EXHIBIT 1.4
EXECUTION COPY
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
ELAN INTERNATIONAL SERVICES, LTD.
AND
TARGETED GENETICS CORPORATION
AND
TARGETED GENETICS NEWCO, LTD.
TABLE OF CONTENTS
1. DEFINITIONS........................................................... 2
2. NEWCO'S BUSINESS...................................................... 11
3. REPRESENTATIONS AND WARRANTIES........................................ 12
4. AUTHORIZATION AND CLOSING............................................. 15
5. CERTAIN ASSIGNMENT RIGHTS............................................. 16
6. NON-COMPETITION....................................................... 16
7. DIRECTORS; MANAGEMENT AND R&D COMMITTEES.............................. 17
8. THE BUSINESS PLAN AND REVIEWS......................................... 20
9. RESEARCH AND DEVELOPMENT WORK......................................... 20
10. INTELLECTUAL PROPERTY RIGHTS.......................................... 22
11. EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD............................ 25
12. COMMERCIALIZATION..................................................... 26
13. MANUFACTURING......................................................... 27
14. TECHNICAL SERVICES AND ASSISTANCE..................................... 27
15. AUDITORS, BANKERS, REGISTERED OFFICE, ACCOUNTING REFERENCE DATE....... 28
16. REGULATORY............................................................ 29
17. TRANSFERS OF SHARES; RIGHT OF FIRST OFFER; TAG ALONG RIGHTS........... 29
18. MATTERS REQUIRING PARTICIPANTS' APPROVAL.............................. 32
19. DISPUTES.............................................................. 35
20. SUBSEQUENT FUNDING.................................................... 36
21. TERMINATION........................................................... 36
22. CONFIDENTIALITY....................................................... 37
23. COSTS................................................................. 40
24. GENERAL............................................................... 40
-i-
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 21st
day of July, 1999,
among:
ELAN CORPORATION, PLC, a public limited company incorporated under the laws
of Ireland, and having its registered office at Xxxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxx 0, Xxxxxxx ("Elan");
ELAN INTERNATIONAL SERVICES, LTD., a private limited company incorporated
under the laws of Bermuda, and having its registered office at Xxxxxxxxx Xxxxx,
0 Xxxxxx Xx., Xxxxxxxx, Xxxxxxx ("XXX");
TARGETED GENETICS CORPORATION, a corporation incorporated under the laws of
Washington and having its principal place of business at 0000 Xxxxx Xxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America ("TGEN"); and
TARGETED GENETICS NEWCO, LTD., a private limited company incorporated under
the laws of Bermuda, and having its registered office at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xx., Xxxxxxxx, Xxxxxxx ("Xxxxx").
RECITALS:
A. Newco desires to issue and sell to the Participants (as defined
below), and the Participants desire to purchase from Newco, for aggregate
consideration of $15,000,000, apportioned between them as set forth herein, (i)
7,491 shares of Newco's common stock, par value $1.00 per share (the "Common
Stock"), allocated 6,000 shares to TGEN and 1,491 shares to EIS, and (ii) 4,509
shares of Newco's preferred stock, par value $1.00 per share (the "Preferred
Stock"). allocated 3,612 shares to TGEN and 897 shares to EIS.
B. Elan is beneficially entitled to the use of certain patents which have
been granted or are pending in relation to Drug Delivery Technologies (as
defined below).
C. TGEN is beneficially entitled to the use of certain patents that have
been granted or are pending in relation to Gene Delivery Technologies (as
defined below).
D. As of the date hereof, Elan Pharmaceutical Technologies, a division of
Elan ("EPT"), has entered into a license agreement with Newco, and TGEN has
entered into a license agreement with Newco, in connection with the license to
Newco of the Elan Intellectual Property and the TGEN Intellectual Property,
respectively (each as defined below).
[*] OMITTED, CONFIDENTIAL MATERIAL, WHICH MATERIAL HAS BEEN SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.
E. Elan and TGEN have agreed to co-operate in the establishment and
management of a business for the research, development and commercialization of
the Products (as defined below).
F. Elan and TGEN have agreed to enter into this Agreement for the purpose
of recording the terms and conditions of the joint venture and of regulating
their relationship with each other and certain aspects of the affairs of and
their dealings with Newco.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS
A. In this Agreement, the following terms shall, where not inconsistent
with the context, have the following meanings respectively.
1.1. "Affiliate" shall mean, with respect to Elan or TGEN, any
corporation or entity other than Newco (and entities controlled by it)
controlling, controlled by, or under the common control of Elan or TGEN, as the
case may be, and, with respect to Newco, any corporation or entity under control
of Newco. A corporation or non-corporate entity shall be regarded as in control
of another corporation if it owns or directly or indirectly controls more than
fifty percent (50%) of the voting stock of the other corporation or (a) in the
absence of the ownership of at least fifty percent (50%) of the voting stock of
a corporation or (b) in the case of a non-corporate entity, the power to direct
or cause the direction of the management and policies of such corporation or
non-corporate entity, as applicable.
1.2. "Agreement" means this agreement (which expression shall be
deemed to include the Recitals and the Schedules hereto).
1.3. "Antisense" shall mean [*]
1.4. "Base Technologies" shall mean technologies, techniques and
formulations for the administration of an active agent to a mammal: (i) in
formulations of the active agent with one or more substantially inert
ingredients, including, without limitation, tonicity modifiers and bulking
agents; or (ii) with or through devices or mechanical targeting systems or
mechanical delivery systems (other than Elan's MEDIPAD(R) Drug Delivery System
or devices utilizing autoinjector technology).
1.5. "Business" shall mean the business of Newco as described in
Clause 2 and as more particularly specified in the Business Plan and such other
* Confidential Treatment Requested
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business as the Participants may agree from time to time in writing should be
carried on by Newco.
1.6. "Business Plan" shall mean the business plan and program of
development to be agreed by Elan and TGEN within 60 days of the Closing Date,
with respect to the research, development, and Commercialization of the
Products, which shall include portions relating to the Project that will
constitute the "Plan" defined in the License Agreements, and which shall be
reviewed and updated by Elan and TGEN on an annual basis, upon mutual written
agreement in accordance with Clause 8 hereof.
1.7. "Clinical Phase" shall mean that portion of the Project during
which regulatory approval to conduct human clinical trials of one or more
Products will be sought in one or more territories and clinical trials will be
conducted.
1.8. "Closing Date" shall mean the date upon which the Transaction
Documents are executed and delivered by the Parties and the transactions
effected thereby are closed.
1.9. "Commercialization" shall mean the manufacture, promotion,
distribution, marketing and sale of the Products .
1.10. "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.
1.11. "Control" shall mean, with respect to Base Technologies, Drug
Delivery Technologies, Gene Delivery Technologies or Genes, the ability to grant
a license or sublicense as contemplated herein without violating the terms of
any agreement with any third party.
1.12. "Convertible Note" shall mean that certain Convertible
Promissory Note, of even date herewith, by and between TGEN and EIS.
1.13. "Development Candidate" shall mean a TGEN Proprietary Gene, or
a Gene obtained from an Independent Third Party, jointly selected by the
Participants and Newco to be developed for incorporation in Products. For the
avoidance of doubt, if it is subsequently determined by the Management Committee
of Newco that the TGEN Proprietary Gene initially offered for development as
Products is not suitable for use in a Product, TGEN shall offer an additional
TGEN Proprietary Gene to the extent available, as described in Section 9.5
below, and such additional TGEN Proprietary Gene shall in that instance become
the Development Candidate.
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1.14. "Development Phase" shall mean that portion of the Project
during which the Platform will, as implemented for administration of the
Development Candidate, be developed, improved, tested (in vitro and in animal
models), and evaluated by or for Newco for therapeutic and commercial potential.
1.15. "Directors" shall mean, at any time, the directors of Newco.
1.16. "Drug Delivery Technologies" shall mean formulation and/or
excipient systems and technologies for delivery of a therapeutic agent to a
mammal, including but not limited to [*] allowing such agent, without limitation
on other features that may be sought in addition to or instead of the following,
to be administered on an optimized schedule, and/or to be administered with
reduced side effects, and/or to be administered with enhanced efficacy, and/or
to be administered with better patient compliance, and/or to be administered in
reduced dosages. Drug Delivery Technologies shall also include Elan device
delivery technologies including the MEDIPAD(R) Drug Delivery System and devices
utilizing autoinjector technology. Notwithstanding the foregoing, Drug Delivery
Technologies shall not include Base Technologies or Gene Delivery Technologies.
1.17. "EIS Director" shall have the meaning set forth in Clause 7.
1.18. "EIS Exchange Right" shall have the meaning assigned to such
term in the TGEN Securities Purchase Agreement.
1.19. "Elan Improvements" shall have the meaning assigned thereto in
the Elan License Agreement.
1.20. "Elan Intellectual Property" shall have the meaning assigned
thereto in the Elan License Agreement.
1.21. "Elan Know-How" shall have the meaning assigned thereto in the
Elan License Agreement.
1.22. "Elan License" shall have the meaning assigned thereto in the
Elan License Agreement.
1.23. "Elan License Agreement" shall mean the license agreement
between Elan and Newco, of even date herewith, attached hereto as Schedule 1.
1.24. "Elan Patents" shall have the meaning assigned thereto in the
Elan License Agreement.
* Confidential Treatment Requested
4
1.25. "Elan Program Technology" " shall have the meaning assigned
thereto in the Elan License Agreement.
1.26. "Elan Right of First Negotiation" shall have the meaning
provided in Section 2.12 of the Elan License Agreement.
1.27. "Encumbrance" shall mean any liens, charges, encumbrances,
equities, claims, options, proxies, pledges, security interests, or other
similar rights of any nature.
1.28. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.29. "Feasibility Phase" shall mean the initial portion of the
Project during which the Feasibility Studies will be performed by or for Newco
on the Platform and potential Products.
1.30. "Feasibility Studies" shall mean those studies described in the
Research and Development Program. Each Feasibility Study will be applicable to
one or more Platforms, as is indicated in the Research and Development Program.
1.31. "Field" shall mean the research, development and
Commercialization of a Platform for delivery of Genes to mammals. For avoidance
of doubt, the Field shall exclude (i) cell therapy, (ii) ex vivo gene therapy,
(iii) Antisense delivery and (iv) transcutaneous and/or transdermal delivery
(i.e., pertaining to delivery, onto, into and through the skin).
1.32. "Financial Year" shall mean each year commencing on January 1
(or in the case of the first Financial Year, the date hereof) and expiring on
December 31 of each year.
1.33. "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.
1.34. "Funding Agreement" shall mean the Funding Agreement, dated as
of the date hereof, among Elan, EIS and TGEN.
1.35. "Gene" shall mean any nucleotide sequence that includes a
region or regions (or gene cassette(s)) capable of coding, causing or modulating
expression of a protein or other genetic element (other than directly modulating
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expression where the nucleic acid sequence is an Antisense) and includes one or
more elements that can control expression of said protein(s) or other genetic
element(s).
1.36. "Gene Delivery Technologies" shall mean [*]
1.37. "Independent Third Party" shall mean any person other than
Newco, TGEN, Elan or any of their respective Affiliates.
1.38. "Initial Funding" shall mean the amounts contributed to Newco
by the Participants pursuant to Section 4.3.1 hereof.
1.39. "License Agreements" shall mean the Elan License Agreement and
the TGEN License Agreement.
1.40. "Licensed Technologies" shall mean, together, the Elan
Intellectual Property and the TGEN Intellectual Property.
1.41. "MEDIPAD(R) Drug Delivery System" shall mean the ambulatory
continuous micro infusion device having a drug reservoir volume ranging from 3.3
to 5.0 ml. and associated technology.
1.42. "Newco Memorandum of Association and Bye-Laws" shall mean the
Memorandum of Association and By-Laws of Newco.
1.43. "Newco Patents" shall mean any and all patents and patent
applications Controlled by Newco, existing and/or pending as of the Effective
Date or hereafter filed or obtained by Newco, other than Elan Patents and TGEN
Patents. Newco Patents shall also include all extensions, continuations,
continuations-in-part, divisionals, patents-of-additions, re-examinations, re-
issues, supplementary protection certificates and foreign counterparts of such
patents and patent applications and any patents issuing thereon and extensions
of any patents licensed hereunder.
1.44. "Newco Program Technology" shall mean all Program Technology
other than Elan Program Technology and TGEN Program Technology.
1.45. "Newco Technology" shall mean all Program Technology and all
technology licensed or acquired by Newco or developed by Newco whether or not
pursuant to the Research and Development Program, excluding, however, TGEN
Intellectual Property and Elan Intellectual Property.
1.46. "Participant" shall mean TGEN or Elan, as the case may be, and
"Participants" shall mean both Elan and TGEN.
* Confidential Treatment Requested
6
1.47. "Party" shall mean Elan, TGEN, or Newco, as the case may be,
and "Parties" means all three together.
1.48. "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.
1.49. "Permitted Transferee" shall mean any Affiliate or subsidiary
of Elan, EIS or TGEN, to whom this Agreement may be assigned, in whole or in
part, pursuant to the terms hereof or in the case of Elan/EIS, an off-balance
sheet special purpose entity created by Elan or EIS.
1.50. "Platform" shall mean the combined utilization of Drug Delivery
Technologies and Gene Delivery Technologies for delivery of Genes by any route
of administration
1.51. "Product" shall mean a Gene formulated for administration to
mammals, including humans, by use of a Platform.
1.52. "Program Technology" shall mean all technology developed by or
on behalf of Newco, whether by Elan, TGEN, a third party or jointly by any
combination thereof, pursuant to the Research and Development Program.
1.53. "Project" shall mean all activity as undertaken by Elan, TGEN
and Newco in order to develop the Platform and Products in accordance with the
Business Plan.
1.54. "Registration Rights Agreements" shall mean the Registration
Rights Agreements of even date herewith relating to securities of TGEN and
Newco, respectively.
1.55. "Regulatory Application" shall mean any regulatory application
or any other application for marketing approval for a Product, which Newco will
file in any country of the Territory, including any supplements or amendments
thereto.
1.56. "Regulatory Approval" shall mean the final approval to market a
Product in any country of the Territory, and any other approval which is
required to launch the Product in the normal course of business.
1.57. "Research and Development Term" shall mean the period
commencing on the Closing Date and continuing for a period of [*] thereafter, or
as
* Confidential Treatment Requested
7
extended by agreement of the Participants, up to an aggregate of [*]; provided,
however, that if a Participant shall be prevented by (i) events beyond the
Participant's control, or (ii) by such Participant's delay or negligent act or
omission, from performing its obligations under the Transaction Documents within
said [*] period (or as extended), then the other Participant at its option, may
extend the duration of the Research and Development Term by a term equal in
length to the period during which the first Participant was unable to perform
its obligations hereunder.
1.58. "RHA" shall mean any relevant government health authority (or
successor agency thereof) in any country of the Territory whose approval is
necessary to market a Product in the relevant country of the Territory.
1.59. "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.60. "Shares" shall mean the shares of Common Stock and Preferred
Stock of Newco.
1.61. "Stockholder" shall mean any of EIS, TGEN, any Permitted
Transferee or any other Person who subsequently becomes bound by this Agreement
as a holder of the Shares, and "Stockholders" refers to all of the Stockholders.
1.62. "Subsequent Funding" shall have the meaning given to such term
in the Funding Agreement.
1.63. "Subsidiary" shall mean any company that is a subsidiary of
Newco within the meaning of applicable laws.
1.64. "Technological Competitor of Elan" shall mean any entity which
has a significant program for the development of Drug Delivery Technology and
which is active in promoting and contracting the use of such Drug Delivery
Technology to third parties, a listing of which is contained on Schedule 3
hereto, and as such list may be supplemented by Elan from time to time with the
consent of TGEN, which consent shall not be unreasonably withheld if the
proposed additions are within the parties' contemplation as to the purpose of
the original list.
1.65. "Technological Competitor of TGEN" shall mean any entity which
has a significant program for the discovery and development of Gene Delivery
Technology, a listing of which is contained on Schedule 4 hereto, and as such
list may be supplemented by TGEN from time to time with the consent of Elan,
which consent shall not be unreasonably withheld if the proposed additions are
within the parties' contemplation as to the purpose of the original list.
* Confidential Treatment Requested
8
1.66. "Term" shall mean the term of this Agreement.
1.67. "Territory" shall mean all of the countries of the world.
1.68. "TGEN Directors" shall have the meaning set forth in Clause 7.
1.69. "TGEN Improvements" shall have the meaning given to such term
in the TGEN License Agreement.
1.70. "TGEN Intellectual Property" shall have the meaning given to
such term in the TGEN License Agreement.
1.71. "TGEN Know-How" shall have the meaning given to such term in
the TGEN License Agreement.
1.72. "TGEN License" shall have the meaning given to such term in the
TGEN License Agreement.
1.73. "TGEN License Agreement" shall mean the license agreement
between TGEN and Newco, of even date herewith, attached hereto as Schedule 2.
1.74. "TGEN Patents" shall have the meaning given to such term in the
TGEN License Agreement.
1.75. "TGEN Program Technology" shall have the meaning given to such
term in the TGEN License Agreement.
1.76. "TGEN Proprietary Gene" shall mean any Gene Controlled by TGEN.
1.77. "TGEN Right of First Negotiation" shall have the meaning
provided in Section 2.12 of the TGEN License Agreement.
1.78. "TGEN Securities Purchase Agreement" shall mean that certain
securities purchase agreement, of even date herewith, by and between TGEN and
EIS.
1.79. "Transaction Documents" shall mean this Agreement, the Funding
Agreement, the Elan License Agreement, the TGEN License Agreement, the
Convertible Note, the TGEN Securities Purchase Agreement, the Registration
Rights Agreements and associated documentation of even date herewith, by and
between TGEN, Elan, EIS, EPT and Newco, as applicable.
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1.80. "United States Dollar" and "US$" and "$" shall mean the lawful
currency of the United States of America.
B. In addition, the following definitions shall have the meanings in the
Clauses corresponding thereto, as set forth below.
Definition Clause
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"Closing"................................. 4.2
"Common Stock"............................ Recital
"Confidential Information"................ 22.1
"Co-sale Notice".......................... 17.3
"Elan".................................... Recital
"Elan Right of First Negotiation"......... 12.4
"EIS"..................................... Recital
"EPT"..................................... Recital
"Management Committee".................... 7.2.1
"Newco"................................... Recital
"Notice of Exercise"...................... 17.2
"Notice of Intention"..................... 17.2
"Offered Shares".......................... 17.2
"Offering Price".......................... 17.2
"R&D Committee"........................... 7.2.2
"Remaining Stockholders".................. 17.3
"Relevant Event".......................... 20.2
"Research and Development Program"........ 9.1
"Selling Stockholder"..................... 17.2
"Tag-Along Right"......................... 17.3
"TGEN".................................... Recital
"TGEN Right of First Negotiation"......... 12.5
"Transaction Proposal".................... 17.2
"Transfer"................................ 17.1
"Transferee Terms"........................ 17.3
"Transferring Stockholders"............... 17.3
1.1. Words importing the singular shall include the plural and vice
versa.
1.2. 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.
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1.3. Reference to a statute or statutory provision includes a
reference to it as from time to time amended, extended or re-enacted.
1.4. The headings in this Agreement are inserted for convenience only
and do not affect its construction.
1.5. Unless the context or subject otherwise requires, references to
words in one gender include references to the other genders.
1.6. Capitalized terms used but not defined herein shall have the
meanings ascribed in the Transaction Documents, if defined therein.
2. NEWCO'S BUSINESS
2.1 The primary objective of Newco and any Subsidiaries is to carry on the
business of the development, testing, registration, manufacture,
commercialization and licensing of Products in the Territory and to achieve the
objectives set out in this Agreement. The focus of the collaborative venture
will be to develop the Products using the Elan Intellectual Property, the TGEN
Intellectual Property and the Newco Technology to agreed-upon specifications and
timelines.
2.2 Except as the Participants otherwise agree in writing and except as
may be provided in this Agreement, the Business Plan or the License Agreements,
the Participants shall exercise their respective powers in relation to Newco so
as to ensure that the Business is carried on in a proper and prudent manner.
2.3 Each Participant shall use all commercially reasonable and proper
means at its disposal and within its power to maintain, extend and improve the
Business of Newco, within the limits of this Agreement, and to further the
reputation and interests of Newco.
2.4 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. The Participants shall use commercially reasonable
efforts to ensure that to the extent required pursuant to the laws of Bermuda,
and to ensure the sole residence of Newco in Bermuda, all meetings of the
Directors are held in Bermuda or other jurisdictions outside the United States
and generally to ensure that Newco is treated as resident for taxation purposes
in Bermuda.
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3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Newco: Newco hereby represents and
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warrants to each of the Stockholders as follows, as of the date hereof:
3.1.1 Organization: Newco is an exempted company duly organized,
------------
validly existing and in good standing under the laws of Bermuda, and has all the
requisite corporate power and authority to own and lease its properties, to
carry on its business as presently conducted and as proposed to be conducted, to
execute this Agreement, which has been duly authorized and is enforceable
against Newco in accordance with its terms, and to carry out the transactions
contemplated hereby.
3.1.2 Capitalization: As of the date hereof, the authorized capital
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stock of Newco consists of 7,491 shares of Common Stock and 4,509 shares of
Preferred Stock. Prior to the date hereof, no shares of capital stock of Newco
have been issued.
3.1.3 Authorization: The execution, delivery and performance by
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Newco of this Agreement, including the issuance of the Shares, have been duly
authorized by all requisite corporate actions; this Agreement has been duly
executed and delivered by Newco and is the valid and binding obligation of
Newco, enforceable against it in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the enforcement of creditors' rights generally,
and by general equity principles and limitations on the availability of
equitable relief, including specific performance. 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
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party, except where such violation, conflict or breach would not, individually
or in the aggregate, have a material adverse effect on Newco; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of Newco, except as contemplated by the Transaction
Documents.
3.1.5 Approvals: As of the date hereof, no permit, authorization,
---------
consent or approval of or by, or any notification of or filing with, any Person
is required in connection with the execution, delivery or performance of this
Agreement by Newco. Newco has full authority to conduct its business as
contemplated in the Business Plan and the Transaction Documents.
3.1.6 Disclosure: This Agreement does not contain any untrue
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statement of a material fact or omit to state any material fact necessary to
make the statements contained herein not misleading. Newco is not aware of any
material contingency, event or circumstance relating to its business or
prospects, which could have a material adverse effect thereon, in order for the
disclosure herein relating to Newco not to be misleading in any material
respect.
3.1.7 No Business; No Liabilities: Newco has not conducted any
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business or incurred any liabilities or obligations prior to the date hereof,
except solely in connection with its organization and formation.
3.2 Representations and Warranties of the Stockholders: Each of the
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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 corporate power and
---------
authority to enter into this Agreement and to perform its obligations hereunder,
which have been duly authorized by all requisite corporate action of such
Stockholder. 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 by general equity principles and limitations on the availability
of equitable relief, including specific performance.
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3.2.3 No Conflicts: The execution, delivery and performance by such
------------
Stockholder of this Agreement, 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 known by and 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;
(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 the transactions contemplated hereunder; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of such Stockholder, except as contemplated by the
Transaction Documents.
3.2.4 Approvals: As of the date hereof, no material permit,
---------
authorization, consent or approval of or by, or any notification of or filing
with, any Person is required in connection with the execution, delivery or
performance of this Agreement by such Stockholder.
3.2.5 Investment Representations: Such Stockholder 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 this investment and such
Stockholder is acquiring the Common Stock 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 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.
14
3.3 Survival: The representations and warranties in this Clause 3 shall
--------
survive for a period of two years from and after the date hereof.
4. AUTHORIZATION AND CLOSING
4.1 Newco has authorized the issuance to (i) EIS of 2,388 shares of Common
Stock and (ii) TGEN of 6,000 shares of Common Stock and 3,612 shares of
Preferred Stock, issuable as provided in Clause 4.3 hereof.
4.2 The closing (the "Closing") shall take place at the offices of Xxxxx
Xxxxxxxxxxx LLC at 000 Xxxx 00/xx/ Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the date
hereof or such other place if any, as the Parties may agree and shall occur
contemporaneously with the closing under the TGEN Securities Purchase Agreement.
4.3 At the Closing,
4.3.1 Newco shall issue and sell to EIS, and EIS shall purchase from
Newco, upon the terms and subject to the conditions set forth herein, 1,491
shares of Common Stock for an aggregate purchase price of $240,234 and 897
shares of Preferred Stock for an aggregate purchase price of $2,743,923 for a
total aggregate purchase price for all Shares of $2,984,157. Newco shall issue
and sell to TGEN, and TGEN shall purchase from Newco, upon the terms and
conditions set forth herein, 6,000 shares of Common Stock for an aggregate
purchase price of $966,735 and 3,612 shares of Preferred Stock for an aggregate
purchase price of $11,049,108 for a total aggregate purchase price for all
Shares of $12,015,843.
4.3.2 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 which the
Parties shall reasonably require.
4.4 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 BERMUDA LAW, THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS AND NO INTEREST SHALL BE
SOLD, TRANSFERRED OR
15
OTHERWISE DISPOSED OF UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE
SECURITIES LAWS OR THIS CORPORATION RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO
THIS CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN
THAT CERTAIN SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING
AGREEMENT, DATED JULY 20, 1999, BY AND AMONG ELAN
CORPORATION, PLC, ELAN INTERNATIONAL SERVICES, INC.,
TARGETED GENETICS CORPORATION AND TARGETED GENETICS NEWCO,
LTD.
5. CERTAIN ASSIGNMENT RIGHTS
At any time after exercise of the EIS Exchange Right and upon 1 month's
prior notice in writing from Elan to Newco and TGEN, Newco shall assign the
Newco Technology from Newco to a wholly-owned subsidiary of Newco to be
incorporated in Ireland, which company shall be newly incorporated by Elan on
behalf of Newco to facilitate such assignment; provided, however, that such
assignment shall not have a direct or indirect tax or other material adverse
effect on any of the Parties.
6. NON-COMPETITION
6.1 The Parties acknowledge and agree to be bound by the provisions of
Clause 11 of the Elan License Agreement and the provisions of Clause 11 of the
TGEN License Agreement which set forth the agreement between the parties thereto
in relation to the non-competition obligations of Elan and TGEN, respectively.
6.2 Nothing contained herein or in either the TGEN License Agreement or
the Elan License Agreement (including, without limitation, the respective
Sections 11 of those agreements) shall be construed as limiting (i) the
activities of TGEN to utilize or pursue the creation of products (other than
Products in the Field) incorporating Excluded TGEN Technology; (ii) the
activities of Elan to utilize or pursue the creation of products (other than
Products in the Field) incorporating Excluded Elan
16
Technology or NanoCrystal(TM) technology licensed to a Independent Third Party
for use with proprietary compounds Controlled by such Independent Third Party;
or (iii) the activities of TGEN or Elan to utilize or pursue the creation of
products (other than Products in the Field) incorporating (A) cell therapy, ex
vivo gene therapy, Antisense, and/or transcutaneous and/or transdermal delivery
or (B) Base Technologies.
7. DIRECTORS; MANAGEMENT AND R&D COMMITTEES
Directors:
---------
Prior to the exercise of the EIS Exchange Right, the Board of
Directors of Newco shall be composed of four Directors. TGEN shall have the
right to nominate three directors of Newco ("TGEN Directors"), provided that one
such director is a resident of Bermuda, and EIS shall have the right to nominate
one Director of Newco ("EIS Director"). TGEN may appoint one of the TGEN
Directors to be the chairman of Newco. Each Participant agrees to vote its
shares of Common Stock and Preferred Stock in favor of the election of the
nominees of the other Participant to the Board of Directors.
7.1.1 If the chairman is unable to attend any meeting of the Board,
the TGEN Directors shall be entitled to appoint another Director to act as
chairman in his place at the meeting.
7.1.2 If EIS removes the EIS Director, or TGEN removes any of the
TGEN Directors, EIS or TGEN, as the case may be, shall indemnify the other
Stockholder against any claim by such removed Director arising from such
removal.
7.1.3 The Directors shall meet not less than three times in each
Financial Year and all Directors' meetings shall be held in Bermuda to the
extent required pursuant to the laws of Bermuda or to ensure the sole residence
of Newco in Bermuda.
7.1.4 At any such meeting, the presence of the EIS Director and one
of the TGEN 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 any meeting shall lack a quorum, the meeting shall be
adjourned for a period of seven days. A notice shall be sent to the EIS
Director and the TGEN Directors specifying the date, time and place where such
adjourned meeting is to be held and reconvened.
17
7.1.5 The chairman of Newco shall hold office until the first meeting
of the Directors after the exercise by EIS of the EIS Exchange Right. In the
event that the EIS Exchange Right is exercised at any time by EIS, each of TGEN,
and EIS shall cause the board of Directors of Newco to be reconfigured so that
an equal number of Directors are designated by EIS and TGEN. Thereafter, each of
EIS and TGEN, beginning with EIS, shall have the right, exercisable
alternatively, of nominating one Director to be chairman of Newco for a term of
one year. If the chairman of Newco is unable to attend any meeting of the
Directors, the Directors shall be entitled to appoint another Director to act as
chairman of Newco in his place at the meeting.
7.1.6 In case of an equality of votes at a meeting of the board of
Directors of Newco, the chairman of Newco shall not be entitled to a second or
casting vote. In the event of continued deadlock, the board of Directors shall
resolve the deadlock pursuant to the provisions set forth in Clause 19.
7.2 Management and R&D Committees:
-----------------------------
7.2.1 The Directors shall appoint a management committee (the
"Management Committee") to perform certain operational functions, such
delegation to be consistent with the Directors' right to delegate powers
pursuant to the Newco Memorandum of Association of Bye-Laws. The Management
Committee shall initially consist of four members, two of whom will be nominated
by EIS and two of whom will be nominated by TGEN, and each of whom shall be
entitled to one vote, whether or not present at any Management Committee meeting
during which such operational functions are discussed. Except as otherwise
provided herein or in the License Agreements, decisions of the Management
Committee shall require approval by at least one EIS nominee on the Management
Committee and one TGEN nominee on the Management Committee. Each of EIS and TGEN
shall be entitled to remove any of their
18
nominees to the R&D Committee and appoint a replacement in place of any nominees
so removed.
7.2.3 The Management Committee shall be responsible for, inter alia,
devising, implementing and reviewing strategy for the Business of Newco, and the
operation of Newco, and in particular, devising Newco's strategy for research
and development and to monitor and supervise the implementation of Newco's
strategy for research and development.
7.2.4 The R&D Committee shall be responsible for:
7.2.4.1 designing that portion of the Business Plan that
relates to the Project for consideration by the Management Committee;
7.2.4.2 establishing a joint Project team consisting of an
equal number of team members from Elan and TGEN, including one Project leader
from each of Elan and TGEN; and
7.2.4.3 implementing such portion of the Business Plan that
relates to the Project, as approved by the Management Committee.
7.2.5 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 EPT
and the Chief Executive Officer of TGEN pursuant to Clause 19 hereof.
7.2.6 Not more than one time in each Financial Year, nor more than
once with respect to any accounting period, Elan and TGEN shall permit
representatives of an internationally-recognized firm of independent certified
accountants selected by Newco to have access, on reasonable notice and at any
reasonable time during normal business hours to inspect and audit the accounts
and records of Elan or TGEN 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 TGEN's records, as the case may be, shall be at the
expense of Newco, except that if such inspection reveals an overpayment in the
amount paid to Elan or TGEN, 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 TGEN, as the case may be, then the expense of such inspection
shall be borne solely by Elan or TGEN, as the case may be, instead of by Newco.
Any surplus over the sum properly payable
19
by Newco to Elan or TGEN, as the case may be, shall be paid promptly by Elan or
TGEN, as the case may be, to Newco. If such inspection reveals a deficit in the
amount of the sum properly payable to Elan or TGEN, as the case may be, by
Newco, Newco shall pay the deficit to Elan or TGEN, as the case may be.
8. THE BUSINESS PLAN AND REVIEWS
8.1 The Directors shall meet as soon as reasonably practicable after the
Closing Date hereof and shall agree upon and approve the Business Plan for the
current Financial Year within 60 days of the date hereof. In subsequent
Financial Years, the Directors shall meet prior to the accounting reference date
specified in Clause 15 and agree upon and approve the Business Plan for the
following Financial Year, or any amendment or modification to the Business Plan.
EIS and TGEN agree that they will cause their respective Directors at all times
when preparing and voting upon the Business Plan to consider in good faith
Newco's budgeting and funding requirements and the progress of the Research and
Development Program and the prospects for results therefrom in determining
whether, and at what level, to continue the development funding for the Research
and Development Program.
8.2 The Participants agree that the Management Committee shall submit to
the Directors on February 15th, May 15th, August 15th, and November 15/th/ or as
soon as reasonably practicable thereafter in each Financial Year a report on the
performance of the Business and research and development activities of Newco,
and the Directors shall hold such meeting as may be necessary to review the
performance of Newco against the Business Plan for the relevant year.
9. RESEARCH AND DEVELOPMENT WORK
9.1 During the Research Term, Newco will diligently pursue the research
and development of the Elan Intellectual Property, TGEN Intellectual Property
and Newco Technology in accordance with the Research and Development Program.
The "Research and Development Program" will be the program for (a) the
development of the Platform, and (b) the development of one or more Products in
the Field, including without limitation, screening, in-vitro pharmacology,
toxicology, stability, prototype dosage form development, formulation,
optimization, clinical and regulatory activities. Such work shall be agreed to
and conducted by Elan and/or TGEN under contract with Newco as provided in the
Business Plan.
9.2 The Research and Development Program shall include a Feasibility
Phase, a Development Phase and a Clinical Phase. During the Feasibility Phase,
Newco will diligently pursue the research and development of the Feasibility
Studies
20
and the Program Technology. The objectives of this initial phase of research and
development work will be to develop the Platform which can be broadly applied in
the delivery of a variety of Products. The foregoing shall be provided for in
the Research and Development Program.
9.3 On successful completion of the Feasibility Phase and the designation
of one or more Products to be developed by Newco, Elan and TGEN shall meet to
discuss the development and commercial strategy for Newco and the further
exploitation of the technologies and Products vested in Newco. For example,
TGEN and Elan shall discuss strategy and terms relating to product and clinical
development, corporate partnering, licensing and supply agreements.
9.4 TGEN and Elan shall provide such research and development services as
may be reasonably required by Newco in accordance with the provisions in the
License Agreements. Newco shall pay TGEN and Elan for any research and
development work carried out by them on behalf of Newco at the end of each month
during the Research and Development Program, subject to the proper vouching of
research and development work and expenses. An invoice shall be issued to Newco
by TGEN or Elan, as applicable, by the 15/th/ day of the month following the
month in which work was performed, or as soon thereafter as practicable. Newco
shall pay the amounts invoiced within thirty days following its receipt of the
invoice. The payments by Newco to TGEN or Elan, as the case may be, shall be at
the rates prescribed in the respective License Agreement. Research and
development activities that are outsourced to third party providers shall be
charged to Newco at [*]
9.5 In the event the Management Committee, by unanimous vote of its
members, shall determine that preclinical toxicology or pharmacology studies
indicate that clinical trials of the Development Candidate should not be
undertaken, or the Management Committee determines that development of the
Development Candidate is not economically viable, TGEN in good faith shall
offer, and the Management Committee, by unanimous vote of its members shall
approve, one additional TGEN Proprietary Gene that the Management Committee
deems economically viable as a substituted Development Candidate, if and to the
extent there are then any TGEN Proprietary Genes that would be appropriate to
serve as the Development Candidate and that are not then otherwise restricted by
agreement with an Independent Third Party (it being understood that it shall be
within TGEN's discretion, subject only to its compliance with Clause 11 of the
TGEN License Agreement, to so restrict any TGEN Proprietary Genes), and subject
to the agreement of the Participants, negotiating in good faith, to changes
concerning the budget, Business Plan, license terms and funding of Newco;
provided, however, in no event shall license terms include any
* Confidential Treatment Requested
21
obligation of Newco to make up front cash payments by Newco with respect to any
TGEN Proprietary Gene.
9.6 Except as otherwise provided herein and as provided in the TGEN
License Agreement, upon designation of a TGEN Proprietary Gene as a substituted
Development Candidate, (i) all rights to the unsuitable Development Candidate if
it is a TGEN Proprietary Gene shall revert to TGEN and (ii) all provisions
contained herein and in the TGEN License Agreement other than in the preceding
Clause (i) relating to the Development Candidate shall be deemed to apply to the
substituted Development Candidate.
10. INTELLECTUAL PROPERTY RIGHTS
10.1 Title and all other ownership rights, including patent rights,
relating to the Elan Intellectual Property shall belong to Elan. Title and all
other ownership rights, including patent rights relating to the TGEN
Intellectual Property shall belong to TGEN. Title and all other ownership
rights, including patent rights, relating to the Newco Technology shall belong
to Newco.
10.2 The Participants shall discuss in good faith all material issues
relating to filing, prosecution and maintenance of Elan Patents and TGEN Patents
insofar as such patent rights are of relevance to the License Agreements and any
patentable inventions and discoveries within the Elan Intellectual Property,
TGEN Intellectual Property and Newco Technology that relate to the License
Agreements. Subject to mutual agreement to the contrary by TGEN and Elan the
following provisions shall apply:
10.2.1 Elan, at its expense, shall make a good faith effort (i) to
secure the grant of any material patent applications within the Elan Patents
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 Patents that relate to the Field
(including any letters patent that may issue covering any such Elan Improvements
that relate to the Field). Elan shall have the right in its discretion to
control such filing, prosecution, defense and maintenance provided that Newco
and TGEN at their request shall be provided with copies of all documents
relating to such filing, prosecution, defense and maintenance in sufficient time
to review such documents and comment thereon prior to filing.
10.2.2 TGEN, at its expense, shall make a good faith effort (i) to
secure the grant of any material patent applications within the TGEN Patents
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
22
within the TGEN Patents that relate to the Field (including any letters patent
that may issue covering any such TGEN Improvements that relate to the Field).
TGEN shall have the right in its discretion to control such filing, prosecution,
defense and maintenance provided that Elan and Newco at their request shall be
provided with copies of all documents relating to such filing, prosecution,
defense and maintenance in sufficient time to review such documents and comment
thereon prior to filing.
10.2.3 It is understood that the respective owners of the
technologies and rights described herein shall retain the discretion, in their
sole judgment, as to whether and where to file or to prosecute patent
applications on any such technologies or rights.
10.2.4 Elan and TGEN, at their joint expense on behalf of Newco,
shall (i) file and prosecute patent applications on patentable inventions and
discoveries within the Newco Technology; (ii) defend all such applications
against third party oppositions and interferences; and (iii) maintain in force
any issued letters patent within the Newco Patents (including any patents that
issue on patentable inventions and discoveries within the Newco Technology).
Elan and TGEN, directly or through the Management Committee, shall control such
filing, prosecution, defense and maintenance. Elan and TGEN agree to negotiate
in good faith on the course of action to be taken with respect to Newco
Technology.
10.2.5 Newco, Elan and TGEN shall promptly inform each other in
writing of any alleged infringement of any patents within the Elan Patents, the
TGEN Patents or Newco Patents or any alleged misappropriation of trade secrets
within the Elan Intellectual Property, the TGEN Intellectual Property or the
Newco Technology 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.
10.2.6 Newco shall have the right to prosecute at its own expense
and for its own benefit any infringements of the Elan Patents, the TGEN Patents
or misappropriation of the Elan Intellectual Property and the TGEN Intellectual
Property, insofar as such infringements or misappropriation relate solely to the
Field. In the event that Newco takes such action, Newco shall do so at its own
cost and expense. At Newco's request, 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 a reasonable period but in any event within twenty (20)
days after receiving written notice of such alleged infringement or
misappropriation each of the Participants may
23
in its discretion initiate such proceedings in its own name, at its expense and
for its own benefit, and at such Participant's request, 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 Patents or the TGEN Patents affects both the
Field as well as other products being developed or commercialized by TGEN or
Elan or its commercial partners outside the Field, TGEN or Elan, as the case may
be, shall endeavor 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.
10.2.7 Newco shall have the first right but not the obligation to
bring suit or otherwise take action against any alleged infringement of the
Newco patents or alleged misappropriation of the Newco Technology. If any such
alleged infringement or misappropriation occurs that gives rise to a cause of
action both inside and outside the Field, Newco, in consultation with the
Participants, shall determine the cause 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 TGEN informed of any action in
a timely manner so as to enable TGEN 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.
10.2.8 In the event that Newco does not bring suit or otherwise take
action against an infringement of the Newco Patents or misappropriation of the
Newco Technology, 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.
10.2.9 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 TGEN
Intellectual Property, as the case may be, infringes the intellectual property
rights of such party, Newco shall promptly advise the other Participants of such
threat or suit.
24
10.2.10 Newco shall indemnify, defend and hold harmless Elan or
TGEN, as the case may be, against all actions, losses, claims, demands, damages,
costs and liabilities (including reasonable attorneys fees) relating directly or
indirectly to all such claims or proceedings referred to herein, provided that
Elan or TGEN, 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 TGEN, as the case may be, may elect to take over the conduct of
such proceedings from Newco provided that Newco's indemnification obligations
shall continue; the costs of defending such claim shall be borne by Elan or
TGEN, as the case may be and 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.
10.3 Newco shall not encumber any of its rights under the Licenses or the
Newco Technology without the prior written consent of Elan and TGEN. Newco shall
not be permitted to assign or sublicense any of its rights under the Licenses or
the Program Technology without the prior written consent of Elan and TGEN,
respectively, which may be withheld in Elan's or TGEN's sole discretion, as the
case may be. Notwithstanding the foregoing, subject to the Elan Right of First
Negotiation and the TGEN Right of First Negotiation, neither Elan nor TGEN shall
unreasonably withhold their consent to the licensing of rights to Commercialize
Products to Independent Third Parties who are not, with respect to Elan,
Technological Competitors of Elan or, with respect to TGEN, Technological
Competitors of TGEN. Any permitted agreement between Newco and any permitted
third party for the development or exploitation of the Elan Intellectual
Property and/or TGEN Intellectual Property in the Field shall require such third
party to maintain the confidentiality of all information concerning the Elan
Intellectual Property and the TGEN Intellectual Property.
11. EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
11.1 Licenses to Elan Program Technology and TGEN Program Technology.
---------------------------------------------------------------
Subject to the provisions of the License Agreements, Newco shall grant to Elan
an exclusive, royalty free and sublicensable license in the Territory to Elan
Program Technology outside of the Field, and to TGEN an exclusive, royalty free
and sublicensable license in the Territory to the TGEN Program Technology
outside of the Field. Such license shall be effective and exclusive on a
country-by-country basis for the life of any patents on such Elan Program
Technology or TGEN Program Technology, as the case may be, in such country, or,
to the extent the Elan Program Technology or TGEN Program Technology is not
patented or covered by pending
25
patent applications in any country, for fifteen years from the date any products
are first introduced on the market in such country by Elan or TGEN, as the case
may be, under such license, or for such shorter period as shall be required
under the applicable law of any country in the Territory.
11.2 Licenses for Newco Program Technology. Newco shall negotiate in good
-------------------------------------
faith with Elan and TGEN, respectively, for the grant of exclusive or non-
exclusive licenses for the rights to Newco Program Technology (other than TGEN
or Elan Program Technology) outside the Field in the Territory. All such
licenses shall contain such customary terms contained in similar licenses in the
industry, as agreed to by the licensee and the unanimous decision of the
Management Committee, acting in good faith.
12. COMMERCIALIZATION
12.1 The Participants shall assist Newco in diligently pursuing the
research, development, prosecution and commercialization of Products in
accordance with the Business Plan. It is contemplated that TGEN, either as agent
for Newco or through its representatives on the Management Committee, shall,
during and after the Research and Development Term, locate and negotiate with
Independent Third Party development and/or marketing partners for the
Product(s), and Elan and Newco agree to refer all inquiries and prospects to
TGEN for such purposes. In the course of such representation, TGEN shall keep
Newco and Elan fully informed of its efforts and progress with respect to the
foregoing; provided that Elan shall be entitled to participate in discussions
with such Independent Third Parties and that the Management Committee of Newco
shall make all decisions concerning any agreements with any such parties; and
provided further, however, that any such information shall be kept confidential
and shall not be disclosed to the Elan Pharmaceutical Division (excluding senior
executive personnel of Elan who are bound to this confidentiality provision).
12.2 In the event TGEN shall propose to Newco the development of one or
more Products containing a TGEN Proprietary Gene, the Management Committee, by
unanimous decision, shall determine whether or not to develop any such Product.
12.3 In the event an Independent Third Party shall propose to Newco the
development of a Product containing a proprietary Gene of an Independent Third
Party, the Management Committee, by unanimous decision, shall determine whether
or not to develop any such Product. Any agreements with Independent Third
Parties shall be on commercially reasonable terms (e.g., royalties, milestones,
development fees, manufacturing rights) for developing and licensing Products.
26
13. MANUFACTURING
13.1 Elan and TGEN shall have preferential rights to negotiate agreements
with Newco whereby Elan and/or TGEN will manufacture Products to meet Newco's
requirements. Newco shall evaluate each such manufacturing agreement in light
of which of Elan or TGEN (or neither, or both) has the capability and the
committed resources to perform such manufacturing services in the best interests
of Newco. If the parties cannot come to mutual agreement on who is best
qualified to perform such manufacturing services, the matter will be resolved
through the dispute resolution procedures contained in Clause 19 of this
Agreement. To the extent Elan or TGEN performs any manufacturing services to
Newco, it shall be paid a price equal to [ * ] and other terms and conditions
customary in a supply agreements shall apply.
13.2 Subject to the foregoing rights, and the right of Newco to develop or
Commercialize Products where the project was offered to, but not agreed upon,
with Elan under the Elan Right of First Negotiation, or with TGEN under the TGEN
Right of First Negotiation, Newco shall not be permitted to contract the
manufacture or Commercialization of any Product without the prior written
consent of Elan and TGEN, which consent will not be unreasonably withheld or
delayed; provided that such reasonableness standard, in the case of Elan, shall
not be applicable in the case of a proposed sublicense to any Technological
Competitor of Elan and in the case of TGEN, shall not be applicable in the case
of a proposed sublicense to any Technological Competitor of TGEN.
14. TECHNICAL SERVICES AND ASSISTANCE
14.1 Whenever commercially and technically feasible, Newco shall contract
with TGEN 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 TGEN.
14.2 Newco shall, if appropriate, conclude an administrative support
agreement with Elan and/or TGEN on such terms as the Parties thereto shall in
good faith negotiate. The administrative services shall include one or more of
the following administrative services as requested by Newco:
14.2.1 accounting, financial and other services;
* Confidential Treatment Requested
27
14.2.2 tax services;
14.2.3 insurance services;
14.2.4 human resources services;
14.2.5 legal and company secretarial services;
14.2.6 patent and related intellectual property services; and
14.2.7 all such other services consistent with and of the same type
as those services to be provided pursuant to this Agreement, as may be required.
The foregoing list of services shall not be deemed exhaustive and may be
changed from time to time upon written request by Newco.
14.3 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 industry standard insurance policies shall be in
place for all activities to be carried out by Newco.
14.4 If Elan or TGEN so requires, TGEN 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 TGEN Intellectual Property, as the case may
be, as necessary to further the Project.
14.5 The employees received by Elan or TGEN, 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.
15. AUDITORS, BANKERS, REGISTERED OFFICE, ACCOUNTING REFERENCE DATE
Unless otherwise agreed by the Stockholders and save as may be provided to
the contrary herein:
15.1 the auditors of Newco shall be Ernst & Young;
28
15.2 the bankers of Newco shall be Bank of Bermuda or such other bank as
may be mutually agreed from time to time; and
15.3 the accounting reference date of Newco shall be December 31st in each
Financial Year.
16. REGULATORY
16.1 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.
16.2 To the extent provided in the Business Plan, Newco shall, at its own
cost, file, prosecute and maintain any and all Regulatory Applications for the
Products in the Territory.
16.3 Any and all Regulatory Approvals obtained hereunder for any Product
shall remain the property of Newco, provided that Newco shall allow Elan and
TGEN access thereto solely to enable Elan and TGEN to fulfill their respective
obligations and exercise their respective rights under this Agreement to the
extent provided in the Business Plan. Newco shall maintain such Regulatory
Approvals at its own cost.
16.4 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 TGEN shall have any liability to
Newco solely as a result of any failure of a Product to achieve the approval of
any RHA.
17. TRANSFERS OF SHARES; RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
17.1 General:
-------
No Stockholder shall, directly or indirectly, sell or otherwise transfer
(each, a "Transfer") any Shares held by it except in accordance with 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
29
manner, except in accordance with this Agreement, and any purported transfer not
in compliance with this Agreement shall be void.
17.2 Rights of First Offer:
---------------------
If at any time after the end of the 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 an Affiliate or
subsidiary or in the case of EIS to an off-balance sheet special purpose entity
established by EIS, 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 (and any transferee
thereof permitted hereunder, if any), 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 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 shall be subject to any "Tag Along Right" benefiting a
Stockholder which may be provided for by Clause 17, subject to the exceptions
set forth therein.
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. In the event that all of the Offered Shares are not
purchased by the non-selling Stockholders, 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 a third party than those presented to
the non-selling Stockholders. If such sale does not occur, the Offered Shares
shall again be subject to the Right of First Offer set forth in Clause 17.2.
In the event that any of the Stockholders who are not the Selling
Stockholder exercises its 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
30
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), 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.
17.3 Tag Along Rights:
----------------
Subject to Clause 17.2, 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 Shares,
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").
In the event a Transferring Stockholder proposes to Transfer any Shares in
a transaction subject to this Clause 17.3, 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, 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.
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
31
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 Section 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.
At the closing of any Transfer of Shares subject to this Clause 17, 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.
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.
The rights and obligations of each of the Stockholders pursuant to the "Tag
Along Right" provided herein shall terminate upon the date that the Common Stock
is registered under Section 12(b) or 12(g) of the Exchange Act.
18. MATTERS REQUIRING PARTICIPANTS' APPROVAL
18.1 In consideration of TGEN and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that Newco shall not during the 54-month
period beginning on the Closing Date, without the prior approval of the EIS
Director and at
32
least two of the TGEN Directors, but subject to any agreements in any
Transaction Documents whereby consent to certain of the following is not to be
unreasonably withheld, conditioned or delayed:
18.1.1 engage in any activity other than the Business;
18.1.2 acquire or dispose of assets of a value in excess of US
$25,000 or sell the principal assets, undertaking or Business of Newco;
18.1.3 create any fixed or floating charge, lien (other than a lien
arising by operation of law) or other encumbrance over the whole or any part of
the undertaking, property or assets of Newco or of any Subsidiary;
18.1.4 borrow any sum in excess of a maximum aggregate sum
outstanding at any time of US $25,000;
18.1.5 make any loan or advance or give any credit (other than normal
trade credit) in excess of US$25,000 to any Person;
18.1.6 give any guarantee or indemnity to secure the liabilities or
obligations of any Party other than those which it is usual to give in the
ordinary course of a business similar to the Business;
18.1.7 enter into any contract, arrangement or commitment involving
expenditure on capital account or the realization of capital assets if the
amount or the aggregate amount of such expenditure or realization by Newco would
exceed US$50,000 in any one year or in relation to any one project, and for the
purpose of this paragraph the aggregate amount payable under any agreement for
hire, hire purchase or purchase on credit sale or conditional sale terms shall
be deemed to be capital expenditure incurred in the year in which such agreement
is entered into;
18.1.8 issue any unissued Shares or create or issue any new shares;
18.1.9 alter any rights attaching to any class of share in the
capital of Newco or alter the Newco Memorandum of Association and Bye-Laws;
18.1.10 consolidate, sub-divide or convert any of Newco's share
capital or in any way alter the rights attaching thereto;
18.1.11 dispose of Newco or of any shares in Newco;
33
18.1.12 enter into any partnership or profit sharing agreement with
any Person other than arrangements with trade representatives and similar
Persons in the ordinary course of business;
18.1.13 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;
18.1.14 issue any debentures or other securities convertible into
shares or debentures or any share warrants or any options in respect of shares
in Newco;
18.1.15 enter into any contract or transaction except in the ordinary
and proper course of the Business on arm's length terms;
18.1.16 acquire, purchase or subscribe for any shares, debentures,
mortgages or securities (or any interest therein) in any company, trust or other
Person;
18.1.17 adopt any employee benefit program or incentive schemes;
18.1.18 engage any new employee at remuneration of greater than
US$60,000 per annum;
18.1.19 pay any remuneration to the Directors by virtue of holding
such office other than Directors who hold executive office;
18.1.20 license or sub-license any of the Elan Intellectual Property,
TGEN Intellectual Property, or Newco Technology;
18.1.21 amend or vary the terms of the TGEN License Agreement or the
Elan License Agreement;
18.1.22 change the authorized signatories on Newco bank accounts;
18.1.23 amend or vary the Business Plan or approve the Budget;
18.1.24 alter the number of Directors;
18.1.25 pay dividends or distributions in respect of, or redeem or
repurchase, the equity of Newco;
18.1.26 enter into joint venture agreements or any similar
arrangements with any Person; or
34
18.1.27 create, acquire or dispose of any Subsidiary or of any shares
in any Subsidiary.
19. DISPUTES
19.1 Should any dispute or difference arise between Elan and TGEN, or
between Elan or TGEN and Newco, during the period that this Agreement is in
force, then any Party may forthwith give notice to the other Parties that it
wishes such dispute or difference to be referred to the Chief Executive Officer
of TGEN and the President of EPT.
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 TGEN and the President
of EPT 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 Officer of TGEN and the
President of EPT who shall endeavor 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 In the event the chief executive officers of the Participants are
unable to resolve such dispute, then any Party may forthwith give notice to the
other Parties that it wishes such dispute or difference to be referred to non-
binding arbitration and conciliation by a mediator jointly selected by the
Participants.
19.4 Any dispute hereunder relating to the interpretation of this Agreement
or the claim for misrepresesntation or breach of obligation that is not settled
by mutual consent or through such non-binding arbitration and conciliation shall
be finally adjudicated by binding arbitration in accordance with the rules of
the American Arbitration Association to be conducted in the County, City and
State of New York before a panel of three arbitrators, one (1) of whom shall be
selected by Elan, one (1) by TGEN and the third by the two (2) previously
selected arbitrators. Each of the Parties agrees that the decisions of the
arbitrators shall be final and binding upon it. The costs of any arbitration
shall be shared equally by TGEN and Xxxx.
00
00. SUBSEQUENT FUNDING
20.1 The Subsequent Funding shall be provided by EIS and TGEN in accordance
with the Funding Agreement at such times as shall be necessary for the
development of Products, as shall be reasonably determined in good faith by the
Newco Board of Directors, including the EIS Director (or after the exercise of
the Exchange Right by at least one of the EIS Directors) and at least two of the
TGEN directors, that such Subsequent Funding is required for the development of
Products, whether in accordance with the Business Plan or otherwise.
20.2 In the event that (a) one Participant determines not to fund any
amounts required to develop and commercialize a particular Product, as opposed
to generally failing to fund as described under Section 20.1, above, and (b) the
other Participant desires to fund such Product, the Participant so desiring to
provide such funding shall have the right to cause Newco to transfer such
Product to it (and to enter into any appropriate license or assignment
agreements) on then-standard market terms and conditions, including as to
pricing.
21. TERMINATION
21.1 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 21.
21.2 For the purpose of this Clause 21, a "Relevant Event" is committed or
suffered by a Participant if:
21.2.1 it commits a material breach of its obligations under this
Agreement or the applicable License, which breach remains uncured 60 days after
written notice thereof; provided, however, that (x) if the breaching Participant
has proposed a course of action to rectify the breach and is acting in good
faith to rectify same but has not cured the breach by the 60th day, such period
shall be extended by such period as is reasonably necessary to permit the breach
to be rectified and (y) if there is a good faith dispute as to the existence of
the breach or as to its materiality, or regarding the amount of any required
payment, provided, in the case of disputes as to the amount due, that any
undisputed amount is paid, the right of the non-breaching Party to terminate
this Agreement shall be stayed for a reasonable period during which a good faith
resolution of the dispute will be obtained, either by agreement or, failing
that, through the dispute resolution provisions under Clause 19 of this
Agreement;
36
21.2.2 a distress, execution, sequestration or other process is
levied or enforced upon or sued out against a material part of its property
which is not discharged or challenged within 30 days;
21.2.3 it is unable to pay its debts in the normal course of
business;
21.2.4 it ceases wholly or substantially to carry on its business,
otherwise than for the purpose of a reconstruction or amalgamation, without the
prior written consent of the other Participant (such consent not to be
unreasonably withheld);
21.2.5 the appointment of a liquidator, receiver, administrator,
examiner, trustee or similar officer of such Participant or over all or
substantially all of its assets under the law of any applicable jurisdiction,
including without limitation, the United States of America, Bermuda or Ireland;
21.2.6 an application or petition for bankruptcy, corporate re-
organization, composition, administration, examination, arrangement or any other
procedure similar to any of the foregoing under the law of any applicable
jurisdiction, including without limitation, the United States of America,
Bermuda or Ireland, is filed, and is not discharged within 60 days, or a
Participant applies for or consents to the appointment of a receiver,
administrator, examiner or similar officer of it or of all or a material part of
its assets, rights or revenues or the assets and/or the business of a
Participant are for any reason seized, confiscated or condemned.
21.3 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.
21.4 The provisions of Clauses 1, 3, 7.1, 7.2.6, 11.1, 15, 17, 19 (but only
with respect to disputes relating to this Agreement and not necessarily all
disputes arising after the Term that may otherwise relate to Newco), 21.4, 22,
23 and 24 shall survive the termination of this Agreement; all other terms and
provisions of this Agreement shall cease to have effect and be null and void
upon the termination of this Agreement.
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 Technology, the Elan
37
Intellectual Property or the TGEN Intellectual Property, as the case may be, or
otherwise as to 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 written 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;
22.2.6 information which the receiving Party is required to disclose
pursuant to:
(i) a valid order of a court or other governmental body or any
political subdivision thereof or as otherwise required by law, rule or
regulation; or
(ii) other requirement of law; provided, however, that if the
receiving Party becomes legally required to disclose any Confidential
Information, the receiving Party shall give the disclosing Party prompt notice
of such fact so that the disclosing Party may obtain a protective order or seek
confidential treatment or other appropriate remedy concerning any such
disclosure. The receiving Party shall fully co-operate with the disclosing
Party in connection with the disclosing Party's efforts to obtain any such order
or other remedy. If any such order or other remedy does not fully preclude
disclosure, the receiving Party shall make such disclosure only to the extent
that such disclosure is legally required;
38
22.2.7 information which was already in the possession of the
receiving Party at the time of receiving such information, as evidenced by its
written records, provided such information was not previously provided to the
receiving Party from a source which was under an obligation to keep such
information confidential; or
22.2.8 information that is the subject of a written permission to
disclose, without restriction or limitation, by the disclosing Party.
22.3 Each Party agrees to disclose Confidential Information of another
Party only to those employees, representatives and agents requiring knowledge
thereof in connection with their duties directly related to the fulfilling of
the Party's obligations under this Agreement, so long as such persons are under
an obligation of confidentiality no less stringent than as set forth herein.
Each Party further agrees to inform all such employees, representatives and
agents of the terms and provisions of the Transaction Documents 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, but no less than a reasonable 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.
22.4 Notwithstanding the above, each Party may use or disclose
Confidential Information disclosed to it by another Party to the extent such use
or disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations, including without limitation those relating to
securities regulations and disclosures 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.
22.5 Nothing contained herein other than Clause 6 ("Non-Competition")
shall obligate or restrict any Party from utilizing public, non-proprietary
information which is not subject to the protection of applicable patent laws.
22.6 The provisions relating to confidentiality in this Clause 22 shall
remain in effect during the Term and for a period of seven years following the
termination of this Agreement.
39
22.7 The Parties agree that the obligations of this Clause 22 are
necessary and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be inadequate to
compensate a Party for any breach by the other Party of its covenants and
agreements set forth herein. Accordingly, the Parties agree and acknowledge that
any such violation or threatened violation will cause irreparable injury to a
Party and that, in addition to any other remedies that may be available, in law
or in equity or otherwise, any Party shall be entitled to obtain injunctive
relief against the threatened breach of the provisions of this Clause 22, or a
continuation of any such breach by the other Party, specific performance and
other equitable relief to redress such breach together with its damages and
reasonable counsel fees and expenses to enforce its rights hereunder, without
the necessity of proving actual or express damages.
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 other 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.
24. GENERAL
24.1 Good Faith:
----------
Each of the Parties hereto undertakes with the others to do all things
reasonably within its power that are necessary or desirable to give effect to
the spirit and intent of this Agreement.
24.2 Further Assurance:
-----------------
At the request of any of the Parties, the other Party or Parties shall (and
shall use reasonable efforts to procure that any other necessary parties shall)
execute and perform all such documents, acts and things as may reasonably be
required subsequent to the signing of this Agreement for assuring to or vesting
in the requesting Party the full benefit of the terms hereof.
24.3 Reliance on Representation and Warranties:
-----------------------------------------
40
Each of the Parties hereto hereby acknowledges that in entering into this
Agreement it has not relied on any representation or warranty except as
expressly set forth herein or in any document referred to herein.
24.4 Force Majeure:
-------------
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay is caused by or
results from causes beyond its reasonable control, including without limitation,
acts of God, fires, strikes, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances or intervention of any relevant government authority, but any such
delay or failure shall be remedied by such Party as soon as practicable.
24.5 Relationship of the Parties:
---------------------------
Nothing contained in this Agreement is intended or is to be construed to
constitute Elan/EIS and TGEN as partners, or Elan/EIS as an employee or agent of
TGEN, or TGEN 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.
24.6 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.
24.7 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 telefaxed to:
41
Elan at:
Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx 0
Xxxxxxx
Attention: Vice President & General Counsel,
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Fax: 000-0-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Fax: 000-000-0000
EIS at:
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx Xxxxxx XX00
Bermuda
Attention: President
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Fax: 000-000-0000
TGEN at:
Targeted Genetics Corporation
0000 Xxxxx Xxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telefax: (000) 000-0000
42
with a copy to:
Xxxxxxx Coie LLP
000-000/xx/ Xxxxxx X.X., Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telefax: (000) 000-0000
Newco at:
Targeted Genetics Newco, Ltd.
c/o Conyers Xxxx & Xxxxxxx
Xxxxxxxxx Xxxxx, Xxxxxx Xxxxxx
P.O. Box HM 666
Xxxxxxxx XX CX
Bermuda
Attention: Xxxxx Xxxxx
Fax: 00-0-000-0000
with a copy to each of TGEN, EIS and their respective counsel at the addresses
indicated above;
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 seven
(7) 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 by telephone. Notices of change of address shall be effective upon
receipt.
24.8 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to any conflict of law
provision or rule.
24.9 Severability:
------------
If any provision in this Agreement or of any Transaction Document 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
43
amended without materially altering the intention of the Parties, it will be
deleted, with effect from the date of such agreement or such earlier date as the
Parties may agree, and the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be impaired or affected in any
way.
24.10 Amendments:
----------
No amendment, modification or addition hereto shall be effective or binding
on any Party unless set forth in writing and executed by a duly authorized
representative of all Parties.
24.11 Waiver:
------
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with such
waiver, and no waiver of any breach or failure to perform shall be deemed to be
a waiver of any future breach or failure to perform or of any other right
arising under this Agreement.
24.12 Assignment:
----------
None of the Parties shall be permitted to assign its rights or obligations
hereunder without the prior written consent of the other Parties except as
follows:
24.12.1 Elan, EIS and/or TGEN shall have the right to assign their
rights and obligations hereunder to their Affiliates, provided, however, that
such assignment does not result in adverse tax consequences for any other
Parties.
24.12.2 Elan and EIS shall have the right to assign their rights
and obligations hereunder to an off-balance sheet special purpose entity
established by Elan or EIS; provided, however, that such assignment does not
result in adverse tax consequences for any other Parties.
24.12.3 Elan, EIS and/or TGEN shall have the right to assign or
otherwise transfer their rights and obligations hereunder in connection with a
sale of all or substantially all of the business of such Party to which the
transaction Documents relate, whether by merger, sale of stock, sale of assets
or otherwise.
Notwithstanding any assignment hereof, each Party will remain fully liable
hereunder.
24.13 Whole Agreement/No Effect on Other Agreements:
---------------------------------------------
44
This Agreement (including the Schedules attached hereto) and the other
Transaction Documents set forth all of the agreements and understandings between
the Parties with respect to the subject matter hereof, and supersedes and
terminates all prior agreements and understandings between the Parties with
respect to the subject matter hereof. There are no agreements or understandings
with respect to the subject matter hereof, either oral or written, between the
Parties other than as set forth in this Agreement and the other 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.
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 or the License Agreement specifically provides
otherwise.
24.14 Successors:
----------
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
day first set forth above.
SIGNED
BY: /s/ Xxxxx Xxxxxx
-----------------------
for and on behalf of
ELAN CORPORATION, PLC
in the presence of: /s/ [illegible]
-----------------
SIGNED
BY: /s/ Xxxxx Xxxxxx
-----------------------
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of: /s/ [illegible]
-----------------
SIGNED
BY: /s/ Xxxxxxx Xxxxxx
-----------------------
for and on behalf of
TARGETED GENETICS CORPORATION
in the presence of: /s/ Xxx Xxxxxxx
-----------------
SIGNED
BY: /s/ Xxxxxxx Xxxxxx
-----------------------
for and on behalf of
TARGETED GENETICS NEWCO, LTD.
in the presence of: /s/ Xxx Xxxxxxx
-----------------
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