EXTENSION OPTION AGREEMENT
This Extension Option Agreement (this "Agreement") is made and entered into as
of May 11, 1998, by and among SERAGEN, INC., a Delaware Corporation
("Seragen"), LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
("Ligand"),
MARATHON BIOPHARMACEUTICALS, LLC, a Massachusetts limited liability company
(the "Company"),
000 XXXXXXXXXXXX XXXXXX XXXX XXXXXX CORP., a Massachusetts corporation ("520
Commonwealth"), and
660 CORPORATION, a Massachusetts corporation ("660 Corporation," and together
with 520 Commonwealth and the Company, "Sellers").
RECITALS
WHEREAS, concurrently with the execution of this Agreement,
Sellers and Ligand have entered into that certain Option and Asset Purchase
Agreement (the "Asset Agreement"), which agreement expires on January 31,
1999, whereby, among other things, Ligand will purchase substantially all of
the assets of the Company (the "Asset Purchase");
WHEREAS, the Company is a party to that certain Service Agreement,
dated as of February 14, 1997 (the "Service Agreement"), by and between
Seragen and Boston University, of which the Company is an assignee, which
agreement expires on January 31, 1999;
WHEREAS, concurrently with the execution of this Agreement,
Ligand, Seragen and Knight Acquisition Corporation, a Delaware corporation,
are entering into an Agreement and Plan of Reorganization (the "Merger
Agreement") and other transactions contemplated therein, whereby, among other
things, Seragen will become a wholly owned subsidiary of Ligand (the
"Merger");
WHEREAS, the Merger may not close before January 31, 1999;
WHEREAS, the closing of the Merger is a condition to the closing
of the Asset Purchase;
WHEREAS, as a condition to Ligand's execution of the Asset
Agreement and the Merger Agreement and consummation of the transactions
contemplated therein, Sellers have agreed to grant to Ligand an irrevocable
option pursuant to the terms and conditions of this Agreement; and
WHEREAS, as a condition to Seragen's execution of the Merger
Agreement and consummation of the transactions contemplated therein, Sellers
have agreed to grant to Seragen an irrevocable option pursuant to the terms
and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged,
the parties agree as follows:
Section 1. Option Grant. The Sellers hereby grant each of Ligand and
Seragen an irrevocable option (the "Option") to extend the terms of both the
Asset Agreement and the Service Agreement (collectively, the "Agreement Term")
for one or more additional sixty-day periods (each, an "Extension Term") upon
the terms and conditions set forth in this Agreement.
Section 2. Option Exercise. Ligand shall have the right upon written
notice to the Company and Seragen to exercise the Option on or before the
thirtieth day prior to the expiration of the Agreement Term or the then-
effective Extension Term, as the case may be (each, a "Ligand Expiration
Date"); provided, however, that in the event Ligand fails at any time to
exercise the Option prior to a Ligand Expiration Date, the Option shall
immediately terminate with respect to Ligand. If, and only if, Ligand fails
to exercise the Option prior to a Ligand Expiration Date, Seragen shall have
the right upon written notice to the Company and Ligand to exercise the Option
(a) with respect to the Agreement Term, during the period from the Ligand
Expiration Date for such term to the end of the Agreement Term, and (b) with
respect to each Extension Term, (i) if Ligand has exercised the Option for
such Extension Term, during the period from the Ligand Expiration Date for
such Extension Term to the end of such Extension Term, or (ii) if Seragen has
exercised the Option for such Extension Term, at any time on or before the
tenth day prior to the expiration of such Extension Term. Seragen may not
exercise the Option without the prior written consent of the Sellers, which
consent may be granted or withheld in the sole discretion of the Sellers. If
neither Ligand nor Seragen has exercised the Option prior to the end of the
Agreement Term or any Extension Term, the Option shall immediately terminate
at the end of such term.
Section 3. Covenants of the Company, Ligand and Seragen.
(a) With respect to any exercise of the Option by Ligand for an
Extension Term, Ligand shall be responsible for any and all
Operating Losses incurred by the Company, and shall benefit from
any Cash Revenue generated by the Company, during such Extension
Term.
(b) With respect to any exercise of the Option by Seragen for an
Extension Term, Seragen shall be responsible for any and all
Operating Losses incurred by the Company, and shall benefit from
any Cash Revenue generated by the Company, during such Extension
Term.
(c) For purposes of Sections 3(a) and (b), Operating Losses shall
mean, with respect to each Extension Term, the difference between
(i) all cash actually expended by the Company during such period
(whether the same would be capitalized or expensed in accordance
with U.S. GAAP), in such period ("Cash Expended"), less (ii) all
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cash revenues actually received by the Company during such period
("Cash Revenue"); provided, however, that Cash Expended shall
include only such expenditures (including capital expenditures) as
are reasonably necessary to conduct the business of the Company
and are consistent with past practice; and provided further that
the Company shall not make any capital expenditures in an
Extension Term, in excess of $30,000 in the aggregate, without the
prior written consent of the party responsible for such
expenditures in such Extension Term; and provided further that
Cash Revenue in each Extension Term (i) shall include any cash
revenue that would have been received in such Extension Term
consistent with past practice, but was not received in such
Extension Term, and (ii) shall exclude any cash revenue that was
received in such Extension Term, but would not have been received
in such Extension Term consistent with past practice.
(d) The obligations of Seragen and Ligand in Sections 3(a) through
3(c) accrued through the termination or earlier expiration of this
Agreement shall survive such termination or expiration.
(e) The Company and Seragen each shall perform their respective
obligations under the Service Agreement, consistent with past
practice, during any Extension Term.
Section 4. Representations and Warranties of Sellers. Each of the
Sellers represents and warrants to each of Seragen and Ligand, as of the date
hereof, as follows:
(a) The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts. The Company currently conducts its business
exclusively within the Commonwealth of Massachusetts. The Company
has the corporate power and authority to own and hold its assets
and properties and to carry on its business as currently
conducted. Xxxxxxx X. Xxxxxx is the Manager of the Company. The
Company has the following named officers, each duly elected and
qualified by the Manager of the Company as of the date hereof:
Xxxxxxxxx Xxxx, President, and Xxxxxxx X. Xxxxxx, Treasurer. The
Company has delivered to each of Seragen and Ligand correct and
complete copies of the Company's Certificate of Organization and
Operating Agreement, each as amended to date. The Members of the
Company are 000 Xxxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Corp., a
Massachusetts corporation, and 660 Corporation, a Massachusetts
corporation (collectively, the "Members").
(b) The Company has the limited liability company power and authority
to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized and
approved by the Company's Manager and the Company's Members. This
Agreement has been duly executed and delivered by, and constitutes
the legal, valid and binding obligation of each of the Sellers,
enforceable against each of the Sellers in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws now
or hereafter in effect, as well as limitations imposed by general
principles of equity upon the specific enforceability of any of
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the remedies, covenants or other provisions and the availability
of injunctive relief or other equitable remedies.
(c) The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the performance of this
Agreement will not, except as set forth in the Disclosure Schedule
to the Asset Agreement, (i) conflict with or result in any breach
of any trust agreement, certificate of organization or operating
agreement of the Company, (ii) except for approval of the
transactions contemplated hereby by the Office of the Attorney
General of the Commonwealth of Massachusetts, Public Charities
Division, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or
regulatory authority or any third party, or (iii) result in a
breach of or default (or give rise to any right of termination,
cancellation or acceleration) under any law, rule or regulation or
any judgment, decree, order, governmental permit (other than
permits set forth in the Disclosure Schedule to the Asset
Agreement which are not transferable), license or order or any of
the terms, conditions or provisions of any mortgage, indenture or
note or any material license, agreement or other instrument or
obligation to which the Company is a party or by which the Company
or its assets and properties are bound.
(d) Each Member has all necessary corporate power and authority and
has taken all action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder and no other proceedings on the part of such
Member is necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. Each Member is a
corporation duly authorized to conduct business and is in good
standing under the laws of the Commonwealth of Massachusetts.
Section 5. Representations and Warranties of Ligand. Ligand
represents and warrants to Sellers, as of the date hereof, as follows:
(a) Ligand is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Ligand is
duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required
except for any jurisdiction where failure to so qualify would not
have a material adverse effect upon Ligand. Ligand has full power
and authority, and holds all permits and authorizations necessary,
to carry on the business in which it is engaged and to own and use
the properties owned and used by it except where the failure to
have such power and authority or to hold such license, permit or
authorization would not have a material adverse effect on Ligand.
(b) Ligand has all necessary corporate power and authority and has
taken all action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder and no other proceedings on the part of
4.
Ligand are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Ligand and constitutes the legal,
valid and binding obligation of Ligand enforceable against Ligand
in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium and other
similar laws now or hereafter in effect, as well as limitations
imposed by general principles of equity upon the specific
enforceability of any of the remedies, covenants or other
provisions and the availability of injunctive relief or other
equitable remedies.
Section 6. Representations and Warranties of Seragen. Seragen
represents and warrants to Sellers, as of the date hereof, as follows:
(a) Seragen is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Seragen is
duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required
except for any jurisdiction where failure to so qualify would not
have a material adverse effect on Seragen. Seragen has full power
and authority, and holds all permits and authorizations necessary,
to carry on the business in which it is engaged and to own and use
the properties owned and used by it except where the failure to
have such power and authority or to hold such license, permit or
authorization would not have a material adverse effect on Seragen.
(b) Seragen has all necessary corporate power and authority and has
taken all action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder and no other proceedings on the part of
Seragen are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seragen and constitutes the legal,
valid and binding obligation of Seragen enforceable against
Seragen in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, arrangement, moratorium
and other similar laws now or hereafter in effect, as well as
limitations imposed by general principles of equity upon the
specific enforceability of any of the remedies, covenants or other
provisions and the availability of injunctive relief or other
equitable remedies.
Section 7. Termination. This Agreement shall remain in effect until
the termination of the Option with respect to both Ligand and Seragen pursuant
to Section 2 hereof, unless (a) the Merger Agreement or the Asset Agreement is
earlier terminated or (b) this Agreement is earlier terminated by written
consent of each of the parties hereto.
Section 8. Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (a) words of any gender include
each other gender; (b) words using the singular or plural number also include
the plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (d)
the terms "Article" or "Section" refer to the specified Article or Section of
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this Agreement; (e) the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or"; and (f) the term
"including" means "including without limitation." Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under GAAP.
Section 9. Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only
if delivered personally against written receipt or by facsimile transmission
with answer back confirmation or mailed (postage prepaid by certified or
registered mail, return receipt requested) or by overnight courier to the
parties at the following addresses or facsimile numbers:
IF TO THE COMPANY, TO:
Marathon Biopharmaceuticals, LLC
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: President
WITH COPIES TO:
Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx
and Popeo PC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxxx & Xxxx
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
000 Xxxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Corp.
(See below)
IF TO THE MEMBERS, TO:
000 Xxxxxxxxxxxx Xxxxxx Xxxx Xxxxxx Corp.
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, President
6.
IF TO LIGAND, TO:
Ligand Pharmaceuticals Incorporated
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
WITH COPIES TO:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
IF TO SERAGEN, TO:
Seragen, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Reed R. Prior.
WITH COPIES TO:
Xxxxxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change
its address, facsimile number or other information for the purpose of notices
to that party by giving notice specifying such change to the other parties
hereto.
Section 10. Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party hereto of any term or condition of this Agreement, in any
7.
one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
All remedies, either under this Agreement or by law or otherwise afforded,
will be cumulative and not alternative.
Section 11. Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
Section 12. No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention
of the parties to confer third-party beneficiary rights upon any other person
or entity.
Section 13. Assignment. Neither this Agreement nor any right, interest
or obligation hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto and any attempt to do so will be
void.
Section 14. Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
Section 15. Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and
if the rights or obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible
and mutually acceptable to the parties herein.
Section 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts executed and performed in such State, without giving
effect to conflicts of laws principles.
Section 17. Consent to Jurisdiction and Forum Selection. The parties
hereto agree that all actions or proceedings arising in connection with this
Agreement shall be initiated and tried exclusively in the State and Federal
courts located in the Commonwealth of Massachusetts. The aforementioned
choice of venue is intended by the parties to be mandatory and not permissive
in nature, thereby precluding the possibility of litigation between the
parties with respect to or arising out of this Agreement in any jurisdiction
other than that specified in this Section. Each party hereby waives any right
it may have to assert the doctrine of forum non conveniens or similar doctrine
or to object to venue with respect to any proceeding brought in accordance
with this paragraph, and stipulates that the State and Federal courts located
in the Commonwealth of Massachusetts shall have in personam jurisdiction and
venue over each of them for the purposes of litigating any dispute,
controversy or proceeding arising out of or related to this Agreement. Each
party hereby authorizes and accepts service of process sufficient for personal
jurisdiction in any action against it as contemplated by this Section by
registered or certified mail, return receipt requested, postage prepaid, to
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its address for the giving of notices as set forth in this Agreement, or in
the manner set forth in Section of this Agreement for the giving of notice.
Any final judgment rendered against a party in any action or proceeding shall
be conclusive as to the subject of such final judgment and may be enforced in
other jurisdictions in any manner provided by law.
Section 18. Counterparts. This Agreement may be executed in any number
of counterparts and by facsimile, each of which will be deemed an original,
but all of which together will constitute one and the same instrument.
[SIGNATURE PAGES TO FOLLOW]
9.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto as of the date first above written.
SERAGEN, INC.,
a Delaware corporation
By: /s/ Reed R. Prior
---------------------
Name: Reed R. Prior
Title: Chief Executive Officer
LIGAND PHARMACEUTICALS INCORPORATED,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and CEO
MARATHON BIOPHARMACEUTICALS, LLC,
a Massachusetts limited liability company
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
000 XXXXXXXXXXXX XXXXXX XXXX XXXXXX CORP., a Massachusetts corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
[SIGNATURE PAGE 1 OF 2 TO EXTENSION OPTION AGREEMENT]
10.
660 CORPORATION, a Massachusetts corporation
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
[SIGNATURE PAGE 2 OF 2 TO EXTENSION OPTION AGREEMENT]
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