1
Exhibit 10.10
CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
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
ATHERSYS, INC.
AND
ATHERSYS NEWCO LTD
2
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
CLAUSE 8 COMMERCIALIZATION
CLAUSE 9 SUBLICENSE AND ASSIGNMENT RIGHTS
CLAUSE 10 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
CLAUSE 11 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 12 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;
DRAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING PARTICIPANTS' APPROVAL
CLAUSE 19 DISPUTES
3
CLAUSE 20 TERMINATION
CLAUSE 21 SHARE RIGHTS
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
4
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT (the "Agreement")
is made and entered into this 21st day of October, 1999.
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 that is wholly owned by
Elan, plc, 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 that is wholly owned by Elan,
plc, and having its registered office at XXX Xxxxx, Xxxxxxx Xxxxxxxx
Xxxx, Xxxxxxx, Xxxxxx Xxxxx, Xxxxxxx ("EPIL");
(4) ATHERSYS, INC., a corporation duly incorporated and validly existing
under the laws of Delaware and having its principal place of business
at 00000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000 ("ATHERSYS"); and
(5) ATHERSYS NEWCO LTD. a Bermuda exempted limited liability company
incorporated under the laws of Bermuda by EIS and Athersys on the 18th
day of October, 1999 and having its registered office at Clarendon
House, Church St., Hamilton, Bermuda ("NEWCO").
RECITALS:
A. Newco desires to issue and sell to the Stockholders (as defined below),
and the Stockholders desire to purchase from Newco, for aggregate
consideration of $15,000,000, apportioned between them as set forth
herein, 12,000 ordinary shares of Newco's common stock, par value $1.00
per share (the "COMMON STOCK"), to Athersys and 2,980 shares of Newco's
non-voting convertible preferred stock, par value $1.00 per share (the
"Preferred Stock"), to EIS.
B. As of the date hereof, Elan, plc and EPIL have entered into a license
agreement with Newco, and Athersys has entered into a license agreement
with Newco, in
5
connection with the license to Newco of the Elan Intellectual Property
and the Athersys Intellectual Property, respectively (each as defined
below).
C. Elan, plc, EPIL and Athersys have agreed to co-operate in the research,
development and commercialization of the Products solely for use in the
Field based on their certain respective technologies.
D. Elan and Athersys have agreed to enter into this Agreement to establish
the terms and conditions regulating their relationship with each other,
with respect to the Licensed Technologies and with Newco.
In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1
DEFINITIONS
1.1. In addition to the terms defined elsewhere in this Agreement, the
following terms shall, unless the context clearly requires otherwise,
have the following meanings respectively.
"AAA" shall mean the American Arbitration Association.
"AFFILIATE" shall mean, with respect to Elan, EIS, Athersys or Newco,
any corporation or entity (other than Newco and entities controlled by
Newco) controlling, controlled by or under the common control with such
Party, as the case may be, and, with respect to Newco, any corporation
or entity under control of Newco. For the purpose of this definition,
"control" shall mean (a) direct or indirect ownership of fifty percent
(50%) or more of the stock or shares entitled to vote for the election
of directors, or (b) the actual ability to control and direct the
management of the applicable entity. Notwithstanding the previous two
sentences, it is understood that Newco shall not be deemed to be an
Affiliate of Elan or EIS for the purposes of this Agreement.
"AGREEMENT" shall mean this Subscription, Joint Development And
Operating Agreement, together with the Recitals and the Schedules
hereto.
"ATHERSYS DIRECTORS" has the meaning set forth in Clause 5.
"ATHERSYS IMPROVEMENTS" has the meaning assigned thereto in the
Athersys License Agreement.
2
6
"ATHERSYS INTELLECTUAL PROPERTY" has the meaning assigned thereto in
the Athersys License Agreement.
"ATHERSYS LICENSE AGREEMENT" shall mean the License Agreement between
Athersys and Newco, of even date herewith, a copy of which is attached
hereto in Schedule 2.
"ATHERSYS PATENT RIGHTS" has the meaning assigned thereto in the
Athersys License Agreement.
"ATHERSYS SECURITIES PURCHASE AGREEMENT" shall mean that certain
Securities Purchase Agreement of even date herewith, by and between
Athersys and EIS.
"BOARD" shall mean the board of directors of Newco.
"BUSINESS" shall mean the research, development and Commercialization
activities and business of Newco with respect to Products, as specified
in the Business Plan.
"BUSINESS PLAN" shall mean the plan and program for the research,
development and Commercialization of Products by Newco during a
particular Financial Year, established by the Management Committee and
approved by the Board as provided in Clause 6.1, as such plan may be
amended, updated and/or modified as provided in Clause 6.2.
"CERTIFICATE OF INCORPORATION" shall mean that certain Amended and
Restated Certificate of Incorporation of Athersys as on file with the
Delaware Secretary of State as of the Effective Date hereof, which
includes the preferences and rights of the Class E Preferred Stock of
Athersys.
"CLOSING" shall mean the completion of execution and delivery by the
Parties of all the Transaction Documents and the closing of the
transactions effected thereby.
"CLOSING DATE" shall mean the date of the Closing.
"COMMERCIALIZATION" shall mean the manufacture, have manufactured,
promotion, distribution, import, use, marketing and sale of the
Products, by or on behalf of Newco, for use in the Field.
"COMMON STOCK EQUIVALENTS" shall mean any options, warrants, rights or
any other securities convertible, exercisable or exchangeable, in whole
or in part, for or into Common Stock.
"CONVERTIBLE NOTE" shall mean that certain convertible promissory note,
of even date herewith, by and between Athersys and EIS.
3
7
"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 LICENSE AGREEMENT" shall mean the license agreement between Elan,
plc, EPIL and Newco, of even date herewith, attached hereto in Schedule
1.
"ELAN PATENT RIGHTS" 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 RIGHT" has the meaning assigned to such term in the
Certificate of Incorporation.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FIELD" shall mean the subcutaneous administration of the Selected
Protein produced using RAGE via the MEDIPAD(R) Drug Delivery System to
treat the Selected Indication.
"FINANCIAL YEAR" shall mean a year commencing on January 1 (or in the
case of the first Financial Year, the date hereof) and expiring on
December 31 of such year.
"FULLY DILUTED COMMON STOCK" shall mean all of the issued and
outstanding Common Stock, assuming the conversion, exercise or exchange
of all outstanding Common Stock Equivalents.
"FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
date hereof, between EIS and Athersys.
4
8
CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
[***](1)
[***](2)
"INITIAL INDICATION" shall mean the treatment of [***](3)
"LICENSE AGREEMENTS" shall mean collectively, the Elan License
Agreement and the Athersys License Agreement.
"LICENSED TECHNOLOGIES" shall mean, collectively, the Elan Intellectual
Property and the Athersys Intellectual Property.
"MEDIPAD(R) DRUG DELIVERY SYSTEM" shall have the meaning assigned
thereto in the Elan License Agreement.
"NEWCO INTELLECTUAL PROPERTY" shall mean all Newco Program Technology
and all technology licensed or acquired by Newco (excluding all Elan
Intellectual Property and all Athersys Intellectual Property) or
developed by Newco outside of the Project and all intellectual property
rights in or appurtenant to any of the foregoing.
"NEWCO MEMORANDUM OF ASSOCIATION AND BYE-LAWS" shall mean the
Memorandum of Association and Bye-Laws of Newco, in the form attached
as Schedule 3 hereto.
"NEWCO PROGRAM TECHNOLOGY" shall mean any and all Program Technology,
excluding all Elan Improvements and all Athersys Improvements.
"PARTICIPANT" shall mean Athersys or Elan, as the case may be, and
"PARTICIPANTS" shall mean both of the Participants together.
"PARTY" shall mean Elan, plc, EPIL, Athersys, EIS or Newco, as the case
may be, and "PARTIES" shall mean all five such entities together.
----------------------------
(1) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(2) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(3) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
5
9
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.
"PERMITTED TRANSFEREE" shall mean any Affiliate or subsidiary of Elan,
EIS or Athersys, to whom this Agreement may be assigned, in whole or in
part, pursuant to Clause 17.1 hereof or in the case of Elan and EIS, a
special purpose financing or similar entity created by Elan or EIS.
"PRODUCT" shall mean the Selected Protein produced using RAGE and
incorporated within or packaged with the Medipad(R) Drug Delivery
System.
"PROJECT" shall mean all activities undertaken by or on behalf of Newco
relating to the development and/or Commercialization of the Products
for use in the Field, in accordance with the Business Plan.
"PROGRAM TECHNOLOGY" has the meaning assigned thereto in the License
Agreements.
"RAGE" shall mean the technology owned or licensed by Athersys related
to randomly activated gene expression techniques.
"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.
"REGISTRATION RIGHTS AGREEMENTS" shall mean the Registration Rights
Agreements of even date herewith relating, one to Newco and the other
to Athersys, respectively.
"REGULATORY APPLICATION" shall mean any regulatory application or any
other application for marketing approval for a Product, for use in the
Field that Newco files in any country of the Territory, including any
supplements or amendments thereto.
"REGULATORY APPROVAL" shall mean the final approval of any governmental
or quasi-governmental entity to market a Product in any country of the
Territory and any other approval of any governmental or
quasi-governmental entity which is required to launch the Product in
the normal course of business.
"RHA" shall mean any relevant governmental health authority (or
successor agency thereof) in any country of the Territory whose
approval is required to market a Product in the relevant country of the
Territory.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
6
10
CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
"SELECTED INDICATION" shall mean the Initial Indication, unless and
until a Substitute Indication is designated to be the subject of the
Project pursuant to the designation of a Substitute Protein/Indication
under the provisions of Clause 7.2 or 7.3, in which case the term
"Selected Indication" shall mean such Substitute Indication.
"SELECTED PROTEIN" shall mean [***](4) unless and until a Substitute
Protein is designated to be subject of the Project pursuant to the
designation of a Substitute Protein/Indication under the provisions of
Clause 7.2 or 7.3, in which case the term "Selected Protein" shall mean
such designated Substitute Protein.
"SHARES" shall mean, collectively, the shares of Common Stock and
shares of Preferred Stock of Newco.
"STOCKHOLDER" shall mean any of EIS, Athersys, any Permitted Transferee
or any other Person who subsequently becomes bound by this Agreement as
a holder of Shares, and "STOCKHOLDERS" shall mean all of the
Stockholders together.
"SUBSTITUTE INDICATION" shall mean [***](5).
"SUBSTITUTE PROTEIN" shall mean [***](6).
"SUBSTITUTE PROTEIN/INDICATION" shall as designated pursuant to the
terms of Clause 7.2 or 7.3.
"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.
--------------------------
(4) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(5) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(6) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
7
11
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Funding
Agreement, Elan License Agreement, the Athersys License Agreement, the
Convertible Note, the Stockholder's Agreement, the Senior Note, the
Athersys Securities Purchase Agreement, the Registration Rights
Agreements, the Certificate of Designations and associated
documentation of even date herewith, by and between Athersys, Elan, EIS
and Newco, as applicable.
"UNITED STATES DOLLAR" and "US$" and "$" shall mean the lawful currency
of the United States of America.
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
DEFINITION CLAUSE
"Common Stock" Recitals
"Confidential Information" 22.1
"Co-Sale Notice" 17.4
"Elan/Newco Option" 8.4
"Expert" 19.3
"Management Committee" 5.2.1
"Notice of Exercise" 17.3
"Notice of Intention" 17.3
"Offered Shares" 17.3
"Offer Price" 17.3
"Preferred Stock" Recitals
"R&D Committee" 5.2.3
"Remaining Stockholders" 17.4
"Relevant Event" 20.2
"Selling Stockholder" 17.3
"Services Agreement" 15.1
"Tag-Along Right" 17.4
"Transaction Proposal" 17.3
"Transfer" 17.1
"Transferee Terms" 17.4
"Transferring Stockholders" 17.4
1.3 Words importing the singular shall include the plural and vice versa,
where applicable.
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.
8
12
1.5 Reference to a statute or statutory provision includes a reference to
such statute or statutory provision 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 both genders.
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Transaction Documents, if defined therein.
CLAUSE 2
BUSINESS
2.1 The primary objective of this 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 Athersys Intellectual Property and the Newco
Intellectual Property to agreed-upon specifications and timelines and
to conduct the Commercialization of Products for use in the Field upon
achieving Regulatory Approval.
2.2 The central management and control of Newco shall be exercised in
Bermuda and shall be vested in the Directors and such Persons as they
may delegate the exercise of their powers in accordance with the Newco
Memorandum of Association and Bye-Laws. Subject to the provisions of
Clause 9.2, the Participants shall use their best endeavors to ensure
that to the extent required pursuant to applicable law 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 Stockholders as follows, as of the date hereof:
3.1.1 ORGANIZATION. Newco is an exempted Bermuda company duly
organized, validly existing and in good standing under the
laws of Bermuda, and has
9
13
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, and to carry out
the transactions contemplated hereby.
3.1.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Newco consists of 12,000 shares of Common Stock and
2,980 shares of Preferred Stock. Prior to the Closing, 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 action;
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 equity or 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 Stockholders 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; or
(iii) result in the creation of, any Encumbrance upon any
of the properties or assets of Newco.
3.1.5 APPROVALS. No permit, authorization, consent or approval of or
by, 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
10
14
has full authority to conduct its business as contemplated in
the Business Plan and the Transaction Documents.
3.1.6 DISCLOSURE. Newco is not aware of any material contingency,
event or circumstance relating to its business or prospects,
which could have a material adverse effect thereon, or that
would be material to the decision by any Stockholder to enter
into the transactions contemplated by the Transaction
Documents.
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 for the liabilities which were entered
into solely in connection with its organization and formation.
3.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS: Each of the
Stockholders hereby severally represents and warrants to Newco as
follows as of the date hereof:
3.2.1 ORGANIZATION. Such Stockholder 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 Stockholder 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 Stockholder, 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 equity or of public policy.
3.2.3 NO CONFLICTS. The execution, delivery and performance by such
Stockholder of this Agreement, the purchase of the Shares, and
compliance with the provisions hereof by such Stockholder will
not:
(i) violate any provision of applicable law, statute,
rule or regulation applicable to such Stockholder or
any ruling, writ, injunction, order, judgment or
decree of any court, arbitrator, administrative
agency or other governmental body applicable to such
Stockholder or any of its properties or assets; or
11
15
(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 Stockholder or any material contract
to which such Stockholder is a party, except where
such violation, conflict or breach would not,
individually or in the aggregate, have a material
adverse effect on such Stockholder.
3.2.4 APPROVALS. 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 and the transactions
contemplated hereby by such Stockholder.
3.2.5 INVESTMENT REPRESENTATIONS. Such Stockholder is sophisticated
in transactions of this type and, is capable of evaluating the
merits and risks of its investment in Newco. Such Stockholder
has not been formed solely for the purpose of making the
investment in Newco and such Stockholder is acquiring the
Common Stock and Preferred Stock as the case may be, 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 Stockholder 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 Stockholders' representations and warranties
as expressed herein. Such Stockholder 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.
3.3 REPRESENTATIONS AND WARRANTIES OF ELAN. Elan, plc hereby
represents and warrants to Athersys that the representations
and warranties of Elan, plc made to Newco on a best knowledge
basis in Clauses 8.1 and 8.2 of the Elan License Agreement are
all true and correct, and Elan, plc makes the foregoing
warranty with the understanding that Athersys is relying on
such warranty to enter into the Transaction Documents.
3.4 REPRESENTATIONS AND WARRANTIES OF ATHERSYS. Athersys hereby
represents and warrants to Elan that the representations and
warranties of Athersys made to Newco on a best knowledge basis
in Clauses 8.1 and 8.2 of the Athersys License Agreement are
all true and correct, and Athersys
12
16
makes the foregoing warranty with the understanding that Elan
is relying on such warranty to enter into the Transaction
Documents.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 Newco has authorized the issuance to (i) EIS of 2,980 shares of
Preferred Stock and (ii) Athersys of 12,000 shares of Common Stock,
issuable as provided in Clause 4.4 hereof.
4.2 Athersys 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 Closing) the subscription amounts each as
provided in Clause 4.4.1.
4.3 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 Athersys Securities
Purchase Agreement.
4.4 At the Closing, each of the Stockholders 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 terms and subject to the conditions set forth
herein, 2,980 shares of Preferred Stock for an aggregate
purchase price of $2,985,000. Newco shall issue and sell to
Athersys, and Athersys shall purchase from Newco, upon the
terms and conditions set forth herein, 12,000 shares of Common
Stock for an aggregate purchase price of $12,015,000;
4.4.2 the Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Stock and
Preferred Stock described above and any other certificates,
resolutions or documents that the Parties shall reasonably
require;
4.4.3. the adoption by Newco of the Newco Memorandum of Association
and Bye-Laws;
4.4.4. the appointment of Xxxxx Xxxxxx, Xx. Xxx Van Bokkelen and Xx.
Xxxxx Xxxxxx as Directors of Newco;
13
17
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 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 Athersys shall use reasonable efforts to file any documents
that are required to be filed with the Registrar of Companies in
Bermuda within the prescribed time limits.
4.7. In the event that EIS exercises the Exchange Right prior to the second
anniversary of the date hereof, Newco shall, immediately upon receipt
from Athersys of shares of Common Stock for conversion to Preferred
Stock for purposes of effecting the Exchange Right, issue to EIS a
number of shares of Preferred Stock equal to the number of shares of
Common Stock delivered by Athersys to Newco. Such
14
18
Preferred Stock issued to EIS, if and when so issued, will be duly
authorized, validly issued, fully paid and nonassessable shares of
Preferred Stock and will be free and clear of all Encumbrances other
than any Encumbrance created by EIS. In the event that EIS exercises
the Exchange Right on or after the second anniversary of the date
hereof, Newco shall, immediately upon receipt of notification of the
exercise of the Exchange Right, transfer legal and beneficial ownership
of the number of shares of Common Stock set forth in such notice from
Athersys to EIS. In connection with the foregoing, Newco and the
Stockholders shall take all necessary or appropriate steps to ensure
such ownership by EIS of such Common Stock or Preferred Stock, as the
case may be.
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 three Directors.
Athersys shall have the right to nominate two directors of
Newco, ("ATHERSYS DIRECTORS") and EIS shall have the right to
nominate one Director of Newco ("EIS DIRECTOR") which
Director, save as further provided herein, shall only be
entitled to 15% of the votes of the Board.
In the event that the Exchange Right is exercised by EIS
within 2 years following the Closing Date, the EIS Director
shall only be entitled to 15% of the votes of the Board until
the expiry of 2 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 2 years following the Closing Date where the
Exchange Right has been exercised by EIS within 2 years
following the Closing Date, each of Athersys, and EIS shall
cause the Board to be reconfigured so that an equal number of
Directors are designated by EIS and Athersys and that each of
the Directors has equal voting power.
5.1.2 If EIS removes the EIS Director, or Athersys removes any of
the Athersys Directors, EIS or Athersys, as the case may be,
shall indemnify the other Stockholder 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
15
19
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 one of the Athersys 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
Athersys Directors specifying the date, time and place where
such adjourned meeting is to be held and reconvened.
5.1.5 On the Closing Date, Athersys may appoint one of the Athersys
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 2 years following the Closing Date where the
Exchange Right has been exercised by EIS within 2
years following the Closing Date
(in each case the "CHAIRMAN STATUS BOARD MEETING")
After the Chairman Status Board Meeting, each of EIS and
Athersys, beginning with EIS at the Chairman Status Board
Meeting, shall have the right, exercisable alternatively, of
nominating one Director to be chairman of Newco for a term of
one year.
If the chairman is unable to attend any meeting of the Board
held prior to the Chairman Status Board Meeting, the Athersys
Directors shall be entitled to appoint another Athersys
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.
16
20
5.2 MANAGEMENT AND R&D COMMITTEES:
5.2.1 Newco hereby appoints a management committee (the "Management
Committee") which shall initially consist of four members, two of whom (the
"Elan Representatives") shall be nominated by Elan and two of whom (the
"Athersys Representatives") shall be nominated by Athersys and each of whom
shall be entitled to one vote, whether or not present at any Management
Committee meeting. Each of the Elan members of the Board and the Athersys
members of the Board shall be entitled to remove any of their representatives to
the Management Committee and appoint a replacement in place of any
representative so removed. The number of members of the Management Committee may
be altered if agreed to by the Board; provided that Elan and the Athersys shall
be entitled at all times to appoint an equal number of members to the Management
Committee.
Decisions of the Management Committee shall require approval
by at least one Elan Representative and one Athersys
Representative. If the Management Committee cannot resolve any
issue or matter, the dispute will be referred to the President
of Elan Pharmaceutical Technologies and the Chief Executive
Officer of Athersys, and thereafter, in the event of continued
deadlock, pursuant to the deadlock provisions set forth in
Clause 19.
5.2.2 The Management Committee shall inter alia, devise, implement and
review strategy for the Project and for the business and operation of Newco as
it relates to the Field, the licensed use of the Licensed Technologies and the
conduct of the Business Plan, and, in particular, devise Newco's strategy for
research, development and Commercialization of Products for use in the Field and
to monitor and supervise the implementation of the Business Plan. The Management
Committee shall report all significant developments to the Board on the
occurrence thereof and, in addition shall report at quarterly intervals to the
Board.
5.2.3 The Management Committee shall appoint a research and development
committee (the "R&D Committee"), which shall initially be comprised of four
members, with an equal number being nominated by the Elan Representatives and by
the Athersys Representatives, and each of whom shall have one vote, whether or
not present at an R&D Committee meeting. Decisions of the R&D Committee shall
require approval by at least one Elan representative on the R&D Committee and
one Athersys representative on the R&D Committee. The Elan Representatives and
the Athersys Representatives shall be entitled to remove any of their respective
representatives to the R&D Committee and appoint a replacement in place of any
such representative so removed. The number of members of the R&D Committee may
be altered if agreed to by the Management Committee; provided that Elan and
Athersys shall be entitled to appoint an equal number of members to the R&D
Committee.
17
21
5.2.4 The R&D Committee shall (a) design that portion of the Business
Plan that relates to the research and development program for Products for
consideration and approval by the Management Committee, and (b) implementing
such portion of the approved Business Plan that relates to such research and
development program. The R&D Committee shall appoint a project team (the
"Project Team"), a leader of the Project Team, and a program manager. The R&D
Committee shall meet at least once each calendar quarter alternately at the
offices of Elan and Athersys (except where otherwise agreed) to monitor the
progress of that portion of the Business Plan that relates to the research and
development program and to report on their progress to the Management Committee.
5.2.5 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, the dispute will be referred to the President of Elan
Pharmaceutical Technologies and the Chief Executive Officer of
Athersys, and thereafter, in the event of continued deadlock,
pursuant to the deadlock provisions set forth in Clause 19.1.
CLAUSE 6
THE BUSINESS PLAN AND REVIEWS
6.1 The Management Committee shall meet together as soon as
reasonably practicable after the Closing Date and shall agree
upon, subject to approval of the Board, the Business Plan for
the current Financial Year and for the Financial Year
commencing January 1, 2000 as soon as practicable, in any
event within 60 days from the Closing Date (with respect to
the current Financial Year) or January 1, 2000 (with respect
to the Financial Year commencing January 1, 2000). In
addition, at least (60) days prior to the commencement of each
subsequent Financial Year, the Management Committee will agree
upon and submit to the Board for Board approval the Business
Plan for such Financial Year, and may solicit recommendations
from the R & D Committee and/or appropriate Elan and Athersys
representatives with respect thereto.
6.2 During any particular Financial Year the Business Plan
applicable thereto shall be subject to ongoing review by the
Management Committee and the R & D Committee and, on a
quarterly basis, the unanimous approval of the Board. If
appropriate based on the results of the Project or other
developments or changes, the R & D Committee may recommend to
the Management Committee modifications or amendments to the
Business Plan. The Management Committee will review any such
18
22
recommendations, and may discuss its own amendments, changes
or modifications to the Business Plan, and any amendments,
changes or modifications submitted to and approved by the
Board will be deemed incorporated into the Business Plan upon
such Board approval.
6.3 Funding of Newco's activities under the Business Plan shall be
provided in accordance with the terms of the Funding
Agreement.
CLAUSE 7
RESEARCH AND DEVELOPMENT WORK
7.1 Research and development work related to the Products and the Newco
Intellectual Property for use in the Field shall be conducted by or on
behalf of Newco in accordance with the research and development program
developed by the R&D Committee and approved by the Management Committee
as part of the Business Plan.
7.2 Within forty-five (45) days of the Effective Date, the Parties shall
jointly determine in their good faith and reasonable judgment whether
the research, development and commercialization of the Product for
treatment of the Initial Indication is commercially viable. If the
Parties determine within such time that such research, development and
commercialization of the Product for the treatment of the Initial
Indication is not commercially viable, then the Parties will in good
faith select and designate, by the date that is sixty (60) days after
the Effective Date, a Substitute Protein/Indication to be pursued by
Newco. The selection of the Substitute Protein/Indication shall be
subject, inter alia, to the then-existing contractual arrangements of
Elan and Athersys and such discussions as Elan and Athersys are having
with one or more third parties at the time of such selection, as well
as any intellectual property assessment conducted with regard to the
proposed commercialization of such Substitute Protein/Indication. If
the Parties designate a Substitute Protein/Indication for pursuit by
Newco, then the Parties shall promptly thereafter negotiate in good
faith such amendments as are required to the Elan License, the Athersys
License and the research and development budgeted costs for the Project
to substitute such Substitute Protein/Indication for the existing
Product and Field, including without limitation appropriate amendments
to the definition of Product and Field (if any are needed). If no such
substitution is made as contemplated in the foregoing, then Newco will
proceed under the Business Plan to research, develop and commercialize
the Product for use in treating the Initial Indication.
7.3 If the Parties determine in their good faith and reasonable judgment
that the Product does not meet the pre-determined performance criteria
established by the Management Committee, whether from a pharmaceutical,
pharmacokinetic,
19
23
clinical or commercial standpoint, then the Parties by mutual agreement
may, within sixty (60) days of such determination, designate a
Substitute Protein/Indication to be pursued by Newco, which designation
shall be subject, inter alia, to availability of resources at Newco to
pursue such new project and to then-existing contractual arrangements
of Elan and Athersys and such discussions Elan and Athersys are having
with one or more third parties at the time of such selection, as well
as any intellectual property assessment conducted with regard to the
proposed commercialization of such Substitute Protein/Indication. If
the Parties designate a Substitute Protein/Indication for pursuit by
Newco, then the Parties shall promptly thereafter negotiate in good
faith such amendments as are required to the Elan License, the Athersys
License and the research and development budgeted costs for the Project
to substitute such Substitute Protein/Indication for the existing
Product and Field, including without limitation appropriate amendments
to the definition of Product and Field (if any are needed).
7.4 Subject to the provisions of Clause 6.3, Elan and Athersys, at Newco's
request and subject to appropriate Service Agreements (as defined in
Clause 15.1) covering such work agreed to by the Parties, may undertake
research and development work related to the development and
Commercialization of the Products, 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, Athersys Intellectual Property and Newco
Intellectual Property. The cost of such development work shall be
Elan's and Athersys', as the case may be, fully-burdened actual costs
in respect thereof, plus 30% of such costs, which shall be reimbursed
by Newco according to the terms of the applicable Services Agreements
(as defined below in Clause 15.1). Research and development activities
that are outsourced to third party providers shall be charged to Newco
at fully burdened actual costs.
7.5 Elan and Athersys 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.
7.6 Elan and Athersys 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 Athersys 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 Athersys'
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 Athersys, as the case may be, for the Research and Development
Program hereunder in any Financial Year of 5% or more of the amount due
to Elan or Athersys, as the case may be, then the expense of such
inspection shall be borne solely by Elan or Athersys, as the case may
be, instead of by Newco. Any surplus over the sum properly payable by
20
24
Newco to Elan or Athersys, as the case may be, shall be paid promptly
by Elan or Athersys, as the case may be, to Newco. If such inspection
reveals a deficit in the amount of the sum properly payable to Elan or
Athersys, as the case may be, by Newco, Newco shall pay the deficit to
Elan or Athersys, as the case may be.
CLAUSE 8
COMMERCIALIZATION
8.1 Newco shall diligently pursue research, prosecution, development, and
Commercialization of the Products, solely for use in the Field, in
accordance with the Business Plan, which may include establishing
strategic partnerships with pharmaceutical companies interested in
sub-licensing the Product for use in the Field, or the right under the
Licensed Technologies to develop and commercialize the Product for use
in the Field. At any time during the development of the Product, Newco
may, subject to the other provisions of this Agreement, license the
rights to the Product to one or more marketing partners for use solely
in the Field, or otherwise Commercialize the Product for use in the
Field under an alternative strategy determined by the Management
Committee.
8.2 Newco shall be responsible for negotiating with third parties
commercially reasonable terms (e.g., royalties, milestones, fees,
profit sharing, manufacturing rights, supply terms, etc.) but shall do
so under a strategy agreed with Elan and Athersys and shall keep the
Management Committee and Elan and Athersys informed throughout the
negotiation process.
8.3 If an independent third party and Athersys enter into a binding
agreement for the research, development and/or commercialization of
products with respect to the subcutaneous, administration of the
Selected Protein for an indication other than the Selected Indication,
and if Athersys and such independent third party desire that Newco
research, develop and/or commercialize such product for use in such
indication, then Newco shall negotiate in good faith with Athersys and
such independent third party with respect to the research, development
and commercialization of such product for such use by Newco.
8.4 If the Management Committee unanimously agrees that Newco should
research and develop products for neurological disorders, pain
management, acute care and/or in the oncology area, then, subject to
existing contractual commitments, the Participants shall promptly
thereafter negotiate in good faith such amendments that are required to
the Elan License Agreement and the Athersys License Agreement and the
research and development budgeted costs for the Project, including
without limitation appropriate amendments to the definition of Product
and Field (if any are needed). If at any time, upon the unanimous
approval of the Management Committee, Newco in good faith intends to
commercialize such product for such
21
25
indication, then Newco shall so notify Elan in writing. Elan shall have
a first option to negotiate the terms of any agreement for the
commercialization of each such product for such indication, which
option shall be exercised within sixty (60) days of Elan's receipt of
such written notification from Newco (the "Elan/Newco Option"). If,
despite good faith negotiations, Elan and Newco do not reach agreement
on the terms of such an agreement within 120 days from Elan's exercise
of the Elan/Newco Option, then Newco shall be free to offer a third
party, other than a Technological Competitor of Elan, to commercialize
the product for such indication that is subject to the Elan/Newco
Option in the Territory.
CLAUSE 9
SUBLICENSE AND ASSIGNMENT RIGHTS
9.1 Newco shall not be permitted to assign or sublicense the Newco
Intellectual Property or to enter into agreements with third parties
for the development of the Newco Intellectual Property to the extent
related to development or Commercialization of Products except with the
unanimous approval of the Management Committee.
9.2 Upon thirty (30) days prior notice in writing from Elan to Newco and
Athersys, Newco shall assign 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 and Athersys to facilitate
such assignment. Such assignment need not be effected if it would
result in a material adverse effect on Athersys. The expenses for such
incorporation and assignment will be paid entirely by Elan.
CLAUSE 10
OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
10.1. The Parties acknowledge and agree that the applicable provisions of the
Elan License Agreement and the Athersys License Agreement set forth the
agreement between the parties thereto in relation to the ownership of
the Elan Intellectual Property, the Athersys Intellectual Property and
the Newco Intellectual Property.
CLAUSE 11
INTELLECTUAL PROPERTY RIGHTS
The Participants shall discuss in good faith all material issues
relating to filing, prosecution and maintenance of Elan Patent Rights
and Athersys Patent Rights
22
26
insofar as such patent rights are of relevance to the use thereof in
the Field and the rights licensed to Newco under the License Agreements
and any patentable inventions and discoveries within the Elan
Intellectual Property, Athersys Intellectual Property and Newco
Intellectual Property that relate to the Field and the rights licensed
to Newco under the License Agreements. Subject to written mutual
agreement to the contrary by Athersys and Elan the following provisions
shall apply:
11.1 Elan, at its expense, shall make a good faith effort (i) to
secure the grant of any material patent applications within
the Elan Patent Rights that relate to the Field; (ii) to
defend all such applications against third party oppositions
and interferences; and (iii) to maintain in force any material
issued letters patent within the Elan Patent Rights that
relate to the Field (including any letters patent that may
issue covering any such Elan Improvements that relates to the
Field). Elan shall have the right in its discretion to control
such filing, prosecution, defense and maintenance provided
that Newco and Athersys 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 Athersys, at its expense, shall make a good faith effort (i)
to secure the grant of any material patent applications within
the Athersys Patent Rights that relate to the Field; (ii) to
defend all such applications against third party oppositions
and interferences; and (iii) to maintain in force any material
issued letters patent within the Athersys Patent Rights that
relate to the Field (including any letters patent that may
issue covering any such Athersys Improvements that relate to
the Field). Athersys shall have the right in its discretion to
control such filing, prosecution, defense and maintenance,
provided, that Elan and Newco at their request shall be
provided with copies of all documents relating to such filing,
prosecution, defense and maintenance in sufficient time to
review such documents and comment thereon prior to filing.
11.3 Newco, at its expense, shall make a good faith effort to (i)
file and prosecute patent applications on patentable
inventions and discoveries within the Newco Intellectual
Property; (ii) defend all such applications against third
party oppositions and interferences; and (iii) maintain in
force any issued letters patent within any Newco patents
(including any patents that issue on patentable inventions and
discoveries within the Newco Intellectual Property). Newco
shall have the right in its discretion to control such filing,
prosecution, defense and maintenance, provided, that Elan and
Athersys 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
23
27
filing. All decisions relating to the filing, prosecution,
defense and maintenance of Newco patents shall be made by the
Management Committee.
11.4 Newco, Elan and Athersys shall promptly inform each other in
writing of any alleged infringement of any patents within the
Elan Patent Rights, the Athersys Patent Rights or Newco
patents or any alleged misappropriation of trade secrets
within the Elan Intellectual Property, the Athersys
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 infringement or
misappropriation insofar as such infringements or
misappropriation relate solely to the Field.
11.5 Newco shall have the right to prosecute at its own expense and
for its own benefit any infringements of the Elan Patent
Rights, the Athersys Patent Rights or misappropriation of the
Elan Intellectual Property and the Athersys Intellectual
Property, insofar as such infringements or misappropriation
relate solely to the Field; provided that with respect to
enforcement of Elan Patent Rights against non-Affiliates, Elan
consents to such enforcement, and with respect to enforcement
of Athersys Patent Rights against non-Affiliates, Athersys
consents to such enforcement. In the event that Newco takes
such action, Newco shall do so at its own cost and expense. At
Newco's request and expense, the Participants 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 infringement
proceeding shall belong to Newco. Should Newco decide not to
pursue such infringers within forty-five (45) days after
receiving written notice of such alleged infringement or
misappropriation, then Elan (as to the Elan Intellectual
Property) or Athersys (as to the Athersys Intellectual
Property), as applicable, may in its discretion initiate such
proceedings in its own name, at its expense and for its own
benefit, and at such Participant's request and expense, Newco
shall cooperate with such action. Alternatively, the
Participants 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 Patent Rights or the Athersys Patent Rights affects both
the Field as well as other products being developed or
commercialized by Athersys or Elan or its commercial partners
outside the Field, Athersys or Elan, as the case may be, shall
endeavor in good faith to agree with Newco 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, and the expense of any costs not recovered, or
the costs or damages payable to the third party, provided that
the applicable
24
28
Participant shall be entitled to pursue an action against such
infringer for activities outside the Field, in any event.
11.6 Newco shall have the first right but not the obligation to
bring suit or otherwise take action against any alleged
infringement of Newco patents or alleged misappropriation of
the Newco Intellectual Property. If any such alleged
infringement or misappropriation occurs that gives rise to a
cause of action inside the Field, Newco, in consultation with
the Participants, 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 Athersys informed
of any action in a timely manner so as to enable Athersys and
Elan to provide input in any such action and Newco shall
reasonably take into consideration any such input. At Newco's
request, the Participants shall cooperate with any such action
at Newco's cost and expense.
11.7 In the event that Newco does not bring suit or otherwise take
action against an infringement of any Newco patents or
misappropriation of the Newco Intellectual Property, then (i)
if only one Participant determines to pursue such suit or take
such action at its own cost and expense, it shall be entitled
to all damages and monetary award recovered in or with respect
to such action and (ii) if the Participants 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 Participant's request, Newco shall cooperate
with any such action at the Participant's cost and expense.
11.8 In the event that a claim is, or proceedings are, brought
against Newco by a third party alleging that the sale,
distribution or use of a Product in the Territory or use of
the Elan Intellectual Property or the Athersys Intellectual
Property, as the case may be, infringes the intellectual
property rights of such third party, Newco shall promptly
advise the other Participants of such threat or suit, and
shall defend any such action at its expense. The Participants
shall assist and cooperate reasonably in such defense.
11.9 Save and except for claims arising in respect of a breach of
representation or warranty set forth in Clauses 8.1 and 8.2 of
the License Agreements, Newco shall indemnify, defend and hold
harmless Elan or Athersys, as the case may be, against all,
losses, demands, damages, costs and liabilities (including
reasonable attorneys fees) arising from any claim, suit or
action by a third party against Elan or Athersys alleging that
the manufacture, use or sale of a Product by (or on behalf of)
Newco, or the use or practice by
25
29
CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Newco of the Athersys Intellectual Property or the Elan
Intellectual Property, infringes a patent owned or licensed by
such third party, provided that Elan or Athersys, 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 Athersys, as the case may be, may elect to take over
the conduct of such proceedings from Newco provided that (a)
Newco's indemnification obligations shall continue; (b) the
costs of defending such claim shall be borne by Elan or
Athersys, as the case may be and (c) such Participant shall
not compromise or settle any such claim or proceeding without
the prior written consent of Newco, such consent not to be
unreasonably withheld, conditioned or delayed.
CLAUSE 12
EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
12.1 Newco agrees to grant (i) to Athersys an exclusive,
world-wide, royalty free perpetual license of Newco Program
Technology exclusively as it relates to randomly activated
gene expression for exploitation in all fields outside the
Field, and (ii) [***](7) exclusively as it relates to the
MEDIPAD(R) Drug Delivery System for exploitation in all
fields outside the Field. All such licenses shall, subject
to the immediately preceding sentence, be granted pursuant to
license agreements to be negotiated in good faith by the
applicable Parties which shall contain such customary terms
contained in similar licenses in the pharmaceutical industry,
as agreed to by the licensee and the unanimous decision of
the Management Committee, acting in good faith.
12.2 In instances where commercialization of the Newco Program
Technology outside the Field requires a license to the
Athersys Intellectual Property or the Elan Intellectual
Property, then a separate license may be negotiated in good
faith for those licenses with the other Participant parallel
with discussions regarding the Newco Program Technology;
provided, however, that neither Participant is under any
obligation to grant such a license.
---------------------
(7) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
26
30
CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
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 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 Newco shall, at its own cost, file, prosecute and maintain any and all
Regulatory Applications for the Products in the Territory in accordance
with the Business Plan.
13.3 Any and all Regulatory Approvals obtained hereunder for any Product
shall remain the property of Newco, provided that Newco shall allow
Elan and Athersys access thereto to enable Elan and Athersys to fulfill
their respective obligations and exercise their respective rights under
this Agreement. Newco shall maintain such Regulatory Approvals at its
own cost.
13.4 It is hereby acknowledged that there are inherent uncertainties
involved in the registration of pharmaceutical products with the RHAs
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. Therefore,
except for liabilities resulting from failure to use reasonable
efforts, none of Elan, EIS or Athersys shall have any liability to
Newco solely as a result of any failure of a Product to achieve the
approval of any RHA.
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 8.2, [***](8) with respect
to the Product [***](9) negotiated in good faith by Newco and Elan;
and Athersys shall have the first right to manufacture and supply,
and/or subcontract the manufacture and supply, of the selected Protein
produced using RAGE with respect to the
--------------------
(8) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
(9) CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
27
31
Product on standard commercial terms negotiated in good faith by Newco
and Athersys.
CLAUSE 15
TECHNICAL SERVICES AND ASSISTANCE
15.1 The Parties contemplate that, where commercially and technically
feasible, Newco shall contract with Athersys 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 Athersys. There shall be no
obligation upon either of Athersys or Elan to perform such services.
Any such services to be performed on behalf of Newco shall be pursuant
to contracts (each, a "Services Agreement") that are negotiated in good
faith by the Parties and approved by each of Elan and Athersys.
15.2 Newco shall, if the Participants so agree, conclude an administrative
support Service Agreement with Elan and/or Athersys 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
Stockholders and Newco shall ensure that the
28
32
industry standard insurance policies shall be in place for all
activities to be carried out by Newco.
15.4 If Elan or Athersys so requires, Athersys 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
Athersys Intellectual Property, as the case may be, as necessary to
further the Project.
15.5 The employees received by Elan or Athersys, 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 Stockholders in writing and save as may be
provided to the contrary herein:
16.1 the auditors of Newco shall be Ernst & Young of Cleveland, Ohio;
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; DRAG ALONG RIGHTS
17.1 GENERAL:
Until such time as the Common Stock shall be registered pursuant to the
Exchange Act and be publicly traded in an established securities
market, no
29
33
Stockholder shall, directly or indirectly, sell, assign, pledge,
dispose of, or otherwise transfer (each, a "TRANSFER") all or any part
of the Shares held by it except as is 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 Stockholder 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 Stockholder 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
Stockholder may Transfer Shares provided such Stockholder complies with
the provisions of Clauses 17.3, 17.4 and 17.5.
Notwithstanding anything contained herein to the contrary, at all
times, a Stockholder may Transfer Shares held by it to a Permitted
Transferee; provided, that such Transfer shall be subject to and such
Permitted Transferee shall agree to be expressly subject to and bound
by all the limitations and provisions which are embodied in this
Agreement.
17.2 No Stockholder shall, except with the prior written consent of the
other Stockholder, 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
Stockholder shall desire to Transfer any Shares owned by it (a "SELLING
STOCKHOLDER"), in any transaction or series of related transactions
other than a Transfer to a Permitted Transferee, then such Selling
Stockholder shall deliver prior written notice of its desire to
Transfer (a "NOTICE OF INTENTION") (i) to Newco and (ii) to the
Stockholders who are not the Selling Stockholder, as applicable,
setting forth such Selling Stockholder'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, and the per
share price at which such Selling Stockholder proposes to Transfer the
Offered Shares (the "OFFER PRICE"). The "Right of First Offer" provided
for in this Clause 17.3 shall take precedence over "Tag Along Right"
and "Drag-Along Right" benefiting a Stockholder which may be provided
for by Clause 17, and if the non-Selling Stockholder does not exercise
its right to purchase the Offered Shares pursuant to this Clause 17.3,
then the provisions of Clauses 17.4 and 17.5 shall apply as provided
therein.
30
34
Upon receipt of the Notice of Intention, the Stockholders who are not
the Selling Stockholder shall have the right to purchase at the Offer
Price the Offered Shares, exercisable by the delivery of notice to the
Selling Stockholder (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
Stockholders who are not the Selling Stockholder 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 Stockholder shall be entitled to Transfer all of the Offered
Shares to the intended transferee; provided, however, the Selling
Stockholder shall sell the available Offered Shares within 30 days
after the delivery of such Notice of Intention on terms no more
favorable to the third party set forth in the Notice of Intention than
those presented to the non-selling Stockholders. If such sale does not
occur within such thirty (30) day period, the Offered Shares shall
again be subject to the Right of First Refusal set forth in this Clause
17.3.
In the event that any of the Stockholders who are not the Selling
Stockholder exercises their right to purchase all of the Offered Shares
(in accordance with this Clause 17), then the Selling Stockholder shall
sell all of the Offered Shares to such Stockholder(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
Stockholders who are not the Selling Stockholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Stockholders on the basis of their pro rata equity interests in Newco.
The rights and obligations of each of the Stockholders pursuant to the
Right of First Offer provided herein shall terminate upon the date that
the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act.
At the closing of the purchase of all of the Offered Shares by the
Stockholders who are not the Selling Stockholder (scheduled in
accordance with Clause 17.3), the Selling Stockholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed,
or accompanied by written instruments of transfer in form reasonably
satisfactory to the Stockholders who are not the Selling Stockholder,
duly executed by the Selling Stockholder, 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:
17.4.1 Subject to Clause 17.3, a Stockholder (the "TRANSFERRING
STOCKHOLDER") shall not Transfer (either directly or
indirectly), in any one transaction or series of related
transactions, to any Person or group of Persons, any amount of
such Stockholder's Shares which exceeds 10% of the Shares
31
35
owned by such Stockholder and its Permitted Transferees,
unless the terms and conditions of such Transfer shall include
an offer to the other Stockholders (the "REMAINING
STOCKHOLDERS"), to sell Shares at the same price and on the
same terms and conditions as the Transferring Stockholder has
agreed to sell its Shares (the "TAG ALONG RIGHT").
17.4.2 In the event a Transferring Stockholder proposes to Transfer
any Shares in a transaction subject to Clause 17.4.1, it shall
notify, or cause to be notified, the Remaining Stockholders 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 17.4, if such right is applicable, and the
total number of Shares the transferee has agreed to purchase
from the Stockholders in accordance with the terms hereof.
17.4.3 The Tag Along Right may be exercised by each of the Remaining
Stockholders by delivery of a written notice to the
Transferring Stockholder (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 Stockholder which the
Remaining Stockholder wishes to include in such Transfer;
provided, however, that without the written consent of the
Transferring Stockholder, the amount of such securities
belonging to the Remaining Stockholder included in such
Transfer may not be greater than such Remaining Stockholder's
percentage beneficial ownership of Fully Diluted Common Stock
multiplied by the total number of shares of Fully Diluted
Common Stock to be sold by both the Transferring Stockholder
and all Remaining Stockholders. Upon receipt of a Co-sale
Notice, the Transferring Stockholder 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 Stockholder 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 Stockholder prior to the expiration of the
10 business day period referred to above and if the provisions
of this Clause have been complied with in all respects, the
Transferring Stockholder 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 Stockholders
of the proposed Transfer and complying with the requirements
of this Clause 17.
32
36
At the closing of any Transfer of Shares subject to this
Clause 17.4, the Transferring Stockholder, and the Remaining
Stockholder, 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.
17.5 DRAG ALONG RIGHTS
17.5.1 Subject to Clause 17.3, at any time after the latter of (i)
the expiration of the Research and Development Term, and (ii)
the sixth anniversary of the Closing Date, so long as this
Agreement shall remain in effect and a Selling Stockholder and
its Affiliates beneficially own, collectively, on a fully
diluted basis an aggregate number of Shares not less than a
majority of the Shares then outstanding, if a Selling
Stockholder receives a bona fide offer from a Person that is
not an Affiliate of such Selling Stockholder (a "Third Party")
to purchase in an arms'-length transaction all, but not less
than all, of the outstanding Shares owned by the Selling
Stockholder and such offer is accepted by such Selling
Stockholder, then each Stockholder other than the Selling
Stockholder hereby agrees that it or he will transfer all
Shares owned by it or him to such Third Party on the terms of
the offer so accepted by the Selling Stockholder, including
the same per share consideration.
17.5.2 The Selling Stockholder shall give notice (the "Drag-Along
Notice") to each of the other Stockholders (other than the
Selling Stockholder) of any proposed Transfer giving rise to
the rights of the Selling Stockholder set forth in Clause
17.5.1 as soon as practicable following the acceptance of the
offer referred to in Clause 17.5.1. The Drag-Along Notice
shall set forth the number of Shares proposed to be so
Transferred, the name of the proposed transferee, the proposed
amount and form of consideration (and if such consideration
consisting in part or in whole of property other than cash,
the Selling Stockholder shall provide such information, to the
extent reasonably available to the Selling Stockholder,
relating to such consideration as the Stockholders other than
the Selling Stockholder may reasonably request in order to
evaluate such non-cash consideration) and the other terms and
conditions of the offer. The Selling Stockholder shall notify
Newco at least 5 days in advance of entering into a definitive
agreement in connection with such offer if the Stockholders
other than the Selling Stockholder will be required to sign
any agreement containing representations, warranties and
indemnities and will provide in advance to one counsel acting
for the Stockholders other than the Selling Stockholder
subject to the Drag-Along Notice (which counsel shall be other
than counsel for the Selling Stockholder) a copy of the
representations,
33
37
warranties and indemnities proposed to be made by such
Stockholders. In any such agreement such Stockholders will be
required to make the same representations, warranties and
indemnities as the Selling Stockholder so long as they are
made severally and not jointly with respect to such
Stockholders' Shares only and only concerning such
Stockholders' ownership rights in such Shares. Newco shall pay
the fees and expenses of counsel for the Stockholders (other
than the Selling Stockholder) as well as counsel for the
Selling Stockholder in connection with any transactions
referred to in this Clause 17.5. If the Transfer referred to
in the Drag-Along Notice is not consummated within 120 days
from the date of the Drag-Along Notice and the Selling
Stockholder still desires to Transfer its Shares, then it must
again comply first with the provisions of Clause 17.3 and then
with the provisions of Clause 17.4 and this Clause 17.5 as if
the Notice of Intention, Co-Sale Notice and Drag-Along Notice
had not been previously delivered.
17.6 Notwithstanding the foregoing, this Clause 17 shall not apply
to any sale of Common Stock 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 Athersys 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 at least one (1)
Athersys Director:
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, material changes in the Business;
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 Common Stock Equivalents or
create or issue any new shares (including a split of the
Shares) or Common Stock 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 shares 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
34
38
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, the
Athersys Intellectual Property, or the Newco Intellectual
Property;
18.1.9. amend or vary the terms of the Athersys 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; 18.1.12.
alter the number of Directors; and
18.1.13. determine whether any Shares of Newco will be registered for
public trading with any governmental authority for public
trading in any securities market.
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 Athersys, or between Elan or Athersys 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 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, which disputes or
differences shall be resolved, if at all, by arbitration pursuant to
Clause 24.7), such representatives cannot reach a resolution to such
dispute or difference within a reasonable period, then any Party
35
39
may forthwith give notice to the other Parties that it wishes such
dispute or difference to be referred to the chief executive officer of
Athersys 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 officers of the Participants 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, 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
final and binding on the Parties.
36
40
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 Party if:
20.2.1 such Party commits a material breach of its obligations under
this Agreement and fails to cure or remedy such breach within
60 days of being specifically required in writing to do so by
the other Party; provided, that if the breaching Party has
proposed a course of action to remedy or cure the breach and
is acting in good faith to rectify or cure 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 so long as such breaching Party
continues to exert good faith efforts to recitify or cure the
breach; or
20.2.2 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);
20.2.3 upon appointment, as to such Party, of a liquidator, receiver,
administrator, examiner, trustee or similar officer with
authority or over all or substantially all of its assets under
the law of any applicable jurisdiction, including without
limitation, the United States of America, Bermuda or Ireland;
or
20.2.4 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 by a Party, and is not discharged
within 60 days, or all or substantially all the assets and/or
the business of a Party are for any reason seized, confiscated
or condemned.
20.3 If either Participant commits a Relevant Event, the other Stockholder
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, so long as such termination notice is provided within
180 days of the date of such Relevant Event.
37
41
If this Agreement is terminated pursuant to this Clause 20.3, the
License Agreements shall automatically terminate.
20.4 In the event of a termination of the Elan License Agreement and/or the
Athersys 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.
20.5 The provisions of Clauses 1, 3, 5.1, 9, 10, 11, 12, 17, 20.5, 22, 23,
and 24 shall survive the termination of this Agreement under this
Clause 20 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 or by mutual consent.
20.6 Should the Parties determine to terminate this Agreement in its
entirety then in such case the Parties hereto will ensure that Newco
shall be wound up in accordance with the provisions of the Bermuda
Companies Act of 1981.
CLAUSE 21
SHARE RIGHTS
21.1 The Stockholders agree that the Common Stock and the Preferred Stock
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
Stock issued to EIS shall not carry voting rights in Newco.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties and/or Newco acknowledge and agree that it may be
necessary, from time to time, to disclose to each other confidential
and/or proprietary information, including without limitation,
inventions, works of authorship, trade secrets, specifications,
designs, data, know-how and other information, relating to the Field,
the Products, present or future products, the Newco Intellectual
Property, the Elan Intellectual Property or the Athersys Intellectual
Property, as the case
38
42
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 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;
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 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
22.2.7 information that is the subject of a written permission to
disclose, without restriction or limitation, by the disclosing
Party.
22.3 Further, a receiving Party may disclose the Confidential Information of
the other Party to the extent it is required to disclose such
information pursuant to:
(i) a valid order of a court or other governmental body; or
(ii) any other requirement of law;
provided that if the receiving Party becomes legally required to
disclose any Confidential Information, the receiving Party shall give
the disclosing Party prompt notice of such fact so that the disclosing
Party may obtain a protective
39
43
order 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
22.4 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.
22.5 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.
22.6 Any breach of this Clause 22 by any employee, representative or agent
of a Party is considered a breach by the Party itself.
22.7 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.
40
44
22.8 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 Stockholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the Transaction
Documents. For the avoidance of doubt, Newco shall not bear any of the
costs and expenses incurred in the negotiation and preparation of the
Transaction 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.
CLAUSE 24
GENERAL
24.1 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.
24.2 NO REPRESENTATION:
Each of the Parties hereto hereby acknowledges that in entering into
this Agreement it has not relied on any representation or warranty
except as expressly set forth herein or in any document referred to
herein.
41
45
24.3 FORCE MAJEURE:
No 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; provided that the Party whose performance is
delayed or prevented continues to use good faith diligent efforts to
mitigate, avoid or end such delay or failure in performance as soon as
practicable.
24.4 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed
to constitute Elan/EIS and Athersys as partners, or Elan/EIS as an
employee or agent of Athersys, or Athersys 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.
24.5 COUNTERPARTS:
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute this Agreement.
24.6 NOTICES:
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
42
46
and
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx XX00
Bermuda
Attention: President
Telephone: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000 United States of America
Attention: Xxxxx Xxxxxxx, Esq.
Telephone 000-000-0000
Fax: 000-000-0000
Athersys at:
00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxx Xxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
43
47
Newco at:
000 Xx. Xxxxx Xxxxx
Xxxxxxxxx House
Church St.
Xxxxxxxx, Bermuda
Attention: Secretary
Telephone: 000-000-0000
Fax: 000-000-0000
with a copy to:
Mello, Hollis, Xxxxx & Xxxxxx
Xxxx House
00 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx
XX00
Xxxxxxxxx: Xxxxxxx Xxxxxx
Facsimile: (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.
24.7 GOVERNING LAW; ARBITRATION
24.7.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, excluding its conflicts of laws
provisions or principles.
24.7.2 In the event there is a dispute and the Parties after good faith
negotiation between their respective executives in accordance with
Clause 19 do not reach a mutually acceptable resolution, the Parties
agree to consider other dispute resolution mechanisms including
mediation.
24.7.3 Any dispute or difference under this Agreement or the License
Agreements which is not settled by mutual consent 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
44
48
property shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the AAA by three
arbitrators appointed in accordance with said rules. Such arbitrators
shall be reasonably satisfactory to each of the Parties; provided, that
if the Parties are unable to agree upon the identity of such
arbitrators within 15 days of demand by a Party, then any Party shall
have the right to request the AAA to appoint the arbitrator.
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, except that the Arbitrators may decide to
establish a sharing of such costs between the parties that is other
than equal.
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 arbitrator.
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.
45
49
24.8 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed
amended to conform to applicable laws so as to be valid and enforceable
or, if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from the date
of such agreement or such earlier date as the Parties may agree, and
the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be impaired or affected in any way.
24.9 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties.
24.10 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, 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.
24.11 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
24.11.1 Elan, EIS and/or Athersys shall have the right to assign
their rights and obligations hereunder to their respective
Affiliates, provided, however, that such assignment does not
result in adverse tax consequences for any other Parties.
24.11.2 Elan and EIS shall have the right to assign their rights and
obligations hereunder to a Permitted Transferee.
24.11.3 Athersys shall be entitled to assign this Agreement to its
successor in interest pursuant to acquisition, merger,
consolidation or purchase of all or substantially all of the
assets of Athersys. For the avoidance of doubt, nothing in
this Clause 24.11.3 shall prejudice Elan's rights under the
Elan License Agreement, including Elan's right to terminate
the Elan License Agreement in accordance with Clause 9.4
thereof.
46
50
24.11.4 Elan shall be entitled to assign this Agreement to its
successor in interest pursuant to acquisition, merger,
consolidation or purchase of all or substantially all of the
assets of Elan.
24.12 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
This Agreement (including the Schedules attached hereto) the
Transaction Documents and the Confidentiality Agreement (as defined in
the Stock Purchase Agreement) 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 Transaction
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 except with respect
to Clause 21 in which case the Newco Memorandum of Association and
Bye-Laws shall prevail.
No provision of this Agreement shall be construed so as to negate,
modify or affect in any way the provisions of any other agreement
between any of the 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.
24.13 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
47
51
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: /s/ Xxxxx Xxxxxx
---------------------------------
for and on behalf of
ELAN CORPORATION, PLC
in the presence of: /s/ Xxx Xxxxxxx
---------------
SIGNED
BY: /s/ Xxxxx Xxxxxx
---------------------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of: /s/ Xxx Xxxxxxx
---------------
SIGNED
BY: /s/ Xxxxx Xxxxxx
---------------------------------
for and on behalf of
ELAN PHARMA INTERNATIONAL LIMITED
in the presence of: /s/ Xxx Xxxxxxx
---------------
48
52
SIGNED
BY: /s/ Gil Van Bokkelen
-----------------------
for and on behalf of
ATHERSYS, INC.
in the presence of: /s/ Xxxxx X. Xxxxxx
--------------------
SIGNED
BY: /s/ I. S. Xxxxxxxxxxx
-----------------------
for and on behalf of
ATHERSYS NEWCO LTD.
in the presence of:____________________
49
