EXHIBIT 10.58
Execution copy
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SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
ELAN PHARMA INTERNATIONAL LTD.
ELAN INTERNATIONAL SERVICES, LTD.
AND
INCARA PHARMACEUTICALS CORPORATION
AND
INCARA DEVELOPMENT, LTD.
Portions of this exhibit marked [*] have been omitted pursuant to a request for
confidential treatment.
INDEX
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CLAUSE 1 DEFINITIONS
CLAUSE 2 BUSINESS
CLAUSE 3 REPRESENTATIONS AND WARRANTIES
CLAUSE 4 AUTHORIZATION AND CLOSING
CLAUSE 5 DIRECTORS; MANAGEMENT AND R&D COMMITTEES
CLAUSE 6 THE BUSINESS PLAN AND REVIEWS
CLAUSE 7 RESEARCH AND DEVELOPMENT
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS[*]
CLAUSE 10 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 11 CROSS LICENSING
CLAUSE 12 REGULATORY MATTERS/CLINICAL TRIALS
CLAUSE 13 MANUFACTURING
CLAUSE 14 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 15 AUDITORS, BANKERS,
ACCOUNTING REFERENCE DATE; SECRETARY
CLAUSE 16 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 17 MATTERS REQUIRING SHAREHOLDERS' APPROVAL
CLAUSE 18 DISPUTES
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
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CLAUSE 19 TERMINATION
CLAUSE 20 SHARE RIGHTS
CLAUSE 21 CONFIDENTIALITY
CLAUSE 22 COSTS
CLAUSE 23 GENERAL
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THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 19 day of
January 2001
BETWEEN:
(1) ELAN CORPORATION, PLC., a public limited company incorporated under the
laws of Ireland, and having its registered office at Xxxxxxx Xxxxx, Xxxxxxx
Xxxxx, Xxxxxx 0, Xxxxxxx;
(2) ELAN PHARMA INTERNATIONAL LTD., a limited liability company incorporated
under the laws of Ireland, and having its registered office at XXX Xxxxx,
Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx;
(3) ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
company incorporated under the laws of Bermuda, and having its registered
office at Xxxxxxxxx Xxxxx, 0 Xxxxxx Xx., Xxxxxxxx, Xxxxxxx ("XXX");
(4) INCARA PHARMACEUTICALS CORPORATION (FORMERLY INTERCARDIA, INC.), a
corporation duly incorporated and validly existing under the laws of
Delaware and having its principal place of business at 0000 Xxxx Xxxxxxx
54, Cape Fear Building, Suite 300, Research Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx
00000, Xxxxxx Xxxxxx of America; and
(5) INCARA DEVELOPMENT, LTD., a Bermuda exempted limited liability company
incorporated under the laws of Bermuda, and having its registered office at
Xxxxxxxxx Xxxxx, 0 Xxxxxx Xx., Xxxxxxxx, Xxxxxxx ("Xxxxx").
RECITALS:
A. Newco desires to issue and sell to Incara, and Incara desires to purchase
from Newco, for aggregate consideration of $7,500,000, 6000 Newco's common
Shares, par value $1.00 per share (the "Common Shares").
Additionally, Newco desires to issue and sell to the Shareholders (as
defined below), and the Shareholders desire to purchase from Newco, for
aggregate consideration of $7,500,000 apportioned between them as set forth
herein, 6000 Newco's preference Shares, par value $1.00 per share (the
"Preference Shares"), allocated 3612 Shares to Incara for aggregate
consideration of $4,515,000 and 2388 Shares to EIS for aggregate
consideration of $2,985,000.
B. As of the Closing Date, Elan Corp. and EPIL have entered into the Elan
License Agreement, and Incara has entered into the Incara License
Agreement, in
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connection with the license to Newco of the Elan Intellectual Property and
the Incara Intellectual Property, respectively (each as defined below).
C. Elan and Incara have agreed to co-operate in the research, development and
commercialization of the Products (as defined below) based on their
respective technologies.
D. Elan and Incara have agreed to enter into this Agreement for the purpose of
recording the terms and conditions regulating their relationship with each
other, with respect to the Licensed Technologies and with Newco.
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1
DEFINITIONS
1.1 In this Agreement, the following terms shall, where not inconsistent with
the context, have the following meanings respectively.
"Affiliate" shall mean any corporation or entity controlling, controlled or
under the common control of Elan or Incara or any third party, as the case
may be, excluding, in the case of Elan, an Elan JV. For the purpose of
this definition, (i)"control" shall mean direct or indirect ownership of
fifty percent (50%) or more of the stock or shares entitled to vote for the
election of directors and (ii) Newco shall not be an Affiliate of Elan or
EIS or Incara.
"Agreement" shall mean this agreement (which expression shall be deemed to
include the Recitals and the Schedules hereto).
"Board" shall mean the board of directors of Newco.
"Business" shall mean the business specified in the Business Plan.
"Business Plan" shall mean the business plan and program of development to
be agreed by Elan and Incara pursuant to Clause 6, with respect to the
research, development, and commercialization of the Products, that shall
contain, among other things, to the extent practicable, the research and
development objectives, desired Product specifications, clinical
indications, clinical trial designs, development timelines, budgeted costs
and the relative responsibilities of Incara and Elan as it relates to the
implementation of the R&D Plan.
"Closing Date" shall mean the date upon which the Definitive Documents are
executed and delivered by the Parties and the transactions effected thereby
are closed.
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"Common Shares Equivalents" shall mean any options, warrants, rights or any
other securities convertible, exercisable or exchangeable, in whole or in
part, for or into Common Shares.
"Certificate of Designations" shall mean that certain certificate of
designations, preferences and rights of Series B Preferred Shares and
Series C Preferred Shares of Incara issued on the Closing Date.
"Compound" shall mean the compound identified by Incara as OP2000, an ultra
low molecular weight heparin, the structure of which is described in
Schedule 1, and in the Incara Patents.
"Convertible Note" shall mean that certain convertible promissory note, of
even date herewith, effective 21 December 2000, by and between Incara and
EPIL.
"Definitive Documents" shall mean this Agreement, the Elan License
Agreement, the Incara License Agreement, the Convertible Note, the Incara
Securities Purchase Agreement, the Registration Rights Agreements, the
Certificate of Designations and associated documentation of even date
herewith, by and between Incara, Elan, EPIL, EIS and Newco, as applicable.
"Development Funding" shall have the meaning set forth in Clause 6.
"Directors" shall mean, at any time, the directors of Newco.
"EIS Director" shall have the meaning set forth in Clause 5.
"Elan" shall mean EPIL and Affiliates and subsidiaries of Elan Corp within
the division of Elan Corp carrying on business as Elan Pharmaceutical
Technologies. For the avoidance of doubt, "Elan" shall exclude the
Excluded Entities.
"Elan Corp" shall mean Elan Corporation, plc., a public limited company
incorporated under the laws of Ireland.
"Elan Improvements" has the meaning assigned thereto in the Elan License
Agreement.
"Elan Intellectual Property" has the meaning assigned thereto in the Elan
License Agreement.
"Elan JV" shall mean an entity that Elan and a third party (i) establish or
have established, (ii) take shareholdings in or have a right to take
shareholdings in, and (iii) grant certain licenses in and to certain
intellectual property rights for the purpose of implementing a strategic
alliance.
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"Elan License" has the meaning assigned thereto in the Elan License
Agreement.
"Elan License Agreement" shall mean the license agreement between Elan and
Newco, of even date herewith, attached hereto in Schedule 2.
"EIS/Newco Option" shall have the meaning set forth in Clause 8.
"Encumbrance" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"EPIL" or "Elan Pharma International Limited" shall mean Elan Pharma
International Limited, a private limited company incorporated under the
laws of Ireland.
"Exchange Right" has the meaning assigned to such term in the Certificate
of Designations in effect on the Closing Date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Entities" shall mean The Liposome Company, Inc. and its
subsidiaries; Axogen Limited; Neuralab Limited; Dura Pharmaceuticals, Inc.
and its subsidiaries; and Affiliates (present or future) of Elan Corp
within the division of Elan Corp carrying on business as Elan
Pharmaceuticals which incorporates, inter alia, EPIL (only to the extent
that it is the owner of patents, know-how or other intellectual property or
technology invented and/or developed within the division of Elan Corp
carrying on business as Elan Pharmaceuticals), Athena Neurosciences, Inc.,
Elan Pharmaceuticals, Inc. and Elan Europe Limited.
"FDA" shall mean the United States Food and Drug Administration or any
other successor agency in the USA.
"Field" shall mean the treatment and/or amelioration of any gastro-
intestinal disease by the administration of the Product. For the avoidance
of doubt, gastro-intestinal disease includes inflammatory bowel disease
(including ulcerative colitis and Crohn's Disease).
"Financial Year" shall mean each year commencing on January 1 (or in the
case of the first Financial Year, the Closing Date) and expiring on
December 31 of each year.
"Fully Diluted Common Shares" shall mean all of the issued and outstanding
Common Shares, assuming the conversion, exercise or exchange of all
outstanding Common Shares Equivalents.
"Incara" shall mean Incara Pharmaceuticals Corporation (formerly
Intercardia, Inc.), a Delaware corporation and its Affiliates.
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"Incara Directors" has the meaning set forth in Clause 5.
"Incara Improvements" has the meaning assigned thereto in the Incara
License Agreement.
"Incara Intellectual Property" has the meaning assigned thereto in the
Incara License Agreement.
"Incara License" has the meaning assigned thereto in the Incara License
Agreement.
"Incara License Agreement" shall mean the license agreement between Incara
and Newco, of even date herewith, attached hereto in Schedule 3.
"Incara Patents" has the meaning assigned thereto in the Incara License
Agreement.
"Incara Securities Purchase Agreement" shall mean that certain securities
purchase agreement, of even date herewith, by and between Incara and EIS.
"License Agreements" shall mean the Elan License Agreement and the Incara
License Agreement.
"Licensed Technologies" shall mean, collectively, the Elan Intellectual
Property and the Incara Intellectual Property.
"Newco Intellectual Property" shall mean all rights to patents, know-how
and other intellectual property arising out of the conduct of the Project
by any person, including any technology acquired by Newco from a third
party, that does not constitute Elan Intellectual Property or Incara
Intellectual Property.
For the avoidance of doubt, any preclinical and clinical data and/or
toxicity, stability and pharmacological data generated pursuant to the
Project relating to the Compound shall constitute Newco Intellectual
Property.
For the further avoidance of doubt, any patent application filed by Newco,
or by Elan or Incara on behalf of Newco, and any patent issued pursuant
thereto, covering a Product shall constitute Newco Intellectual Property.
"Newco Bye-Laws" shall mean the Memorandum of Association and Bye-Laws of
Newco.
"Opocrin" shall mean Opocrin S.p.A., a corporation organized under the laws
of Italy.
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"Opocrin Agreement" shall mean the License, Development, Marketing and
Clinical Trials Supply Agreement dated 20 July 1998 between Opocrin and
Incara (as amended by amendment agreement dated 15 September 2000).
"Participant" shall mean Incara or Elan, as the case may be, and
"Participants" shall mean both of the Participants together.
"Party" shall mean Elan Corp, EPIL, EIS, Incara, or Newco, as the case may
be, and "Parties" shall mean all such parties together.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or authority
or other entity of whatever nature.
"Permitted Transferee" shall mean any Affiliate or subsidiary of Elan,
EPIL, EIS or Incara, to whom this Agreement may be assigned, in whole or in
part, pursuant to the terms hereof or in the case of Elan, EPIL, EIS, a
special purpose financing entity created by Elan, EPIL or EIS.
"Product(s)" shall mean:
(i) the System containing or packaged with the Compound developed pursuant
to the Project; and/or
(ii) an injectable (including, for the avoidance of doubt, by intramuscular
injection, intravenous injection, or subcutaneous injection)
formulation of the Compound developed pursuant to the Project.
For the avoidance of doubt, "Product" shall exclude any oral formulation of
heparin or any heparinoid.
"Project" shall mean all activity as undertaken by or on behalf of Newco in
order to develop the Products in accordance with the Business Plan.
"Registration Rights Agreements" shall mean the Registration Rights
Agreements of even date herewith relating to Newco and Incara,
respectively.
"Regulatory Application" shall mean any regulatory application or any other
application for marketing approval for a Product, which Newco will file in
any country of the Territory, including any supplements or amendments
thereto.
"Regulatory Approval" shall mean the final approval to market a Product in
any country of the Territory, and any other approval which is required to
launch the Product in the normal course of business.
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"RHA" shall mean any relevant government health authority (or successor
agency thereof) in any country of the Territory whose approval is necessary
to market a Product in the relevant country of the Territory.
"R&D Plan" shall mean the program of work, including the budget, agreed by
the Management Committee as part of the Business Plan that relates to the
formulation, biopharmaceutical and clinical development of the Products and
such further research and development work as may be agreed by the
Management Committee from time to time.
"R&D Program(s)" shall mean any research and development program(s)
commenced by Newco pursuant to the Project.
"R&D Term" shall mean the period of [*] starting from 21 December 2000.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the Common Shares and Preference Shares of Newco.
"Shareholder" shall mean any of EIS, Incara, any Permitted Transferee or
any other Person who subsequently becomes bound by this Agreement as a
holder of the Shares, and "Shareholders" shall mean all of the Shareholders
together.
"System" has the meaning assigned thereto in the Elan License Agreement.
"Technological Competitor of Elan" shall mean a person or entity listed in
Schedule 4 and divisions, subsidiaries and successors thereof or any
additional broad-based technological competitor of Elan added to such
Schedule from time to time upon mutual agreement of Incara and Elan.
"Term" shall mean the term of this Agreement.
"Territory" shall mean all of the countries of the world, except for Japan
and Korea.
"United States Dollar" and "US$" and "$" shall mean the lawful currency of
the United States of America.
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
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Definition Clause
"AAA" 19.5
"Buyout Option" 19.3
"Closing" 4.3
"Common Shares" Recital
"Confidential Information" 21.1
"Co-sale Notice" 16.4
"Expert" 18.3
"Management Committee" 5.2.1
"Notice of Exercise" 16.3
"Notice of Intention" 16.3
"Offered Shares" 16.3
"Offer Price" 16.3
"Preference Shares" Recital
"Proposing Participant" 19.3
"Proposing Participant Price: 19.5
"Purchase Price" 19.5
"R&D Committee" 5.2.2
"Recipient Participant" 19.3
"Recipient Participant Price" 19.5
"Remaining Shareholders" 16.4
"Relevant Event" 19.2
"Selling Shareholder" 16.3
"Tag-Along Right" 16.4
"Transaction Proposal" 16.3
"Transfer" 16.1
"Transferee Terms" 16.4
"Transferring Shareholder" 16.4
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Unless the context otherwise requires, reference to a recital, article,
paragraph, provision, clause or schedule is to a recital, article,
paragraph, provision, clause or schedule of or to this Agreement.
1.5 Reference to a statute or statutory provision includes a reference to it as
from time to time amended, extended or re-enacted.
1.6 The headings in this Agreement are inserted for convenience only and do not
affect its construction.
1.7 Unless the context or subject otherwise requires, references to words in
one gender include references to the other genders.
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1.8 Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Definitive Documents, if defined therein.
CLAUSE 2
BUSINESS
2.1 The primary objective of the Agreement is to regulate the business of the
development, testing, registration, manufacture, commercialization and
licensing of Products in the Territory and to achieve the other objectives
set out in this Agreement. The focus of the Business will be the
development of the Products using the Elan Intellectual Property, the
Incara Intellectual Property and the Newco Intellectual Property to agreed-
upon specifications and timelines.
2.2 The central management and control of Newco shall be exercised in Bermuda
and shall be vested in the Directors and such Persons as they may delegate
the exercise of their powers. The majority of the Board shall be resident
in Bermuda. The Shareholders agree to conduct the Business in such a
manner as to ensure that Newco is liable to taxation in Bermuda and not in
any other jurisdiction. The Participants shall use their best endeavors to
ensure the sole residence of Newco in Bermuda, all meetings of the
Directors are held in Bermuda or other jurisdictions outside the United
States and generally to ensure that Newco is treated as resident for
taxation purposes in Bermuda.
2.3 The Management Committee may determine, by unanimous agreement, that any
R&D Program commenced as part of the Project in respect of the Compound
should be terminated where the Compound or System fails to meet agreed
specifications or the R&D Program reveals scientific or technical or
intellectual property issues which would have a material adverse effect on
the development and commercialization of the Compound or the System in the
Field in the Territory.
In either such event, the Management Committee shall review in good faith
the possibility of in-licensing to Newco an alternative System or an
alternative compound or alternative compounds from Incara, or of in-
licensing or acquiring the rights from one or more third parties to such
alternative compound or alternative compounds (in either case, "Alternative
Compounds") provided that the number of Alternative Compounds selected
under this Clause 2.3 shall not exceed two.
If the Parties should agree to in-license to Newco an alternative System or
an Alternative Compound from Incara, Elan or from a third party, the
Parties shall discuss in good faith whether any amendments are required to
the Definitive Documents as a result of such approval, such as amending the
provisions regulating non-competition.
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2.4 In the event that the Management Committee, by unanimous agreement,
terminates any R&D Program in respect of any Compound ("Abandoned
Compound") pursuant to Clause 2.3:
2.4.1 as provided in the Elan License Agreement, Newco and Incara shall
confirm to Elan in writing that the Elan License has terminated
insofar as it previously related to the Abandoned Compound;
2.4.2 as provided in the Incara License Agreement, Newco and Elan shall
confirm to Incara in writing that the Incara License has terminated
insofar as it previously related to the Abandoned Compound; and
2.4.3 as provided in the License Agreements, Elan and Incara will cease to
be bound by the [*] obligations set forth in this Clause 5 of the
License Agreements or otherwise set forth in the Definitive
Documents in respect of the Abandoned Compound, and the Parties
shall discuss in good faith what additional amendments are required
to the Definitive Documents.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Newco: Newco hereby represents and
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warrants to each of the Shareholders as follows, as of the Closing Date:
3.1.1 Organization: Newco is an exempted company duly organized, validly
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existing and in good standing under the laws of Bermuda, and has all
the requisite corporate power and authority to own and lease its
properties, to carry on its business as presently conducted and as
proposed to be conducted.
3.1.2 Capitalization: The authorized capital Shares of Newco consists of
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6000 Common Shares and 6000 Preference Shares. Prior to the Closing
Date, no shares of capital stock of Newco have been issued.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
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3.1.3 Authorization: The execution, delivery and performance by Newco of
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this Agreement, including the issuance of the Shares, have been duly
authorized by all requisite corporate actions; this Agreement has
been duly executed and delivered by Newco and is the valid and
binding obligation of Newco, enforceable against it in accordance
with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the enforcement of creditors' rights
generally, and except as enforcement of rights to indemnity and
contribution hereunder may be limited by United States federal or
state securities laws or principles of public policy. The Shares,
when issued as contemplated hereby, will be validly issued and
outstanding, fully paid and non-assessable and not subject to
preemptive or any other similar rights of the Shareholders or
others.
3.1.4 No Conflicts: The execution, delivery and performance by Newco of
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this Agreement, the issuance, sale and delivery of the Shares, and
compliance with the provisions hereof by Newco, will not:
(i) violate any provision of applicable law, statute, rule or
regulation applicable to Newco or any ruling, writ,
injunction, order, judgment or decree of any court,
arbitrator, administrative agency or other governmental body
applicable to Newco or any of its properties or assets;
(ii) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with notice or
lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration) under the Newco
Bye-Laws or any material contract to which Newco is a party,
except where such violation, conflict or breach would not,
individually or in the aggregate, have a material adverse
effect on Newco; or
(iii) result in the creation of, any Encumbrance upon any of the
properties or assets of Newco.
3.1.5 Approvals: No permit, authorization, consent or approval of or by,
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or any notification of or filing with, any Person is required in
connection with the execution, delivery or performance of this
Agreement by Newco. Newco has full authority to conduct its business
as contemplated in the Business Plan and the Definitive Documents.
3.1.6 Disclosure: This Agreement does not contain any untrue statement of
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a material fact or omit to state any material fact necessary to make
the statements contained herein not misleading. Newco is not aware
of any material contingency, event or circumstance relating to its
business or prospects, which could have a material adverse effect
thereon, in order for
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the disclosure herein relating to Newco not to be misleading in any
material respect.
3.1.7 No Business; No Liabilities: Newco has not conducted any business
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or incurred any liabilities or obligations prior to the Closing
Date, except solely in connection with its organization and
formation.
3.2 Representations and Warranties of the Shareholders: Each of the
---------------------------------------------------
Shareholders hereby severally but not jointly represents and warrants to
Newco as follows, as of the Closing Date:
3.2.1 Organization: Such Shareholder is a corporation duly organized and
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validly existing under the laws of its jurisdiction of organization
and has all the requisite corporate power and authority to own and
lease its respective properties, to carry on its respective business
as presently conducted and as proposed to be conducted and to carry
out the transactions contemplated hereby.
3.2.2 Authority: Such Shareholder has full legal right, power and
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authority to enter into this Agreement and to perform its
obligations hereunder, which have been duly authorized by all
requisite corporate action. This Agreement is the valid and binding
obligation of such Shareholder, enforceable against it in accordance
with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the enforcement of creditors' rights
generally, and except as enforcement of rights to indemnity and
contribution hereunder may be limited by United States federal or
state securities laws or principles of public policy.
3.2.3 No Conflicts: The execution, delivery and performance by such
------------
Shareholder of this Agreement, purchase of the Shares, and
compliance with the provisions hereof by such Shareholder will not:
(i) violate any provision of applicable law, statute, rule or
regulation known by and applicable to such Shareholder or any
ruling, writ, injunction, order, judgment or decree of any
court, arbitrator, administrative agency or other governmental
body applicable to such Shareholder or any of its properties or
assets;
(ii) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with notice or
lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under the charter or
organizational documents of such Shareholder or any material
contract to which such Shareholder is a party, except where
such violation, conflict or breach would not,
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individually or in the aggregate, have a material adverse
effect on such Shareholder; or
(iii) result in the creation of, any Encumbrance upon any of the
properties or assets of such Shareholder.
3.2.4 Approvals: No permit, authorization, consent or approval of or by,
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or any notification of or filing with, any Person is required in
connection with the execution, delivery or performance of this
Agreement by such Shareholder.
3.2.5 Investment Representations: Such Shareholder is sophisticated in
--------------------------
transactions of this type and capable of evaluating the merits and
risks of its investment in Newco. Such Shareholder has not been
formed solely for the purpose of making this investment and such
Shareholder is acquiring the Common Shares and Preference Shares for
investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution
of any part thereof. Such Shareholder understands that the Shares
have not been registered under the Securities Act or applicable
state and foreign securities laws by reason of a specific exemption
from the registration provisions of the Securities Act and
applicable state and foreign securities laws, the availability of
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of such Shareholders'
representations as expressed herein. Such Shareholder understands
that no public market now exists for any of the Shares and that
there is no assurance that a public market will ever exist for such
Shares.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 Newco has authorized the issuance to (i) EIS of 2388 Preference Shares and
(ii) Incara of 6000 Common Shares and 3612 Preference Shares, issuable as
provided in Clause 4.3 hereof.
4.2 Incara and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to Newco in consideration therefore, by wire
transfer of immediately available funds (to a bank account established by
Newco in connection with Completion) the subscription amounts each as
provided in Clause 4.4.1.
4.3 The closing (the "Closing") shall take place at the offices of Xxxxx
Xxxxxxxxxxx LLC at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the
Closing Date or such other places if any, as the Parties may agree and
shall occur
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contemporaneously with the closing under the Incara Securities Purchase
Agreement.
4.4 At the Closing, each of the Shareholders shall take or (to the extent
within its powers) cause to be taken the following steps at Directors and
shareholder meetings of Newco, or such other meetings, as appropriate:
4.4.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the terms and subject to the conditions set forth
herein, 2388 Preference Shares for an aggregate purchase price of
$2,985,000;
Newco shall issue and sell to Incara, and Incara shall purchase from
Newco, upon the terms and conditions set forth herein, (i) 6000
Common Shares for an aggregate purchase price of $7,500,000 and (ii)
3612 Preference Shares for an aggregate purchase price of
$4,515,000;
4.4.2 the Parties shall execute and deliver to each other, as applicable,
certificates in respect of the Common Shares and Preference Shares
described above and any other certificates, resolutions or documents
which the Parties shall reasonably require;
4.4.3. the adoption by Newco of Newco Bye-Laws;
4.4.4. the appointment of [*] as Directors of Newco;
4.4.5. the resignation of all directors and the secretary of Newco holding
office prior to the execution of this Agreement and delivery of
written confirmation under seal by each Person so resigning that he
has no claim or right of action against Newco and that Newco is not
in any way obligated or indebted to him; and
4.4.6. the transfer to Newco of the share register.
4.5 Exemption from Registration:
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The Shares will be issued under an exemption or exemptions from
registration under the Securities Act. Accordingly, the certificates
evidencing the Shares shall, upon issuance, contain the following legend:
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAWS OF A STATE OR
OTHER JURISDICTION AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF (OTHER THAN TO AN AFFILIATE OF THE
ORIGINAL HOLDER OR AS OTHERWISE PERMITTED IN THE AGREEMENT PURSUANT TO
WHICH THEY WERE ISSUED) EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS, OR (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE
SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING TO
THE DISPOSITION OF SECURITIES) TOGETHER WITH AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
4.6. Newco shall use reasonable efforts to file any documents that require
filing with the Registrar of Companies in Bermuda within the prescribed
time limits. EIS and Incara shall provide all reasonable co-operation to
Newco in relation to the matters set forth in this Clause 4.6.
4.7. In the event that EIS exercises the Exchange Right, Newco and the
Participants shall, immediately upon such exercise, take all necessary
steps to ensure that EIS obtains full legal right, title and interest in
and to the Preference Shares covered thereby.
The Parties acknowledge that such Shares have been pledged to EIS pursuant
to the Incara Securities Purchase Agreement and that EIS' lawyers have
physical possession of such Shares. Upon exercise by EIS of the Exchange
Right, EIS shall be entitled to take full legal ownership of, and title to,
such Shares in accordance with the applicable provisions of the Incara
Securities Purchase Agreement. In the event that EIS fails to exercise the
Exchange Right, EIS shall cause such Shares to be promptly returned to
Incara.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. Directors:
---------
18
5.1.1 Prior to the exercise of the Exchange Right, the Board shall be
composed of five Directors.
Incara shall have the right to nominate four directors of Newco,
provided that at least two such directors are residents of Bermuda,
("Incara Directors") and EIS shall have the right to nominate one
Director of Newco ("EIS Director") which Director, save as further
provided herein, shall only be entitled to 15% of the votes of the
Board.
In the event that the Exchange Right is exercised by EIS within [*]
years following the Closing Date, the EIS Director shall only be
entitled to 15% of the votes of the Board until the expiry of [*]
years from the Closing Date.
In the event that the Exchange Right is exercised by EIS at any time
after two years following the Closing Date or upon the expiry of [*]
years following the Closing Date where the Exchange Right has been
exercised by EIS within [*] years following the Closing Date, each
of Incara, and EIS shall cause the Board to be reconfigured so that
an equal number of Directors are designated by EIS and Incara and
that each of the Directors has equal voting power.
5.1.2 If EIS removes the EIS Director, or Incara removes any of the Incara
Directors, EIS or Incara, as the case may be, shall indemnify the
other Shareholder against any claim by such removed Director arising
from such removal.
5.1.3 The Directors shall meet not less than [*] times in each Financial
Year and all Board meetings shall be held in Bermuda to ensure the
sole residence of Newco in Bermuda.
5.1.4 At any such meeting, the presence of the EIS Director and at least
two of the Incara Directors shall be required to constitute a quorum
and, subject to Clause 17 hereof, the affirmative vote of a majority
of the Directors present at a meeting at which such a quorum is
present shall constitute an action of the Directors. In the event of
any meeting being inquorate, the meeting shall be adjourned for a
period of seven days. A notice shall be sent to the EIS Director and
the Incara Directors specifying the date, time and place where such
adjourned meeting is to be held and reconvened.
5.1.5 On the Closing Date, Incara may appoint one of the Incara Directors
to be the chairman of Newco. The chairman of Newco shall hold office
until:
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
19
(i) the first meeting of the Board following the exercise by EIS of
the Exchange Right, where the Exchange Right has been exercised
by EIS after [*] years following the Closing Date; or
(ii) the first meeting of the Board following the expiry of [*]
years following the Closing Date where the Exchange Right has
been exercised by EIS within [*] years following the Closing
Date
(in each case the "Chairman Status Board Meeting")
After the Chairman Status Board Meeting, each of EIS and Incara,
beginning with EIS at the Chairman Status Board Meeting, shall have
the right, exercisable alternatively, of nominating one Director to
be chairman of Newco for a term of one year.
If the chairman is unable to attend any meeting of the Board held
prior to the Chairman Status Board Meeting, the Incara Directors
shall be entitled to appoint another Incara Director to act as
chairman in his place at the meeting.
If the chairman of Newco is unable to attend any meeting of the
Board held after the Chairman Status Board Meeting, the Directors
shall be entitled to appoint another Director to act as chairman of
Newco in his place at the meeting.
5.1.6 In case of an equality of votes at a meeting of the Board, the
chairman of Newco shall not be entitled to a second or casting vote.
In the event of continued deadlock, the Board shall resolve the
deadlock pursuant to the provisions set forth in Clause 18.
5.2 Management and R&D Committees:
------------------------------
5.2.1 The Board shall appoint a management committee (the "Management
Committee") to consist initially of four members, two of whom shall
be nominated by Elan and two of whom shall be nominated by Incara,
and each of whom shall be entitled to one vote, whether or not
present at any Management Committee meeting. Decisions of the
Management Committee shall require approval of at least one Elan
nominee on the Management Committee and one Incara nominee on the
Management Committee.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
20
Each of Elan and Incara shall be entitled to remove any of their
nominees to the Management Committee and appoint a replacement
therefor. The number of members of the Management Committee may be
altered if agreed to by a majority of the directors of Newco;
provided that, each of Elan and Incara shall be entitled to appoint
an equal number of members to the Management Committee. The
Management Committee shall be responsible for, inter alia, devising,
implementing and reviewing strategy for the Project.
5.2.2 The Management Committee shall appoint a research and development
committee (the "R&D Committee"), which shall initially be comprised
of four members, two of whom shall be nominated by Elan and two of
whom shall be nominated by Incara, and each of whom shall have one
vote, whether or not present at an R&D Committee meeting. Decisions
of the R&D Committee shall require approval of at least one Elan
nominee on the R&D Committee and one Incara nominee on the R&D
Committee.
Each of Elan and Incara shall be entitled to remove any of their
nominees to the R&D Committee and appoint a replacement therefor.
The number of members of the R&D Committee may be altered if agreed
to by a majority of the directors of Newco provided that each of
Elan and Incara shall be entitled to appoint an equal number of
members to the R&D Committee.
5.2.3 The R&D Committee shall be responsible for, inter alia:-
(1) designing that portion of the Business Plan that relates to the
Project for consideration by the Management Committee;
(2) establishing a joint Project team consisting of an equal number
of team members from Elan and Incara, including one Project
leader from each of Elan and Incara; and
(3) implementing such portion of the Business Plan that relates to
the Project, as approved by the Management Committee.
5.2.4 In the event of any dispute amongst the R&D Committee, the R&D
Committee shall refer such dispute to the Management Committee whose
decision on the dispute shall be binding on the R&D Committee.
If the Management Committee cannot resolve any dispute referred to
it by the R&D Committee, or any dispute within the Management
Committee, after 15 days or such other period as may be agreed by
the Management Committee, the dispute will be referred to a
designated senior officer of each of Elan and Incara, and
thereafter, in the event of continued deadlock, pursuant to the
deadlock provisions set forth in Clause 18,
21
involving inter alia, the referral of the dispute to an expert,
whose decision, however, will ultimately be non-binding on the
Participants.
CLAUSE 6
THE BUSINESS PLAN AND REVIEWS
6.1 The Directors shall meet together as soon as reasonably practicable after
the Closing Date and shall agree upon and approve the Business Plan for the
current Financial Year within 60 days of the Closing Date.
6.2. The Business Plan shall be subject to ongoing review and updating by the
Directors and the approval of the EIS Director and the Incara Directors on
a quarterly basis.
6.3 It is estimated that Newco will require an US$[*] to commence and continue
the development of the Products (the "Development Funding").
Subject to Clause 6.4, during the R&D Term, EIS and Incara may provide to
Newco, by way of contributed surplus or loan, as may be agreed to by both
EIS and Incara, up to an aggregate maximum amount of US$[*] in Development
Funding, [*], such funding to be provided by EIS and Incara on a pro rata
basis based on their respective equity interests, on a fully-diluted basis,
at the time of each such funding, in Newco.
6.4 Neither Participant shall be obliged to provide Development Funding [*] to
Newco in the absence of quarterly approval of the Business Plan and a
determination by each Participant, in its sole discretion, that Development
Funding [*] shall be provided for the development of the Products.
6.5 [*]
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.]
22
[*]
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 It is the expectation of the Parties that [*] shall perform substantially
all the research and development work in the Project in accordance with the
provisions of this Clause 7.
Subject to the provisions of Clause 6.3 and Clause 6.4, each of Elan and
Incara Elan may, at its respective discretion, provide research and
development services to Newco, at the request of Newco and as articulated
in the Business Plan in furtherance of the development and
commercialization of the Products and cultivation of patent rights and
know-how related to the Elan Intellectual Property, Incara Intellectual
Property and Newco Intellectual Property.
It is acknowledged by the Parties that Incara has undertaken research and
development work relating to the Compound prior to the Closing Date. For
the avoidance of doubt, Incara has agreed to indemnify and continues to
indemnify the other parties hereto against any claims, losses or damages
arising against any party thereunder prior to the Closing Date.
7.2 The cost of any research and development work undertaken by Elan and/or
Incara shall be calculated based on a rate of $[*] per FTE (Full Time
Equivalent Employee Rate) per year (an FTE being the equivalent of 1500
hours per year per employee).
Research and development work that is subcontracted by Elan or Incara to
third party providers shall be charged by Elan or Incara to Newco at the
amount invoiced by the relevant third party provider.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
23
7.3 Newco shall pay Incara and Elan for any research and development work
carried out by them on behalf of Newco at the end of each month during the
R&D Program, subject to the proper vouching of research and development
work and expenses. An invoice shall be issued to Newco by Incara or Elan,
as applicable, by the 15/th/ day of the month following the month in which
work was performed.
7.4 Elan and Incara shall permit Newco or its duly authorized representative on
reasonable notice and at any reasonable time during normal business hours
to have access to inspect and audit the accounts and records of Elan or
Incara and any other book, record, voucher, receipt or invoice relating to
the calculation or the cost of the R&D Program and to the accuracy of the
reports which accompanied them. Any such inspection of Elan's or Incara's
records, as the case may be, shall be at the expense of Newco, except that
if such inspection reveals an overpayment in the amount paid to Elan or
Incara, as the case may be, for the R&D Program hereunder in any Financial
Year of 5% or more of the amount due to Elan or Incara, as the case may be,
then the expense of such inspection shall be borne solely by Elan or
Incara, as the case may be, instead of by Newco. Any surplus over the sum
properly payable by Newco to Elan or Incara, as the case may be, shall be
paid promptly by Elan or Incara, as the case may be, to Newco. If such
inspection reveals a deficit in the amount of the sum properly payable to
Elan or Incara, as the case may be, by Newco, Newco shall pay the deficit
to Elan or Incara, as the case may be.
CLAUSE 8
COMMERCIALIZATION
8.1 Newco shall diligently pursue the research, development, prosecution and
commercialization of the Products as provided in the Business Plan.
8.2 At such time as Newco notifies EIS in writing that Newco in good faith
intends to commercialize a Product, EIS shall have a first option to
negotiate the terms of any agreement for the commercialization of such
Product, which option shall be exercised within 45 days of EIS' receipt of
such written notification from Newco (the "EIS/Newco Option"). If EIS
elects to enter into such negotiations, the Parties shall negotiate in good
faith the terms of the agreement for the commercialization of such Product
by EIS.
24
If, despite good faith negotiations, EIS and Newco do not reach agreement
within 120 days from EIS' exercise of the EIS/Newco Option, then Newco
shall be free for a period of [*] months thereafter to enter into
negotiations with a third party (other than a Technological Competitor of
Elan) to agree upon terms upon which the third party would commercialize
the Product in the Territory, provided that such terms when taken as a
whole, are not more favorable to the third party than the principal terms
of the last written proposal offered by Newco to EIS or by EIS to Newco, as
the case may be.
If Newco has not entered into an agreement with a third party within the
[*] month period described above, the EIS/Newco Option shall be deemed to
have re-commenced upon the same terms as set forth herein [*].
CLAUSE 9
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS[*]
9.1. The Parties acknowledge and agree to be bound by the provisions of Clause
3 of the Elan License Agreement and Clause 3 of the Incara License
Agreement which set forth the agreement between the Parties in relation to
the ownership of the Elan Intellectual Property, the Incara Intellectual
Property and the Newco Intellectual property respectively.
9.2 The Parties acknowledge and agree to be bound by the provisions of Clause
4 of the Elan License Agreement and the provisions of Clause 4 of the
Incara License Agreement which set forth the agreement between the parties
thereto in relation to the [*] obligations of Elan and Incara,
respectively.
CLAUSE 10
INTELLECTUAL PROPERTY RIGHTS
10.1 Elan, at [*] expense, may:
10.1.1 secure the grant of any patent applications within the Elan
Intellectual Property in the Field;
10.1.2 file and prosecute patent applications on patentable inventions and
discoveries relating to the same;
10.1.3 defend all such applications against third party oppositions; and
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
25
10.1.4 maintain in force any issued letters patent relating to the same.
Elan shall have the right in its discretion to control such filing,
prosecution, defense and maintenance, provided that Newco and Incara at
their request shall be provided with copies of all documents relating to
such filing, prosecution, defense and maintenance in sufficient time to
review such documents and comment thereon prior to filing.
10.2 Incara, at [*] expense, may:
10.2.1 secure the grant of any patent applications within the Incara
Intellectual Property in the Field;
10.2.2 file and prosecute patent applications on patentable inventions and
discoveries relating to the same;
10.2.3 defend all such applications against third party oppositions; and
10.2.4 maintain in force any issued letters patent that relate to the
same.
Incara shall have the right in its discretion to control such filing,
prosecution, defense and maintenance provided that Elan and Newco at their
request shall be provided with copies of all documents relating to such
filing, prosecution, defense and maintenance in sufficient time to review
such documents and comment thereon prior to filing.
10.3 All results of research and development pursuant to the Project shall be
promptly disclosed by each Party to the Management Committee.
The Management Committee shall review on an ongoing basis whether such
results constitute Incara Intellectual Property, Elan Intellectual Property
or Newco Intellectual Property having regard to the provisions of this
Agreement.
In the event that the disclosing Party informs the other Parties that it
does not intend to file patent applications on disclosed patentable
inventions and discoveries, or maintain issued patents which are Incara
Intellectual Property or Elan Intellectual Property, as the case may be,
that relate to the Products or the Field in one or more countries in the
Territory or fails to file such an application within a reasonable period
of time, Newco may request such disclosing Party to file and prosecute such
patent application(s) at Newco's expense.
The disclosing Party shall comply with such request unless the disclosing
party believes such request is without merit.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
26
10.4 Newco at [*] expense, may:
10.4.1 secure the grant of any patent applications within the Newco
Intellectual Property in the Field;
10.4.2 file and prosecute patent applications on patentable inventions and
discoveries relating to the same;
10.4.3 defend all such applications against third party oppositions; and
10.4.4 maintain in force any issued letters patent that relate to the
same.
Newco shall have the right in its discretion to control such filing,
prosecution, defense and maintenance provided that Elan and Incara at their
request shall be provided with copies of all documents relating to such
filing, prosecution, defence and maintenance in sufficient time to review
such documents and comment thereon prior to filing.
10.5 In the event that Newco informs both Elan and Incara that it does not
intend to file an application on disclosed patentable inventions and
discoveries or maintain any issued patent within the Newco Intellectual
Property, Elan shall have the right to file and prosecute such patent
applications on inventions which relate predominantly to the Elan
Intellectual Property, and Incara shall have the right to file and
prosecute and maintain such patent applications on inventions which relate
predominantly to the Incara Intellectual Property, and Elan and Incara
agree to negotiate in good faith on the course of action to be taken with
respect to Newco Intellectual Property that relates equally to both Elan
Intellectual Property and Incara Intellectual Property.
10.6 Each Party shall notify the Management Committee in a timely manner of any
decision to abandon a pending or issued patent relating to the Compound,
the System, the Products or the Field. The other Party (that is Incara in
the case that Elan proposes to abandon; and Elan in the case that Incara
proposes to abandon) shall have the option of requesting the owner of the
pending or issued patent to continue the prosecution or maintenance of such
pending or issued patent at Newco's expense, provided that such decision is
commercially reasonable.
10.7 The Parties shall promptly inform each other in writing of any actual or
alleged unauthorized use of Elan Intellectual Property, the Incara
Intellectual Property or the Newco Intellectual Property by a third party
of which it becomes aware and provide the others with any available
evidence of such unauthorized use.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
27
10.8 At its option, as the case may be, Elan or Incara shall have the first
option to enforce at [*] expense and for [*] benefit any unauthorized use
of its respective intellectual property (the Elan Intellectual Property or
the Incara Intellectual Property, as the case may be,) in the Field.
At the enforcing party's request, the other Parties shall cooperate with
such action.
Should Elan or Incara decide not to enforce the Elan Intellectual Property
or the Incara Intellectual Property respectively, against such
unauthorized use in the Field, within a reasonable period but in any event
within 20 days after receiving written notice of such actual or alleged
unauthorized use, Newco may in its discretion request the respective
intellectual property owner to initiate such proceedings in Newco's name,
at Newco's expense and for Newco's benefit. Elan or Incara, as the case
may be, shall cooperate in bringing such action on Newco's behalf unless
Elan or Incara believe in good faith that such an action is without merit.
Alternatively, Elan or Incara may agree to enforce either or both such
Party's intellectual property in their joint names and shall reach
agreement as to the proportion in which they shall share the proceeds of
any such action, and the expense of any costs not recovered,
10.9 Newco shall have the first right but not the obligation to bring suit or
otherwise take action against any alleged infringement of the Newco
Intellectual Property or alleged unauthorized use of the Newco
Intellectual Property.
In the event that Newco takes such action, Newco shall do so at its own
cost and expense and all damages and monetary award recovered in or with
respect to such action shall be the property of Newco.
Newco shall keep Elan and Incara informed of any action in a timely manner
so as to enable Incara and Elan to provide input in any such action and
Newco shall reasonably take into consideration any such input.
At Newco's request, the Parties shall co-operate with any such action at
Newco's cost and expense.
10.10 In the event that Newco does not bring suit or otherwise take action
against an infringement of any Newco Intellectual Property or
misappropriation of the Newco Intellectual Property:
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
28
10.10.1 if only one Participant determines to pursue such suit or take
such action at its own cost and expense, it shall be entitled to
all damages and monetary award recovered in or with respect to
such action; and
10.10.2 if the Participants pursue such suit or action jointly outside of
Newco, they shall negotiate in good faith an appropriate
allocation of costs, expenses and recovery amounts. At the
Participants' request, Newco shall co-operate with any such action
at the Participants' cost and expense.
10.11 In the event that a claim is or proceedings are brought against Newco by a
third party alleging that the sale, distribution or use of a Product in
the Territory or use of the Elan Intellectual Property or the Incara
Intellectual Property, as the case may be, infringes the intellectual
property rights of such third party, Newco shall promptly advise the other
Parties of such threat or suit.
Save in respect of claims by Newco against either Participant or by a
third party against Newco where there has been a breach of representation
or warranty under the Elan License Agreement or the Incara License
Agreement, by Elan or Incara, respectively, Newco shall indemnify, defend
and hold harmless Elan or Incara, as the case may be, against all actions,
losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys fees) relating directly or indirectly to all such
claims or proceedings, provided that Elan or Incara, as the case may be,
shall not acknowledge to the third party or to any other person the
validity of any claims of such a third party, and shall not compromise or
settle any claim or proceedings relating thereto without the prior written
consent to Newco, not to be unreasonably withheld or delayed.
At its option, Elan or Incara, as the case may be, may elect to take over
the conduct of such proceedings from Newco provided that Newco's
indemnification obligations shall continue; the costs of defending such
claim shall be borne by Elan or Incara, as the case may be and such Party
shall not compromise or settle any such claim or proceeding without the
prior written consent of Newco, such consent not to be unreasonably
withheld or delayed.
CLAUSE 11
CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
11.1 Solely for the purposes of, and only to the extent necessary, to enable
Elan to conduct research and development work on behalf of Newco, Newco
shall grant to Elan [*] license for the term of the License Agreements:
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
29
11.1.1 to use the Newco Intellectual Property in the Field in the
Territory; and
11.1.2 subject to the terms and conditions of the Incara License Agreement
and the Elan License Agreement, a sublicense to use the Incara
Intellectual Property and the Elan Intellectual Property in the
Field in the Territory.
11.2 Solely for the purposes of, and only to the extent necessary, to enable
Incara to conduct research and development work on behalf of Newco, Newco
shall grant to Incara [*] license for the term of the License Agreements:
11.2.1 to use the Newco Intellectual Property in the Field in the
Territory; and
11.2.2 subject to the terms and conditions of the Elan License Agreement
and the Incara License Agreement, a sublicense to use the Elan
Intellectual Property and the Incara Intellectual Property in the
Field in the Territory.
CLAUSE 12
REGULATORY MATTERS/CLINICAL TRIALS
12.1 Newco shall keep the other Parties promptly and fully advised of Newco's
regulatory activities, progress and procedures. Newco shall inform the
other Parties of any dealings it shall have with an RHA, and shall furnish
the other Parties with copies of all material correspondence relating to
the Products. The Parties shall collaborate to obtain any required
Regulatory Approval of the RHA to market the Products.
12.2 Newco shall, at its own cost, file, prosecute and maintain any and all
Regulatory Applications for the Products in the Territory in accordance
with the Business Plan.
12.3 Subject to Clause 12.5, any and all Regulatory Approvals obtained hereunder
for any Product shall remain the property of Newco, provided that Newco
shall allow Elan and Incara access thereto to enable Elan and Incara to
fulfill their respective obligations and exercise their respective rights
under this Agreement. Newco shall maintain such Regulatory Approvals at its
own cost.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
30
12.4 It is hereby acknowledged that there are inherent uncertainties involved in
the registration of pharmaceutical products with the RHA's insofar as
obtaining approval is concerned and such uncertainties form part of the
business risk involved in undertaking the form of commercial collaboration
as set forth in this Agreement.
12.5 All Regulatory Approvals and the DMF (Drug Master File) relating to the
Compound(s) shall be processed by and be the property of Incara and at all
times held in Incara's sole name.
All regulatory approvals and the MAF (Master File) relating to the System
shall be processed by and be the property of Elan and at all times held in
Elan's sole name.
Each of Elan and Incara will authorize Newco to reference such Party's DMF
or MAF, as described herein, with any RHA to the extent necessary for
Newco's regulatory purposes.
Newco will authorize Elan and Incara to reference Newco's Regulatory
Approvals to the extent necessary for Elan's and Incara's regulatory
purposes relating specifically to the Project.
12.6 The Management Committee shall, by unanimous agreement, be responsible for
determining Newco's strategy as regards the conduct of any clinical trials
with respect to the development of the Products. Any agreement between
Newco and Elan or Incara, as the case may be, or between Newco and any
independent third party relating to the conduct of any clinical trial with
respect to the development of the Products shall require the prior approval
in writing of Elan and Incara, which shall not be unreasonably withheld.
For the avoidance of doubt, where Elan or Incara commences any clinical
trial with respect to the development of the Products (the "Clinical Trial
Co-ordinator") such Clinical Trial Co-ordinator will indemnify the other
Parties hereto (for the avoidance of doubt, including Elan or Incara, as
the case may be) against any claims, losses or damages arising against any
such other Party hereto in connection with any such clinical trial with
respect to the development of the Products.
12.7 The Parties agree that each Party shall effect and maintain comprehensive
general liability insurance in respect of all clinical trials and other
activities performed by them on behalf of Newco. The Participants and
Newco shall ensure that the industry standard insurance policies shall be
in place for all activities to be carried out by Newco.
CLAUSE 13
31
MANUFACTURING
13.1 Subject to the provisions of Clause 13.2, Newco shall be responsible for
assembling and manufacturing, or having assembled and manufactured, all
quantities of Products required for the development and commercialization
of Products for use in the Field in the Territory.
13.2 Elan shall have the first right to manufacture and supply, and/or
subcontract the manufacture and supply, of the System with respect to the
Product on industry standard, commercially reasonable terms negotiated in
good faith on an arms' length basis by Newco and Elan; and Incara shall,
subject to the Opocrin Agreement, have the first right to manufacture and
supply, and/or subcontract the manufacture and supply, of the Compound with
respect to the Product, on industry standard, commercially reasonable terms
negotiated in good faith on an arms' length basis by Newco and Incara.
13.3 Any such supply agreements (including quality agreements) shall be
negotiated and agreed by the Parties not later than the date of completion
of Phase III (as such term is commonly used in connection with FDA
applications) of the R&D Plan. The terms of the said supply agreements
shall be negotiated in good faith on standard industry and commercial
terms.
13.4 The cost charged by Elan and/or Incara to Newco in respect of the
provision by Elan and/or Incara to Newco of any clinical trial supplies
pursuant to the Project shall be agreed by the Parties as soon as
practicable in advance of supply to Newco.
CLAUSE 14
TECHNICAL SERVICES AND ASSISTANCE
14.1 Whenever commercially and technically feasible, Newco shall contract with
Incara or Elan, as the case may be, to perform such other services as Newco
may require, other than those specifically dealt with hereunder or in the
License Agreements. In determining which Party should provide such
services, the Management Committee shall take into account the respective
infrastructure, capabilities and experience of Elan and Incara. There
shall be no obligation upon either of Incara or Elan to perform such
services.
14.2 Newco shall, if the Participants so agree, conclude an administrative
support agreement with Elan and/or Incara on such terms as the Parties
thereto shall in good faith negotiate. The administrative services shall
include one or more of the following administrative services as requested
by Newco:
14.2.1 accounting, financial and other services;
32
14.2.2 tax services;
14.2.3 insurance services;
14.2.4 human resources services;
14.2.5 legal and company secretarial services;
14.2.6 patent and related intellectual property services; and
14.2.7 all such other services consistent with and of the same type as
those services to be provided pursuant to this Agreement, as may be
required.
The foregoing list of services shall not be deemed exhaustive and may be
changed from time to time upon written request by Newco.
14.3 If Elan or Incara so requires, Incara or Elan, as the case may be, shall
receive, at times and for periods mutually acceptable to the Parties,
employees of the other Party (such employees to be acceptable to the
receiving Party in the matter of qualification and competence) for
instruction in respect of the Elan Intellectual Property or the Incara
Intellectual Property, as the case may be, as necessary to further the
Project.
14.4 The employees received by Elan or Incara, as the case may be, shall be
subject to obligations of confidentiality no less stringent than those set
out in Clause 21 and such employees shall observe the rules, regulations
and systems adopted by the Party receiving the said employees for its own
employees or visitors.
CLAUSE 15
AUDITORS, BANKERS, ACCOUNTING REFERENCE DATE; SECRETARY
Unless otherwise agreed by the Participants and save as may be provided to the
contrary herein:
15.1 the bankers of Newco shall be [*] or such other bank as may be mutually
agreed from time to time;
15.2 the accounting reference date of Newco shall be September 30 in each
Financial Year; and
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
33
15.3 the secretary of Newco shall be [*] or such other Person as may be
appointed by the Directors from time to time.
CLAUSE 16
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
General:
--------
16.1. Until such time as the Common Shares shall be registered pursuant to the
Exchange Act and be publicly traded in an established securities market,
no Shareholder shall, directly or indirectly, sell or otherwise transfer
(each, a "Transfer") any Shares held by it except in as expressly
permitted by and accordance with the terms of this Agreement. Newco shall
not, and shall not permit any transfer agent or registrar for any Shares
to, transfer upon the books of Newco any Shares from any Shareholder to
any transferee, in any manner, except in accordance with this Agreement,
and any purported transfer not in compliance with this Agreement shall be
void.
During the R&D Term, no Shareholder shall, directly or indirectly, sell or
otherwise Transfer any of its legal and/or beneficial interest in the
Shares held by it to any other Person. After completion of the R&D Term, a
Shareholder may Transfer Shares provided such Shareholder complies with
the provisions of Clauses 16.2 and 16.3.
Notwithstanding anything contained herein to the contrary, at all times,
EIS and/or Incara shall have the right to Transfer any Shares to their
Affiliates provided, however, that such assignment does not result in
adverse tax consequences for any other Parties. EIS shall have the right
to Transfer any Shares to a special purpose financing or similar entity
established by Elan or EIS; provided, that such Affiliates or other
Permitted Transferee to which such legal and/or beneficial interest in the
Shares have been transferred shall agree to be expressly subject to and
bound by all the limitations and provisions which are embodied in this
Agreement.
16.2 No Shareholder shall, except with the prior written consent of the other
Shareholder, create or permit to subsist any Encumbrance over, or grant
any option or other rights in all or any of the Shares held by it (other
than by a Transfer of such Shares in accordance with the provisions of
this Agreement).
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
34
16.3 Rights of First Offer:
----------------------
If at any time after the end of the R&D Term a Shareholder shall desire to
Transfer any Shares owned by it (a "Selling Shareholder"), in any
transaction or series of related transactions other than a Transfer to an
Affiliate or subsidiary or in the case of EIS to a special purpose
financing or similar entity established by EIS, then such Selling
Shareholder shall deliver prior written notice of its desire to Transfer
(a "Notice of Intention") (i) to Newco and (ii) to the Shareholders who
are not the Selling Shareholder (and any transferee thereof permitted
hereunder, if any), as applicable, setting forth such Selling
Shareholder's desire to make such Transfer, the number of Shares proposed
to be transferred (the "Offered Shares") and the proposed form of
transaction (the "Transaction Proposal"), together with any available
documentation relating thereto, if any, and the price at which such
Selling Shareholder proposes to Transfer the Offered Shares (the "Offer
Price"). The "Right of First Offer" provided for in this Clause 16 shall
be subject to any "Tag Along Right" benefiting a Shareholder which may be
provided for by Clause 16, subject to the exceptions set forth therein.
Upon receipt of the Notice of Intention, the Shareholders who are not the
Selling Shareholder shall have the right to purchase at the Offer Price
the Offered Shares, exercisable by the delivery of notice to the Selling
Shareholder (the "Notice of Exercise"), with a copy to Newco, within 10
business days from the date of receipt of the Notice of Intention. If no
such Notice of Exercise has been delivered by the Shareholders who are not
the Selling Shareholder within such 10-business day period, or such Notice
of Exercise does not relate to all of the Offered Shares covered by the
Notice of Intention, then the Selling Shareholder shall be entitled to
Transfer all of the Offered Shares to the intended transferee. In the
event that all of the Offered Shares are not purchased by the non-selling
Shareholders, the Selling Shareholder shall sell the available Offered
Shares within 30 days after the delivery of such Notice of Intention on
terms no more favourable to a third party than those presented to the non-
selling Shareholders. If such sale does not occur, the Offered Shares
shall again be subject to the Right of First Offer set forth in Clause
16.3.
In the event that any of the Shareholders who are not the Selling
Shareholder exercises their right to purchase all of the Offered Shares
(in accordance with this Clause 16), then the Selling Shareholder shall
sell all of the Offered Shares to such Shareholder(s), in the amounts set
forth in the Notice of Intention, after not less than 10 business days and
not more than 25 business days from the date of the delivery of the Notice
of Exercise. In the event that more than one of the Shareholders who are
not the Selling Shareholders wish to purchase the Offered Shares, the
Offered Shares shall be allocated to such Shareholders on the basis of
their pro rata equity interests in Newco.
35
The rights and obligations of each of the Shareholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Shares is registered under Section 12(b) or 12(g) of the
Exchange Act.
At the closing of the purchase of all of the Offered Shares by the
Shareholders who are not the Selling Shareholder (scheduled in accordance
with Clause 16), the Selling Shareholder shall deliver certificates
evidencing the Offered Shares being sold, duly endorsed, or accompanied by
written instruments of transfer in form reasonably satisfactory to the
Shareholders who are not the Selling Shareholder, duly executed by the
Selling Shareholder, free and clear of any adverse claims, against payment
of the purchase price therefor in cash, and such other customary documents
as shall be necessary in connection therewith.
16.4 Tag Along Rights:
-----------------
Subject to Clause 16.3, a Shareholder (the "Transferring Shareholder")
shall not Transfer (either directly or indirectly), in any one transaction
or series of related transactions, to any Person or group of Persons, any
Shares, unless the terms and conditions of such Transfer shall include an
offer to the other Shareholders (the "Remaining Shareholders"), to sell
Shares at the same price and on the same terms and conditions as the
Transferring Shareholder has agreed to sell its Shares (the "Tag Along
Right").
In the event a Transferring Shareholder proposes to Transfer any Shares in
a transaction subject to this Clause 16.4, it shall notify, or cause to be
notified, the Remaining Shareholders in writing of each such proposed
Transfer. Such notice shall set forth: (i) the name of the transferee and
the amount of Shares proposed to be transferred, (ii) the proposed amount
and form of consideration and terms and conditions of payment offered by
the transferee (the "Transferee Terms") and (iii) that the transferee has
been informed of the Tag Along Right provided for in this Clause 16.4, if
such right is applicable, and the total number of Shares the transferee
has agreed to purchase from the Shareholders in accordance with the terms
hereof.
The Tag Along Right may be exercised by each of the Remaining Shareholders
by delivery of a written notice to the Transferring Shareholder (the "Co-
sale Notice") within 10 business days following receipt of the notice
specified in the preceding subsection. The Co-sale Notice shall state the
number of Shares owned by such Remaining Shareholder which the Remaining
Shareholder wishes to include in such Transfer; provided, however, that
without the written consent of the Transferring Shareholder, the amount of
such securities belonging to the Remaining Shareholder included in such
Transfer may not be greater than such Remaining Shareholder's percentage
beneficial ownership of Fully Diluted Common Shares multiplied by the
total number of Fully Diluted Common Shares to be sold by both the
Transferring Shareholder and all Remaining Shareholders. Upon receipt of a
Co-sale Notice, the Transferring Shareholder shall be obligated
36
to transfer at least the entire number of Shares set forth in the Co-sale
Notice to the transferee on the Transferee Terms; provided, however, that
the Transferring Shareholder shall not consummate the purchase and sale of
any Shares hereunder if the transferee does not purchase all such Shares
specified in all Co-sale Notices. If no Co-sale Notice has been delivered
to the Transferring Shareholder prior to the expiration of the 10 business
day period referred to above and if the provisions of this Section have
been complied with in all respects, the Transferring Shareholder shall
have the right for a 45 day calendar day period to Transfer Shares to the
transferee on the Transferee Terms without further notice to any other
party, but after such 45-day period, no such Transfer may be made without
again giving notice to the Remaining Shareholders of the proposed Transfer
and complying with the requirements of this Clause 16.
At the closing of any Transfer of Shares subject to this Clause 16.4, the
Transferring Shareholder, and the Remaining Shareholder, in the event such
Tag Along Right is exercised, shall deliver certificates evidencing such
securities as have been Transferred by each, duly endorsed, or accompanied
by written instruments of transfer in form reasonably satisfactory to the
transferee, free and clear of any adverse claim, against payment of the
purchase price therefor.
Notwithstanding the foregoing, this Clause 16.4 shall not apply to any
sale of Common Shares pursuant to an effective registration statement
under the Securities Act in a bona fide public offering.
CLAUSE 17
MATTERS REQUIRING SHAREHOLDERS' APPROVAL
17.1 In consideration of Incara and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that Newco shall not without the
prior approval in writing of EIS and Incara:
17.1.1. make a material Newco determination outside the ordinary course
of business, including, among other things, acquisitions or
dispositions of intellectual property and licenses or
sublicenses, changes in the Business or the Newco budget, in each
case, as they relate to the Licensed Technologies; enter into
joint ventures and similar arrangements as they relate to the
Licensed Technologies and changes to the Business Plan as they
relate to the Licensed Technologies;
17.1.2. issue any unissued Shares or unissued Common Shares Equivalents,
or create or issue any new shares (including a split of the
Shares) or Common Shares Equivalents, except as expressly
permitted by the Newco Bye-Laws;
37
17.1.3. alter any rights attaching to any class of share in the capital of
Newco or alter the Newco Bye-Laws;
17.1.4. consolidate, sub-divide or convert any of Newco's share capital or
in any way alter the rights attaching thereto;
17.1.5. dispose of all or substantially all of the assets of Newco;
17.1.6. do or permit to be done any act or thing whereby Newco may be
dissolved (whether voluntarily or compulsorily), save as otherwise
expressly provided for in this Agreement;
17.1.7. enter into any contract or transaction except in the ordinary and
proper course of the Business on arm's length terms;
17.1.8. subject to Clause 23.13, assign, license or sub-license any of the
Elan Intellectual Property, Incara Intellectual Property, Newco
Intellectual Property;
17.1.9. amend or vary the terms of the Incara License Agreement or the
Elan License Agreement;
17.1.10 permit a person other than Newco to own a Regulatory Approval
relating to the Product(s) ) (save as otherwise provided in Clause
12);
17.1.11 approve, or amend or vary, the Business Plan or the Newco budget
as they relate to the Licensed Technologies;
17.1.12 alter the number of Directors
17.1.13 change the domicile of Newco from, or discontinue Newco out of,
Bermuda;
17.1.14 register any Shares of Newco for public trading with any
governmental authority for public trading in any securities
market;
17.1.15 declare or pay any dividend or make any distribution, directly or
indirectly, with respect to its capital Shares; or issue, sell,
exchange, deliver, redeem, purchase or otherwise acquire or
dispose of any shares of its capital stock or other securities;
and
17.1.16 adopt or register or use any trade name, trademark or service xxxx
on behalf of Newco.
38
CLAUSE 18
DISPUTES
18.1 Subject to the provisions of Clause 5.3, should any dispute or difference
arise between Elan and Incara, or between Elan or Incara and Newco, during
the period that this Agreement is in force, then any Party may forthwith
give notice to the other Parties that it wishes such dispute or difference
to be referred to a designated senior officer of each of Elan and Incara.
18.2 In any event of a notice being served in accordance with Clause 18.1, each
of the Participants shall within 14 days of the service of such notice
prepare and circulate to the designated senior officer of each of Elan and
Incara a memorandum or other form of statement setting out its position on
the matter in dispute and its reasons for adopting that position. Each
memorandum or statement shall be considered by the designated senior
officers of each of Elan and Incara who shall endeavor to resolve the
dispute. If designated senior officers of each of Elan and Incara agree
upon a resolution or disposition of the matter, they shall each sign a
statement which sets out the terms of their agreement. The Participants
agree that they shall exercise the voting rights and other powers available
to them in relation to Newco to procure that the agreed terms are fully and
promptly carried into effect.
18.3 In the event the designated senior officers of each of Elan and Incara are
unable to resolve a dispute or difference within 60 days of its being
referred to them under Clause 18.1, the following procedures shall apply:
18.3.1 If the dispute relates to the interpretation of this Agreement or
any other Definitive Document or the compliance of the Parties with
their legal obligations thereunder, or the ownership of any
intellectual property, the provisions of Clause 23.9.2 shall
govern.
18.3.2 If the dispute does not relate to the interpretation of this
Agreement or any other Definitive Document or the compliance of the
Parties with their legal obligations thereunder, or the ownership
of any intellectual property, the provisions of Clause 18.4 shall
govern.
18.4 The designated senior officers of each of Elan and Incara shall, if they
are unable to resolve a dispute or difference described in Clause 18.3.2
within sixty (60) days of such referral, and if so agreed to by Elan and
Incara, refer the matter to an independent expert in pharmaceutical product
development and marketing (including clinical development and regulatory
affairs) jointly selected by the designated senior officers of each of Elan
and Incara (the "Expert").
In the event the designated senior officers of each of Elan and Incara
cannot agree upon the designation of the Expert, the Participants shall
request the American
39
Arbitration Association ("AAA"), sitting in the City of New York to select
the Expert. In each case, the Expert shall be selected having regard to his
suitability to determine the particular dispute or difference on which the
Expert is being requested to determine. Unless otherwise agreed between the
designated senior officers of each of Elan and Incara, the following rules
shall apply to the appointment of the Expert. The fees of the AAA and the
Expert shall be shared equally by the Participants. The Expert shall be
entitled to inspect and examine all documentation and any other material
which the Expert may consider to be relevant to the dispute. The Expert
shall afford each Party a reasonable opportunity (in writing or orally) of
stating reasons in support of such contentions as each Party may wish to
make relative to the matters under consideration. The Expert shall give
notice in writing of his determination to the Parties within such time as
may be stipulated in his terms of appointment or in the absence of such
stipulation as soon as practicable but in any event within four weeks from
the reference of the dispute or difference to him.
18.5 Any determination by the Expert of a dispute or difference shall not be
binding on the Parties, and neither Participant may introduce any such
determination into evidence, or otherwise provide such determination as
evidence in any manner, in any legal, administrative or arbitration
proceeding.
CLAUSE 19
TERMINATION
19.1 This Agreement shall govern the operation and existence of Newco until
19.1.1 terminated by written agreement of all Parties hereto; or
19.1.2 otherwise terminated in accordance with this Clause 19.
19.2 For the purpose of this Clause 19, a "Relevant Event" is committed by a
Participant if:
19.2.1 it commits a material breach of its representations, warranties or
obligations under this Agreement and fails to cure it within [*]
days of being specifically required in writing to do so by the
other Participant; provided, however, that if the breaching
Participant has proposed a course of action to cure the breach and
is acting in good faith to cure same but has not cured the breach
by the [*] day, such period shall be extended by such period as is
reasonably necessary to permit the breach to be cured, provided
that such period shall not be extended by more than [*] days,
unless otherwise agreed in writing by the Parties; or
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
40
19.2.2 a distress, execution, sequestration or other process is levied or
enforced upon or sued out against a material part of its property
which is not discharged or challenged within [*] days; or
19.2.3 it is unable to pay its debts in the normal course of business; or
19.2.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or amalgamation,
without the prior written consent of the other Participant (such
consent not to be unreasonably withheld); or
19.2.5 the appointment of a liquidator, receiver, administrator, examiner,
trustee or similar officer of such Participant or over all or
substantially all of its assets under the law of any applicable
jurisdiction, including without limitation, the United States of
America, Bermuda or Ireland; or
19.2.6 an application or petition for bankruptcy, corporate re-
organization, composition, administration, examination, arrangement
or any other procedure similar to any of the foregoing under the
law of any applicable jurisdiction, including without limitation,
the United States of America, Bermuda or Ireland, is filed, and is
not discharged within 60 days, or a Participant applies for or
consents to the appointment of a receiver, administrator, examiner
or similar officer of it or of all or a material part of its
assets, rights or revenues or the assets and/or the business of a
Participant are for any reason seized, confiscated or condemned.
19.3 If either Participant commits a Relevant Event, the other Participant shall
be entitled, within three months of the occurrence of the Relevant Event,
to require the defaulting Participant (the "Recipient Participant") to sell
on reasonable terms of payment to the non-defaulting Participant (the
"Proposing Participant") all (but not less than all) of the Shares, held or
beneficially owned by the Recipient Participant for an amount equal to [*]%
of the fair market value of the Shares of the Recipient Participant (the
"Buyout Option").
19.4 The Proposing Participant shall notify the Recipient Participant of the
exercise of the Buyout Option, no later than 30 business days prior to the
proposed exercise thereof, by delivering written notice to the Recipient
Participant stating that the Buyout Option is exercised and the price at
which the Proposing Participant is willing to purchase the Shares of the
Recipient Participant.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
41
19.5 In the event that the Participants do not agree upon a purchase price
for the Shares within five business days following the receipt by the
Recipient Participant of written notice from the Proposing Participant
pursuant to Clause 19.4 above, the Proposing Participant may contact
the American Arbitration Association ("AAA"), sitting in New York City
and request that an independent US-based arbitrator who is
knowledgeable of the pharmaceutical/biotechnology industry be
appointed within 10 business days. The AAA shall endeavor to select an
arbitrator who is technically knowledgeable in the
pharmaceutical/biotechnology industry (and who directly and through
his affiliates, has no business relationship with, or shareholding in,
either the Proposing Participant or the Recipient Participant).
Promptly upon being notified of the arbitrator's appointment, the
Proposing Participant and the Recipient Participant shall submit to
the arbitrator details of their assessment of the fair market value
for the Shares of the Recipient Participant together with such
information as they think necessary to validate their assessment. The
arbitrator shall notify the Recipient Participant of [*]% of the fair
market value assessed by the Proposing Participant (the "Proposing
Participant Price") and shall notify the Proposing Participant of [*]%
of the fair market value assessed by the Recipient Participant (the
"Recipient Participant Price"). The Proposing Participant and the
Recipient Participant shall then be entitled to make further
submissions to the arbitrator within five business days explaining why
the Recipient Participant Price or the Proposing Participant Price, as
the case may be, is unjustified. The arbitrator shall thereafter meet
with the Proposing Participant and the Recipient Participant and shall
thereafter choose either the Recipient Participant Price or the
Proposing Participant Price (but not any other price) as the purchase
price for the Shares (the "Purchase Price") on the basis of which
price the arbitrator determines to be closer to [*]% of the fair
market value for the Shares of the Recipient Participant. The
arbitrator shall use his best efforts to determine the Purchase Price
within 30 business days of his appointment. The Proposing Participant
and the Recipient Participant shall bear the costs of the arbitrator
equally provided that the arbitrator may, in his discretion, allocate
all or a portion of such costs to one Party. Any decision of the
arbitrator shall be final and binding.
19.6 The Proposing Participant shall purchase the Shares of the Recipient
Participant by delivery of the Purchase Price in cash no later than
the 90th business day following determination of the Purchase Price by
the Expert.
19.7 The Shares of the Recipient Participant so transferred shall be sold
by the transferor as beneficial owner with effect from the date of
such transfer free from any lien, charge or encumbrance with all
rights and restrictions attaching thereto.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
42
19.8 If the Proposing Participant exercises the Buyout Option, both parties
will negotiate in good faith to agree to additional reasonable
provisions and/or amendments to the License Agreements to protect the
intellectual property rights of the Recipient Party.
19.9 If either Participant commits a Relevant Event, the other Shareholder
shall have in addition to all other legal and equitable rights and
remedies hereunder, the right to terminate this Agreement upon 30
days' written notice.
19.10 In the event of a termination of the Elan License Agreement and/or the
Incara License Agreement, both parties will negotiate in good faith to
determine whether this Agreement should be terminated.
19.11 The provisions of Clauses 1.1, 3, 9, 10, 12.5, 12.6, 16, 17, 18, 19,
20, 21, and 23 shall survive the termination of this Agreement under
this Clause 19; all other terms and provisions of this Agreement shall
cease to have effect and be null and void upon the termination of this
Agreement.
CLAUSE 20
SHARE RIGHTS
The provisions regulating the rights and obligations attaching to the Common
Shares and the Preference Shares are set out in the Newco Bye-laws.
CLAUSE 21
CONFIDENTIALITY
21.1 The Parties and/or Newco acknowledge and agree that it may be
necessary, from time to time, to disclose to each other confidential
and/or proprietary information, including without limitation,
inventions, works of authorship, trade secrets, specifications,
designs, data, know-how and other information, relating to the Field,
the Products, present or future products, the Newco Intellectual
Property, the Elan Intellectual Property or the Incara Intellectual
Property, as the case may be, methods, compounds, research projects,
work in process, services, sales suppliers, customers, employees
and/or business of the disclosing Party, whether in oral, written,
graphic or electronic form (collectively "Confidential Information").
21.2 Save as otherwise specifically provided herein, any Confidential
Information revealed by a Party to another Party shall be maintained
as confidential and shall be used by the receiving Party exclusively
for the purposes of fulfilling the
43
receiving Party's rights and obligations under this Agreement, and for
no other purpose. Confidential Information shall not include:
21.2.1 information that is generally available to the public;
21.2.2 information that is made public by the disclosing Party;
21.2.3 information that is independently developed by the receiving
Party, as evidenced by such Party's records, without the
aid, application or use of the disclosing Party's
Confidential Information;
21.2.4 information that is published or otherwise becomes part of
the public domain without any disclosure by the receiving
Party, or on the part of the receiving Party's directors,
officers, agents, representatives or employees;
21.2.5 information that becomes available to the receiving Party on
a non-confidential basis, whether directly or indirectly,
from a source other than the disclosing Party, which source
did not acquire this information on a confidential basis; or
21.2.6 information which was already in the possession of the
receiving Party at the time of receiving such information,
as evidenced by its records, provided such information was
not previously provided to the receiving party from a source
which was under an obligation to keep such information
confidential; or
21.2.7 information that is the subject of a written permission to
disclose, without restriction or limitation, by the
disclosing Party.
21.3 The receiving Party will be entitled to disclose Confidential
Information which the receiving Party is required to disclose pursuant
to:
21.3.1 a valid order of a court or other governmental body or any
political subdivision thereof or as otherwise required by
law, rule or regulation; or
21.3.2 any other requirement of law;
provided that if the receiving Party becomes legally required to
disclose any Confidential Information, the receiving Party shall give
the disclosing Party prompt notice of such fact so that the disclosing
Party may obtain a protective order or confidential treatment or other
appropriate remedy concerning any such disclosure. The receiving Party
shall fully co-operate with the disclosing Party in connection with
the disclosing Party's efforts to obtain any such order or other
remedy. If any such order or other remedy does not fully preclude
disclosure, the receiving Party shall make such disclosure only to the
extent that such disclosure is legally required.
44
21.4 Save as otherwise specifically provided herein, each Party agrees to
disclose Confidential Information of another Party only to those
employees, representatives and agents requiring knowledge thereof in
connection with their duties directly related to the fulfilling of the
Party's obligations under this Agreement, so long as such persons are
under an obligation of confidentiality no less stringent than as set
forth herein. Each Party further agrees to inform all such employees,
representatives and agents of the terms and provisions of this
Agreement and their duties hereunder and to obtain their consent
hereto as a condition of receiving Confidential Information. Each
Party agrees that it will exercise the same degree of care and
protection to preserve the proprietary and confidential nature of the
Confidential Information disclosed by a Party, as the receiving Party
would exercise to preserve its own Confidential Information. Each
Party agrees that it will, upon request of another Party, return all
documents and any copies thereof containing Confidential Information
belonging to or disclosed by such other Party. Each Party shall
promptly notify the other Parties upon discovery of any unauthorized
use or disclosure of the other Parties' Confidential Information.
21.5 Any breach of this Clause 21 by any employee, representative or agent
of a Party is considered a breach by the Party itself.
21.6 The provisions relating to confidentiality in this Clause 21 shall
remain in effect during the Term and for a period of [*] years
following the termination of this Agreement.
21.7 The Parties agree that the obligations of this Clause 21 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of
its covenants and agreements set forth herein. Accordingly, the
Parties agree and acknowledge that any such violation or threatened
violation will cause irreparable injury to a Party and that, in
addition to any other remedies that may be available, in law or in
equity or otherwise, any Party shall be entitled to obtain injunctive
relief against the threatened breach of the provisions of this Clause
21, or a continuation of any such breach by the other Party, specific
performance and other equitable relief to redress such breach together
with its damages and reasonable counsel fees and expenses to enforce
its rights hereunder, without the necessity of proving actual or
express damages.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
45
CLAUSE 22
COSTS
22.1 Each Shareholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Definitive
Documents.
22.2 All other costs, legal fees, registration fees and other expenses
relating to the transactions contemplated hereby, including the costs
and expenses incurred in relation to the incorporation of Newco, shall
be borne by Newco.
CLAUSE 23
GENERAL
23.1 Exclusion of liability:
----------------------
Notwithstanding anything to the contrary in this Agreement, no Party
shall be liable to any other Party by reason of any representation or
warranty, condition or other term or any duty of common law, or under
the express terms of this Agreement, for any consequential, special or
incidental or punitive loss or damage (whether for loss of current or
future profits, loss of enterprise value or otherwise) and whether
occasioned by the negligence of the respective Parties, their
employees or agents or otherwise.
23.2 Good Faith:
----------
Each of the Parties agrees to act reasonably in giving effect to the
provisions of this Agreement.
23.3 Further Assurance:
-----------------
At the request of any of the Parties, the other Party or Parties shall
(and shall use reasonable efforts to procure that any other necessary
parties shall) execute and perform all such documents, acts and things
as may reasonably be required subsequent to the signing of this
Agreement for assuring to or vesting in the requesting Party the full
benefit of the terms hereof.
23.4 No Representation:
-----------------
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
23.5 Force Majeure:
-------------
46
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is
caused by or results from causes beyond its reasonable control,
including without limitation, acts of God, fires, strikes, acts of war
(whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances or
intervention of any relevant government authority, but any such delay
or failure shall be remedied by such Party as soon as practicable.
23.6 Relationship of the Parties:
---------------------------
Nothing contained in this Agreement is intended or is to be construed
to constitute Elan/EIS/EPIL and Incara as partners, or Elan/EIS/EPIL
as an employee or agent of Incara, or Incara as an employee or agent
of Elan/EIS/EPIL.
No Party hereto shall have any express or implied right or authority
to assume or create any obligations on behalf of or in the name of
another Party or to bind another Party to any contract, agreement or
undertaking with any third party.
23.7 Counterparts:
------------
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
23.8 Notices:
-------
Any notice to be given under this Agreement shall be sent in writing
in English by registered or recorded delivery post or reputable
overnight courier or telefaxed to:
Elan at:
Xxxxxxx Xxxxx,
Xxxxxxx Xxxxx,
Xxxxxx 0,
Xxxxxxx
Attention: Vice President & General Counsel
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 000-0-000-0000
Fax: 000-0-000-0000
and
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
00
Xxxxxx, Xxxxxx XX00
Bermuda
Attention: President
Telephone: 000-000-0000
Fax: 000-000-0000
Incara at:
0000 Xxxx Xxxxxxx 00,
Xxxx Xxxx Xxxxxxxx,
Xxxxx 000,
Post Office Box 14287,
Research Xxxxxxxx Xxxx,
Xxxxx Xxxxxxxx 00000
XXX.
Attn: Chief Executive Officer
Telephone 000 000 000 0000
Fax: 000 000 000 0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxx Xxxxxx LLP,
0000 Xxxx Xxxxx Xxxxx,
Xxxxx 000,
Xxxxxxx,
XX 00000.0000,
XXX
Attention: Xxxxx X. Xxxxxxx
Telephone 000 000 000 0000
Fax: 000 000 000 0000
Newco at:
Xxxxxxxxx Xxxxx,
0 Xxxxxx Xx.,
Xxxxxxxx,
Xxxxxxx
Xxxxxxxxx: Secretary
Telephone: 000 000 0000
Fax: 000 000 0000
or to such other address(es) as may from time to time be notified by
any Party to the others hereunder.
48
Any notice sent by mail shall be deemed to have been delivered within
7 business days after dispatch or delivery to the relevant courier and
any notice sent by telefax shall be deemed to have been delivered upon
confirmation of receipt. Notices of change of address shall be
effective upon receipt. Notices by telefax shall also be sent by
another method permitted hereunder.
23.9 Governing Law and Jurisdiction
------------------------------
23.9.1. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
23.9.2 In the event that a dispute regarding the matters described in Clause
18.3.1 is not resolved pursuant to the provisions of Clause 18.1, the
Parties agree to consider other dispute resolution mechanisms
including mediation.
23.9.3 In the event that the Parties fail to agree on a mutually acceptable
dispute resolution mechanism within 10 days of either Party's demand
for such alternative dispute resolution under Clause 23.9.2 or in the
event that the dispute is not resolved pursuant to any dispute
resolution mechanism agreed by the Parties under Clause 23.9.2 within
6 months, save as otherwise agreed by the Parties, the dispute shall
be finally settled by the courts of competent jurisdiction. For the
purposes of this Agreement the parties submit to the non-exclusive
jurisdiction of the courts of the State and Federal Courts located in
the State, City and County of New York.
23.10 Severability:
------------
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed
amended to conform to applicable laws so as to be valid and
enforceable or, if it cannot be so amended without materially altering
the intention of the Parties, it will be deleted, with effect from the
date of such agreement or such earlier date as the Parties may agree,
and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be impaired or affected in any
way.
23.11 Amendments:
----------
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a
duly authorized representative of all Parties.
23.12 Waiver:
------
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged
with such waiver,
49
and no waiver of any breach or failure to perform shall be deemed to
be a waiver of any future breach or failure to perform or of any other
right arising under this Agreement.
23.13 Assignment:
-----------
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
23.13.1 Elan, EIS and/or Incara shall have the right to assign their
rights and obligations hereunder to their Affiliates
provided, however, that such assignment does not result in
adverse tax consequences for any other Parties.
23.13.2 Elan and EIS shall have the right to assign their rights and
obligations hereunder to a special purpose financing or
similar entity established by Elan or EIS.
23.13.3 Any permitted assignee under this Clause 23.13 shall assume
all obligations of the assignor under this Agreement.
23.14 Assignment of Newco Intellectual Property:
-----------------------------------------
Upon unanimous agreement of the Parties, and upon one month's prior
notice in writing from Elan and Incara to Newco, Newco shall assign
the Newco Intellectual Property from Newco to a wholly-owned
subsidiary of Newco to be incorporated in Ireland, which company shall
be newly incorporated to facilitate such assignment.
23.15 Whole Agreement:
---------------
This Agreement (including the Schedules attached hereto) and the
Definitive Documents set forth all of the agreements and
understandings between the Parties with respect to the subject matter
hereof, and supersede and terminate all prior agreements and
understandings between the Parties with respect to the subject matter
hereof. There are no agreements or understandings with respect to the
subject matter hereof, either oral or written, between the Parties
other than as set forth in this Agreement and the Definitive
Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Newco Bye-Laws, the terms of this
Agreement shall prevail except with respect to the rights and
obligations attaching to the Common Shares and the Preference Shares,
where the Newco Bye-Laws shall prevail.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the
50
Parties unless specifically referred to, and solely to the extent
provided herein. In the event of a conflict between the provisions of
this Agreement and the provisions of the License Agreements, the terms
of this Agreement shall prevail unless this Agreement specifically
provide otherwise.
23.16 Successors:
----------
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
51
Schedule 1
----------
The Compound
------------
OP2000 STRUCTURE
[*]
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
52
Schedule 2
----------
Elan License Agreement
----------------------
53
Schedule 3
----------
Incara License Agreement
------------------------
54
Schedule 4
----------
Technological Competitors of Elan
---------------------------------
[*]
Including any and all divisions or subsidiaries of such entities and
successor entities.
[*] Confidential Treatment Requested; Certain Information Omitted and Filed
Separately with the SEC.
55
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
first set forth above.
SIGNED
BY: /s/ Xxxxx Xxxxxx
------------------------------
for and on behalf of
ELAN CORPORATION, PLC
SIGNED
BY: /s/ Xxxxx Xxxxxx
------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LTD.
SIGNED
BY: /s/ Xxxxx Xxxxxx
------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
SIGNED
BY: /s/ Xxxxxxx X. Xxxxxx
------------------------------
for and on behalf of
INCARA PHARMACEUTICALS CORPORATION
SIGNED
BY: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
for and on behalf of
INCARA DEVELOPMENT, LTD.
56
