21
TERMINATION AGREEMENT
THIS AGREEMENT is made this 14th day of July,
1997 (the "Agreement") by and between THE LIPOSOME
COMPANY, INC., a Delaware corporation, having its
principal place of business at Xxx Xxxxxxxx Xxx,
Xxxxxxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
("Liposome") and PFIZER INC, a Delaware corporation,
having its principal office at 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, 00000 ("Pfizer Inc") and PFIZER
PHARMACEUTICALS PRODUCTION CORPORATION, formerly known
as PFIZER CHEMICAL CORPORATION, a Panamanian
corporation that is wholly owned by Pfizer Inc. having
a place of business at Ringaskiddy, County Cork,
Ireland ("PPPC") (Pfizer Inc and PPPC being
collectively referred to herein as "Pfizer").
RECITALS
A. Pfizer and Liposome are parties to that
certain License and Development Agreement, dated as of
Nov. 19, 1990, as amended by letter agreement on
December 20, 1990 (the "L&D Agreement"), relating to
the development, licensing and marketing of Liposome's
proprietary liposomal doxorubicin, TLC D-99 (the
"Product").
B. Pfizer and TLC wish to terminate the L&D
Agreement on the terms and conditions set forth herein,
and the parties wish the termination of the L&D
Agreement shall proceed in an orderly and amicable
fashion, subject to the terms and conditions of this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
agreements, covenants, representations and warranties
contained in this Agreement and other good and valuable
consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
A. Termination of L&D Agreement. On the terms
and subject to the conditions set forth in this
Agreement, Pfizer and Liposome hereby agree that the
L&D Agreement is hereby terminated effective as of the
date of this Agreement; and each of Pfizer and
Liposome, on behalf of themselves and their respective
affiliates and assigns, hereby waives and renounces all
rights and releases the other (and their respective
officers, directors, shareholders, affiliates,
employees, agents and representatives) from all claims,
liabilities and obligations of any nature whatsoever,
in each case whether or not accrued, arising out of or
relating to the L&D Agreement, except for obligations
under this Agreement and the Debenture referred to in
Section I hereof. Any obligations under the L&D
Agreement which purport to survive its termination
shall be superseded by the obligations set forth in
this Agreement. All expenses incurred under the L&D
Agreement up to the date hereof shall be paid as set
forth in the L&D Agreement. All capitalized terms not
defined in this agreement shall have the meaning
assigned to them under the L&D Agreement.
B. Assignments of Ownership. Pfizer hereby
transfers and assigns to Liposome all of Pfizer's
rights, title and interest in and to the following: (i)
the Data and Dossier as defined in Sections 1.06 and
1.09 of the L&D Agreement, (ii) all information
relating to the commercialization, promotion and
distribution of the Product developed pursuant to
Article IIA of the Agreement; (iii) all Technical
Information developed by Pfizer in connection with the
Development Program, the commercialization or
manufacture of Product; (iv) to the extent permissible
under applicable law all regulatory filings held by
Pfizer for Product; (v) Pfizer's ownership interest in
any Licensed Patents in which Pfizer has been assigned
a joint interest; and (vi) Pfizer's ownership interest
in any clinical supplies of Product which are in
Liposome's or a clinical investigator's possession.
Pfizer shall assign all rights and obligations in
Pfizer's name under contracts which relate to Human
Clinical Trials or data analysis therefrom for those
studies set forth in Section C1, below.
C. Transfers by Pfizer. To effect the
assignments of ownership, Pfizer shall transfer to
Liposome within 90 days of the effective date of this
Agreement the following in the form in which they exist
on the date of transfer:
1. the reports, documents and other
materials listed in SCHEDULE A hereto, in the format
(whether printed, on computer diskette or otherwise)
set forth in such Schedule, relating to certain studies
of the Product completed prior to the date of this
Agreement ("Completed Studies"). Such reports,
documents and materials shall constitute Liposome
confidential information upon such transfer;
2. [
];
3. to the extent permissible under
applicable law the INDs for the Product or NDAs which
have been filed in Pfizer's name outside the U.S. or
Canada as listed in SCHEDULE B.
D. Transfer of Ongoing Studies.
1. Study #180-301. Pfizer hereby transfers
and assigns to Liposome all of Pfizer's rights, title
and interest in and to, and Liposome hereby assumes
from Pfizer all of Pfizer's liabilities and obligations
under, in each case whether or not accrued,[
]
2. Studies #0589 and #0652. At no
additional cost to Liposome, Pfizer shall continue to
perform its sponsorship obligations relating to the
United States Phase III studies Pfizer is conducting of
the Product known to the parties hereto as Studies
#0589 and #0652. Pfizer shall promptly undertake to
enter into negotiations with a Contract Research
Organization to continue the supervision of such
studies, with the purpose of assigning to Liposome all
of Pfizer's rights, title and interest in and to such
agreement[s]. Liposome shall be permitted to
participate in the negotiations and shall cooperate in
assisting Pfizer to complete the transaction as quickly
as possible. Liposome shall assume all liabilities and
obligations under such agreement[s] upon Pfizer's
assignment, and upon the successful completion of such
assignment, Pfizer shall transfer to Liposome all
reports, documentation and other materials, in whatever
form, prepared or received in connection with Studies
#0589 and #0652, and shall have no further obligations
with respect to such studies. If Liposome refuses to
assume such liabilities, Pfizer shall have no further
obligations respecting studies #0589 and #0652 other
than to transfer to Liposome the study files in the
form in which they exist on the date of transfer.
E. Cooperation and Assistance. For a period of
90 (ninety) days following the date of this Agreement,
Pfizer will provide Liposome with reasonable assistance
in assuming Pfizer's functions in connection with the
studies referred to in Section C of this Agreement.
Such assistance will be provided during normal business
hours and upon reasonable notice from Liposome.
F. [
]
G. [
]
H. Issuance of Debentures. For a period of five
years from the date hereof Liposome may issue and sell,
and, simultaneously with its delivery of the Receipt
(defined below) shall deliver, to Pfizer and Pfizer
agrees to purchase from Liposome debentures in the
cumulative principal amount of up to $10,000,000.00
(Ten Million United States Dollars) substantially in
the form of, and on the terms and conditions set forth
in the debenture attached as EXHIBIT A hereto (the
"Debentures"); and immediately upon receipt of such
amount in immediately available funds (net of any
withholdings or deductions of any kind) in its account
number [
], Liposome shall
acknowledge such receipt by signing and delivering to
Pfizer a receipt in a form reasonably acceptable to
Pfizer. Liposome covenants and agrees that the
proceeds from the sale of the Debentures shall be used
exclusively for the continued development of the
Product. Liposome's right to issue and sell and
Pfizer's obligation to purchase Debentures shall be
subject to no Event of Default, as defined under
Section 6 of the Debenture, having occurred. Liposome
may not issue additional Debentures after the date on
which the U.S. Food and Drug Administration approves an
NDA for TLC D-99 (the "Product").
I. Representations and Warranties of Liposome.
Liposome hereby represents and warrants to Pfizer that:
1. Corporate Organization and Standing.
Liposome is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware. Liposome has the requisite corporate
power to carry on its business as presently conducted
and as proposed or contemplated to be conducted in the
future and to enter into and carry out the provisions
of this Agreement and the transactions contemplated
hereby.
2. Subsidiaries. Liposome has the
subsidiaries listed on Schedule C. No subsidiaries
have acquired any rights or obligations under the L&D
Agreement.
3. Corporate Capitalization.
a. Liposome's authorized capital stock
consists of two authorized classes of capital stock,
consisting of 60,000,000 shares of common stock, of
which 34,415,721 shares are issued and outstanding, and
2,400,000 shares of preferred stock of which no shares
are issued or outstanding. All issued and outstanding
shares of capital stock have been duly authorized and
validly issued and are fully paid and nonassessable.
b. Except as contemplated or set forth
in this Agreement or in Schedule D attached hereto, as
of the Closing, there are no outstanding preemptive or
other rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from
Liposome of any shares of its capital stock.
4. Authorization. All corporate action on
the part of Liposome, its directors and shareholders
necessary for the authorization, execution, delivery
and performance of this Agreement by Liposome, the
authorization, sale, issuance and delivery of the
Debenture (and the common Stock issuable upon
conversion of the Debenture, herein defined as the
"Conversion Shares") and the performance of all of
Liposome's obligations hereunder has been taken and
remains in full force and effect; and a true and
correct copy of all directors and shareholders
resolutions relating to such action is attached hereto
as EXHIBIT C. This Agreement, when delivered by
Liposome, shall constitute a valid and binding
obligation of Liposome, enforceable in accordance with
its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific
performance, injunctive relief or other equitable
remedies. The Debenture, when issued in compliance
with the provisions of this Agreement, will be validly
issued, and Pfizer will have the rights, preferences
and privileges described in the Debenture; the
Conversion Shares have been duly and validly reserved
and, when issued in compliance with the provisions of
the Debenture, will be validly issued, fully paid and
nonassessable; and the Conversion Shares will be free
of any liens or encumbrances.
5. Compliance with Other Instruments. The
execution, delivery, and performance of and compliance
with this Agreement, the Debenture, the Registration
Rights Agreement and the issuance of the Conversion
Shares pursuant to the Debenture, do not and will not
conflict with, result in a violation or breach of, or
constitute an event of default or potential event of
default under, (i) the articles of incorporation,
bylaws or any shareholder or Board of Directors
resolutions of Liposome, (ii) any material agreement,
indebtedness, permit, authorization or concession to
which Liposome is a party or by which it or any of its
assets are bound, or (iii) any statute, rule,
regulation, ordinance, code, order, judgment, writ,
injunction, decree or award; nor will any such action
result in the creation of any mortgage, pledge, lien,
encumbrance, or charge upon any of the Conversion
Shares.
6. Compliance with Laws. No governmental
orders, permissions, consents, approvals or
authorizations are required to be obtained and no
registrations or declarations are required to be filed
in connection with the execution and delivery of this
Agreement, the Debenture [or the Registration Rights
Agreement], and the issuance of the Conversion Shares,
except as such has been duly and validly obtained or
filed.
7. Disclosure. No representation or
warranty by Liposome in this Agreement or in any
written statement or certificate furnished or to be
furnished to the Pfizer pursuant hereto or in
connection with the transactions contemplated hereby
contains or will contain any untrue statement of a
material fact or omits or will omit to state a material
fact necessary to make the statements made therein, in
the light of the circumstances under which they were
made, not misleading.
8. Survival of Representations. All
representations made by Liposome in or under this
Agreement shall be true and accurate as of the date of
this Agreement and shall survive until the repayment of
all amounts due under the Debenture or, in the event of
the issuance of the Conversion Shares, shall survive
indefinitely.
J. Representations and Warranties of Pfizer.
Pfizer represents and warrants to Liposome that:
1. Authorization. All corporate action on
the part of Pfizer, its directors and shareholders
necessary for the authorization, execution, delivery
and performance of this Agreement by Pfizer and the
performance of all of Pfizer's obligations hereunder
has been taken and remains in full force and effect.
This Agreement, when delivered by Pfizer, shall
constitute a valid and binding obligation of Pfizer,
enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or
other equitable remedies.
2. Investment. Pfizer is acquiring the
Debenture and any Conversion Shares (hereinafter
collectively the "Securities") for investment for its
own account, and not with a view to, or resale in
connection with, any distribution thereof, and it has
no present intention of selling or distributing any
such Securities. It understands that the Securities
have not been registered under the Securities Act of
1933, as amended (the "Securities Act") by reason of a
specific exemption from the registration provisions of
the Securities Act which depends upon, among other
things, the bona fide nature of the investment as
expressed herein.
3. Investment Experience. Pfizer is an
"accredited investor" as that term is defined in
Regulation D promulgated by the Securities and Exchange
Commission.
4. Previous Investments. Pfizer is an
investor in securities of companies in the development
stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment
and has such knowledge and experience in financial or
business matters that it is capable of evaluating the
merits and risks of the investment contemplated herein.
5. Risks. Pfizer understands that an
investment in Liposome involves a high degree of risk
and is suitable only for investors who can afford a
loss of their entire investment and who have no need
for liquidity from their investment.
K. Restrictive Legends. Each certificate or
other written documentation representing any of the
Securities which Pfizer is purchasing or may purchase
hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger,
consolidation or similar event (unless no longer
required in the opinion of the counsel for Liposome)
shall be stamped or otherwise imprinted with legends
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAW, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, OR THE HOLDER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF THE SECURITIES SATISFACTORY TO THE
CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER STATE LAW.".
L. Confidentiality
1. Definition of Confidential Information.
As used in this Agreement, "Confidential Information"
shall mean the terms and provisions of this Agreement,
of the L&D Agreement and all other business, financial,
technical and other information of a party or its
affiliates designated by that party as confidential
information, provided, however, that "Confidential
Information" shall not include information that the
party receiving any Confidential Information (the
"Receiving Party") can demonstrate to the reasonable
satisfaction of the party disclosing its Confidential
Information (the "Disclosing Party") a. was in the
possession of the Receiving Party without obligation of
confidence to the Disclosing Party before receipt
thereof from the Disclosing Party; b. is or has become
available to the public without fault of the Receiving
Party; or c. is disclosed to the Receiving Party,
without restriction, by a third party. Confidential
Information shall include information disclosed by a
Disclosing Party to the Receiving Party during the Term
of this Agreement or during the term of the L&D
Agreement, or otherwise subject to the confidentiality
provisions (Article VI) of the L&D Agreement.
2. Treatment of Confidential Information.
(a) The Receiving Party shall maintain, and shall cause
its officers, directors, employees, agents, assigns and
any other persons or entities working under its
supervision, or at its direction ("Representatives") to
maintain, any Confidential Information in confidence
and shall not use it for any purpose other than the
purposes contemplated by this Agreement. The Receiving
Party may disclose the other party's Confidential
Information only (1) to the Representatives of the
Receiving Party who have a need to know such
information to accomplish the purposes of this
Agreement, or (2) to third parties upon the prior
written approval of the Disclosing Party, except in the
event that, upon the advice of its outside legal
counsel, it is required by law to disclose such
information to governmental authorities or in
connection with any litigation or proceeding.
(b) In the event the Receiving Party is
required by law to disclose Confidential Information of
the Disclosing Party to governmental agencies or
authorities or in connection with any litigation or
proceeding, it shall endeavor to limit disclosure to
that purpose and shall give the Disclosing Party
reasonable written notice of any instance of such a
requirement.
(c) Notwithstanding the foregoing, the
parties agree that they shall issue a press release in
a mutually agreed form describing the termination of
the L&D Agreement, and that thereafter all
communications concerning the Product shall be the sole
responsibility of Liposome and all inquiries concerning
the Product shall be referred to Liposome.
3. Return of Confidential Information. At
any time during the term of, and upon termination of,
this Agreement, each party, on the written request of
the other party, shall deliver to the Disclosing Party
any written, printed or other materials embodying
Confidential Information of the Disclosing Party in its
possession or in the possession of any of its
Representatives; provided, however, that if the
Disclosing Party's Confidential Information has been
combined with Confidential Information of the Receiving
Party, then the Receiving Party may, at its option,
destroy all materials containing the Disclosing Party's
Confidential Information (including all copies
thereof).
4. Obligated Persons. The foregoing
obligations of confidentiality shall apply to any
Representatives of the parties or their Affiliates and
to any other person to whom the parties have delivered
copies of, or permitted access to, such Confidential
Information pursuant to this Agreement.
M. Miscellaneous.
1. Successors and Assigns. Except as
otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
2. Entire Agreement. This Agreement and
the exhibits attached hereto and the other documents
delivered pursuant hereto constitute the full and
entire understanding and agreement between and among
the parties with regard to the subjects hereof and
thereof. It is understood and acknowledged that Pfizer
may assign its rights and obligations under this
Agreement to a wholly-owned direct or indirect
subsidiary.
3. Notice. Any notice, payment, report or
other communication required or permitted to be given
by one party to any other party by this Agreement shall
be in writing and either (i) served personally on the
other party or parties; (ii) sent by express,
registered or certified first class mail, postage
prepaid, addressed to the other party or parties at its
or their address or addresses as indicated next to
their signatures below, or to such other address as any
addressee shall have theretofore furnished to the other
parties by like notice; (iii) delivered by commercial
courier to the other party or parties; or (iv) sent by
facsimile with the original sent by U.S. Mail. Such
notice shall be deemed received on the second day after
transmittal if sent by one day courier together with a
transmission of such notice by facsimile if the
recipient has the capability to receive a facsimile at
its address and if sent by other methods shall be
deemed received upon receipt.
4. Titles and Subtitles. The titles of the
Sections and subsections of this Agreement are for the
convenience of reference only and are not to be
considered in construing this Agreement.
5. Counterparts. This Agreement may be
executed in any number of counterparts, each of which
shall be an original, but all of which together shall
constitute one instrument.
6. Severability. If any portion of this
Agreement is construed to be illegal, invalid or
unenforceable, such portion shall be deemed stricken
and deleted from this Agreement to the same extent and
effect as if it were never incorporated herein, but all
other portions shall continue in full force and effect;
provided that such resulting construction of the
Agreement does not frustrate the main purpose of the
Agreement.
7. Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws
of the State of New York without regard to principles
of conflicts of law.
8. Indemnification for Product Liability.
Liposome shall indemnify, defend and hold Pfizer
harmless from and against any and all losses,
liabilities, damages, obligations, payments, costs and
expenses ("Claims") which are incurred by or rendered
against Pfizer at any time and which arise from the
clinical testing or use, sale or distribution of
Product, except to the extent such Claims are directly
attributable to Pfizer's negligence or intentional
misconduct; provided, however, that Pfizer shall give
Liposome notice as soon as practicable of any such
Claim to which the foregoing provisions apply and that
Pfizer shall have the right to participate in any
compromise, settlement or defense thereof. Pfizer
shall indemnify, defend and hold Liposome harmless from
and against any such Claims which arise from the
clinical testing of Product under the supervision or
sponsorship of Pfizer, except to the extent such claims
are directly attributable to Liposome's negligence or
intentional misconduct; provided, however, that
Liposome shall give Pfizer notice as soon as
practicable of any such Claim to which the foregoing
provisions apply and that Liposome shall have the right
to participate in any compromise, settlement or defense
thereof.
9. Submission to Jurisdiction. Each of the
parties hereby irrevocably and unconditionally agrees
to be subject to the jurisdiction of the courts of the
State of New York and of the federal courts sitting in
the State of New York with respect to any disputes
concerning this Agreement and the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year
hereinabove first written.
The Liposome Company, Inc. Pfizer Inc
One Research Way 235 East 42nd Street
Princeton Xxxxxxxxx Center New York, NY
10017-5755
Xxxxxxxxx, XX 00000
By: _/s/ Xxxxxxx X. Baker________ By: _Paul S.Miller__________
Name: Xxxxxxx X. Xxxxx Name: Xxxx X. Xxxxxx
Title: Chairman and CEO Title: Sr. V.P.
Pfizer Pharmaceuticals
Production Corporation
By: _/s/ Xxxxxx X. Cronin_____
Name: Xxxxxx X. Xxxxxx
Title: Vice President
EXHIBIT A
THIS DEBENTURE AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS DEBENTURE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING THIS DEBENTURE AND/OR SUCH SECURITIES, OR
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER STATE LAW.
The Liposome Company, Inc.
Convertible Subordinated Debenture
Due June __, 2007
$xxxxxx [New York, New York]
FOR VALUE RECEIVED, The Liposome Company, Inc., a
Delaware corporation (the "Corporation"), hereby promises to
pay to Pfizer Inc, a Delaware corporation, or its successors
and permitted assigns ("Holder"), the principal amount of
$xxxx, together with interest thereon at the rate provided
herein, on the terms set forth below.
Section 1. Repayment of Principal. Subject to the
provisions of Section 6 hereof, the principal amount of this
Debenture shall be repaid in twenty (20) equal quarterly
installments of $xxxx commencing on the fifth anniversary of
the date of the Termination Agreement dated July 14, 1997,
between Pfizer and the Corporation; ("Scheduled Payment
Dates") provided, however, that Corporation shall repay the
entire outstanding principal amount of this Debenture within
180 days after date on which the U.S. Food and Drug
Administration approves an NDA for TLC D-99 (the "Product").
Section 2. Interest. Interest shall accrue on this
Debenture on a daily basis at a rate equal to [
]. Interest on this Debenture
shall be payable on the Scheduled Payment Dates, and all
interest accruing through the first Scheduled Payment Date
shall be paid on such first Scheduled Payment Date, and
interest shall be paid on such other date that any part of
the principal amount of this Debenture is repaid. Following
the occurrence and during the continuance of any Event of
Default (as defined below) under this Debenture, including
any overdue payment of principal or interest, interest shall
accrue on this Debenture at a rate equal to[
].
Section 3. Optional Prepayments. Upon not less than
30 days prior written notice, the Corporation may, at its
option at any time, prepay the principal amount of this
Debenture, in whole (but not in part), without premium or
penalty, provided that no such notice may be delivered or
prepayment may be made if Pfizer shall have previously
delivered to the Corporation notice that it is exercising
its Conversion Option (as defined below) pursuant to the
provisions of Section 4 hereof. Any such prepayment of
principal shall be accompanied by the payment of all accrued
and unpaid interest on the amount prepaid to the date of
prepayment.
Section 4. Conversion.
a. Holder's Option to Convert. All or any
portion of the outstanding principal and accrued interest on
this Debenture is convertible at the option of the Holder
exercisable at any time and from time to time, into fully
paid and nonassessable shares of the Corporation's common
stock, par value $__ per share (the "Common Stock"), at the
Conversion Price (as defined below) in effect on the date on
which the Holder provides the Company with written notice of
its election to exercise its right to convert the Debenture,
subject to adjustment as provided herein. The "Conversion
Price" shall mean the closing sale price for the Common
Stock on the applicable date or, in case no such sale takes
place on such day, the average of the reported closing bid
and asked prices, in each case on the principal securities
exchange or quotation system on which the Common Stock is
quoted or listed or admitted to trading, or, if not quoted
or listed or admitted to trading on any national securities
exchange or quotation system, the average of the closing bid
and asked prices of the Common Stock on the over-the-counter
market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally
accepted reported service.
b. Surrender and Cancellation of Debenture.
Upon written notice of a conversion by the Holder together
with delivery of this Debenture to the Corporation or its
transfer agent, the applicable amount of outstanding
principal and accrued interest on this Debenture shall be
converted. The Corporation shall not be obligated to issue
certificates evidencing the shares of the securities
issuable upon such conversion unless this Debenture is
either delivered to the Corporation, or the Holder notifies
the Corporation that this Debenture has been lost, stolen or
destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss
incurred by it in connection with this Debenture. The
Corporation shall, as soon as practicable after such
delivery, or such agreement and indemnification, issue and
deliver at such office to the Holder of this Debenture, a
certificate for the securities to which the Holder shall be
entitled. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of
closing of the transaction causing conversion or the date of
receipt of written notice by the Corporation from the Holder
causing conversion. The person entitled to receive the
securities issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such
securities on such date.
c. Adjustments to Conversion Price. If any
capital reorganization or reclassification of the capital
stock of the Corporation or any consolidation or merger of
the Corporation with another corporation, or the sale of all
or a material amount of the Corporation's assets to another
corporation shall be effected in such a way that holders of
the Corporation's Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange
for the Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision as reasonably determined
in the good faith judgment of the board of directors of the
Corporation shall be made whereby the Holder shall
thereafter have the right to receive upon the terms and
conditions of this Section 4 and in lieu of the shares of
the Common Stock to which it is entitled to receive upon the
conversion of this Debenture, securities or assets as may be
issued or distributable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to
the number of shares of such Common Stock to which it
entitled to receive upon the conversion of this Debenture
had such reorganization, reclassification, consolidation,
merger or sale not taken place. The Corporation will not
effect any such consolidation, merger or sale unless prior
to the consummation thereof the successor corporation, if
other than the Corporation, resulting from such
consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument (an execution
copy of which shall be delivered to the Holder), the
obligation to deliver to the Holder such shares of stock,
securities or assets as the Holder may be entitled to
receive in accordance with the foregoing provisions.
D. Reservation of Shares; etc. The
Corporation shall provide, free from preemptive rights, out
of its authorized but unissued shares or shares held in
treasury, sufficient shares of Common Stock to provide for
the conversion of the Debenture from time to time as such
Debenture is presented for conversion.
The Corporation covenants that all shares of
Common Stock which may be issued upon conversion of
Debentures will upon issue be fully paid and nonassessable
by the Corporation and free from all taxes, liens and
charges with respect to the issue thereof.
The Corporation further covenants that if at any
time the Common Stock shall be listed on the Nasdaq Stock
Market or any other national securities exchange or
automated quotation system the Corporation will list and
keep listed, so long as the Common Stock shall be so listed
on such exchange or automated quotation system, all Common
Stock issuable upon conversion of the Debenture.
Section 5. Subordination of Debenture. The
Corporation covenants, and the Holder by its acceptance of
this Debenture likewise covenants and agrees, that the
payment of the principal of and interest on this Debenture
shall, to the extent and in the manner hereinafter set
forth, be subordinated and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as
defined herein), whether outstanding at the date of this
Debenture of thereafter created. Upon any payment by the
Corporation, or distribution of assets of the Corporation,
to creditors upon any dissolution or winding-up or
liquidation or reorganization of the Corporation, whether
voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to
become due upon all Senior Indebtedness shall first be paid
in full before any payment is made on account of the
principal of or interest on the Debenture. The holders of
Senior Indebtedness shall have the right to rely upon this
Section 5.
The term "Senior Indebtedness" means the principal of,
premium, if any, and interest (including all interest
accruing subsequent to the commencement of any bankruptcy or
similar proceeding) payable on or in connection with,
indebtedness, obligations and other liabilities for borrowed
money ("Indebtedness"), whether outstanding on the date of
this Debenture or thereafter created or incurred, unless in
the case of any particular Indebtedness the instrument
creating or evidencing the same expressly provides that such
Indebtedness shall not be senior in right of payment to the
Debenture or expressly provides that such Indebtedness is
"pari passu" or "junior" to the Debentures.
Section 6. Events of Default; Acceleration.
(a) An "Event of Default" shall occur if:
(i) the Corporation defaults in the payment
of the principal or interest on this
Debenture when due and payable pursuant to
the terms hereof;
ii) any representation or warranty made by
the Corporation in that certain Termination
Agreement dated ___________, 1997 between the
Corporation and Pfizer pursuant to which
Pfizer purchased this Debenture shall prove
to have been incorrect in any material
respect when made;
(iii) the Corporation shall fail to perform
or observe any other term, covenant or
agreement contained in this Debenture to be
performed or observed by it; or
(iv) the Corporation pursuant to the United
States Bankruptcy Code or any state
bankruptcy or insolvency law: (A) commences a
voluntary case, consents to the entry of an
order for relief against it in an involuntary
case or to the appointment of a trustee,
receiver or custodian for all or
substantially all of its assets or makes a
general assignment for the benefit of its
creditors; or (B) an involuntary case is
commenced against the Corporation in a court
of competent jurisdiction and such case is
not dismissed within 60 days.
(b) If any Event of Default occurs and is
continuing for a period of sixty (60) days after the
Corporation's receipt of written notice of the Event of
Default and the circumstances surrounding it, then the
Holder may, by written notice to the Corporation, declare
the unpaid principal amount of and any accrued interest on
this Debenture to be immediately due and payable. If an
Event of Default specified in Section 6(a)(iv) above occurs,
the unpaid principal amount of and any accrued interest on
this Debenture shall be immediately due and payable without
any declaration or other act on the part of the Holder. The
Holder may rescind an acceleration and its consequences if
the rescission would not conflict with any judgment or
decree of a court or governmental agency and if all existing
Events of Default (other than nonpayment of principal or
interest that has become due solely as a result of the
acceleration) have been cured or waived. No such rescission
shall affect any subsequent Event of Default or impair any
right consequent thereto.
Section 7. Debenture Confers No Rights As Shareholder.
The Holder of this Debenture shall not have any rights as a
shareholder of the Corporation with regard to the shares
issuable hereunder prior to actual conversion hereunder.
Section 8. Waivers. The Corporation hereby waives
presentment, demand for performance, notice of
non-performance, protest, notice of protest and notice of
dishonor. No delay on the part of Holder in exercising any
right hereunder shall operate as a waiver of such right or
any other right.
Section 9. Assignment. The Holder shall not assign
this Debenture without the prior written consent of the
Corporation which consent shall not be unreasonably
withheld; provided, however, that the Holder may assign this
Debenture to a whollyowned direct or indirect subsidiary of
the Holder.
Section 10. Applicable Law. This Debenture shall be
governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflict
of laws.
THE LIPOSOME COMPANY, INC.
By:__________________________
Name:
Title:
SCHEDULE A
[ ]
SCHEDULE B
[ ]
SCHEDULE C
SUBSIDIARIES OF THE LIPOSOME COMPANY, INC.
Princeton Liposome Conference, Inc.
The Liposome Manufacturing Company Inc.
Liposome Holdings Inc.
The Liposome Company, Japan, Ltd.
Nichiyu Liposome Co., Ltd. (Joint venture with Nippon Oil and
Fats Corp.)
The Liposome Company Ltd. (U.K.)
Laboratoires Liposome E.U.R.L. (France)
Liposome S.L. (Spain)
Liposome Canada Inc.
Liposome S.r.L. (Italy)
Liposome S.a.r.1 (Switzerland)
Liposome, B.V. (Netherlands)
Liposome PTY LTD. (Australia)
SCHEDULE D
OPTIONS, WARRANTS AND RIGHTS
Stock Options
Liposome has several stock option plans available for the
issuance of incentive stock options and non-qualified stock
options to employees, directors, consultants and advisors. As of
December 29, 1996, Liposome had outstanding grants of 4,352,523
shares.
Warrants
Effective May 15, 1997, Liposome granted to Xxxxxx Xxxxxxx
a warrant to purchase 50,000 shares of Common Stock at $24.50 per
share.
Liposome has agreed, in connection with the settlement of
litigation with The Regents of the University of Texas and M.D.
Xxxxxxxx Cancer Center, to issue Common Stock to the University
having a market value of $255,000 as of July 31, 1997, and to
grant to the University warrants to purchase 1,000,000 shares of
Common Stock at $15 per share.
Shareholder Rights Plan
Rights were issued to all holders of Common Stock pursuant
to the Shareholder Rights Plan adopted by Liposome's Board of
Directors on July 11, 1996.
