIST OF EXHIBITS
EXHIBIT A Merger Agreement, dated May 11, 1998, by and between Seragen,
Inc., Ligand Pharmaceuticals Incorporated, and Knight Acquisition Corporation.
