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ITEM 7.C.
EXHIBIT 1
CONFIDENTIAL TREATMENT REQUESTED: PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "CONFIDENTIAL TREATMENT REQUESTED," AND APPROPRIATE
SECTIONS, WHERE TEXT HAS BEEN OMITTED, ARE NOTED WITH "[CONFIDENTIAL TREATMENT
REQUESTED]." AN UNREDACTED VERSION OF THIS AGREEMENT HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of February 28, 1997 by and among HOUGHTEN PHARMACEUTICALS, INC., a
Delaware corporation ("HPI"), MULTIPLE PEPTIDE SYSTEMS, INC., a California
corporation and a wholly-owned subsidiary of HPI ("MPS"), XXXXXXX X. XXXXXXXX,
PH.D., an individual ("HOUGHTEN"), and RAH Acquisition Corp., a California
corporation ("NEWCO"), with reference to the following facts:
RECITALS
A. Pursuant to the Amended and Restated Articles of Incorporation
of MPS, a copy of which is attached hereto as EXHIBIT A (the "MPS ARTICLES"),
MPS is authorized to issue only one class of shares of stock, and the total
number of shares which MPS is authorized to issue is 1,000,000 shares (the "MPS
CAPITAL STOCK"). HPI owns all of the issued and outstanding shares (the
"SHARES") of MPS Capital Stock.
B. Newco is a corporation which has been newly-formed by Houghten
for the purpose of acquiring the Shares. Houghten owns all of the issued and
outstanding shares of Newco's capital stock.
X. Xxxxxxxx and his wife, Xxxxxxx X. Xxxxxxxxxxx, are co-trustees
("CO-TRUSTEES") of that certain Xxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxxxxx
Revocable Trust, UTD 11/09/90 (the "TRUST"), which owns at least 300,000 shares
of HPI common stock.
D. Newco desires to purchase, and HPI desires to sell, the Shares
for the consideration and on the terms set forth in this Agreement. The
parties hereto desire to enter into this Agreement and the related arrangements
referenced herein (and, in certain instances, to cause the Co-Trustees on
behalf of the Trust to enter into arrangements referenced herein) for the
purpose of setting forth certain representations, warranties and covenants as
an inducement to the purchase and sale of the Shares and the conditions
precedent to the consummation of such transaction.
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants herein contained, HPI, MPS, Houghten and
Newco agree as follows:
ARTICLE 1
BASIC TRANSACTION
1.1 Purchase and Sale of Shares. On and subject to the terms and
conditions of this Agreement, Newco agrees to purchase from HPI, and HPI agrees
to sell, transfer, convey and deliver to Newco (the "SALE"), all of the Shares
at the Closing (as defined in Section 1.6) in exchange for the Purchase Price
(as defined in Section 1.2) and the performance by Houghten and Newco (and,
following the Closing, MPS) of the covenants of such parties set forth or
referred to in this Agreement (as well as the performance
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by the Co-Trustees on behalf of the Trust of certain obligations referenced
herein).
1.2 Purchase Price. Newco agrees to pay to HPI an aggregate of
$1,500,000.00 in cash (the "PURCHASE PRICE").
(a) Staging of Purchase Price Payment. Payment of the
Purchase Price shall occur as follows: (i) $500,000.00 will paid on the
Closing Date in immediately available funds; (ii) an additional $500,000.00
(plus accrued interest, as provided below) will be paid on or before June 1,
1997 (the "JUNE PAYMENT"); and (iii) an additional $500,000.00 (plus accrued
interest, as provided below) will be paid on or before December 1, 1997 (the
"DECEMBER PAYMENT").
(b) Promissory Notes; Guaranty and Stock Pledge. The
obligations to pay the June Payment and the December Payment shall be evidenced
by, and subject to the further terms of, Promissory Notes substantially in the
form attached hereto as EXHIBIT B (the "PROMISSORY NOTES"). Houghten shall
cause the obligations of Newco under the Promissory Notes to be guaranteed, as
of the Closing, by the Co-Trustees on behalf of the Trust pursuant to the terms
of a Guaranty (the "GUARANTY") in substantially the form attached hereto as
EXHIBIT C, which Guaranty Houghten shall cause to be secured, as of the
Closing, by a pledge of certain shares of HPI common stock owned by the Trust
pursuant to the terms of a Stock Pledge Agreement substantially in the form
attached hereto as EXHIBIT D (the "STOCK PLEDGE AGREEMENT"). Without limiting
the terms of the Promissory Notes, (i) in the event that Newco defaults in the
payment of the June Payment, then the December Payment and an amount of
$750,000.00 of the Customer Referral Payments (defined below - with such amount
of $750,000.00 referred to herein as the "MINIMUM CUSTOMER REFERRAL PAYMENT
AMOUNT") shall become immediately due and payable in full, without notice of
any kind, (ii) in the event that Newco defaults in the payment of the December
Payment, then the Minimum Customer Referral Payment Amount shall become
immediately due and payable in full, without notice of any kind, (iii) each of
the June Payment and the December Payment shall become immediately due and
payable in full, without notice of any kind, in the event there is a "CHANGE IN
CONTROL" (as defined below) of MPS or Newco (excluding, with respect to MPS,
the transaction contemplated by this Agreement), and (iv) the amounts owing
with respect to the June Payment and the December Payment, together with all
the accrued and unpaid interest thereon, shall bear interest from the Closing
Date until the balance thereof, together with all the accrued interest thereon,
is paid in full, at a rate per annum equal to 150 basis points in excess of the
"PRIME RATE" as quoted in the "MONEY RATE" section of The Wall Street Journal
(Western edition) on the Closing Date, computed for the actual number of days
elapsed including the first day, but excluding the last day based on a 365-day
year. For purposes of the foregoing sentence, "CHANGE IN CONTROL" shall mean
the occurrence of any of the following events: (A) the consummation of an
acquisition or series of related acquisitions which results in one person or
entity, or two or more
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CONFIDENTIAL TREATMENT REQUESTED
persons or entities acting as a partnership, limited partnership, syndicate or
other group, owning fifty-one percent (51%) or more of the voting securities of
MPS or Newco; (B) the consummation of a merger, consolidation or other
reorganization of MPS or Newco if after giving effect to such merger,
consolidation or other reorganization, Houghten does not (either directly or
indirectly through Newco) represent a majority-in-interest of the holders of
voting securities (on a fully diluted basis) with the ordinary voting power to
elect directors of Newco and MPS after such merger, consolidation or other
reorganization; (C) the sale of all or substantially all of the assets of Newco
or MPS; (D) the dissolution or liquidation of Newco or MPS (excepting a merger
of Newco with and into MPS or a merger of MPS with and into Newco); or (E) any
event which is similar in effect to any of the foregoing events set forth in
clauses (A) through (D) above; provided, however, that a "CHANGE IN CONTROL"
shall not be triggered by the transfer of shares of Newco or MPS to an estate
planning vehicle of Houghten (such as a revocable trust) so long as Houghten
retains direct (or, in the case of MPS, indirect through Newco) investment
control with respect to such shares.
1.3 Customer Referral Payments. In addition to the Purchase
Price, as consideration for HPI agreeing to undertake certain efforts, to the
extent HPI is able in accordance with the terms of HPI's agreements and
arrangements with its collaborators and research partners (and as further
qualified below), to provide MPS (or Newco, in the event MPS is merged with and
into Newco) following the Closing with customer referrals to collaborators and
research partners of HPI, Newco shall, on each of the third, fourth and fifth
anniversaries of the Closing Date (as defined in Section 1.6), pay to HPI, or
its successor or assignee, an amount equal to the greater of (A) $250,000.00 or
(B) [CONFIDENTIAL TREATMENT REQUESTED] of the aggregate Sales (as defined
below) for the preceding twelve months of MPS, Newco and each affiliate and
licensee of MPS or Newco which utilizes the Licensed Technology (as defined in
Section 5.11) (collectively, the "CUSTOMER REFERRAL PAYMENTS"). In the event
that Newco defaults in the payment of any Customer Referral Payment, then the
balance of the Minimum Customer Referral Payment Amount then unpaid shall
become immediately due and payable in full, without notice of any kind. Except
as provided in Section 1.3(d) below, no prepayment of any Customer Referral
Payment(s) (whether upon acceleration or otherwise) shall extinguish Newco's
obligations to make the balance of such payments as and when due as provided
herein.
(a) Sales. For purposes of determining the amount of the
Customer Referral Payments, "SALES" shall mean (i) all revenues of MPS or Newco
derived from utilizing any of the Licensed Technology, and all revenues of each
of MPS' or Newco's affiliates and licensees derived from utilizing any of the
Licensed Technology, with such revenues to be determined pursuant to the
accounting principles utilized by MPS (or, if Newco becomes the operating
entity upon a merger with MPS, then Newco) in the preparation of its financial
statements (which principles shall at least be in accordance with
generally accepted accounting
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principles applied on a consistent basis from period to period) less (ii)
revenues of MPS or Newco under the terms of contracts with the United States
government (including that certain National Institute on Drug Abuse (NIDA)
Contract No. N01DA-6-7053 ("Synthesis and Distribution of Opioid and Related
Peptides" - dated August 1, 1996) and that certain National Institute of Child
Health & Human Development (NICHD) Contract No. NO1HD-5-3231 ("Maintenance and
Operation of a Synthetic Peptide Facility" - dated May 1, 1995)).
(b) Unconditional Obligation. The obligation of Newco to
pay the Customer Referral Payments shall be unconditional and shall not be
contingent upon the receipt by MPS (or Newco) of a minimum number of referrals,
if any at all, or the occurrence of any other event. Moreover, Houghten and
Newco acknowledge and agree that HPI's customer referral efforts shall be
solely within HPI's discretion and none of Houghten, Newco or MPS shall have
any recourse against HPI with respect thereto.
(c) Guaranty. Houghten shall cause Newco's obligation to
pay the Customer Referral Payments to be guaranteed, as of the Closing, by the
Co-Trustees on behalf of the Trust pursuant to the terms of the Guaranty, which
Guaranty Houghten shall cause to be secured, as of the Closing, by a pledge of
shares of HPI common stock owned by the Trust pursuant to the terms of the
Stock Pledge Agreement.
(d) Prepayment. At any time prior to the third
anniversary of the Closing Date, Newco may satisfy in full its obligation to
make the Customer Referral Payments by making payment to HPI, or its successor
or assignee, of $1,000,000.00 in immediately available funds.
(e) Audit Right. HPI shall have a right to review the
financial records and statements of Newco, MPS and the affiliates and licensees
of Newco or MPS which utilize the Licensed Technology (or derive revenue
therefrom) upon reasonable notice to Newco and from time to time (although no
more frequently for each entity than one period of review during any 12-month
period), and Newco will pay to HPI the reasonable costs and fees related to any
such review if it shall be determined that any Customer Referral Payment made
by Newco was deficient by more than five percent (5%).
1.4 Cash Dividend from MPS to HPI. Prior to the Closing, MPS
shall declare a cash dividend to HPI (the "CASH DIVIDEND"), payable immediately
prior to the Closing, in an amount equal to the amount of cash and cash
equivalents of MPS on the Closing Date in excess of $250,000.00, as set forth
on an estimated balance sheet of MPS as of the Closing Date prepared by the
Chief Financial Officer of MPS in accordance with generally accepted accounting
principles. HPI may cause MPS to make such payment to HPI in the form of a
dividend or a redemption. In the event that payment to HPI of the Cash
Dividend has not been completed prior to the Closing, Newco, Houghten and MPS
shall each exercise their
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commercially reasonable efforts to assist in the execution of such payment.
1.5 Section 338(h)(10) Elections. The parties understand that
Section 338(h)(10) Elections (as defined in Section 5.14) will be made in
respect of MPS, and agree to comply with the provisions of Section 5.14 hereof
in respect thereto.
1.6 Closing. The closing of the Sale (the "CLOSING") shall take
place (a) at the offices of Pillsbury Madison & Sutro LLP, 000 Xxxx Xxxxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx at 9:30 A.M. on the first business day on which
the last to be fulfilled or waived of the conditions set forth in Article 6
hereof shall be fulfilled or waived in accordance with this Agreement or (b) at
such other place and time and/or on such other date as HPI and Houghten may
agree (the "CLOSING DATE").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF HPI AND MPS
Except as otherwise set forth in SCHEDULE 1 hereto delivered to
Houghten and Newco concurrently with the execution of this Agreement, each of
HPI and MPS, jointly and severally, represents, warrants and covenants to
Houghten and Newco as of the date hereof as follows:
2.1 Organization. HPI is a corporation (a) duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (b) duly qualified and in good standing to do business as a foreign
corporation in the State of California. MPS is a corporation (a) duly
organized, validly existing and in good standing under the laws of the State of
California and (b) has all requisite corporate power and corporate authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. A true, correct and complete copy of the MPS Articles is
attached hereto as EXHIBIT A. MPS has heretofore delivered to Houghten (i) a
true, correct and complete copy of the Amended and Restated MPS Bylaws (the
"MPS BYLAWS"), and all amendments thereto, (ii) to the "ACTUAL KNOWLEDGE"1 of
HPI regarding such items, true, correct and complete copies of the minutes of
all meetings and other corporate actions of the directors, committees of the
directors and of the shareholders of MPS from its inception through January 1,
1992, and (iii) true, correct and complete copies of the minutes of all
meetings and other corporate actions of the directors, committees of the
directors and of the shareholders of MPS after January 1, 1992 and through the
Closing Date.
____________________
1 "ACTUAL KNOWLEDGE," as used in this Agreement, shall be defined by the
present and actual knowledge, without any investigation, of the following: (i)
for HPI and MPS, Xx. Xxxxxx X. Xxxxxxxxx and Xx. Xxxxxxx X. XxXxxxxx; and (ii)
for Houghten and Newco, Xx. Xxxxxxx X. Xxxxxxxx.
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2.2 Capital Structure. The authorized capital stock of MPS
consists of 1,000,000 shares of Common Stock, of which only the Shares are
issued and outstanding. HPI is the sole record and beneficial owner of the
Shares and no other person has any right, title or interest in or to the
Shares. HPI has good and valid title to the Shares free and clear of all
liens, charges, claims and encumbrances, security interests, equities or
restrictions on transfer. The Shares have been duly authorized and validly
issued in compliance with applicable law, and are fully paid and nonassessable.
There are (a) no outstanding warrants, options, or rights (including conversion
or preemptive rights) to subscribe for or purchase any capital stock or other
securities from MPS, (b) no voting trusts or voting agreements among, or
irrevocable proxies executed by, the shareholder of MPS, (c) no existing right
of such shareholder to require MPS to register any securities or to participate
with MPS in any registration of securities, and (d) other than the transaction
contemplated hereby, no agreements providing for the purchase or sale of the
capital stock of MPS.
2.3 Authority. HPI and MPS each has all requisite corporate power
and authority to enter into this Agreement and the License Agreements (as
defined in Section 5.11) and, subject to satisfaction of the conditions set
forth herein, to consummate the transactions contemplated hereby and by the
License Agreements. The execution and delivery of this Agreement and the
License Agreements, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of each of HPI and MPS. This Agreement and the License Agreements
have been duly executed and delivered by HPI and MPS, and such agreements
constitute valid and binding obligations of each of HPI and MPS enforceable in
accordance with their terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or state laws
affecting the rights of creditors and the effect or availability of rules of
law governing specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedy is considered in a proceeding
at law or in equity). The execution and delivery of this Agreement and the
License Agreements do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under (a) any provision of the
MPS Articles or the MPS Bylaws or (b) to the "BEST KNOWLEDGE"2 of HPI regarding
such items, any material agreement, contract or arrangement or any instrument,
permit, franchise, license, judgment, order or any local, state, federal
____________________
2 "BEST KNOWLEDGE," as used in this Agreement, shall be defined by the
present and actual knowledge, following reasonable investigation or inquiry, of
the following: (i) for HPI and MPS, Xx. Xxxxxx X. Xxxxxxxxx and Xx. Xxxxxxx X.
XxXxxxxx; and (ii) for Houghten and Newco, Xx. Xxxxxxx X. Xxxxxxxx.
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or foreign law, ordinance, rule or regulation applicable to MPS or its
properties or assets. Other than as set forth on SCHEDULE 1 hereto, to the
Best Knowledge of HPI, there are no consents, waivers or approvals ("CONSENTS")
of third parties applicable to HPI or MPS or their respective operations or
businesses that are required to be obtained by HPI or MPS in connection with
the execution and delivery of this Agreement and the License Agreements by such
parties and the performance of their respective obligations hereunder, except
such Consents as shall have been obtained prior to the Closing. To the Best
Knowledge of HPI, no Consent, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality (a "GOVERNMENTAL ENTITY"), is
required by or with respect to HPI or MPS in connection with the execution and
delivery of this Agreement and the License Agreements by such parties and the
consummation of the transactions contemplated hereby, except for the filing of
a Current Report on Form 8-K by HPI with the Securities and Exchange Commission
(the "SEC").
2.4 Taxes. HPI and MPS have duly filed with the appropriate
United States, state, local and foreign governmental agencies all tax returns
and reports required to be filed by MPS, which returns are accurate and
complete, and have paid or accrued in full all taxes, duties, charges,
withholding obligations and other governmental liabilities of MPS as well as
any interest, penalties, assessments or deficiencies, if any, due to, or
claimed to be due by, any Governmental Entity from MPS (all such items are
collectively referred to herein, for purposes of this Section 2.4, as "TAXES").
MPS is not a party to any pending action or proceeding, nor to the Best
Knowledge of HPI is any such action or proceeding threatened by any
Governmental Entity for the assessment or collection of Taxes. There are no
liens for Taxes except for liens for Taxes not yet delinquent.
2.5 Compensation. A true, correct and complete list of all
employees of MPS as of the date hereof, specifying their names and job
designations, their dates of hire, the total amount paid or payable as wages,
salaries or other forms of direct compensation, and the basis of such
compensation, whether fixed or commission or a combination thereof, has been
provided to Houghten. To the Actual Knowledge of HPI, MPS presently has no
consultants.
2.6 Insurance. MPS has provided Houghten with true, correct and
complete copies of all policies of insurance to which MPS is a party or is a
beneficiary or named insured. MPS has received no notices of cancellation,
termination or non-renewal with respect to such policies.
2.7 Bank Accounts. Included in SCHEDULE 1 is (a) a true, correct
and complete list setting forth the names and addresses of all banks, other
institutions and state governmental departments at which MPS has accounts,
money market accounts, deposits or safety deposit boxes, or special deposits
required to be held by such state governmental departments, together with the
nature of
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such accounts or deposits and the names of all persons authorized to draw on or
give instructions with respect to such accounts or deposits, or to have access
thereto, and (b) the names and addresses of all persons, if any, holding a
power-of-attorney on behalf of MPS.
2.8 Financial Statements. HPI has delivered to Houghten an
unaudited balance sheet, statement of operations and statement of cash flows
for MPS at and for the nine-month period ended September 30, 1996.
2.9 Business of MPS. To the Actual Knowledge of HPI, since March
31, 1995, no events have occurred which have had a materially adverse effect on
MPS, or which with solely the passing of time are likely to have a materially
adverse effect on MPS, except to the extent Houghten has knowledge (under a
Best Knowledge standard) with respect thereto.
2.10 Master Agreements. HPI has not received any notice of a
default by HPI from another party under, and to the Actual Knowledge of HPI no
right of termination arising as a result of any material default by HPI exists
for any other party under, the following arrangements (collectively, the
"MASTER AGREEMENTS"): (i) that certain License Agreement dated April 11, 1985
between The Scripps Research Institute (formerly known as Scripps Clinic and
Research Foundation) ("SCRIPPS") and Houghten; (ii) that certain License
Agreement dated May 6, 1985 between Scripps and Houghten; (iii) the various
assignments by which rights of Houghten under the foregoing license agreements
with Scripps have been assigned to HPI and MPS; (iv) that certain License and
Option to License Agreement effective as of January 1, 1994 between Chiron
Corporation ("CHIRON"), Chiron Mimotopes Pty Ltd. ("CMPL") and HPI; (v) that
certain Sub-License Agreement effective as of January 1, 1994 between Chiron
and HPI; (vi) that certain Letter of Understanding Concerning Licensing
Agreements dated December 15, 1994 from HPI to Chiron and CMPL; and (vii) that
certain Heads of Agreement dated as of March 31, 1995 between Chiron, HPI, MPS,
Chiron Mimotopes U.S. and Chiron Mimotopes Peptide Systems L.L.C.
2.11 Compliance with Law.
(a) To the Best Knowledge of HPI, the business of MPS has
in all material respects been conducted in compliance with all applicable laws,
regulations, orders and other requirements of Governmental Entities, including,
without limiting the generality of the foregoing, all laws, regulations and
orders relating to employment practices and procedures, the health and safety
of employees and export controls.
(b) Since January 1, 1992, there have been no judicial or
administrative proceedings or other investigations, and there are no judicial
or administrative proceedings or other investigations pending (or to the Actual
Knowledge of HPI threatened), alleging violation by MPS of any local, state,
federal or foreign laws, regulations and orders respecting the
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business of MPS. To the Best Knowledge of HPI, since March 31, 1995 MPS has
not received any notice of any investigation, claim or proceeding against MPS
by any Governmental Entity.
2.12 Litigation. There is no claim, dispute, action, proceeding,
notice, order, suit, appeal or investigation, at law or in equity, pending
against MPS, or involving any of its assets or properties, before any court,
agency, authority, arbitration panel or other tribunal, and to the Actual
Knowledge of HPI none have been threatened against MPS. MPS is not subject to
any order, writ, injunction or decree of any court, agency, authority,
arbitration panel or other tribunal which has been promulgated since January 1,
1992.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
HOUGHTEN AND NEWCO
Except as otherwise set forth in SCHEDULE 2 delivered to HPI and MPS
prior to the execution of this Agreement and attached hereto, each of Houghten
and Newco, jointly and severally, represents, warrants and covenants to HPI and
MPS as of the date hereof as follows:
3.1 Organization.
(a) Newco. Newco (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and (ii) has all requisite corporate power and corporate authority to own,
lease and operate its properties and to carry on its business as it is now
being conducted.
(b) Trust. The Trust has been validly formed and validly
exists, and the Co-Trustees are the sole trustees of the Trust. Only the
execution and delivery of the Guaranty and the Stock Pledge Agreement by the
Co-Trustees is required in order for the Trust to undertake the obligations
evidenced by such documents. The shares of HPI common stock pledged pursuant
to the terms of the Stock Pledge Agreement are held beneficially and of record
solely by the Trust, and there are no liens, claims or encumbrances of any kind
with respect to such shares (except for legends imposed by HPI which are
affixed to certificates evidencing such shares and stop transfer orders imposed
by HPI with respect thereto).
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3.2 Authority.
(a) Newco, Houghten and the Co-Trustees (on behalf of the
Trust) each have all requisite power and authority to enter into, as
applicable, this Agreement, the Promissory Notes, the Guaranty and the Stock
Pledge Agreement (the agreements other than this Agreement are collectively
referred to herein as the "OTHER AGREEMENTS"), and, subject to satisfaction of
the conditions set forth herein, to consummate the transactions contemplated
hereby and by the Other Agreements. The execution and delivery of this
Agreement and the Other Agreements and the consummation of the transactions
contemplated hereby and by the Other Agreements have been duly authorized by
all necessary corporate action on the part of Newco and by all necessary action
on the part of the Trust. This Agreement and the Other Agreements have been
duly executed and delivered by Houghten, the Co-Trustees (on behalf of the
Trust) and Newco and such agreements constitute valid and binding obligations
of each of Houghten, the Trust and Newco, enforceable in accordance with their
terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar federal or state laws affecting the
rights of creditors and the effect or availability of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity).
The execution and delivery of this Agreement and the Other Agreements do not,
and the consummation of the transactions contemplated hereby and thereby will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under (a) any provision of the Articles of Incorporation or
Bylaws of Newco, (b) any agreement evidencing the Trust, or (c) any material
agreement, contract or arrangement or any instrument, permit, franchise,
license, judgment, order or any local, state, federal or foreign statute, law,
ordinance, rule or regulation applicable to Houghten, the Co-Trustees, the
Trust or Newco or their respective properties or assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or other
person is required by or with respect to Houghten, the Co-Trustees, the Trust
or Newco in connection with the execution and delivery of this Agreement or the
Other Agreements or the consummation by such parties of the transactions
contemplated hereby and thereby.
3.3 Opportunity to Investigate; Prior Involvement with MPS.
Houghten and Newco expressly acknowledge that each of them and their respective
agents and representatives (a) have been provided with access to the assets,
properties, technology, operations, books, records, licenses, agreements,
third-party arrangements, financial and operating data and other information
with respect to the business, financial and legal condition of MPS and, to the
extent applicable to business of MPS, of HPI (including, in the
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instance of HPI and without limitation, all third-party agreements and
arrangements of HPI (such as technology licenses or assignments) which bear
upon the business of MPS) and (b) have had the opportunity to ask questions and
receive answers from HPI and MPS regarding MPS and its business. Houghten and
Newco expressly acknowledge that Houghten was a founder of MPS, HPI, Newco and
the Xxxxxx Xxxxx Institute for Molecular Studies ("TPIMS") and has, since the
inception of each, been an executive officer and director of each such entity
and closely involved in its operations.
3.4 MPS Intellectual Property. Houghten expressly acknowledges
and agrees that he has knowledge of and has sought the advise of counsel with
respect to the nature and extent of any and all inventions, discoveries,
technology, works, programs, formulae, procedures, protocols, techniques and
results of experimentation, testing and related data and information and all
intellectual property rights relating thereto (including without limitation,
patent rights, copyrights, trademarks, service marks, trade secrets and
know-how) which are (a) owned by or licensed to MPS, HPI or TPIMS or to which
MPS, HPI or TPIMS has otherwise acquired rights or (b) necessary or advisable
for the conduct of the historical, present and intended businesses of MPS.
Specifically, Houghten expressly acknowledges and agrees that he was involved
in the negotiation and drafting of the following agreements (without
limitation) and as a result thereof is aware of the terms and conditions of the
third-party arrangements with respect thereto: (i) each of the Master
Agreements; and (ii) all arrangements to which HPI or TPIMS is a party which
bear upon or relate to positional scanning technology (including, without
limitation, the technology which is the subject of U.S. Patent No. 5,556,762).
3.5 Licensed Technology. Houghten expressly acknowledges and
agrees that he has had the opportunity to become, and is, fully informed as to
the character and confines of the Licensed Technology (as defined in Section
5.11), including, without limitation, all of the rights, obligations,
agreements and restrictions associated therewith as well as the terms of all
third-party arrangements with respect thereto.
3.6 No Intent to Sell. Houghten has no present intent to sell,
transfer or otherwise dispose of the stock or assets of Newco or MPS or to vote
(or to cause Newco to vote) in favor of any proposal or transaction for (a) the
disposition of any portion of the business or assets of Newco or MPS or (b) any
business combination between Newco or MPS and any other person or entity.
Newco is acquiring the Shares for its own account and not with a view to or for
sale in connection with any distribution thereof.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Each of HPI and MPS, jointly and severally on the one hand, and each
of Houghten and Newco, jointly and severally on the other hand, represents,
warrants and covenants to each other as of the date hereof as follows:
4.1 Assets. To their Actual Knowledge, SCHEDULE 3 sets forth a
true and correct list of all of the material franchises, rights, privileges,
properties and assets of MPS of every nature and description, tangible or
intangible, real, personal or mixed, wherever located, which are owned or held
by MPS and directly used in the Business (defined below) of MPS (collectively,
but without reference to the "Actual Knowledge" qualification, the "MPS
ASSETS"). The "BUSINESS" of MPS, as used herein, shall have the same
definition as the "BUSINESS" of MPS following the Sale as set forth in Section
5.8 below.
4.2 Certain Advances. To their Actual Knowledge, there are no
receivables of MPS owing from directors, officers, employees, consultants,
advisors or shareholders of MPS.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Legal Conditions to the Sale. Each party will take all
reasonable actions (a) necessary to comply promptly with all legal requirements
which may be imposed on such party with respect to the Sale and will promptly
cooperate with and furnish information to the other parties hereto in
connection with any such requirements imposed upon the other parties in
connection with the Sale and (b) to obtain (and to cooperate with the other
parties, if any, in obtaining) any consent, authorization, order or approval
of, or any exemption by, any governmental authority, or other third party,
required to be obtained or made by such party, if any (or by the other
parties), in connection with the Sale or the taking of any action contemplated
in connection therewith, by this Agreement, by the License Agreements or by the
Other Agreements.
5.2 Interim Operations of MPS. Each of HPI and MPS covenants and
agrees that, prior to the Closing (unless Houghten shall otherwise agree in
writing), and other than as contemplated by this Agreement, MPS' business shall
be conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of HPI and MPS shall use reasonable efforts to
preserve MPS' business organization intact and maintain MPS' existing relations
with customers, suppliers, employees and business associates.
5.3 Access. Upon reasonable notice, MPS shall afford the
officers, employees, counsel, accountants and other authorized representatives
(collectively, "REPRESENTATIVES") of Houghten and
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Newco access during normal business hours throughout the period prior to the
Closing, to its properties, books, contracts, agreements and records and,
during such period, MPS shall furnish promptly to Houghten and Newco all
information concerning its business, properties and personnel as Houghten,
Newco or their Representatives may reasonably request.
5.4 Good Faith. Each party shall act in good faith (a) in an
attempt to cause to be satisfied all the conditions precedent to its
obligations and those of the other parties to this Agreement over which it has
control or influence and (b) take all reasonable action within its capability
necessary to render accurate as of the Closing its representations and
warranties contained in this Agreement.
5.5 State Statutes. If any state takeover law shall become
applicable to the transactions contemplated by this Agreement, MPS and its
Board of Directors or Newco and its Board of Directors, as the case may be,
shall use their reasonable efforts to obtain such approvals and take such
actions as are necessary so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effects of such
state takeover law on the transactions contemplated by this Agreement.
5.6 Update to Disclosures. Without limiting a party's right to
rely on the representations and warranties of the other party(ies) as of the
date of this Agreement, each party shall provide updates to the disclosures
provided or made available hereunder as to material facts which arise between
the date of this Agreement and the Closing Date and which, if they had occurred
prior to the date of this Agreement, would have been required to have been
disclosed in order to make the representations and warranties contained in
Articles 2, 3 or 4, as the case may be, true and correct as of the date of this
Agreement.
5.7 Publicity; Cooperation. Any public announcement or similar
publicity with respect to this Agreement, the License Agreements and the Other
Agreements and the transactions contemplated hereby and thereby will be issued,
if at all, at such time and in such manner as HPI shall determine in its
reasonable discretion. Subject to HPI's obligations under the federal
securities laws, Houghten shall have a reasonable opportunity to review and
modify any such announcement or publicity prior to its public dissemination.
5.8 Non-Competition.
(a) Activities of HPI.
(i) Relative to the Business of MPS. From and
after the Closing Date and until the seventh anniversary of the Closing Date,
neither HPI nor any majority-owned subsidiary of HPI shall directly or
indirectly, without the prior written consent of
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CONFIDENTIAL TREATMENT REQUESTED
MPS, Newco or Houghten, operate any business or enterprise engaged in any
business which is competitive with the Business (as defined below) of MPS. For
the purposes of this Section 5.8(a), (1) the "BUSINESS" of MPS shall mean (A)
the making, using and selling of [CONFIDENTIAL TREATMENT REQUESTED] (defined
below), (B) the making, using and selling of [CONFIDENTIAL TREATMENT REQUESTED]
utilizing technology which is the subject of [CONFIDENTIAL TREATMENT
REQUESTED], which can be [CONFIDENTIAL TREATMENT REQUESTED] and (C) the
manufacture and sale of [CONFIDENTIAL TREATMENT REQUESTED] (2) [CONFIDENTIAL
TREATMENT REQUESTED] shall be defined as set forth on SCHEDULE X and the
related appendix attached hereto, (3) [CONFIDENTIAL TREATMENT REQUESTED] shall
be comprised solely of [CONFIDENTIAL TREATMENT REQUESTED] and (4) [CONFIDENTIAL
TREATMENT REQUESTED] shall mean a [CONFIDENTIAL TREATMENT REQUESTED].
(ii) Restrictions on Sublicensing. From and after
the Closing Date and until the seventh anniversary of the Closing Date, HPI
shall not, without the prior written consent of MPS, Newco or Houghten, further
sublicense its rights under [CONFIDENTIAL TREATMENT REQUESTED] to any entity
which is engaged primarily in the manufacture, use and sale of [CONFIDENTIAL
TREATMENT REQUESTED].
(iii) Exceptions. Notwithstanding the foregoing,
the covenants of HPI set forth in this Section 5.8(a) shall not prohibit HPI or
any subsidiary of HPI from making, having made, using, selling or otherwise
acting or dealing in respect of (A) any [CONFIDENTIAL TREATMENT REQUESTED], and
(B) [CONFIDENTIAL TREATMENT REQUESTED].
(iv) Injunctive Relief. HPI expressly
acknowledges that damages alone may not be an adequate remedy for any breach by
HPI or any of its majority-owned subsidiaries of the covenants set forth in
this Section 5.8(a) and that MPS or Newco, in addition to any other remedies
which it may have, shall be entitled to seek injunctive relief, including
specific performance, in any court of competent jurisdiction with respect to
any actual or threatened breach by HPI or any of its majority-owned
subsidiaries of said covenants.
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CONFIDENTIAL TREATMENT REQUESTED
(b) Activities of MPS, Newco or Houghten.
(i) [CONFIDENTIAL TREATMENT REQUESTED]. Houghten
and Newco each acknowledge and agree that:
(1) activities such as (but not limited to) [CONFIDENTIAL
TREATMENT REQUESTED], making, using, selling and synthesizing
members of:
(a) the [CONFIDENTIAL TREATMENT REQUESTED];
(b) [CONFIDENTIAL TREATMENT REQUESTED]; or
(c) [CONFIDENTIAL TREATMENT REQUESTED],
are important parts of HPI's business (the foregoing are
referred to herein as the [CONFIDENTIAL TREATMENT REQUESTED]);
(2) the transactions contemplated by this Agreement (including,
without limitation, the access of Houghten, Newco and MPS to
the Licensed Technology) will enable MPS, Newco or Houghten to
compete unfairly with HPI in this regard; and
(3) the parties have agreed that MPS, Newco and Houghten will
covenant to avoid such a result.
For purposes of this Section 5.8, a [CONFIDENTIAL TREATMENT REQUESTED] shall be
defined as a [CONFIDENTIAL TREATMENT REQUESTED].
Accordingly, each of MPS, Newco and Houghten agrees that from and
after the Closing Date, none of MPS, Newco or Houghten, nor
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CONFIDENTIAL TREATMENT REQUESTED
any company or other entity or person directly or indirectly controlled by MPS,
Newco or Houghten, shall knowingly engage in [CONFIDENTIAL TREATMENT
REQUESTED].
(ii) Publication and Publicity. In addition to
the provisions of Section 5.8(b)(i), none of MPS, Newco or Houghten, nor any
company or other person or entity directly or indirectly controlled by MPS,
Newco or Houghten, shall publish material relating to any [CONFIDENTIAL
TREATMENT REQUESTED] without the written consent of HPI, which consent may be
withheld in HPI's sole discretion as follows:
(1) MPS, Newco or Houghten shall provide HPI with the opportunity
to review any proposed manuscript or any other proposed
disclosure describing said work sixty (60) days prior to its
submission for publication or other proposed disclosure;
(2) if HPI in its sole discretion believes:
(A) patentable subject matter is disclosed in the
manuscript or other disclosure and so notifies MPS,
Newco or Houghten; or
(B) such submission for publication or other disclosure
would cause the loss of significant foreign patent
rights, said publication shall be withheld for a
reasonable period of time until HPI, in its sole
discretion, undertakes and completes all applicable
patent filings; and
(3) if HPI in its sole discretion believes that the subject matter
disclosed in the manuscript or other disclosure constitutes a
trade secret of HPI, then said publication shall be withheld
at the sole discretion of HPI for so long as HPI determines
such subject matter constitutes a trade secret of HPI.
(iii) Exception. Notwithstanding the foregoing,
the covenants of MPS, Newco and Houghten set forth in this Section 5.8(b) shall
not apply with respect to the following:
(1) at any time after the date which is seven years following the
Closing Date;
(2) [CONFIDENTIAL TREATMENT REQUESTED];
(3) any item if (and only from and after such time as)
MPS, Newco or Houghten can demonstrate that
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CONFIDENTIAL TREATMENT REQUESTED
[CONFIDENTIAL TREATMENT REQUESTED]; or
(4) [CONFIDENTIAL TREATMENT REQUESTED].
The provisions of this Section 5.8 shall also not apply to the [CONFIDENTIAL
TREATMENT REQUESTED].
(iv) Injunctive Relief. Each of MPS, Newco and
Houghten expressly acknowledges that damages alone may not be an adequate
remedy for any breach by MPS, Newco, Houghten or any company or other person or
entity directly or indirectly controlled by MPS, Newco or Houghten of the
covenants set forth in this Section 5.8(b) and that HPI, in addition to any
other remedies which it may have, shall be entitled to seek injunctive relief,
including specific performance, in any court of competent jurisdiction with
respect to any actual or threatened breach by MPS, Newco, Houghten or any
company or other person or entity directly or indirectly controlled by MPS,
Newco or Houghten of said covenants.
5.9 Magainin Pharmaceuticals; Czechoslovak Institute. The parties
hereto expressly acknowledge the issuance of 275,000 shares of Common Stock
(the "MAGAININ SHARES") of Magainin Pharmaceuticals ("MAGAININ") to HPI (or
MPS) in satisfaction of certain obligations of Magainin to MPS under that
certain Agreement dated as of November 4, 1988, as amended, between MPS and
Magainin and agree that, for purposes of this Agreement and the transactions
contemplated hereby, MPS has no right, title or interest in the Magainin
Shares. The parties also expressly acknowledge the rights of MPS (the
"CZECH/TPIMS RIGHTS") pursuant to that certain letter agreement dated May 5,
1993 between MPS and TPIMS with respect to arrangements between MPS and the
Czechoslovak Institute of Organic Chemistry and Biochemistry. Without limiting
the provisions of Section 5.10 or Section 5.12 below, on or prior to the
Closing MPS shall assign or distribute to HPI all of its right, title and
interest in and to (i) the Czech/TPIMS Rights, (ii) the Magainin Shares (and
any proceeds thereof), (iii) that certain License Agreement dated as of October
20, 1988, as amended, between Scripps and MPS, and (iv) that certain Agreement
dated November 4, 1988, as amended, between MPS and Magainin.
5.10 MPS Technology. Prior to the Closing, Houghten and MPS shall
transfer and assign to HPI, utilizing one or more Assignments substantially in
the form of EXHIBIT E attached hereto (each an "ASSIGNMENT"), all of his and
its right, title and interest in and to the MPS Technology (as defined below),
including without limitation all of MPS' right, title and interest
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(if any) in and to (a) those certain U.S. Patent Nos. 4,631,211 (dated December
23, 1986 entitled "Means for Sequential Solid Phase Organic Synthesis and
Methods Using the Same"), and 5,556,762 (dated September 17, 1996 entitled
"Scanning synthetic peptide combinatorial libraries: oligopeptide mixture sets
having a one predetermined residue at a single, predetermined position, methods
of making and using the same"), and all reissues, renewals, extensions or
additions of, and counterparts to, any of the foregoing, of the United States
of America and all foreign countries (including the right to apply for patents
in foreign countries in its own name and to claim any priority rights for such
foreign applications to which such applications are entitled under
international conventions, treaties or otherwise), (b) that certain License
Agreement between Scripps and Houghten dated April 11, 1985 regarding Scripps
Disclosure No. 84-35, (c) that certain License Agreement between Scripps and
Houghten dated May 6, 1985 regarding Scripps Disclosure No. 84-37 and (d) any
other right which is a subject of, or otherwise covered by, any of the Master
Agreements or any agreement or arrangement, directly or indirectly, with TPIMS.
If, at any time subsequent to the Closing, Houghten, Newco or MPS, or any of
their officers, directors, employees or agents, becomes aware of any
inventions, discoveries, technology, works, programs, formulae, procedures,
protocols, techniques or results of experimentations, testing and related data
or information or any intellectual property rights relating thereto (including
without limitation, patent rights, copyrights, trademarks, service marks, trade
secrets and know-how) which were owned by or licensed to MPS at any time prior
to the Closing or to which MPS otherwise held rights at any time prior to the
Closing (collectively, the "MPS TECHNOLOGY") and which were not included in the
MPS Technology assigned and transferred to HPI on or prior to the Closing as
contemplated by this Section 5.10, then Houghten, Newco and MPS shall promptly
notify HPI of the existence of such MPS Technology and shall, upon the request
of HPI, promptly execute and deliver to HPI any deeds, bills of sale,
assignments, assurances in law or other appropriate documents and take and do
any and all such other actions as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under such
MPS Technology in HPI.
5.11 Licensed Technology.
(a) License Agreements. Prior to the Closing and to be
effective as of or prior to the Closing, HPI and MPS shall enter into one or
more License Agreements, substantially in the form attached hereto as EXHIBIT F
(the "LICENSE AGREEMENT"), pursuant to which HPI shall grant to MPS a
nonexclusive license (or sublicense) in and to the technology set forth on
SCHEDULE 4 attached hereto (the "LICENSED TECHNOLOGY"), but only to the extent
that HPI has the right to grant licenses (or sublicenses), immunities or other
rights thereunder as of the date of each such License Agreement. Any such
license (or sublicense) shall be on an "as is" basis and without representation
or warranty of any kind.
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(b) Covenants of HPI. In those instances where Licensed
Technology is sublicensed to MPS by HPI pursuant to a License Agreement, HPI
shall exercise its commercially reasonable efforts to assist MPS in
establishing appropriate and reasonable stand-by arrangements with the
licensors of the Licensed Technology (i.e., Scripps and Chiron), respectively,
so as to protect the sublicensed rights of MPS to the Licensed Technology in
the event of a default by HPI and the subsequent termination by the relevant
licensor of HPI's rights to such Licensed Technology. In addition to the
foregoing, HPI agrees that it shall not provide notice to Scripps or Chiron
regarding an election by HPI to terminate its rights to licenses covering
Licensed Technology without providing Newco or MPS with at least 90 days
advance written notice of HPI's intentions with respect thereto.
5.12 Assets Other Than MPS Assets. If, at any time subsequent to
the Closing, Houghten, Newco or MPS, or any of their officers, directors,
employees or agents, becomes aware of any franchises, rights, privileges,
properties or assets of any nature or description, tangible or intangible,
real, personal or mixed, which are owned or held by MPS but which were not
directly used in the Business of MPS (as defined in Section 4.3 above) as of
the Closing (e.g., items which are not listed on SCHEDULE 3 hereto), then
Houghten, Newco and MPS shall promptly notify HPI of the existence of such
franchises, rights, privileges, properties or assets and shall, upon the
request of HPI and at no cost to HPI, promptly execute and deliver to HPI any
deeds, bills of sale, assignments, assurances in law or other appropriate
documents and take and do any and all such other actions as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such franchises, rights, privileges, properties or assets in HPI
free and clear of any and all liens.
5.13 No Representation or Warranty. Notwithstanding the
representations and warranties of HPI and MPS set forth herein or elsewhere,
neither HPI nor MPS makes any representation or warranty, and Houghten and
Newco hereby acknowledge and agree as to the absence of any representation or
warranty by HPI and MPS, (a) as to the quality, value or sufficiency of any
assets held by MPS for any purpose (including, without limitation, any rights
of MPS in the Licensed Technology), (b) as to the sufficiency of such assets
for the operation of the business of MPS as it has been, is now being or is
proposed to be conducted, (c) as to the nature or extent of any liabilities or
obligations of MPS or (d) that the use of any such assets for any purposes
related to the business of MPS as it has been, is now being or is proposed to
be conducted, or any successor business using any of such assets, (i) shall be
in compliance with any applicable requirement of law or (ii) does not and shall
not conflict with, infringe or misappropriate any rights of third parties
(including, without limitation, any rights reflected in any patents, patent
applications, computer programs, trade secrets, copyrights, inventions,
drawings, designs, data, trademarks, trade names, service marks, proprietary
know-how or information).
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5.14 Tax Matters.
(a) Section 338(h)(10) Elections. HPI shall join with
Newco in making elections under Sections 338(g) and 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "Code"), and any corresponding elections
under state or local tax law (collectively, "Section 338(h)(10) Elections")
with respect to the purchase and sale of the Shares. HPI shall pay any
federal, state and local Taxes (which term, for purposes of this Section 5.14,
is defined below) imposed on MPS or HPI that are (i) attributable to any Taxes
due in respect of any taxable period ending on or prior to the Closing,
including without limitation, any Taxes imposed on MPS pursuant to Treas. Reg.
Section 1.1502-6 (and any comparable provision of state or local law), or (ii)
apportioned, pursuant to Section 5.14(d), to HPI. HPI shall indemnify
Houghten, Newco and MPS against any such Taxes and any actions, suits, expenses
or fees (including, without limitation, attorneys' fees and expenses) imposed
on MPS which arise out of any failure of HPI to pay such Taxes.
(b) Taxes. For purposes of this Section 5.14, "Taxes" or
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the
Code), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated or other tax of any kind, including any interest,
penalty or addition thereto.
(c) Allocation of Purchase Price. The parties agree to
allocate the Purchase Price for all Tax purposes as set forth on the schedule
attached hereto as EXHIBIT I.
(d) Default Provisions. In the event that any state or
local taxing jurisdiction does not recognize a Section 338(h)(10) Election and
a comparable election is not available, HPI and Newco agree that they shall, to
the extent permitted by applicable law, treat (or elect with the relevant
taxing authority to treat) for all purposes the Closing as the last day of a
taxable period with respect to MPS and, in any case where applicable state or
local law does not permit the parties to treat the Closing as the last day of a
taxable period, to apportion:
(i) Any Tax levied by such jurisdiction that is
based on the net income of MPS as if the Closing were the last day of a taxable
period of MPS (it being understood that, subject to the other provisions of
this Agreement, Newco is responsible only for the portion of such Taxes of MPS
attributable to periods starting (or deemed, pursuant to this Section 5.14(d),
to start) after the Closing);
(ii) All real property Taxes, personal property
Taxes and similar ad valorem obligations that are levied by such
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jurisdiction with respect to MPS for assessment periods within which the
Closing occurs (collectively, the "Apportioned Obligations") between HPI and
Newco based on the number of days in any such period falling on or before the
Closing, on the one hand, and after the Closing, on the other hand (it being
understood that, subject to the other provisions of this Agreement, Newco is
responsible only for the portion of each such Apportioned Obligation
attributable to the number of days after the Closing in the relevant assessment
period); and
(iii) With respect to all other Taxes levied by such
jurisdiction, HPI shall be liable for all such Taxes incurred by or accrued to
MPS on or before the Closing, and, subject to the other provisions of this
Agreement, Newco shall be liable for all such Taxes incurred by or accrued to
MPS after the Closing.
(e) Further Provisions. In the event that any state or
local taxing jurisdiction does not recognize a Section 338(h)(10) Election and
a comparable election is not available:
(i) HPI shall be responsible for the timely
filing (taking into account any extensions received from the relevant tax
authorities) of all tax returns and information reports required by law to be
filed in such jurisdiction in respect of MPS on or prior to the Closing, and
shall promptly deliver copies of all such returns and reports in its possession
to Newco, and Newco shall be responsible for the timely filing (taking into
account any extensions received from the relevant tax authorities) of all tax
returns and information reports required by law to be filed in such
jurisdiction in respect of MPS after the Closing;
(ii) Except as otherwise provided in this
Agreement, any interest and penalties arising in connection with such Taxes
shall be the responsibility of the party required to file correct tax returns
concerning such Taxes in a timely manner; entitlement to any refunds or awards
with respect to any such Taxes shall rest with the party responsible for
payment therefor under this Agreement; and control of any legal or
administrative proceedings concerning any such Taxes shall rest with the party
responsible for the payment of a majority of the Taxes in dispute (although
such party shall be required to act reasonably and in good faith regarding the
meritorious claims of any other parties with respect thereto).
(iii) In the event that any refund, rebate or
similar payment is received by HPI or Newco in respect of MPS, and which
payment pertains to the assessment period in which the Closing falls, the
parties agree that such payment will be apportioned between HPI or Newco in
accordance with the provisions of clause (d) above; HPI shall notify Newco in
writing within thirty (30) days as to any examination by or disputes with
taxing authorities that relate to periods of operating MPS through and
including the Closing Date and which would affect the liability for Taxes of
Newco or MPS for any period after the Closing Date or that could result in
Newco owing money to HPI under any provisions
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in this Agreement; Newco shall notify HPI in writing within thirty (30) days as
to any examination by or disputes with taxing authorities that relate to MPS
which would affect the liability for Taxes of HPI or MPS for any period prior
to and including the Closing Date or that could result in HPI owing money to
Newco or MPS under any provisions in this Agreement; and
(iv) The parties shall cooperate, including,
without limitation, in connection with any audits by tax authorities and in the
preparation of tax returns, to avoid payment of duplicate or inappropriate
Taxes in respect of MPS, and each party shall furnish, at the request of the
other, proof of payment of such taxes and any other documentation that may be a
prerequisite to avoiding payment of a duplicate or inappropriate tax.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of HPI, MPS, Houghten and Newco to
Effect the Sale. The obligations of HPI, MPS, Houghten and Newco to effect the
Sale shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions unless waived by HPI, MPS, Houghten and Newco:
(a) Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of the Sale shall have been issued by any federal or state court
and remain in effect, and no litigation seeking the issuance of such an order
or injunction shall be pending which, in the good faith judgment of Newco or
HPI, has a reasonable probability of resulting in such order, injunction or
damages. In the event any such order or injunction shall have been issued,
each party agrees to use its reasonable efforts to have any such injunction
lifted.
(b) Statutes. No statute, rule or regulation shall have
been enacted by any Governmental Entity which would (i) make the consummation
of the Sale illegal, or (ii) render HPI, MPS or Newco unable to consummate the
Sale, except for any waiting period provisions.
(c) License Agreements. HPI and MPS shall have executed
one or more License Agreements with respect to all of the Licensed Technology
and, to the extent required by the terms of licenses, agreements or
arrangements relating to any portion of the Licensed Technology, each of
Chiron, Scripps and any other relevant third party(ies) shall have consented to
the sublicensing to MPS (pursuant to the terms of one or more of the License
Agreements, as applicable) of such portion of the Licensed Technology.
(d) Assignment of MPS Technology. MPS shall have
executed, in favor of HPI, one or more Assignments with respect to
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all of the MPS Technology and such Assignments shall have been approved by
those third parties (e.g., Scripps) entitled or required to approve such an
assignment pursuant to the terms of licenses, agreements or arrangements
relating to the MPS Technology.
(e) Third-Party Approvals. Any and all notices to or
consents or approvals required from third parties in order to consummate the
transactions contemplated herein relating to contracts, agreements, licenses,
leases and other instruments material to the business of MPS as it has been or
is now being conducted (including, without limitation, the Licensed Technology)
shall have been given or obtained, as the case may be.
6.2 Conditions to Obligations of Houghten and Newco. The
obligations of Houghten and Newco to effect the Sale are subject to the
satisfaction on or prior to the Closing Date of the following additional
conditions, unless waived by Houghten and Newco:
(a) Representations and Warranties. The representations
and warranties of HPI and MPS set forth in this Agreement shall be true,
correct and complete in all material respects as of the Closing Date, except as
otherwise specified by this Agreement, and Houghten and Newco shall have
received a certificate or certificates to such effect signed by the President
and the Secretary of HPI and MPS (the "HPI/MPS OFFICERS").
(b) Performance of Obligations of HPI and MPS. Each of
HPI and MPS shall have performed in all material respects all obligations
required to be performed by it under this Agreement prior to the Closing Date
for the direct or indirect benefit of Houghten or Newco, and Houghten and Newco
shall have received a certificate to such effect signed by the HPI/MPS
Officers.
(c) Government Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement, including any
such requirements under applicable federal or state securities laws, shall have
been filed, occurred or been obtained, other than filings with and approvals by
Governmental Entities relating to the Sale if failure to make such filings or
obtain such approvals would not be materially adverse to MPS.
(d) Opinion of HPI's Counsel. Houghten and Newco shall
have received the legal opinion of counsel to HPI dated as of the Closing Date
and substantially in the form attached hereto as EXHIBIT G.
6.3 Conditions to Obligations of HPI and MPS. The obligations of
HPI and MPS to effect the Sale are subject to the satisfaction on or prior to
the Closing Date of the following additional conditions unless waived by HPI
and MPS:
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(a) Representations and Warranties. The representations
and warranties of Houghten and Newco set forth in this Agreement shall be true,
correct and complete in all material respects as of the Closing Date, except as
otherwise contemplated herein or therein, and HPI and MPS shall have received a
certificate to such effect signed by (i) the President of Newco (the "NEWCO
OFFICER") and (ii) Houghten.
(b) Performance of Obligations of Houghten and Newco.
Houghten and Newco shall have performed in all material respects all
obligations required to be performed by them under this Agreement prior to the
Closing Date for the direct or indirect benefit of HPI or MPS, and HPI and MPS
shall have received a certificate signed by the Newco Officer and Houghten to
such effect.
(c) Opinion of Houghten and Newco's Counsel. HPI shall
have received the legal opinion of counsel to Houghten and Newco dated as of
the Closing Date and substantially in the form attached hereto as EXHIBIT H.
(d) Resignation of Houghten. Houghten shall have
tendered his resignation as an officer of HPI, with such resignation poised to
become effective as of the Closing.
(e) Magainin Technology. Without limiting the provisions
of Section 6.1(d) above, all of MPS' right, title and interest in and to the
agreements and assets referenced in Section 5.9 above shall have been assigned
to HPI or its designee; provided, however, that neither HPI nor MPS shall
permit the Closing to be delayed as a result of this condition.
(f) MPS Technology. Without limiting the provisions of
Section 6.1(d) above, all of MPS' right, title and interest in and to the MPS
Technology shall have been assigned to HPI or its designee; provided, however,
that neither HPI nor MPS shall permit the Closing to be delayed as a result of
this condition.
(g) Cash Dividend. The Cash Dividend shall have been
received by HPI; provided, however, that neither HPI nor MPS shall permit the
Closing to be delayed as a result of this condition.
(h) Promissory Notes. Newco shall have executed and
delivered to HPI the Promissory Notes.
(i) Guaranty and Stock Pledge Agreement; Consent of
Spouse. The Co-Trustees on behalf of the Trust shall have executed and
delivered to HPI the Guaranty and Stock Pledge Agreement, and the Co-Trustees
on behalf of the Trust shall have delivered to HPI (i) certificates in respect
of the HPI common stock which is a subject of the Stock Pledge Agreement and
(ii) executed assignments with respect thereto in the form attached to the
Stock Pledge Agreement. In addition, Houghten's spouse shall have executed and
delivered to HPI a Consent of Spouse in form and substance satisfactory to HPI.
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(j) Replacing Board of MPS. Newco, as the prospective
sole shareholder of MPS following the Closing, shall have executed a
prospective Consent Action to replace the current Board of Directors of MPS
with a new slate of Directors, each of whom shall have consented in writing
thereto, and such action shall be poised to become effective as of the Closing.
(k) Assumption of Dominion Lease Obligations. MPS shall
have executed an assumption, in form and substance reasonably satisfactory to
the parties, of the lease and related obligations regarding certain assets and
equipment leased from Dominion Ventures, Inc. by HPI for the benefit of MPS.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification of Houghten, Newco and MPS. HPI shall
indemnify, defend and hold each of Houghten, Newco and MPS, and their
directors, officers, shareholders, agents and employees, from and against any
and all losses, liabilities, claims, suits, proceedings, demands, judgments,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements and amounts paid in settlement of any claim,
act or suit) of every kind, nature and description (collectively, "LOSSES")
suffered by Houghten, Newco or MPS, or their directors, officers, shareholders,
agents or employees, based upon, resulting from, arising out of or otherwise
relating to or in respect of:
(a) any claim, suit or proceeding relating to that
certain laboratory accident occurring in an MPS laboratory in April 1995 with
respect to which the California Department of Industrial Relations, Division of
Occupational Safety and Health (the "DIR"), has issued certain citations to
MPS;
(b) any liability of MPS as of the Closing Date for
payment of the purchase price of that certain Kiloprep 100 HPLC System
(manufacturer's no. KP02b-30200 - HPI purchase order no. 60899); or
(c) bonuses paid to employees of MPS relating to their
tenure and performance with MPS during calendar year 1996, but only in such
amounts as may be determined by HPI in its sole discretion;
provided, that
(i) the liability of HPI with respect to the matter
described in subsection (b) above shall not exceed $100,000.00;
(ii) the liability of HPI with respect to the matters
described in subsection (c) above shall not exceed $90,000.00; and
(iii) the aggregate liability of HPI with respect to the
matters set forth in subsections (b) and (c) above shall in no
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event exceed the amount of the Cash Dividend received by HPI pursuant to the
provisions of Section 1.4 above.
7.2 Indemnification of HPI. Each of Houghten, Newco and MPS,
jointly and severally, shall indemnify, defend and hold HPI and its directors,
officers, shareholders, agents and employees harmless from and against any and
all Losses suffered by HPI or its directors, officers, shareholders, agents or
employees based upon, resulting from, arising out of or otherwise relating to
or in respect of:
(a) the payment of any royalties, fees or other payments
due to third parties (including, without limitation, Chiron and Scripps), and
the performance of any other obligations or duties owed to third parties
(including, without limitation, indemnification, reporting and confidentiality
obligations), pursuant or with respect to Licensed Technology;
(b) the conduct of the business of MPS subsequent to the
Closing (including, without limitation, the payment of any royalties, fees or
other payments to third parties), and the performance of any other obligations
or duties owed to third parties (including, without limitation,
indemnification, reporting and confidentiality obligations), pursuant or with
respect to technology other than Licensed Technology; and
(c) any actual or alleged infringement by Houghten, Newco
or MPS of any patents, patent applications, computer programs, trade secrets,
copyrights, inventions, drawings, designs, data, trademarks, trade names,
service marks, proprietary know-how or information in connection with the
conduct of the business of MPS or Newco subsequent to the Closing.
7.3 Notice and Opportunity to Defend. Promptly after and in any
event within twenty (20) days after receipt by any party hereto ("INDEMNIFIED
PARTY") of notice from a party to this Agreement or from a third party of the
assertion of any Loss or discovery of any fact upon which such party expects to
make a claim for indemnification hereunder, the Indemnified Party shall give
the party or parties who may become obligated to provide indemnification
hereunder ("INDEMNIFYING PARTY") written notice describing such Loss or fact in
reasonable detail. With respect to claims by third parties (other than claims
with respect to the matter set forth in Section 7.1(a) above, for which all
parties agree that HPI shall have the sole right to compromise or defend with
respect to all parties hereto), the Indemnifying Party shall have the right, at
such party's option, to compromise or defend, at such party's own expense and
by such party's own counsel, any such matter involving the asserted liability
of the Indemnified Party as to which the Indemnifying Party shall have
acknowledged its obligation to indemnify the party seeking indemnification
hereunder; provided that counsel for the Indemnifying Party shall be approved
by the Indemnified Party, whose approval shall not be unreasonably withheld;
and provided further that the Indemnifying Party shall not, without the consent
of the Indemnified Party,
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consent to the entry of any judgment or enter into any settlement that does not
include the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability with respect to such claim for litigation. If any
Indemnifying Party shall undertake to compromise or defend any such asserted
liability, such party shall promptly notify the Indemnified Party of such
party's intention to do so, and the Indemnified Party agrees to cooperate fully
with the Indemnifying Party and such party's counsel in the compromise of, or
defense against, any such asserted liability. The Indemnified Party shall have
the right at its own expense to participate in the defense of such asserted
liability as long as its participation does not materially impede or otherwise
materially and adversely affect the ability of the Indemnifying Party to
fulfill its obligations in a reasonable and cost-effective manner.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) By mutual written consent of HPI, MPS, Houghten and
Newco;
(b) By Houghten or Newco, if (i) there has been a
material breach of this Agreement on the part of HPI or MPS with respect to any
of their agreements, covenants, representations or warranties contained herein
and such breach has not been cured within five (5) business days after written
notice thereof from Houghten or Newco or (ii) the Sale has not been consummated
on or before March 31, 1997 (and neither Houghten nor Newco is in breach of its
obligations under this Agreement);
(c) By HPI or MPS, if (i) there has been a material
breach of this Agreement on the part of Houghten or Newco with respect to any
of their agreements, covenants, representations or warranties contained herein
and such breach has not been cured within five (5) business days after written
notice thereof from HPI or MPS or (ii) the Sale has not been consummated on or
before March 31, 1997 (and neither HPI nor MPS is in breach of its obligations
under this Agreement); or
(d) By HPI, MPS, Houghten or Newco if: (i) there shall be
a final nonappealable order of a federal or state court in effect preventing
consummation of the Sale; (ii) there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable
to the Sale by any Governmental Entity which would make consummation of the
Sale illegal; or (iii) there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Sale by any Governmental Entity, which would render HPI or Newco unable to
consummate the Sale.
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8.2 Effect of Termination. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become void and
there shall be no liability on the part of either HPI, MPS, Houghten or Newco,
except for liability arising out of the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
8.3 Amendment/Waiver. This Agreement may not be amended except by
an instrument in writing signed on behalf of all the parties hereto. At any
time prior to the Closing, the parties hereto may (a) mutually extend the time
for the performance of any of the obligations or other acts of the parties
hereto, (b) waive any inaccuracies in the representations and warranties by
another party contained herein or in any document delivered by such party
pursuant hereto or (c) waive compliance by another party with any of the
agreements or conditions contained herein. Any agreement on the part of the
parties hereto to any such extension or waiver shall be valid only if set forth
in a writing signed on behalf of the party to be bound.
ARTICLE 9
GENERAL
9.1 Payment of Expenses. HPI, MPS, Houghten and Newco shall each
pay its own fees and expenses incurred incident to the preparation and carrying
out of the transactions herein contemplated (including legal and accounting
expenses).
9.2 Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the other shall be in writing and
delivered personally or sent by certified mail, postage prepaid, by courier
service, or by telecopy with confirmation copy sent by one of the above
methods, as follows:
if to HPI or MPS:
Houghten Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
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if to Houghten or Newco (or Houghten as the representative of the
Co-Trustees):
Xx. Xxxxxxx Xxxxxxxx
c/o Multiple Peptide Systems, Inc.
0000 Xxxxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
or to such other persons as may be designated in writing by the parties, by a
notice given as aforesaid.
9.3 Headings/Gender/Plural. The headings of the several
sections of this Agreement are inserted for convenience of reference only and
are not intended to affect the meaning or interpretation of this Agreement.
Any reference to the masculine, feminine or neutral gender shall be deemed to
include any or all other genders as appropriate. Any reference to the singular
form of a word or phrase shall be deemed to include or mean the plural, if
appropriate, and vice versa.
9.4 Counterparts. This Agreement may be executed in
counterparts, and when so executed each counterpart shall be deemed to be an
original, and said counterparts together shall constitute one and the same
instrument.
9.5 Binding Nature. This Agreement shall be binding upon and
inure to the benefit of the parties hereto. No party may assign or transfer
any rights under this Agreement.
9.6 Merger of Documents. This Agreement and all agreements and
documents contemplated hereby constitute one agreement and are interdependent
upon each other in all respects, and shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede all previous negotiations, understandings, agreements, commitments
and writings with respect to such subject matter (including, without
limitation, that certain binding letter of intent dated November 13, 1996
between Houghten and HPI).
9.7 Incorporation. All Exhibits and Schedules attached hereto
are by this reference incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
9.8 Severability. Should any one or more of the provisions of
this Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable in any
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relevant jurisdiction, then such illegal or unenforceable provision shall be
modified by the proper court, if possible, but only to the extent necessary to
make such provision enforceable, and such modified provision and all other
provisions of this Agreement and of each other agreement entered into pursuant
to this Agreement shall be given effect separately from the provision or
portion thereof determined to be illegal or unenforceable and shall not be
affected thereby; provided, however, that any such modification shall apply
only with respect to the operation of this Agreement (or any affected agreement
entered into pursuant to this Agreement) in the particular jurisdiction in
which such determination of illegality or unenforceability is made.
9.9 Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with, the laws of the State of California
as applied to contracts entered into solely between residents of, and to be
performed entirely in, such state.
9.10 Dispute Resolution. The sole and exclusive method, means
and procedure to resolve any controversy or claim arising out of or relating to
this Agreement, the License Agreements (except as otherwise provided therein),
the Other Agreements or any agreements or arrangements among the parties
contemplated hereby or thereby (a "DISPUTE") shall be as set forth below in
this Section 9.10 and the parties hereto hereby irrevocably waive any and all
rights to the contrary and shall at all times conduct themselves in strict,
full, complete and timely accordance with the requirements of the following
procedures. Any and all attempts to circumvent the provisions of this Section
9.10 shall be absolutely null and void and of no force or effect whatsoever.
(a) Any Dispute shall be settled within thirty (30) days of
receipt by all involved parties of a notice of the Dispute (such notice to be
delivered pursuant to the provisions of Section 9.2 hereof) by negotiations
between representatives of the parties with authority to settle such Dispute.
The parties shall use their best efforts to settle any such Dispute and shall
consult and negotiate with each other, in good faith and, recognizing their
mutual interests, attempt to reach a just and equitable solution satisfactory
to all involved parties.
(b) In the absence of such a negotiated settlement, any
Dispute shall be finally resolved by arbitration before a single arbitrator
(except as provided below) in San Diego, California, in accordance with the
Rules of the American Arbitration Association then existing, and judgment on
the arbitration award may be entered in any state or federal court sitting in
San Diego County, California.
(c) The arbitrator shall be a person experienced in the
subject matter of the circumstances to be arbitrated and shall be selected by
mutual agreement of the involved parties. If the parties are unable to agree
on the arbitrator within a period of thirty (30) days after arbitration is
demanded by any party, then each of HPI and Newco shall select a qualified
arbitrator and the
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two arbitrators so selected shall select a third and the three so chosen shall
constitute the board of arbitrators.
(d) The arbitrator(s) shall render a decision as soon as
possible. The parties agree to abide by and perform any directions and awards
made by the arbitrator(s) whose decision shall be final and binding for all
purposes. The arbitrator(s) may direct any party to pay any sum of money or to
do or subject itself to any act or execute any instrument for the purpose of
carrying the award of the arbitrator(s) into effect.
(e) The arbitrator(s) shall award the prevailing party(ies),
if any, as determined by the arbitrator(s), all of their costs and fees.
"COSTS AND FEES" shall mean all reasonable pre-award expenses of the
arbitration, including, without limitation, the arbitrators' fees,
administrative fees, travel expenses, out-of-pocket expenses such as copying
and telephone, court costs, witness fees and attorneys' fees. Each party shall
be entitled to pre-hearing discovery as provided in California Civil Code of
Procedure Section 1283.05.
(f) Any party may, without inconsistency with these
provisions, seek from a court any interim or provisional relief (including,
without limitation, injunctive relief) that may be necessary to protect the
rights or property of that party or to maintain the status quo until such time
as the arbitration award is rendered or the Dispute is otherwise resolved.
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9.11 Survival. The warranties, representations and covenants
contained herein or made pursuant to this Agreement shall survive the execution
and delivery of this Agreement and the Closing.
9.12 Further Assurances. At any time or from time to time after
the date hereof (including from and after the Closing), the parties agree to
cooperate with each other, and at the request of any party, to execute and
deliver any further instruments or documents and to take all such further
action as any party may reasonably request in order to evidence or effectuate
the consummation of the transactions contemplated hereby and to otherwise carry
out the intent of the parties hereunder.
IN WITNESS WHEREOF, HPI, MPS, Houghten and Newco have caused this
Agreement to be executed and attested, all as of the date first above written.
HOUGHTEN PHARMACEUTICALS, INC.,
a Delaware corporation
ATTEST: By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
/s/ Xxxxxxx X. XxXxxxxx Title CEO
---------------------------- ---------------------------
MULTIPLE PEPTIDE SYSTEMS, INC.,
a California corporation
ATTEST: By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
/s/ Xxxxxxx X. XxXxxxxx Title CEO
---------------------------- ---------------------------
RAH ACQUISITION CORP.,
a California corporation
ATTEST: By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
/s/ Xxxx XxXxxx Title CEO
---------------------------- ---------------------------
ATTEST:
/s/ Xxxx XxXxxx /s/ Xxxxxxx X. Xxxxxxxx
---------------------------- ---------------------------------
XXXXXXX X. XXXXXXXX, PH.D.,
an individual
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CONFIDENTIAL TREATMENT REQUESTED
INDEX OF EXHIBITS
Exhibit Description
------- -----------
*A Articles of MPS
*B Form of Promissory Notes
*C Form of Guaranty
*D Form of Stock Pledge Agreement
*E Form of Assignment
*F Form of License Agreement
*G Form of Legal Opinion for Counsel to HPI and MPS
*H Form of Legal Opinion for Counsel to Houghten and Newco
*I Allocation of Purchase Price
INDEX OF SCHEDULES
Schedule Description
-------- -----------
1 HPI/MPS Disclosure Schedule
2 Houghten/Newco Disclosure Schedule
*3 Schedule of MPS Assets
4 Licensed Technology
X Definition of [CONFIDENTIAL TREATMENT REQUESTED]
* THE EXHIBITS AND THE ATTACHMENT TO SCHEDULE 3 HAVE BEEN OMITTED FROM
THIS AGREEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "SEC"). THE OMITTED INFORMATION IS CONSIDERED IMMATERIAL FROM AN
INVESTOR'S PERSPECTIVE. HPI WILL FURNISH SUPPLEMENTALLY A COPY OF ANY
OF THE DOCUMENTS TO THE SEC UPON REQUEST OF THE SEC.
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SCHEDULE 1
HPI/MPS DISCLOSURE SCHEDULE
Inclusion of items set forth below under any specific Section heading is
solely for convenience of reference. All items set forth below shall be deemed
to apply to all Sections of Article 2.
All Sections
All facts, events and circumstances of which Houghten has personal knowledge,
or should reasonably be deemed to have personal knowledge due to his intimate
relationship with MPS, are incorporated herein as though fully set forth in
this SCHEDULE 1.
Without limiting the foregoing, much of the Licensed Technology is subject to
consent/approval rights of third parties (including, without limitation, Chiron
and Scripps).
Section 2.3 - Authority
To the Best Knowledge of HPI, the following consents, waivers and approvals
are required in connection with the Agreement and the transactions contemplated
thereby:
(1) The consent of Chiron with respect to aspects of the Licensed
Technology;
(2) The consent of Scripps with respect to aspects of the Licensed
Technology;
(3) The consent of General Atomics with respect to the facilities lease of
MPS (at 3550 General Atomics Court in San Diego); and
(4) The consent of Dominion Ventures, Inc. with respect to equipment and
other assets leased by or for the benefit of MPS.
Section 2.7 - Bank Accounts
Set forth below is a list, to the Best Knowledge of HPI, setting forth the
names and addresses of all banks, other institutions and state governmental
departments at which MPS has accounts, money market accounts, deposits or
safety deposit boxes, or special deposits required to be held by such state
governmental departments, together with the names of all persons authorized to
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35
CONFIDENTIAL TREATMENT REQUESTED
draw on or give instructions with respect to such accounts or deposits, or to
have access thereto:
BANK NAME & ADDRESS ACCOUNT TYPE & # AUTHORIZED SIGNERS
[CONFIDENTIAL
TREATMENT REQUESTED]
Sections 2.11 and 2.12
The events and circumstances referenced in Section 7.1(a) of the Agreement
are incorporated herein (including, without limitation, the citations issued by
the DIR to MPS as a result of the precipitating events).
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36
SCHEDULE 2
HOUGHTEN/NEWCO DISCLOSURE SCHEDULE
[None]
1-1
37
SCHEDULE 3
MPS ASSETS
The provisions of SCHEDULE 4 are incorporated herein by reference.
[FURTHER INFORMATION IS ATTACHED HERETO.]
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SCHEDULE 4
LICENSED TECHNOLOGY
Any licensing or sublicensing of the Licensed Technology, all of which
is on a nonexclusive basis, is expressly subject to the terms of the Agreement
(to which this SCHEDULE 4 is attached) and the License Agreements. The License
Agreements, and not this SCHEDULE 4, shall be referred to with respect to any
matters pertaining to the granting of (or other matters pertaining to) licenses
or sublicenses to the Licensed Technology.
The Licensed Technology relates to the following:
Tea-Bag
* U.S. Patent No. 4,631,211 and all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions or
additions to such patent; but only to the extent that HPI has
the right to grant licenses, immunities or other rights
thereunder in the Field (as defined in the relevant License
Agreement) as of the date of the Agreement (the "TEA BAG
PATENT RIGHTS").
* All information and data (including but not limited to
formulae, procedures, protocols, techniques and results of
experimentation and testing) (i) owned by or licensed to HPI
as of the date of the relevant License Agreement, (ii) which
are not generally known and (iii) which were actively utilized
and employed by MPS as of or within 12 months prior to the
date of the relevant License Agreement (as demonstrated by the
written records of MPS as of the date of the relevant License
Agreement) in the practice of the processes and methods
claimed by the Tea Bag Patent Rights to make, use, develop,
sell or seek regulatory approval to market a Product for use
in the Field; but only to the extent that HPI has the right to
grant licenses, immunities or other rights thereunder for use
in the Field as of the date of the relevant License Agreement.
Positional Scanning
* U.S. Patent No. 5,556,762 and all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions or
additions to such patent; but only to the extent that HPI has
the right to grant licenses, immunities or other rights
thereunder in the Field (as defined in the relevant License
Agreement) as of the date of the Agreement (the "PSCAN PATENT
RIGHTS").
* All information and data (including but not limited to
formulae, procedures, protocols, techniques and results of
experimentation and testing) (i) owned by or licensed to HPI
as of the date of the relevant License Agreement,
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39
(ii) which are not generally known and (iii) which were
actively utilized and employed by MPS as of or within 12
months prior to the date of the relevant License
Agreement (as demonstrated by the written records of MPS as of
the date of the relevant License Agreement) in the practice of
the processes and methods claimed by the PScan Patent Rights
to make, use, develop, sell or seek regulatory approval to
market a Product for use in the Field; but only to the extent
that HPI has the right to grant licenses, immunities or other
rights thereunder for use in the Field as of the date of the
relevant License Agreement.
Chiron
* Those patents and patent applications which are referred to in
the following documents and which are licensed or sublicensed
by Chiron to HPI:
- that certain License and Option to License Agreement
effective as of January 1, 1994 between Chiron, CMPL
and HPI;
- that certain Sub-License Agreement effective as of
January 1, 1994 between Chiron and HPI;
- that certain Letter of Understanding Concerning
Licensing Agreements dated December 15, 1994 from HPI
to Chiron and CMPL; and
- that certain Heads of Agreement dated as of March 31,
1995 between Chiron, HPI, MPS, Chiron Mimotopes U.S.
and Chiron Mimotopes Peptide Systems L.L.C.;
as well as any and all patents that have issued or in the
future issue from any such patent applications referred to
above (including utility, model and design patents and
certificates of invention), and all divisionals,
continuations, continuations-in-part, reissues, renewals,
extensions or additions to any such patents and patent
applications; but only to the extent that HPI has the right to
grant licenses, immunities or other rights thereunder in the
Field (as defined in the relevant License Agreement) as of the
date of the Agreement (the "CHIRON PATENT RIGHTS").
* All information and data (including but not limited to
formulae, procedures, protocols, techniques and results of
experimentation and testing) (i) owned by or licensed to HPI
as of the date of the relevant License Agreement, (ii) which
are not generally known and (iii) which were actively utilized
and employed by MPS as of or within 12 months prior to the
date of the relevant License Agreement (as demonstrated by the
written records of MPS as of the date of the relevant License
Agreement) in the
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practice of the processes and methods claimed by the Chiron
Patent Rights to make, use, develop, sell or seek regulatory
approval to market a Product for use in the Field; but only to
the extent that HPI has the right to grant licenses,
immunities or other rights thereunder for use in the Field as
of the date of the relevant License Agreement.
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41
CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE X
DEFINITION OF [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED] shall mean any compound comprised
of at least two (2) or more [CONFIDENTIAL TREATMENT REQUESTED]:
(a) [CONFIDENTIAL TREATMENT REQUESTED];
(b) [CONFIDENTIAL TREATMENT REQUESTED];
(c) [CONFIDENTIAL TREATMENT REQUESTED]; or
(d) [CONFIDENTIAL TREATMENT REQUESTED];
provided, however, that [CONFIDENTIAL TREATMENT REQUESTED].
Without limitation, the [CONFIDENTIAL TREATMENT REQUESTED].
For purposes of this SCHEDULE X, an [CONFIDENTIAL TREATMENT
REQUESTED].
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42
CONFIDENTIAL TREATMENT REQUESTED
Notwithstanding the foregoing provisions of this SCHEDULE X requiring
that [CONFIDENTIAL TREATMENT REQUESTED], the following [CONFIDENTIAL TREATMENT
REQUESTED] shall be permitted:
(v) [CONFIDENTIAL TREATMENT REQUESTED];
(w) [CONFIDENTIAL TREATMENT REQUESTED];
(x) [CONFIDENTIAL TREATMENT REQUESTED];
(y) [CONFIDENTIAL TREATMENT REQUESTED]; and
(z) [CONFIDENTIAL TREATMENT REQUESTED].
Notwithstanding any of the foregoing provisions of this SCHEDULE X,
the following shall apply to all [CONFIDENTIAL TREATMENT REQUESTED]:
(1) [CONFIDENTIAL TREATMENT REQUESTED]; and
(2) [CONFIDENTIAL TREATMENT REQUESTED].
