Asset Purchase Agreement between Synta Pharmaceuticals Corp. and Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., SinglePixel Biomedical, Inc., and CMAC, LLC (December 17, 2003)

Contract Categories: Business Finance › Purchase Agreements
Summary

This agreement, dated December 17, 2003, is between Synta Pharmaceuticals Corp. (the buyer) and Cancer Genomics, Inc., Kava Pharmaceuticals, Inc., SinglePixel Biomedical, Inc. (the sellers), and CMAC, LLC (the stockholder). Under the agreement, Synta will purchase all assets (except certain retained assets) and the business goodwill of the sellers, subject to specified liabilities. Each seller is responsible for its own obligations. The agreement outlines the terms, conditions, and consideration for the asset sale, and includes standard representations, warranties, and covenants from all parties.

Read More Arrow
EX-10.12 17 a2174966zex-10_12.txt EXHIBIT 10.12 Exhibit 10.12 SYNTA PHARMACEUTICALS CORP. HAS REQUESTED THAT THE MARKED PORTIONS OF THIS DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED. [*] DENOTES WHERE CONFIDENTIAL MATERIALS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASSET PURCHASE AGREEMENT Asset Purchase Agreement dated as of December 17, 2003, by and among SYNTA PHARMACEUTICALS CORP., a Delaware corporation ("Buyer"), CANCER GENOMICS, INC., a Delaware corporation ("CG"), KAVA PHARMACEUTICALS, INC., a Delaware corporation ("Kava"), SINGLEPIXEL BIOMEDICAL, INC., a Delaware corporation ("SinglePixel"; CG, Kava and SinglePixel shall singly and collectively be referred to herein as a "Seller" or "Sellers") and CMAC, LLC, a Delaware limited liability company ("Stockholder"). This Agreement sets forth the terms and conditions upon which the Buyer will purchase from the Sellers, and Sellers (each severally and not jointly) will sell to the Buyer, all the assets of such Sellers (other than the Retained Assets, as hereinafter defined) and the business and goodwill of the Sellers as a going concern, subject to those liabilities of the Sellers which are specifically hereinafter described, for the consideration provided herein. In all instances, except where otherwise provided, each Seller's rights and obligations hereunder shall be deemed several and not joint among the Sellers. In consideration of the foregoing, the mutual representations, warranties and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINITIONS. For the purposes of this Agreement, all capitalized words or expressions used in this Agreement shall have the meanings specified in this Article I (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "AFFILIATE" means when used with respect to any Person, if such Person is a corporation, any officer or director thereof and any Person which is, directly or indirectly, the beneficial owner (by itself or as part of any group) of more than fifty percent (50%) of any class of any Equity Security thereof, and, if such beneficial owner is a partnership, any general or limited partner thereof, or if such beneficial owner is a corporation, any Person controlling, controlled by or under common control with such beneficial owner, or any officer or director of such beneficial owner or of any corporation occupying any such control relationship. "AGREEMENT" means this Asset Purchase Agreement (together with all Exhibits and Schedules hereto) as in effect from time to time. "BUSINESS DAY" means any day, excluding Saturday, Sunday and any other day on which commercial banks in Boston, Massachusetts are authorized or required by law to close. 1 "CHARTER" means the Certificate of Incorporation, Articles of Incorporation or Organization or other organizational document of a corporation, as amended and restated through the date hereof. "CLAIM" means an action, suit, proceeding, hearing, investigation, litigation, charge, complaint, claim or demand. "CODE" means the Internal Revenue Code of 1986, and the regulations, rulings, and court decisions in respect thereof, all as the same shall be in effect at the time. "COMMISSION" means the Securities and Exchange Commission and any other similar or successor agency of the federal government administering the Securities Act or the Exchange Act. "ENVIRONMENTAL ACTION" means any administrative, regulatory or judicial action, suit, demand, claim, notice of non-compliance or violation, investigation, request for information, proceeding, consent order or consent agreement relating in any way to any Environmental Law or any Environmental Permit. "ENVIRONMENTAL LAW" means any applicable federal, state or local law, statute, rule, regulation, or ordinance relating to the environment, human health or safety from pollution or other environmental degradation or Hazardous Materials. "EQUITY SECURITY" shall have the meaning given to such term in Section 3(a)(ii) of the Exchange Act. "ERISA" means the Employee Retirement Income Security Act of 1974, and any similar or successor federal statute, and the rules, regulations and interpretations thereunder, all as the same shall be in effect at the time. "EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules and regulations and interpretations of the Commission thereunder, all as the same shall be in effect at the time. "GAAP" means generally accepted accounting principles, consistently applied. "LIEN" means, with respect to any asset, any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien, charge, restriction, adverse claim by a third party, title defect or encumbrance of any kind. "MATERIAL ADVERSE EFFECT" means a material adverse impact or effect on the assets of a Seller or of the Buyer, as the case may be. "OFFICER'S CERTIFICATE" means a certificate signed in the name of a corporation by its President, Chief Executive Officer, Treasurer, Chief Financial Officer, or, if so specified, the Secretary, acting in his or her official capacity. 2 "PERSON" means any individual, firm, partnership, association, trust, corporation, limited liability company, governmental body or other entity. "PURCHASE DOCUMENTS" means this Agreement, the Non-Competition Agreements, the Bills of Sale, the Instruments of Assumption, the Patent Assignments, the Kava Pharmaceutical License Agreement and any other certificate, document, instrument, stock power, or agreement executed in connection therewith. "SECURITIES ACT" means the Securities Act of 1933 and the rules, regulations and interpretations of the Commission thereunder, all as the same shall be in effect at the time. "SUBSIDIARY" means, with respect to any Person, any corporation, association or other entity of which such Person owns at least a majority in interest of the outstanding capital stock or other Equity Securities having by the terms thereof voting power under ordinary circumstances to elect a majority of the directors, managers or trustees thereof. "TAX" means any federal, state, local or foreign tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "TAX RETURN" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "TO STOCKHOLDER'S KNOWLEDGE", "KNOWN TO STOCKHOLDER", "TO THE KNOWLEDGE OF THE STOCKHOLDER" and words of similar import means the actual knowledge of any of Michael R.L. Astor, Joel W. McCleary, Nicholas N. Noon and Todd A. Klibansky as of the date hereof. "VALID CLAIM" shall mean a claim in an issued, unexpired patent or in a pending patent application within the Kava Patents, Single Pixel Patents or CG Patents that (a) has not been finally cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction, (b) has not been revoked, held invalid, or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is unappealable or uappealed within the time allowed for appeal, (c) has not been rendered unenforceable through disclaimer or otherwise, (d) is not lost through an interference proceeding or (e) to the extent pending, has not been pending for longer than five (5) years from the filing date of the earliest patent application from which the pending application claims priority, provided that subsequent to such five (5) year period, if the pending claim is issued as a claim of an issued and unexpired patent within the Kava Patents, Single Pixel Patents or CG Patents, such claim shall be considered thereafter as a Valid Claim hereunder. 3 The following terms are defined in the following Sections of this Agreement:
Term Section ---- ------- Agreement Recitals Assumed Liabilities 2.1 Bills of Sale 2.8 Business 2.1 Buyer Recitals Closing 2.7 Closing Date 2.7 Seller Financial Statements 3.4 Gross Revenues 2.5(b) Indemnifying Party 8.5 Instruments of Assumption 2.9 Losses 8.2 Necessary Permits 3.13 Non-Competition Agreements 6.1 Patent Assignment 6.1 Plan 3.15(a) Purchased Assets 2.1 Purchase Price 2.2 Retained Assets 2.2 Retained Liabilities 2.4 Stockholder Recitals
ARTICLE II PURCHASE AND SALE OF ASSETS 2.1 PURCHASE OF ASSETS. Upon the terms and subject to the conditions contained in this Agreement, at the Closing (as defined in Section 2.7 below), each Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase, acquire and accept from each Seller, the business of the respective Sellers as a going concern (the "Business"), including all of the Sellers' assets of every kind and description as set forth on SCHEDULE 2.1 hereto (the "Purchased Assets") (other than those assets included in the Retained Assets as defined in Section 2.2 below), and subject only to the liabilities and obligations of the Sellers which are defined in Section 2.3 (the "Assumed Liabilities"). The Purchased Assets include, without limitation, all assets, rights, interests and properties of the Sellers (other than those assets included in the Retained Assets as defined in Section 2.2). 2.2 RETAINED ASSETS. The Sellers will each retain ownership only of such Seller's cash and cash equivalents on hand and in banks, minute and stock record books, journals, ledgers and books of original entry and such Seller's rights under the Purchase Documents (collectively, the "Retained Assets"). 4 2.3 ASSUMED LIABILITIES. The Buyer shall assume and agree to pay, perform and discharge the Assumed Liabilities, and will pay, perform and discharge the Assumed Liabilities as they become due. The Assumed Liabilities shall consist of the liabilities of the Sellers listed on SCHEDULE 2.3 attached hereto. 2.4 RETAINED LIABILITIES. The liabilities and obligations which shall be retained by each of the Sellers (the "Retained Liabilities") shall consist of all liabilities of such Seller other than Assumed Liabilities, including, without limitation, the following: (a) all liabilities of each Seller relating to indebtedness for borrowed money whether or not such liabilities are reflected on the Seller Financial Statements; (b) all liabilities of each Seller or the Stockholder resulting from, constituting or relating to a breach of any of the representations, warranties, covenants or agreements of the such Seller or the Stockholder under this Agreement; (c) all liabilities of each Seller for Taxes, including any gain and income from the sale of the Assets and other transactions contemplated herein; (d) all liabilities for all environmental, ecological, health, safety, products liability (except as specifically referred to herein) or other claims pertaining to the Business or the Purchased Assets which relate to time periods or events occurring on or prior to the Closing Date; (e) all liabilities of each Seller arising in connection with its operations unrelated to the Business and all liabilities (including any liability pursuant to any claim, litigation or proceeding) in connection with the operation of the Business prior to the Closing except as otherwise specifically provided herein and any liability of such Seller based on its tortuous or illegal conduct; (f) any liability or obligation incurred by each Seller in connection with the negotiation, execution or performance of this Agreement, including, without limitation, all legal, accounting, brokers', finders' and other professional fees and expenses; (g) all liabilities incurred by each Seller after the Closing Date; (h) all liabilities or obligations associated with a Seller's employees, including but not limited to any liability or obligation under or with respect to any collective bargaining agreement, employment agreement, unemployment or workers' compensation laws, or any liability or obligation arising from the decision of Buyer not to offer employment to any such employees; and (i) all liabilities and obligations arising out of, resulting from, or relating to any employee benefit plan, program, or arrangement maintained or contributed to by each Seller, 5 or any entity which is or has been aggregated with such Seller for purposes of section 414 of the Code or section 4001 of ERISA. 2.5 PURCHASE PRICE. Upon the terms and subject to the conditions contained in this Agreement, and in consideration of the sale, assignment, transfer and delivery of the Purchased Assets and covenants not to compete received from the Sellers and the Stockholder, Buyer will issue to the Sellers an aggregate of 553,344 shares of the Buyer's common stock, par value $0.0001 per share ("Common Stock" and the "Consideration Shares", and together with the adjustments set forth below, the "Purchase Price"). The Consideration Shares shall be apportioned among the Sellers as follows: 25% to CG, 50% to Kava and 25% to SinglePixel. Delivery of stock certificates representing the Consideration Shares shall be made to each of the Sellers at the Closing. The parties agree that the Purchase Price represents fair consideration and reasonably equivalent value for the Purchased Assets. (a) ADJUSTMENTS FOR MILESTONES. Buyer shall make a one-time only payment: (i) to Kava, or any of its assignees, of [*] payable in either cash or shares of the Buyer's Common Stock (at the discretion of the Buyer and, if such payment is in Common Stock, valued at the then current fair market value of the Common Stock) in a single payment by wire transfer or delivery of shares of Common Stock to an account designated in writing by Kava, or any of its assignees, to Buyer within sixty (60) days of the commencement by Buyer of a Phase III (or other pivotal) clinical trial for any drug candidate, the manufacture, use or sale of which infringes one or more Valid Claims of the Kava Patents (a "Kava Drug Candidate"). For purposes of this Agreement, "Kava Patents" shall mean any and all patent filings assigned to Kava or to which Kava has or will have any right, title or interest, including the issued patents and pending patent applications under the Kava IP (as defined in SCHEDULE 2.1), and all non-provisionals, divisionals, continuations, continuations-in-part and all patents issuing on any of the foregoing, and all foreign counterparts thereof; together with all registrations, reissues, re-examinations, supplemental protection certificates and extensions thereof and all foreign counterparts thereof. In the event that Buyer commences a Phase III (or other pivotal) clinical trial for a drug candidate, the manufacture, use of sale of which does not infringe one or more Valid Claims of the Kava Patents at the time of the commencement of such clinical trial but the manufacture, use or sale of which later infringes one or more Valid Claims of the Kava Patents, then Buyer shall make such one-time only payment under this subsection (i) of Section 2.5(a) within sixty (60) days of the drug candidate becoming a Kava Drug Candidate under this Agreement; and (ii) to SinglePixel, or any of its assignees, [*] payable in either cash or shares of the Buyer's Common Stock (at the discretion of the Buyer and, if such payment is in Common Stock, valued at the then current fair market value of the Common Stock) in a single payment by wire transfer or delivery of shares of Common Stock to an account designated in writing by SinglePixel, or any of its assignees, to Buyer within sixty (60) days of the receipt by Buyer of approval by the Federal Drug Administration of any SinglePixel diagnostic product, the 6 manufacture, use or sale of which infringes one or more Valid Claims of the SinglePixel Patents (a "SinglePixel Product"). For purposes of this Agreement, "SinglePixel Patents" shall mean any and all patent filings assigned to SinglePixel or to which SinglePixel has or will have any right, title or interest, including the issued patents and pending patent applications identified under the SinglePixel IP (as defined in SCHEDULE 2.1), and all non-provisionals, divisionals, continuations, continuations-in-part and all patents issuing on any of the foregoing, and all foreign counterparts thereof; together with all registrations, reissues, re-examinations, supplemental protection certificates and extensions thereof. In the event that Buyer receives approval by the Federal Drug Administration of any SinglePixel diagnostic product, the manufacture, use or sale of which does not infringes one or more Valid Claims of the SinglePixel Patents at the time of receipt of such approval but the manufacture, use or sale of which later infringes one or more Valid Claims of the SinglePixel Patents, then Buyer shall make such one-time only payment under this subsection (ii) of Section 2.5(a) within sixty (60) days of the SinglePixel diagnostic product becoming a SinglePixel Product under this Agreement. For purposes of this Section 2.5, the term "diagnostic product" means any product which is intended to predict, detect or identify a disease, determine the presence of a pathologic condition or monitor the course of disease or therapy in humans or other animals. (b) ROYALTIES FOR CERTAIN PATENTS. In the event that Buyer obtains revenue or other measurable economic benefit ("Gross Revenues") from products or services covered by a Valid Claim in any Kava Patent or CG Patent (the "Kava Products", and the "CG Products", respectively), Buyer shall pay to Kava or CG, or any of their assignees, as the case may be, a percentage of the Gross Revenues received by Buyer or such licensee from sales of such Kava Product or CG Product as follows: (i) [*]% of Gross Revenues of the Kava Product, and (ii) [*]% of Gross Revenues of the CG Product. The amount of such Gross Revenues shall be proportionately adjusted to reflect the exclusion of the contribution of ingredients or components not directly related to the Kava Product and/or CG Product, but in no case less than [*]% of the rates specified above. Any payments by Buyer pursuant to this subsection shall be made by cash or check within ninety (90) days of the end of each fiscal year of Buyer in which any applicable sale is made. The obligations under this section shall continue on a country-by-country basis until the later of (1) the expiration date, as such date may be modified or extended, of the last-to-expire patent of the relevant Kava IP or CG IP (as the case may be) in such country, or (2) ten (10) years from first commercial sale of the Kava Product or CG Product. For purposes of this Section 2.5, "CG Patents" shall mean any and all patent filings assigned to CG or to which CG has or will have any right, title or interest, including the issued patents and pending patent applications identified under the CG IP (as defined in SCHEDULE 2.1), and all non-provisionals, divisionals, continuations, continuations-in-part; and all patents issuing on any of the foregoing, and all foreign counterparts thereof; together with all registrations, reissues, re-examinations, supplemental protection certificates and extensions thereof. (c) THIRD PARTY ROYALTY OFFSET. In the event that in any royalty period, Buyer, in order to sell any Kava Product or CG Product in any country, makes royalty payments to one or more third parties ("Third Party Payments") as consideration for a license to an issued patent or patents owned by such third party(ies), in the absence of which the Kava Product or CG Product could not legally be made, used or sold in such country, then Buyer shall have the right 7 to reduce the royalties otherwise due pursuant to Section 2.5(b) above for such Kava Product or CG Product by [*]% of such Third Party Payments. Notwithstanding the foregoing, such reductions under this subsection (c) shall in no event reduce such royalty for such Kava Product or CG Product in any such country to less than [*]% of the rates otherwise specified above. 2.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among the Purchased Assets and the covenants not to compete received from the Sellers and the Stockholder as set forth in SCHEDULE 2.6 attached hereto. The Sellers and Buyer shall be bound by such allocation for all purposes and to account for and report the purchase and sale contemplated hereby for all financial, accounting and Tax purposes in accordance with such allocation. 2.7 TIME AND PLACE OF CLOSING. The closing of the transactions described in Sections 2.1 through 2.6 above (the "Closing") shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., at 11:00 a.m. on January 9, 2004, or at such other place or time as the parties hereto may agree. The date and time at which the Closing actually occurs is hereinafter referred to as the "Closing Date." 2.8 EXECUTION AND DELIVERY OF DOCUMENTS OF TITLE BY THE SELLERS. At the Closing, each Seller shall execute and deliver to Buyer the form of Bill of Sale attached hereto as EXHIBIT A and such deeds, conveyances, bills of sale, certificates of title, assignments, assurances and other instruments and documents as Buyer may reasonably request in order to effect the sale, conveyance, and transfer of the Purchased Assets from the Sellers to the Buyer. Such instruments and documents shall be sufficient to convey to Buyer good and merchantable title in all of the Purchased Assets. Each Seller will, from time to time after the Closing Date, take such additional actions and execute and deliver such further documents as Buyer may reasonably request in order more effectively to sell, transfer and convey the Purchased Assets to Buyer and to place Buyer in position to operate and control all of the Purchased Assets. 2.9 EXECUTION AND DELIVERY OF DOCUMENTS BY BUYER. At the Closing, Buyer shall execute and deliver to each Seller an Instrument of Assumption in the form attached hereto as EXHIBIT B, and such other documents as the Sellers may reasonably request in order to evidence Buyer's assumption of the Assumed Liabilities. Buyer will, from time to time after the Closing Date, take such additional action and deliver such further documents as the Sellers may reasonably request in order effectively to assume the Assumed Liabilities. 2.10 CONSENT TO ASSIGNMENT. Upon the terms, and subject to the conditions set forth in this Agreement, each Seller hereby assigns to the Buyer all of the Purchased Assets which are capable of assignment without the consent of other parties. Insofar as any Purchased Asset is not assignable to the Buyer without the agreement of or novation by or consent to the assignment from another party and no such agreement, novation or consent has been obtained by such Seller on or prior to Closing Date, this Agreement shall not constitute an assignment or attempted assignment if such assignment or attempted assignment would constitute a breach of Seller's obligations related to such Purchased Asset. In the event that consent or novation is required to such assignment: 8 (a) the Seller shall use all reasonable endeavors to cooperate with the Buyer in its efforts to procure such novation or assignment as aforesaid. The reasonable costs of any such novation or assignment shall be paid by the Buyer; (b) unless and until any such Purchased Asset shall be novated or assigned as aforesaid the Seller shall hold such Purchased Asset and any moneys, goods or other benefits received thereunder as agent of the Buyer and the Buyer shall (if such sub-contracting is permissible and lawful under such Purchased Asset in question) as the Seller's sub-contractor perform all the obligations of the Seller under such Purchased Asset; (c) unless and until any such Purchased Asset shall be novated or assigned, the Seller will (so far as it lawfully may) give such assistance to the Buyer (and at the Buyer's cost) as the Buyer may reasonably require to enable the Buyer to enforce its rights under such Purchased Asset and (without limitation) will provide access to all relevant books, documents and other information in relation to such Purchased Asset as the Buyer may reasonably require from time to time. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE STOCKHOLDER Each Seller and the Stockholder each hereby represents and warrants to Buyer as follows: 3.1 ORGANIZATION AND QUALIFICATION. Each Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Stockholder is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Stockholder and each Seller have full power and authority to own, use and lease their properties and to conduct their business as currently conducted and as proposed to be conducted. The copies of the Stockholder's operating agreement, as amended to date and certified by an officer of the Stockholder and delivered to Buyer's counsel prior to the Closing, is true, complete and correct. The copies of each Seller's Charter and By-Laws, as amended to date, in each case certified by their respective Secretaries and delivered to Buyer's counsel prior to the Closing, are true, complete and correct. 3.2 AUTHORITY; NO VIOLATION. Each Seller and the Stockholder has all requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance of this Agreement by each Seller and the Stockholder have been duly and validly authorized and approved by all necessary corporate action. This Agreement constitutes the legal and binding obligation of each Seller and the Stockholder, enforceable against each of them in accordance with its terms. The entering into of this Agreement by the Stockholder and each Seller does not, and the consummation by such Seller and the Stockholder of the transactions contemplated hereby, including specifically the transfer of the Purchased Assets to Buyer by such Seller, will not violate the provisions of (a) to the knowledge of the Stockholder, any applicable federal, state, local or foreign laws, (b) such 9 Seller's or Stockholder's respective Charter, By-Laws or operating agreement, as the case may be, or (c) any provision of, or result in a default or acceleration of any obligation under, or result in any change in the rights or obligations of such Seller or the Stockholder under, any Lien, contract, agreement, license, lease, instrument, indenture, order, arbitration award, judgment, or decree to which such Seller or the Stockholder is a party or by which any of them is bound, or to which any property of such Seller or the Stockholder is subject. 3.3 SUBSIDIARIES. Each Seller represents and warrants that it has no Subsidiaries. 3.4 SELLER FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 3.4 are unaudited consolidating balance sheets as of June 30, 2003 (collectively, the "Seller Financial Statements") for each Seller. The Seller Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby. The Stockholder represents and warrants that the Seller Financial Statements fairly present the financial condition and the results of operation of each Seller and that there are no assets of the Sellers that are not included in the Seller Financial Statements, except for assets of any Seller that are not required by GAAP to be included in the Seller Financial Statements. 3.5 ABSENCE OF CERTAIN CHANGES. Except as otherwise disclosed in SCHEDULE 3.5 attached hereto, since June 30, 2003, there has not been: (a) any material change in the business, operations, assets, liabilities, prospects or condition (financial or otherwise) of any Seller; (b) any obligation or liability incurred by a Seller other than obligations and liabilities incurred in the ordinary course of business for an amount not more than $5,000 in each case or $15,000 in the aggregate; (c) any Lien placed on any of the Sellers' properties or assets which remains in existence on the date hereof or any payment or discharge of a material Lien or liability of the Sellers not disclosed on the Seller Financial Statements or incurred in the ordinary course of business; (d) any purchase, sale, lease, assignment, transfer or other disposition, or any agreement or other arrangement for the purchase, sale, lease, assignment, transfer or other disposition, of any part of the Sellers' properties or assets, other than purchases for and sales from inventory in the ordinary course of business, except for fixed assets purchased or other capital expenditures made in amounts not exceeding $5,000 for any single item and $25,000 in the aggregate for all such items; (e) any damage, destruction or loss, whether or not covered by insurance, adversely affecting a Seller's properties, assets or business; (f) any declaration, setting aside or payment of any dividend on, or the making of any other distribution in respect of, any Equity Security of a Seller, or any direct or 10 indirect redemption, purchase or other acquisition by a Seller of any of its own Equity Securities, or any issuance by a Seller of any Equity Security; (g) any labor trouble or claim of unfair labor practices involving a Seller; any change in the employment contracts of or compensation payable or to become payable by a Seller to any of its current or former officers, directors, employees, consultants, or agents, or any bonus payment, loan or arrangement made to or with respect to any of such officers, directors, employees, consultants, or agents; or any change in coverage vesting, or benefits available under any Plan; (h) any change with respect to a Seller's management or supervisory personnel; (i) any contracts, licenses, leases or agreements entered into by a Seller which are outside the ordinary course of business or which obligate such Seller for more than $5,000 in any one case or more than $25,000 in the aggregate or any cancellation, termination, modification, or acceleration by any party to any contract, license, lease or agreement involving more than $10,000 to which any such Seller is a party or by which any of them is bound; (j) any amendment or other change (or any authorization to make such an amendment or change) to such Seller's Charter or By-Laws, except as required in connection with the consummation of the transactions contemplated hereby; (k) any postponement or delay in payment of any accounts payable or other liability of such Seller except in the ordinary course of business consistent with prior practices; (l) any cancellation, waiver, compromise or release of any right or claim either involving more than $10,000 or outside the ordinary course of business consistent with prior practices; (m) any other occurrence, action, failure to act or transaction involving a Seller other than transactions in the ordinary course of business consistent with prior practices. 3.6 TITLE, SUFFICIENCY AND CONDITION OF ASSETS. Except as disclosed in SCHEDULE 3.6 hereto, each Seller has good and marketable title to, or a valid leasehold interest in, all of the Purchased Assets, free and clear of all Liens, and free of any material infractions or non-compliance with applicable laws and regulations (collectively, "Defects") and the sale and delivery of the Purchased Assets to Buyer pursuant hereto shall vest in Buyer good and marketable title thereto, free and clear of any and all Liens or Defects, other than as disclosed in SCHEDULE 3.6 hereto or as may be created by Buyer. The Stockholder and each Seller shall each, prior to the Closing, use their best efforts to cure at their expense any Defect identified by Buyer. Each Seller owns or leases all property and assets necessary for the conduct of their respective businesses as such businesses are presently conducted and are proposed to be conducted, and all such property and assets are included in the Purchased Assets. To the knowledge of the Stockholder and except as disclosed in SCHEDULE 3.6 hereto, all tangible properties and assets owned or leased by such Seller and contained in the Purchased Assets are in good operating 11 condition and repair, ordinary wear and tear excepted, have been well maintained, and conform with all applicable laws, statutes, ordinances, rules and regulations. 3.7 INTELLECTUAL PROPERTY. All patents, patent applications, proprietary designs, copyrights, trade names, servicemarks, trademarks and trademark applications and proprietary know how which are currently owned by or licensed to each Seller are listed in SCHEDULE 3.7 attached hereto ("Intellectual Property"). Except as set forth in SCHEDULE 3.7, the Intellectual Property is all of the intellectual property necessary for the operation of the Business as it is currently conducted. All of each Seller's patents, patent applications and trademarks have been registered in, filed in or issued by the United States Patent Office or the corresponding offices of other countries identified in SCHEDULE 3.7, and have been properly maintained and renewed in accordance with all applicable laws and regulations in the United States and each such country. To the knowledge of the Stockholder, all of the issued patents within the Intellectual Property are currently in compliance with applicable formal legal requirements (including payment of filing, examination or maintenance fees) and are valid and enforceable. Except as set forth in SCHEDULE 3.7 and to the knowledge of the Stockholder, the Intellectual Property's use does not require the consent of or payment to any other Person. To the knowledge of the Stockholder and except as set forth in SCHEDULE 3.7, the Intellectual Property is freely transferable and owned exclusively by each Seller, free and clear of any Liens. To the knowledge of the Stockholder and except as set forth in SCHEDULE 3.7, (a) no other Person has an interest in or right or license to use, or the right to license any other Person to use, any of the Intellectual Property, (b) there are no claims or demands of any other Person pertaining thereto and no proceedings have been instituted, or are pending or, to the knowledge of the Stockholder, threatened, which challenge any Seller's rights in respect thereof, (c) none of the Intellectual Property is being infringed by another Person or is subject to any outstanding order, decree, ruling, charge, injunction, judgment or stipulation, and (d) no Claim has been made or, to the knowledge of the Stockholder, is threatened charging such Seller with infringement of any adversely held Intellectual Property. With respect to all know-how that is included as part of the Intellectual Property, to the knowledge of the Stockholder, each Seller has taken all reasonable precautions to protect the secrecy, confidentiality and value of such know-how (including the enforcement by each Seller of a policy requiring each employee or contractor to execute proprietary information and confidentiality agreements substantially in the form of such Seller's standard form, a copy of which has been provided to Buyer). 3.8 CONTRACTS. Except for contracts, commitments, leases, licenses, plans and agreements described in SCHEDULE 3.8 attached hereto, no Seller is a party to or subject to: (a) any plan or contract regarding or providing for bonuses, pensions, options, stock purchases, deferred compensation, severance benefits retirement payments, profit sharing, stock appreciation, collective bargaining or the like, or any contract or agreement with any labor union; (b) any employment or consulting contract or contract for personal services not terminable at will by such Seller without penalty to the Seller; 12 (c) any contract or agreement for the purchase of any commodity, product, material, supplies, equipment or other personal property, or for the receipt of any service, other than purchase orders entered into in the ordinary course of business for less than $5,000 each and which in the aggregate do not exceed $25,000; (d) any contract or agreement for the purchase or lease of any fixed asset, whether or not such purchase or lease is in the ordinary course of business, for a price in excess of $5,000; (e) any contract or agreement for the sale of any commodity, product, material, equipment, or other personal property, or the furnishing by such Seller of any service, other than contracts with customers entered into in the ordinary course of business; (f) any contract or agreement providing for the purchase of all or substantially all of its requirements of a particular product from a supplier, or for periodic minimum purchases of a particular product from a supplier; (g) any contract or agreement concerning a partnership or joint venture with one or more Persons; (h) any confidentiality agreement or any non-competition agreement or other contract or agreement containing covenants limiting such Seller's freedom to compete in any line of business or in any location or with any Person; (i) any license agreement (as licensor or licensee); (j) any contract or agreement with the Stockholder or any present or former officer, director, consultant, agent or stockholder of such Seller or with any Affiliate of any of them; (k) any loan agreement, indenture, note, bond, debenture or any other document or agreement evidencing a capitalized lease obligation or Indebtedness to any Person; (l) any agreement of guaranty, indemnification, or other similar commitment with respect to the obligations or liabilities of any other Person (other than lawful indemnification provisions contained in the Charters and By-Laws of such Seller); or (m) any other agreement or contract (or group or related agreements or contracts) under which the consequences of a default or termination could have a Material Adverse Effect or the performance of which involves consideration paid or received by the Seller in excess of $5,000. Copies of all such contracts, commitments, plans, leases, licenses and agreements have been provided to Buyer prior to the execution of this Agreement, and all such copies are true, correct and complete and have been subject to no amendment, extension or other modification as of the date hereof, except such as are described in SCHEDULE 3.8. Except as listed and described 13 in SCHEDULE 3.8, none of the Sellers, or to the knowledge of the Stockholder, any other Person, is in default under any such contract, commitment, plan, lease, license or agreement and each such contact, commitment, plan, lease, license or agreement is in full force and effect and is valid and enforceable in accordance with its terms. 3.9 COMPLIANCE WITH LAWS. Each Seller has conducted and is conducting its business in compliance with applicable federal, state, local or foreign laws, statutes, ordinances, regulations, rules or orders or other requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal relating to it. None of the Sellers are now charged with, and to the knowledge of the Stockholder, is not now under investigation with respect to, any possible violation of any applicable law, statute, ordinance, regulation, rule, order or requirement relating to any of the foregoing. Each Seller has all licenses, permits, franchises, orders, approvals, accreditations, written waivers and other authorizations as are necessary in order to enable it to own and conduct its business as currently conducted and as proposed to be conducted and to occupy and use its real and personal properties without incurring any material liability ("Necessary Permits"), except for such licenses, permits, franchises, orders, approvals, accreditations, written waivers and other authorizations as would not reasonably be expected to have a Material Adverse Effect. Except as set forth in SCHEDULE 3.9, no registration, filing, application, notice, transfer, consent, approval, order, qualification, waiver or other action of any kind is required by virtue of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby to effect the transfer to Buyer of such Necessary Permits. To the knowledge of the Stockholder, each Seller is in full compliance with the terms and conditions of all Necessary Permits. 3.10 LITIGATION. Except as disclosed on SCHEDULE 3.10 attached hereto, (a) there is no Claim pending or, to the knowledge of the Stockholder, threatened (or, to the knowledge of the Stockholder, any facts which could lead to such a Claim) by, against, affecting or regarding the Business or the Sellers or the Stockholder or their respective businesses, properties or assets, at law or in equity, before any federal, state, local or foreign court or any other governmental or administrative agency or tribunal or any arbitrator or arbitration panel, and (b) there are no judgments, orders, rulings, charges, decrees, injunctions, notices of violation or other mandates against or affecting the Business or the Sellers or the Stockholder with respect to the businesses, properties or assets of a Seller. Nothing listed on SCHEDULE 3.10, either individually or when aggregated with other listings on such Schedule, would reasonably be expected to have a Material Adverse Effect. 3.11 TAXES, EMPLOYEE BENEFITS AND ENVIRONMENTAL. (a) The Stockholder is not aware of any dispute or Claim concerning any liability for Taxes of any Seller. (b) No Seller has a profit sharing, 401(k), disability, medical, dental, severance pay, vacation pay, sick pay, deferred compensation, incentive compensation, fringe benefit, stay-with-bonus, change of control agreement, or other employee benefit plan, program, or agreement (other than stock option plans), including without limitation, any employee benefit plan as defined in section 3(3) of ERISA, which is maintained or contributed to by a Seller, or 14 under which such Seller has any liability or contingent liability. (c) The use and operation by each Seller and by all past owners and operators, of all facilities and properties used in the business of each Seller have been, and will be on the Closing Date, in compliance in all material respects with all Environmental Laws, and no Environmental Action has been filed, commenced, or, to the knowledge of the Sellers and the Stockholder, threatened with or against any of them alleging any failure so to comply. 3.12 DISCLOSURE OF MATERIAL INFORMATION. This Agreement (including the Schedules and Exhibits hereto) does not contain, with respect to each Seller or the Stockholder, any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. There is no fact known to the Stockholder which has or would reasonably be expected in the future to result in a Material Adverse Effect and which has not been set forth in this Agreement or previously disclosed in writing to the Buyer. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to each Seller and the Stockholder as follows: 4.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with full power and authority to own, use or lease its properties and to conduct its business as such properties are owned, used or leased and as such business is conducted. 4.2 AUTHORITY. Buyer has the requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized and approved by all necessary corporate action on the part of Buyer, and this Agreement constitutes the legal and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. Assuming the accuracy of the representations and warranties of the Sellers and the Stockholder hereunder and to the best knowledge of Buyer, the entering into of this Agreement by Buyer does not, and the consummation by Buyer of the transactions contemplated hereby will not, violate the provisions of (a) any applicable laws of the United States or any other state or jurisdiction in which Buyer does business, (b) the Charter or By-Laws of Buyer or (c) any provision of, or result in a default or acceleration of any obligation under, or result in any change in the rights or obligations of Buyer under, any mortgage, Lien, lease, agreement, contract, instrument, order, arbitration award, judgment, or decree to which Buyer is a party or by which Buyer is bound, or to which any property of Buyer is subject. 4.3 BROKERS. Neither Buyer nor anyone acting on its behalf has engaged, retained or incurred any liability to any broker, investment banker, finder or agent or has agreed to pay any brokerage fees, commissions, finder's fees or other fees with respect to the purchase of 15 Purchased Assets, the issuance of the Consideration Shares, this Agreement or the transactions contemplated hereby. 4.4 BUYER FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.4 are the following financial statements (collectively the "Buyer Financial Statements"): unaudited consolidated balance sheets and statements of income, changes in stockholders' equity and cash flow as of and for the fiscal year ended December 31, 2002 of the Buyer. The Buyer Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, present fairly the financial condition of the Buyer as of such dates and the results of operations of the Buyer for such periods, are correct and complete, and are consistent with the books and records of the Buyer, except that the Buyer Financial Statements may not contain all footnotes required by GAAP and are subject to normal year-end audit adjustments. 4.5 FINANCIAL CONDITION. Since the date of the Buyer Financial Statements, there have been no subsequent events having a material adverse effect on Buyer's business, results of operations or financial condition. Buyer represents that as of the date of this Agreement, it currently has in excess of $50 million in a combination of cash, cash equivalents and amounts committed under investor subscription agreements. 4.6 ONE CLASS OF STOCK. Buyer has one class of capital stock outstanding, and Buyer's certificate of incorporation, as amended or restated through the date hereof, authorizes no class of capital stock senior to the Buyer's Common Stock in terms of liquidation, dividend or redemption rights. 4.7 LITIGATION. Except as disclosed on SCHEDULE 4.7 attached hereto, (a) there is no Claim pending or, to the knowledge of the Buyer, threatened (or, to the knowledge of the Buyer, any facts which could lead to such a Claim) by, against, affecting or regarding the Buyer or its business, properties or assets, at law or in equity, before any federal, state, local or foreign court or any other governmental or administrative agency or tribunal or any arbitrator or arbitration panel that would reasonably be expected in the future to have a Material Adverse Effect, and (b) there are no judgments, orders, rulings, charges, decrees, injunctions, notices of violation or other mandates against or affecting the Buyer with respect to the business, properties or assets of the Buyer. 4.8 DISCLOSURE OF MATERIAL INFORMATION. This Agreement (including the Schedules and Exhibits hereto) does not contain, with respect to the Buyer, any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. 16 ARTICLE V COVENANTS 5.1 COVENANTS OF THE SELLERS AND THE STOCKHOLDER. Each Seller and the Stockholder shall keep, perform and fully discharge the following covenants and agreements: (a) INTERIM CONDUCT OF BUSINESS. From the date hereof until the Closing, each Seller shall operate its business consistent with prior practice immediately before the date hereof and in the ordinary course of business (except as may be authorized pursuant to this Agreement or as set forth on SCHEDULE 5.1(a) hereto). Without limiting the generality of the foregoing, from the date hereof until the Closing, except for transactions contemplated by this Agreement or expressly approved in writing by Buyer, no Seller shall: (i) enter into or amend any employment, bonus, severance, or retirement contract or arrangement, or increase any compensation payable or to become payable to any person other than in the ordinary course of business consistent with prior practice; (ii) purchase, lease or otherwise acquire any real estate or any interest therein; (iii) declare, set aside or pay any dividend or make any other distribution with respect to any Equity Security or authorize for issuance, issue, sell or deliver any of its own Equity Securities or split, combine or reclassify any class of Equity Security or redeem or otherwise acquire, directly or indirectly, any of its Equity Securities; (iv) merge or consolidate with or agree to merge or consolidate with, or purchase or agree to purchase all or substantially all of the assets of, acquire securities of or otherwise acquire any Person; (v) sell, lease or otherwise dispose of or agree to sell, lease or otherwise dispose of any of its assets, properties, rights or claims, whether tangible or intangible, except in the ordinary course of business consistent with prior practice; (vi) incur any liability, guaranty or obligation (fixed or contingent) other than in the ordinary course of business consistent with prior practice or make any investment in excess of $5,000, whether singly or in the aggregate, in property, plant and equipment and other items of capital expenditure; (vii) place or permit to be placed any Lien on any of its assets or properties, other than statutory Liens arising in the ordinary course of business; 17 (viii) make or authorize any amendments or changes to its Charter or By-Laws; or (ix) abandon any part of its business not abandoned as of the date hereof. (b) ACCESS. Each Seller shall, upon reasonable notice, give Buyer and its representatives full and free access to all properties, assets, books, contracts, commitments and records of such Seller during reasonable business hours and shall promptly furnish Buyer with all financial and operating data and other information as to the history, ownership, Affiliates, business, operations and properties of such Seller as Buyer may from time to time reasonably request. (c) TRANSFER OF NECESSARY PERMITS. From and after the date hereof through to the Closing Date and following the Closing, each Seller will use reasonable commercial efforts to effect the transfer to Buyer of all of the Necessary Permits and all other permits, licenses (except the DFCI License Agreement), and leases which are associated with the Business as presently conducted, to the extent the same are by their terms transferable. (d) RETAINED LIABILITIES. From and after the date hereof through to the Closing Date and following the Closing, each Seller agrees to pay, perform and fully discharge all of the Retained Liabilities. (e) SATISFACTION OF CONDITIONS. Each Seller and the Stockholder shall use their best efforts to accomplish the satisfaction of the conditions precedent to Closing contained in Section 6.1 herein on or prior to the Closing Date. (f) NO SOLICITATION, CONFIDENTIALITY, ETC. Prior to the termination of this Agreement pursuant to Article VII hereof, no Seller or the Stockholder will (i) solicit or negotiate with respect to any inquiries or proposals relating to (x) the possible direct or indirect acquisition of any Equity Security of any Seller or of all or a portion of the Purchased Assets or Business or (y) any merger, consolidation, joint venture or business combination with any Seller or (ii) discuss or disclose either this Agreement or other confidential information pertaining to any Seller with any Person (except as may be required by law or except as may be required in connection with the transactions contemplated by this Agreement to Affiliates, officers, directors, employees and agents of such Seller or any stockholder) without the prior written approval of Buyer. Buyer acknowledges that the prior distribution of material regarding the Sellers to interested parties shall not be deemed to violate this Section 5.1(g). The Sellers and the Stockholder shall advise such parties of the existence of this Agreement and shall refrain from entering into further discussions with such parties concerning the sale of any Seller to the extent otherwise prohibited by this Section 5.1(g). (g) ACCURACY OF REPRESENTATIONS AND WARRANTIES. Without the prior written consent of Buyer, the Stockholder and each Seller will not take any action from the date hereof to the Closing Date, whether as an officer, director or stockholder of such Seller or otherwise, 18 that would cause any representation or warranty of such Seller or the Stockholder contained in this Agreement to become untrue or cause the breach of any agreement hereof or covenant contained herein. The Stockholder and each Seller will promptly bring to the attention of Buyer any facts which come to its attention that would cause any of the representations and warranties of such Seller or the Stockholder to be untrue or materially misleading in any respect. (h) TAX MATTERS. The Stockholder shall be responsible for and shall cause to be prepared and duly filed all Tax Returns relating to Taxes of each Seller. 5.2 COVENANTS OF BUYER, THE SELLERS AND THE STOCKHOLDER. The parties hereto hereby agree to keep, perform and fully discharge the following covenants and agreements: (a) WAIVER OF COMPLIANCE WITH THE BULK SALES ACT. In connection with the transactions contemplated hereby, the parties hereby waive compliance with the provisions of Article 6 of the Uniform Commercial Code - Bulk Transfers and the Bulk Sales Act and any other applicable United States, Mexican, state or provincial bulk sales act or statute ("Bulk Sales Acts"). Each Seller shall remove any and all Liens against the Purchased Assets as a result of payments made by such Seller to others. Each Seller and the Stockholder, severally but not jointly, shall indemnify and hold the Buyer harmless from and against any and all liabilities under the Bulk Sales Acts. (b) BUY-BACK OPTION. If, within thirty (30) months following the Closing Date, Buyer has not initiated clinical trials for a Kava Product, then Kava shall have the option to repurchase the Kava IP from Buyer for the sum of Seven Hundred Fifty Thousand Dollars ($750,000) in cash (the "Buy-Back Option"). The Buyer shall deliver a written notice to Kava or any of its authorized assignees or designees within one month after the start of any such clinical trial for a product derived from the Kava IP. Kava shall be permitted to assign the Buy-Back Option to the Stockholder or any member or designee of Stockholder upon providing written notice to Buyer. The Buy-Back Option shall be exercisable by Kava or any of its authorized assignees or designees for a period of three (3) months after said thirty (30) month period ends by providing written notice of exercise to Buyer. If Kava or any of its authorized assignees or designees fails to provide such notice within such period, the Buy-Back Option shall terminate and be of no further force or effect. The Buyer agrees to notify Kava, or its assignee, when this clinical trial requirement has been satisfied. 5.3 ADDITIONAL COVENANTS. (a) CUSTOMERS AND OTHER BUSINESS RELATIONSHIPS. After the Closing, Sellers will cooperate with Buyer in its efforts to continue and maintain for the benefit of Buyer those business relationships of Seller existing prior to the Closing and relating to the Business to be operated by Buyer after the Closing, including relationships with lessors, regulatory authorities, licensors, customers, suppliers and others, and Sellers will use reasonable commercial efforts to satisfy the Retained Liabilities in a manner that is not detrimental to any of such relationships. After the Closing, Sellers will refer to Buyer all inquiries relating to the Business. Neither Seller nor any of its officers, agents or shareholders shall take any action that would reasonably be expected to diminish the value of the Purchased Assets after the Closing or that would interfere 19 with the business of Buyer to be engaged in after the Closing, including disparaging the name or business of Buyer. (b) FURTHER ASSURANCES. The parties shall cooperate reasonably with each other and with their respective representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement, and shall (i) furnish upon request to each other such further information; (ii) execute and deliver to each other such other documents; and (iii) do such other acts and things, all as the other Party may reasonably request as is necessary to carry out the intent of this Agreement and the transactions contemplated hereby. 5.4 COVENANTS OF BUYER. The Buyer hereby agrees to keep, perform and fully discharge the following covenants and agreements: (a) PROGRESS REPORTS. Beginning twelve months after the Closing Date and annually thereafter, Buyer shall submit to Stockholder a progress report summarizing Buyer's activities related to the development and testing of products relating to the Kava IP, CG IP and the SinglePixel IP and the obtaining of governmental approvals necessary for marketing same. (b) ROYALTY REPORT. After the first commercial sale anywhere in the world of a Kava Product or CG Product, Buyer shall make quarterly royalty reports to Stockholder for such Kava Product or CG Product (as the case may be) no later than forty-five (45) days after the end of each such quarter. Each such royalty report will cover Buyer's most recently completed calendar quarter and shall include the units sold, gross revenue and royalties payable by Buyer to the Sellers, or any of their assignees, itemized by product. (c) RIGHT TO AUDIT. Buyer shall keep full and accurate books and records in sufficient detail so that all amounts due and payable to any Seller or the Stockholder hereunder can be properly determined. Such books and records shall be preserved for at least three years from the date of entry to which they pertain. Such books and records shall be open to inspection at any reasonable time during business hours not more often than once each calendar year by an independent certified public accountant selected by the Stockholder for the sole purpose of verifying reports and payments hereunder. Such independent certified public accountant shall report the findings of his or her inspection to the Stockholder but shall under no circumstances report any information other than information related to the accuracy of such reports and payments. All fees and expenses of such inspection shall be borne by the Stockholder; provided that, if such inspection determines that gross revenue reported to Stockholder pursuant to Section 5.4(b) of this agreement is understated in any quarter by five percent (5%) or more, then Buyer shall bear all the fees and expenses of such inspection. ARTICLE VI CLOSING CONDITIONS 6.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to consummate this Agreement and the transactions contemplated hereby are subject to the fulfillment, prior to or at 20 the Closing, of the following conditions precedent, subject to a bring-down of the disclosure schedules. (a) REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the representations and warranties of the Sellers and the Stockholder contained in this Agreement shall remain true and correct in all material respects at the Closing Date as fully as if made on the Closing Date (other than the representations and warranties that contain an express materiality qualification, which shall be true and correct in all respects); each Seller and the Stockholder shall have performed in all material respects, on or before the Closing Date, all of its respective obligations under this Agreement and the other Purchase Documents which by the terms thereof are to be performed on or before the Closing Date; and each Seller and the Stockholder shall have delivered to Buyer an Officer's Certificate dated the Closing Date of such Seller and the Stockholder to such effect. (b) PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. Buyer's purchase of and payment for the Purchased Assets (a) shall not be prohibited by any applicable law or governmental order, rule, ruling, regulation, release or interpretation (b) shall not constitute a fraudulent or voidable conveyance under any applicable law and (c) shall be permitted by all applicable laws, statutes, ordinances, regulations and rules of the jurisdictions to which Buyer is subject. (c) PROCEEDINGS SATISFACTORY. All proceedings taken in connection with the purchase and sale of the Purchased Assets, all of the other Purchase Documents and all documents and papers relating thereto, shall be in form and substance reasonably satisfactory to Buyer. (d) CONSENTS - PERMITS. Each Seller shall have received (and there shall be in full force and effect) all material consents (except with respect to the DFCI License Agreement), approvals, licenses, permits, orders and other authorizations of, and shall have made (and there shall be in full force and effect) all such filings, registrations, qualifications and declarations with, any Person pursuant to any applicable law, statute, ordinance regulation or rule or pursuant to any agreement, order or decree to which such Seller is a party or to which it is subject, in connection with the transactions contemplated by this Agreement and the sale of the Purchased Assets. (e) CORPORATE DOCUMENTS. Each Seller shall have delivered to Buyer: (i) an Officer's Certificate of the Secretary of each Seller and the managing member of the Stockholder certifying (x) the incumbency and genuineness of signatures of all officers of the Stockholder and the Sellers, as the case may be, executing this Agreement, any document delivered by the Stockholder and the Sellers at the Closing and any other document, instrument or agreement executed in connection herewith, (y) the truth and correctness of resolutions of the Sellers and the Stockholder authorizing the entry by the Sellers and the Stockholder into this Agreement and the transactions contemplated hereby and (z) the truth, correctness and completeness of the By-Laws of the Sellers and the Stockholder; 21 (ii) the certificate of formation of the Stockholder and the Charter of each Seller certified as of a recent date by the Secretary of State of the State of Delaware; and (iii) certificates of corporate good standing and legal existence of each of the Stockholder and each Seller as of a recent date from the Secretary of State of the State of Delaware. (f) BILLS OF SALE. Each Seller shall have executed and delivered to the Buyer a Bill of Sale in the form of EXHIBIT A attached hereto. (g) INSTRUMENTS OF ASSUMPTION. The Buyer and each Seller shall have executed and delivered an Instrument of Assumption in the form of EXHIBIT B attached hereto. (h) TRANSFER OF NECESSARY PERMITS. All of the Necessary Permits (except any Permit with respect to the DFCI License Agreement) shall have been transferred to or obtained by Buyer on or before the Closing Date (i) NON-COMPETITION AGREEMENTS. Each Seller and the Stockholder shall have executed and delivered to Buyer non-competition, non-solicitation and non-disclosure agreements in substantially the form of EXHIBIT C attached hereto (the "Non-Competition Agreements"). (j) PATENT ASSIGNMENTS. Each Seller shall have executed and delivered to Buyer a patent assignment in substantially the form of EXHIBIT D attached hereto (the "Patent Assignments"). 6.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS AND THE STOCKHOLDER. The obligations of each Seller and the Stockholder to consummate this Agreement and the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing, of the following conditions precedent: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of Buyer in this Agreement shall remain true and correct in all material respects at the Closing Date as fully as if made on the Closing Date (other than the representations and warranties that contain an express materiality qualification, which shall be true and correct in all respects, and Buyer shall, on or before the Closing Date, have performed, in all material respects, all of its obligations under this Agreement and the Other Purchase Documents which by the terms thereof are to be performed by it on or before the Closing Date; and Buyer shall have delivered an Officer's Certificate to counsel for the Sellers dated the Closing Date to such effect. (b) LICENSE GRANT BY BUYER. Buyer shall have executed and delivered to Kava an exclusive, perpetual, assignable, fully paid-up, royalty-free license to use the Kava IP solely for liquid beverages (including "shooters") in substantially the form of EXHIBIT E attached hereto (the "Kava Pharmaceutical License Agreement"). 22 ARTICLE VII TERMINATION 7.1 TERMINATION OF AGREEMENT. This Agreement and the transactions contemplated hereby may (at the option of the party having the right to do so) be terminated at any time on or prior to the Closing Date by: (a) MUTUAL CONSENT. By mutual written consent of Buyer and a Seller; (b) COURT ORDER. By Buyer, a Seller or the Stockholder if any court of competent jurisdiction shall have issued an order pursuant to the request of a third party restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement; (c) FAILURE TO CLOSE BY JANUARY 31, 2004. By Buyer or the Stockholder if the transactions contemplated hereby shall not have been consummated on or before January 31, 2004, PROVIDED, HOWEVER, that such right to terminate this Agreement shall not be available to any party whose failure to fulfill any obligation of this Agreement has been the cause of, or resulted in, the failure of the transactions contemplated hereby to be consummated on or before such date; (d) TERMINATION BY STOCKHOLDER. By the Stockholder upon notice to Buyer at any time prior to the Closing Date, if (i) a condition to the performance of a Seller set forth in Section 6.2 hereof shall not be fulfilled at the time specified for the fulfillment thereof, (ii) a material default under or a material breach of this Agreement shall be made by Buyer, or (iii) any representation or warranty set forth in this Agreement or in any instrument delivered by Buyer pursuant hereto shall be materially false or misleading; or (e) TERMINATION BY BUYER. By Buyer by notice to a Seller at any time prior to the Closing Date, if (i) a condition to the performance of Buyer set forth in Section 6.1 hereof shall not be fulfilled at the time specified for the fulfillment thereof, (ii) a default under or a breach of this Agreement shall be made by such Seller or the Stockholder, or (iii) any representation set forth in this Agreement or in any instrument delivered by such Seller or the Stockholder pursuant hereto shall be false or misleading. 7.2 EFFECT OF TERMINATION AND RIGHT TO PROCEED. If this Agreement is terminated pursuant to this Article VII, then except as provided below, all further obligations of Buyer, such Seller(s) and the Stockholder under this Agreement shall terminate without further liability of Buyer or any Affiliate thereof to the Stockholder or such Seller(s) or of the Stockholder or such Seller(s) to Buyer or any Affiliate thereof, except with respect to the obligations set forth in Sections 7.1, 9.1, 9.2 and 9.12, and except, in the case of termination pursuant to Section 7.1(d) or Section 7.1(e), as to liability for misrepresentation, breach or default in connection with any warranty, representation, covenant or obligation given, occurring or arising to the date of termination. In addition, anything in this Agreement to the contrary notwithstanding, if any of the conditions to obligations specified in Sections 5.1, 5.2 or 5.3 23 hereof have not been satisfied, Buyer, in addition to any other rights which it may have, shall have the right to waive its rights to have such conditions satisfied and elect to proceed with the transactions contemplated hereby and, if any of the conditions to the obligations of a Seller and the Stockholder specified in Section 5.4 hereof have not been satisfied, such Seller and the Stockholders in addition to any other rights which may be available to them, shall have the right to waive their rights to have such conditions satisfied and elect to proceed with the transactions contemplated hereby. ARTICLE VIII INDEMNIFICATION 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each and every such representation and warranty set forth in this Agreement shall survive until the first anniversary of the Closing Date, except for representations and warranties relating to the Intellectual Property, which shall survive until the second anniversary of the Closing Date. 8.2 INDEMNIFICATION BY THE SELLERS AND THE STOCKHOLDER. Each Seller and the Stockholder shall indemnify, defend and hold Buyer, its officers, directors, employees, owners, agents and Affiliates, harmless from and in respect of any and all losses, damages, costs and expenses of any kind and nature whatsoever (including, without limitation, interest and penalties, reasonable expenses of investigation and court costs, reasonable attorneys' fees and disbursements and the reasonable fees and disbursements of other professionals) which may be sustained or suffered by any of them (collectively, "Losses"), arising out of, resulting from or pertaining to any breach or inaccuracy of any representation or warranty or the breach of or failure to perform any warranty, covenant, undertaking or other agreement of a Seller or the Stockholder contained in this Agreement or any other Purchase Document; PROVIDED, HOWEVER, that the maximum liability of a Seller and the Stockholder pursuant to this Section 8.2 shall be limited to the Purchase Price and all other payments received by such Seller and the Stockholder hereunder. 8.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend and hold each of the Sellers and the Stockholder, their respective officers, directors, employees, consultants, owners, agents and Affiliates, harmless from and in respect of any and all Losses which may be sustained or suffered by any of them arising out of or resulting from any breach or inaccuracy of any representation or warranty or the breach of or failure to perform any warranty, covenant, undertaking or other agreement of Buyer contained in this Agreement or any other Purchase Document. 8.4 MINIMUM INDEMNIFICATION; MATERIALITY. Notwithstanding anything to the contrary contained herein, no party hereto shall be entitled to recover from any other party unless and until the total of all claims for indemnity or damages with respect to any inaccuracy or breach of any such representations or warranties or breach of or default in the performance of any covenants, undertakings or other agreements, whether such claims are brought under this Article VIII or otherwise, exceeds $50,000, in which case such parties shall be entitled to recover the total amount of such claims. 24 8.5 NOTICE AND OPPORTUNITY TO DEFEND. If there occurs an event which a party asserts is an indemnifiable event pursuant to Section 8.2 or 8.3, the parties seeking indemnification shall promptly notify the other parties obligated to provide indemnification (collectively, the "Indemnifying Party"). If such event involves (a) any Claim or (b) the commencement of any action, suit or proceeding by a third person, the party seeking indemnification will give such Indemnifying Party prompt written notice of such Claim or the commencement of such action, suit or proceeding, PROVIDED, HOWEVER, that the failure to provide prompt notice as provided herein will relieve the Indemnifying Party of its obligations hereunder only to the extent that such failure prejudices the Indemnifying Party hereunder. In case any such action, suit or proceeding shall be brought against any party seeking indemnification and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate therein and, to the extent that it desires to do so, to assume the defense thereof, with counsel reasonably satisfactory to such party seeking indemnification and, after notice from the Indemnifying Party to such party seeking indemnification of such election so to assume the defense thereof, the Indemnifying Party shall not be liable to the party seeking indemnification hereunder for any attorneys' fees or any other expenses, in each case subsequently incurred by such party, in connection with the defense of such action, suit or proceeding. The party seeking indemnification agrees to cooperate fully with the Indemnifying Party and its counsel in the defense against any such action, suit or proceeding. In any event, the party seeking indemnification shall have the right to participate at its own expense in the defense of such action, suit or proceeding. In no event shall an Indemnifying Party be liable for any settlement or compromise effected without its prior consent. If, however, the party seeking indemnification refuses its consent to a BONA FIDE offer of settlement which the Indemnifying Party wishes to accept (which must include the unconditional release of the parties seeking indemnification from all liability with respect to the Claim at issue), the party seeking indemnification may continue to pursue such matter, free of any participation by the Indemnifying Party, at the sole expense of the party seeking indemnification. In such event, the obligation of the Indemnifying Party to the party seeking indemnification shall be equal to the lesser of (i) the amount of the offer or settlement which the party seeking indemnification refused to accept plus the costs and expenses of such party prior to the date the Indemnifying Party notifies the party seeking indemnification of the offer of settlement and (ii) the actual out-of-pocket amount the party seeking indemnification is obligated to pay as a result of such party's continuing to pursue such matter. ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. Each of the parties hereto will pay and discharge its own expenses and fees in connection of with the negotiation of and entry into this Agreement and the consummation of the transactions contemplated hereby. 9.2 NOTICES. All notices, requests, demands, consents and communications necessary or required under this Agreement or any other Purchase Document shall be made in the manner specified, or, if not specified, shall be delivered by hand or sent by registered or certified mail, return receipt requested, or by telecopy (receipt confirmed) to: 25 if to Buyer: Synta Pharmaceuticals Corp. 45 Hartwell Ave. Lexington, MA 02421 Attention: Chief Executive Officer Facsimile Transmission Number: (781) 274-8228 with a copy to: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA 02111 Attention: Jeffrey Wiesen, Esq. Facsimile Transmission Number: (617) 542-2241 if to CG, Kava or SinglePixel: Peregrine Financial Corporation 84 State Street Boston, MA 02109 Attention: Todd Klibansky Facsimile Transmission Number: (617) 523-2289 with a copy to: Testa, Hurwitz & Thibeault, LLP 125 High Street Boston, MA 02105 Attention: Rufus King, Esq. Facsimile Transmission Number: (617) 248-7282 if to Stockholder: CMAC, LLC 84 State Street Boston, MA 02109 Attention: Todd Klibansky Facsimile Transmission Number: (617) 523-2289 with a copy to: Testa, Hurwitz & Thibeault, LLP 125 High Street Boston, MA 02105 Attention: Rufus King, Esq. Facsimile Transmission Number: (617) 248-7282 26 All such notices, requests, demands, consents and other communications shall be deemed to have been duly given or sent two (2) days following the date on which mailed, or on the date on which delivered by hand or by facsimile transmission (receipt confirmed), as the case may be, and addressed as aforesaid. 9.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly set forth herein, all covenants and agreements set forth in this Agreement and made by or on behalf of any of the parties hereto shall bind and inure to the benefit of the successors and assigns of such party, whether or not so expressed, except that the Sellers and the Stockholder may not assign or transfer, other than to the Stockholder or any Affiliate of Stockholder, any of their respective rights or obligations under this Agreement without the consent in writing of Buyer. 9.4 COUNTERPARTS, ETC. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which together shall constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. If any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason in any jurisdiction, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that each of parties' rights and privileges shall be enforceable to the fullest extent permitted by law, and any such invalidity, illegality and unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.5 TAX MATTERS. (a) Each Seller will timely file all federal, state, local and foreign tax reports and returns for any period which ends on or prior to the Closing Date and which are required to be filed to reflect the operations of such Seller. All such reports and returns shall be submitted to Buyer for review at least thirty (30) days prior to filing such reports and returns. Buyer shall be entitled to participate in the preparation of such reports and returns. All such reports and returns will be prepared and filed using tax accounting methods and principles which are substantially consistent with those used in the returns and reports of taxes for such Seller for preceding tax periods unless Buyer agrees otherwise. Any item of income, deduction or credit to be included in any such tax return or report shall be based on the permanent records (including work papers) of such Seller. Buyer shall prepare and file on behalf of such Seller all federal, state, local and foreign tax reports and returns for any period which ends after the Closing Date and which are required to be filed to reflect the operations of such Seller attributable to a period prior to the Closing Date. (b) All refunds of taxes attributable to any or all years or periods (or portions thereof) ending prior to the Closing Date or attributable to any taxable year or period which ends at or after the Closing Date, to the extent that the refund is attributable to the operations of such 27 Seller up to the Closing Date (as determined on the basis of the permanent records of such Seller), shall belong to and be retained by such Seller. (c) The parties hereto shall, and shall cause such Seller to, provide such necessary information as any other party hereto may reasonably request in connection with the preparation of such parties' Tax Returns, or to respond to or contest any audit, prosecute any claim for refund or credit or otherwise satisfy any requirements relating to Taxes of such Seller. (d) Each Seller shall pay all real property transfer Taxes, sales Taxes, stock transfer Taxes, documentary stamp Taxes, recording charges and other similar Taxes resulting from, arising under or in connection with the transfer of the Purchased Assets or any other related transaction under the Agreement. (e) The obligations of each Seller set forth in the Agreement relating to Taxes shall, except as otherwise agreed in writing, be unconditional and absolute and shall remain in effect without limitation as to time or amount of recovery by Buyer until thirty (30) days after the expiration of the applicable statute of limitations governing the Taxes to which such obligations relate (after giving effect to any agreement extending or tolling such statute of limitations). 9.6 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). 9.7 ENTIRE AGREEMENT. This Agreement, including the Schedules and Exhibits referred to herein, is complete, and all promises, representations, understandings, warranties and agreements with reference to the subject matter hereof, and all inducements to the making of this Agreement relied upon by all the parties hereto, have been expressed herein or in said Schedules or Exhibits. This Agreement, including the Schedules and Exhibits referred to herein, constitute the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof. None of the provisions of this Agreement, including the Schedules and Exhibits referred to herein, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. This Agreement may not be amended except by an instrument in writing signed on behalf of each Seller, Buyer and the Stockholder. [Remainder of Page Intentionally Left Blank] 28 IN WITNESS WHEREOF the parties hereto have executed this Asset Purchase Agreement under seal as of the date first set forth above. ATTEST: SYNTA PHARMACEUTICALS CORP. /s/ WENDY E. RIEDER By: /s/ SAFI BAHCALL - ----------------------- ----------------------- Chief Executive Officer ATTEST: CANCER GENOMICS, INC. By: /s/ TODD KLIBANSKY - ---------------------------- ----------------------- Treasurer ATTEST: KAVA PHARMACEUTICALS, INC. By: /s/ TODD KLIBANSKY - ---------------------------- ----------------------- Treasurer ATTEST: SINGLEPIXEL BIOMEDICAL, INC. By: /s/ TODD KLIBANSKY - ---------------------------- ----------------------- Treasurer ATTEST: CMAC, LLC By: /s/ TODD KLIBANSKY - ---------------------------- ----------------------- Treasurer 29 EXHIBIT A FORM OF BILL OF SALE KNOW ALL PERSONS THAT_____________, a________corporation (the "Seller"). acting pursuant to that certain Asset Purchase Agreement (the "Agreement"), dated and effective as of____________, by and between the Seller and Synta Pharmaceuticals Corp., a Delaware corporation (the "Buyer"), for consideration specified in the Agreement, the receipt and sufficiency of which are hereby acknowledged, does hereby bargain, sell, transfer, assign and deliver unto the Buyer all of the Purchased Assets but specifically excluding the Retained Assets. All Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement. The Purchased Assets shall include the following: [TO BE COMPLETED] TO HAVE AND TO HOLD, all and singular, the Purchased Assets hereby assigned, transferred, and delivered unto Buyer, its successors and assigns, for its own use and behalf forever. The representations and warranties of the Seller and the Buyer set forth in the Agreement are hereby incorporated herein by reference and made a part hereof. The indemnification obligations of the parties set forth in Article VIII of the Agreement shall, as provided and subject to the limitations contained in the Agreement, survive the execution and delivery of this Bill of Sale and the consummation of the transactions effected hereby and thereby. Nothing contained herein is intended to supercede the covenants, representations and warranties regarding the Purchased Assets contained in the Agreement, which representations and warranties shall survive the execution and delivery of this Bill of Sale as set forth in the Agreement. This Bill of Sale and the Agreement (including the schedules and exhibits thereto) constitute the entire agreement between the parties in connection with the Purchased Assets and may be amended only by a writing signed by an authorized representative of each party. This Bill of Sale shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. This Bill of Sale shall be governed by and construed in accordance with the laws of the State of Delaware to the full extent permitted by applicable law, without giving effect to the conflict of laws principles thereof. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement. The use of any singular term shall include the plural and vice versa. The Seller hereby covenants and agrees that it will, at the request of the Buyer, execute and deliver such other instruments of conveyance, assignment and transfer and take such other action as Buyer may reasonably request to vest in Buyer the Company's entire right, title and interest in Exh. A-1 and to the Purchased Assets being transferred hereby, provided that Buyer shall bear the reasonable and documented costs in connection with the taking of such actions and the execution and delivery of such documents. [SIGNATURE PAGE FOLLOWS] Exh. A-2 IN WITNESS WHEREOF, Seller has executed this Bill of Sale dated and effective as of the ____day of _________,2003. SELLER: [NAME] BY: ------------------------- Name: Title: Exh. A-3 EXHIBIT B FORM OF INSTRUMENT OF ASSUMPTION This INSTRUMENT OF ASSUMPTION dated__________is executed and delivered by ___________________, a _______corporation, (hereinafter referred to as "Seller"), to SYNTA PHARMACEUTICALS CORP., a Delaware corporation (hereinafter referred to as "Buyer"). All capitalized words and terms used in this Instrument of Assumption and not defined herein shall have the respective meanings ascribed to them in that certain Asset Purchase Agreement, dated as of___________(the "Agreement"), among Buyer, Seller and the other parties named therein. WHEREAS, pursuant to the Agreement, the Seller has agreed to sell, convey, assign, transfer and deliver to the Buyer all of the Purchased Assets; WHEREAS, in consideration therefore, the Agreement requires the Purchaser to assume the Assumed Liabilities; NOW, THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Purchaser hereby agrees as follows: 1. The Seller hereby assigns to the Buyer, and the Buyer hereby assumes and agrees to perform, pay and discharge when due all of the Assumed Liabilities. 2. Nothing herein shall be deemed to deprive the Buyer of any defenses, set-offs or counterclaims which the Seller may have had or which the Buyer shall have with respect to any of the obligations, liabilities and commitments hereby assumed (the "Defenses and Claims"). The Seller hereby transfers, conveys and assigns to the Buyer all Defenses and Claims. 3. This instrument shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. 4. This instrument may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopy by a party of a copy of an executed counterpart hereof shall constitute execution and delivery hereof by such party. 5. This instrument shall inure to the benefit of, and shall be binding upon, Buyer and Seller and their respective successors and assigns. 6. Any amendments to this instalment shall be made only in writing, signed by the parties hereto. Exh. B-1 IN WITNESS WHEREOF, the undersigned, have executed this instrument as of the date first written above. Seller: --------------------- By: --------------------------- Name: Title: BUYER: SYNTA PHARMACEUTICALS CORP. By: --------------------------- Name: Title: Exh. B-2 EXHIBIT C FORM OF NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY AGREEMENT (the "Agreement"), dated as of [____________], 2003, by and among Synta Pharmaceuticals Corp., a Delaware corporation ("Buyer"), [____________], Inc., a Delaware corporation (the "Seller"), and CMAC, LLC, a Delaware limited liability company ("Stockholder"). Each capitalized term used but not defined herein shall have the meaning set forth in the Asset Purchase Agreement (defined below). WITNESSETH: WHEREAS, the Buyer, the Seller and the Stockholder have entered into a Asset Purchase Agreement, dated as of [____________], 2003 (the "Asset Purchase Agreement"), pursuant to which the Seller shall sell to the Buyer and the Buyer shall purchase from the Seller certain assets of the Seller as more specifically set forth therein; WHEREAS, the Stockholder, by virtue of, among other things, the Stockholder's status as the majority stockholder of the Seller, is in possession of certain confidential and proprietary information relating to the Seller; WHEREAS, the Seller is engaged in the business of [____________] (the "Business"); WHEREAS, it is a condition to the obligations of the Buyer under the Asset Purchase Agreement that the Seller and Stockholder enter into this Agreement; and WHEREAS, the Seller and Stockholder have agreed to enter into this Agreement in consideration of the Buyer's acts as contemplated by the Asset Purchase Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Buyer, the Seller and the Stockholder agree as follows: 1. MATERIALITY. The Seller and Stockholder hereby agree that a portion of the Purchase Price (as defined in the Asset Purchase Agreement) is being paid to protect the goodwill of the Seller, which includes the confidential information, trade secrets and know-how of the Seller. Accordingly, the Seller and Stockholder hereby agree that the covenants set forth in this Agreement form a material and substantial part of the transactions contemplated by the Asset Purchase Agreement to protect the confidential information, trade secrets and know-how of the Seller and that the Seller and Stockholder have entered into this Agreement in order to induce the Buyer to enter into the Asset Purchase Agreement. 2. STOCKHOLDER AND SELLER NON-COMPETE. (a) The Seller and Stockholder acknowledge and agree with respect to the Seller that the Business of the Seller is conducted around the world (the "Territory"), and that the Seller's Exh. C-1 reputation and goodwill are an integral part of its business success throughout the Territory. If the Stockholder or Seller deprives the Buyer of any of the Seller's goodwill or in any manner utilizes its reputation and goodwill in competition with the Business, the Buyer will be deprived of the benefits it has bargained for pursuant to the Asset Purchase Agreement. Accordingly, as an inducement for the Buyer to enter into the Asset Purchase Agreement, the Seller and Stockholder agree that during the period beginning on the Closing Date and ending on the second anniversary of the Closing Date (the "Non-Competition Period") the Seller and Stockholder shall not (and shall cause their Affiliates not to), without the Buyer's prior written consent, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, or be connected as a director, officer, employee, partner, consultant or otherwise with, or permit the Seller's or Stockholder's name to be used by or in connection with, any Person that, directly or indirectly, competes with the Buyer in the Business (as conducted by the Buyer) in the Territory (any such Person being a "Competitive Business"). (b) Notwithstanding anything to the contrary in subclause (a), the Stockholder may be a passive owner (which shall not prohibit the exercise of any rights as a shareholder) of not more than 5% of the outstanding stock of any class of any Competitive Business. 3. NON-SOLICITATION. During the period beginning on the Closing Date and ending on the second anniversary of the Closing Date (the "Restricted Period"), the Seller and Stockholder shall not (and shall cause their Affiliates not to) (i) solicit, raid, entice, induce or contact, or attempt to solicit, raid, entice, induce or contact, any Person that is a customer of the Buyer[Business] immediately after the Closing (as defined in the Asset Purchase Agreement) to become a customer of any other Person for services which are the same as, or competitive with, those services sold, rendered or otherwise made available to customers by the Seller as of the Closing Date or by the Buyer on and after the Closing Date, or approach any such Person for such purpose or authorize the taking of such actions by any other Person or assist or participate with any such Person in taking such action, or (ii) solicit, raid, entice, induce or contact, or attempt to solicit, raid, entice, induce or contact any Person that currently is or at any time during the Restricted Period shall be (or, in the case of termination is at the time of termination), an employee, agent or consultant of or to the Seller or the Buyer, as the case may be, to do anything from which the Seller or Stockholder is restricted by reason of this SECTION 3, and the Seller and Stockholder shall not (and shall cause the their Affiliates not to) approach any such employee, agent or consultant for such purpose or authorize or participate in the taking of such Person in taking such action. The term "customer" shall include: (i) customers of the Seller or Buyer existing immediately prior to the Closing; (ii) customers that have used the products and services of the Seller within the one (1) year period prior to the Closing Date; and (iii) any prospective customers identified as such by the BuyerSeller prior to the Closing Date. 4. NON-DISPARAGEMENT. During the Restricted Period, the Seller and Stockholder shall not make any statement or other communication that impugns or attacks the reputation or character of the Business or damages the goodwill of the BuyerSeller or theits Business, take any action that would interfere with any contractual or customer or supplier relationships conveyed to the Buyer as part of the Purchased Assets, including but not limited to any Exh. C-2 action that would result in a diminution of business, or otherwise take any action that is detrimental to the best interests of the Business or the Purchased Assets. 5. CONFIDENTIALITY. The Seller and Stockholder covenant and agree that neither the Seller nor Stockholder shall at any time, directly or indirectly, disclose any secret or confidential information that the Seller or Stockholder has about the other, including information that the Seller or Stockholder may learn or has learned by reason of prior ownership of the Purchased Assets or the Stockholder's ownership of Seller securities, or use any such information in a manner detrimental to the interests of the Buyer, unless (i) such information becomes known to the public generally through no fault of the Seller and Stockholder, (ii) disclosure is required by law or the order of any governmental authority under color of law; or (iii) the disclosing party reasonably believes that such disclosure is required in connection with the defense of a lawsuit against the disclosing party, provided that prior to disclosing any information pursuant to clause (i)-(iii) above, the Seller and/or Stockholder shall give prior written notice thereof to the Buyer and provide Buyer with the opportunity to contest such disclosure and shall cooperate with the efforts to prevent such disclosure. The Seller and Stockholder acknowledge that the right to maintain the secrecy of the trade secrets, know-how and confidential information related to the Purchased Assets constitutes a proprietary right that the Buyer is entitled to protect and that the disclosure, or improper use, of the trade secrets, know-how or the confidential information of the Seller through the Closing Date or related to the Purchased Assets by the Seller and/or Stockholder will cause irreparable harm to the Buyer. The term "confidential information" includes, without limitation, information not previously disclosed to the public or to the trade, including without limitation information about Seller's products, facilities, methods, trade secrets and other intellectual property, software, source code, systems, procedures, manuals, confidential reports, product price lists, customer lists, financial information (including the revenues, costs or profits associated with any of the Seller's products), business plans, prospects or opportunities. 6. ENFORCEABILITY. (a) The Seller and Stockholder agree that a breach of the covenants contained in this Agreement will cause irreparable damage to the Buyer, the exact amount of which will be difficult to ascertain, and that the remedies at law (including, without limitation, a claim for monetary damages) for any such breach will be inadequate. In the event of the breach or a threatened breach by the Seller or Stockholder of any of the provisions of this Agreement, the Buyer, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an actual breach or violation by the Seller or Stockholder of this Agreement, the Non-Competition Period and the Restricted Period with respect to the Seller or Stockholder, as the case may be, shall be tolled until such breach or violation has been duly cured. (b) Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in Exh. C-3 any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. More specifically, if any court determines that the non-competition restrictions set forth in SECTION 2 of this Agreement are unenforceable by reason of extending the Non-Competition Period for too great a period of time, over too great a geographical scope or otherwise, the parties to this Agreement specifically agree and authorize such court to rewrite this Agreement to reflect the maximum time, geographical and/or other restrictions permitted under applicable law to be reasonable and enforceable. 7. REASONABLE RESTRAINT. The parties agree that the foregoing covenants impose a reasonable restraint on the Seller and Stockholder in light of the activities and business of the parties on the date of execution of this Agreement and the transactions contemplated in the Asset Purchase Agreement; but it is also the intent that such covenants be construed and enforced in accordance with the changing activities and business of the Buyer throughout the term of this Agreement. 8. COUNTERPARTS. This Agreement may be executed in counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. Signatures may be exchanged by telecopy and each party to this Agreement agrees that it will be bound by its own telecopied signature and that it accepts the telecopied signatures of the other parties to this Agreement. 9. CAPTIONS. The captions used in this Agreement are for convenience of reference only, do not constitute a part of this Agreement and will not be deemed to limit, characterize or in any way affect any provision of this Agreement. All provisions of this Agreement will be enforced and construed as if no caption had been used in this Agreement. 10. BINDING EFFECT; AMENDMENT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. Neither the Seller nor Stockholder may assign its rights or obligations under this Agreement. The rights of the Buyer under this Agreement may be assigned to any of the Affiliates of the Buyer and to any third party that purchases the stock or assets of the Buyer. Each party hereto represents and warrants that this Agreement has been duly and validly authorized, executed and delivered by such party and constitutes a valid and binding obligation of such party, enforceable against such party in accordance with its terms. This Agreement may be amended only by a writing signed by the parties hereto. 11. GOVERNING LAW. This Agreement shall be subject to and governed by the laws of the CommonwealthState of Massachusetts. The parties hereto agree that venue and jurisdiction with respect to any matter arising under this Agreement shall be exclusively in the state or federal courts, as applicable, located in the CommonwealthState of Massachusetts. Each party submits to the jurisdiction of such courts in the CommonwealthState of Massachusetts with respect to any claims or controversies arising under this Agreement. 12. NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or Exh. C-4 interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 13. NOTICE. All notices, requests, demands, claims, and other communications hereunder will be in writing. Notices, requests, demands, claims and other communications to the parties hereto shall, unless another address is set forth in writing, be sent to the address or telecopy number set forth below: If to Buyer: Synta Pharmaceuticals Corp. 45 Hartwell Avenue Lexington, MA 02421 Attention: Facsimile Transmisssion Number: with a copy to: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA 02111 Attention: Jeffrey Wiesen, Esq. Facsimile Transmission Number: (617) 542-2241 If to Seller: Peregrine Financial Corporation 84 State Street Boston, MA 02109 Attention: Todd Klibansky Facsimile Transmission Number: (617) 523-2289 with a copy to: Testa, Hurwitz & Thibeault, LLP 125 High Street Boston, MA 02105 Attention: Rufus King, Esq. Facsimile Transmission Number: (617) 248-7282 If to the Stockholder: CMAC, LLC 84 State Street Boston, MA 02109 Attention: Todd Klibansky Facsimile Transmission Number: (617) 523-2289 Exh. C-5 with a copy to: Testa, Hurwitz & Thibeault, LLP 125 High Street Boston, MA 02105 Attention: Rufus King, Esq. Facsimile Transmission Number: (617) 248-7282 Any party may send any notice, request, demand, claim, or other communication hereundcr to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. 14. Notwithstanding any of the foregoing, as used in this Agreement in connection with the term "Stockholder", the term "Affiliates" shall not include any member of the Stockholder or any principals of any members of the Stockholder. [Signature Page Follows] IN WITNESS WHEREOF, each of the parties has caused this Non-Competition, Non-Solicitation and Confidentiality Agreement to be duly executed, all as of the day and year first above written. BUYER: SYNTA PHARMACEUTICALS CORP. By: ----------------------- Name: Title: SELLER: [NAME OF ENTITY] By: ----------------------- Name: Title: Exh. C-6 STOCKHOLDER: CMAC, LLC By: ----------------------- Name: Title: Exh. C-7 EXHIBIT D FORM OF PATENT ASSIGNMENT This PATENT ASSIGNMENT is made as of______________, 200__ by ______________________, an individual with his principal residence at __________________________________________("ASSIGNOR"). RECITALS WHEREAS, Assignor is the beneficial owner of all rights, title and interests in a certain United States Patent as identified on SCHEDULE I attached hereto (the "PATENT"); WHEREAS, pursuant to the Transaction Agreement dated as of______________, _____________________ (the "TRANSACTION AGREEMENT") by and among Assignor,________________________, a _______________________("ASSIGNEE") and the Investor named therein, Assignor has agreed to transfer certain of its assets and the intellectual property rights thereto, including, without limitation, the Patent, to Assignee; and WHEREAS, Assignee desires to acquire all rights, title and interests in, to and under said Patent. NOW, THEREFORE, for good and valuable consideration set forth in the Transaction Agreement, the receipt and sufficiency of which is hereby acknowledged by Assignor, 1. Assignor hereby conveys, assigns, transfers and delivers absolutely to Assignee, its successors and assigns free from encumbrances, (i) all rights, title and interests throughout the world in, to and under the Patent, and the underlying inventions described therein and any United States or foreign reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and substitutes therefor, and all letters patent of the United States which have been or may be granted thereon and all foreign counterparts thereof, together with all rights and powers arising or accrued therefrom including, without limitation, the right to sue and recover damages and other remedies for future or past infringements of the Patent and to fully and entirely stand in the place of Assignor in all matters related thereto and (ii) the right to apply for, prosecute and obtain patent or similar protection throughout the world in respect of the inventions claimed in the Patents including the right to claim priority therefrom to the intent that the grant of any patents or similar protection shall be in the name of and vest in the Assignee. Assignor agrees to take such further action and to execute such additional documents as may be necessary to perfect Assignee's title in and to the Patent and all foreign counterparts thereof. In addition, Assignor hereby conveys, assigns, transfers and delivers to Assignee, its successors and assigns, all of its right, title and interest throughout the world in and to all lab notes, prototypes, product definition, market analysis, marketing studies, draft patent applications, any and all correspondence with the United States Patent and Trademark Office or any foreign patent office, trade secrets, nondisclosure agreements, invention agreements, noncompete agreements and any other document recording the secret knowledge of Assignor relating to the Patent. Exh. D-1 2. Assignor hereby requests the Commissioner of Patents and Trademarks (the "COMMISSIONER") to record this Patent Assignment to Assignee. Assignor hereby further requests the Commissioner to issue any and all letters patent of the United States or derived from the Patent to Assignee as assignee of the entire interest. Assignor hereby covenants that the Commissioner has full right to convey the entire interest herein assigned, and that Assignor has not executed, and will not execute, any agreements inconsistent herewith. 3. GENERAL PROVISIONS. This Agreement will be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to its principles of conflicts of laws. This Agreement may not be supplemented, altered or modified in any manner except by a writing signed by both parties hereto. The failure of either party to enforce any terms or provisions of this Assignment will not waive any rights under such terms and provisions. This Agreement may be executed by facsimile signature and in counterparts, each of which will be an original and all of which when taken together will constitute one and the same Instrument. IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be executed as of the day and year first written above. ASSIGNOR - ---------------------------- THE COMMONWEALTH OF MASSACHUSETTS County of ) On this the____________day of_______________, 200__before me personally appeared ________________to me personally known, and known to me to be the person who signed the foregoing assignment, and acknowledged the signing of same as his free act and deed. --------------------------------- Notary Public My commission expires____________ Acknowledged and accepted: ASSIGNEE BY: ------------------------------ Name: Title: Exh. D-2 SCHEDULE I TO PATENT ASSIGNMENT U.S. PATENT NO. TITLE ISSUE DATE Exh. D-3 EXHIBIT E FORM OF LICENSE AGREEMENT This Agreement (together with Exhibit A attached hereto, this "Agreement") is made and entered into as of the_________day of_____________, 2003 (the "Effective Date"), by and between SYNTA PHARMACEUTICALS, INC. ("LICENSOR"), organized and existing under the laws of the state of Delaware, having its principal office at 45 Hartwell Avenue, Lexington, Massachusetts 02421, and KAVA PHARMACEUTICALS, INC. ("LICENSEE"), a corporation organized and existing under the laws of the state of Delaware, having its principal office at 84 State Street, Suite 900, Boston, Massachusetts 02109. WHEREAS, LICENSOR, as of the closing of an asset sale between the parties concurrently herewith, is the owner of certain PATENT RIGHTS, and the LICENSOR has the right to grant licenses under such PATENT RIGHTS; and WHEREAS, LICENSEE desires to obtain certain licenses under the PATENT RIGHTS upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1 - DEFINITIONS For purposes of this Agreement, the following words and phrases shall have the following meanings: 1.1 AFFILIATE shall mean any business entity which directly or indirectly is the legal or beneficial owner of, or controls greater than fifty-percent (50%) of the issued and voting capital stock or other share participation of a party hereto. 1.2 CONFIDENTIAL INFORMATION shall mean information, including but not limited to, regarding existing or proposed research, development efforts, business or products; marketing and distribution data, methods, plans and efforts; the identities of and the course of dealing with actual and prospective customers, contractors and suppliers; and any other materials that have not been made available to the general public. Information in written form shall be Exh. E-1 marked "Confidential" in order to qualify for such treatment. Information in other than written form shall be confirmed in writing within thirty (30) days of disclosure in order to qualify for such treatment. 1.3 FIELD shall mean the development, manufacture and sale of kava kava extracts, and components thereof, for use in beverages and drink formulations. 1.4 LICENSED PRODUCT shall mean any product or part thereof which is: (a) covered in whole or in part by an issued, unexpired or pending claim contained in the PATENT RIGHTS in the country in which any such product or part thereof is made, used or sold; or (b) manufactured by using, or is employed to practice, a process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the PATENT RIGHTS in the country in which such process is used or in which such product or part thereof is used or sold. 1.5 PATENT RIGHTS shall mean LICENSOR intellectual property described below: (a) The United States and foreign patents (including, reissues, reexaminations, conversions, patents of addition, and extensions thereof) and/or patent applications listed in EXHIBIT A; (b) United States and foreign patents (including, reissues, reexaminations, conversions, patents of addition, and extensions thereof) issued from the applications listed in Exhibit A and from divisionals, continuations, and continuations-in-part of these applications; (c) Claims of U.S. and foreign continuation-in-part applications, and of the resulting patents, which are directed to subject matter specifically described in the U.S. and foreign applications listed in Exhibit A; (d) Claims of all foreign patent applications, and of the resulting patents, which are directed to subject matter specifically described in the United States patents and/or patent applications described in (a), (b) or (c) above. 1.6 SUBLICENSEE shall mean any third party to whom LICENSEE grants a sublicense of some or all of the rights granted to LICENSEE pursuant to Article 2 hereof. Exh. E-2 1.7 TERM shall have the meaning set forth in Section 7.1, hereof. 1.8 TERRITORY shall mean worldwide. ARTICLE 2 - GRANT 2.1 LICENSE GRANT. LICENSOR for the sum of ten (US$ 10.00) U.S. dollars and other good and valuable consideration the receipt of which is hereby acknowledged, hereby grants to LICENSEE, subject to the terms and conditions of this Agreement, a fully paid-up and royalty- free right and exclusive license, including the right to grant sublicenses in accordance with Section 2.2 below, under the PATENT RIGHTS to make, have made, use and sell LICENSED PRODUCTS in the FIELD during the TERM in the TERRITORY. 2.2 RIGHT TO SUBLICENSE. LICENSEE shall have the right to grant to any SUBLICENSEE sublicenses to all or any portion of its rights under the license granted pursuant to this Article 2; PROVIDED, HOWEVER, that (a) LICENSOR shall be notified in writing of any and all potential sublicenses, and (b) any and all sublicenses shall be consistent with the terms and conditions of this Agreement. 2.3 RETAINED RIGHTS. LICENSOR hereby retains the right to practice the PATENT RIGHTS for any and all uses outside of the FIELD. ARTICLE 3 - CONFIDENTIALITY 3.1 Each party will maintain the confidential nature of CONFIDENTIAL INFORMATION it receives from the other and shall, at a minimum, take those precautions that it utilizes to protect its own confidential information, but not less than a commercially reasonable standard of care, and shall refrain from using any of the CONFIDENTIAL INFORMATION except in connection with this Agreement. The foregoing provisions shall not apply to any information that is: (i) generally available to the public immediately prior to the time of disclosure; (it) becomes available to the public in compliance with provisions of this Agreement; (iii) is independently developed by the receiving party as demonstrated by written evidence, (iv) is received from a third party, provided that such third party did not receive the information by any unauthorized disclosure; or (v) is disclosed in compliance with an order of an administrative or regulatory agency or court of competent jurisdiction. This obligation of confidentiality will Exh. E-3 commence on the Effective Date and continue until five (5) years after the expiration or termination of this Agreement. 3.2 In the event that any party is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any CONFIDENTIAL INFORMATION, that party will notify the other promptly of the request or requirement so that the other party or parties may seek an appropriate protective order. A party may disclose the CONFIDENTIAL INFORMATION subject to order of an administrative or regulatory agency or court of competent jurisdiction; provided, however, that such party shall use its best efforts to obtain, at the request of the other party, a protective order or other assurance that confidential treatment will be accorded to such portion of the CONFIDENTIAL INFORMATION required to be disclosed. 3.3 For the purposes of this Article 3, a "party" is specifically deemed to include any AFFILIATE thereof. ARTICLE 4 - INTELLECTUAL PROPERTY 4.1 PATENT FILING, PROSECUTION AND MAINTENANCE. Subject to the other terms of this Article 4, LICENSOR shall be solely responsible for preparing, filing, prosecuting, obtaining and maintaining, at its sole cost, expense and discretion, all PATENT RIGHTS in all countries. LICENSOR will keep LICENSEE reasonably informed of the status of all actions it takes with respect to the PATENT RIGHTS that are licensed to LICENSEE hereunder. LICENSOR shall also provide written notice to LICENSEE prior to taking or failing to take any such action that would reasonably be expected to affect the scope or validity of the PATENT RIGHTS licensed to LICENSEE hereunder, such that LICENSEE has a reasonable opportunity to review and provide comment. If LICENSOR determines in its sole discretion not to undertake the filing of any patent application or submission with respect to any of the PATENT RIGHTS licensed to LICENSEE hereunder, then it shall give LICENSEE prompt written notice of same, at which time LICENSEE may undertake such filing at its own expense, in LICENSOR's name. ARTICLE 5 - INFRINGEMENT ACTIONS Exh. E-4 5.1 NOTICE OF INFRINGEMENT. If, during the TERM, either party learns of any actual, alleged or threatened infringement by a third party of any PATENT RIGHTS, such party shall promptly notify the other party and shall provide such other party with all available evidence of such infringement. 5.2 RIGHTS OF PARTIES. LICENSOR shall have the first right (but not the obligation), at its own expense and with legal counsel of its own choice, to bring suit (or take other appropriate legal action) against any actual, alleged or threatened infringement of the PATENT RIGHTS. LICENSEE shall have the right, at its own expense, to be represented in any such action by LICENSOR by counsel of LICENSEE's own choice; PROVIDED, HOWEVER, that under no circumstances shall the foregoing affect the right of LICENSOR to control the suit as described in the first sentence of this Section 5.2. If LICENSOR does not file any action or proceeding against any material infringement of the PATENT RIGHTS within the FIELD within six (6) months after the later of (i) LICENSOR's notice to LICENSEE under Section 5.1 above. (ii) LICENSEE's notice to LICENSOR under Section 5.1 above, or (iii) a written request from LICENSEE to take action with respect to such infringement, then LICENSEE shall have the right (but not the obligation), at its own expense, to bring suit (or take other appropriate legal action) against such actual, alleged or threatened infringement, with legal counsel of its own choice, but shall not be permitted to settle any such suit without the prior consent of LICENSOR, which consent shall not be unreasonably withheld. Any damages, monetary awards or other amounts recovered, whether by judgment or settlement, pursuant to any suit, proceeding or other legal action taken under this Section 5.2, shall applied as follows: (a) first, to reimburse the parties for their respective costs and expenses (including reasonable attorneys' fees and costs) incurred in prosecuting such enforcement action; (b) second, to LICENSEE in reimbursement for any lost sales associated with LICENSED PRODUCTS directly attributable to such infringement; and (c) third, any amounts remaining shall be allocated as follows: (a) if LICENSOR is the party bringing such suit or proceeding or taking such other legal action, one hundred percent (100%) to LICENSOR, (b) if LICENSEE is the party bringing such suit or Exh. E-5 proceeding or taking such other legal action, one hundred percent (100%) to LICENSEE, and (c) if the suit is brought jointly by the parties, fifty percent (50%) to each party. If a party brings any such action or proceeding hereunder, the other party agrees to be joined as party plaintiff if necessary to prosecute such action or proceeding, and to give the party bringing such action or proceeding reasonable assistance and authority to file and prosecute the suit; PROVIDED, HOWEVER, that neither party shall be required to transfer any right, title or interest in or to any property to the other party or any third party to confer standing on a party hereunder. ARTICLE 6 - INDEMNIFICATION / LIMITATION OF LIABILITY 6.1 LICENSEE shall at all times during the term of this Agreement and thereafter indemnify, defend and hold LICENSOR, its trustees, officers, employees and affiliates harmless against all claims and expenses, including legal expenses and reasonable attorneys' fees, arising out of the death of or injury to any person or persons or out of any damage to property or the environment, and against any other claim, proceeding, demand, expense and liability of any kind whatsoever resulting from the clinical investigation, production, manufacture, sale, use, lease, consumption or advertisement of any LICENSED PRODUCT by LICENSEE or any AFFILIATE of LICENSEE or any SUBLICENSEE, unless directly caused by the gross negligence or willful misconduct of LICENSOR. 6.2 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION OR WARRANTY GIVEN BY LICENSOR THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY. Exh. E-6 ARTICLE 7 - TERMINATION 7.1 TERM. Unless earlier terminated as provided herein, the term of this Agreement shall commence on the Effective Date and shall continue until the last to expire patent or patent claim under the PATENT RIGHTS (the "TERM"). 7.2 LICENSOR shall have the right to terminate this Agreement if LICENSEE shall default in the performance of any of the obligations herein contained and such default has not been cured within ninety (90) days after receiving written notice thereof from LICENSOR. 7.3 In the event this Agreement is terminated for any reason, then upon the request by a disclosing party, the receiving party will promptly return or certify the destruction of all CONFIDENTIAL INFORMATION it received from the disclosing party along with all copies made by the receiving party. Upon such a request, the disclosing party's CONFIDENTIAL INFORMATION contained on data storage media shall be certified as being deleted there from. 7.4 Upon termination of this Agreement, neither party shall be released from any obligation that matured prior to the effective date of such termination; provided, LICENSEE and any SUBLICENSEE may, for a period of six (6) months or such longer time period (if any) on which the parties mutually agree in writing, sell all LICENSED PRODUCTS which LICENSEE (or any SUBLICENSEE) produced prior to the effective date of such termination. Without limitation of the foregoing, the provisions of Articles 3, and 6 shall survive termination of this Agreement. ARTICLE 8 - NOTICES 8.1 Any notice or communication pursuant to this Agreement shall be sufficiently made or given if sent by certified or registered mail, postage prepaid, or by overnight courier, with proof of delivery by receipt, addressed to the address below or as either party shall designate by written notice to the other party. In the case of LICENSOR: SYNTA PHARMACEUTICALS, INC. 45 Hartwell Avenue Lexington, Massachusetts 02421 Attention: President Exh. E-7 In the case of LICENSEE: Peregrine Financial Corporation Attn: Mr. Todd Klibansky 84 State Street, Suite 900 Boston, Massachusetts 02109 ARTICLE 9 - MISCELLANEOUS 9.1 This Agreement is not assignable without the prior written consent of LICENSOR and any attempt to do so shall be null and void; however, LICENSEE may, upon prior written notice to LICENSOR, assign this Agreement and all its rights and obligations hereunder to a third party, including Drinks That Work, Inc., solely in connection with the LICENSEE'S winding-down and liquidation of its business. This Agreement may be assigned by LICENSOR provided that any successor in interest assumes all rights and obligations of LICENSOR hereunder. 9.2 This Agreement may not be amended or modified except by the execution of a written instrument signed by the parties hereto. 9.3 Nothing in this Agreement shall be construed to deem either party as agent for the other. 9.4 This Agreement shall be governed, interpreted and construed in accordance with the laws of the Commonwealth of Massachusetts, irrespective of choice of laws provisions. Both parties shall use reasonable efforts to resolve by mutual agreement any disputes, controversies, claims or difference which may arise from, under, out of or in connection with this Agreement. If such disputes, controversies, claims or differences cannot be settled between the parties, any dispute resolution proceeding shall take place in the United States, but if either party files a claim in a state or federal court, such claim shall be filed in the state or federal courts in the Commonwealth of Massachusetts. Nothing herein shall alter or affect any other rights either party may have to redress any breach or act of the other party. 9.5 Nothing contained in this Agreement shall be construed as conferring upon either party any right to use in advertising, publicity or other promotional activities any name, trade name, trademark, or other designation of the other party, including any contraction, abbreviation, or simulation of any of the foregoing. Without the express written approval of the other party, Exh. E-8 neither party shall use any designation of the other party in any promotional activity associated with this Agreement, including without limitation, any LICENSED PRODUCT. Neither party shall issue any press release or make any public statement in regard to this Agreement without the prior written approval of the other party. 9.6 If one or more of the provisions of this Agreement shall be held invalid, illegal or unenforceable, the remaining provisions shall not in any way be affected or impaired thereby. In the event any provision is held illegal or unenforceable, the parties shall use reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as is practical, implements purposes of the provision held invalid, illegal or unenforceable. 9.7 Failure at any time to require performance of any of the provisions herein shall not waive or diminish a party's right thereafter to demand compliance therewith or with any other provision. Waiver of any default shall not waive any other default. A party shall not be deemed to have waived any rights hereunder unless such waiver is in writing and signed by a duly authorized officer of the party making such waiver. 9.8 The parties acknowledge that this Agreement sets forth the entire understanding and intentions of the parties hereto as to the subject matter hereof and supersedes all previous understandings between the parties, written or oral, regarding such subject matter. [The remainder of this page left intentionally blank.] Exh. E-9 IN WITNESS WHEREOF, the parties have set their hands and seals as of the date set forth on the first page hereof. For LICENSOR For LICENSEE SYNTA PHARMACEUTICALS, INC. KAVA PHARMACEUTICALS, INC. - ------------------------ ----------------------- Name: Name: Title: Title: Exh. E-10 EXHIBIT A
COUNTRY SERIAL NUMBERS FILING DETAILS - ---------------------- -------------------------------- ------------------------- United States Patent Appln. No. 09/584,220 Filed May 31, 2000 United States Patent Appln. No. 09/962,514 Filed September 24, 2001 United States Patent Appln. No. 10/396,117 Filed March 25, 2003 International PCT Patent Appln. No. Filed June 1, 2000 Taiwan Patent Appln. No. 89112231 Filed June 21, 2000 United States Patent Appln. No. 09/853,304 Filed May 11, 2001 United States Patent Appln. No. 10/010,201 Filed November 30, 2001 United States Patent Appln. No. 60/311,437 Filed August 10, 2001 United States Patent Appln. No. 10/214,624 Filed August 8, 2002 PCT Patent Appln. No. Filed August 8, 2002 Taiwan Patent Appln. No. 91117959 Filed August 9, 2002 United States Patent Appln. No. 09/923,462 Filed August 6, 2001 PCT Patent Appln. No. Filed August 5, 2002 Taiwan Patent Appln. No. 91117646 Filed August 6, 2002 United States Patent Appln. No. 60/328,986 Filed October 12, 2001 United States Patent Appln. No. 10/269,722 Filed October 11, 2002 PCT Patent Appln. No. Filed October 15, 2002 United States Patent Appln. No. 60/351,167 Filed January 22, 2002 United States Patent Appln. No. 10/349,194 Filed January 22, 2003 PCT Patent Appln No. Filed May 13, 2002 Taiwan Patent Appln No. 91109804 Filed May 10, 2002 United States Patent Appln. No. 60/359,864 Filed February 27, 2002 United States Patent Appln. No. 10/376,800 Filed February 27, 2003 PCT Patent Appln. No. Filed February 27, 2003
TRA 1862567v2 Exh. E-11