-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KyVe4z1w1vOdlUc+7KdRn6xV8KZBVGa6vIgu8i+7ZZ673BeL6j5o2Uc+tuEhpbKm Vlvos9gzwGAiK/T0Fp2Vdw== 0000950135-00-001275.txt : 20000308 0000950135-00-001275.hdr.sgml : 20000308 ACCESSION NUMBER: 0000950135-00-001275 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000127 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BIOGENETIC SCIENCES INC CENTRAL INDEX KEY: 0000856984 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 112655906 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19041 FILM NUMBER: 562592 BUSINESS ADDRESS: STREET 1: 1375 AKRON STREET STREET 2: P O BOX 1001 CITY: COPIAGUE STATE: NY ZIP: 11726 BUSINESS PHONE: 5167892600 8-K 1 AMERICAN BIOGENETIC SCIENCES INC 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 27, 2000 American Biogenetic Sciences, Inc. (Exact Name of Registrant as Specified in Charter) Delaware (State or Other Jurisdiction of Incorporation) 0-19041 11-2655906 (Commission File Number) (I.R.S. Employer Identification No.) 1375 Akron Street, Copiague, New York 11726 (516) 789-2600 (Registrant's Telephone Number, Including Area Code) 2 Item 5. OTHER EVENTS On January 27, 2000, American Biogenetic Sciences, Inc. (the "Company") entered into an Exclusive License Agreement with Abbott Laboratories ("Abbott") under which the Company granted to Abbott an exclusive worldwide license to its ABS-103 compound, related technology and patent rights. The Exclusive License Agreement gives Abbott the exclusive rights to develop and market the compound, which presently is in the pre-clinical stage. In consideration for the license grant and in addition to customary royalties on sales, Abbott paid the Company an initial license fee of $500,000 and agreed to pay additional milestone payments aggregating up to $17 million depending upon successfully reaching development milestones, generally by indication. There can be no assurance that these milestones will be achieved. In connection with the entering into of the Exclusive License Agreement, the Company and Abbott also entered into a Stock Purchase Agreement dated January 27, 2000 pursuant to which Abbott purchased $1,500,000 of shares of the Company's Class A Common Stock, or 2,782,931 shares (the "Shares"), calculated based upon the arithmetic average of the last sale price of the Class A Common Stock as reported on the then principal market for such stock for the 20 consecutive trading-day period ending on the second day preceding the closing of the purchase of the Shares by Abbott. The Company also entered into a Registration Rights Agreement with Abbott pursuant to which, among other things, the Company agreed to register the Shares under the Securities Act of 1933, as amended (the "Act") upon Abbott's request at any time after the first anniversary of the sale and to include the Shares in any other registration of the Company's securities under the Act after that date. All expenses of registration of the Shares are to be borne by the Company, other than underwriting discounts, selling commissions and fees and disbursements of counsel for Abbott. Abbott is an "accredited investor" as defined in Rule 501 of Regulation D under the Act and acknowledged in the Stock Purchase Agreement that it was purchasing the Shares for investment for its own account and not with a view towards distribution. The Company believes the exemption afforded under Section 4(2) of the Act is applicable to the issuance of the Shares. Copies of the Exclusive License Agreement, the Stock Purchase Agreement and the Registration Rights Agreement appear as exhibits to this Report and the foregoing descriptions are qualified in their entirety by reference to such documents. Item 7. FINANCIAL STATEMENTS AND EXHIBITS (c) EXHIBITS: Item No. Description 4.1 Registration Rights Agreement, dated as of January 27, 2000, between American Biogenetic Sciences, Inc. and Abbott Laboratories. 3 10.1* Exclusive License Agreement, dated as of January 27, 2000, between American Biogenetic Sciences, Inc. and Abbott Laboratories. 99.1 Stock Purchase Agreement, dated as of January 27, 2000, between American Biogenetic Sciences, Inc. and Abbott Laboratories. - --------------- *Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of Exhibit 10.1 have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN BIOGENETIC SCIENCES, INC. (Registrant) By: /s/ Josef C. Schoell ----------------------------------- Josef C. Schoell, Vice President - Finance and Chief Financial Officer Dated: March 7, 2000 5 EXHIBIT INDEX 4.1 Registration Rights Agreement, dated as of January 27, 2000, between American Biogenetic Sciences, Inc. and Abbott Laboratories. 10.1* Exclusive License Agreement, dated as of January 27, 2000, between American Biogenetic Sciences, Inc. and Abbott Laboratories. 99.1 Stock Purchase Agreement, dated as of January 27, 2000, between American Biogenetic Sciences, Inc. and Abbott Laboratories. - ------------------- *Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of Exhibit 10.1 have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. EX-4.1 2 REGISTRATION RIGHTS AGREEMENT 1 Exhibit 4.1 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of this day of January, 2000, by and between American Biogenetic Sciences, Inc., a Delaware corporation ("ABS"), and Abbott Laboratories, an Illinois corporation ("Abbott"). RECITALS WHEREAS, ABS and Abbott are parties to an Exclusive License Agreement (the "License Agreement") and a Stock Purchase Agreement (the "Stock Purchase Agreement"), both of which are of even date herewith; and; WHEREAS, the execution and delivery of this Agreement are a condition to the Share Closing of the Stock Purchase Agreement; NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS: 1. DEFINITIONS. All terms not otherwise defined in this Agreement shall have the same meanings ascribed to them in the Stock Purchase Agreement. For purposes of this Agreement: 1.1 EXCHANGE ACT. The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 1.2 REGISTER, REGISTERED, AND REGISTRATION. The terms "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document. 1.3 REGISTRABLE SECURITIES. The term "Registrable Securities" means such portion of the Shares that has not previously been registered or sold to the public. 1.4 REGISTRATION STATEMENT. The term "Registration Statement" means a registration statement filed with the SEC under the Securities Act to register the resale of the Registrable Securities by Abbott. 1.5 RULE 144. The term "Rule 144" shall mean Rule 144 promulgated by the SEC (or its successor rule). 1.6 SEC. The term "SEC" shall mean the Securities and Exchange Commission. 1.7 SECURITIES ACT. The term "Securities Act" means the Securities Act of 1933, as amended. 2 1.8 SHARES. The term "Shares" means the shares of Class A common stock of ABS, $.001 par value per share, issued to Abbott pursuant to the Stock Purchase Agreement and any common stock of ABS issued as a dividend or other distribution with respect to such common stock. 2. REGISTRATION. ABS covenants and agrees as follows: 2.1 REGISTRATION RIGHTS - GENERALLY. At any time after the first anniversary of this Agreement, Abbott may request ABS to file a Registration Statement registering the resale of the Shares. Within forty-five (45) days following such request, ABS shall prepare and file a Registration Statement on Form S-3 (or such other short form registration statement as is then available) and any related qualification or compliance with respect to all of the Shares so as to permit or facilitate the sale and distribution of all of the Shares. ABS agrees to use reasonable commercial efforts to cause the Registration Statement to be declared effective as soon as practicable after filing, but in any event no later than three (3) business days after any notification by the SEC of its decision not to review the Registration Statement or its determination that it has completed its review of the Registration Statement and will accept an acceleration request. ABS agrees it will not include any securities of ABS other than the Shares and will not permit any other person or entity to include any additional securities in the Registration Statement to be filed pursuant to this SECTION 2.1. 2.2 PIGGYBACK REGISTRATION RIGHTS. If, at any time after the first anniversary of this Agreement, ABS shall determine to register any of its securities, either for its own account or the account of a security holder or holders exercising their respective registration rights, other than (i) a registration relating solely to employee benefit plans on Form S-8 (or a similar successor form), or (ii) a registration on Form S-4 (or a similar successor form) relating solely to a transaction subject to Rule 145 under the Securities Act, ABS will promptly give Abbott written notice thereof, and subject to the terms of SECTION 2.3 below, use its reasonable efforts to include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all Registrable Securities specified in a written request to ABS made within fifteen (15) business days after the receipt of such written notice by Abbott. 2.3 UNDERWRITING. (a) If the registration of which ABS gives notice pursuant to SECTION 2.2 is for a registered offering involving an underwriting, then Abbott's right to registration shall be conditioned upon Abbott's participation in the underwriting and the inclusion of Abbott's Registrable Securities in the underwriting to the extent provided in this Agreement. Abbott (together with ABS and the holders of other securities of ABS distributing their securities through that underwriting (such other holders being termed the "Other Holders")) shall enter into an underwriting agreement in customary -2- 3 form with the representative of the underwriter or underwriters selected by ABS. (b) Notwithstanding any other provision of this SECTION 2, if the representative of the underwriters advises ABS in writing that marketing factors require a limitation on the number of shares to be underwritten, then ABS shall so inform Abbott and the Other Holders. The number of shares of ABS common stock being sold by ABS for its own account shall not be reduced by operation of this SECTION 2.3. The number of shares of Registrable Securities held by Abbott and the Other Holder(s) that may be included in the underwriting (in addition to those being sold by ABS for its own account) shall be allocated among Abbott and the Other Holders in proportion (as nearly as practicable) to the amount of Registrable Securities owned by each such holder. (c) Any holder which does not agree to the terms of the such underwriting shall be excluded from that underwriting by written notice from ABS or the underwriter. Any Registrable Securities or other securities excluded or withdrawn from that underwriting shall be withdrawn from the registration. 2.4 REGISTRATION EXPENSES. ABS shall pay all "registration expenses" (as defined below) in connection with any registration, qualification or compliance under this Agreement. Abbott shall pay all "selling expenses" (as defined below). The term "registration expenses" shall mean all expenses, except for selling expenses, incurred by ABS in complying with the registration provisions of this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for ABS, accounting fees, blue sky fees and expenses, and the expense of any attest service incident to or required by any such registration. The term "selling expenses" shall mean all selling commissions, underwriting fees and stock transfer taxes applicable to the Shares and all fees and disbursements of counsel for Abbott. 2.5 OBLIGATIONS OF ABS. In the case of a registration effected by ABS pursuant to this SECTION 2, ABS will use reasonable efforts to: (a) keep such registration effective until the earliest of: (i) such date as all of the Shares have been sold, or (ii) if ABS is not then eligible to effect such registration on Form S-3 (or a similar successor form), one hundred and twenty (120) days after the effective date of the Registration Statement, or -3- 4 (iii) the termination of the registration rights pursuant to SECTION 2.9 hereof. (b) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement; (c) furnish such number of prospectuses, prospectus supplements, and other documents incident thereto, including any amendment of or supplement to the prospectus, as Abbott from time to time may reasonably request; (d) cause all Shares registered as described herein to be listed on any securities exchange or quoted on any quotation service on which similar securities issued by ABS are then listed or quoted; (e) provided a transfer agent and registrar for all Registrable Securities registered pursuant to the Registration Statement and a CUSIP number for all such Shares; (f) otherwise use reasonable efforts to comply with all applicable rules and regulations of the SEC; and (g) file the documents required of ABS and otherwise use reasonable efforts to maintain requisite blue sky clearance in: (i) all jurisdictions in which any of the Shares are originally sold; and (ii) all other states specified in writing by Abbott, provided as to this clause (ii), however, that ABS shall not be required to qualify to do business or consent to service of process in any state in which it is not now so qualified or has not so consented. 2.6 SELLING PROCEDURES. (a) In the event Abbott intends to sell Shares pursuant to a Registration Statement, Abbott shall give ABS five (5) business days notice of its intent to sell in reliance on such Registration Statement (the "Notice of Sale"). ABS may refuse to permit Abbott to resell any Shares pursuant to the Registration Statement; provided, however, that in order to exercise this right, ABS must -4- 5 deliver a certificate in writing within three (3) business days following the Notice of Sale to Abbott to the effect that a sale pursuant to the Registration Statement in its then current form could constitute a violation of the federal securities laws. In such an event, ABS shall either (i) use commercially reasonable efforts to promptly amend the Registration Statement, if necessary, and take all other actions necessary to allow such sale under the federal securities laws, and shall notify Abbott promptly after it has determined that such sale has become permissible under the federal securities laws, or (ii) exercise its right under paragraph (b) below to delay the sale. (b) If in the good faith judgment of the Board of Directors of ABS, after consultation with counsel, the filing of a Registration Statement or an amendment thereto or prospectus supplement so as permit the proposed sale without a violation of securities laws would materially adversely affect a pending or scheduled public offering, or an acquisition, merger, or similar transaction, or negotiations of either of the foregoing, or would require the disclosure of another material development prior to the time it would otherwise be required to be disclosed in a manner adverse to the best interests of ABS, then it may decline to permit the resale of any Shares pursuant to the Registration Statement for up to a maximum of ninety (90) days, provided that it may not exercise this right more than twice in any twelve (12) month period. Abbott hereby covenants and agrees that it will not sell any Shares pursuant to the Registration Statement during the periods sales in reliance upon the Registration Statement are prohibited as set forth in this SECTION 2.6. 2.7 INFORMATION FROM ABBOTT. It shall be a condition precedent to the obligations of ABS to take any action pursuant to SECTION 2 of this Agreement with respect to the Shares that Abbott shall furnish to ABS such information as ABS may reasonably request, including information regarding Abbott, the Shares held by it, the intended method of disposition of such securities, and such other information as required to effect the registration of the Shares. 2.8 ASSIGNMENT OF REGISTRATION RIGHTS. The right to cause ABS to register the Shares pursuant to this Agreement may be assigned by Abbott to a transferee of the Shares only if: (a) ABS is, prior to such transfer, furnished with written notice of the name and address of such transferee and the Shares with respect to which such registration rights are being assigned and a copy of a duly executed written instrument in form reasonably satisfactory to ABS by which such transferee assumes all of the obligations and -5- 6 liabilities of its transferor hereunder and agrees itself to be bound hereby; (b) immediately following such transfer the disposition of the Shares by the transferee is restricted under the Securities Act; (c) such assignment includes all of the Shares then held by Abbott; provided, however, that such share limitation shall not apply to transfers by Abbott to its affiliates if all such transferees or assignees agree in writing to appoint a single representative as their attorney-in-fact for the purpose of receiving any notices and exercising their rights under this Agreement; and (d) Abbott guarantees the performance of the transferee of its obligations under this Agreement. 2.9 TERMINATION OF REGISTRATION RIGHTS. The registration rights provided in this Agreement shall terminate if Abbott may sell all of the Shares pursuant to Rule 144 in any three (3) month period. Upon the termination of registration rights pursuant to this SECTION 2.9, ABS may withdraw the Registration Statement, or any portion thereof, covering the Shares. 2.10 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making available to Abbott the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Abbott to sell securities of ABS to the public without registration or pursuant to a registration on Form S-3, ABS agrees to: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times; (b) file with the SEC in a timely manner all reports and other documents required of ABS under the Securities Act and the Exchange Act; and (c) furnish to Abbott, so long as Abbott owns any Shares, forthwith upon request (i) a written statement by ABS that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report of ABS and such other reports and documents so filed by ABS, and (iii) such other information as may be reasonably requested in availing Abbott of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form. 3. INDEMNIFICATION AND CONTRIBUTION -6- 7 3.1 INDEMNIFICATION BY ABS. ABS agrees to indemnify and hold harmless Abbott, each of Abbott's directors, officers and U.S. wholly-owned subsidiaries, and each person, if any, who controls Abbott within the meaning of the Securities Act or the Exchange Act, from and against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) to which they may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon any untrue statements of a material fact contained in (or upon the omission of a material fact from) a Registration Statement delivered or circulated by Abbott in connection with a sale of ABS securities by Abbott, or arise out of any failure by ABS to fulfill any undertaking included in the Registration Statement, and ABS will, as incurred reimburse Abbott and such persons for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that ABS shall not be liable in any such case to the extent that such loss, claim damage or liability arise out of, or is based upon (i) an untrue statement made in (or upon the omission of a material fact from) such Registration Statement in reliance upon and in conformity with written information furnished to ABS by or on behalf of Abbott specifically for use in preparation of the Registration Statement, (ii) the failure of Abbott to comply with the covenants or agreements contained in SECTION 2.6 hereof, or (iii) any untrue statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Abbott prior to the pertinent sale or sales by Abbott. 3.2 INDEMNIFICATION BY ABBOTT. Abbott agrees to indemnify and hold harmless ABS, each of ABS's directors and officers, and each person, if any, who controls ABS within the meaning of the Securities Act or the Exchange Act, from and against any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) to which they may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon: (i) either an untrue statement made in or the omission of a material fact from such Registration Statement in reliance upon and in conformity with written information furnished to ABS by or on behalf of Abbott specifically for use in preparation of the Registration Statement, (ii) the failure of Abbott to comply with the covenants or agreements contained in SECTION 2.6 hereof, or (iii) any untrue statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Abbott prior to the pertinent sale or sales by Abbott, and Abbott will, as incurred, reimburse ABS and such persons for any legal or other expenses reasonably incurred in investigating, defending, or preparing to defend any such action, proceeding, or claim; provided, however, that Abbott shall not be liable for any amount in excess of the amount by which the net amount received by Abbott from the sale of the Shares to which such loss relates minus the amount of any damages which Abbott has otherwise been required to pay by reason of such untrue or allegedly untrue statement or omission or alleged omission 3.3 INDEMNIFICATION PROCEDURES. Promptly after receipt by any indemnified party 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 this SECTION 3, 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 -7- 8 an indemnified person and the indemnifying person shall have been notified thereof, the 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 the indemnified person. After notice from the indemnifying person to such indemnified person of the indemnifying person's election to assume the defense thereof, the 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 present 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. 3.4 CONTRIBUTION. If the indemnification provided for in this SECTION 3 is unavailable to or insufficient to hold harmless an indemnified party under SECTION 3.1 or 3.2 above in respect of any losses, claims, damages, or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of ABS on one hand and Abbott on the other in connection with the statements or omissions which resulted in such losses, claims, damages, or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact related to information supplied by ABS on one hand or Abbott on the other and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. ABS and Abbott agree that it would not be just and equitable if contribution pursuant to this SECTION 3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this SECTION 3.4. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above in this SECTION 3.4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 3.5 CONTINUING OBLIGATIONS. The obligations of ABS and Abbott under this SECTION 3 shall survive the completion of the offering of the Shares pursuant to the Registration Statement and shall be in addition to any liability that ABS and Abbott may otherwise have. 4. MISCELLANEOUS. 4.1 SURVIVAL OF WARRANTIES. The warranties, representations and covenants of ABS and Abbott contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement. -8- 9 4.2 ENTIRE AGREEMENT, CONTROLLING DOCUMENT. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, and understandings between the parties with respect to the subject matter hereof, whether oral or in writing. 4.3 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 4.4 DELAY AND WAIVER. No delay on the part of either party in exercising any right under this Agreement shall operate as a waiver of such right. The waiver by either party of any other term or condition of this Agreement shall not be construed as a waiver of a subsequent breach or failure of the same term or condition or a waiver of any other term or condition contained in this Agreement. 4.5 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Delaware without regard to conflicts of law principles. 4.6 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by personal delivery, facsimile, overnight courier or mailed by certified or registered mail, postage prepaid, return receipt requested, to the facsimile number or address as follows: ABS: American Biogenetic Sciences, Inc. 1375 Akron Street Copiague, NY 11726 Telephone: (516) 789-2600 Facsimile: (516) 789-1661 Attention: Chairman with a copy (which will not constitute notice) to: Brown, Rudnick, Freed & Gesmer One Financial Center Boston, MA 02111 Telephone: (617) 856-8200 Facsimile: (617) 856-8201 Attention: Mark A. Hofer, Esq. Abbott: Abbott Laboratories 100 Abbott Park Road Dept. 309, Bldg. AP30 Abbott Park, IL 60064-3537 Telephone: (847) 938-6863 -9- 10 Facsimile: (847) 938-5383 Attention: Senior Vice President, Pharmaceutical Operations with a copy (which will not constitute notice) to: Abbott Laboratories 100 Abbott Park Road Dept. 364, Bldg. AP6D Abbott Park, Illinois 60064-6049 Telephone: (847) 937 - 8906 Facsimile: (847) 938 - 6277 Attention: Senior Vice President, Secretary and General Counsel or to such other facsimile number or address provided to the parties to this Agreement in accordance with this SECTION 4.6. Such notices or other communications shall be deemed delivered upon receipt, in the case of overnight delivery, personal delivery, or facsimile transmission (as evidenced by the confirmation thereof), or 2 days after deposit in the mails (as determined by reference to the postmark). 4.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 4.8 EXPENSES. Each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, and delivery of this Agreement. 4.9 ALTERNATIVE DISPUTE RESOLUTION. The parties agree to effectuate all reasonable efforts to resolve in an amicable manner any and all disputes between them in connection with this Agreement. The parties agree that any dispute that arises in connection with this Agreement, which cannot be amicably resolved informally shall be finally settled as set forth in the Alternative Dispute Resolution provisions of Exhibit C to the License Agreement. 4.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of ABS and the Abbott. 4.11 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. -10- 11 4.12 FURTHER ASSURANCES. ABS and Abbott shall do and perform or cause to be performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, or documents as the other party may reasonably request from time to time in order to carry out the intent and purposes of this Agreement and the consummation of the transactions contemplated by the Agreement. Neither ABS nor Abbott shall voluntarily undertake any course of action inconsistent with the satisfaction of the requirements applicable to them as set forth in this Agreement, and each shall promptly do all such acts and take all such measures as may be appropriate to enable them to perform as early as practicable their obligations under this Agreement. 4.13 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to his Agreement. 4.14 MUTUAL DRAFTING. This Agreement is the joint product of ABS and Abbott and each provision of the Agreement has been subject to consultation, negotiation and agreement of ABS and Abbott and their respective legal counsel and advisers and any rule of construction that a document shall be interpreted or construed against the drafting party shall not apply. 4.15 SEC RULE CHANGES. To the extent necessary to give effect to the agreements and understandings of the parties set forth in this Agreement, any reference in this Agreement to any forms, rules, regulations, or procedures of the SEC or any provision of the Securities Act or the Exchange Act existing as of the date of this Agreement shall be deemed to refer to any modifying, supplementing, or succeeding rules, regulations procedures, or provisions as may exist from time to time after the date of this Agreement. IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written. AMERICAN BIOGENETIC SCIENCES, INC. By: ------------------------------- Alfred J. Roach, Chairman ABBOTT LABORATORIES By: ------------------------------- Its: SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT -11- EX-10.1 3 EXCLUSIVE LICENSE AGREEMENT 1 Exhibit 10.1 EXCLUSIVE LICENSE AGREEMENT This Exclusive License Agreement ("Agreement") is made as of this day of January, 2000 (the "Effective Date") by and between ABBOTT LABORATORIES, a company organized under the laws of the State of Illinois, with its principal office at 100 Abbott Park Road, Abbott Park, IL 60064 ("Abbott") and AMERICAN BIOGENETIC SCIENCES, INC., a company organized under the laws of the State of Delaware, with its principal office at 1375 Akron Street, Copiague, N.Y. 11726 ("ABS"). WITNESSETH WHEREAS, ABS is the holder of certain patent applications and patents ("Patents," as more fully defined below) relating to Compound (as defined below); WHEREAS, ABS also possesses proprietary Know-How (as defined below) relating to the Compound and/or Product (as defined below); WHEREAS, Abbott wishes to obtain, and ABS wishes to grant to Abbott and its Affiliates (as defined below), an exclusive license in the Territory under the Patents and Know-How for the development and commercialization of Product; NOW THEREFORE, in consideration of the mutual obligations and promises as set forth herein, the parties do hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: 1.1 "ABS'S TECHNOLOGY" means the Patents and Know-How, including all Improvements developed by ABS. 1.2 "AFFILIATE" means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control of either party hereto. For purposes of this definition, control shall mean direct or indirect ownership of at least fifty percent (50%) of the stock or participating shares entitled to vote for the election of directors. 1.3 "COMBINATION PRODUCT" means a pharmaceutical product that is comprised in part of Product and in part of one or more other active agents in any configuration, formulation or combination. 1.4 "COMPOUND" means ABS-103, (***). - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 2 1.5 "CONFIDENTIAL INFORMATION" means any and all information or data relating to the Compound and/or Product which a party discloses to the other party, its employees or representatives, or is conceived or reduced to practice during the Term by either party or by a third party conducting feasibility and evaluation studies for Abbott, whether in writing, orally or by observation, including, without limitation, all scientific, clinical, technical, commercial, financial and business information and Know-How, and other information or data considered confidential in nature, except any portion thereof which: (i) is known to the receiving party at the time of disclosure and documented by written records made prior to the date of this Agreement; (ii) is subsequently disclosed to the receiving party without any obligations of confidence by an unaffiliated third person who has not obtained it directly or indirectly from the other party and who has the right to make such disclosure; (iii) becomes patented, published or otherwise part of the public domain as a result of acts by an unaffiliated third person obtaining such information as a matter of right; (iv) is independently developed by or for the receiving party by person(s) having no knowledge of or access to such information and without breach of any confidentiality obligation as evidenced by its written records; or (v) is required to be disclosed by legal, regulatory, statutory or governmental process or authorities, provided in each case the party disclosing information promptly informs the other and uses its best efforts to limit the disclosure and to maintain confidentiality to the maximum extent possible and permits the other party to attempt by appropriate legal means to limit such disclosure. The parties agree that the contents of and the Exhibits to this Agreement shall constitute Confidential Information. 1.6 "EFFECTIVE DATE" shall have the meaning ascribed to such term in the opening paragraph of this Agreement. 1.7 "FDA" means the United States Food and Drug Administration or any successor entity and its equivalent in other countries of the Territory. 1.8 "FIRST COMMERCIAL SALE" means the first sale of Product in the Territory by Abbott, its Affiliates (or their sublicensee) to any unaffiliated third party as evidenced by the selling party's invoice or other relevant document to such third party. A sale to an unaffiliated third party shall not include quantities delivered solely for research purposes, for clinical trials or quantities distributed as samples or promotions. -2- 3 1.9 "IMPROVEMENTS" means all additions, developments, modifications, enhancements and adaptations (i) which directly relate to the Compound, the Product or any formulation thereof, (ii) which come into existence during the Term, and (iii) which are conceived or reduced to practice during the Term. 1.10 "IND" means an investigational new drug application filed with the FDA or an equivalent application in other countries of the Territory, in order to commence human clinical testing of a drug or biologic. An IND together with all supplemental filings referencing the initial IND filing shall be deemed one and the same IND for all purposes of this Agreement. 1.11 "KNOW-HOW" means any proprietary technology (other than the Patents) owned by or licensed (with a right of sublicense) to ABS during the Term relating to the Compound and/or Product, including all trade secrets and any other technical information relating to design, development, use or sale. 1.12 "LIABILITIES" shall have the meaning ascribed to such term in Section 5.2 of this Agreement. 1.13 "MAJOR MARKET COUNTRY" means (***). 1.14 "NDA" means an application (whether original, supplementary or abbreviated) to the FDA, or an equivalent application in other countries of the Territory, for approval by the FDA or the equivalent governmental agencies in other countries of the Territory, necessary for the commercial sale of a product in such country. An NDA, together with all supplemental filings referencing the initial NDA filing shall be deemed one and the same NDA for all purposes of this Agreement. 1.15 "NET SALES" means gross sales of the Product covered by the claims of a composition of matter, formulation, therapeutic use or process of manufacture patent, sold by Abbott, its Affiliates and sub-licensees to unrelated third parties, in arm's length transactions, including but not limited to, pharmaceutical wholesalers, pharmacies, hospitals or dispensing physicians, less any of the following charges or expenses that are incurred in connection with gross sales of the Product during the term of this Agreement: (i) discounts, including cash discounts, customary trade allowances or rebates actually taken, governmental rebates, charge-backs, and group purchasing management fees for formulary access; (ii) credits or allowances given or made for retroactive price reductions, rejection, recall or return of previously sold Product actually taken; (iii) any tax or government charge (including any tax such as a value added or similar tax or government charge) levied on the sale, transportation or -3- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 4 delivery of Product when included on the invoice or other written document between the parties; (iv) freight, postage, transportation, insurance and duties on shipment of Product when included on the invoice or other written document between the parties; and (v) provisions for uncollectible accounts determined in accordance with generally accepted accounting principles consistently applied to all products sold by the seller of Product. Net Sales shall not include quantities of Product distributed for research, testing, pre-clinical, clinical, development or as promotional samples or free goods. With respect to a Combination Product, Net Sales of such Combination Product shall first be calculated in accordance with Net Sales of Product above, and then the Net Sales of such Combination Product shall be determined on a country-by-country basis as follows: (i) multiply the Net Sales of such Combination Product by the fraction A/(A+B), where A is the total of the average selling price of Product which contains the Compound as its sole active ingredient and B is the total of the average selling prices in such country of pharmaceutical product(s) which contain each of the other active ingredients as their sole active ingredient; or (ii) if either the average selling price of the Product which contains the Compound as its sole active ingredient or the average selling price of all of the other pharmaceutical products which contain each of the other active ingredients in such Combination Product is not available, multiply the Net Sales of such Combination Product by a percentage, determined by mutual agreement of the parties, which represents the proportionate economic value of the Compound relative to the economic value contributed by all other active ingredients in such Combination Product. If the parties cannot agree, then the alternative dispute resolution procedure set forth on Exhibit C shall be used to determine the matter. 1.16 "PATENTS" means the patent applications and patents listed in Exhibit A hereto and any and all other patents and patent applications, including foreign equivalents, and any and all substitutions, extensions, additions, reissues, reexaminations, renewals, divisions, continuations, continuations-in-part or supplementary protection certificates owned by or licensed to (with the right to sublicense) ABS during the Term relating to the Compound and/or the Product. 1.17 "PRODUCT" means any pharmaceutical formulation containing the Compound as an active ingredient, and any Improvement. -4- 5 1.18 "REGULATORY APPROVAL" means all governmental approvals and authorizations necessary for the manufacture and commercial sale of the Product in a country of the Territory, including, but not limited to, marketing authorization, pricing approval and pricing reimbursement, as applicable. 1.19 "ROYALTY PERIOD" shall have the meaning ascribed to such term in Exhibit F of this Agreement. 1.20 "TERM" means the period commencing on the Effective Date and terminating as set forth in Article 7 below. 1.21 "TERRITORY" means the entire world. 1.22 "TRADEMARK" means any trademark registered, owned and chosen for Product by Abbott in any country of the Territory. 2. LICENSE GRANT; DOCUMENTATION; RELATIONSHIP; SUPPLY; EXCLUSIVITY. 2.1 LICENSE GRANT: ABS hereby grants to Abbott and its Affiliates an exclusive right and license in the Territory and under ABS's Technology, and for all indications with the right to grant sublicenses, to: (i) research, develop, apply for and obtain Regulatory Approvals, all as may be required to manufacture and commercialize Compound and Product; and (ii) make, have made, register, use, import/export, market, offer to sell and sell Compound and Product. Such license shall be exclusive to Abbott, its Affiliates and its sublicensees and shall operate to exclude all others, including ABS, within the Territory. 2.2 DOCUMENTATION AND MATERIALS: Within thirty (30) days following the Effective Date, ABS shall convey to Abbott all existing information under ABS's and its Affiliates' control involving the Compound including, but not limited to, all Know-How in the possession of ABS, its Affiliates and agents, involving: (a) Results of prior sponsored research or research performed by ABS outside of this Agreement. (b) Patents. (c) Clinical research and development. (d) Requirements for Regulatory Approval. Thereafter, and continuing throughout the Term, ABS shall promptly convey to Abbott all additional Know-How developed and/or acquired by ABS, its Affiliates and agents, -5- 6 and information of a like nature as and when generated by ABS, its Affiliates and agents in connection with the Compound. 2.3 NON-DISCLOSURE: ABS, on behalf of itself and its Affiliates, hereby covenants that it shall not, during the Term, disclose Confidential Information except in furtherance of this Agreement or enter into any discussions for a business relationship with any third party regarding ABS's Technology which would conflict with the license granted to Abbott herein, nor take any action, or commit any omission, which could have the effect of materially diminishing the value of ABS's Technology. 2.4 SUPPLY OF COMPOUND: At the request of Abbott, ABS shall provide Abbott with a sufficient supply of Compound, having an optical purity (***) to enable Abbott to conduct its feasibility and evaluation studies. The initial schedule of required deliveries is set forth on Exhibit B attached hereto. The price for such Compound supplied by ABS shall be (***). Except with respect to the quantities set forth in Exhibit B, nothing contained in this Section 2.4 shall prevent Abbott from purchasing Compound from a third party manufacturing source or from manufacturing Compound itself. 2.5 ALTERNATIVE COMPOUNDS: (***). 2.6 EXCLUSIVITY: During the Term, ABS and its Affiliates shall not undertake any development or commercialization activities related to the use of any (***). Abbott shall have the exclusive right to work with ABS and its Affiliates on development or commercialization of (***) during the Term and any inquiries that ABS or its Affiliates shall receive during the Term with respect to these fields shall be referred to Abbott. (***). As soon as practicable following the Effective Date, ABS and its Affiliates shall identify any existing collaborations with respect -6- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 7 to the Compound and during the Term, ABS and its Affiliates shall not conduct any activities with the Compound. 3. EXECUTION FEE, EQUITY INVESTMENT, MILESTONE PAYMENTS AND ROYALTIES. 3.1. EXECUTION FEE: Abbott shall pay to ABS Five Hundred Thousand Dollars ($500,000) within ten (10) days after the Effective Date. 3.2 EQUITY INVESTMENT: Within ten (10) days after the Effective Date, Abbott will make an equity investment in ABS of One Million Five Hundred Thousand Dollars ($1,500,000) by purchasing from ABS unregistered shares of Class A Common Stock at the average of the closing market prices for the period measured by the twenty (20) trading days immediately preceding the Effective Date (but not including the Effective Date itself). Abbott's equity investment in ABS shall be documented by a Stock Purchase Agreement and a Registration Rights Agreement executed by the parties of even date herewith and attached to this Agreement as Exhibits D and E, respectively. 3.3 (***). 3.4 ROYALTIES: (a) Abbott shall make royalty payments to ABS as set forth in Exhibit F. (b) ROYALTY REPORTS AND PAYMENTS. Beginning with the First Commercial Sale anywhere in the Territory, within forty-five (45) days after the end of each calendar quarter, Abbott shall prepare and deliver to ABS a report detailing the calculation of Net Sales in (***), on a (***), for such just ended quarter along with the calculation of royalties due thereon pursuant to Section 3.4(a) above. Each report shall be accompanied by full payment in US dollars of the royalties shown thereon to be due. In the event that conversion from foreign currency is required in calculating a royalty payment hereunder, the exchange rate used shall be the ratio in effect at the end of the last business day of the applicable quarter for which royalties are calculated, as reported by the Wall Street Journal. (c) BOOKS AND RECORDS/AUDIT RIGHTS. Abbott shall keep books and records accurately showing all Products manufactured, used or sold under the terms of this Agreement. Such books and records shall be open to inspection by representatives of ABS solely for the purposes of determining the correctness of the royalties paid under this Agreement. Such audit, conducted no more than one time per calendar year, shall be during normal business hours after reasonable advance notice and subject -7- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 8 to suitable confidentiality provisions. In the event an audit shows a deficiency to be due, Abbott shall immediately pay such deficiency along with the reasonable costs and expense of the audit if the deficiency is more than ten percent (10%) of the amount due during such audited period. If the audit shows that an excess was paid, Abbott shall be entitled to deduct the amount of such excess from the payment due for the next calendar quarter. Such books and records shall be preserved for a period of at least three (3) years after the date of the royalty payment to which they pertain, and no audit may be conducted with respect to royalties due in any calendar year that is more than two (2) years preceding the calendar year in which the audit is being conducted. Books and records for a given calendar year may only be audited once. (d) WITHHOLDING TAXES ON ROYALTIES. Where any sum due to be paid to ABS hereunder is subject to any withholding or similar tax, the parties shall use all reasonable efforts to do all such acts and things and to sign all such documents as will enable them to take advantage of any applicable double taxation agreement or treaty. In the event there is no applicable double taxation agreement or treaty, or if an applicable double taxation agreement or treaty reduces but does not eliminate such withholding or similar tax, ABBOTT shall pay such withholding or similar tax to the appropriate government authority, deduct the amount paid from the amount due ABS and secure and send to ABS the best available evidence of such payment sufficient to enable ABS to obtain a deduction for such withheld taxes or obtain a refund thereof. 3.5 For purposes of this Article 3, Abbott means Abbott, its Affiliates and sublicensees. Abbott shall advise ABS in writing within 30 days of the occurrence of each Milestone as it is achieved. 4. FEASIBILITY/EVALUATION/MANUFACTURING/MARKETING/OTHER. 4.1 FEASIBILITY/EVALUATION STUDIES: Abbott shall have sole responsibility for conducting and/or supervising the performance by third parties of feasibility and evaluation studies on the Compound. Abbott shall provide ABS with a copy of all such studies related to the Compound and until the first of the Fourth Milestones is achieved, with semi-annual summary reports providing a synopsis of any experiments performed and the results obtained during the 6 months preceding the report and a general description of the efforts to be undertaken during the following 6 months. ABS and Abbott agree that Abbott shall, at all times, have the right to undertake feasibility and evaluation activities relating to compounds similar to the Compound in parallel with those feasibility and evaluation activities being conducted on the Compound under this Section 4.1. -8- 9 4.2 TERMINATION: If Abbott determines in its reasonable scientific and commercial judgment that the Compound does not have an acceptable profile or a reasonable likelihood of commercial success, Abbott shall have the right to terminate this Agreement upon thirty (30) days written notice, at the end of which the termination shall be effective. 4.3 MANUFACTURING: Except as provided in Section 2.4 hereof, Abbott and its Affiliates shall have sole responsibility for manufacturing Product or having Product manufactured for it by a third party manufacturer. 4.4 MARKETING: Abbott shall have sole responsibility for marketing Product, including entering into any co-marketing and/or co-promotion arrangements with third parties, and neither ABS nor its Affiliates shall have any rights to market and/or co-promote the Product. 4.5 CLINICAL DEVELOPMENT: Abbott shall have sole responsibility for the clinical development of Product and have final decision making authority with regard to all clinical development activities conducted with respect to the Product. 4.6 (***). 5. REPRESENTATIONS/WARRANTY/INDEMNITY. 5.1 REPRESENTATIONS AND WARRANTIES OF ABS: ABS makes the following representations and warranties with respect to this Agreement and ABS's Technology: (a) CORPORATE POWER AND AUTHORIZATION. ABS represents and warrants that it is duly organized, validly existing and in good standing under the laws of Delaware, that it has full corporate power and authority to enter into this Agreement and to carry out its provisions, and that there are no outstanding agreements, assignments or encumbrances in existence that are inconsistent with the provisions of this Agreement. ABS further represents and warrants that it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder and that the execution, delivery and performance of this Agreement by it does not require the consent, approval or authorization of or notice, filing or registration with any governmental or regulatory agency. (b) TITLE AND VALIDITY OF PATENTS; NO THIRD PARTY RIGHTS. ABS represents and warrants to Abbott that (i) ABS either owns and possesses or controls all right, title and interest in and to ABS's Technology and no third party owns, has acquired or possesses any right, title or interest in or to ABS's Technology; (ii) ABS has valid and complete assignments and/or license rights from each inventor listed on Patents, (iii) ABS is the sole and exclusive licensee of all of (***) and its foreign -9- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 10 counterparts (included in Patents) pursuant to a (***); (iv) ABS has provided Abbott with a true, correct and complete copy of the aforesaid license agreement; (v) there are no defaults or events which, with the lapse of time or otherwise would constitute defaults under the aforesaid license agreement; (vi) the Patents have not knowingly been obtained through any act, omission or representation that would limit or destroy their validity and ABS has no knowledge or information that would materially impact the validity and/or enforceability of the Patents; (vii) there are no actions, threatened or pending before any court or administrative tribunal or body relating to ABS's Technology; (viii) ABS has not granted any third party any rights or license to ABS's Technology and has no agreement to grant any such rights or license; (ix) Exhibit A lists all the patents issued and patent applications filed on or before the Effective Date that are included in the Patents and all of the inventors named in said patents and applications have assigned or are under an obligation to assign or license all of their right, title and interest thereto to ABS; and (x) none of the Patents, as of the Effective Date, has lapsed by reason of abandonment or non-payment of annuities or other fees. (c) WARRANTY ON EXISTENCE OF PRE-CLINICAL/CLINICAL DATA: ABS represents and warrants that ABS has no knowledge of the existence of any pre-clinical or clinical data or information concerning Product which suggests that there may exist toxicity, safety and/or efficacy concerns which may materially impair the utility and/or safety of the Product. (d) WARRANTY OWNERSHIP OR INTEREST IN OTHER RELEVANT PATENTS: ABS represents and warrants that the Patents listed on Exhibit A represent all the patents and patent applications owned or exclusively licensed by ABS as of the Effective Date relating to Compound. ABS also represents and warrants that the Patents listed on Exhibit A represent all the patents and patent applications owned or exclusively licensed by ABS as of the Effective Date in the area of bipolar disorder, epilepsy and migraine, except for ABS-205. 5.2 INDEMNIFICATION BY ABS: ABS shall indemnify, defend and hold Abbott, its Affiliates and sublicensees and their directors, officers, employees and agents harmless from and against any and all liabilities, actions, suits, claims, demands, prosecutions, damages, costs, expenses or money judgments (including reasonable legal fees) (the "LIABILITIES") incurred by or instituted or rendered against Abbott to the extent that such Liabilities result from the willful misconduct or the negligent acts or omissions of ABS or its Affiliates, or ABS's breach of the terms of this Agreement; provided, however, that Abbott shall give ABS notice in writing as -10- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 11 soon as practicable of any such claim or lawsuit and shall permit ABS to undertake the defense thereof at ABS's expense. In any such claim or lawsuit: (a) Abbott will cooperate in the defense by providing access to witnesses and evidence available to it. Abbott shall have the right to participate, at its expense, in any defense to the extent that in its judgment Abbott may be prejudiced thereby. (b) With respect to this Agreement, Abbott shall not settle, offer to settle or admit liability in any claim or suit in which Abbott intends to seek indemnification by ABS without the written consent of a duly authorized officer of ABS, which consent shall not be unreasonably withheld. 5.3 REPRESENTATIONS AND WARRANTIES OF ABBOTT: Abbott makes the following representations and warranties with respect to this Agreement: (a) CORPORATE POWER AND AUTHORIZATION: Abbott represents and warrants that it is duly organized, validly existing and in good standing under the laws of Illinois, that it has full corporate power and authority to enter into this Agreement and to carry out its provisions, and that there are no outstanding agreements, assignments or encumbrances in existence that are inconsistent with the provisions of this Agreement. Abbott further represents and warrants that it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and that the execution, delivery and performance of this Agreement by it does not require the consent, approval or authorization of or notice, filing or registration with any governmental or regulatory agency. 5.4 INDEMNIFICATION BY ABBOTT: Abbott shall indemnify and hold ABS, its Affiliates and their directors, officers, employees and agents harmless from and against Liabilities incurred by or instituted or rendered against ABS to the extent such Liabilities result from the willful misconduct or the negligent acts or omissions of Abbott or its Affiliates or Abbott's breach of the terms of this Agreement; provided, however, that ABS shall give Abbott notice in writing as soon as practicable of any such claim or lawsuit and shall permit Abbott to undertake the defense thereof at Abbott's expense. In any such claim or lawsuit: (a) ABS will cooperate in the defense by providing access to witnesses and evidence available to it. ABS shall have the right to participate, at its expense, in any defense to the extent that in its judgment ABS may be prejudiced thereby. (b) With respect to this Agreement, ABS shall not settle, offer to settle or admit liability in any claim or suit in which ABS intends to seek indemnification by Abbott without the written consent of a duly -11- 12 authorized officer of Abbott, which consent shall not be unreasonably withheld. 5.5 REPORTABLE OCCURRENCES: Each party warrants that it shall advise the other promptly of any occurrence which is reported or reportable by it to the regulatory authorities relating in any way to the Compound or the Product. 5.6 LIMITATION: Except for the express warranties in this Article 5, neither party makes any warranties, express or implied, in fact or by operation of law, statutory or otherwise. ABS specifically disclaims any implied warranty of merchantability or fitness for a particular purpose. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY HERETO OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED PROFITS RELATING TO THE SAME) ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME. 5.7 TERM OF INDEMNIFICATION: The obligations of the parties set forth in this Article 5 shall apply during the Term and for a period of seven (7) years thereafter, after which time they shall terminate, except with respect to claims notified to the other party prior to the expiration of the seven (7) year period. 6. CONFIDENTIALITY AND NON-DISCLOSURE. 6.1. Neither party shall use or disclose any Confidential Information received by it from the other party pursuant to this Agreement without the prior written consent of the other during the Term. This obligation will continue for a period of seven (7) years after termination of this Agreement or expiration of the Term, whichever is earlier. 6.2 Each party shall restrict dissemination of Confidential Information to those of its employees, agents and sublicensees (if any) who have an actual need to know and have a legal obligation to protect the confidentiality of such Confidential Information. All Confidential Information disclosed by one party to the other shall remain the sole property of the disclosing party and neither party shall obtain any right of any kind to the Confidential Information disclosed, except as granted under this Agreement. 6.3 Nothing contained in this Article 6 shall be construed to restrict the parties from disclosing Confidential Information solely to the extent and solely as required: (a) for regulatory, tax or customs reasons; (b) for audit purposes; -12- 13 (c) by court order or other government order or request; or (d) from using such Confidential Information as is reasonably necessary to perform acts permitted by this Agreement, including disclosure by Abbott to third parties undertaking feasibility and evaluation studies, clinical trials and the like on behalf of Abbott. 6.4 Neither ABS nor its Affiliates shall publish any information relating to the Compound or the Product during the Term. Abbott may publish information relating to the Compound or the Product without obtaining ABS's consent. 7. TERM. 7.1. The term of the license to ABS's Technology shall (***). 7.2. Either party may terminate this Agreement by giving to the other party prior written notice of not less than thirty (30) days in the event the other party shall commit a material breach of this Agreement (ten (10) days, in the case of any payment default), and such breaching party shall fail to cure such breach during the thirty (30) day period or ten (10) day period, as applicable. In the case of a non-monetary breach, the cure period may be extended for such longer period as may reasonably be necessary if cure is not reasonably possible within the initial thirty (30) day period, provided the breaching party continues its diligent efforts to cure. No such cancellation and termination shall release the breaching party from any obligations hereunder incurred prior thereto. It is understood that in the event of a dispute whether a material breach has occurred, the existence of material breach shall be determined using the alternative dispute resolution procedure agreed upon by the parties as set forth on Exhibit C, and that a party's right to terminate this Agreement shall only apply if the breaching party fails to cure such breach in the manner required by the final judgment of the alternative dispute resolution hearing. In the event that this Agreement is terminated for Abbott's material breach, ABS shall be entitled to retain for its own use all funds previously paid by Abbott, together with all studies and information generated hereunder and Abbott shall return all unused Compound previously supplied by ABS. In the event that this Agreement is terminated for ABS's material breach, Abbott shall not be liable for payments not yet due and payable under Article 3 hereof, and Abbott shall be entitled to retain for its own use all studies and information generated hereunder and all Compound previously supplied by ABS. 7.3 In lieu of Abbott's exercise of its right to terminate this Agreement for a material breach by ABS as provided in Section 7.2 above, Abbott shall have the right to withhold all payments payable under Article 3 until ABS cures such breach. If Abbott elects to exercise said rights to withhold such payments, Abbott shall give ABS sixty (60) days' prior written notice of -13- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 14 its intention to withhold such payments. The notice shall include a detailed statement describing the nature of the breach. If the breach is capable of being remedied within the sixty (60) day notice period or is capable of remedy but only within an additional sixty (60) day period, then Abbott shall not withhold payment. If the breach is incapable of remedy, or if ABS does not cure the breach within the original sixty (60) days given if the breach is capable of remedy within such time, or cure the breach within the additional sixty (60) days, if applicable, then the withholding of payments shall take effect at the end of the sixty (60) day notice period or sixty (60) day extension, if applicable, and shall continue until the breach by ABS is remedied. 7.4 Either party may terminate this Agreement on thirty (30) days notice if the other party passes a resolution or the court makes an order for its winding up; or has a receiver or administrator appointed over its business or any of its assets; or is or becomes bankrupt or insolvent; or takes or suffers any analogous action on account of debt; or ceases or threatens to cease to carry on business or the equivalent to any of the above in any jurisdiction. In the event that this Agreement is terminated under this Section 7.4, the terminating party shall be entitled to retain for its own use all studies and information generated hereunder and all Compound previously supplied. Notwithstanding the bankruptcy or insolvency of ABS or the impairment of performance by ABS of its obligations under this Agreement as a result of bankruptcy or insolvency of ABS, Abbott shall be entitled to retain the licenses granted herein, without any further obligation to ABS other than the royalty obligations under Section 3.4 and the other payment obligations under Article 3. 7.5 (a) Abbott may terminate this Agreement without cause, (***), upon three (3) months prior written notice and, upon such termination Abbott shall pay all payments, milestones or royalties which may have become due prior to the effective date of such termination. ABS shall be entitled to retain for its own use (***). (b) Abbott shall use all commercially reasonable efforts to develop and commercialize the Product on a country-by-country basis using at least that level of effort it would use with its own similar compounds. If there is any material disagreement between the parties concerning whether material efforts towards commercialization have been made, then the matter shall be submitted to alternative dispute resolution pursuant to Exhibit C where remedies for failure to expend such efforts could include a requirement to expend additional efforts to make up for any failures, damages and/or termination of the license rights in the applicable country unless Abbott chooses to undertake such activities and expenses as needed to correct the failure. In determining whether commercially reasonable efforts have been expended, local market and regulatory issues shall be considered. Nothing contained herein shall require Abbott to undertake commercialization where the effect would be to create an adverse financial impact upon the Product or Abbott. 7.6 Termination of this Agreement shall be without prejudice to any rights of either party against the other which may have accrued up to the date such termination becomes effective. -14- - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 15 7.7 All causes of action accruing to either party under this Agreement shall survive expiration or termination of this Agreement for any reason. 7.8 Upon any termination or expiration of this Agreement, each party shall promptly return to the other party all written Confidential Information, and all copies thereof (retaining one copy of the Confidential Information of the other in its confidential files for archival purposes only), which is not covered by a paid-up license or other rights specified herein surviving such termination or expiration. 8. INFRINGEMENT OF PATENTS BY THIRD PARTY. In the event of an actual or suspected infringement of a Patent by a third party, the following shall apply: 8.1 NOTICE: Each party shall give the other written notice if one of them becomes aware of any infringement by a third party of any Patent. Upon notice of any such infringement, the parties shall promptly consult with one another with a view toward reaching agreement on a course of action to be pursued. 8.2 ABBOTT'S RIGHT TO BRING INFRINGEMENT ACTION: (a) ABBOTT ELECTION: If a third party infringes any patent included in the Patents in the Territory, Abbott shall have the first right but not the obligation to institute and prosecute an action or proceeding to abate such infringement and to resolve such matter by settlement or otherwise. (i) Abbott shall notify ABS of its intention to bring an action or proceeding prior to filing the same and in sufficient time to allow ABS the opportunity to discuss with Abbott the choice of counsel for such matter. Abbott shall keep ABS timely informed of material developments in the prosecution or settlement of such action or proceeding. Abbott shall be responsible for all costs and expenses of any action or proceeding against infringers which Abbott initiates, provided, that, Abbott may decrease the amount of royalties due under Section 3.4 by up to fifty percent (50%) effective as of the date of filing an action against third party infringers to reimburse Abbott for legal expenses and fees of the action. Notwithstanding the foregoing, Abbott shall withhold only that portion of such royalties as may reasonably be necessary to reimburse amounts incurred in the prosecution of such action in accordance with the terms of this paragraph. ABS shall cooperate fully at its expense by joining as a party plaintiff if required to do so by law to maintain such action or proceeding and by executing and making available such documents as Abbott may reasonably request. ABS may be represented by counsel in any such legal - 15 - 16 proceedings, at ABS's own expense, subject to reimbursement under subparagraph (b) below, acting in an advisory but not controlling capacity. The prosecution, settlement, including the granting of one or more sublicenses, or abandonment of any infringement action or proceeding brought by Abbott shall be at Abbott's reasonable discretion provided that Abbott shall not otherwise have any right to surrender, limit or adversely affect any of ABS's rights to the Patents. (ii) If Abbott elects not to exercise such first right, ABS shall have the right, at its discretion, to institute and prosecute an action or proceeding to abate such infringement and to resolve such matter by settlement or otherwise. Abbott shall cooperate fully by joining as a party plaintiff if required to do so by law to maintain such action and by executing and making available such documents as ABS may reasonably request. In such case, ABS shall promptly reimburse Abbott for its out-of-pocket fees and expenses incurred in joining the action at ABS's request. Abbott may be represented by counsel in any such action at its own expense, provided, if the amounts recovered by ABS exceed its reasonable third party out-of-pocket fees and expenses, ABS agrees to pay Abbott for its out-of-pocket fees and expenses incurred as a result of electing to join the action. (b) USE OF PROCEEDS: Except as provided herein, all amounts of every kind and nature recovered from an action or proceeding of infringement by Abbott shall belong to Abbott. If the amount recovered by Abbott exceeds Abbott's reasonable out-of-pocket fees and expenses of the action, the excess shall first be applied to reimburse ABS for withheld royalties and second to reimburse ABS for out-of-pocket fees and expenses ABS incurred in joining the action at Abbott's request. The balance of the amounts recovered by Abbott shall be considered Net Sales under this Agreement and subject to royalty payments under Section 3.4. 9. INFRINGEMENT OF THIRD PARTY RIGHTS 9.1 ABBOTT DEFENSE OF SUIT: If ABS, its Affiliates, Abbott, its Affiliates, sublicensees, distributors or other customers are sued or threatened with suit in the Territory by a third party alleging infringement in one or more countries of the Territory of patents or other intellectual property rights that are alleged to cover the manufacture, use sale, import, export or distribution of one or more Products, Abbott or ABS, whichever is relevant, will promptly notify the other in writing and provide a copy of the lawsuit or claim. Abbott may elect to control the defense in any such claim or suit and withhold up to fifty percent (50%) of the royalties payable under Section 3.4 related to the Product(s) affected. Abbott shall use such withheld royalties to - 16 - 17 reimburse the legal defense costs, fees and liability incurred in such infringement suit. Notwithstanding the foregoing, Abbott shall withhold only that portion of such royalties as may reasonably be necessary to reimburse amounts incurred in the defense of such action in accordance with the terms of this paragraph. If Abbott is required to pay a royalty or other amount to a third party for the manufacture, use, sale, import, export or distribution of one or more Products in the Territory as a result of a final judgment or settlement, such amounts may be deducted by Abbott from the royalties payable under Section 3.4. ABS shall cooperate with Abbott in the defense of any such action at ABS's expense. Abbott shall have the sole right to settle any such suit, including the right to grant one or more sublicenses, provided that Abbott shall not otherwise have the right to surrender, limit or adversely affect any rights to the Patents. If the royalties deducted by Abbott are sufficient to pay the costs and fees for the defense of the claim or suit, including any appeals, the excess shall be paid to ABS with the next reporting period for royalties under Section 3.4(b). If the royalties deducted by Abbott are insufficient to pay the costs and fees for the defense of the claim or suit, including any appeals, Abbott may continue to deduct the amount of the insufficiency against future royalties until the costs and fees are fully paid. 9.2 INDEMNIFICATION BY ABS: ABS shall indemnify, defend and hold harmless Abbott, its Affiliates, sublicensees, distributors and customers of the foregoing and their directors, officers, employees and agents from and against any and all third party claims, demands, losses, settlement amounts, damages, penalties, costs and expenses (including fees and costs of attorneys and witnesses) of any kind or nature, arising from the alleged infringement by Abbott of (i) patent rights that dominate a claim of the Patent or (ii) patents or other intellectual property rights that cover the manufacture, use, sale, import, export or distribution of one or more Products, but only as to the Compound and not to any other aspect of Product such as delivery vehicle, stabilizing agents or formulation and further provided, that ABS's liability under this indemnity shall not exceed the total monies paid to ABS under this Agreement (including Abbott's equity investment in ABS under Section 3.2 hereof). ABS shall have no obligation to Abbott or its Affiliates, sublicensees, distributors and other customers with respect to claims, demands, losses, settlement amounts, damages, penalties, costs and expenses (including fees and costs of attorneys and witnesses) of any kind or nature, arising out of the intentional or negligent acts of Abbott or its Affiliates, sublicensees and distributors or the directors, officers, employees and agents of any of them. If a claim is made or a suit is brought against Abbott, its Affiliates, sublicensees, distributors or other customers, Abbott will promptly notify ABS in writing and provide a copy of the lawsuit or claim. ABS and Abbott shall promptly meet to discuss the handling of the claim or suit. In the event Abbott elects not to defend any such claim or suit, ABS shall defend the same in accordance with its indemnification obligation contained herein. If Abbott defends the claim or suit, Abbott shall be entitled to withhold that portion of royalties payable under Section 3.4 with respect to the Product(s) that are the subject of the claim or suit as may reasonably be necessary to reimburse amounts incurred by Abbott in the defense of such claim or suit. If ABS defends the claim or suit, Abbott shall continue to pay royalties for such Product(s) while defense of the claim or suit is ongoing. The non-defending party agrees to cooperate with the party defending the claim or suit at the non-defending party's expense. Upon final resolution of the claim or suit, including any appeals, - 17 - 18 if Abbott defended the claim or suit, Abbott shall resume paying ABS any royalties payable hereunder, provided that, if Abbott, as a result of the settlement or final outcome of the claim or suit, becomes obligated to pay royalties to a third party in order to manufacture, use, sell, import, export or distribute the Products that were the subject of the claim or suit, one hundred percent (100%) of such royalties shall be creditable against royalties payable by Abbott under Section 3.4. In no event shall Abbott be liable for the payment of royalties previously deducted by Abbott for the defense of the claim or suit except as to any costs which shall have been reimbursed in connection with the defense of the claim. If the royalties deducted by Abbott were insufficient to pay the costs and fees for the defense of the claim or suit, including any appeals, Abbott may continue to deduct the amount of the insufficiency against future royalties until the costs and fees are fully paid. 9.3 ABBOTT ENJOINED: If Abbott is enjoined or otherwise prohibited from making, having made, importing, exporting, using or selling any Product as a result of alleged infringement of a third party patent in any country of the Territory, then (i) the royalties for such Product otherwise due and payable under Section 3.4 shall not be due and payable and Abbott shall not be liable to ABS for such royalties for the period of time the injunction is in effect, including any time the injunction may be stayed pending the outcome of any appeals; and (ii) Abbott shall have the right to delete such country from the Territory on ten (10) days prior written notice given any time while the injunction is in effect, including any time the injunction may be stayed pending the outcome of any appeals. 10. PATENT PROSECUTION AND MAINTENANCE; PATENT COSTS. 10.1 DISCLOSURE OF PATENTS/APPLICATIONS TO ABBOTT: Within ten (10) days following the Effective Date, ABS shall disclose to Abbott the complete text (a) of all patent applications included in the Patents filed anywhere in the Territory; and (b) of all patents included in the Patents as well as all information in ABS's, its Affiliates and its patent counsel's possession concerning the institution or possible institution of any interference, opposition, re-examination, reissue, revocation, nullification or any official proceeding involving an issued patent included in the Patents anywhere in the Territory. 10.2 PROSECUTION AND MAINTENANCE: Beginning with the Effective Date, Abbott shall be solely responsible for the preparation, filing, prosecution and maintenance of the Patents in ABS's name including oppositions and interferences. Abbott shall pay 100% of the external Patent costs incurred on and after the Effective Date but shall have the right to apply such external Patent costs as a credit against future payments due under Sections 3.3 and 3.4 up to $100,000. ABS shall cooperate and shall use reasonable efforts to cause its Affiliates, employees and agents to cooperate with Abbott in the preparation, filing, prosecution and maintenance of the Patents by disclosing such information as may be necessary for the same and by promptly executing such documents as Abbott may reasonably request in connection therewith. Within 60 days after the Effective Date, Abbott shall cause its patent counsel to provide ABS with a list of the countries in which it intends to file applications other than those listed in Exhibit A. Such - 18 - 19 list shall be provided to ABS at least sixty (60) days prior to the expiration of the relevant priority date to allow ABS time to suggest that additional countries be added to the list. Abbott shall file applications in the additional countries requested by ABS unless it otherwise notifies ABS in writing in sufficient time to allow ABS an opportunity to file prior to the relevant priority date. If ABS so elects to file in any such countries, such patents shall not be included in the definition of Patents. ABS shall bear its own costs in connection with its cooperation with Abbott under this Article. Abbott will provide ABS copies of all material documents received or prepared by Abbott in the prosecution and maintenance of the Patents. Abbott shall provide copies in a timely manner to allow ABS an opportunity to review and comment on Abbott's proposed patent strategy. 10.3 ABS'S RIGHTS TO PROSECUTE AND MAINTAIN PATENTS: Abbott shall notify ABS in writing of any country(ies) where it either previously declared its intention to file under Section 10.2 above and subsequently decided not to file in such country(ies) or previously filed and decided to abandon the patent application or issued patent. Such notice shall be given so as to allow ABS a reasonable time within which to file in countries where Abbott does not now intend to file or take over the maintenance or prosecution of the relevant application or patent Abbott intends to abandon. Such patents shall not be included in the definition of Patents. 10.4 COVENANT RE: PATENTS LICENSED FROM THIRD PARTIES. ABS shall maintain in good standing all Patents licensed by ABS from third parties and shall, during the Term, provide Abbott with any and all default notices or other correspondence of a material nature received by ABS from the third party licensor(s) of such Patents. Within two (2) weeks following the Effective Date, ABS shall provide Abbott with an agreement from all licensors of Patents to provide written notice to Abbott of any alleged defaults under their applicable license agreements with ABS, providing Abbott with the right to cure such default within an acceptable time period. In the event Abbott is required to expend money to cure any such default by ABS, Abbott shall be entitled to deduct all such amounts paid to the third party licensor from payments due under Article 3 hereof. 11. TRADEMARK. Abbott may select any Trademark or Trademarks for the Product in the Territory. All costs related to the selection and maintenance of the Trademark(s) shall be borne by Abbott. The Trademark(s) shall be owned by Abbott, and ABS shall have no claims or rights in or to the Trademark(s). 12. IMPROVEMENTS. All Improvements made solely by Abbott and/or its Affiliates hereunder shall be the sole and exclusive property of Abbott. All Improvements made solely by ABS and/or its Affiliates shall become part of ABS's Technology, licensed exclusively to Abbott with all of the rights set forth in Section 2.1 hereof. All Improvements made jointly by Abbott and ABS (or by their Affiliates) hereunder shall be the sole and exclusive property of Abbott. 13. MISCELLANEOUS. - 19 - 20 13.1 FORCE MAJEURE: If the performance by either party of any of its obligations under this Agreement shall be prevented by circumstances beyond its reasonable control which could not have been avoided by the exercise of reasonable diligence, then such party shall be excused from the performance of that obligation for the duration of the event. The affected party shall promptly notify the other party in writing should such circumstances arise, give an indication of the likely extent and duration thereof, and shall use all commercially reasonable efforts to resume performance of its obligations as soon as practicable. 13.2 NOTICES: Any notice required to be given or made under this Agreement by one of the parties hereto to the other shall be in writing, by personal delivery, registered U.S. mail or overnight courier, addressed to such other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon the date of receipt. If to ABS: American Biogenetic Sciences, Inc. 1375 Akron Street, Copiague Copiague, NY 11726 Attn: Chairman With a copy to: Brown, Rudnick, Freed & Gesmer One Financial Square Boston, MA 02111 Attn: Mark A. Hofer, Esq. If to Abbott: Abbott Laboratories 100 Abbott Park Road Dept. 309; Bldg. AP30 Abbott Park, IL 60064-3537 Attn: Senior Vice President, Pharmaceutical Operations With a copy to: Abbott Laboratories 100 Abbott Park Road Dept. 364; Bldg. AP6D Abbott Park, IL 60064-6032 Attn: Senior Vice President, General Counsel and Secretary 13.3 APPLICABLE LAW/COMPLIANCE: This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding its conflict of laws provision. Each party hereto shall comply with all applicable laws, rules, ordinances, guidelines, consent decrees and regulations of any federal, state or other governmental authority. - 20 - 21 13.4 ENTIRE AGREEMENT: Except for the Stock Purchase Agreement and the Registration Rights Agreement entered into between the parties of even date herewith, this Agreement and the attachments contain the entire understanding of the parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto. 13.5 COUNTERPARTS: This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13.6 SEVERABILITY: If any provision of this Agreement is deemed unenforceable, the remainder of the Agreement will not be affected and, if appropriate, the parties will attempt to replace the unenforceable provision with a new provision that, to the extent possible, reflects the parties' original intent. 13.7 ASSIGNMENT: Neither party may without written approval of the other: (a) assign this Agreement or transfer its interest or any part thereof under this Agreement to any third party except that (i) either party may assign this Agreement to a third party that acquires all or substantially all of the business to which this Agreement pertains, or, (ii) in the case of Abbott, Abbott may assign this Agreement in whole or part to any Affiliate or sublicensee of Abbott, and Abbott hereby guarantees the performance by such Affiliates and sublicensees. (b) designate or cause any third party to perform all or part of its activities hereunder, or to have the benefit of all or part of its non-monetary rights hereunder. 13.8 MISCELLANEOUS: The parties hereto shall attempt to settle any dispute arising out of or relating to this Agreement in an amicable way. Any controversy, claim or right of termination for cause which may arise under, out of, in connection with, or relating to this Agreement, or any breach thereof, shall be settled according to the Alternative Dispute Resolution provisions attached hereto as Exhibit C. 13.9 INDEPENDENT CONTRACTOR: It is understood that both parties hereto are independent contractors and engage in the operation of their own respective businesses and neither party hereto is to be considered the agent of the other party for any purpose whatsoever and neither party has any authority to enter into any contract or assume any obligation for the other party or to make any warranty or representation on behalf of the other party. Each party shall be fully responsible for its own employees, servants and agents, and the employees, - 21 - 22 servants and agents of one party shall not be deemed to be employees, servants and agents of the other party for any purpose whatsoever. 13.10 NO IMPLIED OBLIGATIONS OF ABBOTT: Abbott's sole obligation to exploit the Patents is as set forth in Article 4 and Section 7.5. Nothing in this Agreement shall be deemed to require Abbott to otherwise exploit the Patents or prevent Abbott from commercializing products similar to or competitive with a Product. 13.11 PUBLICITY: Except as otherwise required by law or regulation, neither party nor their Affiliates shall make any public announcement concerning this Agreement nor the subject matter thereof without the prior written consent of the other party. If either party (or such party's Affiliate) determines that a public announcement is required by law or regulation, such party shall submit a copy of the proposed announcement to the other party for review. The other party shall have three (3) days (or 24 hours if urgent) to review such announcement and provide comments and suggestions. The party issuing such announcement, subject to legal requirements, shall use all reasonable efforts to accommodate the other party's comments and suggestions. Both parties agree that the names of the other party, its officers, employees and agents will not be used for purposes of any public commercial activity without their prior written consent. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. ABBOTT LABORATORIES AMERICAN BIOGENETIC SCIENCES, INC. By: ____________________________ By: _________________________________ Print Name: Arthur J. Higgins Print Name: Alfred J. Roach Its: Senior Vice President, Its: Chairman Pharmaceutical Operations - 22 - 23 EXHIBIT A Patents and Patent Applications (***) ISSUED PATENTS: A. (***) PATENT APPLICATIONS: B. (***) - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 24 C. (***) D. (***) E. (***) F. (***) Page 1 of 2 - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 25 EXHIBIT B Delivery Dates Material Delivery Date (***) grams of ABS-103 (***) (***) (***) (***) grams of ABS-103 (***) (***) (***) (***) grams of ABS-103 (***) (***) A (***) sample of each lot(s) of any material sent to (***) shall be sent in advance to Abbott for confirmation of analysis. If multiple lots are involved, they shall be split evenly for shipment to Abbott & to (***) so that each of these parties is working with the same material. All shipments shall be accompanied by certificates of analysis. - ----------- ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 26 EXHIBIT C ALTERNATIVE DISPUTE RESOLUTION The parties recognize that a bona fide dispute as to certain matters may arise from time to time during the term of this Agreement which relates to either party's rights and/or obligations. To have such a dispute resolved by this Alternative Dispute Resolution (ADR) provision, a party must send written notice of the dispute to the other party for attempted resolution by good faith negotiations between their respective presidents (or their equivalents) of the affected subsidiaries, divisions, or business units within twenty-eight (28) days after such notice is received (all references to "days" in this ADR provision are to calendar days). If the matter has not been resolved within twenty-eight (28) days of the notice of the dispute, or if the parties fail to meet within such twenty-eight (28) days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by counsel in such a proceeding. 1. To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR. 2. Within twenty-one (21) days following receipt of the original ADR notice, the parties shall select a mutually acceptable neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, either party may request the President of the CPR Institute for Dispute Resolution (CPR), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures: (a) The CPR shall submit to the parties a list of not less than five (5) candidates within fourteen (14) days after receipt of the request, along with a Curriculum Vitae for each candidate. No candidate shall be an employee, director, or shareholder of either party or any of their subsidiaries or Affiliates. (b) Such list shall include a statement of disclosure by each candidate of any circumstance likely to affect his or her impartiality. (c) Each party shall number the candidates in order of preference (with the number one (1) signifying the greatest preference) and shall deliver the list to the CPR within seven (7) days following receipt of the list of candidates. If a party believes a conflict of interest exists regarding any of the candidates, the party shall provide a written explanation of the conflict to the CPR along with its list showing its order of preference for the candidates. Any party failing to return a list of preferences on time shall be deemed to have no order of preference. (d) If the parties collectively have identified fewer than three (3) candidates deemed to have conflicts, the CPR shall designate as neutral the candidate for whom the parties 27 collectively have indicated the greatest preference. If a tie shall result between two candidates, the CPR may designate either candidate. If the parties collectively have identified three (3) or more candidates deemed to have conflicts, the CPR shall review the explanations regarding conflicts, and, in its sole discretion, may either (i) immediately designate as the neutral the candidate for whom the parties collectively have indicated the greatest preference, or (ii) issue a new list of not less than five (5) candidates, in which case the procedures set forth in subparagraphs 2(a) 2(d) shall be repeated. 3. No earlier than twenty-eight (28) days or later than fifty-six (56) days after the selection, the neutral shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree, the neutral shall designate a location other than the principle place of business of either party or any of their subsidiaries or Affiliates. 4. At least seven (7) days prior to the hearing, each party shall submit the following to the other party and the neutral: (a) a copy of all exhibits on which such party intends to rely in any oral or written presentation to the neutral; (b) a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness; (c) a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any legal arguments and shall not exceed one (1) page per issue. (d) a brief in support of each party's proposed rulings and remedies provided that the brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. Except as expressly set forth in subparagraphs 4(a) 4(d), no discovery shall be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents. 5. The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules: (a) Each party shall be entitled to five (5) hours of hearing time to present its case. The neutral shall determine whether each party has had the five (5) hours to which it is entitled. (b) Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross examine witnesses, and to make a closing argument. Cross examination of witnesses shall occur immediately after their 28 direct testimony, and cross examination shall be charged against the party conducting the cross examination. (c) The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence. (d) Except when testifying, witnesses shall be excluded from the hearing until closing arguments. (e) Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral shall have sole discretion regarding the admissibility of any evidence. 6. Within seven (7) days following completion of the hearing, each party may submit to the other party and the neutral a posthearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. 7. The neutral shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one parties proposed rulings and remedies on some issues and the other party's proposed rulings and remedies on other issues. The neutral shall not issue any written opinion or otherwise explain the basis of the ruling. 8. The neutral shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court recorder, and any expenses for a hearing room, shall be paid as follows: (a) If the neutral rules in favor of one party on all disputed issues in the ADR, the losing party shall pay 100% of such fees and expenses. (b) If the neutral rules in favor of one party on some issues, and the other party on other issues, the neutral shall issue with the rulings a written determination as to how such fees and expenses shall be allocated between the parties. The neutral shall allocate the fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses. 29 9. The rulings of the neutral and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction. 10. Except as provided in paragraph 9 and except as to such disclosure which is required by applicable law or regulation, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information. EXHIBIT D (Filed as Exhibit 99.1) EXHIBIT E (Filed as Exhibit 4.1) EXHIBIT F PAYMENTS MILESTONE PAYMENTS 3.3 Abbott shall make the following milestone payments to ABS within thirty (30) days after the occurrence of the corresponding named events: (a) FIRST MILESTONE PAYMENT: (***). (b) SECOND MILESTONE PAYMENT: (***). (c) THIRD MILESTONE PAYMENTS: (***). (d) FOURTH MILESTONE PAYMENTS: (***). Royalty Payments (a) ROYALTY RATE AND ROYALTY PERIOD: Beginning with the First Commercial Sale, Abbott will pay a royalty in accordance with the following schedule: ANNUAL NET SALES ROYALTY ---------------- ------- (***) (***) (***) ***Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. EX-99.1 4 STOCK PURCHASE AGREEMENT 1 Exhibit 99.1 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the ______ day of January, 2000, by and between American Biogenetic Sciences, Inc., a Delaware corporation ("ABS") and Abbott Laboratories, an Illinois corporation ("Abbott"). WHEREAS, ABS and Abbott have entered into a Registration Rights Agreement and an Exclusive License Agreement (the "License Agreement"), both of even date herewith (collectively the "Alliance Agreements"); and WHEREAS, subject to the terms and conditions of this Agreement and on the basis of the representations and warranties set forth herein, ABS and Abbott have agreed to the purchase and sale of shares of ABS's Class A common stock $0.001 par value per share (the "Class A Common Stock"). NOW THEREFORE, ABS and Abbott agree as follows: 1. PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions of this Agreement and on the basis of the representations and warranties set forth herein, ABS shall issue and sell to Abbott and Abbott shall purchase from ABS at the Share Closing provided for in SECTION 1.3, shares of ABS's Class A Common Stock (the "Shares") having an aggregate value of One Million Five Hundred Thousand Dollars ($1,500,000). 1.1 PRICE PER SHARE. The price per share to be paid by Abbott for each of the Shares (the "Price per Share") shall be equal to the arithmetic average for the twenty (20) consecutive trading day period ending on the second day preceding the date of this Agreement of (i) the last sale price, as reported on the Small Cap Market, of the Class A Common Stock for the days that it was traded on that market, and (ii) the last sale price reported on the OTC Bulletin Board, or if no sale is reported that day, the average of the bid and ask price, of the Class A Common Stock, as reported on the OTC Bulletin Board for the days when it was primarily traded on that market. 1.2 NUMBER OF SHARES. On the day before the Share Closing, ABS and Abbott shall determine the number of Shares to be issued, purchased, and sold pursuant to this Agreement by dividing: (a) One Million Five Hundred Thousand Dollars ($1,500,000) by (b) the Price per Share and then rounding down to the nearest whole number the number obtained by that division. 1.3 SHARE CLOSING. The closing of the purchase and sale of the Shares (the "Share Closing") shall be held at the offices of Brown, Rudnick, Freed & Gesmer, One Financial Center, Boston, MA 02111, within ten (10) business days following the date of this Agreement, at 10:00 a.m. Eastern time, or at such other time and place upon which ABS and Abbott shall agree. 1.4 DELIVERY. At the Share Closing, ABS will issue a certificate to Abbott registered in Abbott's name representing the number of Shares being purchased by Abbott against payment to ABS of One Million Five Hundred Thousand Dollars ($1,500,000). Abbott shall pay the purchase price to ABS by wire transfer to the bank account of ABS: Name of Bank: Bank of New York Name of Account: American Biogenetic Sciences, Inc. Account Number: 041-5206748 ABA #: 021-000018 2. REPRESENTATIONS AND WARRANTIES OF ABS. Except as set forth in the Schedule of Exceptions attached hereto as EXHIBIT - SECTION 2 (SCHEDULE OF EXCEPTIONS), ABS hereby represents, warrants, and covenants to Abbott that: 2 2.1 AUTHORITY. (a) ABS has full legal right power and authority to execute and deliver this Agreement and each of the Alliance Agreements and to consummate the transactions contemplated hereby and thereby. (b) All corporate action on the part of ABS, its officers, directors, and stockholders necessary for the execution and delivery of, and the consummation of the transactions contemplated by, this Agreement and the Alliance Agreements and the performance of all obligations of ABS hereunder and thereunder have been taken. (c) Assuming the due and proper execution and delivery by Abbott, this Agreement and each of the Alliance Agreements, upon execution and delivery by ABS, constitute legal, valid and binding obligations of ABS, enforceable in accordance with their respective terms, except as may be limited by: (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, (ii) the effect of rules of law governing the availability of equitable remedies, and (iii) the enforceability of the indemnity obligations of SECTION 3.1 of the Registration Rights Agreement. (d) The making and performance of this Agreement and the Alliance Agreements by ABS and the consummation of the transactions contemplated by this Agreement and the Alliance Agreements will not (i) violate any provision of the organizational documents of ABS or any of its subsidiaries, (ii) result in the creation of any lien, charge, security interest or encumbrance upon any assets of ABS pursuant to the terms or provisions of, and will not conflict with, result in the breach or violation of, or constitute, (either by itself or upon notice or the passage of time or both), a default under or give rise to a right of termination, cancellation, or acceleration of any obligation to, or loss of benefits under any agreement, mortgage, deed of trust, lease, franchise, licence, indenture, permit, or other instrument to which ABS or any of its subsidiaries is a party or by which ABS or any of its subsidiaries or any of their respective properties may be bound or affected, in each case which would have a material adverse affect on the condition (financial or otherwise), properties, business, prospects, or results of operations of ABS and its subsidiaries taken as a whole (a "Material Adverse Effect") or which would restrict the power of ABS to perform its obligations as contemplated by this Agreement or the Alliance Agreements or, (iii) violate, to ABS's knowledge, any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency, or other governmental body applicable to ABS or any of its subsidiaries or any of their respective properties. (e) Except as disclosed on EXHIBIT - SECTION 2 (SCHEDULE OF EXCEPTIONS) item 1 hereto, the Company does not have or otherwise contribute to or participate in any employee benefit plan subject to the Employee Retirement Income Security Act of 1974. 2.2 ORGANIZATION, GOOD STANDING AND QUALIFICATION. (a) ABS and each of its subsidiaries, has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with full power and authority (corporate and other) to own and lease its properties and conduct its businesses as presently conducted and as proposed to be conducted. ABS and each of its subsidiaries is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the ownership or leasing of properties or the conduct of its business requires such qualification, except for jurisdictions in which the failure to so qualify would not have a Material Adverse Effect; and no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail such power and authority or qualification. (b) Except as set forth on EXHIBIT - SECTION 2 (SCHEDULE OF EXCEPTIONS) item 2, ABS has no direct or indirect loans to any partnership, corporation, joint venture, business association, or other entity, nor does it own or control, directly or indirectly, any interest in any partnership, corporation, joint venture, association, or entity which is material to its business. With respect to any person, the term "subsidiary" means any corporation more than fifty percent (50%) of whose total interest is, directly or indirectly, owned by that person. The term 2 3 "affiliate" when used to indicate a relationship with a specified person, shall mean a person that directly, or indirectly through one or more intermediaries, control, or is controlled by, or is under common control with, such specified person. (c) ABS has delivered to Abbott complete and correct copies of its Certificate of Incorporation and Bylaws as amended to the date hereof, and will furnish to Abbott true and correct copies of any amendments thereto throughout the term of this Agreement. 2.3 CAPITALIZATION. (a) The authorized capital stock of ABS consists of 100,000,000 shares of Class A Common Stock, and 3,000,000 shares of Class B common stock (the "Class B Common Stock"). The Board of Directors has approved the solicitation of stockholder consents to amend ABS's Certificate of Incorporation to authorize up to 10,000,000 shares of preferred stock, $.001 par value per share (the "Preferred Stock"), of which it intends to designate 6,000 as Series A Preferred Stock. (b) As of January 14, 2000, there were 36,918,510 shares of Class A Common Stock issued and outstanding, 3,000,000 shares of Class B Common Stock issued and outstanding and no shares of Preferred Stock issued and outstanding. All such issued an outstanding shares have been duly authorized and validly issued and are fully paid and non-assessable and no issued and outstanding shares are subject to preemptive rights created by statute, the ABS Certificate of Incorporation or Bylaws, or any agreement to which ABS is a party or by which ABS may be bound. (c) All outstanding shares of ABS's capital stock have been issued in compliance with applicable federal and state securities laws. (d) ABS has reserved for issuance an aggregate of approximately 8,248,000 shares of Class A Common Stock for issuance in connection with options and warrants. (e) Except (i) as set forth in Section 2.3(d) above and on EXHIBIT - SECTION 2 (SCHEDULE OF EXCEPTIONS) item 3, and (ii) for the right of Abbott to acquire the Shares under this Agreement, there are no other options, warrants, conversion privileges, or other contractual rights presently outstanding or in existence to purchase or otherwise acquire any authorized but unissued shares of ABS's capital stock or other securities or the capital stock or other securities of any subsidiary of ABS. 2.4 SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. The purchase and sale of the Shares pursuant to this Agreement has been approved by the Board of Directors of ABS prior to the date of this Agreement for the purposes of Section 203 of the Delaware General Corporation Law ("Section 203") such that after the date of this Agreement, neither Abbott nor any of its affiliates will be subject to the restrictions on business combination transactions set forth in Section 203 with respect to ABS on account of such purchase. 2.5 VALID ISSUANCE OF CLASS A COMMON STOCK. The Shares have been duly authorized and, when issued, delivered, and paid for in the manner set forth in this Agreement, will be duly authorized, validly issued, fully paid and nonassessable, and Abbott shall have good and marketable title to the Shares free of any liens or restrictions (unless created by Abbott), other than the restrictions expressly set forth in this Agreement or the Alliance Agreements or under applicable state and federal securities laws. No preemptive rights or other rights to subscribe for or purchase exist with respect to the issuance and sale of the Shares by ABS pursuant to this Agreement. 2.6 GOVERNMENTAL CONSENTS. Other than compliance with the Securities Act of 1933, as amended (the "Securities Act") and such filings as may be required to be made with the National Association of Securities Dealers, no consent, approval order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of ABS is required in connection with the consummation of the transactions contemplated by this Agreement. 3 4 2.7 OFFERING. Subject in part to the truth and accuracy of Abbott's representations set forth in SECTION 3 of this Agreement, the offer, sale, and issuance of the Class A Common Stock as contemplated by this Agreement are exempt from the registration requirements of the Securities Act, and neither ABS nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. 2.8 LITIGATION. Other than as disclosed in its SEC Documents, there are no legal or governmental actions, suits or proceedings pending or, to ABS's knowledge, threatened to which ABS or any of its subsidiaries is or may be a party or of which property owned or leased by ABS or any of its subsidiaries is or may be the subject, which actions, suits or proceedings might, individually or in the aggregate, prevent or adversely affect the transactions contemplated by this Agreement or result in a Material Adverse Effect. ABS is not a party or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body, administrative agency, or other governmental body. There are no material legal or governmental actions, suits, or proceedings pending or, to ABS's knowledge, threatened against any executive officers or directors of ABS. 2.9 DISCLOSURE. ABS has provided Abbott with all the information that Abbott has requested for deciding whether to purchase the Class A Common Stock. Neither this Agreement, nor any other statements or certificates made or delivered in connection herewith or therewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading. 2.10 CHANGES. Since September 30, 1999, except as otherwise disclosed in the Schedule of Exceptions: (a) ABS has not incurred any material liabilities or obligations, indirect, direct or contingent, or entered into any material verbal or written agreement or other transaction which is not in the ordinary course of business; (b) ABS has not sustained any material loss or interference with its business or properties from fire, flood, windstorm, accident, or other calamity, whether or not covered by insurance; (c) ABS has not paid or declared any dividends or other distributions with respect to its capital stock and ABS is not in default in the payment of principal or interest on any outstanding debt obligations; (d) there has not been any change in the capital stock or, other than in the ordinary course of business, indebtedness material to ABS; and (e) there has not been any event, change or development resulting in or which may reasonably be expected to result in a Material Adverse Event. 2.11 SEC DOCUMENTS. (a) Since January 1, 1997 ABS has filed each statement, annual, quarterly, and other report, registration statement and definitive proxy statement required to be filed (other than preliminary material) by ABS with the United States Securities and Exchange Commission (the "SEC Documents"). As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act") as the case may be, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. (b) The audited consolidated financial statements and unaudited consolidated interim financial statements of ABS included in ABS's SEC Documents fairly present in all material respects in conformity with generally accepted accounting principles applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of ABS as of the dates thereof and ABS's consolidated results of 4 5 operations and cash flows for the periods then ended. Except as reflected or reserved against in the consolidated balance sheet of ABS at September 30, 1999 or the Schedule of Exceptions, ABS has no liabilities of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities incurred in the ordinary course of business since that date and liabilities which would not, individually or in the aggregate, have a Material Adverse Effect. 2.12 USE OF PROCEEDS. ABS will use the proceeds from the sale of the Shares for research and development and for working capital. 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ABBOTT. Abbott hereby represents, warrants, and covenants to ABS that: 3.1 AUTHORIZATION. Abbott has full power and authority to execute and deliver, and to consummate the transactions contemplated by the Share Closing and this Agreement. All corporate action on the part of Abbott necessary for (i) the execution and delivery of, and the consummation of the transactions contemplated by, this Agreement; and (ii) as of the Share Closing, the performance of all obligations of Abbott under this Agreement, has been taken. Assuming the due and proper execution and delivery by ABS, this Agreement, upon execution and delivery by Abbott, constitutes a legal, valid and binding obligation of Abbott, enforceable in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization, or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law governing the availability of equitable remedies. 3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with Abbott in reliance upon Abbott's representation to ABS, which by Abbott's execution of this Agreement Abbott hereby confirms, that the shares to be received by Abbott will be acquired for investment for Abbott's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Abbott has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Abbott further represents that Abbott does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares. 3.3 GOVERNMENTAL CONSENTS. Other than compliance with the Securities Act, the Securities Exchange Act, and such filings as may be required to be made with the Securities and Exchange Commission or the National Association of Securities Dealers, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of Abbott is required in connection with the consummation of the transactions contemplated by this Agreement. 3.4 NO CONSENT. No consent, approval, waiver or other action by any entity under any material contract, agreement, indenture, lease, instrument, or other document to which Abbott is a party or by which it is bound is required or necessary for the execution, delivery and performance of, or the consummation of the transactions contemplated by, this Agreement by Abbott. 3.5 DISCLOSURE OF INFORMATION. Abbott believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares. Abbott further represents that it has had an opportunity to ask questions and receive answers from ABS regarding the terms and conditions of the offering of the Shares and the business, properties, prospects, and financial condition of ABS. The foregoing, however, does not limit or modify the representations and warranties of ABS in SECTION 2 of this Agreement or the right of Abbott to rely on those representations and warranties. 3.6 INVESTMENT EXPERIENCE. Abbott is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares. Abbott has not been organized for the purpose of acquiring the Shares. 5 6 3.7 RESTRICTED SECURITIES. Abbott understands that the Shares it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from ABS in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, Abbott represents that it is familiar with Securities and Exchange Commission Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. 3.8 LEGENDS. (a) Each certificate or instrument representing Shares shall bear legends in substantially the following forms: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (II) IN COMPLIANCE WITH RULE 144, OR (III) PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SUCH SALE, OFFER OR DISTRIBUTION". (b) The certificate shall also bear any other legends required by Delaware law or applicable blue sky or state securities laws. Except as provided in the Registration Rights Agreement, ABS need not register a transfer of any of the Shares and may also instruct its transfer agent not to register a transfer of any Shares, unless the conditions specified in the foregoing legends are satisfied to the extent applicable. 3.9 ACCREDITED INVESTOR. Abbott is an "accredited investor" within the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as now in effect. 4. CONDITIONS OF ABBOTT'S OBLIGATIONS AT SHARE CLOSING. Abbott's obligations to purchase the Shares at the Share Closing are subject to fulfillment, on or prior to the Share Closing with respect to the Shares, of each of the following conditions unless waived by Abbott. 4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of ABS contained in SECTION 2 shall be true and correct when made and at the Share Closing with the same effect as though such representations and warranties had been made on and as of the date of the Share Closing. 4.2 PERFORMANCE. ABS shall have performed and complied with all agreements, obligations, and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Share Closing. 4.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of the Share Closing. 4.4 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated at the Share Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Abbott, and it shall have received all such counterpart original and certified or other copies of such documents as it may reasonably request. 6 7 4.5 ALLIANCE AGREEMENTS. The parties shall have entered into each of the Alliance Agreements and the Alliance Agreements remain in full force and effect. 4.6 OPINION OF COUNSEL TO ABS. Abbott shall have received from Brown, Rudnick, Freed & Gesmer, counsel to ABS, an opinion addressed to it, dated as of the date of the Share Closing and in substantially the form of EXHIBIT 4.6. 4.7 NO ORDER PENDING. There shall not then be in effect any order enjoining or restraining the transactions contemplated by this Agreement or the Alliance Agreements. 4.8 COMPLIANCE CERTIFICATE. ABS shall have delivered to Abbott a certificate, in substantially the form of EXHIBIT 4.8, executed on behalf of ABS by the Chief Executive Officer of ABS, dated as of the date of the Share Closing and certifying to the fulfillment of the conditions specified in SECTION 4.1. 5. CONDITIONS OF ABS'S OBLIGATIONS AT SHARE CLOSING. ABS's obligations to issue and sell the Shares at the Share Closing are subject to fulfillment, on or prior to the Share Closing with respect to the Shares, of each of the following conditions unless waived by ABS. 5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Abbott contained in SECTION 3 shall be true and correct when made and at the Share Closing with the same effect as though such representations and warranties had been made on and as of the date of the Share Closing. 5.2 PAYMENT OF PURCHASE PRICE. Abbott shall have delivered the purchase price for the Shares. 5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of the Share Closing for those shares. 5.4 ALLIANCE AGREEMENTS. The parties shall have entered into each of the Alliance Agreements and the Alliance Agreements remain in full force and effect. 5.5 OPINION OF COUNSEL TO ABBOTT. ABS shall have received from Brian J. Smith, Divisional Vice President, Domestic Legal Operations and Assistant Secretary, an opinion addressed to it, dated as of the date of the Share Closing and certifying, in substantially the form of EXHIBIT 5.5. 5.6 NO ORDER PENDING. There shall not then be in effect any order enjoining or restraining the transactions contemplated by this Agreement or the Alliance Agreements. 5.7 COMPLIANCE CERTIFICATE. Abbott shall have delivered to ABS a certificate, in substantially the form of EXHIBIT 5.7, executed on behalf of Abbott by an officer of Abbott, dated as of the date of the Share Closing and certifying to the fulfillment of the conditions specified in SECTION 5.1. 6. MISCELLANEOUS. 6.1 SURVIVAL OF WARRANTIES. The warranties, representations and covenants of ABS and Abbott contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Share Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of Abbott or ABS. 6.2 ENTIRE AGREEMENT; CONTROLLING DOCUMENT. This Agreement and the Alliance Agreements constitute the entire agreement of the parties with respect to the subject matter hereof and supersede 7 8 any and all prior negotiations, correspondence and understandings between the parties with respect to the subject matter hereof, whether oral or in writing. 6.3 ASSIGNMENT: SUCCESSORS AND ASSIGNS. No provision of this Agreement may be assigned without the prior written consent of the other party hereto. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any of the Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 6.4 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 6.5 DELAY AND WAIVER. No delay on the part of either party in exercising any right under this Agreement shall operate as a waiver of such right. The waiver by either party of any other term or condition of this Agreement shall not be construed as a waiver of a subsequent breach or failure of the same term or condition or a waiver of any other term or condition contained in this Agreement. 6.6 ASSIGNMENT: SUCCESSORS AND ASSIGNS. No provision of this Agreement may be assigned without the prior written consent of the other party hereto. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 6.7 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Delaware without regard to conflict of law principles. 6.8 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by personal delivery, facsimile, overnight courier or mailed by certified or registered mail, postage prepaid, return receipt requested, to the facsimile number or address as follows: ABS: American Biogenetic Sciences, Inc. 1375 Akron Street Copiague, NY 11726 Telephone: (516) 789-2600 Facsimile: (516) 789-1661 Attention: Chairman with a copy (which will not constitute notice) to: Brown, Rudnick, Freed & Gesmer One Financial Square Boston, MA 02111 Telephone: (617) 856-8327 Facsimile: (617) 856-8201 Attention: Mark A. Hofer, Esq. Abbott: Abbott Laboratories 100 Abbott Park Road Dept. 309, Bldg. AP30 Abbott Park, IL 60064-3537 8 9 Telephone: (847) 938-6863 Facsimile: (847) 938-5383 Attention: Senior Vice President, Pharmaceutical Operations with a copy (which will not constitute notice) to: Abbott Laboratories 100 Abbott Park Road Dept. 364, Bldg. AP6D Abbott Park, Illinois 60064-6049 Telephone: (847) 937 - 8906 Facsimile: (847) 938 - 6277 Attention: Senior Vice President, Secretary and General Counsel or to such other facsimile number or address provided to the parties to this Agreement in accordance with this SECTION 6.8. Such notices or other communications shall be deemed delivered upon receipt, in the case of overnight delivery, personal delivery or facsimile transmission (as evidenced by the confirmation thereof), or 2 days after deposit in the mails (as determined by reference to the postmark). 6.9 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 6.10 EXPENSES. Irrespective of whether either of the Share Closing is effected, each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement. 6.11 ALTERNATIVE DISPUTE RESOLUTION. The parties shall attempt to resolve amicably disputes arising between them regarding the validity, construction, enforceability or performance of the terms of this Agreement and any differences or disputes in the interpretation of the rights, obligations, liabilities and/or remedies under this Agreement, that have been identified in a written notice from one party to the other, by good faith settlement discussions between the Senior Vice President, Pharmaceutical Operations of Abbott and the Chief Executive Officer of ABS. The parties agree that any dispute that arises in connection with the Agreement, that cannot be resolved amicably by such representatives within thirty (30) days after the receipt of such written notice, shall be resolved by binding Alternative Dispute Resolution in the manner described in EXHIBIT C to the License Agreement. 6.12 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of ABS and Abbott. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities and ABS. 6.13 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 6.14 FURTHER ASSURANCES. ABS and Abbott shall do and perform or cause to be performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments or documents as the other party may reasonably request from time to time in order to carry out the intent and purposes of this Agreement and the consummation of the transactions contemplated by the Agreement. Neither ABS nor Abbott shall voluntarily undertake any course of action inconsistent with the satisfaction of the requirements applicable to them as set forth in this Agreement, and each shall promptly do all such acts and take all such measures as may be appropriate to enable them to perform as early as practicable their obligations under this Agreement. 9 10 6.15 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to his Agreement. 6.16 MUTUAL DRAFTING. This Agreement is the joint product of ABS and Abbott and each provision of the Agreement has been subject to consultation, negotiation and agreement of ABS and Abbott and their respective legal counsel and advisers and any rule of construction that a document shall be interpreted or construed against the drafting party shall not apply. 6.17 FINDER'S FEE. (a) Each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction. Abbott agrees to indemnify and hold harmless ABS from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which such Abbott or any of its officers, partners, employees or representatives is responsible. (b) ABS agrees to indemnify and hold harmless Abbott from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which ABS or any of its officers, employees or representatives is responsible. 10 11 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AMERICAN BIOGENETIC SCIENCES, INC. By: _________________________________ Alfred J. Roach Chairman ABBOTT LABORATORIES: By:: _________________________________ Title: _______________________________ 11 -----END PRIVACY-ENHANCED MESSAGE-----