FORBEARANCE AGREEMENT
This Forbearance Agreement is made as of September 1997, by and
between Seragen, LLC, a Massachusetts limited liability company ("BU"), ▇▇▇▇
▇. ▇▇▇▇▇▇, an individual residing in Norwalk, Connecticut ("▇▇▇▇▇▇"), ▇▇▇▇
▇▇▇▇▇▇▇▇, an individual residing in Norwalk, Connecticut ("Josefsen"), and
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individuals residing in Great
Falls, Virginia (together, the "Cassidys"; collectively with BU, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇, the "Holders"), Seragen, Inc., a Delaware corporation ("Seragen"),
and Seragen Technology, Inc., a Delaware corporation ("STI").
WHEREAS, BU is the owner, beneficially and of record, of 11,800
shares (the "BU STI Shares") of STI's Class B Common Stock, par value $.01 per
share (the "Class B Common");
WHEREAS, ▇▇▇▇▇▇ is the owner, beneficially and of record, of 7,000
shares (the "▇▇▇▇▇▇ STI Shares") of the Class B Common;
WHEREAS, Josefsen is the owner, beneficially and of record, of 3,000
shares (the "Josefsen STI Shares") of the Class B Common;
WHEREAS, the Cassidys are the joint owners, beneficially and of
record, of 2,000 shares (the "▇▇▇▇▇▇▇ STI Shares"; collectively with the BU
STI Shares, the ▇▇▇▇▇▇ STI Shares and the Josefsen STI Shares, the
"Outstanding STI Shares") of the Class B Common;
WHEREAS, STI has executed a Collateral Assignment of Patents, dated
July 1, 1996 (the "Collateral Assignment"), in favor of the Holders to secure
certain dividend obligations of STI with respect to the Outstanding STI Shares
and has delivered the Collateral Assignment to Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., as escrow agent (the "Escrow Agent"), pursuant to an
Escrow Agreement, dated July 1, 1996 (the "Escrow Agreement"), among STI, the
Holders and the Escrow Agent;
WHEREAS, the Escrow Agreement provides, in Section 3 thereof, that
the Collateral Assignment is to be delivered by the Escrow Agent to the agent
for the Holders upon the delivery by the agent for the Holders to the Escrow
Agent, with a copy to STI, of a written notice (a "Default Notice") stating
that a dividend payment on the Outstanding STI Shares is in arrears and is due
and payable and the expiration of 60 days following the Escrow Agent's receipt
of such notice without payment of the arrearage;
WHEREAS, STI has failed to pay Class B Common dividends due on
January 1, 1997, April 1, 1997, and July 1, 1997, and has informed the Holders
that it does not anticipate paying Class B Common dividends due on October 1,
1997, and January 1, 1998;
WHEREAS, the Holders, by virtue of STI's failure to pay dividends in
respect of the Outstanding STI Shares as aforesaid, currently have the right
under Section 3 of the Escrow Agreement to cause their agent to deliver a
Default Notice;
WHEREAS, the Holders believe it to be in their interest that Seragen
effect, at the earliest possible time, the issuance of additional shares of
capital stock, authorized or to be authorized, in one or more public or
private offerings (each such offering, or a related series of such offerings,
a "New Offering");
WHEREAS, Seragen has been informed by its financial advisers that
successful completion of a New Offering requires that the Holders agree to
forbear until March 1, 1998, from causing their agent to deliver a Default
Notice or otherwise exercising their rights under Section 3 of the Escrow
Agreement;
WHEREAS, Seragen is therefore unable and unwilling to incur the
substantial costs associated with preparation for a New Offering in the
absence of an agreement by the Holders to so forbear from exercising their
rights under Section 3 of the Escrow Agreement;
WHEREAS, in order to induce Seragen to proceed with preparation for
a New Offering, the Holders are willing to agree to agree to forbear from
exercising their rights under Section 3 of the Escrow Agreement upon the terms
and conditions set forth herein; and
WHEREAS, in consideration of the agreement of the Holders to so
forbear from exercising their rights under Section 3 of the Escrow Agreement,
Seragen is willing to agree, upon the terms and conditions set forth herein,
to proceed with preparations for a New Offering;
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. Forbearance
The Holders hereby agree to forbear until March 1, 1998 from causing
or permitting their agent to deliver a Default Notice or otherwise exercising
such rights as they may have pursuant to Section 3 of the Escrow Agreement to
require delivery of the Collateral Assignment to them or their agent.
2. Seragen to Prepare for New Offering.
Seragen shall, from and after the date hereof, proceed in good faith
to prepare for and effect a New Offering that will yield net cash proceeds to
Seragen of at least $15,000,000. Notwithstanding the foregoing, Seragen may
cease further efforts to prepare for and effect a New Offering at such time as
Seragen's management determines in good faith that it will not be possible for
Seragen to effect the contemplated New Offering on commercially reasonable
terms.
3. Representations and Warranties of Seragen and STI.
Seragen and STI hereby represent and warrant to the Holders as
follows:
(a) Organization and Standing. Each of Seragen and STI is a
corporation, duly organized, validly existing and in good standing, under the
laws of the State of Delaware and has the corporate power and authority to
enter into, deliver and perform its obligations and undertakings under this
Agreement.
(b) Validity. The execution, delivery and performance by each
of Seragen and STI of this Agreement have been duly authorized and approved by
all necessary corporate action. This Agreement has been duly executed and
delivered and constitutes the valid and binding obligation of Seragen and STI,
enforceable against each of them in accordance with its terms, subject to laws
of general application affecting creditors' rights and the exercise of
judicial discretion in accordance with general equitable principles.
(c) No Conflicts. The execution, delivery and performance of
this Agreement by Seragen and STI will not (i) conflict with, or result in a
breach of any of the terms of, or constitute a default under, the certificate
of incorporation or by-laws of either Seragen or STI, (ii) to the knowledge of
Seragen or STI, conflict with or result in a material breach of any of the
terms of, or constitute a material default under, any agreement, instrument,
covenant or other restriction to which Seragen or STI is a party or by which
Seragen or STI or any of their properties or assets are bound, or (iii)
conflict with any law, rule, regulation, order or decree or any rule of the
Nasdaq National Market applicable to Seragen and STI or by which Seragen and
STI are bound; except, in each instance, for such conflicts, breaches or
default as would not, individually or in the aggregate, materially and
adversely affect the financial condition, business or assets of Seragen and
STI, taken together, or the ability of Seragen and STI to consummate the
transactions contemplated hereby.
(d) Governmental Consent. No consent, permit, approval or
authorization of any governmental authority is required under existing laws,
rules and regulations in connection with the execution and delivery of this
Agreement by Seragen or STI.
4. Representations and Warranties of the Holders
Each Holder hereby represents and warrants to Seragen and STI as
follows:
(a) Authority of Holder; Validity. The Holder has all requisite
power and authority to enter into this Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Agreement by the
Holder have been duly authorized and approved by all necessary corporate or
other action. This Agreement has been duly executed and delivered and
constitutes a valid and binding obligation of the Holder, enforceable against
the Holder in accordance with its terms, subject to laws of general
application affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
(b) No Conflicts. The execution, delivery and performance of
this Agreement by the Holder will not (i) conflict with, or result in a breach
of any of the terms of, or constitute a default under, the organic documents
of the Holder, if any, (ii) to the knowledge of the Holder, conflict with or
result in a material breach of any of the terms of, or constitute a material
default under, any agreement, instrument, covenant or other restriction to
which the Holder is a party or by which the Holder or any of its properties or
assets are bound, or (iii) conflict with any law, rule, regulation, order or
decree applicable to the Holder or by which the Holder is bound; except, in
each instance, for such conflicts, breaches or default as would not,
individually or in the aggregate, materially and adversely affect the
financial condition, business or assets of the Holder or the ability of the
Holder to consummate the transactions contemplated hereby.
(c) Governmental Consent. No consent, approval or authorization
of any governmental authority is required under existing laws, rules and
regulations in connection with the execution and delivery of this Agreement by
the Holder.
5. Miscellaneous.
(a) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by
overnight courier, or (iv) sent by registered mail, return receipt requested,
postage prepaid.
If to the
Investors: at the addresses set forth on
Schedule 1 hereto
If to Seragen: Seragen, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
mail, on the fifth business day following the day such mailing is made.
(b) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Agreement shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
(c) Amendments. The terms and provisions of the Agreement may
be modified, amended or waived, or consent for the departure therefrom
granted, only by written consent of all of the parties hereto. No such waiver
or consent shall be deemed to be, or shall constitute, a waiver or consent
with respect to any other terms or provisions of this Agreement, whether or
not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
(d) Assignment. The rights and obligations under this Agreement
may not be assigned by any party hereto without the prior written consent of
the other party.
(e) Benefit. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and
permitted assigns of each party hereto. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties hereto,
and no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
(f) Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the law of the Commonwealth of Massachusetts, without giving
effect to the conflict of law principles thereof.
(g) Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof,
wholly unenforceable, the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
(h) Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only
and shall in no way modify, or affect the meaning or construction of, any of
the terms or provisions hereof.
(i) No Waiver of Rights, Powers and Remedies. No failure or
delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate
as a waiver of any such right, power or remedy of the party. No single or
partial exercise of any right, power or remedy under this Agreement by a party
hereto, nor any abandonment or discontinuance of steps to enforce any such
right, power or remedy, shall preclude such party from any other or further
exercise thereof or the exercise of any other right, power or remedy
hereunder. The election of any remedy by a party hereto shall not constitute
a waiver of the right of such party to pursue other available remedies. No
notice to or demand on a party not expressly required under this Agreement
shall entitle the party receiving such notice or demand to any other or
further notice or demand in similar other circumstances or constitute a waiver
of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand.
(j) Specific Performance. Seragen and STI, on the one hand, and
each Holder, on the other hand, acknowledge that it would be impossible to
determine the amount of damages that would result from any breach by the other
party of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any such provisions would likely be
inadequate and, accordingly, agree that Seragen and STI, on the one hand, and
each Holder, on the other hand, shall, in addition to any other rights or
remedies which it may have, be entitled to seek such equitable and injunctive
relief as may be available from any court of competent jurisdiction to compel
specific performance of, or restrain the other party from violating any of,
such provisions. In connection with any action or proceeding for injunctive
relief, Seragen and STI, on the one hand, and each Holder, on the other hand,
hereby waive the claim or defense that a remedy at law alone is adequate and
agree, to the extent permitted by law, to have each provision of this
Agreement specifically enforced against it.
(m) Counterparts; Facsimiles. This Agreement may be executed in
one or more counterparts, and by different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page of this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.
In WITNESS WHEREOF, each of the undersigned has executed this
Agreement to be effective as of the date first set forth above.
HOLDERS:
SERAGEN LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________
Name:
Title
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SERAGEN:
SERAGEN, INC.
By: /s/ Reed R. Prior
____________________________
Reed R. Prior
Chairman, Chief Executive
Officer and Treasurer
STI:
SERAGEN TECHNOLOGY, INC.
By: /s/ Reed R. Prior
___________________________
Reed R. Prior
Chairman, Chief Executive
Officer and Treasurer
LIST OF EXHIBITS AND SCHEDULES
Schedule 1 List of Holders and Addresses
SCHEDULE 1
List of Holders and Addresses
Name, Address and Fax Number of Investor
Seragen LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President for Financial
Affairs and Treasurer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Cassidy and Associates, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇