EXHIBIT 6
CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO REGULATION
240.25B-2B OF THE SECURITIES EXCHANGE ACT OF 1934. [*] INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST AND IS FILED
SEPARATELY WITH THE COMMISSION.
Execution Copy 2
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
(acting through its division Elan Pharmaceutical Technologies)
AND
ELAN INTERNATIONAL SERVICES, LTD.
AND
ELAN PHARMA INTERNATIONAL LIMITED
AND
RIBOZYME PHARMACEUTICALS, INC.
AND
MEDIZYME PHARMACEUTICALS LTD.
INDEX
-----
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 WORK
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 10 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NONCOMPETITION
CLAUSE 11 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 12 CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
CLAUSE 13 REGULATORY
CLAUSE 14 MANUFACTURING
CLAUSE 15 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 16 AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY
CLAUSE 17 TRANSFER OF SHARES; RIGHTS OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING PARTICIPANTS' APPROVAL
CLAUSE 19 DISPUTES
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this __ day of
January, 2000
BETWEEN:
(1) ELAN CORPORATION, PLC, a public limited company incorporated under the laws
of Ireland, acting through its division Elan Pharmaceutical Technologies
and having its registered office at Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx 0,
Xxxxxxx ("Elan, plc");
(2) ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited liability
company incorporated under the laws of Bermuda, and having its registered
office at Clarendon House, Church St., Hamilton, Bermuda ("EIS");
(3) ELAN PHARMA INTERNATIONAL LIMITED a private limited company incorporated
under the laws of Ireland, and having its registered office at XXX Xxxxx,
Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx ("EPIL");
(4) RIBOZYME PHARMACEUTICALS, INC. a corporation duly incorporated and validly
existing under the laws of Delaware and having its principal place of
business at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 ("RPI"); and
(5) MEDIZYME PHARMACEUTICALS 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 the Shareholders (as defined below), and
the Shareholders desire to purchase from Newco, for aggregate consideration
of $15,000,000, apportioned between them as set forth herein, (i) 6,000
shares of Newco's common shares, par value $1.00 per share (the "Common
Shares") to RPI, and (ii) 6,000 shares of Newco's preferred shares, par
value $1.00 per share (the "Preferred Shares") allocated 3,612 shares to
RPI and 2,388 shares to EIS.
B. As of the date hereof, Elan, plc and EPIL have entered into a license
agreement with Newco, and RPI has entered into a license agreement with
Newco, in connection with the license to Newco of the Elan Intellectual
Property and the RPI Intellectual Property, respectively (each as defined
below).
C. Elan, plc, EPIL and RPI have agreed to co-operate in the research,
development and commercialization of the Products (as defined below) based
on their respective technologies.
D. Elan, plc, EPIL and RPI 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" of any Person (in the case of a legal entity) shall mean any
other Person controlling, controlled or under the common control of such
first Person, as the case may be. For the purposes of this definition,
"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 "controlling" and "controlled" shall be construed accordingly. For
purposes of this Agreement, Newco is not an Affiliate of Elan or EIS.
"Agreement" shall mean this agreement (which expression shall be deemed to
include the Recitals and the Schedules hereto).
[ * ]shall mean a Ribozyme targeted against [ * ]
"Board" shall mean the board of directors of Newco.
"Business" shall mean the business specified in the Business Plan.
"Business Plan" has the meaning set forth in Clause 6 below.
"Certificate of Designations" shall mean that certain certificate of
designations, preferences and rights of Series A Preferred Stock and Series
B Preferred Stock of RPI issued on the date hereof.
"Closing Date" shall mean the date upon which the Substantive Documents are
executed and delivered by the Parties and the transactions effected thereby
are closed.
"Common Share 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.
"Convertible Note" shall mean that certain Convertible Promissory Note, of
even date herewith, by and between RPI and EIS.
5
"Directors" shall mean, at any time, the directors of Newco.
"EIS Director" has the meaning set forth in Clause 5.
"Elan" shall mean Elan, plc and EPIL.
"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 Know-How" has the meaning assigned thereto in the Elan License
Agreement.
"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 1.
"Elan Patents" has the meaning assigned thereto in the Elan License
Agreement.
"Elan Research License" has the meaning assigned thereto in the Elan
License Agreement.
"Encumbrance" shall mean any liens, charges, encumbrances, equities,
claims, options, proxies, pledges, security interests, or other similar
rights of any nature.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Right" has the meaning assigned to such term in the RPI
Securities Purchase Agreement in effect on the date hereof.
"Field" shall mean the [ * ] of the Target Ribozyme using the System for
the down regulation of HER-2.
"Financial Year" shall mean each year commencing on January 1 (or in the
case of the first Financial Year, the date hereof) 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 Share Equivalents.
"Funding Agreement" shall mean the Funding Agreement, of even date
herewith, between EIS, RPI, and Elan.
"HER-2" shall mean Human Epidermal Growth Factor Receptor Type 2.
6
"License Agreements" shall mean the Elan License Agreement and the RPI
License Agreement.
"Licensed Technologies" shall mean, collectively, the Elan Intellectual
Property and the RPI Intellectual Property.
"Licenses" shall mean the Elan License, the Elan Research License and RPI
License.
"Management Committee" shall have the meaning set forth in Clause 5.2
hereof.
"Newco Intellectual Property" shall mean Newco Patents and Newco Know How.
"Newco Know-How" shall mean any and all rights owned, licensed or
controlled by Newco to any scientific, pharmaceutical or technical
information, data, discovery, invention (whether patentable or not),
technique, process, procedure, system, formulation or design that is not
generally known to the public arising out of the conduct of the Project by
any person that does not constitute Elan Improvements or RPI Improvements.
"Newco Patents" shall mean any and all patents and patent applications
arising out of the conduct of the Project by any person that does not
constitute Elan Improvements or RPI Improvements and all rights therein,
and including all extensions, continuations, continuations-in-part,
divisionals, patents-of-additions, re-examinations, re-issues,
supplementary protection certificates and foreign counterparts thereto
owned or licensed to Newco.
"Newco Memorandum of Association and Bye-Laws" shall mean the Memorandum of
Association and Bye-Laws of Newco Limited.
"Oligonucleotide" shall mean a [ * ] non-protein, non-peptide encoding
nucleic acid molecule including those with [ * ] used as a human
therapeutic and/or prophylactic compound comprising between [ * ] including
oligonucleotide analogs which may include natural or non-natural
heterocycles, sugars and/or backbone linkage modifications, capable of
specifically inhibiting the function, activity or expression of a gene. For
the purposes hereof Oligonucleotide (a) shall include [ * ]
oligonucleotides, and (b) shall exclude polymers in which the linkages are
[ * ] but shall not exclude [ * ]
"Participant" shall mean RPI or Elan, as the case may be, and
"Participants" shall mean both of the Participants together.
"Party" shall mean Elan, plc, EPIL, RPI, or Newco, as the case may be, and
"Parties" shall mean all four 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.
7
"Permitted Transferee" shall mean any Affiliate or subsidiary of Elan, EIS
or RPI, to whom this Agreement may be assigned, in whole or in part,
pursuant to the terms hereof or in the case of Elan and EIS, a special
purpose financing entity created by Elan or EIS or their respective
affiliates.
"Product(s)" shall mean the pharmaceutical formulation incorporating the
Target Ribozyme and incorporated within or packaged with the System.
"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 RPI, respectively.
"R&D Committee" shall have the meaning set forth in Clause 5.2 hereof.
"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.
"Research and Development Term" shall mean the research and development
stage of the Business Plan, which stage shall be deemed terminated upon the
first commercial launch of a Product by Newco.
"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.
"Ribozyme" shall mean an [ * ] directed to inhibit, by catalytic cleavage,
the translation of mRNA coding for a gene. For the avoidance of doubt,
Ribozyme does not include a gene that encodes a [ * ].
"RPI Directors" has the meaning set forth in Clause 5 hereof.
"RPI Improvements" has the meaning assigned thereto in the RPI License
Agreement.
"RPI Intellectual Property" has the meaning assigned thereto in the RPI
License Agreement.
"RPI Know-How" has the meaning assigned thereto in the RPI License
Agreement.
"RPI License" has the meaning assigned thereto in the RPI License
Agreement.
"RPI License Agreement" shall mean the license agreement between RPI and
Newco, of even date herewith, attached hereto in Schedule 2.
8
"RPI Patent Rights" has the meaning assigned thereto in the RPI License
Agreement.
"RPI Securities Purchase Agreement" shall mean that certain securities
purchase agreement, of even date herewith, by and between RPI and EIS.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the shares of Common Shares and shares of Preferred
Shares of Newco.
"Shareholder" shall mean any of EIS, RPI, 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.
"Substantive Documents" shall mean this Agreement, the Funding Agreement,
the Elan License Agreement, the RPI License Agreement, the Convertible
Note, the RPI Securities Purchase Agreement, the Registration Rights
Agreements, the Certificate of Designations and associated documentation of
even date herewith, by and between RPI, Elan, EIS and Newco, as applicable.
"Substitute Ribozyme" shall have the meaning set forth in Clause 2.2
hereof.
"Substitute Target" shall have the meaning set forth in Clause 2.2 hereof.
"System" shall mean the ambulatory drug delivery system for direct
attachment to the body of a patient having a flexible diaphragm drug
reservoir, which is capable of delivering factory pre-programmed continuous
amounts of drug upon activation as disclosed and described in the Elan
Patents set forth in Schedule 1 of the Elan License Agreement.
"Target Ribozyme" shall mean a Ribozyme directed to HER-2 unless and until
a [ * ] directed to a [ * ] is designated to be the subject of the Project
pursuant to the designation of a [ * ] and [ * ] under the provisions of
Clause 2.2 hereof, in which case the term [ * ]shall mean such designated
[ * ] directed to the [ * ]
"Technological Competitor of Elan" has the meaning assigned thereto in the
Elan License Agreement.
"Term" shall mean the term of this Agreement.
"Territory" shall mean all of the countries of the world.
"United States Dollar" and "US$" and "$" shall mean the lawful currency of
the United States of America.
9
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
Definition Clause
"AAA" 19.3
"Buyout Option" 20.4
"Closing" 4.3
"Common Shares" Recital
"Confidential Information" 22.1
"Co-sale Notice" 17.4
"Expert" 19.3
"Notice of Exercise" 17.3
"Notice of Intention" 17.3
"Offered Shares" 17.3
"Offering Price" 17.3
"Preferred Shares" Recital
"Proposing Participant" 20.4
"Proposing Participant Price: 20.6
"Purchase Price" 20.6
"R&D Committee" 5.2.2
"Recipient Participant Price" 20.6
"Remaining Shareholders" 17.4
"Relevant Event" 20.2
"Selling Shareholder" 17.3
"Tag-Along Right" 17.4
"Transaction Proposal" 17.3
"Transfer" 17.1
"Transferee Terms" 17.4
"Transferring Shareholder" 17.4
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.
10
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Substantive 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 for use in the Field in the Territory and to achieve
the other objectives set out in this Agreement. The focus of the Business
will be to develop the Products using the Elan Intellectual Property, the
RPI Intellectual Property and the Newco Intellectual Property in accordance
with the Business Plan.
2.2. Should the Target Ribozyme [ * ] in accordance with the Business Plan, the
Parties shall promptly review in good faith [ * ], for the treatment of an
indication(s) to be determined in good faith by the Parties (the
"Substitute Target"). In either case, the Parties shall promptly negotiate
in good faith such amendments as are required to the License Agreements and
to this Agreement, such as amending the provisions regulating non-
competition, and to the research and development budgeted costs for the
Project.
2.3 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 in accordance with the Newco Memorandum of
Association and Bye-Laws. Subject to Clause 9.2 below, the Participants
shall use their best endeavors to ensure that to the extent required
pursuant to the laws of Bermuda, and 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.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Newco: Newco hereby represents and
---------------------------------------
warrants to each of the Shareholders as follows, as of the date hereof:
3.1.1 Organization: Newco is an exempted company duly organized, validly
-------------
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.
11
3.1.2 Capitalization: As of the date hereof, the authorized capital
---------------
stock of Newco consists of 6,000 shares of Common Shares and 6,000
shares of Preferred Shares. Prior to the date hereof, no shares of
capital stock of Newco have been issued.
3.1.3 Authorization: The execution, delivery and performance by Newco
--------------
of 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
------------
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 its
charter or organizational documents 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: As of the date hereof, no permit, authorization,
---------
consent or approval of or by, 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
Substantive Documents.
3.1.6 Disclosure: This Agreement does not contain any untrue statement
-----------
of 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
12
adverse effect thereon, in order for 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 or
----------------------------
incurred any liabilities or obligations prior to the date hereof,
except solely in connection with its organization and formation.
3.2 Representations and Warranties of the Shareholders: Each of the
---------------------------------------------------
Shareholders hereby severally represents and warrants to Newco as follows
as of the date hereof:
3.2.1 Organization: Such Shareholder is a corporation duly organized and
------------
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
----------
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,
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.
13
3.2.4 Approvals: As of the date hereof, no permit,
----------
authorization, consent or approval of or by, 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 Preferred 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 2,388 shares of
Preferred Shares, and (ii) RPI of 6,000 shares of Common Shares and
3,612 shares of Preferred Shares, issuable as provided in Clause 4.4
hereof
4.2 RPI and EIS hereby subscribe for the number of Shares set forth in
Clause 4.1 and shall pay to Newco in consideration therefor, by wire
transfer of immediately available funds (to a bank account established
by Newco in connection with he Closing) 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
date hereof or such other places if any, as the Parties may agree and
shall occur contemporaneously with the closing under the RPI
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 or
locations, as appropriate:
4.4.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the
14
terms and subject to the conditions set forth herein, 2,388
shares of Preferred Shares for an aggregate purchase price of
$2,985,000.00. Newco shall issue and sell to RPI, and RPI shall
purchase from Newco, upon the terms and conditions set forth
herein, 6,000 shares of Common Shares for an aggregate purchase
price of $7,500,000.00 and 3,612 shares of Preferred Shares for
an aggregate purchase price of $4,515,000.00. The total aggregate
purchase price for all Shares is $15,000,000.00.
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Shares and
Preferred 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 Memorandum of Association and Bye-
Laws;
4.4.4. the appointment of Xxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxxx,
Xxxxx X. Xxxxxxx, and Xxxxx X. Xxxxxxxxxxxxxx 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:
----------------------------
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:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), 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
15
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE
STATE SECURITIES LAWS.
4.6. EIS and RPI shall use reasonable efforts to file any documents that require
filing with the Registrar of Companies in Bermuda within the prescribed
time limits.
4.7. In the event that EIS exercises the Exchange Right, Newco shall,
immediately upon such exercise, take all necessary steps to ensure that EIS
is duly and validly issued and has full legal right, title and interest in
and to the shares of Preferred Shares covered thereby. The Parties
acknowledge that such Preferred Shares have been pledged to EIS pursuant to
Clause 4.8 below and that EIS has physical possession of such Preferred
Shares.
4.8. In order to secure RPI's obligations pursuant to the Exchange Right, RPI
hereby pledges, assigns and sets over to EIS, all of RPI's right, title and
interest in and to all Newco Shares (as defined in the RPI Securities
Purchase Agreement) deliverable by RPI upon exercise of the Exchange Right
(including share distributions and dividends thereon). RPI shall cause to
be delivered to EIS all of the certificates together with duly executed
stock power in favor of EIS evidencing such shares, and cause to be filed
with the Secretary of State of Delaware an appropriate UCC-1 financing
statement in respect of such pledge, assignment or setting over, and take
all other necessary, appropriate and customary actions in connection
therewith. Such pledge shall be governed by the applicable provisions of
the Delaware Uniform Commercial Code. Upon exercise of the Exchange
Right, EIS shall be entitled to keep and retain such share certificates,
which shall then be owned by EIS in accordance with the terms thereof. In
connection with the foregoing, Newco and the Participants shall take all
necessary or appropriate steps to ensure such ownership by EIS. Until EIS
exercises the Exchange Right, RPI shall retain all rights in and to the
pledged Newco Shares (including without limitation all voting, dividend,
liquidation and other rights), subject only to this pledge and the terms of
this Agreement.
CLAUSE 5
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
5.1. Directors:
---------
5.1.1 Prior to the exercise of the Exchange Right, the Board shall be
composed of five Directors.
RPI shall have the right to nominate four directors of Newco
("RPI Directors") and EIS shall have the right to nominate one
Director of Newco ("EIS Director")
16
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
two years following the Closing Date, the EIS Director shall only
be entitled to 15% of the votes of the Board until the expiry of
two 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 two years following the Closing Date where the Exchange
Right has been exercised by EIS within two years following the
Closing Date, each of RPI, and EIS shall cause the Board to be
reconfigured so that an equal number of Directors are designated
by EIS and RPI and that each of the Directors has equal voting
power.
5.1.2 If EIS removes the EIS Director, or RPI removes any of the RPI
Directors, EIS or RPI, 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 three times in each
Financial Year and all Board meetings shall be held in Bermuda to
the extent required pursuant to the laws of Bermuda or 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 RPI Directors shall be required to constitute a
quorum and, subject to Clause 18 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 RPI Directors specifying the date, time
and place where such adjourned meeting is to be held and
reconvened.
5.1.5 On the Closing Date, RPI may appoint one of the RPI Directors to
be the chairman of Newco. The chairman of Newco shall hold office
until:
(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 two years following the Closing Date;
or
(ii) the first meeting of the Board following the expiry of two
years following the Closing Date where the Exchange Right
has been exercised by EIS within two years following the
Closing Date
(in each case the "Chairman Status Board Meeting")
After the Chairman Status Board Meeting, each of EIS and RPI,
beginning with EIS at the Chairman Status Board Meeting, shall
have the right, exercisable
17
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 RPI Directors
shall be entitled to appoint another RPI 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 19.
5.2 Management and R&D Committees:
------------------------------
5.2.1 Newco's board of directors 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 RPI, 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 RPI nominee on the Management Committee.
Each of Elan and RPI shall be entitled to remove any of their
nominees to the Management Committee and appoint a replacement in
place of any nominees so removed. 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 RPI 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 RPI, and each of whom shall
have one vote, whether or not present at an R&D Committee meeting
during which research and development issues are discussed.
Decisions of the R&D Committee shall require approval of at least
one Elan nominee on the R&D Committee and one RPI nominee on the
R&D Committee.
Each of Elan and RPI shall be entitled to remove any of their
nominees to the R&D Committee and appoint a replacement in place
of any nominees so removed. 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
18
RPI 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:
5.2.3.1 designing that portion of the Business Plan that
relates to the Project for consideration by the
Management Committee;
5.2.3.2 establishing a joint Project team consisting of an
equal number of team members from Elan and RPI,
including one Project leader from each of Elan and RPI;
and
5.2.3.3 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 the matter
after 15 days or such other period as may be agreed by the
Management Committee, the dispute will be referred to the
President of Elan Pharmaceutical Technologies and the Chief
Executive Officer of RPI, and thereafter, in the event of
continued deadlock, pursuant to the deadlock provisions to be set
forth in Clause 19, 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 hereof and shall agree upon and approve the Business Plan
for the current Financial Year within 60 days of the Closing Date with
respect to the research, development, and commercialization of the Product,
which Business Plan shall contain, among other things, to the extent
practicable, the research and development objectives, desired Product
specifications, clinical indications, preliminary clinical trial designs
(Phase I/II), development timelines, budgeted costs and the relative
responsibilities of RPI and Elan as it relates to the implementation of the
R&D Plan.
6.2. The Business Plan shall be subject to ongoing review by the Directors and
the unanimous approval of the Board on a quarterly basis upon mutual
written agreement.
6.3. Neither Participant shall be obliged to provide funding to Newco in the
absence of quarterly approval of the Business Plan and a determination by
each Participant, in its sole discretion, that Subsequent Funding (as such
term is defined in the Funding Agreement) shall be provided for the
development of the Products.
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CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 Research and development work related to the Products and the Newco
Intellectual Property shall be conducted in accordance with the research
and development program developed by the R&D Committee and approved by the
Management Committee.
7.2 The Parties acknowledge that in addition to the Elan License, Elan granted
to Newco the Elan Research License pursuant to the Elan License Agreement
solely to use the System for research and to perform clinical
investigations to determine the commercial viability of the continuous
subcutaneous administration of [ * ] using the System. If the Parties
jointly determine that the continuous subcutaneous administration of [ * ]
using the System is commercially viable, then the Parties shall in good
faith negotiate a nonexclusive license to Newco of the Elan Intellectual
Property and of the RPI Intellectual Property to make, have made, import,
use, offer for sale and sell such product, subject to then existing
contractual obligations. Such license agreement shall contain normal
commercial terms, provided that (i) the research, development and
commercialization of such product shall be without any cost or obligation
whatsoever to Elan without Elan's prior written consent which may be
withheld in Elan's sole discretion, and (ii) [ * ]
Notwithstanding anything contained in this Clauses 7.2 to the contrary,
Newco shall not have the license or right to manufacture or have
manufactured the System with respect to the Product or to manufacture or
have manufactured [ * ] with respect to the product described in this
Clause 7.2. The Parties agree that the manufacture of the System and [ * ]
is subject to Clause 14 below.
7.3 Subject to the provisions of Clause 6.3, Elan and RPI shall undertake at
their discretion research and development work related to the development
and commercialization of the Products, 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, RPI Intellectual
Property and Newco Intellectual Property. The cost of such development work
shall be Elan's and RPI's, as the case may be, fully-burdened actual costs
in respect thereof, plus [*] of such costs. Research and development work
that is sub-contracted by Elan or RPI to third party providers shall be
charged by Elan or RPI to Newco at the amount invoiced by the relevant
third party provider. Newco shall pay RPI and Elan for any research and
development work carried out by them on behalf of Newco at the end of each
month during the Research and Development Program, subject to the proper
vouching of research and development work and expenses. An invoice shall be
issued to Newco by RPI or Elan, as applicable, by the 15/th/ day of the
month following the month in which work was performed.
20
7.4 Elan and RPI shall use reasonable efforts in undertaking any such research
and development work undertaken for Newco hereunder to conduct such
research and development work in a professional and timely manner.
7.5 Elan and RPI 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 RPI
and any other book, record, voucher, receipt or invoice relating to the
calculation or the cost of the Research and Development Program and to the
accuracy of the reports which accompanied them. Any such inspection of
Elan's or RPI'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 RPI, as the case may be, for the Research and Development
Program hereunder in any Financial Year of [ * ] or more of the amount due
to Elan or RPI, as the case may be, then the expense of such inspection
shall be borne solely by Elan or RPI, as the case may be, instead of by
Newco. Any surplus over the sum properly payable by Newco to Elan or RPI,
as the case may be, shall be paid promptly by Elan or RPI, as the case may
be, to Newco. If such inspection reveals a deficit in the amount of the sum
properly payable to Elan or RPI, as the case may be, by Newco, Newco shall
pay the deficit to Elan or RPI, 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 Elan in writing that Newco in good faith
intends to commercialize a Product, Elan shall have a [ * ] the terms of
any agreement for [ * ], which option shall be exercised within [*] days of
Elan's receipt of such written notification from Newco (the "Elan/Newco
Option"); [ * ]. If Elan elects to enter into such negotiations, the
Parties shall negotiate in good faith the terms of an applicable agreement.
If, despite good faith negotiations, Elan and Newco do not reach agreement
within [ * ] from [ * ], then Newco shall be free to enter into
negotiations and an agreement with a third party (other than a
Technological Competitor of Elan) upon which the third party would
commercialize the relevant Product in the Territory, which terms when taken
as a whole, are not more favourable to the third party than the principal
terms of the last written proposal offered by Newco to Elan or by Elan to
Newco, as the case may be. The Parties shall act in good faith and use
their reasonable commercial judgement when negotiating with such third
party for the commercialization of the Product in the Territory. For
purposes of this Clause 8.2, the term Elan shall include Elan and its
Affiliates.
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CLAUSE 9
SUBLICENSE AND ASSIGNMENT RIGHTS
9.1 Newco shall be permitted to assign or sublicense the Newco
Intellectual Property and to enter into agreements with third parties
for the development of the Newco Intellectual Property upon unanimous
approval by the Management Committee.
9.2 Upon 30 days prior notice in writing from Elan to Newco and RPI, 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 by Elan to facilitate such assignment.
9.3 The Parties acknowledge and agree to be bound by the provisions of
Clause 2.6 of the Elan License Agreement and the provisions of Clause
2.6 of the RPI License Agreement which set forth the agreement between
the Parties thereto in relation to the assignment and sub-licensing of
the Elan Intellectual Property and the RPI Intellectual Property
respectively.
CLAUSE 10
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS/NON-COMPETITION
10.1. The Parties acknowledge and agree to be bound by the provisions of
Clause 3 of the Elan License Agreement and Clause 3 of the RPI License
Agreement which set forth the agreement between the parties thereto in
relation to the ownership of the Elan Intellectual Property, the RPI
Intellectual Property and the Newco Intellectual property
respectively.
10.2 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 RPI License Agreement which set forth the agreement between the
parties thereto in relation to the non-competition obligations of Elan
and RPI, respectively.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
11.1 Elan, at its expense and sole discretion shall (i) secure the grant of
any patent applications within the Elan Patents that relate to the
Field; (ii) file and prosecute patent applications on patentable
inventions and discoveries within the Elan Improvements that relate to
the Field; (iii) defend all such applications against third party
oppositions; and (iv) maintain in force any issued letters patent
within the Elan Patents that relate to the Field (including
22
any letters patent that may issue covering any such Elan Improvements
that relate to the Field). Elan shall have the right in its sole
discretion to control such filing, prosecution, defense and
maintenance provided that Newco and RPI 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.
11.2 RPI, at its expense and sole discretion, shall (i) secure the grant of
any patent applications within the RPI Patents that relate to the
Field; (ii) file and prosecute patent applications on patentable
inventions and discoveries within the RPI Improvements that relate to
the Field; (iii) defend all such applications against third party
oppositions; and (iv) maintain in force any issued letters patent
within the RPI Patents that relate to the Field (including any letters
patent that may issue covering any such RPI Improvements that relate
to the Field). RPI shall have the right in its sole 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.
11.3 In the event that Elan does not intend to file for patent protection
on patentable inventions or discoveries within the Elan Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to Newco and RPI, Newco shall
have the option at Newco's expense, upon the prior written approval of
Elan which approval shall not be unreasonably withheld, to request
Elan to file and prosecute such patent application(s) jointly on
behalf of Newco and RPI. Upon such written request from Newco, Elan
shall be responsible for preparing and prosecuting and otherwise
seeking patent protection for such Elan Intellectual Property
described in this Clause 11.3. Any such Elan Intellectual Property
shall be owned by Elan but Elan shall grant to Newco a royalty free
exclusive license to such Elan Intellectual Property in the Field. The
Parties shall have the right to remove their confidential information
from any such patent application.
11.4 In the event that RPI does not intend to file for patent protection on
patentable inventions or discoveries within the RPI Intellectual
Property that relates to the Field in one or more countries in the
Territory after providing written notice to Newco and Elan, Newco
shall have the option at Newco's expense, upon the prior written
approval of RPI which approval shall not be unreasonably withheld, to
request RPI to file and prosecute such patent application(s) jointly
on behalf of Newco and Elan. Upon such written request from Newco, RPI
shall be responsible for preparing and prosecuting and otherwise
seeking patent protection for such RPI Intellectual Property described
in this Clause 11.3. Any such RPI Intellectual Property shall be owned
by RPI but RPI shall grant a royalty free exclusive license to Newco
to such RPI Intellectual Property in the Field. The Parties shall have
the right to remove their confidential information from any such
patent application.
23
11.5 Newco at its expense shall have the right but shall not be obligated
(i) to file and prosecute patent applications on patentable inventions
and discoveries within the Newco Intellectual Property; (ii) to defend
all such applications against third party oppositions; and (iii) to
maintain in force any issued letters patent within the Newco Patents
(including any patents that issue on patentable inventions and
discoveries within the Newco Intellectual Property). Newco shall have
the right to control such filing, prosecution, defense and maintenance
provided that the other Parties 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. The Parties shall have the right to remove
their confidential information from any such patent application.
11.6 In the event that Newco informs both Elan and RPI that it does not
intend to file an application on the Newco Intellectual Property in or
outside the Field, Elan shall have the right to file and prosecute
such patent applications on inventions that Elan invents solely or
which relate predominantly to the Elan Intellectual Property, and RPI
shall have the right to file and prosecute such patent applications on
inventions which RPI invents solely or which relate predominantly to
the RPI Intellectual Property, and Elan and RPI agree to negotiate in
good faith on the course of action to be taken with respect to Newco
inventions that relate to both the Elan and RPI Intellectual Property.
The Parties shall have the right to remove their confidential
information from any such patent application.
11.7 The Parties shall promptly inform each other in writing of any actual
or alleged unauthorized use of any Elan Intellectual Property, the RPI
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.
11.8 At its option, as the case may be, Elan or RPI shall have the first
option to enforce at its own expense and for its own benefit any
unauthorized use of its respective Intellectual Property (the Elan
Intellectual Property or the RPI 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 RPI decide not to
enforce the Elan Intellectual Property or the RPI Intellectual
Property respectively, against such unauthorized use in the Field,
within a reasonable period but in any event within twenty (20) days
after receiving written notice of such actual or alleged unauthorized
use, Newco may in its discretion initiate such proceedings in its own
name, at its expense and for its own benefit, and at such Party's
request, Elan and RPI shall cooperate with such action. Any recovery
remaining after the deduction by Newco of the reasonable expenses
(including attorney's fees and expenses) incurred in relation to such
enforcement proceeding shall belong to Newco. Alternatively, the
Parties may agree to institute such proceedings in their joint names
and shall reach agreement as to the proportion in which they shall
share the proceeds of any such proceedings, and the expense of any
costs not recovered, or the costs or damages payable to the third
party. If the infringement of the Elan Patents or the RPI Patents
affects both the Field as well as other products being developed or
commercialized by RPI or Elan or its commercial partners outside the
Field, RPI or Elan shall endeavor to agree as to the manner in which
the proceedings should be instituted and as to the proportion in which
they shall share the proceeds of any such proceedings,
24
and the expense of any costs not recovered, or the costs or damages
payable to the third party.
11.9 Newco shall have the first right but not the obligation to bring suit
or otherwise take action against any unauthorized use of the Newco
Intellectual Property. If any such alleged use occurs that gives rise
to a cause of action both inside and outside the Field, Newco, in
consultation with the other Parties, shall determine the course of
action to be taken. 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 RPI informed of any
action in a timely manner so as to enable RPI 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
cooperate with any such action at Newco's cost and expense.
11.10 In the event that Newco does not bring suit or otherwise take action
against any unauthorized use of the Newco Intellectual Property (i) if
only one Party 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 (ii) if
the other Parties pursue such suit or action outside of Newco, they
shall negotiate in good faith an appropriate allocation of costs,
expenses and recovery amounts. At the Party's request, Newco shall
cooperate with any such action at the Party's cost and expense.
11.11 In the event that a claim or proceeding is brought against Newco by a
third party alleging that the sale, distribution or use of a Product
in the Territory constitutes the unauthorized use of the intellectual
property rights of such Party, Newco shall promptly advise the other
Parties of such threat or suit.
11.12 Save in respect of claims by Newco against either Party, or by an
Independent Third Party against Newco, where Elan is in breach of a
representation or warranty under [ * ] or where RPI is in breach of a
representation or warranty under [ * ] shall indemnify, defend and
hold harmless Elan or RPI, 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 referred to in [ * ], provided that Elan
or RPI, 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 RPI, 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
RPI, 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.
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CLAUSE 12
CROSS LICENSING/EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
12.1 Solely for the purpose of and insofar as is necessary, in each case,
for Elan to perform research and development work on behalf of Newco,
Newco shall grant to Elan a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
12.1.1 to use the Newco Intellectual Property in the Field, and
12.1.2 subject to the terms and conditions of the RPI License, a
sublicense to use the RPI Intellectual Property in the
Field.
12.2 Solely for the purpose of and insofar as is necessary, in each case,
for RPI to conduct research and development work on behalf of Newco,
Newco shall grant to RPI a non-exclusive, worldwide, royalty-free,
fully paid-up license for the term of the Licenses:
12.2.1 to use the Newco Intellectual Property in the Field, and
12.2.2 subject to the terms and conditions of the Elan License and
the Elan Research License, a sublicense to use the Elan
Intellectual Property in the Field.
12.3 Subject to the provisions of this Clause 12, Newco hereby grants to
each of Elan and RPI a license to the Newco Intellectual Property as
follows:
12.3.1 Newco hereby grants to Elan a worldwide, perpetual, fully-
paid and royalty-free license, with the right to sublicense,
to the Newco Intellectual Property as it relates to the
System for use outside the Field on an as-is basis without
recourse, representation or warranty whether express or
implied, including warranties of merchantability or fitness
for a particular purpose, or infringement of third party
rights, and all such warranties are expressly disclaimed.
12.3.2 Newco hereby grants to RPI a worldwide, perpetual, fully-
paid and royalty-free license, with the right to sublicense,
to the Newco Intellectual Property as it relates to the
Target Ribozyme for use outside the Field on an as-is basis
without recourse, representation or warranty whether express
or implied, including warranties of merchantability or
fitness for a particular purpose, or infringement of third
party rights, and all such warranties are expressly
disclaimed.
CLAUSE 13
REGULATORY
13.1 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
26
it shall have with an RHA, and shall furnish the other Parties with
copies of all correspondence relating to the Products. The Parties
shall collaborate to obtain any required Regulatory Approval of the
RHA to market the Products.
13.2 Subject to the unanimous determination of the Management Committee
that one or more regulatory approvals for permission to conduct
clinical studies and/or for commercialization should be held in the
name of Newco's commercial partner, such regulatory approvals related
to the Products and/or the Newco Intellectual Property shall be
prosecuted and owned by Newco in accordance with the Business Plan.
All regulatory approvals and submissions relating to the Target
Ribozyme, including without limitation, the DMF, shall be processed by
and be the property of RPI and at all times held in RPI's sole name.
All regulatory approvals and submissions relating to the System,
including without limitation, the MAF, shall be processed by and be
the property of Elan and at all times held in Elan's sole name. Each
of Elan and RPI will authorize Newco to reference such Party's
respective regulatory approval and submission, as described herein,
with the FDA and such foreign agency to the extent necessary for
Newco's regulatory purposes.
13.3 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.
CLAUSE 14
MANUFACTURING
14.1 Subject to the provisions of Clause 14.2, Newco shall be responsible
for manufacturing, or having manufactured, all quantities of Products
required for the development and commercialization of Products for use
in the Field.
14.2 Notwithstanding the provisions of Clause 14.1, Elan shall have the
first right to manufacture and supply, and/or subcontract the
manufacture and supply, of (a) the System with respect to the Product,
and (b) the System with respect to the product relating to [ * ], on
standard commercial terms negotiated in good faith by Newco and Elan.
RPI shall have the first right to manufacture and supply, and/or
subcontract the manufacture and supply, of (1) the Target Ribozyme
with respect to the Product, and (2) [ * ], on standard commercial
terms negotiated in good faith by Newco and RPI.
Any such supply agreement 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 on normal
commercial terms, and shall be negotiated in good faith by the Parties
thereto.
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CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 Whenever commercially and technically feasible, Newco shall contract
with RPI 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 RPI. There shall be no obligation upon either of RPI or Elan
to perform such services.
15.2 Newco shall, if the Participants so agree, conclude an administrative
support agreement with Elan and/or RPI 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:
15.2.1 accounting, financial and other services;
15.2.2 tax services;
15.2.3 insurance services;
15.2.4 human resources services;
15.2.5 legal and company secretarial services;
15.2.6 patent and related intellectual property services; and
15.2.7 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.
15.3. 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
Shareholders and Newco shall ensure that the industry standard
insurance policies shall be in place for all activities to be carried
out by Newco.
15.4 If Elan or RPI so requires, RPI 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 RPI
Intellectual Property, as the case may be, as necessary to further the
Project.
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15.5 The employees received by Elan or RPI, as the case may be, shall be subject
to obligations of confidentiality no less stringent than those set out in
Clause 22 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 16
AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY
Unless otherwise agreed by the Shareholders and save as may be provided to the
contrary herein:
16.1 the auditors of Newco shall be KPMG Peat Marwick of Vallis Building,
Hamilton, Bermuda;
16.2 the bankers of Newco shall be Bank of Bermuda or such other bank as may be
mutually agreed from time to time;
16.3 the accounting reference date of Newco shall be December 31st in each
Financial Year; and
16.4 the secretary of Newco shall be I.S. Xxxxxxxxxxx or such other Person as
may be appointed by the Directors from time to time.
CLAUSE 17
TRANSFERS OF SHARES;
RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
General:
--------
17.1. 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 in 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 Research and Development 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 Research and Development Term, a
29
Shareholder may Transfer Shares provided such Shareholder complies with
the provisions of Clauses 17.2 and 17.3.
Notwithstanding anything contained herein to the contrary, at all times,
EIS and/or RPI 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.
17.2 No Shareholder shall, except with the prior written consent of the other
Shareholder, create or permit to subsist any Encumbrance over or 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).
17.3 Rights of First Offer:
----------------------
If at any time after the end of the Research and Development 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 17 shall
be subject to any "Tag Along Right" benefiting a Shareholder which may be
provided for by Clause 17, 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 favorable to a third party than those presented to the non-
selling Shareholders. If such sale does not
30
occur, the Offered Shares shall again be subject to the Right of First
Refusal set forth in Clause 17.3.
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 17), 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.
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 are 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 17), 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.
17.4 Tag Along Rights:
-----------------
Subject to Clause 17.3, 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 17.4, 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 17, 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.
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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 shares of 7 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 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 17.
At the closing of any Transfer of Shares subject to this Clause 17, 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 17 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 18
MATTERS REQUIRING PARTICIPANTS' APPROVAL
18.1 In consideration of RPI and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that Newco shall not without the prior
approval of the EIS Director and the four RPI Directors:
32
18.1.1. 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, discontinue Newco to a named country or jurisdiction
outside of Bermuda, changes in the Business or the Newco budget
as they relate to the Licensed Technologies; entry 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;
18.1.2. issue any unissued Shares or unissued Common Share Equivalents,
or create or issue any new shares (including a split of the
Shares) or Common Share Equivalents, except as expressly
permitted by the Newco Memorandum of Association and Bye-Laws;
18.1.3. alter any rights attaching to any class of share in the capital
of Newco or alter the Newco Memorandum of Association and Bye-
Laws;
18.1.4. consolidate, sub-divide or convert any of Newco's share capital
or in any way alter the rights attaching thereto;
18.1.5. dispose of all or substantially all of the assets of Newco;
18.1.6. do or permit or suffer to be done any act or thing whereby Newco
may be wound up (whether voluntarily or compulsorily), save as
otherwise expressly provided for in this Agreement;
18.1.7. enter into any contract or transaction except in the ordinary and
proper course of the Business on arm's length terms;
18.1.8. sub-license any of the Elan Intellectual Property or RPI
Intellectual Property, or license Newco Intellectual Property;
18.1.9. amend or vary the terms of the RPI License Agreement or the Elan
License Agreement;
18.1.10. permit a person other than Newco to own a Regulatory Approval
relating to the Product(s);
18.1.11. amend or vary the Business Plan or the Newco budget as they
relate to the Licensed Technologies;
18.1.12. alter the number of Directors;
18.1.13. whether any Shares of Newco shall be registered for public
trading with any governmental authority for public trading in any
securities market; and
33
18.1.14. declare or pay any dividend or make any distribution, directly or
indirectly, with respect to its capital stock; or issue, sell,
exchange, deliver, redeem, purchase or otherwise acquire or
dispose of any shares of its capital stock or other securities.
CLAUSE 19
DISPUTES
19.1 During the Term of this Agreement, should any dispute or difference arise
amongst the members of the Management Committee, or between Elan and RPI,
or between Elan or RPI and Newco, the appropriate representatives of the
applicable Parties shall use good faith efforts to resolve such dispute or
difference promptly and to the mutual satisfaction of the affected Parties.
If with respect to any such dispute or difference (but excluding from the
remaining provisions of this Clause 19 any dispute or difference relating
to (i) the interpretation of any provision of this Agreement, (ii) the
interpretation or application of law, or (iii) the ownership of any
intellectual property, which disputes or differences shall be resolved, if
at all, by arbitration pursuant to Clause 24.8), such representatives
cannot reach a resolution to such dispute or difference within a reasonable
period, then any Party may forthwith give notice to the other Parties that
it wishes such dispute or difference to be referred to the chief executive
officer of RPI and the President of Elan Pharmaceutical Technologies.
19.2 In any event of a notice being served in accordance with Clause 19.1, each
of the Participants shall within 14 days of the service of such notice
prepare and circulate to the chief executive officer of each Participant 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 chief executive officers
of the Participants who shall endeavor using good faith diligent efforts to
resolve the dispute. If the chief executive officers of the Participants
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.
19.3 The chief executive officer of RPI and the President of Elan Pharmaceutical
Technologies shall, if they are unable to resolve a dispute or difference
when it is referred to them under Clause 19.1, within sixty (60) days of
such referral, refer the matter to an independent expert in pharmaceutical
product development and marketing (including clinical development and
regulatory affairs) jointly selected by the chief executive officers of the
Participants (the "Expert"). In the event the chief executive officers of
the Participants cannot agree upon the designation of the Expert, the
Participants shall request the American 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 chief executive officers,
34
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.
19.4 Any determination by the Expert of a dispute or difference shall not be
binding on the Parties.
CLAUSE 20
TERMINATION
20.1 This Agreement shall govern the operation and existence of Newco until (i)
terminated by written agreement of all Parties hereto or (ii) otherwise
terminated in accordance with this Clause 20.
20.2 For the purpose of this Clause 20, a "Relevant Event" is committed or
suffered by a Participant if:
20.2.1 it commits a breach of its material obligations under this
Agreement or the applicable License and fails to remedy it within
60 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 rectify the breach
and is acting in good faith to rectify same but has not cured the
breach by the 60th day, such period shall be extended by such
period as is reasonably necessary to permit the breach to be
rectified; or
20.2.2 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 30 days; or
20.2.3 it is unable to pay its debts in the normal course of business;
or
20.2.4 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
20.2.5 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
35
the law of any applicable jurisdiction, including without
limitation, the United States of America, Bermuda or Ireland; or
20.2.6 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.
20.4 If either Participant commits or suffers 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 some only) 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").
20.5 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.
20.6 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 20.5 above, the Proposing Participant may contact the 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
36
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 Expert 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.
20.7 The Proposing Participant shall purchase the Shares of the Recipient
Participant by delivery of the Purchase Price in cash no later than the
15th Business Day following determination of the Purchase Price by the
Expert.
20.8 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. If the Proposing Participant elects to
purchase the Shares of the Recipient Participant, the Shares of the
Recipient Participant shall be sold by the Recipient Participant as
beneficial owner for a price equal to [*] of the Purchase Price with
effect from the date specified by the Proposing Participant in its notice
of election free from any lien, charge or encumbrance together with all
rights attaching thereto.
20.9 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.
20.10 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.
20.11 In the event of a termination of the Elan License Agreement and/or the
RPI License Agreement, both parties will negotiate in good faith to
determine whether this Agreement should be terminated and if so, which
provisions should survive termination.
20.12 The provisions of Clauses 1, 3, 5.1, 9, 10, 11, 12, 17, 20.12, 22, 23,
and 24 shall survive the termination of this Agreement under this Clause
20.10 or by mutual consent pursuant to Clause 20.1 in accordance with
their terms; all other terms and provisions of this Agreement shall cease
to have effect and be null and void upon the termination of this
Agreement under this Clause 20.10 or by mutual consent pursuant to Clause
20.1.
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CLAUSE 21
SHARE RIGHTS
21.1 The Shareholders agree that the Common Shares and the Preferred Shares
shall be separate classes of shares and shall carry the respective rights
and be subject to the restrictions on the transfer and distribution of
assets provided in the Newco Memorandum of Association and Bye-laws and
as set forth in this Agreement.
21.2 Except as otherwise provided in the Bermuda Companies Act of 1981 and in
the Newco Memorandum of Association and Bye-Laws, the Participants agree
that for a period of two years from the Closing, the Preferred Shares
issued to EIS shall not carry voting rights in Newco.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties 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 RPI 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").
22.2 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 receiving Party's rights
and obligations under this Agreement and the License Agreements, and for
no other purpose. Confidential Information shall not include:
22.2.1 information that is generally available to the public;
22.2.2 information that is made public by the disclosing Party;
22.2.3 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;
22.2.4 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;
38
22.2.5 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
22.2.6 information which the receiving Party is required to disclose
pursuant to:
(i) 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
(ii) other requirement of law;
provided, however, 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; or
22.2.7 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
22.2.8 information that is the subject of a written permission to disclose,
without restriction or limitation, by the disclosing Party.
22.3 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.
39
22.4 Notwithstanding the above, each Party may use or disclose Confidential
Information disclosed to it by another Party to the extent such use or
disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with patent
applications, prosecuting or defending litigation, complying with
applicable governmental regulations or otherwise submitting information to
tax or other governmental authorities, conducting clinical trials, or
granting a permitted sub-license or otherwise exercising its rights
hereunder; provided, that if a Party is required to make any such
disclosure of the other Party's Confidential Information, other than
pursuant to a confidentiality agreement, such Party shall inform the third
party recipient of the terms and provisions of this Agreement and their
duties hereunder and shall obtain their consent hereto as a condition of
releasing to the third party recipient the Confidential Information.
22.5 Any breach of this Clause 22 by any employee, representative or agent of a
Party is considered a breach by the Party itself.
22.6 The provisions relating to confidentiality in this Clause 22 shall remain
in effect during the Term and for a period of seven years following the
termination of this Agreement.
22.7 The Parties agree that the obligations of this Clause 22 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 22, 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.
CLAUSE 23
COSTS
23.1 Each Shareholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Substantive
Documents.
23.2 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.
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CLAUSE 24
GENERAL
24.1 Good Faith:
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Each of the Parties hereto undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give effect
to the spirit and intent of this Agreement.
24.2 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.
24.3 No Representation:
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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.
24.4 Force Majeure:
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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.
24.5 Relationship of the Parties:
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Nothing contained in this Agreement is intended or is to be construed to
constitute Elan/EIS and RPI as partners, or Elan/EIS as an employee or
agent of RPI, or RPI as an employee or agent of Elan/EIS.
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.
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24.6 Counterparts:
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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.
24.7 Notices:
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Any notice to be given under this Agreement shall be sent in writing by
registered or recorded delivery post or reputable overnight courier such as
Federal Express or telecopied to:
Elan/EIS at:
Elan Corporation, plc
C/o Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx XX00
Bermuda
Attention: President
Telephone: 000-000-0000
Fax: 000-000-0000
and
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx XX00
Bermuda
Attention: President
Telephone: 000-000-0000
Fax: 000-000-0000
RPI at:
Ribozyme Pharmaceuticals Incorporated
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone 000-000-0000
Fax: 000-000-0000
with a copy to:
Rothgerber Xxxxxxx & Xxxxx LLP
One Xxxxx Center, Suite 3000
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0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telephone 000-000-0000
Fax: 000-000-0000
Newco at:
Medizyme Pharmaceuticals Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxxxxx House
Church St.
Hamilton, Bermuda
Attention: 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.
Any notice sent by mail shall be deemed to have been delivered within
three Business Days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt. Notices of change of address shall be
effective upon receipt. Notices by telecopy shall also be sent by
another method permitted hereunder.
24.8 Governing Law; Arbitration
--------------------------
24.8.1. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the
provisions thereof relating to the conflict of laws.
24.8.2. The Parties will attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiation between
executives of the Parties. In the event that such negotiations do not
result in a mutually acceptable resolution, the Parties agree to
consider other dispute resolution mechanisms including mediation.
24.8.3 Any dispute under this Agreement which is not settled by mutual
consent under Clause 24.8.2 and which relates to (i) the
interpretation or enforcement of any provision of this Agreement or
the License Agreements, (ii) the interpretation or application of law,
or (iii) the ownership of any intellectual property, shall be finally
settled by binding arbitration, conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
by one arbitrator appointed in accordance with said rules. Such
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arbitrator shall be reasonably satisfactory to each of the Parties;
provided, that if the Parties are unable to agree upon the identity of
such arbitrator within 15 days of demand by either Party, then either
Party shall have the right to request the AAA to appoint the
arbitrator. Such arbitrator shall be an independent expert in
pharmaceutical product development and marketing (including clinical
development and regulatory affairs).
The arbitration shall be held in New York, New York.
The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the
Parties must expend for discovery; provided the arbitrator shall
permit such discovery as they deem necessary to permit an equitable
resolution of the dispute.
Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a
true copy thereof.
The costs of the arbitration, including administrative and
arbitrators' fees, shall be shared equally by the Parties and each
Party shall bear its own costs and attorneys' and witness' fees
incurred in connection with the arbitration.
In rendering judgment, the arbitrators may not provide for punitive or
similar exemplary damages.
A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within 30 days
following the final decision of the arbitrators or such other
reasonable period as the arbitrators determine in a written opinion.
Any arbitration under this Agreement shall be completed within one
year from the filing of notice of a request for such arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other Party.
The Parties agree that the decision shall be the sole, exclusive and
binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the arbitrators.
Application may be made to any court having jurisdiction over the
Party (or its assets) against whom the decision is rendered for a
judicial recognition of the decision and an order of enforcement.
24.9 Severability:
------------
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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.
24.10 Amendments:
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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.
24.11 Waiver:
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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, 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.
24.12 Assignment:
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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:
24.12.1 Elan, EIS and/or RPI 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.
24.12.2 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.
24.13 Whole Agreement/No Effect on Other Agreements:
---------------------------------------------
This Agreement (including the Schedules attached hereto) and the
Substantive Documents set forth all of the agreements and
understandings between the Parties with respect to the subject matter
hereof, and supersedes and terminates 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 Substantive
Documents.
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Newco Memorandum of Association and
Bye-Laws, the terms of this Agreement shall prevail.
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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 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.
24.14 Successors:
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This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
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IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized
representatives to execute this Agreement on the day first set forth above.
SIGNED
BY:_______________________
for and on behalf of
ELAN CORPORATION, PLC
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
in the presence of:__________________
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SIGNED
BY:_______________________
for and on behalf of
RIBOZYME PHARMACEUTICALS, INC.
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
MEDIZYME PHARMACEUTICALS LTD
in the presence of:__________________
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SCHEDULE 1
ELAN LICENSE AGREEMENT
49
SCHEDULE 2
RPI LICENSE AGREEMENT
50
