1
EXHIBIT 10.1
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24B-2
SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT
ELAN CORPORATION, PLC
ELAN INTERNATIONAL SERVICES, LTD.
AND
ISIS PHARMACEUTICALS, INC.
AND
ORASENSE LTD.
2
INDEX
CLAUSE 1 DEFINITIONS
CLAUSE 2 NEWCO'S BUSINESS
CLAUSE 3 REPRESENTATIONS AND WARRANTIES
CLAUSE 4 AUTHORIZATION AND CLOSING
CLAUSE 5 CERTAIN ASSIGNMENT RIGHTS
CLAUSE 6 NONCOMPETITION
CLAUSE 7 DIRECTORS; MANAGEMENT AND R&D COMMITTEES
CLAUSE 8 THE BUSINESS PLAN AND REVIEWS
CLAUSE 9 RESEARCH AND DEVELOPMENT WORK
CLAUSE 10 INTELLECTUAL PROPERTY RIGHTS
CLAUSE 11 EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
CLAUSE 12 COMMERCIALIZATION
CLAUSE 13 MANUFACTURING
CLAUSE 14 TECHNICAL SERVICES AND ASSISTANCE
CLAUSE 15 AUDITORS, BANKERS, REGISTERED OFFICE, ACCOUNTING REFERENCE DATE;
SECRETARY; COUNSEL
CLAUSE 16 REGULATORY
CLAUSE 17 TRANSFERS OF SHARES; RIGHT OF FIRST OFFER; TAG ALONG RIGHTS
CLAUSE 18 MATTERS REQUIRING PARTICIPANTS' APPROVAL
CLAUSE 19 DISPUTES
CLAUSE 20 CERTAIN CHANGES OF CONTROL
CLAUSE 21 TERMINATION
i
3
CLAUSE 22 CONFIDENTIALITY
CLAUSE 23 COSTS
CLAUSE 24 GENERAL
ii
4
THIS SUBSCRIPTION, JOINT DEVELOPMENT AND OPERATING AGREEMENT made this 20th day
of April, 1999,
AMONG:
(1) ELAN CORPORATION, PLC, a public limited company incorporated under the
laws of Ireland, and having its registered office at Xxxxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxxxxx 0, Xxxxxxx ("ELAN");
(2) 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");
(3) ISIS PHARMACEUTICALS, INC., a corporation incorporated under the laws of
Delaware and having its principal place of business at 0000 Xxxxxxx
Xxxxxx, Xxxxxxxx, XX 00000, Xxxxxx Xxxxxx of America ("ISIS"); and
(4) ORASENSE 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, 12,000 shares of Newco's common stock, par value $1.00 per share
(the "COMMON STOCK"), allocated 9,612 shares to Isis and 2,388 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 including
modification of the solubility, intrinsic dissolution, stability and/or
permeability of an active agent, improved dosage form processing,
modification of the surface of particles, and in vivo, in situ, and in
vitro cell tissue and animal models for drug absorption.
C. Isis is beneficially entitled to the use of certain patents that have
been granted or are pending in relation to metabolism and transport
inhibitors and methods of identifying the same and in vivo, in situ, and
in vitro cell tissue and animal models for drug absorption.
D. As of the date hereof, Elan Pharmaceutical Technologies, a division of
Elan ("EPT"), has entered into a license agreement with Newco, and Isis
has entered
7.
5
into a license agreement with Newco, in connection with the license to
Newco of the Elan Intellectual Property and the Isis Intellectual
Property, respectively (each as defined below).
E. Elan and Isis 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) based on their
respective technologies.
F. Elan and Isis 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:
CLAUSE 1
DEFINITIONS
1.1 In this Agreement, the following terms shall, where not inconsistent
with the context, have the following meanings respectively.
"AFFILIATE" of any Person (in the case of a legal entity) shall mean any
other Person controlling, controlled or under the common control of such
first Person, as the case may be. For the purposes of this definition,
"control" shall mean direct or indirect ownership of greater than fifty
percent (50%) of the stock or shares entitled to vote for the election
of directors or capital interests representing more than fifty percent
(50%) of the equity thereof and "controlling" and "controlled" shall be
construed accordingly. Notwithstanding the foregoing, Newco shall not be
construed to be an Affiliate, as defined herein, of Elan or EIS.
"AGREEMENT" means this agreement (which expression shall be deemed to
include the Recitals and the Schedules hereto).
"BUSINESS" means the business of Newco as described in Clause 2 and as
more particularly specified in the Business Plan and such other business
as the Participants may agree from time to time in writing (each in its
sole discretion) should be carried on by Newco.
"BUSINESS PLAN" shall mean the business plan and program of development
to be agreed by Elan and Isis within 60 days of the Closing Date, with
respect to the research, development, and commercialization of the
Products, which shall be reviewed and updated by Elan and Isis on an
annual basis, upon mutual written agreement.
2.
6
"CHANGE OF CONTROL" shall mean, with respect to a Party, the acquisition
of fifty percent (50%) or more of its voting securities, the ability, by
contract or otherwise, to control the board of directors or management
of any such entity, or 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.
"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.
"COMMERCIALIZATION" shall mean the manufacture, promotion, distribution,
marketing and sale of the Products and the Development Product.
"COMMON STOCK EQUIVALENTS" means any options, warrants, rights or any
other securities convertible, exercisable or exchangeable, in whole or
in part, for or into Common Stock.
"CONTROL" shall mean, with respect to a drug, the ability to grant a
license or sublicense as contemplated herein without violating the terms
of any agreement with any third party.
"CONVERTIBLE NOTE" means that certain convertible promissory note, of
even date herewith, by and between Isis and EIS.
"DEVELOPMENT CANDIDATE" shall mean a [...***...] antisense inhibitor of
TNF-(alpha), as more specifically detailed in the License Agreements.
"DEVELOPMENT PRODUCT" shall mean any product containing as an active
ingredient the Development Candidate (or a Substituted Development
Candidate) in an Oral formulation for humans.
"DIRECTORS" means, at any time, the directors of Newco.
"EIS DIRECTOR" has the meaning set forth in Clause 7.
"EIS EXCHANGE RIGHT" has the meaning assigned to such term in the Isis
Securities Purchase Agreement.
"ELAN IMPROVEMENTS" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN INTELLECTUAL PROPERTY" has the meaning assigned thereto in the
Elan License Agreement.
* CONFIDENTIAL TREATMENT REQUESTED
3.
7
"ELAN KNOW-HOW" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN LICENSE" has the meaning assigned thereto in the Elan License
Agreement.
"ELAN LICENSE AGREEMENT" means the license agreement between Elan and
Newco, of even date herewith, attached hereto in Schedule 1.
"ELAN PATENT RIGHTS" has the meaning assigned thereto in the Elan
License Agreement.
"ELAN PROGRAM TECHNOLOGY" shall mean all Program Technology solely
conceived or made by Elan and/or its agents.
"ENCUMBRANCE" means any liens, charges, encumbrances, equities, claims,
options, proxies, pledges, security interests, or other similar rights
of any nature.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FIELD" shall mean the research, development and Commercialization of an
Oral Platform for delivery of Oligonucleotide Drugs.
"FINANCIAL YEAR" means each year commencing on January 1 (or in the case
of the first Financial Year, the date hereof) and expiring on December
31 of each year.
"FULLY DILUTED COMMON STOCK" means all of the issued and outstanding
Common Stock, assuming the conversion, exercise or exchange of all
outstanding Common Stock Equivalents.
"FUNDING AGREEMENT" shall mean the Funding Agreement, dated as of the
date hereof, between Elan, EIS and Isis.
"INDEPENDENT THIRD PARTY" shall mean any person other than Newco, Isis,
Elan or any of their respective Affiliates.
"ISIS DELIVERY KNOW-HOW" shall have the meaning given to such term in
the Isis License Agreement.
"ISIS DELIVERY PATENTS" shall have the meaning given to such term in the
Isis License Agreement.
"ISIS DELIVERY TECHNOLOGY" shall have the meaning given to such term in
the Isis License Agreement.
"ISIS DEVELOPMENT CANDIDATE KNOW-HOW" shall have the meaning given to
such term in the Isis License Agreement.
4.
8
"ISIS DEVELOPMENT CANDIDATE PATENTS" shall have the meaning given to
such term in the Isis License Agreement.
"ISIS DEVELOPMENT CANDIDATE TECHNOLOGY" shall have the meaning given to
such term in the Isis License Agreement.
"ISIS DIRECTORS" has the meaning set forth in Clause 7.
"ISIS IMPROVEMENTS" shall have the meaning given to such term in the
Isis License Agreement.
"ISIS INTELLECTUAL PROPERTY" shall have the meaning given to such term
in the Isis License Agreement.
"ISIS LICENSE" shall have the meaning given to such term in the Isis
License Agreement.
"ISIS LICENSE AGREEMENT" shall mean the license agreement between Isis
and Newco, of even date herewith, attached hereto as Schedule 2
"ISIS OLIGONUCLEOTIDE DRUG" shall mean any Oligonucleotide Drug
Controlled by Isis other than the Development Candidate.
"ISIS PRODUCTS" shall mean Products for Oral delivery based upon Isis
Oligonucleotide Drugs that are made, designed, or otherwise created by
or on behalf of Isis or any of its Affiliates after the date hereof
pursuant to the Project using the Newco Technology and/or the Licensed
Technologies.
"ISIS PROGRAM TECHNOLOGY" shall mean all Program Technology solely
conceived or made by Isis and/or its agents.
"ISIS SECURITIES PURCHASE AGREEMENT" means that certain securities
purchase agreement, of even date herewith, by and between Isis and EIS.
"LICENSE AGREEMENTS" means the Elan License Agreement and the Isis
License Agreement.
"LICENSED TECHNOLOGIES" means, together, the Elan Intellectual Property
and the Isis Intellectual Property.
"NEWCO MEMORANDUM OF ASSOCIATION AND BYE-LAWS" shall mean the Memorandum
of Association and Bye-Laws of Newco.
"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 Patent Rights,
Isis Delivery
5.
9
Patent Rights and Isis Development Candidate License Rights. Newco
Patent Rights 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.
"NEWCO PROGRAM TECHNOLOGY" shall mean all Program Technology other than
Elan Program Technology and Isis Program Technology.
"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,
Isis Intellectual Property and Elan
Intellectual Property.
"OLIGONUCLEOTIDE DRUG" shall mean any single stranded, [...***...]
oligonucleotide including those [...***...] used as a human therapeutic
and/or prophylactic compound containing between [...***...] nucleotides
and/or nucleosides including oligonucleotide analogs which may include
[...***...]. For purposes of this Agreement, Oligonucleotide Drug shall
specifically exclude oligonucleotides used in gene therapy except
[...***...] an oligonucleotide, oligonucleotides used as [...***...] or
oligonucleotides used as adjuvants. Oligonucleotide Drug shall also
specifically exclude polymers in which the linkages are amide based,
such as peptides and proteins but shall not exclude [...***...]. Should
Isis develop [...***...] oligonucleotides or should Elan independently
discover drug delivery technology it believes to be potentially
applicable to [...***...] oligonucleotides, then the Participants shall
discuss in good faith whether such oligonucleotides can be formulated
for Oral delivery using the Oral Platform, and whether such formulation
appears feasible without requiring a significant further investment in
developing or enhancing the Oral Platform; if such formulation appears
feasible, the Participants shall discuss in good faith the inclusion of
such oligonucleotides as Oligonucleotide Drugs.
"ORAL" shall mean administration by way of the mouth for the purpose of
topical or systemic delivery by way of the alimentary canal.
"ORAL DELIVERY DEVICES" shall mean devices for delivering an active
agent orally such as those employing [...***...] technologies.
*CONFIDENTIAL TREATMENT REQUESTED
6.
10
"ORAL PLATFORM" shall mean formulation and excipient systems and
technologies including [...***...] and further including the use of
[...***...], which can be employed to develop dosage forms of
Oligonucleotide Drugs, deliver said dosage forms to the alimentary canal
and facilitate and/or promote the Oral systemic and topical delivery of
Oligonucleotide Drugs.
"PARTICIPANT" means Isis or Elan, as the case may be, and "Participants"
means both of the Participants together.
"PARTY" means Elan, Isis, or Newco, as the case may be, and "Parties"
means all three together.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental entity or
authority or other entity of whatever nature.
"PERMITTED TRANSFEREE" means any Affiliate or subsidiary of Elan, EIS or
Isis, 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.
"PRIMARY TECHNOLOGICAL COMPETITOR OF ELAN" shall mean those entities
listed on Schedule 2A to the Elan License Agreement.
"PRODUCT" shall mean any Oligonucleotide Drug under development or
developed by or on behalf of Newco in an Oral formulation for
administration to humans.
"PROGRAM TECHNOLOGY" shall mean all technology developed by or on behalf
of Newco, whether by Elan, Isis, a third party or jointly by any
combination thereof, pursuant to the Research and Development Program.
"PROJECT" shall mean all activity as undertaken by or on behalf of Newco
in order to develop the Products in accordance with the Business Plan.
"REGISTRATION RIGHTS AGREEMENTS" means the Registration Rights
Agreements of even date herewith relating to securities of Isis and
Newco, respectively.
"REGULATORY APPLICATION" means any regulatory application or any other
application for marketing approval for a Product, which Newco will file
in any country of the Territory, including any supplements or amendments
thereto.
"REGULATORY APPROVAL" means 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.
*CONFIDENTIAL TREATMENT REQUESTED
7.
11
"RESEARCH TERM" shall mean the period commencing on the Closing Date and
continuing for a period of thirty-six (36) months thereafter, unless
extended by the mutual written agreement of Elan and Isis; 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 thirty-six (36) months period, then
the other Participant at its option, may extend the duration of the
Research Term by a term equal in length to the period during which the
first Participant was unable to perform its obligations hereunder.
"RHA" means 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.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the shares of Common Stock of Newco.
"STOCKHOLDER" means any of EIS, Isis, any Permitted Transferee or any
other Person who subsequently becomes bound by this Agreement as a
holder of the Shares, and "STOCKHOLDERS" means all of the Stockholders
together.
"SUBSIDIARY" means any company that is a subsidiary of Newco within the
meaning of applicable laws.
"SUBSTITUTED DEVELOPMENT CANDIDATE" shall mean an Isis Oligonucleotide
Drug licensed to Newco by Isis for development by Newco in replacement
of the Development Candidate pursuant to the Isis License Agreement.
"TECHNOLOGICAL COMPETITOR OF ELAN" shall mean any entity which has a
significant program for the development of drug delivery systems and
which is active in promoting and contracting the use of such drug
delivery systems to third parties, a listing of which is contained on
Schedule 2B to the Elan License Agreement, as the same shall be updated
and revised on an annual basis by mutual consent of the Parties.
"TECHNOLOGICAL COMPETITOR OF ISIS" shall mean any entity which has a
significant program for the discovery and development of antisense
drugs, a listing of which is contained on Schedule 3 to the Elan License
Agreement, as the same shall be updated and revised on an annual basis
by mutual consent of the Parties.
"TERM" means the term of this Agreement.
"TERRITORY" means all of the countries of the world.
8.
12
"THIRD PARTY OLIGONUCLEOTIDE DRUG" shall mean any Oligonucleotide Drugs
Controlled by an Independent Third Party, other than an Isis
Oligonucleotide Drug.
"THIRD PARTY PRODUCT" shall mean Products based upon Third Party
Oligonucleotide Drug that are made, designed, or otherwise created by or
on behalf of an Independent Third Party after the date hereof pursuant
to the Project using the Newco Technology and/or the Licensed
Technologies. For avoidance of doubt, any Product based upon an
Oligonucleotide Drug jointly developed by an Independent Third Party and
Isis other than pursuant of the Program shall be deemed to be an Isis
Product.
"TRANSACTION DOCUMENTS" means this Agreement, the Funding Agreement, the
Elan License Agreement, the Isis License Agreement, the Convertible
Note, the Isis Securities Purchase Agreement, the Registration Rights
Agreements and associated documentation of even date herewith, by and
between Isis, Elan, EIS and Newco, as applicable.
"UNITED STATES DOLLAR" and "US$" and "$" means the lawful currency of
the United States of America.
1.2 In addition, the following definitions have the meanings in the Clauses
corresponding thereto, as set forth below.
DEFINITION CLAUSE
"Buyout Option" 20.1
"Closing" 4.2
"Common Stock" Recital
"Confidential Information" 22.1
"Co-sale Notice" 17.3
"Elan" Recital
"Elan Valuation" 20.2
"EIS" Recital
"EPT" Recital
"Isis" Recital
"Isis Valuation" 20.2
"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
"Presiding Justice" 20.2
"Purchase Price" 20.2
"R&D Committee" 7.2.2
"Remaining Stockholders" 17.3
9.
13
"Relevant Event" 21.2
"Research and Development Program" 9.1
"Selling Stockholder" 17.2
"Tag-Along Right" 17.3
"Transaction Proposal" 17.2
"Transfer" 17.1
"Transferee Terms" 17.3
"Transferring Stockholders" 17.3
1.3 Words importing the singular shall include the plural and vice versa.
1.4 Unless the context otherwise requires, reference to a recital, article,
paragraph, provision, clause or schedule is to a recital, article,
paragraph, provision, clause or schedule of or to this Agreement.
1.5 Reference to a statute or statutory provision includes a reference to it
as from time to time amended, extended or re-enacted.
1.6 The headings in this Agreement are inserted for convenience only and do
not affect its construction.
1.7 Unless the context or subject otherwise requires, references to words in
one gender include references to the other genders.
1.8 Capitalized terms used but not defined herein shall have the meanings
ascribed in the Transaction Documents, if defined therein.
CLAUSE 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 Isis 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
10.
14
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 their
best endeavors to ensure that to the extent required pursuant to the
laws of Bermuda, and to ensure the sole residence of Newco in Bermuda,
all meetings of the Directors are held in Bermuda or other jurisdictions
outside the United States and generally to ensure that Newco is treated
as resident for taxation purposes in Bermuda.
CLAUSE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF NEWCO: Newco hereby represents and
warrants to each of the 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
stock of Newco consists of 12,000 shares of Common 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 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.
11.
15
3.1.4 NO CONFLICTS: The execution, delivery and performance by Newco of
this Agreement, the issuance, sale and delivery of the Shares,
and compliance with the provisions hereof by Newco, will not:
(i) violate any provision of applicable law, statute, rule
or regulation applicable to Newco or any ruling, writ,
injunction, order, judgment or decree of any court,
arbitrator, administrative agency or other governmental
body applicable to Newco or any of its properties or
assets;
(ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute (with
notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or
acceleration) under its charter or organizational
documents or any material contract to which Newco is a
party, except where such violation, conflict or breach
would not, individually or in the aggregate, have a
material adverse effect on Newco; or
(iii) result in the creation of, any Encumbrance upon any of
the properties or assets of Newco, 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 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 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
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
12.
16
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.
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
such Stockholder; 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
13.
17
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.
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.
CLAUSE 4
AUTHORIZATION AND CLOSING
4.1 Newco has authorized the issuance to (i) EIS of 2,388 shares of Common
Stock and (ii) Isis of 9,612 shares of Common 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 00xx 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 Isis 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, 2,388 shares of Common Stock for an aggregate purchase
price of $2,985,000. Newco shall issue and sell to Isis, and Isis
shall purchase from Newco, upon the terms and conditions set
forth herein, 9,612 shares of Common Stock for an aggregate
purchase price of $12,015,000.
4.3.2 The Parties shall execute and deliver to each other, as
applicable, certificates in respect of the Common Stock described
above and any other certificates, resolutions or documents which
the Parties shall reasonably require.
14.
18
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 THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY 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 APRIL 20, 1999, BY AND
AMONG ELAN CORPORATION, PLC, ELAN INTERNATIONAL SERVICES, INC., ISIS
PHARMACEUTICALS, INC. AND ORASENSE LTD.
CLAUSE 5
CERTAIN ASSIGNMENT RIGHTS
5.1 At any time after exercise of the EIS Exchange Right and upon 1 month's
prior notice in writing from Elan to Newco and Isis, Newco shall assign
the Newco Intellectual Property from Newco to a wholly-owned subsidiary
of Newco to be incorporated in Ireland, which company shall be newly
incorporated by Elan to facilitate such assignment.
CLAUSE 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 Isis License Agreement which set forth the agreement between the
parties thereto in relation to the non-competition obligations of Elan
and Isis, respectively.
15.
19
CLAUSE 7
DIRECTORS; MANAGEMENT AND R&D COMMITTEES
7.1. DIRECTORS:
Prior to the exercise of the EIS Exchange Right, the Board of Directors
of Newco shall be composed of four Directors. Isis shall have the right
to nominate three directors of Newco ("ISIS 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"). Isis may appoint one
of the Isis Directors to be the chairman of Newco. Each Participant
agrees to vote its shares of Common 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
Isis 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 Isis removes any of the Isis
Directors, EIS or Isis, 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 Isis Directors shall be required to constitute a quorum and,
subject to Clause 18 hereof, the affirmative vote of a majority
of the Directors present at a meeting at which such a quorum is
present shall constitute an action of the Directors. In the event
of any meeting being inquorate, the meeting shall be adjourned
for a period of seven days. A notice shall be sent to the EIS
Director and the Isis Directors specifying the date, time and
place where such adjourned meeting is to be held and reconvened.
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 Isis, 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 Isis. Thereafter, each of EIS
and Isis, 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
16.
20
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 Isis, 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 Isis nominee on the Management Committee. Each of EIS and
Isis shall be entitled to remove any of their nominees to the
Management Committee and appoint a replacement in place of any
nominees so removed.
7.2.2 The Management Committee shall appoint a research and development
committee (the "R&D COMMITTEE") which shall initially be
comprised of four members, two of whom will be nominated by Elan
and two of whom will be nominated by Isis, and each of whom shall
have one vote, whether or not present at an R&D Committee meeting
during which research and development issues are discussed.
Decisions of the R&D Committee shall require approval by at least
one Elan nominee on the R&D Committee and one Isis nominee on the
R&D Committee. Each of Elan and Isis shall be entitled to remove
any of their nominees to the R&D Committee and appoint a
replacement in place of any nominees so removed.
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;
17.
21
7.2.4.2 establishing a joint Project team consisting of an
equal number of team members from Elan and Isis,
including one Project leader from each of Elan and
Isis; 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 Isis pursuant to Clause 19 hereof.
7.2.6 On not more than two times in each Financial Year, Elan and Isis
shall permit Newco or its duly authorized representative on
reasonable notice and at any reasonable time during normal
business hours to have access to inspect and audit the accounts
and records of Elan or Isis 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
Isis'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 Isis, 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 Isis, as the case may
be, then the expense of such inspection shall be borne solely by
Elan or Isis, as the case may be, instead of by Newco. Any
surplus over the sum properly payable by Newco to Elan or Isis,
as the case may be, shall be paid promptly by Elan or Isis, as
the case may be, to Newco. If such inspection reveals a deficit
in the amount of the sum properly payable to Elan or Isis, as the
case may be, by Newco, Newco shall pay the deficit to Elan or
Isis, as the case may be.
CLAUSE 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. The
research and development budget contained in the Business Plan shall
provide for the supply of the Development Candidate and the [...***...]
and [...***...] compounds by Isis to Newco at [...***...]. 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
*CONFIDENTIAL TREATMENT REQUESTED
18.
22
the following Financial Year, or any amendment or modification to the
Business Plan.
8.2 The Participants agree that the Management Committee shall submit to the
Directors on February 15th, May 15th, August 15th, and November 15th 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.
CLAUSE 9
RESEARCH AND DEVELOPMENT WORK
9.1 During the Research Term, Newco will diligently pursue the research and
development of the Elan Intellectual Property, Isis 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 Oral Platform, and (b) the
development of the Development Product 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 Isis under contract with Newco as provided in the Business
Plan.
9.2 Isis 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 Isis 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 Isis or Elan, as applicable, by the
15th day of the month following the month in which work was performed.
The payments by Newco to Isis 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 [...***...].
9.3 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, Isis in good faith
shall offer, and the Management Committee, by unanimous vote of its
members shall approve, an Isis Oligonucleotide Drug in pre-clinical
development that it deems economically viable as a Substituted
Development Candidate, subject to the agreement of the
*CONFIDENTIAL TREATMENT REQUESTED
19.
23
Participants, negotiating in good faith, to changes concerning the
budget, Business Plan and funding of Newco.
9.4 Except as otherwise provided herein and as provided in the Isis License
Agreement, upon designation of an Isis Oligonucleotide as a Substituted
Development Candidate, (i) all rights to the Development Candidate shall
revert to Isis and (ii) all provisions contained herein and in the Isis
License Agreement other than in the preceding clause (i) relating to the
Development Candidate shall be deemed to apply to the Substituted
Development Candidate as if it were the Development Candidate.
CLAUSE 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 Isis
Intellectual Property shall belong to Isis. 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, Isis
Development Candidate Patents and Isis Delivery Patents insofar as such
patent rights are of relevance to the License Agreements and any
patentable inventions and discoveries within the Elan Intellectual
Property, Isis Intellectual Property and Newco Technology that relate to
the License Agreements and any patentable improvements thereto. Subject
to mutual agreement to the contrary by Isis 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 file and prosecute
patent applications on material patentable inventions and
discoveries within the Elan Improvements that relate to the
Field; (iii) to defend all such applications against third party
oppositions; and (iv) 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 Isis 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 Isis, at its expense, shall make a good faith effort (i) to
secure the grant of any material patent applications within the
Isis Delivery Patents that relate
20.
24
to the Field and the Isis Development Candidate Patents; (ii) to
file and prosecute patent applications on material patentable
inventions and discoveries within the Isis Improvements that
relate to the Field and the Development Candidate; (iii) to
defend all such applications against third party oppositions; and
(iv) to maintain in force any material issued letters patent
within the Isis Delivery Patents that relate to the Field and the
Isis Development Candidate Patents (including any letters patent
that may issue covering any such Isis Improvements that relate to
the Field). Isis 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 In the event that a Participant informs the other Participant
that it does not intend to file patent applications on patentable
inventions and discoveries within the Isis Intellectual Property
or Elan Intellectual Property as the case may be that relate to
the Field in one or more countries in the Territory or fails to
file such an application within a reasonable period of time,
Newco shall have the option at its expense to file and prosecute
such patent application(s) in the joint names of Newco and the
Participant not intending or failing to so file (or, if required
by law, on behalf of the inventors and assignable to Newco and
the Participant). Upon written request from Newco, such
Participant shall execute all documents, forms and declarations
and to do all things as shall be reasonably necessary to enable
Newco to exercise such option.
10.2.4 Elan and Isis, 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
(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
Isis, directly or through the Management Committee, shall control
such filing, prosecution, defense and maintenance. Elan and Isis
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 Isis shall promptly inform each other in writing
of any alleged infringement of any patents within the Elan
Patents, the Isis Delivery Patents, the Isis Development
Candidate Patents or the Newco Patents or any alleged
misappropriation of trade secrets within the Elan Intellectual
Property, the Isis 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
21.
25
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
Isis Delivery Patents and the Isis Development Candidate Patents
or misappropriation of the Elan Intellectual Property and the
Isis 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 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, the Isis Delivery Patents or the Isis Development
Candidate Patents affects both the Field as well as other
products being developed or commercialized by Isis or Elan or its
commercial partners outside the Field, Isis or Elan shall
endeavor to agree as to the manner in which the proceedings
should be instituted and as to the proportion in which they shall
share the proceeds of any such proceedings, 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 Isis informed of any action in a timely
manner so as to enable Isis 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.
22.
26
10.2.8 In the event that Newco does not bring suit or otherwise take
action against all 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 Isis 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.
10.2.10 Newco shall indemnify, defend and hold harmless Elan or Isis, 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 Isis, 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 Isis, 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 Isis, 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 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 Isis.
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 Isis, respectively, which may be withheld in Elan's
or Isis' sole discretion, as the case may be. Any permitted agreement
between Newco and any permitted third party for the development or
exploitation of the Elan Intellectual Property and/or Isis Intellectual
Property in the Field shall require such third party to maintain the
confidentiality of all information concerning the Elan Intellectual
Property and the Isis Intellectual Property and shall provide that any
improvements to the Elan Intellectual Property shall belong to Elan and
any improvements to the Isis Intellectual Property shall belong to Isis.
23.
27
CLAUSE 11
EXPLOITATION OF PRODUCTS OUTSIDE THE FIELD
11.1 LICENSES TO ELAN PROGRAM TECHNOLOGY AND ISIS PROGRAM TECHNOLOGY. Subject
to the provisions of the License Agreements, Newco shall grant to Elan a
perpetual, exclusive, royalty free and sublicensable license in the
Territory to Elan Program Technology outside of the Field, and to Isis a
perpetual, exclusive, royalty free and sublicensable license in the
Territory to the Isis Program Technology outside of the Field.
11.2 LICENSES FOR NEWCO PROGRAM TECHNOLOGY. Newco shall grant (i) to Isis an
exclusive license of Newco Program Technology outside the Field in the
Territory solely for use in connection with Isis proprietary drug
products (including drug products discovered or developed in
collaborative partnerships) and (ii) to Elan an exclusive license in the
Territory for the use of Newco Program Technology in all fields other
than the Field or in connection with Isis proprietary drug products. All
such licenses shall contain such customary provisions as are 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. (including all material provisions thereof). The financial terms
of the said license agreement shall have regard, inter alia, to:
11.1.1 the amount of monies expended by Newco in developing the licensed
Newco Program Technology;
11.1.2 the materiality of the contribution of the Newco Intellectual
Property by comparison to the further research and development
work to be conducted, and of the Elan Intellectual Property and
Isis Intellectual Property;
11.1.3 the financial return likely to be earned by Isis or Elan, as the
case may be, from the proposed exploitation outside the Field;
and
11.1.4 the impact of the proposed exploitation of the Newco Program
Technology outside the Field on the exploitation of the Newco
Program Technology within the Field.
CLAUSE 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. During the Research Term, Elan and Isis shall
meet to discuss the commercial strategy for Newco, Commercialization of
the Development
24.
28
Product and the further exploitation of the Newco Technology. For
example, Isis and Elan shall discuss strategy and terms relating to
product and clinical development, corporate partnering, licensing and
supply agreements. It is contemplated that Isis, either as agent for
Newco or through its representatives on the Management Committee, shall
locate and negotiate with Independent Third Party marketing partners for
the Development Product. In the course of such representation, Isis
shall keep Newco and Elan fully informed of its efforts and progress
with respect to the foregoing.
12.2 In the event Isis shall propose to Newco the development of one or more
Isis Products, the Management Committee, by unanimous decision, shall
determine whether or not to develop any such Isis Product. It is
contemplated that Isis shall locate and negotiate with Independent Third
Party marketing partners for Isis Products. Isis shall keep Newco and
Elan apprised of its efforts and progress with respect to the foregoing;
provided, however, that any such information shall be kept confidential
and shall not be disclosed to EPT (excluding senior executive personnel
of Elan).
12.3 The Business Plan shall be reviewed and mutually agreed to by Isis and
Elan on an annual basis.
12.4 If Isis wishes to research, develop, and/or Commercialize one or more
Isis Oligonucleotide Drugs other than the Development Candidate, Newco
shall have an option to negotiate in good faith the terms of the
formulation research, development, and/or Commercialization of any such
Isis Oligonucleotide Drugs. Provided Newco has the capability and
technology to substantially perform the services sought by Isis with
respect to such Isis Oligonucleotide Drugs, Isis will not offer such
arrangement to Newco on terms less favorable than those it offers to
Independent Third Parties and Newco shall not offer such arrangement to
Isis on terms less favorable than those it offers to Independent Third
Parties.
12.5 In the event an Independent Third Party shall propose to Newco the
development of Third Party Products, the Management Committee, by
unanimous decision, shall determine whether or not to develop any such
Third Party Product. Newco shall be responsible for negotiating with any
Independent Third Parties commercially reasonable terms (e.g.,
royalties, milestones, development fees, manufacturing rights) for
developing and licensing Third Party Products. It is contemplated that
Elan, either as agent for Newco or through its representatives on the
Management Committee, shall locate and negotiate Independent Third Party
marketing partners for Third Party Products. In the course of such
representation, Elan shall keep Newco and Elan fully informed of its
efforts and their progress with respect to the foregoing.
12.6 Notwithstanding anything set forth herein, at such time as Newco intends
to Commercialize the Development Product, Elan shall have the right of
first negotiation with respect to the world-wide commercialization of
the Development Product in accordance with the terms of the Elan License
Agreement.
25.
29
12.7 Subject to the rights of Elan with respect to the Development Product,
Newco shall not be permitted to contract the Commercialization of the
Development Product or any other Product without the prior written
consent of Elan and Isis, 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
Isis, shall not be applicable in the case of a proposed sublicense to
any Technological Competitor of Isis.
CLAUSE 13
MANUFACTURING
13.1 Elan shall have a first right of negotiation for the commercial
production of the Development Product on behalf of Newco, in accordance
with the provisions of section 2.13 of the Elan License Agreement.
Subject to the foregoing rights of Elan with respect to the Development
Product, Newco shall not be permitted to contract the manufacture of the
Development Product or any other Product without the prior written
consent of Elan and Isis, 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
Isis, shall not be applicable in the case of a proposed sublicense to
any Technological Competitor of Isis.
CLAUSE 14
TECHNICAL SERVICES AND ASSISTANCE
14.1 Whenever commercially and technically feasible, Newco shall contract
with Isis 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 Isis.
14.2 Newco shall, if appropriate, conclude an administrative support
agreement with Elan and/or Isis 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;
14.2.2 tax services;
26.
30
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 Isis so requires, Isis 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 Isis
Intellectual Property, as the case may be, as necessary to further the
Project.
14.5 The employees received by Elan or Isis, as the case may be, shall be
subject to obligations of confidentiality no less stringent than those
set out in Clause 22 and such employees shall observe the rules,
regulations and systems adopted by the Party receiving the said
employees for its own employees or visitors.
CLAUSE 15
AUDITORS, BANKERS, REGISTERED OFFICE,
ACCOUNTING REFERENCE DATE; SECRETARY; COUNSEL
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;
15.2 the bankers of Newco shall be Bank of Bermuda or such other bank as may
be mutually agreed from time to time;
27.
31
15.3 the accounting reference date of Newco shall be December 31st in each
Financial Year; and
15.4 the secretary of Newco shall be Xxxxx Xxxxxx or such other Person as may
be appointed by the Directors from time to time.
CLAUSE 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 Newco shall, at its own cost, file, prosecute and maintain any and all
Regulatory Applications for the Products in the Territory in accordance
with the Business Plan.
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 Isis access thereto to enable Elan and Isis to fulfill their
respective obligations and exercise their respective rights under this
Agreement. 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 Isis shall have any liability to Newco solely as a result
of any failure of a Product to achieve the approval of any RHA.
CLAUSE 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
28.
32
any transferee, in any 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 their right to purchase all of the Offered Shares
(in accordance with this Clause 17), then the Selling Stockholder shall
sell all of the Offered Shares to such Stockholder(s), in the amounts
set forth in the Notice of Intention, after not less than 10 business
days and not more than 25 business days from the date of the delivery of
the Notice of Exercise. In the event that more than one of the
Stockholders who are not the Selling Stockholders wish to purchase the
Offered Shares, the Offered Shares shall be allocated to such
Stockholders on the basis of their pro rata equity interests in Newco.
29.
33
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.
Notwithstanding any other provision of this Clause 17.2, a Change in
Control of any Stockholder shall not trigger a "Right of First Offer" in
favor of any other Stockholder.
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 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
30.
34
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.
Notwithstanding any other provision of this Clause 17.3, a Change in
Control of any Stockholder shall not trigger a "Tag Along Right" in
favor of any other Stockholder.
CLAUSE 18
MATTERS REQUIRING PARTICIPANTS' APPROVAL
18.1 In consideration of Isis and Elan agreeing to enter into the License
Agreements, the Parties hereby agree that Newco shall not without the
prior approval of the EIS Director and at least two of the Isis
Directors:
18.1.1. engage in any activity other than the Business;
31.
35
18.1.2. acquire or dispose of assets of a value in excess of $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;
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;
32.
36
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,
Isis Intellectual Property, or Newco Technology;
18.1.21. amend or vary the terms of the Isis License Agreement or the
Elan License Agreement;
18.1.22. permit a person other than Newco to own a regulatory approval
relating to the Product(s);
18.1.23. change the authorized signatories on Newco bank accounts;
18.1.24. amend or vary the Business Plan or agree the Budget;
18.1.25. alter the number of Directors;
18.1.26. pay dividends or distributions in respect of, or redeem or
repurchase, the equity of Newco;
18.1.27. enter into joint venture agreements or any similar arrangements
with any Person; or
18.1.28. create, acquire or dispose of any Subsidiary or of any shares
in any Subsidiary.
33.
37
CLAUSE 19
DISPUTES
19.1 Should any dispute or difference arise between Elan and Isis, or between
Elan or Isis and Newco, during the period that this Agreement is in
force, other than a dispute or difference relating to (i) the
interpretation of any provision of this Agreement, (ii) the
interpretation or application of law, or (iii) the ownership of any
intellectual property, 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 Isis 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 Isis 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 Isis 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.
CLAUSE 20
CERTAIN CHANGES OF CONTROL
20.1 Upon the occurrence of a Change of Control of Isis and/or Newco, Elan
shall be entitled, within three months of the occurrence of such event,
to require Isis to sell on reasonable terms of payment to Elan all (but
not some only) of the Shares, held or beneficially owned by Isis for an
amount equal to their fair market value (the "Buyout Option"). Elan
shall notify Isis of the exercise of the Buyout Option, no later than 30
business days prior to the proposed exercise thereof, by delivering
written notice to Isis stating that the Buyout Option is exercised and
the price at which Elan is willing to purchase the Shares of Isis.
20.2 In the event that the Participants do not agree upon a purchase price
for the Shares within Five Business Days following the receipt by Isis
of written notice from Elan pursuant to Clause 20.1 above, the
Participants shall jointly select a nationally recognized investment
banking firm as arbitrator to make such determination. In the event the
Participants do not agree upon the selection of such investment banking
firm, Elan may contact the presiding justice of the Supreme Court of the
State of New York sitting in the City, County, and State of
34.
38
New York (the "PRESIDING JUSTICE") and request that an independent
US-based nationally recognized investment banking firm which is
knowledgeable of the pharmaceutical/biotechnology industry be appointed
within 10 Business Days. The Presiding Justice shall endeavor to select
an investment banking firm as arbitrator which is technically
knowledgeable in the pharmaceutical/biotechnology industry (and which
directly and through its Affiliates, has no business relationship with,
or shareholding in, either of the Participants). Promptly upon being
notified of the arbitrator's appointment, the Participants shall submit
to the arbitrator details of their assessment of the fair market value
for the Shares beneficially owned by Isis together with such information
as they think necessary to validate their assessment. The arbitrator
shall notify Isis of the fair market value assessed by Elan (the "Elan
Valuation") and shall notify Elan of the fair market value assessed by
Isis (the "Isis Valuation"). The Participants shall then be entitled to
make further submissions to the arbitrator within five Business Days
explaining why the proposed valuations, as the case may be, are
unjustified. The arbitrator shall thereafter meet with Isis and Elan and
shall thereafter choose either the Purchase Price on the basis of which
price the arbitrator determines to be closer to the fair market value
for the Shares beneficially owned by Isis. The arbitrator shall use its
best efforts to determine the Elan Valuation or the Isis Valuation (but
not any other price) as the purchase price for the shares (the "Purchase
Price") within 30 Business Days of his appointment. The Participants
shall bear the costs of the arbitrator equally provided that the
arbitrator may, in its discretion, allocate all or a portion of such
costs to one Party. Any decision of the arbitrator shall be final and
binding.
20.3 Elan shall purchase the Shares beneficially owned by Isis by delivery of
the Purchase Price in cash no later than the 15th Business Day following
determination of the Purchase Price by the arbitrator.
20.4 The Shares so transferred shall be sold by Isis with effect from the
date of such transfer free from any lien, charge or encumbrance, but
with all rights and restrictions attaching thereto.
20.5 If Elan exercises the Buyout Option, Newco shall continue to develop
Isis Products on terms which are substantially the same as those which
would be provided to an Independent Third Party negotiating on an arm's
length basis.
20.6 If Elan exercises the Buyout Option, both parties will negotiate in good
faith to agree to additional reasonable provisions and/or amendments to
the License Agreements to protect the intellectual property rights of
the Participants.
20.7 If Elan exercises the Buyout Option, the provisions of Clauses 1, 3,
11.1, 17, 20.7, 21.4, 22, 23 and 24 shall survive the termination of
this Agreement under this Clause 20.7; all other terms and provisions of
this Agreement shall cease to have effect and be null and void.
35.
39
CLAUSE 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 a default involves a good
faith dispute regarding the amount of any required payment,
provided any undisputed amount is paid, such default shall be
stayed and the remainder may be withheld for a reasonable period
during which a good faith resolution of the amount owed is being
pursued;
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
36.
40
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 In the event of a termination of the Elan License Agreement and/or the
Isis License Agreement, both parties will negotiate in good faith to
determine whether this Agreement should be terminated and if so, which
provisions should survive termination.
21.5 The provisions of Clauses 1, 3, 7.1, 11.1, 17, 21.4, 21.5, 22, 23 and 24
shall survive the termination of this Agreement under Clause 21.3 or by
mutual consent pursuant to Clause 21.1 in accordance with their terms;
all other terms and provisions of this Agreement shall cease to have
effect and be null and void upon the termination of this Agreement under
Clause 21.3 or by mutual consent pursuant to Clause 21.1.
CLAUSE 22
CONFIDENTIALITY
22.1 The Parties and/or Newco acknowledge and agree that it may be necessary,
from time to time, to disclose to each other confidential and/or
proprietary information, including without limitation, inventions, works
of authorship, trade secrets, specifications, designs, data, know-how
and other information, relating to the Field, the Products, present or
future products, the Newco Technology, the Elan Intellectual Property or
the Isis Intellectual Property, as the case may be, methods, compounds,
research projects, work in process, services, sales suppliers,
customers, employees and/or business of the disclosing Party, whether in
oral, written, graphic or electronic form (collectively "CONFIDENTIAL
INFORMATION").
22.2 Any Confidential Information revealed by a Party to another Party shall
be maintained as confidential and shall be used by the receiving Party
exclusively for the purposes of fulfilling the receiving Party's rights
and obligations under this Agreement, and 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;
37.
41
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;
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 to preserve the proprietary and confidential nature
of the Confidential Information
38.
42
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 or otherwise submitting information
to tax or other governmental authorities, conducting clinical trials, or
granting a permitted sub-license or otherwise exercising its rights
hereunder; provided, that if a Party is required to make any such
disclosure of the other Party's Confidential Information, other than
pursuant to a confidentiality agreement, such Party shall inform the
third party recipient of the terms and provisions of this Agreement and
their duties hereunder and shall obtain their consent hereto as a
condition of releasing to the third party recipient the Confidential
Information.
22.5 Nothing contained herein 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 Any breach of this Clause 22 by any employee, representative or agent of
a Party shall be considered a breach by the Party itself.
22.7 The provisions relating to confidentiality in this Clause 22 shall
remain in effect during the Term and for a period of seven years
following the termination of this Agreement.
22.8 The Parties agree that the obligations of this Clause 22 are necessary
and reasonable in order to protect the Parties' respective businesses,
and each Party expressly agrees that monetary damages would be
inadequate to compensate a Party for any breach by the other Party of
its covenants and agreements set forth herein. Accordingly, the Parties
agree and acknowledge that any such violation or threatened violation
will cause irreparable injury to a Party and that, in addition to any
other remedies that may be available, in law or in equity or otherwise,
any Party shall be entitled to obtain injunctive relief against the
threatened breach of the provisions of this Clause 22, or a continuation
of any such breach by the other Party, specific performance and other
equitable relief to redress such breach together with its damages and
reasonable counsel fees and expenses to enforce its rights hereunder,
without the necessity of proving actual or express damages.
39.
43
CLAUSE 23
COSTS
23.1 Each Stockholder shall bear its own legal and other costs incurred in
relation to preparing and concluding this Agreement and the 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.
CLAUSE 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:
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.
40.
44
24.5 RELATIONSHIP OF THE PARTIES:
Nothing contained in this Agreement is intended or is to be construed to
constitute Elan/EIS and Isis as partners, or Elan/EIS as an employee or
agent of Isis, or Isis 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 telecopied to:
Elan at:
Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx 0
Xxxxxxx
Attention: Vice President & General Counsel,
Elan Pharmaceutical Technologies,
a division of Elan Corporation, plc
Telephone: 000-0-000-0000
Fax: 000-0-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
EIS at:
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx Xxxxxx XX00
00.
00
Xxxxxxx
Xxxxxxxxx: President
Telephone: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
Isis at:
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: B. Xxxxx Xxxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: L. Xxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
Newco at:
Orasense Ltd.
c/x Xxxxxxx, Xxxxxxxx & Xxxxx
Xxxxx Xxxxx, 00 Xxxxx Xxxxxx
X.X. Xxx XX 0000
Xxxxxxxx, Xxxxxxx XX XX
Attention: Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
with a copy to each of Isis, EIS and their respective counsel at the
addresses indicated above;
42.
46
or to such other address(es) as may from time to time be notified by any
Party to the others hereunder.
Any notice sent by mail shall be deemed to have been delivered within
three Business Days after dispatch or delivery to the relevant courier
and any notice sent by telecopy shall be deemed to have been delivered
upon confirmation of receipt 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 choice or
conflict or law provision or rule.
24.9 ARBITRATION
(a) Any dispute under this Agreement or the other Transaction
Documents which is not settled by mutual consent (whether
pursuant to the provisions in Clause 19 hereof or otherwise)
shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one (1) arbitrator appointed in
accordance with said rules. Such arbitrator shall be reasonably
satisfactory to each of the Parties; provided, that if the
Parties are unable to agree upon the identity of such arbitrator
within 15 days of demand by either Party, then either Party shall
have the right to petition the Presiding Justice to appoint an
arbitrator.
The arbitration shall be held in New York, New York and the
arbitrator shall be an independent expert in pharmaceutical
product development and marketing (including clinical development
and regulatory affairs).
(b) The arbitrator shall determine what discovery will be permitted,
consistent with the goal of limiting the cost and time which the
Parties must expend for discovery; provided the arbitrator shall
permit such discovery as they deem necessary to permit an
equitable resolution of the dispute.
Any written evidence originally in a language other than English
shall be submitted in English translation accompanied by the
original or a true copy thereof.
The costs of the arbitration, including administrative and
arbitrators' fees, shall be shared equally by the Parties and
each Party shall bear its own costs and attorneys' and witness'
fees incurred in connection with the arbitration.
43.
47
(c) In rendering judgment, the arbitrator shall be instructed by the
Parties that he shall be permitted to select solely from between
the proposals for resolution of the relevant issue presented by
each Party, and not any other proposal.
A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty
(30) days following the final decision of the arbitrators or such
other reasonable period as the arbitrators determine in a written
opinion.
(d) Any arbitration under the Transaction Documents shall be
completed within one year from the filing of notice of a request
for such arbitration.
The arbitration proceedings and the decision shall not be made
public without the joint consent of the Parties and each Party
shall maintain the confidentiality of such proceedings and
decision unless otherwise permitted by the other Party.
(e) The Parties agree that the decision shall be the sole, exclusive
and binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims presented to the
arbitrators. Application may be made to any court having
jurisdiction over the Party (or its assets) against whom the
decision is rendered for a judicial recognition of the decision
and an order of enforcement.
24.10 SEVERABILITY:
If any provision in this Agreement is agreed by the Parties to be,
deemed to be or becomes invalid, illegal, void or unenforceable under
any law that is applicable hereto, such provision will be deemed amended
to conform to applicable laws so as to be valid and enforceable or, if
it cannot be so amended without materially altering the intention of the
Parties, it will be deleted, with effect from the date of such agreement
or such earlier date as the Parties may agree, and the validity,
legality and enforceability of the remaining provisions of this
Agreement shall not be impaired or affected in any way.
24.11 AMENDMENTS:
No amendment, modification or addition hereto shall be effective or
binding on any Party unless set forth in writing and executed by a duly
authorized representative of all Parties.
24.12 WAIVER:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver,
44.
48
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.
24.13 ASSIGNMENT:
None of the Parties shall be permitted to assign its rights or
obligations hereunder without the prior written consent of the other
Parties except as follows:
24.13.1 Elan, EIS and/or Isis 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.
24.13.2 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.
24.13.3 Elan, EIS and/or Isis 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, subject, however, to the Elan's right to exercise the
Buyout Option pursuant to the provisions of Clause 20 hereof in
the event of a Change of Control of Isis and/or Newco.
24.14 WHOLE AGREEMENT/NO EFFECT ON OTHER AGREEMENTS:
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
45.
49
provisions of the License Agreements, the terms of this Agreement shall
prevail unless this Agreement specifically provide otherwise.
24.15 SUCCESSORS:
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto, their successors and permitted assigns.
[Signature Page Follows]
46.
50
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the day first set forth above.
SIGNED
BY:_______________________
for and on behalf of
ELAN CORPORATION, PLC
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
ELAN INTERNATIONAL SERVICES, LTD.
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
ISIS PHARMACEUTICALS, INC.
in the presence of:__________________
SIGNED
BY:_______________________
for and on behalf of
ORASENSE LTD.
in the presence of:__________________
