EXHIBIT 10.2
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE is dated as of this 17th day of
March, 2000, and is by and between ALPHA 1 BIOMEDICALS, INC. ("Alpha1"), a
Delaware corporation, and BACHEM BIOSCIENCE INC. ("Bachem"), a Delaware
corporation.
WHEREAS:
A. Alpha1 is currently indebted to Bachem in the amount of approximately
US$543,000 plus simple interest accruing from August 1, 1999 to the present
(the "Indebtedness");
B. Bachem is in the process of manufacturing *** grams of GMP Thymosin
(beta) 4 ("Product") for the account of Alpha1; and
C. Alpha1 and Bachem desire to settle and discharge the Indebtedness and
provide for Alpha1 to purchase Product on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
1. Bachem does hereby forever release and discharge Alpha1 from any and all
actions, causes of action, damages, judgments, liabilities, obligations,
claims and demands of any kind or nature whatsoever, whether in law or in
equity, whether known or unknown, which it now has or which it hereafter
may have, for or by reason of any matter arising out of or in connection
with the circumstances relating to the Indebtedness, other than those
obligations arising under this Settlement Agreement and Mutual Release.
2. Alpha1 does hereby forever release and discharge Bachem from any and all
actions, causes of action, damages, judgments, liabilities, obligations,
claims and demands of any kind or nature whatsoever, whether in law or in
equity, whether known or unknown, which it now has or which it hereafter
may have, for or by reason of any matter arising out of or in connection
with the circumstances relating to Indebtedness, other than those
obligations arising under this Settlement Agreement and Mutual Release.
3. In further consideration of, and as a further inducement for, the foregoing
mutual releases, the parties agree as follows:
a. Immediately upon the execution of this Mutual Release, Alpha1 shall pay
to Bachem the sum of US$125,000 (the "Settlement Amount") by wire
transfer of same day, cash available funds to an account designated in
writing by Bachem.
b. Immediately upon the execution of this Mutual Release, Alpha1 shall pay
to Bachem the sum of US$50,000 (the "Down Payment") by wire transfer of
same day, cash available funds to an account designated in writing by
Bachem, as an advance against the Initial Order Purchase Price (as
hereinafter defined).
- 1 -
c. Within thirty (30) days after Alpha1 is granted an exclusive license
(the "License") from the National Institutes of Health ("NIH") to
certain rights pertaining to the use of Thymosin (beta) 4, Alpha1 will
place an order (the "Initial Order") with Bachem for *** grams of
Product at a price of US *** per gram, or US$100,000 in the aggregate
(the "Initial Order Purchase Price").
d. Contemporaneously with the placement of the Initial Order, Alpha1 will
tender the balance of the Initial Order Purchase Price (the "Balance
Payment") of US$50,000 to Silver, Xxxxxxxx & Xxxx, L.L.P., as Escrow
Agent, by wire transfer of same day, cash available funds to an account
to be designated in writing by the Escrow Agent. Interest, if any,
earned on funds held by the Escrow Agent pursuant to this Settlement
Agreement and Mutual Release, shall accrue to the benefit of Alpha1.
e. Upon Alpha1's receipt of the Initial Order of Product and its
acceptance thereof, Alpha1 shall instruct the Escrow Agent to release
the Balance Payment to Bachem. For the purpose hereof, acceptance shall
be deemed to have occurred when Alpha1 receives the full amount of the
Initial Order of Product and the Product meets or exceeds the
Specifications set forth on Exhibit A hereto. If Alpha1 has received
the full amount of the Initial Order of Product, but it does not meet
or exceed the Specifications, then Alpha1 shall so notify Bachem within
thirty (30) days of Alpha1's receipt of the full amount of the Initial
Order of Product. If Alpha1 does not notify Bachem within thirty (30)
days of Alpha1's receipt of the full amount of the Initial Order of
Product that the Product does not meet or exceed the Specifications,
then the Initial Order of Product will be deemed to have been accepted
by Alpha1. If Alpha1 timely notifies Bachem in writing that the Product
does not meet or exceed the Specifications, and if Bachem contests that
determination in a written notice to Alpha1 within ten (10) calendar
days after Alpha1's notice is given, then the parties shall appoint a
mutually-agreeable, qualified independent laboratory (the "Laboratory")
to test the Product for compliance with the Specifications. If the
Laboratory concludes in a written report delivered to the parties and
to the Escrow Agent that the Product meets or exceeds the
Specifications, then (i) such determination shall be final, (ii) the
Escrow Agent shall release the Balance Payment to Bachem, and (iii)
Alpha1 shall be solely responsible for the Laboratory's fees. If the
Laboratory concludes in a written report delivered to the parties and
to the Escrow Agent that the Product does not meet or exceed the
Specifications, then (i) such determination shall be final, (ii) Bachem
shall be solely responsible for the Laboratory's fees, and (iii) the
Escrow Agent shall retain the Balance Payment until such time as Alpha1
receives the full amount of the Initial Order of Product and the
Product meets or exceeds the Specifications.
f. The Escrow Agent shall hold and disburse the Balance Payment in
accordance with the terms of the Escrow Agreement, attached hereto as
Exhibit B.
- 2 -
g. Bachem agrees to sell to Alpha1 at such time and in such quantities as
Alpha1 may request, up to an additional *** grams of Product at a
price of US*** per gram and upon such other terms as the parties shall
mutually agree. To avoid misunderstanding, the foregoing sentence gives
Alpha1 the right to purchase up to an additional *** grams of Product,
but does not impose an obligation on Alpha1 to do so.
h. For Alpha1's requirements of Product in excess of *** grams, Alpha1
shall recognize Bachem as a preferred (but not exclusive) supplier of
Product, and Bachem agrees to sell Product to Alpha1 upon such pricing
and other terms as the parties shall mutually agree.
4. The releases set forth in Paragraphs 1 and 2 above shall become effective
only upon the payment of the Settlement Amount and the Down Payment by
Alpha1 to Bachem in accordance with Paragraphs 3.a and 3.b above. In the
event NIH has not granted the License to Alpha1 within the two (2) year
period beginning on the date of this Settlement Agreement and Mutual
Release, then Alpha1 hereby agrees to nevertheless purchase the Initial
Order on the terms set forth in Paragraphs 3.c, 3.d, 3.e and 3.f above.
5. It is the intention of the parties in executing this Settlement Agreement
and Mutual Release and in providing the consideration acknowledged and/or
required by this Settlement Agreement and Mutual Release that this
Settlement Agreement and Mutual Release is a full, final, mutual and
complete release of and from the matters referred to Paragraphs 1 and 2
above.
6. All notices, requests, demands and other communications between the parties
shall be in writing and shall be deemed to have been duly given (a) if
personally delivered and a receipt obtained therefor, then on the date and
at the time of delivery, (b) if mailed by certified or registered mail,
postage prepaid, return receipt requested, then three (3) business days
after mailing, (c) if by overnight courier, then on the date following the
date given to the courier firm, or (d) if transmitted by fax, then on the
date of transmission (but only if the sending fax machine produces a
confirmation that the fax machine to which the notice was sent received the
fax), to the parties at the following addresses or fax numbers (or such
other addresses or fax numbers which shall be given in writing by either
party to the other):
If to Alpha1: Alpha 1 Biomedicals, Inc.
------------ 0 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
- 3 -
If to Bachem: Bachem Bioscience Inc.
------------ 0000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
7. This Settlement Agreement and Mutual Release shall inure to the benefit of
each party's officers, directors, stockholders and employees, their
respective heirs, administrators, personal representatives and executors,
and the Company's successors and assigns.
8. This Settlement Agreement and Mutual Release may be amended only by an
instrument in writing signed by all of the parties hereto.
9. This Mutual Release shall be construed and governed by the laws of the
State of Maryland without regard to its conflict of law rules. If any
provision of this Mutual Release is held to be invalid or unenforceable,
such invalidity or unenforceability will not affect the validity or
enforceability of the other provisions of this Mutual Release, the other
provisions of this Mutual Release shall be enforced as fully as possible,
and the unenforceable provision shall be deemed modified to the limited
extent required to permit its enforcement in a manner most closely
approximating the intention of the parties as expressed herein.
10. This Settlement Agreement and Mutual Release may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but
all of which together will constitute one and the same instrument.
11. Each of the parties agrees to execute all further instruments and documents
and to take all further action as the other party may reasonably request in
order to give effect to the terms and purpose of this Settlement Agreement
and Mutual Release.
12. Each person executing this Settlement Agreement and Mutual Release on
behalf of a party to this Settlement Agreement and Mutual Release
represents and warrants that he or she is duly authorized to do so on
behalf of such party.
- 4 -
IN WITNESS WHEREOF, this Settlement Agreement and Mutual Release has been
executed by the parties, the corporate party acting through its duly authorized
officers, as of the date and year first above written.
ALPHA1:
------
ALPHA 1 BIOMEDICALS, INC.
By:/s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxxx,
Chief Executive Officer
BACHEM:
------
BACHEM BIOSCIENCE INC.
By: /s/ Xxxxxx Xxxx
------------------------------
Xxxxxx Xxxx, Vice President and
Chief Operating Officer
- 5 -
