SERVICE AGREEMENT
THIS SERVICE AGREEMENT, made and entered into this 14th day of February,
1997, by and among
SERAGEN, INC., a corporation organized and existing under the laws
of Delaware, having its principal place of business at 00 Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as
"Seragen"), and
TRUSTEES OF BOSTON UNIVERSITY, a corporation organized and
existing under the laws of Massachusetts, having its principal
place of business at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000
(hereinafter referred to as "Service Provider").
W I T N E S S E T H :
WHEREAS, Seragen desires to purchase from Service Provider, and Service
Provider desires to provide, certain services relating to product research,
development, manufacturing, clinical trials, quality control and quality
assurance, all subject to the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
INTERPRETATION AND APPLICATION
1.01 Defined Terms. In addition to terms otherwise defined herein, the
following terms shall have the following meanings for purposes of this
Agreement:
"Agreement" shall mean this Service Agreement entered into by and
between Seragen and Service Provider, as amended or modified from time
to time.
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"Asset Purchase Agreement" means that certain Asset Purchase
Agreement, dated as of the date hereof, by and between Seragen and
Service Provider, as it may be amended from time to time.
"Contract Year" shall mean the period commencing on the date
hereof and terminating on January 31, 1998, and each annual period
thereafter commencing on February 1 and terminating on the following
January 31 occurring during the term of this Agreement.
"Developments" shall include any ideas, products, concepts,
techniques, methods, formulae, trade secrets, systems, inventions,
processes, works of authorship, knowhow or improvements made by Service
Provider or under Service Provider's direction or by the employees,
consultants or agents (including subcontractors) of Service Provider in
connection with the Technology Services or the Additional Services.
"Information" shall include processes, methods, techniques,
systems, formulae, trade secrets, drawings, photographs, machine
readable records, computer software and programs (including source
codes), database technologies, patterns, models, devices, compilations,
supplier, customer and dealer data, market information, internal
financial information, or any other information that Seragen treats as
confidential or proprietary and that is not freely available to the
public, transmitted to or acquired by Service Provider or any Service
Provider employees, consultants or agents in the course of Service
Provider's performance of its obligations hereunder, but shall not
include information that is a matter of public knowledge or information
that Service Provider is required to disclose under law.
"Operating Losses" with respect to any Contract Year or portion
thereof shall mean the difference between (a) all cash actually expended
by Service Provider during such period (whether the same would be
capitalized or expensed in accordance with U.S. generally accepted
accounting principles), exclusive of the $5.0 million purchase price
paid by Service Provider for the Purchased Assets in the first Contract
Year, less (b) all cash revenues actually received by Service Provider
during such period.
"Purchased Assets" means those certain assets to be sold by
Seragen to Service Provider pursuant to and subject to the terms and
conditions contained in the Asset Purchase Agreement.
"Third Party" means any individual, corporation, partnership,
limited partnership, limited liability company, limited liability
partnership, joint venture, association, trust, unincorporated
organization, government or governmental agency, or other legal entity,
other than the parties hereto.
1.02 Other Rules of Construction. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." The headings inserted in this Agreement are for
reference purposes only and shall in no way affect the construction of this
Agreement. All references to "party" and "parties" shall be deemed references
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to the parties to this Agreement and to a party's successor in title unless
the context shall otherwise require. All references to articles, sections and
paragraphs shall be deemed references to articles, sections and paragraphs of
this Agreement, unless the context shall otherwise require. All references
herein to schedules shall be deemed to be references to the schedules attached
to this Agreement. The terms "this Agreement," "hereof," "hereunder," and
similar expressions refer to this Agreement as a whole and not to any
particular article, section or other portion of this Agreement and include any
agreement supplemental hereto. The conjunction "or" shall be understood in
its inclusive sense.
ARTICLE II
SERVICES
2.01 Technology Services. Seragen has developed and provided Schedule
1 to Service Provider. Those services and products which are reflected on
Schedule 1 (collectively, the "Technology Services") represent services and
products which are required in order to continue Seragen's current research
projects. Service Provider, under Seragen's direction, agrees to provide and
deliver the Technology Services to Seragen, upon the terms set forth herein
and on Schedule 1. Service Provider and Seragen from time to time shall in
good faith negotiate amendments (including appropriate price reductions) to
Schedule 1 in the event that Seragen's research and development requirements
change and, as a result thereof, Seragen determines that any services or
products described on Schedule 1 are no longer required or that the standards
or requirements with respect to any described services or products needs to be
changed.
2.02 Additional Services. If Seragen shall require any research and
development services during the Term (as defined in Section 6.01) in addition
to the Technology Services ("Additional Services"), Seragen shall be required
to purchase such Additional Services from Service Provider, provided that
Service Provider has the capacity (including, without limitation, the ability
to make material suitable for the applicable phase of clinical trials or
market manufacture as defined by applicable regulations as promulgated by the
U.S. Food and Drug Administration ("FDA") and interpreted by Seragen) to
perform such Additional Services within the timeframe in which Seragen
reasonably requires the delivery of such Additional Services and in accordance
with any standards reasonably required by Seragen, including those set forth
in Article III. Seragen shall provide written notice (the "Additional Service
Request") to Service Provider if it requires any Additional Services,
specifying the Additional Services required and the reasonable time frame in
which Seragen expects such Additional Services to be performed. Service
Provider shall provide notice to Seragen on or prior to the twentieth (20th)
day following Service Provider's receipt of the Additional Service Request as
to whether it cannot perform the requested Additional Services; provided,
however, that if Service Provider shall fail to provide such notice within
such twenty (20) day period, Service Provider shall be deemed to have agreed
to provide the Additional Services upon the terms set forth in the Additional
Service Request. Service Provider shall be obligated to, and shall, accept
any Additional Service Offer if, and only if, it has the ability and resources
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to timely perform, in accordance with the terms set forth herein, the
Additional Services being requested.
2.03 Facilities; Staffing; Supplies; Equipment. Service Provider, at
all times during the term, shall provide the Technology Services and
Additional Services from its facilities located at 00 Xxxxx Xxxxxx, 00 Xxxxx
Xxxxxx and 000-000 Xxxxx Xxxxxx, all in Hopkinton, Massachusetts (the
"Premises"). Service Provider shall maintain at all times such staffing,
supplies and equipment as is sufficient to ensure that it has the ability to
perform the Technology Services (as well as any Additional Services that it
has become obligated to provide pursuant to the provisions of Section 2.02) in
accordance with the terms hereof. The Chief Executive Officer of Service
Provider shall be subject to Seragen's prior written approval, which will not
be unreasonably withheld. (All Service Provider personnel and consultants
providing research and development services in connection with the Technology
Services or any Additional Services are referred to herein collectively as
"Employees".)
2.04 Subcontracting. Without Seragen's prior written consent, which
shall not be unreasonably withheld, Service Provider shall not enter into any
subcontract with any Third Party for the provision of Technology Services or
Additional Services.
2.05 Access. During normal business hours and on reasonable notice,
Service Provider shall permit Seragen (and its respective representatives and
consultants) to have access to Service Provider's Premises, equipment,
officers and employees and to all books and records (as described in Section
2.09), Legal Records (as defined in Section 3.02), and other technical
information and data in Service Provider's possession relating to this
Agreement or the services provided hereunder; provided, however, that Service
Provider shall not be obligated to provide Seragen with access to that portion
of its Premises, equipment, officers and employees which, at the time of any
request for access, are being utilized in the performance of services of a
proprietary or confidential nature for a Third Party. Seragen shall have the
right to make copies of the books and records, Legal Records and other
information and data relating to this Agreement and the services provided
hereunder. Without limiting the foregoing, Service Provider shall provide all
reasonable cooperation in order that Seragen, among other things, may from
time to time confirm Service Provider's compliance with the provisions of
Article III hereof, including Service Provider's due and reasonable care in
the storage of biological materials and Service Provider's full compliance
with all applicable regulations and legal requirements.
2.06 Manufacturing Process. Under Seragen's direction, Service
Provider shall at all times perform the Technology Services and Additional
Services in accordance with Seragen's manufacturing and quality control
specifications. Unless Seragen directs Service Provider to do so, Service
Provider shall not change its manufacturing processes, equipment or vendors
relating to this Agreement or the services performed by Service Provider
hereunder.
2.07 Third Party Service Agreements. Service Provider shall not enter
into any service agreement with a Third Party to the extent that Service
Provider's provision of services under such agreement would in any way
compromise, impair, or delay the ability of Service Provider to perform the
services required to be performed by it hereunder. In addition, without
Seragen's prior written approval, Service Provider shall not enter into any
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service agreement with a Third Party if the aggregate expenses incurred by
Service Provider in connection therewith in any Contract Year, when aggregated
with all other expenses incurred by Service Provider during such Contract Year
under other service agreements with Third Parties, would exceed the revenues
received by Service Provider under all such contracts during such Contract
Year.
2.08 Approval of Annual Budget and Incurrence of Expenses. Within
thirty (30) days following the execution hereof, and within sixty (60) days
prior to the end of each Contract Year thereafter, Service Provider shall
propose to Seragen an annual projected budget for the upcoming Contract Year.
Such budget shall be subject to the approval of Seragen, which shall not be
unreasonably withheld. Service Provider hereby covenants and agrees that it
shall reasonably endeavor to reasonably limit the expenses incurred by Service
Provider during each Contract Year. Service Provider agrees that it shall
fulfill all of its monetary obligations to third parties in a timely manner,
including its obligations to make payments on the leases for the Premises. If
Service Provider fails to make any such payments in a timely manner, Seragen
shall have the right, but no obligation, to make such payments on Service
Provider's behalf and, in addition to any other remedies it may have at law or
in equity, to set off any such payment against the amounts payable to Service
Provider pursuant hereto.
2.09 Maintenance of Books and Records. Service Provider shall keep
complete and accurate books and records in accordance with generally accepted
accounting principles, consistently applied. Such books and records shall
contain all particulars which may be necessary for the purpose of ascertaining
the Additional Service Fees payable pursuant to Section 4.02 hereof during the
term of this Agreement and any Operating Losses incurred hereunder. Such
books and records shall be kept by Service Provider for not less than three
(3) years following the expiration of the Term. Such records shall be kept at
Service Provider's principal place of business.
ARTICLE III
STANDARDS OF CARE AND COMPLIANCE WITH LAW
3.01 General. Service Provider, under Seragen's direction, shall
supply the Technology Services and Additional Services in accordance with
current scientific, professional, commercial and regulatory standards
prevailing in the biopharmaceutical industry. Without limiting the foregoing,
Service Provider, under Seragen's direction, shall exercise all due and
reasonable care with regard to any biological raw materials, work-in-process,
clinical products or finished products in its custody, including any
XXX000XX-0, XXX000XXX and DAB486IL2 delivered by Seragen to Service Provider
hereunder.
3.02 Compliance with Applicable Law. Service Provider, under Seragen's
direction, shall comply with all applicable laws (including the Food, Drug and
Cosmetic Act), requirements, rules, regulations and standards prescribed by
public authorities in providing the Technology Services and Additional
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Services, and shall maintain all necessary records to so comply (the "Legal
Records"). Without limiting the foregoing, Service Provider, under Seragen's
direction, shall comply with all applicable requirements relating to current
good laboratory practice, current good clinical practice, and current good
manufacturing practice.
3.03 FDA Documents and Reports. Service Provider shall cooperate fully
with Seragen in promptly filing all documents and reports required or
requested by the FDA in a form acceptable to Seragen, and shall provide
Seragen with such information and assistance as Seragen may require with
regard to such filings, including all reports, authorizations, certificates,
methodologies, specifications and other documentation in the possession of or
under the control of Service Provider, and shall ensure that the content of
all such submissions is suitable for regulatory filings. Without limiting the
foregoing, Service Provider, with regard to any drug or biopharmaceutical
product to be manufactured by Service Provider pursuant to this Agreement,
shall (a) cooperate fully with Seragen and use best efforts in promptly filing
a Biologic License Application, or in promptly filing an Establishment License
Application and a Product License Application, with respect to any such
product, in each case as may be required under FDA regulations, and in each
case in form and substance satisfactory to Seragen; (b) take all actions that
may be required in order to ensure that any Biologic License, or Establishment
License and Product License, as applicable, with respect to any such product
will be issued in the name of Seragen, rather than Service Provider; and (c)
take all actions required to maintain in full force and effect any Biologic
License, Establishment License or Product License issued with respect to any
such product. Seragen, as the Product Licensee for FDA purposes, shall have
the right to exercise full functional control as described in this Service
Agreement and as required by all applicable regulations.
3.04 Debarment. Service Provider agrees to inform Seragen in writing
immediately if it or any person who is performing services hereunder is
debarred or is the subject of a debarment investigation or proceeding under
section 306 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 335a, or
any successor thereto, or is the subject of a conviction described therein.
3.05 Serious Adverse Event Notification. Service Provider shall notify
Seragen as soon as is reasonably possible following the receipt of any
information, reports or complaints concerning side effects, injury, toxicity
or sensitivity reaction associated with any product developed, produced,
manufactured or tested by Service Provider hereunder (an "Adverse Event"),
shall cooperate fully with Seragen to investigate any such Adverse Event, and
shall provide such information or assistance as is requested by Seragen in
order to support Seragen's compliance with all applicable laws, requirements,
rules, regulations and standards prescribed by public authorities with regard
to any such Adverse Event. The parties shall exchange reports on the
resolution of Adverse Events monthly, or more frequently if requested by
Seragen.
3.06 Notification of Potential Liability. Service Provider shall
notify Seragen in writing as soon as is reasonably possible following any
event, including the receipt of any notice, warning, citation, finding, report
or service of process or the occurrence of any release, spill, upset or
discharge of hazardous wastes or substances, related to the Technology
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Services or Additional Services that may give rise to liability on the part of
Seragen under any law, requirement, rule, regulation or standard prescribed by
a public authority.
3.07 Governmental Communications and Inspections. Service Provider
shall as soon as is reasonably possible notify Seragen of any communications
from or inspections by the FDA or any other governmental agency, state or
federal, including, without limitation, any communication or directive from
the FDA or any other governmental agency, state or federal, commencing or
threatening seizure of any manufactured product or other removal from the
market of a manufactured product. If a written communication, Service
Provider shall attach a copy; otherwise, Service Provider shall provide a
reasonable description to Seragen of any such communication or inspection.
Seragen shall have the right to be present at any such inspection and to
review in advance and approve any response to such communication or
investigation submitted by Service Provider. If the written communication is
in regard to any product or any manufacturing process or regulatory filing for
which Seragen is the license holder, Seragen will be the respondent. Service
Provider will have the right to review such communication. Service Provider
will cooperate fully in providing the information needed for the
communication.
3.08 Disclaimer of Warranties. The parties hereto acknowledge and
agree that all Technology Services and Additional Services provided hereunder
shall be performed by Service Provider at the direction and under the
supervision of Seragen, and Service Provider disclaims any and all warranties,
express or implied, with respect to any products delivered hereunder,
including without limitation, warranties of fitness for a particular purpose
and merchantability.
ARTICLE IV
SERVICE FEES
4.01 Technology Service Fees. In consideration of Service Provider's
providing the Technology Services set forth on Schedule 1 (but no Additional
Services), Seragen agrees to pay Service Provider $5,521,342 in the first
Contract Year and $6,605,651 in the second Contract Year (which such amounts
shall be prorated to the extent that this Agreement is in effect for any
portion of any Contract Year, based on the number of days in which this
Agreement is in effect divided by 365) (collectively, the "Technology Service
Fees"). In the event Service Provider and Seragen agree in accordance with
Section 2.01 to amend the scope of the Technology Services to be provided with
respect to any Contract Year, the parties, in connection with such agreement,
shall agree upon appropriate adjustments to the Technology Service Fees
payable with respect to such Contract Year; provided, however, that in no
event shall the Technology Service Fees payable with respect to any Contract
Year be reduced to less than $4,300,000 (subject to proration in the event
that this Agreement is in effect for any portion of any Contract Year). The
Technology Service Fees shall be payable in equal monthly installments, in
advance, on or prior to the tenth (10th) day of each month occurring during
the Term.
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4.02 Additional Service Fees. (a) Should Service Provider provide any
Additional Services hereunder, the fees (the "Additional Service Fees")
payable with respect to such Additional Services shall equal the direct costs
(inclusive of overhead) incurred by Service Provider in providing such
Additional Services (including costs associated with employees, consultants,
Premises and equipment), multiplied by 1.10. Any costs incurred by Service
Provider shall be appropriately prorated between Seragen and other parties
based upon the percentage of total time spent on providing the Additional
Services to Seragen.
(b) Payments required to be made pursuant to this Section 4.02 shall be
invoiced by Service Provider to Seragen monthly, within thirty (30) days of
the end of each month, and shall be paid by Seragen within ten (10) days of
its receipt of Service Provider's invoice, unless Seragen in writing disputes
the invoice, in which case Seragen shall pay so much of the invoice as is not
in dispute. Service Provider shall, with each invoice for amounts to be paid
hereunder, break down the invoice total by appropriate categories, and for
each such category shall show in reasonable detail the financial data
underlying the amount invoiced. Invoices that are not disputed in writing by
Seragen within six (6) months of the date of their issue shall be deemed
correct and not subject to further audit or dispute. Service Provider shall
provide reasonable assistance and cooperation to Seragen with respect to
Seragen's preparation of invoices to be delivered to Xxx Xxxxx and Company
pursuant to that certain Strategic Alliance between Seragen and Xxx Lilly and
Company dated August 3, 1994.
(c) During the Term and for a period of one (1) year thereafter,
Seragen shall, at its own cost, be entitled to have its own representatives
and accountants review Service Provider's books and records with respect to
the Additional Services and all receipts with respect thereto (which books and
records shall include all information required to verify the invoices
described in Section 4.02(b)), upon reasonable notice to Service Provider,
during business hours, and subject to the limitations set forth in Section
2.05 hereof. Service Provider or Seragen, as applicable, shall promptly pay
to the other any over or underpayment of Additional Service Fees discovered
and agreed upon in connection with any such review.
4.03 Royalties. Seragen shall pay Service Provider a royalty of one
percent (1.0%) of the net revenues received by Seragen from the sale of any
products produced under protection of a patent issued to Seragen; provided,
that, such revenues are received by Seragen with respect to sales of the
product occurring following the issuance of, and prior to the termination of,
the patent. The applicable royalty rate set forth in the preceding sentence
shall increase from 1% to 2% if, and only if, and effective as of and after
the date that, Seragen's obligation to pay royalties under that certain
License Agreement, dated December 13, 1994, between Ajinomoto Co., Inc. and
Seragen shall terminate. Notwithstanding any other provision hereof to the
contrary, Seragen shall not be obligated to pay any royalties to Service
Provider on product sales occurring at any time following the date, if any,
that both (a) this Agreement is terminated pursuant to Section 6.04 hereof and
(b) Seragen has paid to Service Provider all amounts which are owing from
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Seragen to Service Provider in accordance with the terms of the Asset Purchase
Agreement as a result of such termination.
ARTICLE V
CONFIDENTIALITY OF INFORMATION
AND OWNERSHIP OF DEVELOPMENTS
5.01 Confidentiality of Information. Service Provider agrees for
itself and on behalf of the Employees and any other Service Provider
employees, consultants or agents to at all times during the Term and
thereafter hold in confidence all Information at any time in Service
Provider's possession or control and not to use, disclose, reproduce or
dispose of any such Information in any manner except as necessary to carry out
the Technology Services and Additional Services. Without limiting the
foregoing, Service Provider agrees, for itself and on behalf of the Employees
and its other employees, consultants, and agents, to hold in confidence all
Information, if any, developed pursuant to the Technology Services or the
Additional Services. All Information, including Information developed by
Service Provider or its employees, consultants or subcontractors while
performing the Technology Services or the Additional Services (including any
copies) shall remain the property of Seragen. Promptly upon the termination
of this Agreement or, if earlier, upon Seragen's request, Service Provider
shall return to Seragen all Information, Developments and biological raw
materials, work-in-process, clinical products or finished products in its
custody, which are owned by, or produced by Service Provider for, Seragen (any
such delivery of biological materials to be made with due care and in
accordance with the standards referenced in Section 3.01).
5.02 Injunctive Relief. Service Provider recognizes that the
disclosure of Information will cause irreparable harm to Seragen, inadequately
compensable in damages. In the event of any breach of this Article VI,
Service Provider agrees that, in addition to its other remedies and
notwithstanding Section 8.03, Seragen shall be authorized and entitled to
obtain from any court of competent jurisdiction injunctive relief, whether
preliminary or permanent.
5.03 Ownership of Developments. Service Provider agrees that any
Developments shall be the sole and complete property of Seragen and that any
patents or copyrights resulting from the same shall belong solely and
completely to Seragen. For purposes of the copyright laws of all relevant
jurisdictions, any such Developments shall be considered "works made for
hire." Service Provider agrees that during and after the term hereof, Service
Provider will execute, and will cause its employees, consultants and agents
(including subcontractors) to execute, any assignments or other documents
necessary to vest full title in any such Developments in Seragen.
5.04 Agreements by Personnel. Except for employees to be transferred
from Seragen to Service Provider pursuant to the Asset Purchase Agreement (for
which it shall be the responsibility of Seragen to obtain appropriate
confidentiality and related agreements), Service Provider agrees to cause each
of the Employees and any other employee, consultant or agent (including any
subcontractor) of Service Provider involved in the Technology Services or
Additional Services or receiving or having access to Information to enter into
an agreement with Service Provider, which shall be in form and substance
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reasonably acceptable to Seragen, pursuant to which the employee, consultant
or agent agrees, in his individual capacity, (a) to be bound by the provisions
of Sections 5.01, 5.02 and 5.03 and (b) to the extent allowable under law,
that Seragen shall be an intended third party beneficiary of such agreement,
with the right to enforce the provisions of such agreement without the need to
join Service Provider as a party.
ARTICLE VI
TERM AND TERMINATION
6.01 Term. This Agreement shall commence on the date hereof and
continue in full force and effect through January 31, 1999, subject to earlier
termination pursuant to the provisions of section 6.02, 6.03, or 6.04 (the
"Term").
6.02 Termination for Breach. Upon any material breach of or default
under this Agreement by either party (the "Breaching Party"), the other party
(the "Non-Breaching Party") shall have the right to serve notice upon (a
"Preliminary Termination Notice") the Breaching Party of the Non-Breaching
Party's intention to terminate this Agreement if the breach is not cured
within thirty (30) days following the Breaching Party's receipt of the
Preliminary Termination Notice. The Preliminary Notice shall state the cause
for the Non-Breaching Party's intention to terminate this Agreement. If the
Breaching Party does not remedy such breach or default within such thirty (30)
day period, the Non-Breaching Party shall have the right to terminate this
Agreement effective immediately upon provision of further notice (the "Final
Termination Notice") to the Breaching Party, and following the provision of
such Final Termination Notice, this Agreement and all rights, privileges and
licenses granted hereunder shall automatically terminate and neither party
shall have any further rights, duties or obligations hereunder except as may
have then accrued under this Agreement before such termination or except as
otherwise provided herein. If, at any time prior to receipt of the Final
Termination Notice the Breaching Party shall have remedied such default, this
Agreement shall continue in full force and effect as it would have done if
such notice had not been given.
6.03 Termination By Service Provider. In the event Service Provider's
Operating Losses at any time during any Contract Year exceed $9.0 million and
will not decrease during the remainder of the Contract Year, Service Provider
shall have the right at any time thereafter and prior to expiration of the
Term (excluding any extension thereof) to serve notice upon Seragen of Service
Provider's intention to terminate this Agreement. Such notice shall include a
detailed computation of Service Provider's Operating Losses during the
applicable portion of the Contract Year and the projected additional Operating
Losses for the remainder of the Contract Year, as well as all financial
information necessary in order to determine the amount of the Operating
Losses. If Seragen does not pay an amount to Service Provider equal to the
difference between the amount of the Operating Losses incurred and $9.0
million within thirty (30) days of its receipt of the notice of termination
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from Service Provider and does not also agree in writing to pay all additional
Operating Losses incurred during the remainder of such Contract Year, this
Agreement and all rights, privileges and licenses granted hereunder shall
automatically terminate upon the thirtieth (30th) day following Seragen's
receipt of the notice and neither party shall have any further rights, duties
or obligations hereunder except as may have then accrued under this Agreement
before such termination or except as otherwise provided herein. If, during
the thirty (30) day period Seragen shall have made the required payment and
also shall have agreed in writing to pay all additional Operating Losses
incurred during the remainder of such Contract Year, this Agreement shall
continue in full force and effect as it would have done if such notice had not
been given. Seragen shall, at its own cost, be entitled to have its own
representatives and accountants review Service Provider's books and records
with respect to the Operating Losses (which books and records shall include
all information required to verify the amount of the Operating Losses) at all
times during the Term and, if this Agreement shall have terminated, for a
period of one year thereafter. Service Provider or Seragen, as applicable,
shall promptly pay to the other any over or underpayment made under this
Section 6.03 which is discovered and agreed upon in connection with any such
review.
6.04 Termination upon Cancellation of Asset Purchase. If the Asset
Purchase Agreement terminates and the transactions contemplated thereby are
not consummated, this Agreement automatically and without further action of
the parties shall terminate as of the date of termination of the Asset
Purchase Agreement.
6.05 Consequences of Termination. Except as set forth in last sentence
of this Section 6.05, nothing herein shall be construed to release either
party from any obligation which matured or any breach of this Agreement which
occurred prior to the effective date of termination. Without limiting the
foregoing, the provisions of Article V and Sections 7.01, 7.02, 7.03, 8.03,
and 8.14 shall survive any termination of this Agreement. In addition, except
to the extent provided therein, the provisions of Section 4.03 shall survive
any termination of this Agreement. In the event, and only in the event, that
this Agreement is terminated in accordance with Section 6.04 hereof, Service
Provider shall be obligated to reimburse to Seragen any amounts paid by
Seragen to Service Provider under Article IV hereof on or prior to the date of
such termination; provided, however, that Service Provider shall have the
right to set-off against any such amounts any amounts which Seragen owes to
Service Provider under Section 1.08 or Article X of the Asset Purchase
Agreement.
6.06 Term Extension. (a) Unless this Agreement has been terminated in
accordance with Section 6.02, 6.03 or 6.04 hereof prior to January 31, 1999,
Seragen shall have two successive options to extend the term of this Agreement
each for a period of one year at then prevailing competitive market rates
(i.e., if, and only if, Seragen exercises the option to extend the term for an
additional year, it will have an option at the end of such year to extend the
term for a second year); provided, that, in connection with any such
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extension, Seragen, at the end of each Contract Year of the term extension,
and within thirty (30) days of receiving notice from Service Provider of the
amount payable, shall pay to Service Provider, in addition to any other fees
which Seragen is obligated to pay to Service Provider, an amount equal to the
Operating Losses (if any) incurred by Service Provider during such Contract
Year, multiplied by a ratio equal to the gross revenues paid by Seragen to
Service Provider during such Contract Year divided by the total gross revenues
received by Service Provider during such Contract Year. If Seragen desires to
extend this Agreement, it shall provide written notice to Service Provider not
less than one hundred and twenty (120) nor more than one hundred and fifty
(150) days prior to the termination of the Agreement.
ARTICLE VII
PURCHASE RIGHTS
7.01 Right of First Refusal. (a) Service Provider shall not, during
the Term, sell, transfer, convey or otherwise dispose of any of the assets
used by Service Provider to provide services to Seragen hereunder outside of
the ordinary course of business otherwise than pursuant to a bona fide offer
to buy such assets from a Third Party that is not an affiliate of Service
Provider and after having complied with the provisions of this Section 7.01
(provided, that, the foregoing shall not limit Service Provider from
terminating any employees or consultants during the Term, provided that,
following such terminations, Service Provider possesses the assets necessary
in order for it to fully and timely perform all of its obligations hereunder).
(b) If Service Provider at any time during the Term receives a
bona fide offer from a Third Party to buy any of its assets outside of the
ordinary course of business and desires to accept said offer, Service Provider
shall first make an offer (the "Offer") to sell such assets (the "Offered
Assets") to Seragen in accordance with the procedure set forth in this Section
7.01. Such Offer shall be at the same price and upon the same terms and
conditions as the offer from the Third Party or, if the Third Party provides
for a type of consideration or sets forth other terms and conditions that are
not practically attainable by Seragen, for consideration and on terms and
conditions substantially equivalent to those contained in the Third Party
offer. Service Provider shall send written notice of the Offer (the "Service
Provider Notice") to Seragen, which shall describe the Offered Assets and any
liabilities to be assumed in detail, the price and the other terms and
conditions of the Offer and the name of the prospective purchaser (together
with a copy of all writings between such party and Service Provider necessary
to establish the terms of any such offer).
(c) Notwithstanding any provision hereof to the contrary, Service
Provider shall not pursue or entertain any Third Party offer, and the Third
Party offer shall not be deemed to be "bona-fide," if, following the sale of
the Offered Assets, Service Provider would not possess the assets necessary in
order for it to fully and timely perform all of its obligations hereunder (in
accordance with Section 8.02 hereof, Service Provider shall not have the right
to assign this Agreement to the Third Party without Seragen's prior written
consent, which may be withheld by Seragen in its sole discretion). In
addition, Service Provider shall not pursue or entertain any Third Party
offer, and the Third Party offer shall not be deemed to be "bona fide," if (i)
the Third Party purchaser does not have the financial capability to pay the
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consideration for the Offered Assets, unless the Third Party purchaser has
obtained financing commitments of a type customary for transactions similar to
the proposed transaction; (ii) any condition to the closing of the proposed
transfer that is not within the control of the parties is not reasonably
likely to be satisfied within a reasonable period; (iii) the closing of the
proposed transfer is subject to due diligence or other conditions the conduct
and satisfaction of which are solely within the control of the Third Party
purchaser; (iv) the Third Party is not an affiliate of Service Provider; or
(v) for any other reason the offer would not be reasonably regarded as bona
fide.
(d) In the event of a bona fide Third Party offer, Seragen shall
have the right to purchase all (but not less than all) of the Offered Assets,
which right shall be exercisable by written notice to Service Provider given
within fifteen (15) business days after receipt of the Service Provider
Notice. If Seragen shall fail to respond within that period, such failure
shall be regarded as a rejection by Seragen of the Offer.
(e) Unless Seragen elects to purchase all of the Offered Assets,
Service Provider may sell all (but not less than all) of the Offered Assets to
the Third Party on the same terms and conditions as the Offer described in the
Service Provider Notice to Seragen, provided that such sale is bona fide (as
set forth in Section 7.01(c)) and made within ninety (90) days from the date
of the Service Provider Notice. If such sale is not consummated within such
90-day period, the restrictions provided for herein shall again become
effective, and no sale, transfer, or assignment of such Service Provider's
assets outside of the ordinary course may be made thereafter without the prior
written consent of Seragen or without again offering the same to Seragen in
accordance with this Agreement.
(f) The closing of any purchase by Seragen of Offered Assets
shall be held at the principal office of Seragen at 11:00 A.M. local time on
the ninetieth (90th) day after the receipt of the Service Provider Notice, or
at such other time and place as the parties to the transaction may agree upon.
At such closing, Service Provider shall deliver such instruments of sale and
assignment as Seragen shall reasonably require, accompanied by all requisite
transfer taxes, and the Offered Assets to be transferred shall be free and
clear of any liens, claims, options, charges, encumbrances, or rights of
others (except for any liens, claims, options, charges, encumbrances, or
rights of others assumed by Service Provider from Seragen in connection with
the transactions contemplated by the Asset Purchase Agreement) and Service
Provider shall so represent and warrant, and further represent and warrant
that it is the holder of all right, title and interest in the Offered Assets.
Seragen shall deliver at such closing, by certified or official bank check, so
much of the purchase price as is payable in cash. Both parties to the
transaction shall execute such additional documents as are otherwise
appropriate. Service Provider shall fully cooperate in obtaining all third
party consents required, and in taking all other actions reasonably requested
by Seragen, in connection with the sale.
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7.02 Purchase Option. (a) Seragen shall have the right, exercisable in
its discretion at any time during the four (4) year period following the date
of this Agreement, to purchase all (but not less than all) of Service
Provider's assets at a purchase price in cash equal to the "Purchase Price"
(as determined in accordance with Section 7.03). If Seragen desires to
exercise its purchase right, it shall do so by providing written notice to
Service Provider on or prior to the fourth anniversary of the date hereof.
(b) The closing of any such purchase by Seragen shall be held at
the principal office of Seragen at 11:00 A.M. local time on the ninetieth
(90th) day after the receipt by Service Provider of Seragen's election to
exercise its purchase option, or at such other time and place as the parties
to the transaction may agree. At such closing, Service Provider shall deliver
such instruments of sale and assignment as Seragen shall reasonably require,
accompanied by all requisite transfer taxes, and the assets to be transferred
shall be free and clear of any liabilities, obligations, liens, claims,
options, charges, encumbrances, or rights of others (except for any liens,
claims, options, charges, encumbrances, or rights of others assumed by Service
Provider from Seragen in connection with the transactions contemplated by the
Asset Purchase Agreement) and Service Provider shall so represent and warrant,
and further represent and warrant that it is the holder of all right, title
and interest in the assets being transferred. Seragen shall deliver at such
closing, by certified or official bank check, the purchase price for the
assets. Both parties to the transaction shall execute such additional
documents as are otherwise appropriate. Seragen shall not be required to
assume any liabilities with respect to the purchased assets, except for
liabilities arising after the closing date under written contracts assumed by
Seragen and for any liens, claims, options, charges, encumbrances, or rights
of others assumed by Service Provider from Seragen in connection with the
transactions contemplated by the Asset Purchase Agreement. Service Provider
shall fully cooperate in obtaining all third party consents required, and in
taking all other actions reasonably requested by Seragen, in connection with
the transaction.
7.03 Determination of Purchase Price. "Purchase Price" shall equal:
(a) $5.0 million, plus interest accrued thereon from the date
hereof to the date of payment at the rate of 10% per annum; plus
(b) the greater of (i) the sum of the Operating Losses incurred
by Service Provider during each month or portion thereof occurring during the
Term, with interest accrued on the Operating Losses incurred in any such month
at a rate of 10% per annum from the final day of such month, compounded
quarterly (if Operating Losses in any month are negative (i.e., Service
Provider has an operating profit in any month), the amount of such operating
profit shall be subtracted from the Operating Losses incurred with respect to
other months occurring during the Term) and (ii) zero.
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ARTICLE IX
MISCELLANEOUS
8.01 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given when delivered by registered or certified mail, return receipt
requested, postage prepaid, by facsimile transmission or in hand, addressed as
follows:
If to Seragen:
Seragen, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Chief Executive Officer
If to Service Provider:
Trustees of Boston University
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
8.02 Assignment. No Party hereto shall assign any of its rights or
delegate any of its obligations hereunder to any Third Party without the
express prior written consent of the other party hereto. Notwithstanding any
other provision hereof to the contrary, it is understood and agreed that the
Service Provider may assign this Agreement, and all of its rights, benefits,
duties and obligations hereunder, to a corporation, limited liability company
or other entity which is created by and wholly owned, directly or indirectly,
by Service Provider and which acts or will act as the "Nominee" to purchase
the Purchased Assets pursuant to Section 1.06 of the Asset Purchase Agreement
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(the "Nominee"). If Service Provider shall elect to consummate the
transactions contemplated by the Asset Purchase Agreement through a Nominee
and therefor assign this Agreement to the Nominee, the Service Provider shall
give written notice to Seragen of such nomination and designation not less
than seven (7) days prior to the Closing Date (as defined in the Asset
Purchase Agreement), and the Nominee shall, at such time, deliver to Seragen
an instrument assuming all of Service Provider's obligations and liabilities
hereunder, such instrument to be in form and substance reasonably satisfactory
to Seragen. Upon such nomination, this Agreement shall be deemed to be
assigned to the Nominee, and the Nominee shall be deemed to be the Service
Provider hereunder for all purposes, completely and effectively as if the
Nominee were the Service Provider named herein. In the event that such
Nominee shall be an entity whose sole assets are or will be the Purchased
Assets or that otherwise has insufficient assets to provide commercially
reasonable credit-worthiness for its obligations set forth herein, a
subsidiary of Trustees of Boston University with assets sufficient to provide
commercially reasonably credit-worthiness shall execute and deliver as a
condition to the assignment to Nominee a guarantee of the Nominee's
obligations under this Service Agreement, such guarantee to be in form and
substance reasonably satisfactory to Service Provider and Seragen.
8.03 Arbitration. (a) Subject to paragraph (b) of this Section 8.03,
any dispute arising out of or in connection with this Agreement, including any
question regarding its existence, validity or termination, shall be referred
to final and binding arbitration, to the exclusion of any other court, forum
or jurisdiction. Such arbitration shall be conducted under the commercial
arbitration rules of the American Arbitration Association in effect from time
to time, which rules are deemed to be incorporated by reference into this
clause. The tribunal shall consist of three arbitrators. Each party shall
appoint one arbitrator, and the two party-appointed arbitrators shall select a
third arbitrator, who shall act as chairman. If the party-appointed
arbitrators cannot agree on a chairman, the chairman shall be appointed by the
American Arbitration Association. The place of arbitration shall be Boston,
Massachusetts. Unless the arbitral tribunal shall determine otherwise, the
costs of the arbitration shall be borne by the parties equally and each party
shall bear its other legal costs, including the fees of its attorneys.
(b) In the event that Seragen at any time proposes adjustment to
invoices submitted by Service Provider pursuant to Section 4.02(b), Seragen
and Service Provider shall in good faith attempt to resolve such dispute by
negotiation. If Seragen and Service Provider are unable to resolve any
dispute within fourteen (14) days after the date on which Service Provider
receives notice of such dispute, Seragen and Service Provider shall promptly
submit the dispute for resolution to a qualified accountant selected by the
head of the audit department at the Boston, Massachusetts office of Coopers &
Xxxxxxx (such accountant, the "Accountant"). Within thirty (30) days after
the Accountant is so selected, Seragen and Service Provider each shall submit
to him their respective proposals with respect to resolution of the dispute,
together with such supporting documentation as they deem necessary of as the
Accountant requests. Within thirty (30) days after receiving such proposals
and supporting documentation, the Accountant shall render his findings with
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respect to the dispute (including an equitable allocation of the fees and
expenses of the Accountant based upon the relative merits of the positions
asserted by the parties), which finding shall be final and binding upon the
parties. Within seven (7) days after the Accountant renders his findings,
Seragen or Service Provider, as the case may be, shall pay any amount owing to
the other.
8.04 Injunctive Relief. Service Provider agrees that a breach of this
Agreement during the Term will cause irreparable harm to Seragen, inadequately
compensable in damages. In the event of any breach of this Agreement during
the Term, Service Provider agrees that, in addition to its other remedies and
notwithstanding Section 8.03, Seragen shall be authorized and entitled to
obtain from any court of competent jurisdiction injunctive relief, whether
preliminary or permanent.
8.05 Further Assurances. Each party hereto covenants and agrees that
it will promptly, during the Term and upon the request of the other party,
execute, acknowledge and deliver or otherwise properly authenticate, as may be
required by law, all documents, instruments or applications, assignments,
registrations, or other legal papers which may be necessary to carry into
effect the provisions of this Agreement.
8.06 Effects. This Agreement shall be binding upon, and shall redound
to the benefit of, the parties hereto and their respective successors and
permitted assigns. Except as otherwise expressly provided herein, this
Agreement shall not create or confer, or be construed as creating or
conferring, any right, remedy, claim or benefit upon any Third Party, other
than the respective successors and permitted assigns of the parties hereto.
8.07 Waivers and Amendments. Any amendment or supplementation of this
Agreement or any waiver of any term or condition thereof shall be effective
only if in writing. A waiver of any breach of any of the terms or conditions
of this Agreement shall not in any way be construed as a waiver of any
subsequent breach.
8.08 Severability. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Agreement shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
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8.09 Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
instrument.
8.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts, without
regard to the conflict-of-laws rules thereof.
8.11 Entire Agreement. This Agreement, and the schedules attached
hereto, contains the entire agreement between Seragen and Service Provider in
respect of the transactions contemplated by this Agreement and supersedes all
prior arrangements or understandings with respect thereto.
8.12 Force Majeure. No liability under this Agreement shall result to
a party from delay in performance caused by force majeure, that is,
circumstances beyond the reasonable control of the party affected thereby,
including acts of God, fire, flood, war, changes in government regulations,
labor unrest, or shortage of or an inability to obtain material or equipment.
8.13 Employee Matters. Service Provider acknowledges that Seragen has
the right to make an offer of employment at any time during the Term to any
Employee listed on Schedule 2, and Service Provider agrees not to enter into
any contract or arrangement with any such Employee which would impair that
Employee's ability to accept any such offer from Seragen. In addition,
Service Provider acknowledges and agrees that Seragen shall have the right to
employ, on a part time basis, the Employees listed on Schedule 3, and that,
during the term in which such persons are employed on a part time basis by
Seragen, Service Provider shall continue to employ such persons for the
remainder of their business time and to provide full benefits (medical,
dental, 401(K) and any other benefits generally applicable to Service Provider
full-time employees) to such persons. As partial reimbursement for Service
Provider providing full benefits to such part time employees, Seragen shall
pay to Service Provider within 10 days of the close of each month occurring
during the term in which any such employee is employed by Seragen on a part
time basis, an amount equal to 30% of the salary paid by Seragen to such part
time employee with respect to such month.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
SERAGEN, INC.
By: /s/ Reed R. Prior
-----------------
Name: Reed R. Prior
Title: Chairman and CEO
TRUSTEES OF BOSTON UNIVERSITY
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Treasurer
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SERVICE AGREEMENT
Schedule 1
Services to be performed by Service Provider for Seragen in 1997:
Manufacturing of Batches - 1997:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Manufacturing Fill of Batches - 1997:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Quality Control and Release Testing of Batches - 1997:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Quality Assurance - 1997:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Product Development - 1997
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes labor and direct materials
Clinical/ Pre Clinical/ Regulatory Studies - 1997
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes clinical trial site fees, labs, pathology fees, supplies and
overhead, clinical assays
Clinical/ Pre Clinical/ Regulatory Studies and Other- 1997
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Price for services rendered in 1997- $5,521,342
* - Confidential treatment requested
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Services to be performed by Service Provider for Seragen in 1998:
Manufacturing of Batches - 1998:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Manufacturing Fill of Batches - 1998:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Quality Control and Release Testing of Batches - 1998:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Quality Assurance - 1998:
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes raw materials, labor and utilities
Product Development - 1998
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes labor and direct materials
Clinical/ Pre Clinical/ Regulatory Studies - 1998
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Includes clinical trial site fees, labs, pathology fees, supplies and
overhead, clinical assays
Clinical/ Pre Clinical/ Regulatory Studies and Other- 1998
Service Specifications Estimated Completion Date
------- -------------- -------------------------
*
Price for services rendered in 1998 = $6,605,651
* - Confidential treatment requested
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SERVICE AGREEMENT
Schedule 2
Employees Subject to Rehiring by Seragen
*
* - Confidential treatment requested
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SERVICE AGREEMENT
Schedule 3
Part-Time Employees
Time to Service
Provider
---------------
*
* - Confidential treatment requested
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