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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
-----
Seragen, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
817474-10-9
(CUSIP Number)
James B. Lootens, Assistant Secretary and Associate General
Counsel,
Eli Lilly and Company, Lilly Corporate Center,
Indianapolis, Indiana 46285 317-276-5835
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 7, 1997
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and if filing this schedule because of Rule 13d-1(b)(3) or
(4), check the following box .
--
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
(Continued on following pages)
Page 1 of 34 Pages
CUSIP No. 817474-10-9
(1) Names of Reporting Persons: Eli Lilly and Company
S.S. or I.R.S. Identification 35-0470950
Nos. of Above Persons
(2) Check the Appropriate Box (a)
if a Member of a Group (b)
Not Applicable
(3) SEC Use Only
(4) Source of Funds WC, OO
(5) Check if Disclosure of Legal
Proceedings is Required Pursuant
to Items 2(d) or 2(e) Not Applicable
(6) Citizenship or Place of Indiana
Organization
Number of Shares (7) Sole Voting
Beneficially Owned Power 1,787,092
by Each Reporting (8) Shared Voting None
Person With Power
(9) Sole Dispositive
Power 1,787,092
(10) Shared Disposi- None
tive Power
(11) Aggregate Amount Beneficially
Owned by Each Reporting Person 1,787,092
(12) Check if the Aggregate Amount Not Applicable
In Row (11) Excludes Certain Shares
(13) Percent of Class Represented
by Amount in Row (11) 9.4%
(14) Type of Reporting Person CO
Page 2 of 34 pages
Item 1. Security and Issuer.
This statement relates to the common stock, $.01 par value
per share (the "Common Stock"), of Seragen, Inc., a Delaware
corporation (the "Issuer").
The principal executive offices of the Issuer are located
at 97 South Street, Hopkinton, Massachusetts 01748.
Item 2. Identity and Background.
This statement is filed by Eli Lilly and Company, an
Indiana corporation ("Lilly"). Lilly's principal business and
office address is Lilly Corporate Center, Indianapolis, Indiana
46285. Lilly is a global research-based corporation that
develops, manufactures, and markets pharmaceuticals and animal
health products and provides health-care management services.
Information with respect to the executive officers and
directors of Lilly, including name, business address, present
principal occupation or employment, and the name, principal
business and address of any corporation or other organization in
which such employment is conducted, is listed in Attachment 1
which is incorporated in this Schedule 13D by reference.
Neither Lilly nor, to the best of its knowledge, any
executive officer or director of Lilly, has during the last five
years been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of that proceeding was or is subject
to a judgment, decree, or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
those laws.
Item 3. Source and Amount of Funds or Other Consideration.
Lilly acquired 1,000,000 shares of Common Stock pursuant
to a Stock Purchase Agreement effective as of April 7, 1997, (the
``Stock Purchase Agreement''), a copy of which is filed herewith
as Exhibit A. The consideration for the purchase of the Common
Stock was Lilly's agreement to enter into an Amendment to Sales
and Distribution Agreement and Development Agreement (the
``Amendment''), which was also entered into on April 7, 1997.
Pursuant to the Amendment, in exchange for the shares of Common
Stock Lilly agreed, among other things, to relinquish certain
options granted to it by the Issuer in 1994 which gave Lilly
rights to pursue the development of the Issuer's IL-2 Fusion
Protein investigational compound for indications other than
cancer and to pursue development of other compounds of the
Issuer. Lilly also agreed, subject to certain conditions, to pay
up to $4,300,000 on behalf of the Issuer to assist the Issuer in
meeting certain obligations to a third party under a license
agreement. The source of these funds is Lilly's working capital.
Item 4. Purpose of Transaction.
The Common Stock was acquired by Lilly for investment
purposes, in connection with the execution of the Amendment,
which defined certain rights and responsibilities of the Issuer
and Lilly under an ongoing collaboration to develop the Issuer's
IL-2 Fusion Protein investigational compound.
Page 3 of 34 pages
Lilly has no present plans or proposals which relate to or
would result in:
(a) the acquisition by any person of additional
securities of the Issuer, or the disposition of
securities of the Issuer;
(b) an extraordinary corporate transaction, such
as a merger, reorganization or liquidation,
involving the Issuer or any of its
subsidiaries;
(c) a sale or transfer of a material amount of
assets of the Issuer or any of its
subsidiaries;
(d) any change in the present board of directors or
management of the Issuer including any plans or
proposals to change the number or term of
directors or to fill any existing vacancies on
the board;
(e) any material change in the present
capitalization or dividend policy of the
Issuer;
(f) any other material change in the Issuer's
business or corporate structure;
(g) changes in the Issuer's charter, bylaws, or
instruments corresponding thereto or other
actions which may impede the acquisition of
control of the Issuer by any person;
(h) causing a class of securities of the Issuer to
be delisted from a national securities exchange
or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association;
(i) a class of equity securities of the Issuer
becoming eligible for termination of
registration pursuant to Section 12(g)(4) of
the Act; or
(j) any action similar to any of those enumerated
above.
Item 5. Interest in Securities of the Issuer.
(a) Lilly is the beneficial owner of 1,787,092
shares of Common Stock of the Issuer, which is
9.4% of the number of shares of Common Stock
currently issued, outstanding, and entitled to
vote.
To the best knowledge of Lilly, no executive
officer or director of Lilly beneficially owns
any shares of Common Stock of the Issuer or has
a right to acquire any shares of Common Stock
of the Issuer.
(b) Lilly has the sole power to vote or direct the
vote and to dispose and direct the disposition
of all shares of Common Stock issued to Lilly.
To the best knowledge of Lilly, no executive
officer or director of Lilly has the power to
vote or direct the vote or to dispose or direct
Page 4 of 34
the disposition of any shares of Common Stock
of the Issuer.
(c) Except for the acquisition of Common Stock by
Lilly described in response to Item 3 hereof,
neither Lilly nor, to the best knowledge of
Lilly, any executive officer or director of
Lilly has effected any transaction in the
Common Stock of Issuer during the past 60 days.
(d) No other person has the right to receive or
the power to direct the receipt of dividends
from, or the proceeds from the sale of, the
Common Stock issued to Lilly.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
The 1,000,000 shares of Common Stock were purchased from
the Issuer on April 7, 1997, pursuant to the Stock Purchase
Agreement dated April 7, 1997. A copy of the Stock Purchase
Agreement is attached to this Schedule 13D as Exhibit A.
On August 6, 1994, Lilly acquired 787,092 shares of Common
Stock pursuant to a Stock Purchase Agreement dated that same date
(the ``August 1994 Agreement''), a copy of which is incorporated
by reference as an exhibit hereto. Both Agreements include
customary representations and warranties as well as post-closing
covenants obligating the Issuer to (i) use best efforts to make
available to Lilly the benefit of Rule 144 under the Securities
act of 1933 (the "Securities Act'') for the resale of Common
Stock held by Lilly; and (ii) at Lilly's election, register for
resale under the Securities Act shares of Common Stock held by
Lilly at such time as the Issuer engages in certain registered
public offerings of its equity securities.
Except as set forth above, there are no contracts,
arrangements, understandings or relationships between Lilly or,
to the best of its knowledge, any executive officer or director
of Lilly, and any other person with respect to any securities of
the Issuer, including any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any
securities of the Issuer, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of
proxies.
Item 7. Material to Be Filed as Exhibits.
Exhibit A. Stock Purchase Agreement dated April 7, 1997,
between Seragen, Inc. and Eli Lilly and Company.
Exhibit B. Stock Purchase Agreement dated August 6, 1994,
between Seragen, Inc. and Eli Lilly and Company.
Page 5 of 34 pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
ELI LILLY AND COMPANY
BY: s/Edwin W. Miller
Edwin W. Miller
Vice President and
Treasurer
Date: April 11, 1997
Page 6 of 34 pages
Attachment 1
DIRECTORS
Name and Business Address
(all business addresses are
Lilly Corporate Center
Indianapolis, Indiana 46285 Present Principal
unless otherwise indicated) Occupation or Employment
Evan Bayh Partner, Baker & Daniels law firm
300 N. Meridian St., Suite 2700
Indianapolis, IN 46204
Steven C. Beering, M.D. President, Purdue University
Purdue University
West Lafayette, Indiana 47907
James W. Cozad Retired Chairman of the Board and
205 N. Michigan Avenue Chief Executive Officer,
Suite 4310 Whitman Corporation
Chicago, Illinois 60601
Alfred G. Gilman, M.D., Ph.D. Regental Professor and Chairman,
5323 Harry Hines Blvd. Dept. of Pharmacology, The
Dallas, TX 75235-9041 University of Texas Southwestern
Medical Center
Charles E. Golden* Executive Vice Presiden and
Chief Financial Officer of
Lilly
Karen N. Horn, Ph.D. Senior Managing Director and Head
280 Park Avenue, 3 East of International Private Banking,
New York, NY 10017 Bankers Trust Company
J. Clayburn La Force, Jr., Ph.D. Dean Emeritus, The John E. Anderson
P. O. Box 1595 Graduate School of Management at
Pauma Valley, CA 92061 UCLA
Kenneth L. Lay, Ph.D. Chairman and Chief
P. O. Box 1188 Officer, Enron Corp.
Houston, TX 77251-1188
Franklyn G. Prendergast, Edmond and Marion Guggenheim
M.D., Ph.D. Professor of Biochemistry
Dept. of Pharmacology Molecular Biology and Director,
Mayo Foundation Mayo Cancer Center
200 First St., SW
Rochester, Minnesota 55905
Page 7 of 34 Pages
Kathi P. Seifert Group President, North American
2100 Winchester Road Personal Care Products,
Neenah, Wisconsin 54956 Kimberly-Clark Corporation
Sidney Taurel* President and Chief Operating
Officer of Lilly
Randall L. Tobias* Chairman of the Board and
Chief Executive Officer
of Lilly
August M. Watanabe, M.D.* Executive Vice President,
Science and Technology of
Lilly
Alva O. Way Chairman of the Board,
One State Street IBJ Schroder Bank & Trust
New York, New York 10004 Company
*Executive officer of Lilly
Page 8 of 34 pages
EXECUTIVE OFFICERS (who are not Directors)
Name and Business Address
(all business addresses are
Lilly Corporate Center
Indianapolis, Indiana 46285) Present Principal Occupation or Employment
Mitchell E. Daniels, Jr. Vice President, Corporate Strategy and Policy
Rebecca O. Goss Vice President and General Counsel
Pedro P. Granadillo Vice President, Human Resources
Alan S. Clark President, U. S. Operations
Michael L. Eagle Vice President, Manufacturing
Brendan P. Fox, D.V.M. President, Elanco Animal Health Business Unit
Michael E. Hanson President, Internal Medicine Business Unit
James A. Harper President, Endocrine Business Unit
Gerhard N. Mayr President, European, Middle East
and African Operations
Robert N. Postlethwait President, Neuroscience Business Unit
William R. Ringo, Jr. President, Infectious Diseases
Business Unit
Gino Santini Vice President, Corporate Strategy
and Business Development
Thomas Trainer Vice President, Information Technology,
and Chief Information Officer
Page 9 of 34 Pages
Exhibit Index
Exhibit Description Page
A Stock Purchase Agreement dated 11
April 7, 1997
B Stock Purchase Agreement dated *
August 6, 1994
*Incorporated by reference from Exhibit 10.48 to the quarterly
Report on Form 10-Q of Seragen, Inc., for the quarter ended June
30, 1994.
Page 10 of 34 pages
Exhibit A
STOCK PURCHASE AGREEMENT
by and between
SERAGEN, INC.
and
ELI LILLY AND COMPANY
April 1997
Page 11 of 34 pages
SERAGEN, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is
made this 7th day of April, 1997 by and between Seragen,
Inc., a Delaware corporation (the "Company"), and Eli Lilly
and Company, an Indiana corporation ("Lilly").
WHEREAS, the Company and Lilly are entering into an
Amendment to Sales and Distribution Agreement and
Development Agreement (the "Amendment") of even date
herewith;
WHEREAS, the Company desires to issue and sell to Lilly
and Lilly desires to acquire 1,000,000 shares (the "Shares")
of the Company's Common Stock, par value $.01 per share
("Common Stock"); and
WHEREAS, the Company and Lilly desire to set forth
certain matters to which they have agreed relating to the
Shares;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained in this Agreement the parties
agree as follows:
ARTICLE I - ISSUANCE AND TERMS OF SHARES
SECTION 1.1 Authorization of Shares. Subject to the
terms and conditions of this Agreement, the Company has
authorized the sale of the Shares pursuant to this
Agreement.
SECTION 1.2 Purchase and Sale of Shares. Subject to
the terms and conditions of this Agreement and in reliance
upon the representations and warranties of the Company and
Lilly contained herein, Lilly agrees to purchase the Shares
from the Company and the Company agrees to sell the Shares
to Lilly on the Closing Date in consideration for Lilly's
agreement to enter into the Amendment with the Company.
SECTION 1.3 Resale Limitations. Lilly hereby agrees
not to sell, pledge, assign or otherwise transfer the Shares
for a period of one year following the date of issuance of
the Shares, except with the prior consent of the Company,
which consent shall not be unreasonably withheld; provided
that Lilly shall have the right to transfer the Shares to
its Affiliates (as defined in the Sales and Distribution
Agreement dated as of August 3, 1994 between Lilly and the
Company) during such one-year period without the prior
consent of the Company and provided that those Affiliates
agree in writing to be bound by the restrictions on the
sale, pledge, assignment and transfer of the Shares set
forth in this Section 1.3.
ARTICLE II - CLOSING
SECTION 2.1 Closing. Subject to the satisfaction of
Articles V and VI hereof, the closing hereunder (the
"Closing") shall take place at a place and time (the
"Closing Date") mutually agreed by the Company and Lilly.
At the Closing, the Company shall deliver to Lilly one or
more stock certificates registered in the name of "Eli Lilly
and Company," or in such name or names as may be designated
by Lilly at least five business days in advance of the
Closing Date, for the number of shares described in Section
1.2 hereof, simultaneously with the execution and delivery
by the parties of the Amendment.
SECTION 2.2 Legend. The certificates representing the
Shares shall be subject to a legend restricting transfer
under the Securities Act of 1933, as amended (the
"Securities Act"), such legend to be substantially as
follows:
Page 12 of 34 pages
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY
ANY PERSON UNLESS (1) EITHER (A) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES SHALL BE
EFFECTIVE UNDER THE SECURITIES ACT OF 1933 ("ACT"), OR
(B) THE COMPANY SHALL HAVE REASONABLY REQUESTED AND
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS THEN
AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE
WITH ALL APPLICABLE STATE SECURITIES LAWS."
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
The Company hereby represents and warrants to Lilly
that, as of the date of this Agreement, except as otherwise
described on Exhibit A hereto, the following are true and
correct in all material respects:
SECTION 3.1 Organization and Standing of the Company.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and is duly qualified to transact business as a
foreign corporation and is in good standing in each
jurisdiction in which the conduct of its business or the
ownership or leasing of properties requires such
qualification. The Company has the corporate power and
authority (i) to own and lease its property, (ii) to enter
into, deliver, and perform its obligations and undertakings
under this Agreement, (iii) to issue the Shares, and (iv) to
conduct its business in each of the jurisdictions in which
such business is now conducted. The Company has furnished
to Lilly true and correct copies of its Certificate of
Incorporation and By-laws, as currently in effect.
SECTION 3.2 Subsidiaries. Except as disclosed on
Schedule 3.2 hereto the Company has no subsidiaries and does
not control, directly or indirectly, any other corporation,
association or business organization.
SECTION 3.3 Capitalization. The Company's entire
authorized capital stock consists of: 70,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, $.01
par value per share (the "Preferred Stock"). All of the
Company's outstanding shares of Common Stock and Preferred
Stock, options and warrants are listed on Schedule 3.3
hereto. As of January 31, 1997, the Company had an
aggregate of 1,832,281 shares of Common Stock available for
issuance under the Company's 1992 Long Term Incentive Plan
and 1992 Non-Employee Director Non-Qualified Stock Option
Plan (the "Stock Plans"). The Common Stock and the Preferred
Stock have the preferences, voting powers, qualifications,
and special or relative rights or privileges set forth in
Article IV of the Company's Certificate of Incorporation.
All outstanding shares of Common Stock have been validly
issued, are fully paid and non-assessable and have been
issued in accordance with applicable federal and state
securities laws. In accordance with the Company's
Certificate of Incorporation, as amended, the Shares, when
issued, will be validly authorized, issued and outstanding,
fully paid and non-assessable. Other than as indicated on
Schedule 3.3 hereto or in the SEC Reports (as hereinafter
defined), the Company does not have outstanding any option,
warrant, agreement or other commitment to issue or to
acquire any shares of its capital stock, or any securities
or obligations convertible into or exchangeable for its
capital stock, and the Company has not given any person any
right to acquire from the Company or sell to the Company any
shares of its capital stock. Except as indicated in the SEC
Reports, there is, and immediately upon consummation at the
Closing of the transactions contemplated hereby, there will
be, no agreement, restriction or encumbrance (such as a
right of first refusal, right of first offer, proxy, voting
agreement, etc.) with respect to the sale or voting of any
shares of capital stock of the Company (whether outstanding
or issuable upon conversion or exercise of outstanding
Page 13 of 34 pages
securities) to which the Company is a party except as
contemplated by any provisions of the Company's Certificate
of Incorporation or By-laws. Notwithstanding the foregoing,
there is no agreement, restriction or encumbrance (such as a
right of first refusal, right of first offer, proxy, voting
agreement, etc.) in effect with respect to the Shares or
which will not have been waived prior to Closing.
SECTION 3.4 Validity of this Agreement. The
execution, delivery and performance by the Company of this
Agreement, and the issue and sale of the Shares have been
duly authorized and approved by all necessary corporate
action. This Agreement has been duly executed and delivered
and constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms subject to
laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
The execution, delivery and performance of the Agreement and
the issuance and sale of the Shares will not conflict with,
or result in any breach of any of the terms of, or
constitute a default under, the Certificate of Incorporation
or By-laws of the Company, 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 Company is a party or by which it or any of its
properties or assets is bound.
SECTION 3.5 Accuracy of Reports and Information. The
Company's Common Stock is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Except as described on Schedule 3.5,
all reports (the "SEC Reports") required to be filed by the
Company have been duly filed, were in compliance with the
requirements of their respective forms and were complete and
correct in all material respects as of the dates at which
the information was furnished. Copies of all SEC Reports
filed by the Company during the period from March 1, 1993 to
the date of this Agreement have been furnished to Lilly.
The Company will continue to file all reports required to be
filed under the Exchange Act. Except as described on
Schedule 3.5, the SEC Reports, do not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
SECTION 3.6 Financial Statements. The audited
financial statements of the Company contained in the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996, including the notes relating thereto,
have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods involved. Said financial statements and related
notes fairly present the financial position and the results
of operations and cash flow of the Company as of the
respective dates thereof and for the periods indicated, and
disclose all material liabilities of the Company as of the
respective dates thereof. Since December 31, 1996 there has
not been any change in the assets, properties, liabilities,
financial condition, operating results or business of the
Company, except for depletion of cash resources and changes
in the ordinary course of business which have not been, in
the aggregate, materially adverse.
SECTION 3.7 Governmental Consent, etc. Except for
filings, consents, permits, approvals and authorizations
which will be obtained by the Company prior to Closing, no
consent, approval or authorization of any governmental
authority is required under existing law or regulation in
connection with the execution and delivery of the Agreement
or the offer, issue, sale or delivery of the Shares pursuant
to the Agreement or the consummation of any other
transactions contemplated thereby.
Page 14 of 34 pages
SECTION 3.8 Compliance with Other Agreements and
Instruments. Except as reflected in the SEC Reports, the
Company is not in violation of any provisions of its
Certificate of Incorporation or By-laws, or, to the best of
the Company's knowledge, of any provision of any Federal or
state judgment, writ, decree, order, statute, rule or
governmental regulation applicable to the Company, which
violation materially and adversely affects the business or
financial condition of the Company. The Company is not in
material violation or default of any agreement, instrument
or contract to which it is a party or by which it or its
property is bound, which violation materially and adversely
affects the business or financial condition of the Company.
SECTION 3.9 Valid Issuance of Shares. When issued and
delivered against payment therefor in accordance with the
terms of this Agreement, the Shares shall be duly authorized
and validly issued (including, without limitation, issued in
compliance with applicable federal and state securities
laws), fully paid and non-assessable and not subject to any
preemptive rights, liens, claims or encumbrances, or other
restriction on transfer, except as set forth in this
Agreement.
SECTION 3.10 Private Offering. Neither the Company
nor, to the Company's best knowledge, anyone acting on its
behalf has offered any securities of the Company for
issuance or sale to, or solicited any offer to acquire any
of the same from, any person or entity so as to make the
issuance and sale of the Shares subject to the registration
requirements of Section 5 of the Securities Act of 1933, as
amended ("Securities Act").
SECTION 3.11 Registration Rights. Except as set forth
in Exhibit A and as provided in this Agreement, the Company
is under no contractual obligation to register (now or in
the future, whether contingent or not) under the Securities
Act any of its presently outstanding securities or any of
its securities that may subsequently be issued.
SECTION 3.12 Full Disclosure. The Company believes it
has provided Lilly with all information that Lilly has
requested for deciding whether to purchase the Shares.
Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made
therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF LILLY
Lilly hereby acknowledges, represents, warrants and
agrees as follows:
SECTION 4.1 Authority of Lilly; Validity of this
Agreement. Lilly has all requisite power and authority to
enter into this Agreement and perform its obligations
hereunder. The execution, delivery and performance by Lilly
of this Agreement, and the purchase of the Shares have been
duly authorized and approved by all necessary corporate
action. This Agreement has been duly executed and delivered
and constitutes a valid and binding obligation of Lilly,
enforceable in accordance with its terms, subject to laws of
general application from time to time in effect affecting
creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles. The
execution, delivery and performance of this Agreement and
the purchase of the Shares will not conflict with, or result
in a material breach of any of the terms of, or constitute a
material default under, any charter, by-law, agreement,
instrument, covenant or other restriction to which Lilly is
a party or by which it or any of its properties or assets is
bound.
Page 15 of 34 pages
SECTION 4.2 Investment Representations. Lilly hereby
acknowledges, represents, warrants and agrees as follows:
Lilly has reviewed the SEC Reports and the financial
statements contained therein. Lilly acknowledges that the
Company has made available to Lilly all documents and
information that it has requested relating to the Company
and has provided answers to all of its questions concerning
the Company and the Shares. In evaluating the suitability
of the acquisition of the Shares hereunder, Lilly has not
relied upon any representations or other information
(whether oral or written) other than as set forth in the SEC
Reports or as contained herein.
Lilly is an "accredited investor" as defined in Rule
501(a)(3) of the Securities Act.
Lilly understands that the offering of the Shares has
not been registered under the Securities Act or the
securities laws of any state or other jurisdiction and that
such Shares must be held indefinitely unless an exemption
from registration is available. Lilly understands that the
offering and sale of the Shares is intended to be exempt
from registration under the Securities Act, by virtue of
Section 4(2) and/or Section 4(6) of the Securities Act and
the provisions of Regulation D promulgated thereunder,
based, in part, upon the representations, warranties and
agreements of Lilly contained in this Agreement and the
Company may rely on such representations, warranties and
agreements in connection therewith. Lilly will not transfer
the Shares in violation of the provisions of any applicable
Federal or state securities statute.
Lilly is acquiring the Shares for investment, and not
with a view to the resale or distribution thereof; it has no
present intention of selling, negotiating, or otherwise
disposing of the Shares. Lilly's financial condition and
investments are such that it is in a financial position to
hold the Shares for an indefinite period of time and to bear
the economic risk of, and withstand a complete loss of, such
Shares. In addition, by virtue of its expertise, the advice
available to it, and its previous investment experience,
Lilly has extensive knowledge and experience in financial
and business matters, investments, securities, and private
placements and the capability to evaluate the merits and
risks of the transactions contemplated by this Agreement.
ARTICLE V - CONDITIONS TO LILLY'S OBLIGATIONS
The obligation of Lilly to purchase and pay for the
Shares is subject to the following:
SECTION 5.1 Representations and Warranties. The
representations and warranties of the Company made herein
shall be true, correct and complete in all material respects
on and as of the Closing Date with the same force and effect
as if they had been made on and as of the Closing Date.
SECTION 5.2 Performance. All covenants, agreements
and conditions contained in this Agreement to be performed
or complied with by the Company on or prior to the Closing
Date shall have been performed or complied with in all
material respects.
SECTION 5.3 Opinion of Company's Counsel. Lilly shall
have received an opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., counsel for the Company,
substantially in the form of Exhibit B hereto.
SECTION 5.4 Corporate Proceedings; Consents, Etc. All
corporate and other proceedings to be taken and all waivers
and consents to be obtained in connection with the
transactions contemplated by this Agreement shall have been
Page 16 of 34 pages
taken or obtained and all documents incident thereto shall
be reasonably satisfactory in form and substance to Lilly
and its counsel, each of whom shall have received all such
originals or certified or other copies of such documents as
each may reasonably request.
SECTION 5.5 No Order Pending. There shall not then be
in effect any order enjoining or restraining the
transactions contemplated by this Agreement.
SECTION 5.6 No Law Prohibiting or Restricting such
Sale. There shall not be in effect any law, rule or
regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall
not have been obtained to issue the Shares (except as
otherwise provided in this Agreement).
SECTION 5.7 Officer's Certificate. The Company shall
have delivered to Lilly a certificate, dated the Closing
Date and signed by the Chief Executive Officer or the
President of the Company, to the effect that each of the
conditions to be satisfied by the Company pursuant to this
Article V on or before the Closing Date has been duly
satisfied.
ARTICLE VI - CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to issue the Shares to
Lilly is subject to the following:
SECTION 6.1 Representations and Warranties. The
representations and warranties of Lilly made herein shall be
true, correct and complete in all material respects on and
as of the Closing Date with the same force and effect as if
they had been made on and as of the Closing Date.
SECTION 6.2 Execution of Amendment. Lilly shall have
executed and delivered to the Company the Amendment.
SECTION 6.3 No Order Pending. There shall not then be
in effect any order enjoining or restraining the
transactions contemplated by this Agreement.
SECTION 6.4 No Law Prohibiting or Restricting such
Sale. There shall not be in effect any law, rule or
regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall
not have been obtained to issue the Shares (except as
otherwise provided in this Agreement).
ARTICLE VII - POST CLOSING COVENANTS OF THE COMPANY
SECTION 7.1 Rule 144 Reporting and SEC Form S-3. With
a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit
the sale of the Shares to the public without registration or
a registration on SEC Form S-3, the Company agrees to use
its best efforts to:
(a) Make and keep public information available, as
those terms are understood and defined in Rule 144
under the Securities Act;
(b) File with the Commission in a timely manner all
reports and other documents required of the
Company under the Securities Act and the Exchange
Act;
(c) So long as Lilly owns any Shares, to furnish to
Lilly forthwith upon request (i) a written
statement by the Company as to whether it complies
with the reporting requirements of said Rule 144,
the Securities Act and the Exchange Act, or
Page 17 of 34 pages
whether it qualifies as a registrant whose
securities may be resold pursuant to SEC Form S-3,
(ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and
documents so filed by the Company, and (iii) such
other information as may be reasonably requested
in availing Lilly of any rule or regulation of the
Commission which would permit the selling of the
Shares without registration.
SECTION 7.2 Private Offering. Neither the Company nor
anyone acting on its behalf will offer any securities of the
Company for issuance or sale to, or solicit any offer to
acquire any of the same from, any person or entity so as to
make the issuance and sale of the Shares subject to the
registration requirements of Section 5 of the Securities
Act.
SECTION 7.3 Registration Rights.
(a) Definitions. As used in this Section 7.3, the
following terms shall have the following
respective meanings:
"Commission" shall mean the Securities and
Exchange Commission or any other federal
agency at the time administering the
Securities Act.
"Transfer" shall mean any disposition of the
Shares which would constitute a sale thereof
within the meaning of the Securities Act.
"Restricted Securities" shall mean (i) the
Shares; and (ii) any common stock or other
security issued as a dividend or other
distribution with respect to the foregoing.
(b) Amendments of Registration Rights. Without the
written consent of the holders of 51% of the total
number of shares which would, at the time of such
calculation, constitute Restricted Securities, the
Company shall not amend this Section 7.3, or enter
into any agreement with any holder or prospective
holder of any securities of the Company which
would grant to such holder or prospective holder
rights superior to or in conflict with any rights
conferred upon Lilly under this Section.
(c) "Piggyback" Registrations. Commencing two years
from the Closing Date, if and whenever the Company
proposes to register any of its equity securities
under the Securities Act for an offering to the
general public for cash, whether on its own behalf
or on behalf of controlling shareholders of the
Company participating in a secondary distribution,
it will give written notice to all holders of
Restricted Securities of its intention to do so
and, upon the written request of the holders of
any Restricted Securities given within thirty (30)
days after the Company's giving of such notice
(which request shall state the intended method of
disposition of the securities by the prospective
sellers), the Company will use its best efforts to
cause the Restricted Securities as to which
registration shall have been so requested to be
included in the shares of securities to be covered
by the registration statement proposed to be filed
by the Company, all to the extent requisite to
permit the sale or other disposition (in
accordance with the written request of the
holders) by the prospective seller or sellers of
such Restricted Securities. In the event that any
registration pursuant to this Subsection shall be,
Page 18 of 34 pages
in whole or in part, a firm commitment
underwritten offering of securities of the
Company, any request by such holders pursuant to
this Subsection to register Restricted Securities
must specify that such shares are to be included
in the underwriting on the same terms and
conditions as the shares of securities, if any,
otherwise being sold through underwriters under
such registration. In the event that no shares of
securities are being sold through underwriters
under such registration, then any request by such
holders pursuant to this Subsection to register
such Restricted Securities must specify that such
shares are to be included in the registration on
terms and conditions comparable to those normally
applicable to offerings of common stock in
reasonably similar circumstances. Notwithstanding
any other provision of this Section, if the
underwriter determines that marketing factors
require a limitation of the number of shares to be
underwritten or that it is otherwise advisable,
the underwriter may exclude the Restricted
Securities from such registration, provided,
however, except as otherwise required by
registration rights granted by the Company prior
to the date hereof, if any shares of Common Stock
are to be included in such registration for the
account of any person other than the Company, then
the number of Restricted Securities to be included
in such registration shall be determined pro rata
based upon the ratio of Restricted Securities
requested to be included in such registration to
the total number of shares of Common Stock
(including Restricted Securities) requested to be
included therein.
(d) Registration Procedures. If and whenever the
Company is required by the provisions of this
Section to include any of the Restricted
Securities in a registration under the Securities
Act, Lilly will furnish in writing such
information as is reasonably requested by the
Company for inclusion in the registration
statement relating to such offering and such other
information and documentation as the Company shall
reasonably request, and the Company will, as
expeditiously as possible:
i. Prepare and file with the Commission a
registration statement with respect to such
securities and use its best efforts to cause
such registration to become and remain
effective for such period as may be necessary
to permit the successful marketing of such
securities but not exceeding 120 days.
ii. Prepare and file with the Commission such
amendments and supplements to such
registration statement and the prospectus
used in connection therewith as may be
necessary to comply with the provisions of
the Securities Act and to keep such
registration statement effective for that
period of time specified in paragraph
7.3(d)(i).
iii. Furnish to each selling shareholder such
number of prospectuses and preliminary
prospectuses in conformity with the
requirements of the Securities Act, and such
other documents as such seller may reasonably
request in order to facilitate the public
sale or other disposition of the Restricted
Securities owned by such seller.
iv. If the Company is required by the
underwriters, if any, of the securities
registered under this Section to deliver an
Page 19 of 34 pages
opinion of counsel to such underwriters in
connection with such registration, and if
requested by any holders of Restricted
Securities participating in such
registration, use its best efforts to furnish
such opinion to such holders on the day of
delivery to the underwriters, addressed to
such underwriters and to such holders. Such
opinion shall be in such form as is customary
for similar opinions delivered by such
counsel.
v. If the Company is required by the
underwriters, if any, of the securities
registered in a registration under this
Section to deliver a letter from the
independent certified public accountants of
the Company to such underwriters in
connection with such registration, and if
requested by any holders of Restricted
Securities participating in such
registration, use its best efforts to furnish
such letter to such holders on the day of
delivery to the underwriters, addressed to
such underwriters and to such holders,
providing substantially that such accountants
are independent certified public accountants
within the meaning of the Securities Act and
that in the opinion of such accountants, the
financial statements and other financial data
of the Company included in the registration
statement and the prospectus, and any
amendment or supplement thereto, comply as to
form in all material respects with the
applicable accounting requirements of the
Securities Act. Such letter shall
additionally cover such other financial
matters (including information as to the
period ending not more than five business
days prior to the date of such letter) with
respect to the registration in respect of
which such letter is being given as the
holders of Restricted Securities requesting
such letter may reasonably request, and shall
be in such form as is customary for similar
letters delivered by such certified
independent public accountants.
vi. Use its best efforts to register or qualify
the Restricted Securities covered by such
registration statement under such other
securities or blue sky laws of such
jurisdictions as each such selling
shareholder shall reasonably request and do
any and all other acts and things which may
be necessary or desirable to enable such
seller to consummate the public sale or other
disposition in such jurisdictions of the
Restricted Securities owned by such seller
and covered by such registration statement.
(e) Registration and Selling Expenses. As used
herein, "Registration Expenses" shall mean all
expenses incurred by the Company in complying with
Subsection 7.3(c), including, without limitation,
all registration and filing fees; printing
expenses; fees and disbursements of counsel for
the Company; blue sky fees and expenses; and the
expense of any special audits incident to or
required by any such registration (but excluding
the compensation of regular employees of the
Company which shall be paid in any event by the
Company); and "Selling Expenses" shall mean all
underwriting discounts and selling commissions
applicable to the sales. The Company will pay all
Registration Expenses in connection with the
registration pursuant to Subsection 7.3(c). All
Selling Expenses in connection with each
registration pursuant to Subsection 7.3(c) shall
Page 20 of 34 pages
be borne by the Company and the selling
shareholders pro rata in proportion to the
securities covered thereby being sold by them.
(f) Standoff Agreement. Purchaser agrees in
connection with any registration of the Company's
securities that, upon the request of the Company
or the underwriters managing any underwritten
offering of the Company's securities, not to sell,
make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any
Restricted Securities (other than those included
in the registration) without the prior written
consent of the Company or such underwriters, as
the case may be, for such reasonable period of
time from the effective date of such registration
as the underwriters may specify, provided that all
officers and directors of the Company and all
holders of greater than ten (10%) percent of the
Common Stock enter into similar agreements. Such
agreement shall be in writing and in a form
satisfactory to the Company and such underwriter.
The Company may impose stop-transfer instructions
with respect to the shares subject to the
foregoing restrictions until the end of such
period.
(g) Indemnification. In the event of a registration
of any of the Restricted Securities under the
Securities Act pursuant to this Section, the
Company will indemnify and hold harmless the
seller of such Restricted Securities and each
underwriter of such Restricted Securities and each
other person, if any, who controls such seller or
underwriter within the meaning of Section 15 of
the Securities Act, against any and all losses,
claims, damages or liabilities, joint or several,
to which such seller or underwriter or controlling
person may become subject under the Securities
Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue
statement of any material fact contained on the
effective date thereof in any registration
statement under which such Restricted Securities
are registered under the Securities Act, any
preliminary prospectus or final prospectus
contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, and the Company will reimburse such
seller and each such underwriter and each such
controlling person for any legal or any other
expenses reasonably incurred by them in connection
with their investigating or defending any such
loss, claim, damage, liability or action;
provided, however, that the Company will not be
liable in any such case to the extent that any
such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission
made in such registration statement, said
preliminary prospectus or said prospectus or said
amendment or supplement in reliance upon and in
conformity with written information furnished to
the Company by such seller or underwriter
specifically for use in the preparation thereof;
and provided, further, that if any losses, claims,
damages or liabilities arise out of or are based
upon an untrue statement, alleged untrue
statement, omission or alleged omission contained
in any preliminary prospectus which did not appear
in the final prospectus, the Company shall not
have any liability with respect thereto to (i) the
seller or any person who controls such seller
Page 21 of 34 pages
within the meaning of Section 15 of the Securities
Act, if the seller delivered a copy of the
preliminary prospectus to the person alleging such
losses, claims, damages or liabilities and failed
to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or
supplemented, to such person at or prior to the
written confirmation of the sale to such person or
(ii) any underwriter or any person who controls
such underwriter within the meaning of Section 15
of the Securities Act, if such underwriter
delivered a copy of the preliminary prospectus to
the person alleging such losses, claims, damages
or liabilities and failed to deliver a copy of the
final prospectus, as amended or supplemented if it
has been amended or supplemented to such person at
or prior to the written confirmation of the sale
to such person.
In the event of any registration of any of the
Restricted Securities under the Securities Act
pursuant to this Section, each seller of such
Restricted Securities, severally and not jointly,
will indemnify and hold harmless the Company and
each person, if any, who controls the Company
within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the
registration statement, each director of the
Company, each underwriter and each person who
controls any underwriter within the meaning of
Section 15 of the Securities Act, against any and
all such losses, claims, damages or liabilities
referred to in the first paragraph of this
Subsection, if the statement, alleged statement,
omission or alleged omission in respect of which
such loss, claim, damage or liability is asserted
was made in reliance upon and in conformity with
information furnished in writing to the Company by
or on behalf of such seller specifically for use
in connection with the preparation of such
registration statement, preliminary prospectus,
prospectus, amendment or supplement; provided,
however, that if any losses, claims, damages or
liabilities arise out of or are based upon any
untrue statement, alleged untrue statement,
omission or alleged omission contained in any
preliminary prospectus which did not appear in the
final prospectus, such seller shall not have any
such liability with respect thereto to the
Company, any person who controls the Company
within the meaning of Section 15 of the Securities
Act, any officer of the Company who signed the
registration statement or any director of the
Company, if the Company delivered a copy of the
preliminary prospectus to the person alleging such
losses, claims, damages or liabilities and failed
to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or
supplemented, to such person at or prior to the
written confirmation of the sale to such person.
(h) Promptly after receipt by any indemnified person
of a notice of a claim or the beginning of any
action in respect of which indemnity is to be
sought against an indemnifying person pursuant to
Subsection 7.3(g), such indemnified person shall
notify the indemnifying person in writing of such
claim or of the commencement of such action, and,
subject to the provisions hereinafter stated, in
case any such action shall be brought against an
indemnified person and such indemnifying person
Page 22 of 34 pages
shall have been notified thereof, such
indemnifying person shall be entitled to
participate therein, and, to the extent that it
shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such
indemnified person. After notice from the
indemnifying person to such indemnified person of
its election to assume the defense thereof, such
indemnifying person shall not be liable to such
indemnified person for any legal expenses
subsequently incurred by such indemnified person
in connection with the defense thereof; provided,
however, that if there exists or shall exist a
conflict of interest that would make it
inappropriate in the reasonable judgment of the
indemnified person for the same counsel to
represent both the indemnified person and such
indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled
to retain its own counsel at the expense of such
indemnifying person; provided, further, however
that if the Company is the indemnifying party, it
shall not be required to pay the fees and expenses
of more than one counsel for all of the sellers.
(i) Termination Of Conditions And Obligations.
Except for the Company's indemnification
obligation contained in Subsection 7.3(g), the
obligations and conditions precedent imposed by
this Section shall cease and terminate as to any
of such Restricted Securities on the sooner of (i)
the date such securities shall have been
effectively registered under the Securities Act
and sold or otherwise disposed of in accordance
with the intended method of disposition by the
seller or sellers thereof set forth in the
registration statement covering such securities,
(ii) such time as Lilly has sold or transferred
the Shares pursuant to Rules 144 or 144A of the
Act, or (iii) five years from the date hereof.
(j) Transfer Of Registration Rights. The rights
conferred upon Lilly under this Section may be
assigned by Lilly to any one or more transferees
of Restricted Securities, provided that such
transferee purchases fifty (50%) percent or more
of the Shares.
SECTION 7.4 Company Action. The Company shall not
amend its Certificate of Incorporation, as amended, or
participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action for the purpose of
avoiding or seeking to avoid the observance or performance
of any of the provisions of this Article, but will at all
times in good faith assist in carrying out all of its
actions as may be reasonably necessary or appropriate in
order to protect the rights of the Purchaser.
ARTICLE VIII - MISCELLANEOUS
SECTION 8.1 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 Lilly: Eli Lilly and Company
Lilly Corporate Center
Indianapolis, IN 46285
Attn: General Counsel
Fax: 317/276-3861
If to the Company: Seragen, Inc.
97 South Street
Hopkinton, MA 01748
Attn: President
Fax: 508/435-9805
Page 23 of 34 pages
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, one day after 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 5th business day following the day such mailing is made.
SECTION 8.2 Entire Agreement. This Agreement,
including exhibits, or other documents referred to herein,
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.
SECTION 8.3 Amendments. The terms and provisions of
the Agreement may be modified, amended or waived, or consent
for the departure therefrom granted, by written consent of
the Company and Lilly. 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.
SECTION 8.4 Assignment. The rights and obligations
under this Agreement may not be assigned by either party
hereto without the prior written consent of the other party.
SECTION 8.5 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.
SECTION 8.6 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.
SECTION 8.7 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 unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the
extent that such court deems it reasonable and 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 be interpreted as if such
provision were so excluded and shall nevertheless remain in
full force and effect.
SECTION 8.8 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.
Page 24 of 34 pages
SECTION 8.9 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
or 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.
SECTION 8.10 Expenses. Each of the parties shall pay
its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such
party) in connection with this Agreement and the
transactions contemplated hereby whether or not the
transactions contemplated hereby are consummated.
SECTION 8.11 Brokers. Each of the parties hereto
represents and warrants to the other that no broker, finder
or financial consultant has acted on its behalf in
connection with this Agreement or the transactions
contemplated hereby in such a way as to create any liability
on the other. Each of the parties hereto agrees to
indemnify and save the other harmless from any claim or
demand for commission or other compensation by any other
broker, finder, financial consultant or similar agent
claiming to have been employed by or on behalf of such party
and to bear the cost of legal expenses incurred in defending
against any such claim.
SECTION 8.12 Publicity. No party shall issue any
press releases or otherwise make any public statement with
respect to the transactions contemplated by this Agreement
without the prior written consent of the other party, except
as may be required by applicable law or regulation.
SECTION 8.13 Confidentiality. Lilly acknowledges and
agrees that any information or data it has acquired from the
Company, which is clearly designated in writing as
confidential and is not otherwise properly in the public
domain, was received in confidence. Lilly agrees not to
divulge, communicate or disclose, except as may be required
by law or for the performance of this Agreement, or use to
the detriment of the Company or for the benefit of any other
person or persons, or misuse in any way, any confidential
information of the Company.
SECTION 8.14 Counterparts. 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.
[Remainder of page intentionally left blank]
Page 25 of 34 pages
IN WITNESS WHEREOF, the undersigned have executed this
Stock Purchase Agreement this 7th day of April, 1997.
SERAGEN, INC.
By: s/Reed R. Prior
Name: Reed R. Prior
Title: Chairman and
Chief Executive Officer
ELI LILLY AND COMPANY
By: s/August M. Watanabe, M.D.
Name: August M. Watanabe, M.D.
Title: Executive Vice President
Page 26 of 34 pages
LIST OF SCHEDULES AND EXHIBITS
Schedule 3.2 Subsidiaries
Schedule 3.3 Capitalization
Schedule 3.5 Exception to Accuracy of Reports and Information
Exhibit A Schedule of Exceptions
Exhibit B Form of Legal Opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.
Page 27 of 34 pages
Schedule 3.2
Subsidiaries
Seragen Technologies, Inc., a Delaware corporation
Page 28 of 34 pages
Schedule 3.3
Capitalization as of March 31, 1997
COMMON STOCK AUTHORIZED OUTSTANDING
Common Stock ( excludes 70,000,000 18,048,881
777 treasury shares)
OPTIONS AND WARRANTS
Employee and Director 6,288,753
Stock Options
Common Stock Purchase 12,159,094
Warrants
PREFERRED STOCK
Preferred Stock 5,000,000 31,202
Series A (May 1996) 4,000 2,402
Series B (July 1996) 23,800 23,800
Series C (September 1996) 5,000 5,000
Page 29 of 34 pages
Schedule 3.5
Exception to Accuracy of Reports and Information
Accounting Treatment - Series B
The Company converted $25.0 million of debt into Series B
Preferred Stock in July 1996. The Company also issued to
the debt holders common stock warrants which were valued at
approximately $8.6 million. The Company is required to
reflect the value of these warrants as a dividend and to
increase the net loss per share by the amount of such
dividend. In Seragen's Form 10-Q report for the quarter
ended September 30, 1996, the Company did not include the
value of the warrants in the determination of net loss per
common share. Accordingly, the Company is restating its
Form 10-Q for the September 30, 1996 quarter to restate its
net loss per share to properly reflect the dividend reported
upon issuance of the warrants.
Lilly
Under its agreement with Lilly, the Company received $5.0
million in August 1994 as an advance against Lilly's future
purchases of bulk product from the Company. This payment
was recorded as deferred revenue due to the refundability of
the amount received. In May 1996, the Company amended its
Sales and Distribution Agreement with Lilly. The amended
agreement states that the Company has no obligation to
refund the $5.0 million advance should no bulk purchases be
made by Lilly. The Company is still required to provide
Lilly with material and pay them a 75% royalty on the
purchase of such material, up to $5.0 million. In the
quarter ended June 30, 1996, Seragen recorded the entire
$5.0 million as revenue upon the amendment of the original
agreement. The Company has determined that it is necessary
to provide a $1.2 million reserve for the expected cost of
providing the bulk material after paying a 75% royalty of up
to $5.0 million. The Company has determined that it is
necessary to restate its quarter ended June 30, 1996 to
provide this reserve in the period in which the $5.0 million
of revenue was recorded.
Page 30 of 34 pages
Exhibit A
Schedule of Exceptions
With respect to Section 3.11, the Company has eight
agreements which contain registration rights. Exhibit A-1
to the Stock Purchase Agreement (the "August 1994
Agreement") dated as of August 6, 1994 between Lilly and the
Company is a copy of the principal terms of the registration
rights set forth in the Agreement and Plan of Corporate
Reorganization dated May 28, 1985. Exhibit A-2 to the
August 1994 Agreement is a copy of the principal terms of
the registration rights set forth in the Purchase Agreement
with certain stockholders executed in connection with a
private placement in July 1988. Exhibit A-3 to the August
1994 Agreement is a copy of the principal terms of the
registration rights set forth in the Stock and Warrant
Purchase Agreement executed in connection with a private
placement in February, 1994. Exhibit A-4 to the August 1994
Agreement is a copy of the principal terms of the
registration rights set forth in the Warrant to Purchase
10,757 shares of Common Stock issued to MMC/GATX Partnership
No. I. The Company also has granted registration rights
pursuant to the following agreements: (a) Subscription and
Registration Agreement dated as of May 31, 1995 with respect
to the shares of Common Stock underlying warrants issued to
guarantors of the Company's bank loans, (b) Shareholders'
Agreement dated as of November 22, 1995 with respect to
shares of Common Stock underlying warrants issued to
investors in Seragen Biopharmaceuticals Ltd., (c)
Subscription and Registration Agreement dated as of July 1,
1996 with respect to shares of Common Stock underlying the
Company's Series B Preferred Stock and related warrants, and
(d) Subscription Agreement dated as of September 30, 1996
with respect to shares of a Common Stock underlying the
Company's Series C Preferred Stock and related warrants.
Page 31 of 34 pages
Exhibit B
Form of Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, IN 46285
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section
5.3 of the Stock Purchase Agreement, dated April , 1997
--
(the "Agreement"), between Seragen, Inc., a Delaware
corporation (the "Company"), and Eli Lilly and Company, an
Indiana corporation ("Lilly"), relating to the issuance and
sale by the Company of an aggregate of 1,000,000 shares of
the Company's common stock, $.01 par value ("Common Stock").
Capitalized terms used herein and not otherwise defined have
the same meanings as in the Agreement.
We have acted as counsel for the Company in connection
with the Agreement. In that connection, we have examined
the following:
(i) a certificate of legal existence (long form) and
good standing relating to the Company issued by the
Secretary of State of the State of Delaware, dated April__, 1997;
(ii) a certificate of foreign qualification and good
standing relating to the Company issued by the Secretary of
State of the Commonwealth of Massachusetts, dated April __, 1997;
(iii) a copy, certified by the Secretary of State of
the State of Delaware, of the Restated Certificate of
Incorporation of the Company, as in effect on the date
hereof;
(iv) the Restated By-Laws of the Company, as in
effect on the date hereof;
(v) such records of the corporate proceedings of the
Company as we have deemed material; and
(vi) such other certificates, records and documents
as we deemed necessary for the purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
(a) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, is duly qualified
to do business as a foreign corporation and is in corporate
good standing in all other jurisdictions where the ownership
or leasing of properties or conduct of its business requires
such qualification, except for jurisdictions in which the
failure to so qualify would not have a material adverse
effect on the Company, and has all requisite corporate power
and authority to own its properties and conduct its business
as described in the SEC Reports;
(b) The certificates evidencing the Shares to be
delivered hereunder are in due and proper form under
Delaware law, and when duly countersigned by the Company's
transfer agent and registrar, and delivered to Lilly or upon
its order against payment of the agreed consideration
therefor in accordance with the provisions of the Agreement,
the Shares represented thereby will be duly authorized and
Page 32 of 34 pages
validly issued, fully paid and nonassessable, and to our
knowledge will not have been issued in violation of or
subject to any preemptive rights or other rights to
subscribe for or purchase securities of the Company;
(c) Except as disclosed in the Agreement, to our
knowledge, there is no outstanding option, warrant
or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any
shares of capital stock of the Company or any
securities convertible into or exchangeable for
capital stock of the Company;
(d) The Company has the requisite corporate
power and authority to enter into the Agreement
and to sell and deliver the Shares to be sold by
it; the Agreement has been duly and validly
authorized by all necessary corporate action by
the Company, has been duly and validly executed
and delivered by and on behalf of the Company, and
is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except
as enforceability may be limited by general
equitable principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium
or other laws affecting creditors' rights
generally; and, to our knowledge, no approval,
authorization, order, consent, registration,
filing, qualification, license or permit of or
with any court, regulatory, administrative or
other governmental body is required for the
execution and delivery of the Agreement by the
Company or the consummation of the transactions
contemplated thereby except such as have been
obtained;
(e) The execution and performance of the
Agreement and the consummation of the transactions
therein contemplated will not conflict with,
result in the breach of, or constitute, either by
itself or upon notice or the passage of time or
both, a default under, any agreement, mortgage,
deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the
Company is known by us to be a party or by which
the Company or any of its property is known by us
to be bound or affected which is material to the
Company, or violate any of the provisions of the
charter or by-laws of the Company, or, to our
knowledge, violate any statute, judgment, decree,
order, rule or regulation, of any court or
governmental body having jurisdiction over the
Company or any of its property.
(f) Based in part upon the representations and
warranties of Lilly as set forth in Article IV of
the Agreement, the offer and sale of the Shares
pursuant to the terms of the Agreement are exempt
from the registration requirements of Section 5 of
the Securities Act; and
(g) Based solely upon a review of regularly
accepted unofficial compilations of state
securities laws and regulations and without
obtaining rulings of authorities administering
such laws or opinions of other counsel, no state
qualification is required by Indiana state
securities laws on the part of the Company in
connection with the offer and sale of the Shares
pursuant to the terms of the Agreement.
Our opinions above are limited to the federal
law of the United States of America, the laws of
the Commonwealth of Massachusetts, the General
Corporation Law of the State of Delaware and,
Page 33 of 34 pages
subject to the limitations described in paragraph
(g) above, the securities laws of the State of
Indiana, and we express no opinion with respect to
the laws of any other jurisdiction. No opinion is
expressed herein with respect to the registration
of the Shares, or the qualification of the Shares
for an exemption therefrom, under the securities
or Blue Sky laws of any other state or any foreign
jurisdiction. No opinion is given with respect to
the accuracy or completeness of any disclosures of
the Company to you in connection with the issuance
of the Shares, or to compliance with the anti-
fraud provisions of federal or state securities
laws in connection with such issuance.
This opinion is intended solely for your
benefit in connection with the transactions
contemplated by the Agreement and may not be
relied upon by you for any other purpose; nor may
it be communicated to, or reproduced, filed
publicly or relied upon by, any other person or
entity for any purpose without our express prior
written consent.
Very truly yours,
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Page 34 of 34 pages