<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 1997
REGISTRATION NO. 333-17769
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ILEX ONCOLOGY, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 8071 74-2699185
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
RICHARD L. LOVE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
14785 OMICRON DRIVE, SUITE 101 ILEX ONCOLOGY, INC.
SAN ANTONIO, TEXAS 78245 14785 OMICRON DRIVE, SUITE 101
(210) 677-6080 SAN ANTONIO, TEXAS 78245
(Address, including zip code, and telephone number, (210) 677-6080
including area code, of registrant's principal (Name and address, including zip code, and telephone
executive offices) number, including area code, of agent for service)
</TABLE>
---------------------
Copies to:
<TABLE>
<S> <C>
PHILLIP M. RENFRO, ESQ. GEORGE W. BILICIC, JR., ESQ.
FULBRIGHT & JAWORSKI L.L.P. CRAVATH, SWAINE & MOORE
300 CONVENT STREET, SUITE 2200 825 EIGHTH AVENUE
SAN ANTONIO, TEXAS 78205 NEW YORK, NEW YORK 10019
(210) 224-5575 (212) 474-1000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby (other than underwriting discounts and commissions).
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<S> <C>
Securities and Exchange Commission filing fee............................. $11,326
NASDAQ National Market System application fee............................. 17,500
NASD filing fee........................................................... 4,238
Legal fees and expenses................................................... *
Transfer Agent and Registrar fee and expenses............................. *
Accounting fees and expenses.............................................. *
Blue sky fees and expenses (including counsel fees)....................... *
Printing costs............................................................ *
Miscellaneous............................................................. *
-------
Total........................................................... $ *
=======
</TABLE>
- ---------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. A
Delaware corporation may indemnify any person under such Section in connection
with a proceeding by or in the right of the corporation to procure judgment in
its favor, as provided in the preceding sentence, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action, except that no indemnification shall be
made in respect thereof unless, and then only to the extent that, a court of
competent jurisdiction shall determine upon application that such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper. A person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. A Delaware corporation must indemnify
any person who was successful on the merits or otherwise in defense of any
action, suit or proceeding or in defense of any claim, issue or matter in any
proceeding, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. A Delaware corporation may
pay for the expenses (including attorneys' fees) incurred by an officer or
director in defending a proceeding in advance of the final disposition upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages
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<PAGE> 3
for a breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) in respect of certain unlawful
dividend payments or stock redemptions or repurchases, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article 10 of the Company's Certificate of Incorporation, as amended, eliminates
the liability of directors to the fullest extent permitted by Section 102(b)(7)
of the DGCL. The DGCL permits the purchase of insurance on behalf of directors
and officers against any liability asserted against directors and officers and
incurred by such persons in such capacity, or arising out of their status as
such, whether or not the corporation would have the power to indemnify directors
and officers against such liability.
The Registrant also has a policy insuring its directors and officers
against certain liabilities, including liabilities under the Securities Act.
Section of the Underwriting Agreement (contained in Exhibit 1.1
hereto) provides for indemnification by the Underwriters of directors and
officers of the Registrant against certain liabilities, including liabilities
under the Securities Act of 1933, under certain circumstances.
See "Item 17. Undertakings" for a description of the Securities and
Exchange Commission's position regarding such indemnification provisions.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years, the Registrant sold the following securities
which were not registered under the Securities Act of 1933, as amended (the
"Act"). All share numbers have been adjusted to reflect a 1-for-1.75161005882673
reverse stock split that will occur before the closing of this offering.
The Company was incorporated in December 1993, and January 1994, issued 58
shares of Common Stock to CTRC Research Foundation in exchange for a $1,000
capital contribution.
In November 1994 and January and March 1995, the Company contracted to sell
1,187,481 shares at $0.18 per share of Common Stock to the founders of the
Company, Richard L. Love, Daniel D. Von Hoff, Alexander L. Weis and Charles A.
Coltman. The shares were subsequently issued in early 1995. Each of these sales
was made pursuant to Section 4(2) of the Securities Act.
In April 1995, the Company issued to CTRC Research Foundation and the
University of Texas Health Sciences Center at San Antonio 2,991,477 of its
Series A Convertible Preferred Stock in exchange for certain assets and rights
transferred to the Company as capital contributions, pursuant to Section 4(2) of
the Securities Act.
In September 1995, the Company issued 3,101,448 shares of Series B
Convertible Preferred Stock to various sophisticated private investors, pursuant
to Section 4(2) of the Securities Act and Regulation D thereunder. The aggregate
purchase price for the Series B Convertible Preferred Stock was $10,865,000.
In July 1996, the Company issued to Perseus Pharmaceuticals, L.L.C., Drug
Royalty Corporation, Inc. and certain holders of the Company's Series B
Convertible Preferred Stock, 1,309,424 shares of its Series C Convertible
Preferred Stock and warrants (the "Series C Warrants") for the purchase of
327,367 shares of Common Stock for an aggregate purchase price of $10 million,
pursuant to Section 4(2) of the Securities Act and Regulation D thereunder.
The Series C Warrants entitle the holder, upon exercise thereof, to
purchase from the Company shares of its Common Stock at a price per share of
$8.76. The holders of the Series C Warrants are provided certain registration
rights that arise upon the Company's proposal to register, subsequent to its
initial public offering, the Common Stock for sale to the public under the
Securities Act. The Series C Warrants are also subject to certain adjustments
which may be made to the number of shares purchasable resulting from stock
splits, issuance of additional Common Stock, issuance of additional warrants or
other rights or issuance of securities convertible into Common Stock by the
Company. The
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<PAGE> 4
Company has also issued warrants to Vector Securities International, Inc. and
Chestnut Partners, Inc. for the purchase of 97,054 and 28,546 shares of Common
Stock, respectively. The warrants issued to Vector Securities International,
Inc. were issued in September 1995 in consideration of services rendered in
connection with the offering of the Series B Convertible Preferred Stock and
have an exercise price of $3.50 per share. The warrant issued to Chestnut
Partners, Inc. was issued in July 1996 in consideration of services rendered in
connection with this offering on substantially the same terms as the Series C
Warrant. See "Description of Capital Stock -- Warrants."
In November 1996, the Company issued to Johnson & Johnson Development
Corporation, pursuant to Section 4(2) of the Securities Act and Regulation D
thereunder, 113,953 shares of Series D Convertible Preferred Stock, for an
aggregate purchase price of $1.0 million.
In December 1996, the Company issued to MPI Enterprises, L.L.C., pursuant
to Section 4(2) of the Securities Act and Regulation D thereunder, 475,753
shares of Series E Convertible Preferred Stock, for an aggregate purchase price
of $5.0 million.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
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EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
-------------- -------------------------
<C> <S>
1.1* -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation of the Company
3.2** -- Bylaws of the Company, as amended
4.1* -- Specimen of certificate representing Common Stock, $.01 par value, of
the Company
5.1* -- Opinion of Fulbright & Jaworski L.L.P. regarding legality of the
Common Stock being registered
10.1** -- Revolving Promissory Note dated November 18, 1994, in the original
principal amount of $500,000, payable by the Company to CTRC Research
Foundation
10.2** -- Loan Agreement dated November 18, 1994 between the Company and CTRC
Research Foundation
10.3 -- Letter Agreement dated December 4, 1996 between the Company and CTRC
Research Foundation terminating the line of credit
10.4** -- Assignment of Rights and Assets dated November 1994 from CTRC
Research Foundation to the Company
10.5** -- First Amendment to Assignment of Rights and Assets dated September
1995 between ILEX Oncology, Inc. and CTRC Research Foundation
10.6** -- Services Agreement dated November 18, 1994 between CTRC Research
Foundation and the Company
10.7** -- Covenant Not To Sue dated September 1995 between CTRC Research
Foundation and the Company
10.8** -- Office Lease dated October 1, 1994 between the Company and CTRC
Research Foundation
10.9** -- Lease Agreement dated October 1, 1994 between Texas Research and
Technology Foundation and the Company
10.10 -- Lease Agreement dated September 1, 1995 between CTRC Research
Foundation and the Company
10.11 -- Commercial Industrial Sublease Agreement between TRTF/CTRCRF Building
Corporation and the Company
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
-------------- -------------------------
<C> <S>
10.12** -- Agreement dated November 1, 1994 [cGMP Plant] by and among Texas
Research and Technology Foundation, CTRC Research Foundation,
TRTF/CTRCRF Building Corporation and the Company
10.13+ -- License Agreement [Piritrexim Isethionate] dated March 31, 1995 by
and among Burroughs Wellcome Co., The Wellcome Foundation Limited and
the Company
10.14+ -- License Agreement [Oxypurinol] dated March 31, 1995 by and among
Burroughs Wellcome Co., The Wellcome Foundation Limited and the
Company
10.15+ -- License Agreement [Crisnatol Mesylate] dated November 1, 1993 by and
among Burroughs Wellcome Co., The Wellcome Foundation Limited and
CTRC Research Foundation
10.16+ -- Amendment and Agreement with Respect to License Agreement [crisnatol
mesylate] dated October 5, 1996 amending License Agreement dated
November 1, 1993 by and among Burroughs Wellcome Co., The Wellcome
Foundation Limited and CTRC Research Foundation
10.17+ -- License Agreement [Eflornithine] between ILEX Oncology, Inc. and
Marion Merrell Dow Inc. and its subsidiaries Merrell Dow
Pharmaceuticals Inc. and Marion Merrell Dow France Et Cie
10.18+ -- Development and License Agreement [crisnatol mesylate] dated October
11, 1996 by and among the Company and Janssen Pharmaceutica, N.V.
10.19+ -- License Agreement [Farnesyl Transferase Inhibitors] dated July 1,
1996 by and between Sother Limited and the Company
10.20+ -- License Agreement [RP 60475] dated November 18, 1994 between Rhone-
Poulenc Rorer S.A. and the Company
10.21+ -- Agreement dated November 25, 1996 between Hoffmann-La Roche, Inc. and
the Company [RO23-7553]
10.22+ -- License and Development Agreement [MGBG] dated October 1, 1992
between Sterling Winthrop Inc. and CTRC Research Foundation
10.23+ -- Research Collaboration Agreement dated December 12, 1995 between CTRC
Research Foundation and Sanofi
10.24 -- Consent, Acknowledgment and Waiver Agreement dated September 1994 by
and among CTRC Research Foundation, Sterling Winthrop Inc. and the
Company
10.25+ -- Drug Development Project Agreement [4-hydroperoxycyclophosphamide]
effective April 1, 1993 between CTRC Research Foundation and MGI
Pharma, Inc.
10.26** -- Material Transfer Agreement [Dihydro-5-Azacytidine] dated March 9,
1995 between the Company and the National Institutes of Health
10.27+ -- Patent License Agreement--Exclusive [Methyl-Glyoxal
Bis-Guanylhydrazone] dated September 8, 1991 between the National
Institutes of Health and Cancer Therapy and Research Center
10.28 -- Agreement for Services dated February 15, 1995 between the Company
and The University of Texas Health Science Center at San Antonio
10.29** -- Agreement for Services effective September 20, 1994 between CTRC
Research Foundation and The University of Texas Health Science Center
at San Antonio
10.30** -- Master Services Agreement (Preclinical Services) dated June 11, 1996
by and between the Company and Lipitek International, Inc.
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
-------------- -------------------------
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10.31** -- Letter Agreement dated September 28, 1995 between Cross Atlantic
Partners K/S, Boston Capital Ventures III. Limited Partnership,
Rovent II Limited Partnership, CTRC Research Foundation and the
Company
10.32** -- Warrant for the purchase of shares of Common Stock dated September
1995 between the Company and Vector Securities International, Inc.
10.33* -- Warrant for the Purchase of shares of Common Stock dated July 1996
between the Company and Chestnut Partners, Inc.
10.34** -- Institute for Drug Development Program Agreement dated September 20,
1994 between CTRC Research Foundation and The University of Texas
Health Science Center at San Antonio
10.35** -- Subordinated Option Agreement dated March 27, 1995 between CTRC
Research Foundation and the Company
10.36** -- Employment Agreement dated November 2, 1994 between Richard L. Love
and the Company
10.37 -- Amendment to Employment Agreement dated April 4, 1995 between Richard
L. Love and the Company
10.38 -- Amendment to Employment Agreement dated September 27, 1995 between
Richard L. Love and the Company
10.39** -- Employment Agreement dated November 2, 1994 between Alexander L.
Weis, Ph.D. and the Company
10.40 -- Amendment to Employment Agreement dated April 10, 1995 between
Alexander L. Weis, Ph.D. and the Company
10.41 -- Amendment to Employment Agreement dated September 27, 1995 between
Alexander L. Weis, Ph.D. and the Company
10.42** -- Employment Agreement dated August 13, 1996 between James R. Koch and
the Company
10.43** -- Employment Agreement dated August 27, 1996 between Pedro
Santabarbara, M.D., Ph.D. and the Company
10.44** -- Letter Agreement dated November 2, 1994 between Alexander L. Weis,
Ph.D. and the Company
10.45** -- Consulting Services Agreement dated March 16, 1995 between the
Company and Charles A. Coltman, Jr., M.D.
10.46** -- Consulting Services Agreement dated January 1, 1995 between the
Company and Daniel Von Hoff, M.D.
10.47 -- 1995 Stock Option Plan for the Company
10.48 -- 1996 Non-Employee Director Stock Option Plan for the Company
10.49 -- Form of Non-Employee Director Stock Option Agreement
10.50 -- Third Amended and Restated Registration Rights Agreement between the
Company, CTRC and the holders of the Series B, C, D and E Preferred
Stock
10.51 -- Convertible Preferred Stock Purchase Agreement dated September 29,
1995 among the Company and the holders of Series B Preferred Stock
10.52 -- Convertible Preferred Stock Purchase Agreement dated December 11,
1996 between the Company and MPI
10.53** -- Convertible Preferred Stock Purchase Agreement dated November 11,
1996 between the Company and Johnson & Johnson Development
Corporation
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.54** -- Convertible Preferred Stock Purchase Agreement dated as of July 22,
1996 among the Company and the holders of Series C Preferred Stock
10.55 -- Form of Pledge Agreement between Cancer Therapy and Research Center
Endowment and each of Gary V. Woods, Ruskin C. Norman, M.D. and
Robert V. West, Jr., Ph.D.
10.56+ -- Exclusive License Agreement [Oxypurinol] dated November 27, 1996
between MGI Pharma, Inc. and the Company
10.57+ -- Exclusive License Agreement [DHAC] dated November 27, 1996 between
MGI Pharma, Inc. and the Company
10.58 -- Stock Purchase Agreement dated April 11, 1995 between Daniel Von Hoff
and the Company
10.59 -- Stock Purchase Agreement dated April 11, 1995 between Alexander L.
Weis and the Company
10.60 -- Stock Purchase Agreement dated April 11, 1995 between Richard L. Love
and the Company
10.61 -- Stock Purchase Agreement dated April 11, 1995 between Charles A.
Coltman, Jr. and the Company
10.62 -- Promissory Note dated April 12, 1995 between Daniel Von Hoff and the
Company
10.63 -- Promissory Note dated April 12, 1995 between Richard L. Love and the
Company
10.64 -- Promissory Note dated April 12, 1995 between Charles A. Coltman, Jr.
and the Company
10.65 -- Promissory Note dated April 12, 1995 between Alexander L. Weis and
the Company
10.66 -- Ownership Restriction Agreement dated December 11, 1996 between
MPILEX Management, L.L.C., MPILEX Partners, L.P. and holders of units
thereof.
10.67 -- Agreement of Limited Partnership of MPILEX Partners, L.P. among
MPILEX Management, L.L.C.
10.68 -- Regulations of MPILEX Management, L.L.C. dated December 1996.
10.69+ -- License Agreement dated December 11, 1996 between MPILEX Partners,
L.P. and the Company
11.1** -- Computation of Earnings Per Share
23.1 -- Consent of Arthur Andersen L.L.P.
23.2* -- Consent of Fulbright & Jaworski L.L.P. (included in 5.1)
24.1 -- Power of Attorney (included on signature page of initial filing of
this Registration Statement)
27** -- Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment will be requested with respect to certain portions of
this exhibit. Omitted portions will be filed separately with the Securities
and Exchange Commission.
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<PAGE> 8
(b) Financial Statement Schedules:
All financial statement schedules, for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission, are
not required under the related instructions, are inapplicable or information
required is included in the financial statements and therefore have been
omitted.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions described in Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Antonio, State of Texas on December 31, 1996.
ILEX ONCOLOGY, INC.
By: /s/ RICHARD L. LOVE
------------------------------------
Richard L. Love
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GARY V. WOODS* Director January 6, 1997
- ---------------------------------------------
Gary V. Woods
/s/ RICHARD L. LOVE President, Chief Executive January 6, 1997
- --------------------------------------------- Officer and Director
Richard L. Love (Principal Executive
Officer)
/s/ ALEXANDER L. WEIS, Ph.D.* Director January 6, 1997
- ---------------------------------------------
Alexander L. Weis, Ph.D.
/s/ JAMES R. KOCH* Vice President and Chief January 6, 1997
- --------------------------------------------- Financial Officer
James R. Koch (Principal Financial and
Accounting Officer)
/s/ DANIEL D. VON HOFF, M.D.* Director January 6, 1997
- ---------------------------------------------
Daniel D. Von Hoff, M.D.
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN L. CASSIS* Director January 6, 1997
- ---------------------------------------------
John L. Cassis
/s/ A. DANA CALLOW, JR.* Director January 6, 1997
- ---------------------------------------------
A. Dana Callow, Jr.
/s/ RUSKIN C. NORMAN, M.D.* Director January 6, 1997
- ---------------------------------------------
Ruskin C. Norman, M.D.
/s/ ROBERT V. WEST, JR., Ph.D.* Director January 6, 1997
- ---------------------------------------------
Robert V. West, Jr., Ph.D.
/s/ JASON S. FISHERMAN, M.D.* Director January 6, 1997
- ---------------------------------------------
Jason S. Fisherman, M.D.
*By: /s/ RICHARD L. LOVE
- ---------------------------------------------
Richard L. Love
as Attorney-in-Fact
</TABLE>
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<PAGE> 11
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1* -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation of the Company
3.2** -- Bylaws of the Company, as amended
4.1* -- Specimen of certificate representing Common Stock, $.01 par value, of
the Company
5.1* -- Opinion of Fulbright & Jaworski L.L.P. regarding legality of the
Common Stock being registered
10.1** -- Revolving Promissory Note dated November 18, 1994, in the original
principal amount of $500,000, payable by the Company to CTRC Research
Foundation
10.2** -- Loan Agreement dated November 18, 1994 between the Company and CTRC
Research Foundation
10.3 -- Letter Agreement dated December 4, 1996 between the Company and CTRC
Research Foundation terminating the line of credit
10.4** -- Assignment of Rights and Assets dated November 1994 from CTRC
Research Foundation to the Company
10.5** -- First Amendment to Assignment of Rights and Assets dated September
1995 between ILEX Oncology, Inc. and CTRC Research Foundation
10.6** -- Services Agreement dated November 18, 1994 between CTRC Research
Foundation and the Company
10.7** -- Covenant Not To Sue dated September 1995 between CTRC Research
Foundation and the Company
10.8** -- Office Lease dated October 1, 1994 between the Company and CTRC
Research Foundation
10.9** -- Lease Agreement dated October 1, 1994 between Texas Research and
Technology Foundation and the Company
10.10 -- Lease Agreement dated September 1, 1995 between CTRC Research
Foundation and the Company
10.11 -- Commercial Industrial Sublease Agreement between TRTF/CTRCRF Building
Corporation and the Company
10.12** -- Agreement dated November 1, 1994 [cGMP Plant] by and among Texas
Research and Technology Foundation, CTRC Research Foundation,
TRTF/CTRCRF Building Corporation and the Company
10.13+ -- License Agreement [Piritrexim Isethionate] dated March 31, 1995 by
and among Burroughs Wellcome Co., The Wellcome Foundation Limited and
the Company
10.14+ -- License Agreement [Oxypurinol] dated March 31, 1995 by and among
Burroughs Wellcome Co., The Wellcome Foundation Limited and the
Company
10.15+ -- License Agreement [Crisnatol Mesylate] dated November 1, 1993 by and
among Burroughs Wellcome Co., The Wellcome Foundation Limited and
CTRC Research Foundation
10.16+ -- Amendment and Agreement with Respect to License Agreement [crisnatol
mesylate] dated October 5, 1996 amending License Agreement dated
November 1, 1993 by and among Burroughs Wellcome Co., The Wellcome
Foundation Limited and CTRC Research Foundation
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.17+ -- License Agreement [Eflornithine] between ILEX Oncology, Inc. and
Marion Merrell Dow Inc. and its subsidiaries Merrell Dow
Pharmaceuticals Inc. and Marion Merrell Dow France Et Cie
10.18+ -- Development and License Agreement [crisnatol mesylate] dated October
11, 1996 by and among the Company and Janssen Pharmaceutica, N.V.
10.19+ -- License Agreement [Farnesyl Transferase Inhibitors] dated July 1,
1996 by and between Sother Limited and the Company
10.20+ -- License Agreement [RP 60475] dated November 18, 1994 between Rhone-
Poulenc Rorer S.A. and the Company
10.21+ -- Agreement dated November 25, 1996 between Hoffmann-La Roche, Inc. and
the Company [RO23-7553]
10.22+ -- License and Development Agreement [MGBG] dated October 1, 1992
between Sterling Winthrop Inc. and CTRC Research Foundation
10.23+ -- Research Collaboration Agreement dated December 12, 1995 between CTRC
Research Foundation and Sanofi
10.24 -- Consent, Acknowledgment and Waiver Agreement dated September 1994 by
and among CTRC Research Foundation, Sterling Winthrop Inc. and the
Company
10.25+ -- Drug Development Project Agreement [4-hydroperoxycyclophosphamide]
effective April 1, 1993 between CTRC Research Foundation and MGI
Pharma, Inc.
10.26** -- Material Transfer Agreement [Dihydro-5-Azacytidine] dated March 9,
1995 between the Company and the National Institutes of Health
10.27+ -- Patent License Agreement--Exclusive [Methyl-Glyoxal
Bis-Guanylhydrazone] dated September 8, 1991 between the National
Institutes of Health and Cancer Therapy and Research Center
10.28 -- Agreement for Services dated February 15, 1995 between the Company
and The University of Texas Health Science Center at San Antonio
10.29** -- Agreement for Services effective September 20, 1994 between CTRC
Research Foundation and The University of Texas Health Science Center
at San Antonio
10.30** -- Master Services Agreement (Preclinical Services) dated June 11, 1996
by and between the Company and Lipitek International, Inc.
10.31** -- Letter Agreement dated September 28, 1995 between Cross Atlantic
Partners K/S, Boston Capital Ventures III. Limited Partnership,
Rovent II Limited Partnership, CTRC Research Foundation and the
Company
10.32** -- Warrant for the purchase of shares of Common Stock dated September
1995 between the Company and Vector Securities International, Inc.
10.33* -- Warrant for the Purchase of shares of Common Stock dated July 1996
between the Company and Chestnut Partners, Inc.
10.34** -- Institute for Drug Development Program Agreement dated September 20,
1994 between CTRC Research Foundation and The University of Texas
Health Science Center at San Antonio
10.35** -- Subordinated Option Agreement dated March 27, 1995 between CTRC
Research Foundation and the Company
10.36** -- Employment Agreement dated November 2, 1994 between Richard L. Love
and the Company
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.37 -- Amendment to Employment Agreement dated April 4, 1995 between Richard
L. Love and the Company
10.38 -- Amendment to Employment Agreement dated September 27, 1995 between
Richard L. Love and the Company
10.39** -- Employment Agreement dated November 2, 1994 between Alexander L.
Weis, Ph.D. and the Company
10.40 -- Amendment to Employment Agreement dated April 10, 1995 between
Alexander L. Weis, Ph.D. and the Company
10.41 -- Amendment to Employment Agreement dated September 27, 1995 between
Alexander L. Weis, Ph.D. and the Company
10.42** -- Employment Agreement dated August 13, 1996 between James R. Koch and
the Company
10.43** -- Employment Agreement dated August 27, 1996 between Pedro
Santabarbara, M.D., Ph.D. and the Company
10.44** -- Letter Agreement dated November 2, 1994 between Alexander L. Weis,
Ph.D. and the Company
10.45** -- Consulting Services Agreement dated March 16, 1995 between the
Company and Charles A. Coltman, Jr., M.D.
10.46** -- Consulting Services Agreement dated January 1, 1995 between the
Company and Daniel Von Hoff, M.D.
10.47 -- 1995 Stock Option Plan for the Company
10.48 -- 1996 Non-Employee Director Stock Option Plan for the Company
10.49 -- Form of Non-Employee Director Stock Option Agreement
10.50 -- Third Amended and Restated Registration Rights Agreement between the
Company, CTRC and the holders of the Series B, C, D and E Preferred
Stock
10.51 -- Convertible Preferred Stock Purchase Agreement dated September 29,
1995 among the Company and the holders of Series B Preferred Stock
10.52 -- Convertible Preferred Stock Purchase Agreement dated December 11,
1996 between the Company and MPI
10.53** -- Convertible Preferred Stock Purchase Agreement dated November 11,
1996 between the Company and Johnson & Johnson Development
Corporation
10.54** -- Convertible Preferred Stock Purchase Agreement dated as of July 22,
1996 among the Company and the holders of Series C Preferred Stock
10.55 -- Form of Pledge Agreement between Cancer Therapy and Research Center
Endowment and each of Gary V. Woods, Ruskin C. Norman, M.D. and
Robert V. West, Jr., Ph.D.
10.56+ -- Exclusive License Agreement [Oxypurinol] dated November 27, 1996
between MGI Pharma, Inc. and the Company
10.57+ -- Exclusive License Agreement [DHAC] dated November 27, 1996 between
MGI Pharma, Inc. and the Company
10.58 -- Stock Purchase Agreement dated April 11, 1995 between Daniel Von Hoff
and the Company
10.59 -- Stock Purchase Agreement dated April 11, 1995 between Alexander L.
Weis and the Company
10.60 -- Stock Purchase Agreement dated April 11, 1995 between Richard L. Love
and the Company
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT NUMBER IDENTIFICATION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.61 -- Stock Purchase Agreement dated April 11, 1995 between Charles A.
Coltman, Jr. and the Company
10.62 -- Promissory Note dated April 12, 1995 between Daniel Von Hoff and the
Company
10.63 -- Promissory Note dated April 12, 1995 between Richard L. Love and the
Company
10.64 -- Promissory Note dated April 12, 1995 between Charles A. Coltman, Jr.
and the Company
10.65 -- Promissory Note dated April 12, 1995 between Alexander L. Weis and
the Company
10.66 -- Ownership Restriction Agreement dated December 11, 1996 between
MPILEX Management, L.L.C., MPILEX Partners, L.P. and holders of units
thereof.
10.67 -- Agreement of Limited Partnership of MPILEX Partners, L.P. among
MPILEX Management, L.L.C.
10.68 -- Regulations of MPILEX Management, L.L.C. dated December 1996.
10.69+ -- License Agreement dated December 11, 1996 between MPILEX Partners,
L.P. and the Company
11.1** -- Computation of Earnings Per Share
23.1 -- Consent of Arthur Andersen L.L.P.
23.2* -- Consent of Fulbright & Jaworski L.L.P. (included in 5.1)
24.1 -- Power of Attorney (included on signature page of initial filing of
this Registration Statement)
27** -- Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment will be requested with respect to certain portions of
this exhibit. Omitted portions will be filed separately with the Securities
and Exchange Commission.
<PAGE> 1
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
ILEX ONCOLOGY, INC.
ILEX Oncology, Inc., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is ILEX Oncology, Inc. and the name
under which the corporation was originally incorporated was Biovensa Inc. The
date of filing of its original Certificate of Incorporation with the Secretary
of State of Delaware is December 14, 1993.
2. Pursuant to Sections 242 and 245 of the General Corporation Law
of the State of Delaware, this Restated Certificate of Incorporation restates
and integrates and further amends the provisions of the Certificate of
Incorporation of this corporation.
3. The text of the Restated Certificate of Incorporation as
heretofore amended and supplemented is hereby restated and further amended to
read in its entirety as follows:
FIRST. The name of the corporation is ILEX Oncology, Inc. (the
"Company").
SECOND. The address of the registered office of the Company is 1013
Centre Road, in the City of Wilmington, County of New Castle, Delaware. The
name of the Company's registered agent at that office is Corporation Service
Company.
THIRD. The purpose of the Company is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. A. AUTHORIZED CAPITAL STOCK. The total number of shares which
the Company shall have the authority to issue shall be 60,000,000 shares, of
which 40,000,000 shares shall be common stock, $.01 par value (the "Common
Stock"), and 20,000,000 shares shall be preferred stock, $.01 par value (the
"Preferred Stock").
B. COMMON STOCK. The board of directors of the Company (the "Board
of Directors") is hereby authorized to cause shares of Common Stock to be
issued from time to time for such consideration as may be fixed from time to
time by the Board of Directors, or by way of stock split pro rata to the
holders of the Common Stock. The Board of Directors may also determine the
proportion of the proceeds received from the sale of such stock which shall be
credited upon the books of the Company to capital or capital surplus.
Each share of the Common Stock shall be equal in all respects to every
other share of the Common Stock. Subject to any special voting rights of the
holders of Preferred Stock fixed by or pursuant to the provisions of Paragraph
C of this Article Fourth, the shares of Common Stock shall entitle the holders
thereof to one vote for each share upon all matters upon which stockholders
have the right to vote.
<PAGE> 2
No holder of shares of Common Stock shall be entitled as a matter of
right to subscribe for or purchase any part of any new or additional issues of
stock, or securities convertible into stock, of any class whatsoever, whether
now or hereafter authorized, and whether issued for cash, property, services or
otherwise.
After the requirements with respect to preferential dividends on
Preferred Stock (fixed by or pursuant to the provisions of Paragraph C of this
Article Fourth), if any, shall have been met and after the Company shall have
complied with all the requirements, if any, with respect to the setting aside
of sums as sinking funds or redemption or purchase accounts (fixed by or
pursuant to the provisions of Paragraph C of this Article Fourth) and subject
further to any other conditions which may be fixed by or pursuant to the
provisions of Paragraph C of this Article Fourth, then, but not otherwise, the
holders of Common Stock shall be entitled to receive dividends, if any, as may
be declared from time to time by the Board of Directors, ratably in proportion
to the number of shares of Common Stock held by each such holder.
After distribution in full of the preferential amount (fixed by or
pursuant to the provisions of Paragraph C of this Article Fourth), if any, to
be distributed to the holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or winding
up of the Company, the holders of the Common Stock shall be entitled to receive
all the remaining assets of the Company, tangible and intangible, of whatever
kind available for distribution to stockholders, ratably in proportion to the
number of shares of Common Stock held by each.
C. PREFERRED STOCK. Shares of Preferred Stock may be divided into
and issued in such series, on such terms and for such consideration as may from
time to time be determined by the Board of Directors of the Company. Each
series shall be so designated as to distinguish the shares thereof from the
shares of all other series and classes. All shares of Preferred Stock shall be
identical, except as to variations between different series in the relative
rights and preferences as permitted or contemplated by the next succeeding
sentence. Authority is hereby vested in the Board of Directors to establish
out of shares of Preferred Stock which are authorized and unissued from time to
time one or more series thereof and to fix and determine the following relative
rights and preferences of shares of each such series:
(1) the distinctive designation of, and the number of shares which
shall constitute, the series and the "stated value" or "nominal value," if any,
thereof;
(2) the rate of dividend applicable to shares of such series, if any;
(3) the price at and the terms and conditions on which shares of such
series may be redeemed, if any;
(4) the amount payable upon shares of such series in the event of the
involuntary liquidation of the Company;
(5) the amount payable upon shares of such series in the event of the
voluntary liquidation of the Company;
-2-
<PAGE> 3
(6) sinking fund provisions for the redemption or purchase of shares
of such series, if any;
(7) the terms and conditions on which shares of such series may be
converted, if such shares are issued with the privilege of conversion;
(8) the voting powers, if any, of the holders of shares of the series
which may, without limiting the generality of the foregoing, include (i) the
right to vote on any or all matters voted upon by the stockholders and (ii) the
right to vote, as a series by itself or together with other series of Preferred
Stock or together with all series of Preferred Stock as a class, upon such
matters, under such circumstances and upon such conditions as the Board of
Directors may fix, including, without limitation, the right, voting as a series
by itself or together with other series of Preferred Stock or together with all
series of Preferred Stock as a class, to elect one or more directors of the
Company in the event there shall have been a failure to pay dividends on any
one or more series of Preferred Stock or under such other circumstances and
upon such conditions as the Board of Directors may determine; and
(9) any other such rights and preferences as are not inconsistent
with the General Corporation Law of Delaware.
The preferences and relative participating, optional and other special
rights, and qualifications, limitations and restrictions of the Company's
Series A Convertible Preferred Stock are as set forth on Exhibit A to this
Restated Certificate of Incorporation of the Company.
The preferences and relative participating, optional and other special
rights, and qualifications, limitations and restrictions of the Company's
Series B Convertible Preferred Stock are as set forth on Exhibit B to this
Restated Certificate of Incorporation of the Company.
The preferences and relative participating, optional and other special
rights, and qualifications, limitations and restrictions of the Company's
Series C Convertible Preferred Stock are as set forth on Exhibit C to this
Restated Certificate of Incorporation of the Company.
The preferences and relative participating, optional and other special
rights, and qualifications, limitations and restrictions of the Company's
Series D Convertible Preferred Stock are as set forth on Exhibit D to this
Restated Certificate of Incorporation of the Company.
D. OTHER PROVISIONS.
(1) The relative powers, preferences, and rights of each series of
Preferred Stock shall be as fixed from time to time by the Board of Directors
in the resolution or resolutions adopted pursuant to the authority granted in
Paragraph C of this Article Fourth, and the consent by class or series vote or
otherwise, of the holders of the Preferred Stock or such of the series of the
Preferred Stock as are from time to time outstanding shall not be required for
the issuance by the Board of Directors of any other series of Preferred Stock
whether the powers, preferences and rights of such other series shall be fixed
by the Board of Directors as senior to, or on a parity with, powers,
preferences and rights of such outstanding series, or any of them, provided,
-3-
<PAGE> 4
however, that the Board of Directors may provide in such resolution or
resolutions adopted with respect to any series of Preferred Stock, that the
consent of the holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(2) Subject to the provisions of Section 1 of this Paragraph D,
shares of any series of Preferred Stock may be issued from time to time as the
Board of Directors shall determine and on such terms and for such consideration
as shall be fixed by the Board of Directors.
(3) Common Stock may be issued from time to time as the Board of
Directors shall determine and on such terms and for such consideration as shall
be fixed by the Board of Directors.
(4) The Company reserves the right to increase or decrease its
authorized capital stock, or any class or series thereof or to reclassify the
same and to amend, alter, change or repeal any provision contained in this
Restated Certificate of Incorporation or in any amendment thereto, in the
manner now or hereafter prescribed by law, but subject to such conditions and
limitations as are hereinbefore prescribed, and all rights conferred upon
stockholders in this Restated Certificate of Incorporation or any amendment
thereto, are granted subject to this reservation.
(5) No holder of any of the shares or securities convertible into
such shares, or of options, warrants or other rights to purchase or acquire
shares of any class or series of shares, or of other securities of the Company
shall have any preemptive right to purchase, acquire or subscribe for any
unissued shares of any class or series or any additional shares of any class or
series to be issued by reason of any increase in the authorized capital stock
of the Company of any class or series, or bonds, certificate of indebtedness,
debenture or other securities convertible or exchangeable for shares of any
class or series, or carrying any right to purchase or acquire shares of any
class or series; provided that the foregoing shall not prohibit the Company
from contracting or otherwise agreeing to provide for rights of first refusal
to holders of its outstanding securities.
FIFTH. The business of the Company shall be managed by a Board of
Directors. The number of directors of the Company shall be fixed from time to
time by or pursuant to the By-laws of the Company.
SIXTH. Election of directors need not be by written ballot.
SEVENTH. The Company is to have perpetual existence.
EIGHTH. The Board of Directors is authorized to adopt, amend and repeal
the By-laws of the Company.
NINTH. Meetings of the stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Company may be
kept outside the
-4-
<PAGE> 5
State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-Laws of the Company.
TENTH. A director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of his or her
duties as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Company or its stockholders, (b) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation
Law; or (d) for any transaction from which the director derived an improper
personal benefit.
ELEVENTH. A. RIGHT TO INDEMNIFICATION. Each person who was or is a
director of the Company and who was or is made a party or is threatened to be
made a party to or is otherwise involved (including, without limitation, as a
witness) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, partner, trustee,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee
benefit plan (hereinafter an "Indemnified Director"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer
or in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the Company to the fullest extent permitted by
the General Corporation Law of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
such law permitted the Company to provide prior to such amendment), against all
liability, all reasonable expense and all loss (including, without limitation,
judgments, fines, reasonable attorneys' fees, ERISA excise taxes or penalties
and amounts paid in settlement) incurred or suffered by such Indemnified
Director in connection therewith and such indemnification shall continue as to
an Indemnified Director who has ceased to be a director and shall inure to the
benefit of the Indemnified Director's heirs, executors and administrators.
Each person who was or is an officer of the Company and not a director of the
Company and who was or is made a party or is threatened to be made a party to
or is otherwise involved (including, without limitation, as a witness) in any
proceeding, by reason of the fact that he or she is or was an officer of the
Company or is or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "Indemnified Officer"),
whether the basis of such proceeding is alleged action in an official capacity
as an officer or in any other capacity while serving as an officer, shall be
indemnified and held harmless by the Company against all liability, all
reasonable expense and all loss (including, without limitation, judgments,
fines, reasonable attorneys' fees, ERISA excise taxes or penalties and amounts
paid in settlement) incurred or suffered by such Indemnified Officer to the
same extent and under the same conditions that the Company must indemnify an
Indemnified Director pursuant to the immediately preceding sentence and to such
further extent as is not contrary to public policy and such indemnification
shall continue as to an Indemnified Officer who has ceased to be an officer and
shall inure to the benefit of the Indemnified Officer's heirs, executors and
administrators. Notwithstanding the foregoing and except as provided in
Paragraph B of this Article Eleventh
-5-
<PAGE> 6
with respect to proceedings to enforce rights to indemnification, the Company
shall indemnify any Indemnified Director or Indemnified Officer in connection
with a proceeding (or part thereof) initiated by such Indemnified Director or
Indemnified Officer only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Company. As hereinafter used in this Article
Eleventh, the term "indemnitee" means any Indemnified Director or Indemnified
Officer. Any person who is or was a director or officer of a subsidiary of the
Company shall be deemed to be serving in such capacity at the request of the
Company for purposes of this Article Eleventh. The right to indemnification
conferred in this Article Eleventh shall include the right to be paid by the
Company the expenses incurred in defending any such proceeding in advance of
its final disposition (hereinafter an "advancement of expenses"); provided,
however, that, if the General Corporation Law of Delaware requires, an
advancement of expenses incurred by an indemnitee who at the time of receiving
such advance is a director of the Company shall be made only upon delivery to
the Company of an undertaking (hereinafter an "undertaking"), by or on behalf
of such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Article Eleventh or
otherwise. The right to indemnification and advancement of expenses conferred
in this Paragraph A shall be a contract right.
B. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Paragraph A
of this Article Eleventh is not paid in full by the Company within sixty days
after a written claim has been received by the Company (except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days), the indemnitee may at any time thereafter bring suit against
the Company to recover the unpaid amount of the claim. If successful in whole
or in part in any such suit or in a suit brought by the Company to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
also shall be entitled to be paid the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (other than a suit to enforce a right to an
advancement of expenses brought by an indemnitee who will not be a director of
the Company at the time such advance is made) it shall be a defense that, and
(ii) any suit by the Company to recover an advancement of expenses pursuant to
the terms of an undertaking the Company shall be entitled to recover such
expenses upon a final adjudication that, the indemnitee has not met the
standard that makes it permissible hereunder or under the General Corporation
Law of Delaware (the "applicable standard") for the Company to indemnify the
indemnitee for the amount claimed. Neither the failure of the Company
(including its Board of Directors, a committee of the Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such suit that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the applicable
standard, nor an actual determination by the Company (including its Board of
Directors, a committee of the Board of Directors, independent legal counsel or
its stockholders) that the indemnitee has not met the applicable standard,
shall create a presumption that the indemnitee has not met the applicable
standard or, in the case of such a suit brought by the indemnitee, shall be a
defense to such suit. In any suit brought by the indemnitee to enforce a right
to indemnification or to an advancement of expenses hereunder, or by the
Company to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of
-6-
<PAGE> 7
proving that the indemnitee is not entitled to be indemnified or to such
advancement of expenses under this Article Eleventh or otherwise shall be on
the Company.
C. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to
the advancement of expenses conferred in this Article Eleventh shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, this Restated Certificate of Incorporation, any By-Law, any
agreement, any vote of stockholders or disinterested directors or otherwise.
D. INSURANCE. The Company may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the Company
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Company would have
the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of Delaware.
E. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Company may, to the
extent authorized from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any employee or agent of
the Company and to any person serving at the request of the Company as an agent
or employee of another corporation or of a joint venture, trust or other
enterprise to the fullest extent of the provisions of this Article Eleventh
with respect to the indemnification and advancement of expenses of either
directors or officers of the Company.
F. REPEAL OR MODIFICATION. Any repeal or modification of any
provision of this Article Eleventh shall not adversely affect any rights to
indemnification and to advancement of expenses that any person may have at the
time of such repeal or modification with respect to any acts or omissions
occurring prior to such repeal or modification.
G. SEVERABILITY. In case any one or more of the provisions of this
Article Eleventh, or any application thereof, shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions in this Article Eleventh, and any other application
thereof, shall not in any way be affected or impaired thereby.
TWELFTH. The Company reserves the right to amend, alter, change, or
repeal any provision contained in this Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by law, and all rights conferred upon
the stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
executed this ____ day of _________________ 1996.
By:
----------------------------------
Richard L. Love, President
-7-
<PAGE> 8
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A
CONVERTIBLE PREFERRED STOCK
OF
ILEX ONCOLOGY, INC.
ILEX Oncology, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Law"), does hereby certify:
A. The Certificate of Incorporation of the Corporation fixes the
total number of shares of all classes of capital stock which the Corporation
shall have the authority to issue at 60,000,000 shares, of which 20,000,000
shares shall be shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), and 40,000,000 shares shall be shares of Common Stock, par value $.01
per share ("Common Stock").
B. On April 6, 1995 the Corporation filed with the Secretary of
State of the State of Delaware its Certificate of Designation, Preferences and
Rights of Series A Convertible Preferred Stock, thereby providing for an issue
of a series of the Preferred Stock consisting of 5,239,900 shares designated as
"Series A Convertible Preferred Stock" ("Series A Preferred Stock").
C. On September 29, 1995 the Corporation filed with the Secretary of
State of the State of Delaware a Restated Certificate of Incorporation
including its Amended and Restated Certificate of Designation, Preferences and
Rights of Series A Convertible Preferred Stock.
D. On November 8, 1996 the Corporation filed with the Secretary of
State of the State of Delaware a Restated Certificate of Incorporation
including its Amended and Restated Certificate of Designation, Preferences and
Rights of Series A Convertible Preferred Stock.
E. The Corporation by action of its Board of Directors and its
stockholders, including the holders of its Series A Convertible Preferred
Stock, have duly authorized and approved a fourth amendment and restatement of
the Certificate of Designation, Preferences and Rights of Series A Convertible
Preferred Stock such that the terms of the Series A Preferred Stock as amended
and restated shall be as set forth in this Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock.
RESOLVED, that the preferences and relative participating, optional and
other special rights, and qualifications, limitations and restrictions thereof,
of the Corporation's Preferred Stock that is designated "Series A Convertible
Preferred Stock" and that consists of 5,239,900 shares are hereby amended and
restated as follows:
<PAGE> 9
SECTION 1. DIVIDENDS
1.1 The holders of shares of outstanding Series A Preferred Stock
shall be entitled to receive in any fiscal year, when and as declared by the
Board of Directors of the Corporation (the "Board"), out of assets of the
Corporation legally available therefor, distributions (as defined below) on a
pro rata basis in cash at the annual rate of $0.15 per share (subject to
appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series A Preferred
Stock). Such distributions shall accrue from day to day, whether or not earned
or declared, and shall be cumulative from April 1, 1995, and shall be payable
quarterly or otherwise as the Board may from time to time determine.
Distributions may be declared and paid upon Common Stock and other shares of
the Corporation ranking junior to the Series A Preferred Stock as to
distributions in any fiscal year of the Corporation, only if full cumulative
distributions shall have been paid to or declared upon and set apart for all
shares of Series A Preferred Stock at such annual rate through the date of
distribution. With respect to distributions declared and paid upon Common
Stock, the Series A Preferred Stock shall also be entitled to participate in
and receive distributions on an "as-if-converted" basis. For purposes of the
distributions provided for by this SECTION 1, the Corporation's Series B
Convertible Preferred Stock, $.01 par value per share ("Series B Preferred
Stock"), the Corporation's Series C Convertible Preferred Stock, $.01 par value
per share ("Series C Preferred Stock"), the Corporation's Series D Convertible
Preferred Stock, $.01 par value per share ("Series D Preferred Stock"), and the
Corporation's Series E Convertible Preferred Stock, $.01 par value per share
("Series E Preferred Stock"), shall be considered equal to, and not senior or
junior to, the Series A Preferred Stock and shall be entitled to distributions
with the Series A Preferred Stock in proportion to the relative amounts of
dividends accrued on the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock. Any holder of shares of Series A Preferred Stock
whose shares of Series A Preferred Stock are converted pursuant to SECTION 3
hereof shall, upon such conversion, forfeit and cease to have any claim to any
accrued but unpaid dividends under this SECTION 1 with respect to such
converted shares.
1.2 For purposes of this SECTION 1, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock on Common Stock, or the purchase or redemption of shares of the
Corporation (other than redemptions, retirements, repurchases or acquisitions
of Common Stock authorized pursuant to the terms of SECTION 4.3.A(5) hereof and
redemptions, retirements, repurchases or acquisitions of capital stock pursuant
to terms approved by the Board from employees, advisors, officers, directors
and consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association) for cash or
property, including any such transfer, purchase or redemption by a subsidiary
of the Corporation. Notwithstanding the foregoing, the term "distribution"
shall not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
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SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of each share of
Series A Preferred Stock shall be entitled, before any distribution or payment
is made upon any share of Common Stock or any other class or series of the
Corporation's capital stock ranking junior as to liquidation rights to the
Series A Preferred Stock (but after preferential distributions or payments
required to be made on any shares of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and any
other securities of the Corporation senior to the Series A Preferred Stock), to
be paid with respect to each share of Series A Preferred Stock outstanding, an
amount per share equal to the sum of $1.85 per share (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series A Preferred
Stock) (the "Series A Issue Price") plus any dividends on a share of Series A
Preferred Stock provided for by SECTION 1.1 hereof that are accrued but are
unpaid through the date of distribution to the holders of the outstanding
shares of Series A Preferred Stock in connection with such liquidation,
dissolution or winding up (the sum of such amounts payable with respect to one
share of Series A Preferred Stock being sometimes referred to as the "Series A
Liquidation Preference"); provided, however, that the consolidation or merger
of the Corporation into or with any corporation or corporations (other than a
merger with another corporation in which the Corporation is the surviving
corporation and which does not result in any reclassification or change in the
terms of outstanding shares of the Corporation's stock of any class or series,
whether now or hereafter authorized, and after which the holders of capital
stock of the Corporation immediately preceding such transaction are the holders
of at least fifty-one percent (51%) of the shares of Common Stock immediately
following such transaction (treating all securities of the Corporation
convertible into or exchangeable for shares of Common Stock as having been
fully converted and exchanged and all options, warrants and other rights to
acquire shares of Common Stock or securities convertible into or exchangeable
for Common Stock as having been fully exercised and converted or exchanged)),
or the sale or transfer by the Corporation of all or substantially all of its
assets, shall be deemed to be a liquidation for purposes of this SECTION 2
unless holders representing not less than 66-2/3% of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock, together as a single class,
elect by written consent not to treat such transaction as a liquidation. If
upon a liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series A Preferred Stock (and all holders of other preferred stock of the
Corporation ranking on parity with the Series A Preferred Stock in the event of
a liquidation, dissolution or winding up of the Corporation) shall be
insufficient to permit payments in full to the holders of Series A Preferred
Stock of the Series A Liquidation Preference, then all assets of the
Corporation available for distribution to stockholders after the Corporation
has made preferential distributions or payments required to be made on any
other securities of the Corporation senior to the Series A Preferred Stock
(including the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock and the Series E Preferred Stock) shall be distributed
ratably, in accordance with the liquidation preference rights of the Series A
Preferred Stock, among the holders of Series A Preferred Stock (and all holders
of other preferred stock of the Corporation ranking on parity
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with the Series A Preferred Stock in the event of a liquidation, dissolution or
winding up of the Corporation).
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or
winding up of the Corporation, immediately after the holders of Series A
Preferred Stock and any other series of Preferred Stock shall have been paid in
full any preferred stock liquidation preferences (including the Series A
Liquidation Preference and the liquidation preference for the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock) that they are respectively entitled to, the
remaining assets of the Corporation available for distribution shall be
distributed to the holders of the Common Stock and the holders of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock and the Series E Preferred Stock in proportion to
the number of shares of Common Stock deemed to be held on an "as-if-converted"
basis.
2.3 TERMINATION OF SERIES A PREFERRED STOCK. In the event the
distributions provided for by this SECTION 2 are made to the holders of Series
A Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, the Series A Preferred Stock shall be retired and canceled and the
holders thereof shall cease to have any continuing interest in the Corporation
in their capacity as holders of Series A Preferred Stock.
2.4 NOTICE. Written notice of any liquidation, dissolution or
winding up and any related distribution, stating the payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telecopy to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of Series A Preferred Stock, such notice to
be addressed to each such holder at its address as shown on the records of the
Corporation. Written notice of any election by the holders of the Series A
Preferred Stock to not treat a merger, consolidation or sale or transfer of
assets under SECTION 2.1 hereof as a liquidation shall be given by the electing
holders to the Corporation not less than 5 days prior to the payment date
stated in the Corporation's notice.
SECTION 3. CONVERSION
The holders of Series A Preferred Stock shall have the following
conversion rights (the "Series A Conversion Rights"):
3.1 RIGHT TO CONVERT; AUTOMATIC CONVERSION
A. Subject to SECTION 3.3, each share of Series A Preferred Stock
shall be convertible at any time before a liquidating payment is made to the
holder of such Series A Preferred Stock pursuant to SECTION 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares
of Common Stock provided for below.
B. Each share of Series A Preferred Stock shall be convertible into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Series A Issue Price by the Series A Conversion
Price, determined as hereafter provided, in effect at
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<PAGE> 12
the time of conversion, which result will be rounded to the nearest one-
hundredth of a share. The initial Series A Conversion Price shall be $1.85 per
share, provided, however, that the Series A Conversion Price shall be subject
to adjustment as set forth in SECTION 3.3 below.
C. Each share of Series A Preferred Stock shall automatically and
immediately be converted into shares of Common Stock at the Series A Conversion
Price upon the consummation of a public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
provided that the public offering price of the Common Stock shall be at least
$6.00 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Common Stock) and the gross offering proceeds to the Corporation
and selling stockholders, if any, from such offering shall be at least
$15,000,000.
The holders of the Series A Preferred Stock shall be given prompt
written notice of any event, including a filing by the Corporation of a
registration statement, that by itself could result in an automatic conversion
pursuant hereto.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock (or, in the case of an automatic conversion under SECTION 3.1.C, to
obtain the certificates for the Common Stock into which the Series A Preferred
Stock shall have been converted), such holder shall surrender the certificates
for the shares of Series A Preferred Stock, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares (or the holder shall
notify the Corporation or its transfer agent that such certificate has been
lost, stolen or destroyed and execute an agreement in form and substance
reasonably satisfactory to the Corporation to indemnify the Corporation for any
loss incurred by the Corporation in connection therewith), and shall give
written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
(A holder of Series A Preferred Stock may not effect a transfer of shares
pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and
deliver at such office to such holder of shares of Series A Preferred Stock, or
to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
provided above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the certificate
or certificates (or the indemnification agreement referred to above)
representing the shares of Series A Preferred Stock being converted (except in
the case of an automatic conversion under SECTION 3.1.C, which shall be
effective on the date of the event giving rise thereto), and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. In case the number of shares of
Series A Preferred Stock represented by the certificate or certificates
surrendered exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted.
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3.3 CONVERSION PRICE ADJUSTMENTS. The Series A Conversion Price
shall be subject to adjustment from time to time as follows:
A. (1) If the Corporation shall issue or sell any Additional
Stock (as defined below), or engage in a transaction which is deemed to involve
the issuance or sale of Additional Stock, for a consideration per share less
than the Series A Conversion Price in effect immediately prior to the issuance
or sale of such Additional Stock, then such Series A Conversion Price in effect
immediately prior to each such issuance or sale shall (except as otherwise
provided in this clause (1)) be adjusted to a price determined by dividing (X)
an amount equal to the sum of (a) the product derived by multiplying the Series
A Conversion Price in effect immediately prior to such issue or sale times the
number of shares of Common Stock outstanding immediately prior to such issue or
sale, plus (b) the consideration, if any, received by or deemed to have been
received by the Corporation upon such issue or sale, by (Y) an amount equal to
the sum of (c) the number of shares of Common Stock outstanding immediately
prior to such issue or sale, plus (d) the number of shares of Common Stock
issued or deemed to have been issued in such issue or sale. The number of
shares of Common Stock outstanding for purposes of clauses (X) and (Y)
immediately above shall include any shares of Common Stock issuable (i) upon
conversion of the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock or the Series E
Preferred Stock, (ii) upon exercise of any warrants outstanding on the
Effective Date to purchase shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), (iii) upon
the exercise of any options granted to employees, advisors, officers, directors
and consultants of, and other persons performing services for, the Corporation
in connection with their advisory or other relationship with the Corporation
pursuant to option plans approved by the Board of Directors of the Corporation,
and (iv) upon exercise and/or conversion or exchange of options, rights or
convertible or exchangeable securities as provided in SECTION 3.3.A(5).
(2) No adjustment of the Series A Conversion Price shall be made in
an amount less than one cent per share, provided that any adjustment that is
not required to be made by reason of this sentence shall be carried forward and
taken into account in any subsequent adjustment.
(3) In the case of the issuance or sale of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof and excluding any amounts paid or payable by
the purchaser for interest or dividends accrued but unpaid through the date of
purchase.
(4) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors.
(5) In the case of the issuance, grant or sale (whether directly or
by assumption on a merger or otherwise) after the Effective Date of (i) options
to purchase or rights to
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<PAGE> 14
subscribe for Common Stock (whether or not immediately exercisable), (ii)
securities by their terms convertible into or exchangeable for Common Stock
(whether or not immediately convertible or exchangeable) or (iii) options to
purchase or rights to subscribe for such convertible or exchangeable securities
(where the shares of Common Stock issuable upon exercise of such options or
rights or upon conversion or exchange of such securities are not excluded from
the definition of Additional Stock) (whether or not immediately exercisable
convertible or exchangeable), if such options, rights or convertible or
exchangeable securities provide for a consideration per share of Additional
Stock (determined as provided in this SECTION 3.3) less than the Series A
Conversion Price (as in effect immediately prior to such issuance, grant or
sale), then the following provisions shall apply:
(a) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in SECTIONS
3.3.A(3) AND 3.3.A(4)), if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock covered thereby.
Whenever this SECTION 3 refers to options, such term shall include
warrants.
(b) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration,
if any, received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in
the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)).
(c) In the event of any change in the number of shares of
Common Stock deliverable upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Series A Conversion Price in effect
at the time shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment that was made upon the issuance
of such options, rights or securities not converted prior to such change
or the options or rights related to such securities not converted prior
to such change had been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series A Conversion Price greater than the Series A
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for
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<PAGE> 15
stock splits, stock combinations, stock dividends, reclassifications and
similar events affecting the Series A Preferred Stock).
(d) In the event of any change in the exercise price
deliverable upon exercise of such options or rights or the conversion or
exchange price or ratio deliverable upon or to be utilized in connection
with any such conversion of or exchange for such convertible or
exchangeable securities, the Series A Conversion Price in effect at the
time shall forthwith be readjusted to such Conversion Price as would
have obtained had the adjustment that was made upon the issuance of such
options, rights or securities not exercised, converted or exchanged
prior to such change been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series A Conversion Price greater than the Series A
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series A
Preferred Stock).
(e) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the Series A Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment which
was made upon the issuance of such options, rights or securities or
options or rights related to such securities been made upon the basis of
the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or
rights related to such securities, and in any event such adjustment
shall not result in a Series A Conversion Price greater than the Series
A Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series A
Preferred Stock).
B. "Effective Date" with respect to the Series A Preferred Stock
means the date on which the Certificate of Designation establishing the Series
E Preferred Stock is filed in the office of the Secretary of State of Delaware.
C. "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to SECTION 3.3.A(5)) by the Corporation
after the Effective Date other than:
(1) Common Stock issued pursuant to a transaction described in
SECTION 3.3.D.
(2) Common Stock issued or issuable upon conversion of the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock.
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<PAGE> 16
(3) Common Stock issued or issuable pursuant to (i) warrants
outstanding as of the Effective Date, or (ii) options granted to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans as of the date such exclusion is being
determined.
D. In the event the Corporation should at any time or from time to
time after the Effective Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision, if no record date is fixed), the Series A
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share shall be increased in
proportion to such increase of outstanding shares of Common Stock determined by
taking SECTION 3.3.A(5) into account.
E. If the number of shares of Common Stock outstanding at any time
after the Effective Date is decreased by a combination of the outstanding
shares of Common Stock, then, as of the record date of such combination, the
Series A Conversion Price shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each such share shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
3.4 OTHER DISTRIBUTIONS. In the event the Corporation shall declare
a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in SECTION 3.3.C, then, in each
such case for the purpose of this SECTION 3.4, the holders of the Series A
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series A Preferred Stock
are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
3.5 RECAPITALIZATION. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this SECTION 3), provision shall be made (in form and substance satisfactory to
holders representing not less than 66-2/3% of the Series A Preferred Stock then
outstanding) so that the holders of the Series A Preferred Stock shall
thereafter be entitled to receive, upon conversion of the Series A Preferred
Stock, such shares
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<PAGE> 17
or other securities or property of the Corporation or otherwise, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section with respect to the rights
of the holders of the Series A Preferred Stock after the recapitalization to
the end that the provisions of this Section (including adjustments of the
Series A Conversion Price then in effect and the number of shares issuable upon
conversion of shares of Series A Preferred Stock) shall be applicable after
that event as nearly equivalent as may be practicable.
3.6 NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but shall at all times in good faith assist in the carrying out of
all the provisions of this Section and in the taking of all such action as may
be necessary or appropriate in order to protect the Series A Conversion Rights
of the holders of the Series A Preferred Stock against impairment; provided
that in any event, any provisions of this Section may be amended with the
approval of holders representing not less than 66-2/3% of the outstanding
shares of Series A Preferred Stock (in addition to all other approvals required
by law).
3.7 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
A. In lieu of issuing fractional shares upon a conversion of Series
A Preferred Stock, the Corporation may (but unless otherwise required by
applicable law shall not be obligated to) pay cash equal to the fraction
multiplied by the then fair market value of a share of Common Stock, as
determined by the Board. Whether or not fractional shares would be issuable
upon such conversion shall be determined on the basis of the total number of
shares of Series A Preferred Stock the holder is at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
B. Upon the occurrence of each adjustment of the Series A Conversion
Price pursuant to this Section, the Corporation, at its expense, shall promptly
compute such adjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series A Preferred Stock a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
3.8 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of its stockholders for the purpose of determining
stockholders who are entitled to approve or disapprove of any consolidation or
merger to which the Corporation is a party or who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of any class or any other securities
or property, or to receive any other right, the Corporation shall mail to each
holder of shares of Series A Preferred Stock, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution, right, merger or
consolidation and the amount, character and terms of such dividend,
distribution, right, merger or consolidation.
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3.9 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series A Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series A
Preferred Stock, the Corporation shall take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose. Before taking any action which would cause an adjustment
reducing the Series A Conversion Price below the par value (if any) of the
shares of Common Stock deliverable upon conversion of the shares of Series A
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Common Stock
at such adjusted Series A Conversion Price.
3.10 TRANSFER TAXES, ETC. The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any similar taxes payable in
respect of the issue or delivery of shares of Common Stock upon conversions of
shares of Series A Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Series A
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
3.11 NOTICES. Any notice required by the provisions of this Section
to be given to the holders of shares of Series A Preferred Stock shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, registered or certified, and addressed to each holder of record at the
address of such holder appearing on the stock transfer books of the
Corporation.
3.12 TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition by the Corporation of any
such shares shall be considered an issue or sale of Common Stock for purposes
of this SECTION 3 and SECTION 4.
SECTION 4. VOTING RIGHTS
4.1 GENERAL. Except as provided in SECTIONS 4.2 AND 4.3 and
elsewhere in this Certificate of Designation, Preferences and Rights, in the
Certificate of Incorporation of the Corporation, or in one or more other
Certificates of Designation of the Corporation, and except as otherwise
required by law, the holders of the Series A Preferred Stock shall vote with
the holders of the Common Stock and any other series of convertible Preferred
Stock granted voting rights on an "as-if-converted" basis, such that each
holder of Series A Preferred Stock shall have
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a number of votes equal to the number of whole shares of Common Stock into
which the Series A Preferred Stock held by such holder is at the time
convertible.
4.2 ELECTION OF DIRECTORS. Notwithstanding the general provisions of
SECTION 4.1 hereof and only for so long as there remain issued and outstanding
1,571,970 or more shares of Series A Preferred Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series A Preferred
Stock), the holders of the outstanding shares of Series A Preferred Stock,
voting as a class, shall be entitled to elect three (3) directors to the
Corporation's Board. Except to the extent otherwise provided for from time to
time in the Corporation's Certificate of Incorporation or in one or more
Certificates of Designation for issued and outstanding Preferred Stock of the
Corporation (including the Certificate of Designation for the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock), the holders of the outstanding shares of Common
Stock and other voting stock of the Corporation (including the Series A
Preferred Stock) that may be issued and outstanding from time to time shall
elect the remaining members of the Board. When there ceases to be 1,571,970 or
more issued and outstanding shares of Series A Preferred Stock (subject to
appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series A Preferred
Stock), the term of the directors elected solely by the holders of the Series A
Preferred Stock pursuant to this SECTION 4.2 shall terminate.
4.3. PROTECTIVE PROVISIONS. Beginning as of the Effective Date:
A. And for so long as there remain issued and outstanding not less
than 4,074,674 shares of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock (subject to appropriate adjustment for stock splits,
stock combinations, stock dividends, reclassifications and similar other events
affecting the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock, or the Series E
Preferred Stock), the Corporation shall not without the affirmative vote or
consent of holders representing at least 75% of the outstanding shares of the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock, voting
together as a single class, and in addition to any vote otherwise required by
the Law:
(1) Create, authorize, issue or sell any shares of capital stock or
any other securities of the Corporation, other than (a) shares of Common Stock
issued upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock; (b) shares of Common Stock which may be issued to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans as of the date of such determination; (c) Common
Stock issuable pursuant to
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warrants outstanding on the Effective Date, including the warrants issued to
the purchasers of the Series C Preferred Stock and the warrants to be issued to
Chestnut Partners, Inc., and (d) pursuant to one or more transactions (other
than transactions pursuant to which an employee, advisor, officer, director,
consultant of or other person performing services for the Corporation will be
issued shares of Common Stock (or options to purchase Common Stock) as direct
or indirect compensation for services rendered or to be rendered or otherwise
in connection with their advisory or other relationship with the Corporation)
that do not in the aggregate result in an issuance, grant or sale of shares of
Common Stock or other securities convertible into, exchangeable for or
exercisable for shares of Common Stock aggregating more than 637,625 shares of
Common Stock (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar events affecting
the Common Stock), provided that the price per share of Common Stock
(determined as provided in SECTION 3) and, if applicable, such other security,
is not less than the fair market value of a share of Common Stock and, if
applicable, such other security, as determined in good faith by the Board of
Directors.
(2) Approve, authorize or permit any issuance or sale of capital
stock by a Subsidiary other than to the Corporation in the case of a wholly-
owned subsidiary. As used in this SECTION 4.3, the term "Subsidiary" shall
mean any corporation, partnership, trust or other entity of which the
Corporation and/or any of the Corporation's Subsidiaries directly or indirectly
owns and has the right to vote at the time a majority of the outstanding shares
of the voting securities of such corporation, partnership, trust or other
entity.
(3) Consolidate or merge into or with any other entity or entities,
or sell, transfer or otherwise dispose of all or substantially all of the
Corporation's assets or approve or authorize any such consolidation, merger,
sale, transfer or disposition by any Subsidiary.
(4) Declare or pay any dividend or other distribution (as defined in
SECTION 1.2) payable in cash or property (other than a dividend payable in
shares of Common Stock on Common Stock) on the outstanding shares of capital
stock other than on the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock or stock senior to or in parity with the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock with respect to dividends
pursuant to the terms thereof that are issued in accordance with SECTION
4.3.B(3) or approve, authorize or permit the declaration or payment of any
dividend or other distribution on the outstanding capital stock of any
Subsidiary other than a wholly-owned subsidiary.
(5) Apply any of the Corporation's assets or approve, authorize or
permit any Subsidiary to apply its assets to the redemption, retirement,
repurchase or acquisition, directly or indirectly through one or more
Subsidiaries or otherwise, of any shares of capital stock of the Corporation
other than redemptions, retirements, repurchases and acquisitions of (i) shares
of capital stock made pursuant to the terms thereof that are issued in
accordance with SECTION 4.3.B(3) hereof, and (ii) shares of capital stock
approved by the Board from employees, advisors, officers, directors and
consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association with the
Corporation.
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<PAGE> 21
(6) Subject to SECTION 4.3.B(2), amend, alter or repeal any provision
of, or add any provision to, the Certificate of Incorporation of the
Corporation.
(7) Enter into, permit or acquiesce in any liquidation, dissolution
or winding up of the Corporation.
(8) Acquire any other business.
B. And for so long as there remain issued and outstanding any shares
of the Series A Preferred Stock, without the affirmative vote or consent of
holders representing at least 66-2/3% of the outstanding shares of the Series A
Preferred Stock, and in addition to any vote otherwise required by the Law:
(1) Amend, alter or repeal the rights, preferences, privileges, or
restrictions of such Series A Preferred Stock or effect any reclassification of
the Series A Preferred Stock.
(2) Amend, alter or repeal any provision of, or add any provision to,
the Certificate of Incorporation or By-laws of the Corporation if such change
could reasonably be expected to adversely affect the holders of the Series A
Preferred Stock in any respect, provided that subject to SECTION 4.3.A(1) the
immediately foregoing shall not prohibit the adoption and filing of one or more
additional Certificates of Designation for Preferred Stock not otherwise
prohibited by SECTION 4.3.B(3).
(3) Create, authorize, issue or sell (including but not limited to by
way of reclassification or in connection with the creation of any convertible
indebtedness) any shares of any other class or series of shares providing for
(i) dividends or other distributions on a preferred or parity basis to the
Series A Preferred Stock, (ii) dividends at a rate greater than the dividend
rate for the Series A Preferred Stock, (iii) redemption rights or (iv)
liquidation privileges senior to, or on a parity with, the Series A Preferred
Stock, or senior to the Common Stock in excess of the sum of the original
purchase price thereof plus accrued dividends.
(4) Remove or appoint or elect a replacement for any director elected
or appointed by holders of Series A Preferred Stock pursuant to the first
sentence of SECTION 4.2 hereof, provided that the foregoing shall not prohibit
(i) the holders of the Series A Preferred Stock from taking any such action in
accordance with SECTION 4.2 hereof or (ii) the Corporation from taking any such
action if the holders of the Series A Preferred Stock would not at the time of
the action be entitled to elect such director(s) pursuant to SECTION 4.2
hereof.
SECTION 5. REISSUANCES
5.1 NO REISSUANCE OF SERIES A PREFERRED STOCK. No shares of Series A
Preferred Stock which have been converted into Common Stock or otherwise cease
to be outstanding shall be reissued by the Corporation; provided, however, that
each such share, after being retired and canceled, shall be restored to the
status of an authorized but unissued share of
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Preferred Stock without designation as to series and may thereafter be issued
as a share of Preferred Stock not designated as Series A Preferred Stock.
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<PAGE> 23
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES B
CONVERTIBLE PREFERRED STOCK
OF
ILEX ONCOLOGY, INC.
ILEX Oncology, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Law"), does hereby certify:
A. The Certificate of Incorporation of the Corporation fixes the
total number of shares of all classes of capital stock which the Corporation
shall have the authority to issue at 60,000,000 shares, of which 20,000,000
shares shall be shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), and 40,000,000 shares shall be shares of Common Stock, par value $.01
per share ("Common Stock").
B. On September 29, 1995 the Corporation filed with the Secretary of
State of the State of Delaware its Certificate of Designation, Preferences and
Rights of Series B Convertible Preferred Stock, thereby providing for an issue
of a series of the Preferred Stock consisting of 5,432,500 shares designated as
"Series B Convertible Preferred Stock" ("Series B Preferred Stock").
C. On November 8, 1996 the Corporation filed with the Secretary of
State of the State of Delaware a Restated Certificate of Incorporation
including its Amended and Restated Certificate of Designation, Preferences and
Rights of Series B Convertible Preferred Stock.
D. The Corporation by action of its Board of Directors and its
stockholders, including the holders of its Series B Convertible Preferred
Stock, have duly authorized and approved a third amendment and restatement of
the Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock such that the terms of the Series B Preferred Stock as amended
and restated shall be as set forth in this Certificate of Designation,
Preferences and Rights of Series B Convertible Preferred Stock.
RESOLVED, that the preferences and relative participating, optional and
other special rights, and qualifications, limitations and restrictions thereof,
of the Series B Preferred Stock that consists of 5,432,500 shares are hereby
amended and restated as follows:
SECTION 1. DIVIDENDS
1.1 The holders of shares of outstanding Series B Preferred Stock
shall be entitled to receive in any fiscal year, when and as declared by the
Board of Directors of the Corporation (the "Board"), out of assets of the
Corporation legally available therefor, distributions (as defined below) on a
pro rata basis in cash at the annual rate of $0.16 per share (subject to
appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series B Preferred
Stock). Such
<PAGE> 24
distributions shall accrue from day to day, whether or not earned or declared,
and shall be cumulative from September 29, 1995 and shall be payable quarterly
or otherwise as the Board may from time to time determine. Distributions may
be declared and paid upon Common Stock and other shares of the Corporation
ranking junior to the Series B Preferred Stock as to distributions in any
fiscal year of the Corporation, only if full cumulative distributions shall
have been paid to or declared upon and set apart for all shares of Series B
Preferred Stock at such annual rate through the date of distribution. With
respect to distributions declared and paid upon Common Stock, the Series B
Preferred Stock shall also be entitled to participate in and receive
distributions on an "as-if-converted" basis. For purposes of the distributions
provided for by this SECTION 1, the Corporation's Series A Convertible
Preferred Stock, $.01 par value per share ("Series A Preferred Stock"), the
Corporation's Series C Convertible Preferred Stock, $.01 par value per share
("Series C Preferred Stock"), the Corporation's Series D Convertible Preferred
Stock, $.01 par value per share ("Series D Preferred Stock") and the
Corporation's Series E Convertible Preferred Stock, $.01 par value per share
("Series E Preferred Stock"), shall be considered equal to, and not senior or
junior to, the Series B Preferred Stock and shall be entitled to distributions
with the Series B Preferred Stock in proportion to the relative amounts of
dividends accrued on the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock. Any holder of shares of Series B Preferred Stock
whose shares of Series B Preferred Stock are converted pursuant to SECTION 3
hereof shall, upon such conversion, forfeit and cease to have any claim to any
accrued but unpaid dividends under this SECTION 1 with respect to such
converted shares.
1.2 For purposes of this SECTION 1, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock on Common Stock, or the purchase or redemption of shares of the
Corporation (other than redemptions, retirements, repurchases or acquisitions
of Common Stock authorized pursuant to the terms of SECTION 4.3(A)(5) hereof
and redemptions, retirements, repurchases or acquisitions of capital stock
pursuant to terms approved by the Board from employees, advisors, officers,
directors and consultants of, and persons performing services for, the
Corporation or its subsidiaries upon termination of employment or association)
for cash or property, including any such transfer, purchase or redemption by a
subsidiary of the Corporation. Notwithstanding the foregoing, the term
"distribution" shall not be deemed to include any distribution made in
connection with any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of each share of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock, which, for purposes of this SECTION 2, such
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
shall be considered equal to, and not senior or junior to the Series B
Preferred Stock, shall be entitled, before any distribution or payment is made
upon any share of Common Stock, Series A Preferred Stock or any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series B Preferred Stock (but after preferential distributions or
payments required to be made on any other securities of the
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<PAGE> 25
Corporation senior to the Series B Preferred Stock), to be paid with respect to
each share of Series B Preferred Stock outstanding, an amount per share equal
to the sum of $2.00 per share (subject to appropriate adjustment for stock
splits, stock combinations, stock dividends, reclassifications and similar
other events affecting the Series B Preferred Stock) (the "Series B Issue
Price") plus any dividends on a share of Series B Preferred Stock provided for
by SECTION 1.1 hereof that are accrued but are unpaid through the date of
distribution to the holders of the outstanding shares of Series B Preferred
Stock in connection with such liquidation, dissolution or winding up (the sum
of such amounts payable with respect to one share of Series B Preferred Stock
being sometimes referred to as the "Series B Liquidation Preference");
provided, however, that the consolidation or merger of the Corporation into or
with any corporation or corporations (other than a merger with another
corporation in which the Corporation is the surviving corporation and which
does not result in any reclassification or change in the terms of outstanding
shares of the Corporation's stock of any class or series, whether now or
hereafter authorized, and after which the holders of capital stock of the
Corporation immediately preceding such transaction are the holders of at least
fifty-one percent (51%) of the shares of Common Stock immediately following
such transaction (treating all securities of the Corporation convertible into
or exchangeable for shares of Common Stock as having been fully converted and
exchanged and all options, warrants and other rights to acquire shares of
Common Stock or securities convertible into or exchangeable for Common Stock as
having been fully exercised and converted or exchanged)), or the sale or
transfer by the Corporation of all or substantially all of its assets, shall be
deemed to be a liquidation for purposes of this SECTION 2 unless holders
representing not less than 66-2/3% of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock
and the Series E Preferred Stock, together as a class, elect by written consent
not to treat such transaction as a liquidation. If upon a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(and any other preferred stock of the Corporation ranking on parity with the
Series B Preferred Stock in the event of a liquidation, dissolution or winding
up of the Corporation) shall be insufficient to permit payments in full to the
holders of Series B Preferred Stock of the Series B Liquidation Preference,
then all assets of the Corporation available for distribution to stockholders
after the Corporation has made preferential distributions or payments required
to be made on any other securities of the Corporation senior to the Series B
Preferred Stock shall be distributed ratably, in accordance with the
liquidation preference rights of the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock,
among the holders of Series B Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock and the Series E Preferred Stock (and any other
preferred stock of the Corporation ranking on parity with the Series B
Preferred Stock in the event of a liquidation, dissolution or winding up of the
Corporation).
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or
winding up of the Corporation, immediately after the holders of Series B
Preferred Stock and any other series of Preferred Stock shall have been paid in
full, any preferred stock liquidation preferences (including the Series B
Liquidation Preference and the liquidation preference for the Series A
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock) that they are respectively entitled to, the
remaining assets of the Corporation
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<PAGE> 26
available for distribution shall be distributed to the holders of the Common
Stock and the holders of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock in proportion to the number of shares of Common Stock
deemed to be held on an "as-if-converted" basis.
2.3 TERMINATION OF SERIES B PREFERRED STOCK. In the event the
distributions provided for by this SECTION 2 are made to the holders of Series
B Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, the Series B Preferred Stock shall be retired and canceled and the
holders thereof shall cease to have any continuing interest in the Corporation
in their capacity as holders of Series B Preferred Stock.
2.4 NOTICE. Written notice of any liquidation, dissolution or
winding up and any related distribution, stating the payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telecopy to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of Series B Preferred Stock, such notice to
be addressed to each such holder at its address as shown on the records of the
Corporation. Written notice of any election by the holders of the Series B
Preferred Stock to not treat a merger, consolidation or sale or transfer of
assets under SECTION 2.1 hereof as a liquidation shall be given by the electing
holders to the Corporation not less than 5 days prior to the payment date
stated in the Corporation's notice.
SECTION 3. CONVERSION
The holders of Series B Preferred Stock shall have the following
conversion rights (the "Series B Conversion Rights"):
3.1 RIGHT TO CONVERT; AUTOMATIC CONVERSION
A. Subject to SECTION 3.3, each share of Series B Preferred Stock
shall be convertible at any time before a liquidating payment is made to the
holder of such Series B Preferred Stock pursuant to SECTION 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares
of Common Stock provided for below.
B. Each share of Series B Preferred Stock shall be convertible into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Series B Issue Price by the Series B Conversion
Price, determined as hereafter provided, in effect at the time of conversion,
which result will be rounded to the nearest one-hundredth of a share. The
initial Series B Conversion Price shall be $2.00 per share, provided, however,
that the Series B Conversion Price shall be subject to adjustment as set forth
in SECTION 3.3 below.
C. Each share of Series B Preferred Stock shall automatically and
immediately be converted into shares of Common Stock at the Series B Conversion
Price upon the consummation of a public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
provided that the public offering price of the Common Stock shall be at least
$6.00 per share (subject to appropriate adjustment for
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<PAGE> 27
stock splits, stock combinations, stock dividends, reclassifications and
similar other events affecting the Common Stock) and the gross offering
proceeds to the Corporation and selling stockholders, if any, from such
offering shall be at least $15,000,000.
The holders of the Series B Preferred Stock shall be given prompt
written notice of any event, including a filing by the Corporation of a
registration statement, that by itself could result in an automatic conversion
pursuant hereto.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series B
Preferred Stock shall be entitled to convert the same into shares of Common
Stock (or, in the case of an automatic conversion under SECTION 3.1.C, to
obtain the certificates for the Common Stock into which the Series B Preferred
Stock shall have been converted), such holder shall surrender the certificates
for the shares of Series B Preferred Stock, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares (or the holder shall
notify the Corporation or its transfer agent that such certificate has been
lost, stolen or destroyed and execute an agreement in form and substance
reasonably satisfactory to the Corporation to indemnify the Corporation for any
loss incurred by the Corporation in connection therewith), and shall give
written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
(A holder of Series B Preferred Stock may not effect a transfer of shares
pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and
deliver at such office to such holder of shares of Series B Preferred Stock, or
to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
provided above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the certificate
or certificates (or the indemnification agreement referred to above)
representing the shares of Series B Preferred Stock being converted (except in
the case of an automatic conversion under SECTION 3.1.C, which shall be
effective on the date of the event giving rise thereto), and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. In case the number of shares of
Series B Preferred Stock represented by the certificate or certificates
surrendered exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series B Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted.
3.3 CONVERSION PRICE ADJUSTMENTS. The Series B Conversion Price
shall be subject to adjustment from time to time as follows:
A. (1) If the Corporation shall issue or sell any Additional
Stock (as defined below), or engage in a transaction which is deemed to involve
the issuance or sale of Additional Stock, for a consideration per share less
than the Series B Conversion Price in effect immediately prior to the issuance
or sale of such Additional Stock, then such Series B Conversion Price in effect
immediately prior to each such issuance or sale shall (except as otherwise
provided in this clause (1)) be adjusted to a price determined by dividing (X)
an
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<PAGE> 28
amount equal to the sum of (a) the product derived by multiplying the Series B
Conversion Price in effect immediately prior to such issue or sale times the
number of shares of Common Stock outstanding immediately prior to such issue or
sale, plus (b) the consideration, if any, received by or deemed to have been
received by the Corporation upon such issue or sale, by (Y) an amount equal to
the sum of (c) the number of shares of Common Stock outstanding immediately
prior to such issue or sale, plus (d) the number of shares of Common Stock
issued or sold or deemed to have been issued or sold in such issue or sale.
The number of shares of Common Stock outstanding for purposes of clauses (X)
and (Y) immediately above shall include any shares of Common Stock issuable (i)
upon conversion of the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock or the Series E
Preferred Stock, (ii) upon exercise of any warrants outstanding on the
Effective Date to purchase shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), (iii) upon
the exercise of any options granted to employees, advisors, officers, directors
and consultants of, and other persons performing services for, the Corporation
in connection with their advisory or other relationship with the Corporation
pursuant to option plans approved by the Board of Directors of the Corporation,
and (iv) upon exercise and/or conversion or exchange of options, rights or
convertible or exchangeable securities as provided in SECTION 3.3.A(5).
(2) No adjustment of the Series B Conversion Price shall be made in
an amount less than one cent per share, provided that any adjustment that is
not required to be made by reason of this sentence shall be carried forward and
taken into account in any subsequent adjustment.
(3) In the case of the issuance or sale of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof and excluding any amounts paid or payable by
the purchaser for interest or dividends accrued but unpaid through the date of
purchase.
(4) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors.
(5) In the case of the issuance, grant or sale (whether directly or
by assumption on a merger or otherwise) after the Effective Date of (i) options
to purchase or rights to subscribe for Common Stock (whether or not immediately
exercisable), (ii) securities by their terms convertible into or exchangeable
for Common Stock (whether or not immediately convertible or exchangeable) or
(iii) options to purchase or rights to subscribe for such convertible or
exchangeable securities (where the shares of Common Stock issuable upon
exercise of such options or rights or upon conversion or exchange of such
securities are not excluded from the definition of Additional Stock) (whether
or not immediately exercisable convertible or exchangeable), if such options,
rights or convertible or exchangeable securities provide for a consideration
per share of Additional Stock (determined as provided in this SECTION
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<PAGE> 29
3.3) less than the Series B Conversion Price (as in effect immediately prior to
such issuance, grant or sale), then the following provisions shall apply:
(a) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in SECTIONS
3.3.A(3) AND 3.3.A(4)), if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock covered thereby.
Whenever this SECTION 3 refers to options, such terms shall include
warrants.
(b) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration,
if any, received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in
the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)).
(c) In the event of any change in the number of shares of
Common Stock deliverable upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Series B Conversion Price in effect
at the time shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment that was made upon the issuance
of such options, rights or securities not converted prior to such change
or the options or rights related to such securities not converted prior
to such change had been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series B Conversion Price greater than the Series B
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series B
Preferred Stock).
(d) In the event of any change in the exercise price
deliverable upon exercise of such options or rights or the conversion or
exchange price or ratio deliverable upon or to be utilized in connection
with any such conversion of or exchange for such convertible or
exchangeable securities, the Series B Conversion Price in effect at the
time shall forthwith be readjusted to such Conversion Price as would
have obtained had the
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<PAGE> 30
adjustment that was made upon the issuance of such options, rights or
securities not exercised, converted or exchanged prior to such change
been made upon the basis of such change, but no further adjustment shall
be made for the actual issuance of Common Stock upon the exercise of any
such options or rights or the conversion or exchange of such securities
and in any event such adjustment shall not result in a Series B
Conversion Price greater than the Series B Conversion Price as in effect
on the original adjustment date immediately preceding such original
adjustment (as otherwise appropriately adjusted for stock splits, stock
combinations, stock dividends, reclassifications and similar events
affecting the Series B Preferred Stock).
(e) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the Series B Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment which
was made upon the issuance of such options, rights or securities or
options or rights related to such securities been made upon the basis of
the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or
rights related to such securities, and in any event such adjustment
shall not result in a Series B Conversion Price greater than the Series
B Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series B
Preferred Stock).
B. "Effective Date" with respect to the Series B Preferred Stock
means the date on which the Certificate of Designation establishing the Series
E Preferred Stock is filed in the office of the Secretary of State of Delaware.
C. "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to SECTION 3.3.A(5)) by the Corporation
after the Effective Date other than:
(1) Common Stock issued pursuant to a transaction described in
SECTION 3.3.D.
(2) Common Stock issued or issuable upon conversion of the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock.
(3) Common Stock issued or issuable pursuant to (i) warrants
outstanding as of the Effective Date, or (ii) options granted to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options
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outstanding as of the Effective Date) less that number of shares of Common
Stock previously issued pursuant to such option plans as of the date such
exclusion is being determined.
D. In the event the Corporation should at any time or from time to
time after the Effective Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision, if no record date is fixed), the Series B
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share shall be increased in
proportion to such increase of outstanding shares of Common Stock determined by
taking SECTION 3.3.A(5) into account.
E. If the number of shares of Common Stock outstanding at any time
after the Effective Date is decreased by a combination of the outstanding
shares of Common Stock, then, as of the record date of such combination, the
Series B Conversion Price shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each such share shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
3.4 OTHER DISTRIBUTIONS. In the event the Corporation shall declare
a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in SECTION 3.3.C, then, in each
such case for the purpose of this SECTION 3.4, the holders of the Series B
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series B Preferred Stock
are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
3.5 RECAPITALIZATION. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this SECTION 3), provision shall be made (in form and substance satisfactory to
holders representing not less than 66-2/3% of the Series B Preferred Stock then
outstanding) so that the holders of the Series B Preferred Stock shall
thereafter be entitled to receive, upon conversion of the Series B Preferred
Stock, such shares or other securities or property of the Corporation or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
with respect to the rights of the holders of the Series B Preferred Stock after
the recapitalization to the end that the provisions of this Section (including
adjustments of the Series B Conversion Price then in effect and the number of
shares issuable upon conversion of shares
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of Series B Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
3.6 NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but shall at all times in good faith assist in the carrying out of
all the provisions of this Section and in the taking of all such action as may
be necessary or appropriate in order to protect the Series B Conversion Rights
of the holders of the Series B Preferred Stock against impairment; provided
that in any event, any provisions of this Section may be amended with the
approval of holders representing not less than 66-2/3% of the outstanding
shares of Series B Preferred Stock (in addition to all other approvals required
by law).
3.7 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
A. In lieu of issuing fractional shares upon a conversion of Series
B Preferred Stock, the Corporation may (but unless otherwise required by
applicable law shall not be obligated to) pay cash equal to the fraction
multiplied by the then fair market value of a share of Common Stock, as
determined by the Board. Whether or not fractional shares would be issuable
upon such conversion shall be determined on the basis of the total number of
shares of Series B Preferred Stock the holder is at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
B. Upon the occurrence of each adjustment of the Series B Conversion
Price pursuant to this Section, the Corporation, at its expense, shall promptly
compute such adjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series B Preferred Stock a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
3.8 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of its stockholders for the purpose of determining
stockholders who are entitled to approve or disapprove of any consolidation or
merger to which the Corporation is a party or who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of any class or any other securities
or property, or to receive any other right, the Corporation shall mail to each
holder of shares of Series B Preferred Stock, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution, right, merger or
consolidation and the amount, character and terms of such dividend,
distribution, right, merger or consolidation.
3.9 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series B Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series B Preferred Stock; and if at any
time
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the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series B
Preferred Stock, the Corporation shall take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose. Before taking any action which would cause an adjustment
reducing the Series B Conversion Price below the par value (if any) of the
shares of Common Stock deliverable upon conversion of the shares of Series B
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Common Stock
at such adjusted Series B Conversion Price.
3.10 TRANSFER TAXES, ETC. The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any similar taxes payable in
respect of the issue or delivery of shares of Common Stock upon conversions of
shares of Series B Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Series B
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
3.11 NOTICES. Any notice required by the provisions of this Section
to be given to the holders of shares of Series B Preferred Stock shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, registered or certified, and addressed to each holder of record at the
address of such holder appearing on the stock transfer books of the
Corporation.
3.12 TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition by the Corporation of any
such shares shall be considered an issue or sale of Common Stock for purposes
of this SECTION 3 and SECTION 4.
SECTION 4. VOTING RIGHTS
4.1 GENERAL. Except as provided in SECTIONS 4.2 AND 4.3 and
elsewhere in this Certificate of Designation, Preferences and Rights, in the
Certificate of Incorporation of the Corporation, or in one or more other
Certificates of Designations of the Corporation, and except as otherwise
required by law, the holders of the Series B Preferred Stock shall vote with
the holders of the Common Stock and any other series of convertible Preferred
Stock granted voting rights on an "as-if-converted" basis, such that each
holder of Series B Preferred Stock shall have a number of votes equal to the
number of whole shares of Common Stock into which the Series B Preferred Stock
held by such holder is at the time convertible.
4.2 ELECTION OF DIRECTORS. Notwithstanding the general provisions of
SECTION 4.1 hereof, the holders of the outstanding shares of Series B Preferred
Stock, voting as a class, shall be entitled to elect directors to the
Corporation's Board as follows: (i) if and only for so long
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as there remain issued and outstanding 1,200,000 or more shares of Series B
Preferred Stock (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Series B Preferred Stock) the holders of Series B Preferred Stock
shall be entitled to elect three (3) directors; (ii) if and only for so long as
there remain issued and outstanding fewer than 1,200,000 but 800,000 or more
shares of Series B Preferred Stock (subject to appropriate adjustment for stock
splits, stock combinations, stock dividends, reclassifications and similar
other events affecting the Series B Preferred Stock) the holders of Series B
Preferred Stock shall be entitled to elect two (2) directors; and (iii) if and
only for so long as there remain issued and outstanding fewer than 800,000 but
400,000 or more shares of Series B Preferred Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series B Preferred
Stock) the holders of Series B Preferred Stock shall be entitled to elect one
(1) director. Except to the extent otherwise provided for from time to time in
the Corporation's Certificate of Incorporation or in one or more Certificates
of Designations for issued and outstanding Preferred Stock of the Corporation
(including the Certificate of Designation for the Series A Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock), the holders of the outstanding shares of Common Stock and
other voting stock of the Corporation (including the Series B Preferred Stock)
that may be issued and outstanding from time to time shall elect the remaining
members of the Board.
4.3. PROTECTIVE PROVISIONS. Beginning as of the date shares of Series
B Preferred Stock are first issued and outstanding:
A. And for so long as there remain issued and outstanding not less
than 4,074,674 shares of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock (subject to appropriate adjustment for stock splits,
stock combinations, stock dividends, reclassifications and similar other events
affecting the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock or the Series E
Preferred Stock), the Corporation shall not without the affirmative vote or
consent of holders representing at least 75% of the outstanding shares of the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock, voting
together as a single class, and in addition to any vote otherwise required by
the Law:
(1) Create, authorize, issue or sell any shares of capital stock or
any other securities of the Corporation, other than (a) shares of Common Stock
issued upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock; (b) shares of Common Stock which may be issued to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans, as of the date of such determination; (c) Common
Stock issuable pursuant to
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warrants outstanding on the Effective Date including the warrants issued to the
purchasers of the Series C Preferred Stock and the warrants to be issued to
Chestnut Partners, Inc.; and (d) pursuant to one or more transactions (other
than transactions pursuant to which an employee, advisor, officer, director,
consultant of or other person performing services for the Corporation will be
issued shares of Common Stock (or options to purchase Common Stock) as direct
or indirect compensation for services rendered or to be rendered or otherwise
in connection with their advisory or other relationship with the Corporation)
that do not in the aggregate result in an issuance, sale or grant of shares of
Common Stock or other securities convertible into, exchangeable for or
exercisable for shares of Common Stock aggregating more than 637,625 shares of
Common Stock (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar events affecting
the Common Stock), provided that the price per share of Common Stock
(determined as provided in SECTION 3) and, if applicable, such other security,
is not less than the fair market value of a share of Common Stock and, if
applicable, such other security, as determined in good faith by the Board of
Directors.
(2) Approve, authorize or permit any issuance or sale of capital
stock by a Subsidiary other than to the Corporation in the case of a wholly-
owned subsidiary. As used in this SECTION 4.3, the term "Subsidiary" shall
mean any corporation, partnership, trust or other entity of which the
Corporation and/or any of the Corporation's Subsidiaries directly or indirectly
owns and has the right to vote at the time a majority of the outstanding shares
of the voting securities of such corporation, partnership, trust or other
entity.
(3) Consolidate or merge into or with any other entity or entities,
or sell, transfer or otherwise dispose of all or substantially all of the
Corporation's assets or approve or authorize any such consolidation, merger,
sale, transfer or disposition by any Subsidiary.
(4) Declare or pay any dividend or other distribution (as defined in
SECTION 1.2) payable in cash or property (other than a dividend payable in
shares of Common Stock on Common Stock) on the outstanding shares of capital
stock other than on the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock or stock senior to or in parity with the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock with respect to dividends
pursuant to the terms thereof that are issued in accordance with SECTION
4.3.B(3) or approve, authorize or permit the declaration or payment of any
dividend or other distribution on the outstanding capital stock of any
Subsidiary other than a wholly-owned subsidiary.
(5) Apply any of the Corporation's assets or approve, authorize or
permit any Subsidiary to apply its assets to the redemption, retirement,
repurchase or acquisition, directly or indirectly through one or more
Subsidiaries or otherwise, of any shares of capital stock of the Corporation
other than redemptions, retirements, repurchases and acquisitions of (i) shares
of capital stock made pursuant to the terms thereof that are issued in
accordance with SECTION 4.3.B(3) hereof, and (ii) shares of capital stock
approved by the Board from employees, advisors, officers, directors and
consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association with the
Corporation.
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<PAGE> 36
(6) Subject to SECTION 4.3.B(2) amend, alter or repeal any provision
of, or add any provision to, the Certificate of Incorporation of the
Corporation.
(7) Enter into, permit or acquiesce in any liquidation, dissolution
or winding up of the Corporation.
(8) Acquire any other business.
B. And for so long as there remain issued and outstanding any shares
of Series B Preferred Stock, without the affirmative vote or consent of holders
representing at least 66-2/3% of the outstanding shares of Series B Preferred
Stock, and in addition to any vote otherwise required by the Law:
(1) Amend, alter or repeal the rights, preferences, privileges, or
restrictions of such Series B Preferred Stock or effect any reclassification of
the Series B Preferred Stock.
(2) Amend, alter or repeal any provision of, or add any provision to,
the Certificate of Incorporation or By-laws of the Corporation if such change
could reasonably be expected to adversely affect the holders of the Series B
Preferred Stock in any respect, provided that subject to SECTION 4.3.A(1) the
immediately foregoing shall not prohibit the adoption and filing of one or more
additional Certificates of Designations for Preferred Stock not otherwise
prohibited by SECTION 4.3.B(3).
(3) Create, authorize, issue or sell (including but not limited to by
way of reclassification or in connection with the creation of any convertible
indebtedness) any shares of any other class or series of shares providing for
(i) dividends or other distributions on a preferred or parity basis to the
Series B Preferred Stock, (ii) dividends at a rate greater than the dividend
rate for the Series B Preferred Stock, (iii) redemption rights or (iv)
liquidation privileges senior to, or on a parity with, the Series B Preferred
Stock, or senior to the Common Stock in excess of the sum of the original
purchase price thereof plus accrued dividends.
(4) Remove or appoint or elect a replacement for any director elected
or appointed by holders of Series B Preferred Stock pursuant to the first
sentence of SECTION 4.2 hereof, provided that the foregoing shall not prohibit
(i) the holders of Series B Preferred Stock from taking any such action in
accordance with SECTION 4.2 hereof or (ii) the Corporation from taking any such
action if the holders of Series B Preferred Stock would not at the time of the
action be entitled to elect such director(s) pursuant to SECTION 4.2 hereof.
SECTION 5. REISSUANCES
5.1 NO REISSUANCE OF SERIES B PREFERRED STOCK. No shares of Series B
Preferred Stock which have been converted into Common Stock or otherwise cease
to be outstanding shall be reissued by the Corporation; provided, however, that
each such share, after being retired and canceled, shall be restored to the
status of an authorized but unissued share of Preferred Stock without
designation as to series and may thereafter be issued as a share of Preferred
Stock not designated as Series B Preferred Stock.
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CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES C
CONVERTIBLE PREFERRED STOCK
OF
ILEX ONCOLOGY, INC.
ILEX Oncology, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Law"), does hereby certify:
A. The Certificate of Incorporation of the Corporation fixes the
total number of shares of all classes of capital stock which the Corporation
shall have the authority to issue at 60,000,000 shares, of which 20,000,000
shares shall be shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), and 40,000,000 shares shall be shares of Common Stock, par value $.01
per share ("Common Stock").
B. On July 19, 1996, the Corporation filed with the Secretary of
State of the State of Delaware its Certificate of Designation, Preferences and
Rights of Series C Convertible Preferred Stock, thereby providing for an issue
of a series of the preferred stock consisting of 2,293,578 shares designated as
"Series C Convertible Preferred Stock" ("Series C Preferred Stock").
C. On November 8, 1996, the Corporation filed with the Secretary of
State of the State of Delaware a Restated Certificate of Incorporation
including the Amended and Restated Certification of Designation, Preferences
and Rights of Series C Convertible Preferred Stock.
D. The Corporation by action of its Board of Directors and its
stockholders, including the holders of its Series C Convertible Preferred
Stock, have duly authorized and approved second amendment and restatement of
the Certificate of Designation, Preferences and Rights of Series C Convertible
Preferred Stock such that the terms of the Series C Preferred Stock as amended
and restated shall be as set forth in this Certificate of Designation,
Preferences and Rights of the Series C Convertible Preferred Stock.
RESOLVED, that the preferences and relative participating, optional and
other special rights, and qualifications, limitations and restrictions thereof,
of the Series C Preferred Stock that consists of 2,293,578 shares are hereby
amended and restated as follows:
SECTION 1. DIVIDENDS
1.1 The holders of shares of outstanding Series C Preferred Stock
shall be entitled to receive in any fiscal year, when and as declared by the
Board of Directors of the Corporation (the "Board"), out of assets of the
Corporation legally available therefor, distributions (as defined below) on a
pro rata basis in cash at the annual rate of $0.3488 per share (subject to
appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series C Preferred
Stock). Such distributions shall accrue from day to day, whether or not earned
or declared, and shall be
<PAGE> 38
cumulative from July 22, 1996, and shall be payable quarterly or otherwise as
the Board may from time to time determine. Distributions may be declared and
paid upon Common Stock and other shares of the Corporation ranking junior to
the Series C Preferred Stock as to distributions in any fiscal year of the
Corporation, only if full cumulative distributions shall have been paid to or
declared upon and set apart for all shares of Series C Preferred Stock at such
annual rate through the date of distribution. With respect to distributions
declared and paid upon Common Stock, the Series C Preferred Stock shall also be
entitled to participate in and receive distributions on an "as-if-converted"
basis. For purposes of the distributions provided for by this SECTION 1, the
Corporation's Series A Convertible Preferred Stock, $.01 par value per share
("Series A Preferred Stock"), the Corporation's Series B Convertible Preferred
Stock, $.01 par value per share ("Series B Preferred Stock"), the Corporation's
Series D Convertible Preferred Stock, $.01 par value per share ("Series D
Preferred Stock"), and the Corporation's Series E Convertible Preferred Stock,
$.01 par value per share ("Series E Preferred Stock"), shall be considered
equal to, and not senior or junior to, the Series C Preferred Stock and shall
be entitled to distributions with the Series C Preferred Stock in proportion to
the relative amounts of dividends accrued on the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock. Any holder of shares of Series C
Preferred Stock whose shares of Series C Preferred Stock are converted pursuant
to SECTION 3 hereof shall, upon such conversion, forfeit and cease to have any
claim to any accrued but unpaid dividends under this SECTION 1 with respect to
such converted shares.
1.2 For purposes of this SECTION 1, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock on Common Stock, or the purchase or redemption of shares of the
Corporation (other than redemptions, retirements, repurchases or acquisitions
of Common Stock authorized pursuant to the terms of SECTION 4.3(A)(5) hereof
and redemptions, retirements, repurchases or acquisitions of capital stock
pursuant to terms approved by the Board from employees, advisors, officers,
directors and consultants of, and persons performing services for, the
Corporation or its subsidiaries upon termination of employment or association)
for cash or property, including any such transfer, purchase or redemption by a
subsidiary of the Corporation. Notwithstanding the foregoing, the term
"distribution" shall not be deemed to include any distribution made in
connection with any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary.
SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of each share of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock, which, for purposes of this SECTION 2, such
Series B Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
shall be considered equal to, and not senior or junior to the Series C
Preferred Stock, shall be entitled, before any distribution or payment is made
upon any share of Common Stock, Series A Preferred Stock or any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series C Preferred Stock (but after preferential distributions or
payments required to be made on any other securities of the Corporation senior
to the Series C Preferred Stock), to be paid with respect to each share of
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Series C Preferred Stock outstanding, an amount per share equal to the sum of
$4.36 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Series C Preferred Stock) (the "Series C Issue Price") plus any
dividends on a share of Series C Preferred Stock provided for by SECTION 1.1
hereof that are accrued but are unpaid through the date of distribution to the
holders of the outstanding shares of Series C Preferred Stock in connection
with such liquidation, dissolution or winding up (the sum of such amounts
payable with respect to one share of Series C Preferred Stock being sometimes
referred to as the "Series C Liquidation Preference"); provided, however, that
the consolidation or merger of the Corporation into or with any corporation or
corporations (other than a merger with another corporation in which the
Corporation is the surviving corporation and which does not result in any
reclassification or change in the terms of outstanding shares of the
Corporation's stock of any class or series, whether now or hereafter
authorized, and after which the holders of capital stock of the Corporation
immediately preceding such transaction are the holders of at least fifty-one
percent (51%) of the shares of Common Stock immediately following such
transaction (treating all securities of the Corporation convertible into or
exchangeable for shares of Common Stock as having been fully converted and
exchanged and all options, warrants and other rights to acquire shares of
Common Stock or securities convertible into or exchangeable for Common Stock as
having been fully exercised and converted or exchanged)), or the sale or
transfer by the Corporation of all or substantially all of its assets, shall be
deemed to be a liquidation for purposes of this SECTION 2 unless holders
representing not less than 66-2/3% of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock
and the Series E Preferred Stock, together as a class, elect by written consent
not to treat such transaction as a liquidation. If upon a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock (and any other preferred stock of the Corporation ranking on
parity with the Series C Preferred Stock in the event of a liquidation,
dissolution or winding up of the Corporation) shall be insufficient to permit
payments in full to the holders of Series C Preferred Stock of the Series C
Liquidation Preference, then all assets of the Corporation available for
distribution to stockholders after the Corporation has made preferential
distributions or payments required to be made on any other securities of the
Corporation senior to the Series C Preferred Stock shall be distributed
ratably, in accordance with the liquidation preference rights of the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock, among the holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(and any other preferred stock of the Corporation ranking on parity with the
Series C Preferred Stock in the event of a liquidation, dissolution or winding
up of the Corporation).
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or
winding up of the Corporation, immediately after the holders of Series C
Preferred Stock and any other series of Preferred Stock shall have been paid in
full, any preferred stock liquidation preferences (including the Series C
Liquidation Preference and the liquidation preference for the Series A
Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock) that they are respectively entitled to, the
remaining assets of the Corporation available for distribution shall be
distributed to the holders of Common Stock, and the holders
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of the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock
in proportion to the number of shares of Common Stock deemed to be held on an
"as-if-converted" basis.
2.3 TERMINATION OF SERIES C PREFERRED STOCK. In the event the
distributions provided for by this SECTION 2 are made to the holders of Series
C Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, the Series C Preferred Stock shall be retired and canceled and the
holders thereof shall cease to have any continuing interest in the Corporation
in their capacity as holders of Series C Preferred Stock.
2.4 NOTICE. Written notice of any liquidation, dissolution or
winding up and any related distribution, stating the payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telecopy to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of Series C Preferred Stock, such notice to
be addressed to each such holder at its address as shown on the records of the
Corporation. Written notice of any election by the holders of the Series C
Preferred Stock to not treat a merger, consolidation or sale or transfer of
assets under SECTION 2.1 hereof as a liquidation shall be given by the electing
holders to the Corporation not less than 5 days prior to the payment date
stated in the Corporation's notice.
SECTION 3. CONVERSION
The holders of Series C Preferred Stock shall have the following
conversion rights (the "Series C Conversion Rights"):
3.1 RIGHT TO CONVERT; AUTOMATIC CONVERSION
A. Subject to SECTION 3.3, each share of Series C Preferred Stock
shall be convertible at any time before a liquidating payment is made to the
holder of such Series C Preferred Stock pursuant to SECTION 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares
of Common Stock provided for below.
B. Each share of Series C Preferred Stock shall be convertible into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Series C Issue Price by the Series C Conversion
Price, determined as hereafter provided, in effect at the time of conversion,
which result will be rounded to the nearest one-hundredth of a share. The
initial Series C Conversion Price shall be $4.36 per share, provided, however,
that the Series C Conversion Price shall be subject to adjustment as set forth
in SECTION 3.3 below.
C. Each share of Series C Preferred Stock shall automatically and
immediately be converted into shares of Common Stock at the Series C Conversion
Price upon the consummation of a public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
provided that the public offering price of the Common Stock shall be at least
$6.00 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
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affecting the Common Stock) and the gross offering proceeds to the Corporation
and selling stockholders, if any, from such offering shall be at least
$15,000,000.
The holders of the Series C Preferred Stock shall be given prompt
written notice of any event, including a filing by the Corporation of a
registration statement, that by itself could result in an automatic conversion
pursuant hereto.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series C
Preferred Stock shall be entitled to convert the same into shares of Common
Stock (or, in the case of an automatic conversion under SECTION 3.1.C, to
obtain the certificates for the Common Stock into which the Series C Preferred
Stock shall have been converted), such holder shall surrender the certificates
for the shares of Series C Preferred Stock, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares (or the holder shall
notify the Corporation or its transfer agent that such certificate has been
lost, stolen or destroyed and execute an agreement in form and substance
reasonably satisfactory to the Corporation to indemnify the Corporation for any
loss incurred by the Corporation in connection therewith), and shall give
written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
(A holder of Series C Preferred Stock may not effect a transfer of shares
pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and
deliver at such office to such holder of shares of Series C Preferred Stock, or
to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
provided above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the certificate
or certificates (or the indemnification agreement referred to above)
representing the shares of Series C Preferred Stock being converted (except in
the case of an automatic conversion under SECTION 3.1.C, which shall be
effective on the date of the event giving rise thereto), and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. In case the number of shares of
Series C Preferred Stock represented by the certificate or certificates
surrendered exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series C Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted.
3.3 CONVERSION PRICE ADJUSTMENTS. The Series C Conversion Price
shall be subject to adjustment from time to time as follows:
A. (1) If the Corporation shall issue or sell any Additional
Stock (as defined below), or engage in a transaction which is deemed to involve
the issuance or sale of Additional Stock, for a consideration per share less
than the Series C Conversion Price in effect immediately prior to the issuance
or sale of such Additional Stock, then such Series C Conversion Price in effect
immediately prior to each such issuance or sale shall (except as otherwise
provided in this clause (1)) be adjusted to a price determined by dividing (X)
an amount equal to the sum of (a) the product derived by multiplying the Series
C Conversion Price
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in effect immediately prior to such issue or sale times the number of shares of
Common Stock outstanding immediately prior to such issue or sale, plus (b) the
consideration, if any, received by or deemed to have been received by the
Corporation upon such issue or sale, by (Y) an amount equal to the sum of (c)
the number of shares of Common Stock outstanding immediately prior to such
issue or sale, plus (d) the number of shares of Common Stock issued or sold or
deemed to have been issued or sold in such issue or sale. The number of shares
of Common Stock outstanding for purposes of clauses (X) and (Y) immediately
above shall include any shares of Common Stock issuable (i) upon conversion of
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock or the Series E Preferred Stock,
(ii) upon exercise of any warrants outstanding on the Effective Date to
purchase shares of Common Stock (subject to appropriate adjustment for stock
splits, stock combinations, stock dividends, reclassifications and similar
events affecting the Common Stock), (iii) upon the exercise of any options
granted to employees, advisors, officers, directors and consultants of, and
other persons performing services for, the Corporation in connection with their
advisory or other relationship with the Corporation pursuant to option plans
approved by the Board of Directors of the Corporation, and (iv) upon exercise
and/or conversion or exchange of options, rights or convertible or exchangeable
securities as provided in SECTION 3.3.A(5).
(2) No adjustment of the Series C Conversion Price shall be made in
an amount less than one cent per share, provided that any adjustment that is
not required to be made by reason of this sentence shall be carried forward and
taken into account in any subsequent adjustment.
(3) In the case of the issuance or sale of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof and excluding any amounts paid or payable by
the purchaser for interest or dividends accrued but unpaid through the date of
purchase.
(4) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors.
(5) In the case of the issuance, grant or sale (whether directly or
by assumption on a merger or otherwise) after the Effective Date of (i) options
to purchase or rights to subscribe for Common Stock (whether or not immediately
exercisable), (ii) securities by their terms convertible into or exchangeable
for Common Stock (whether or not immediately convertible or exchangeable) or
(iii) options to purchase or rights to subscribe for such convertible or
exchangeable securities (where the shares of Common Stock issuable upon
exercise of such options or rights or upon conversion or exchange of such
securities are not excluded from the definition of Additional Stock) (whether
or not immediately exercisable convertible or exchangeable), if such options,
rights or convertible or exchangeable securities provide for a consideration
per share of Additional Stock (determined as provided in this SECTION 3.3) less
than the Series C Conversion Price (as in effect immediately prior to such
issuance, grant or sale), then the following provisions shall apply:
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(a) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the
time such options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in SECTIONS
3.3.A(3) AND 3.3.A(4)), if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock covered thereby.
Whenever this SECTION 3 refers to options, such terms shall include
warrants.
(b) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration,
if any, received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in
the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)).
(c) In the event of any change in the number of shares of
Common Stock deliverable upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Series C Conversion Price in effect
at the time shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment that was made upon the issuance
of such options, rights or securities not converted prior to such change
or the options or rights related to such securities not converted prior
to such change had been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series C Conversion Price greater than the Series C
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series C
Preferred Stock).
(d) In the event of any change in the exercise price
deliverable upon exercise of such options or rights or the conversion or
exchange price or ratio deliverable upon or to be utilized in connection
with any such conversion of or exchange for such convertible or
exchangeable securities, the Series C Conversion Price in effect at the
time shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustment that was made upon the issuance of
such options, rights or securities not exercised, converted or exchanged
prior to such change been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common
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Stock upon the exercise of any such options or rights or the conversion
or exchange of such securities and in any event such adjustment shall
not result in a Series C Conversion Price greater than the Series C
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series C
Preferred Stock).
(e) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the Series C Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment which
was made upon the issuance of such options, rights or securities or
options or rights related to such securities been made upon the basis of
the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or
rights related to such securities, and in any event such adjustment
shall not result in a Series C Conversion Price greater than the Series
C Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series C
Preferred Stock).
B. "Effective Date" with respect to the Series C Preferred Stock
means the date on which the Certificate of Designation establishing the Series
E Preferred Stock is filed in the office of the Secretary of State of Delaware.
C. "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to SECTION 3.3.A(5)) by the Corporation
after the Effective Date other than:
(1) Common Stock issued pursuant to a transaction described in
SECTION 3.3.D.
(2) Common Stock issued or issuable upon conversion of the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock.
(3) Common Stock issued or issuable pursuant to (i) warrants
outstanding as of the Effective Date or (ii) options granted to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans as of the date such exclusion is being
determined.
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D. In the event the Corporation should at any time or from time to
time after the Effective Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision, if no record date is fixed), the Series C
Conversion Price shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share shall be increased in
proportion to such increase of outstanding shares of Common Stock determined by
taking SECTION 3.3.A(5) into account.
E. If the number of shares of Common Stock outstanding at any time
after the Effective Date is decreased by a combination of the outstanding
shares of Common Stock, then, as of the record date of such combination, the
Series C Conversion Price shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each such share shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
3.4 OTHER DISTRIBUTIONS. In the event the Corporation shall declare
a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in SECTION 3.3.C, then, in each
such case for the purpose of this SECTION 3.4, the holders of the Series C
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series C Preferred Stock
are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
3.5 RECAPITALIZATION. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this SECTION 3), provision shall be made (in form and substance satisfactory to
holders representing not less than 66-2/3% of the Series C Preferred Stock then
outstanding) so that the holders of the Series C Preferred Stock shall
thereafter be entitled to receive, upon conversion of the Series C Preferred
Stock, such shares or other securities or property of the Corporation or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
with respect to the rights of the holders of the Series C Preferred Stock after
the recapitalization to the end that the provisions of this Section (including
adjustments of the Series C Conversion Price then in effect and the number of
shares issuable upon conversion of shares of Series C Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
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3.6 NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but shall at all times in good faith assist in the carrying out of
all the provisions of this Section and in the taking of all such action as may
be necessary or appropriate in order to protect the Series C Conversion Rights
of the holders of the Series C Preferred Stock against impairment; provided
that in any event, any provisions of this Section may be amended with the
approval of holders representing not less than 66-2/3% of the outstanding
shares of Series C Preferred Stock (in addition to all other approvals required
by law).
3.7 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
A. In lieu of issuing fractional shares upon a conversion of Series
C Preferred Stock, the Corporation may (but unless otherwise required by
applicable law shall not be obligated to) pay cash equal to the fraction
multiplied by the then fair market value of a share of Common Stock, as
determined by the Board. Whether or not fractional shares would be issuable
upon such conversion shall be determined on the basis of the total number of
shares of Series C Preferred Stock the holder is at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
B. Upon the occurrence of each adjustment of the Series C Conversion
Price pursuant to this Section, the Corporation, at its expense, shall promptly
compute such adjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series C Preferred Stock a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
3.8 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of its stockholders for the purpose of determining
stockholders who are entitled to approve or disapprove of any consolidation or
merger to which the Corporation is a party or who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of any class or any other securities
or property, or to receive any other right, the Corporation shall mail to each
holder of shares of Series C Preferred Stock, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution, right, merger or
consolidation and the amount, character and terms of such dividend,
distribution, right, merger or consolidation.
3.9 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series C Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series C Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series C
Preferred Stock, the Corporation shall take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
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authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose. Before taking any action which would
cause an adjustment reducing the Series C Conversion Price below the par value
(if any) of the shares of Common Stock deliverable upon conversion of the
shares of Series C Preferred Stock, the Corporation shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and non-assessable shares
of Common Stock at such adjusted Series C Conversion Price.
3.10 TRANSFER TAXES, ETC. The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any similar taxes payable in
respect of the issue or delivery of shares of Common Stock upon conversions of
shares of Series C Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Series C
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
3.11 NOTICES. Any notice required by the provisions of this Section
to be given to the holders of shares of Series C Preferred Stock shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, registered or certified, and addressed to each holder of record at the
address of such holder appearing on the stock transfer books of the
Corporation.
3.12 TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition by the Corporation of any
such shares shall be considered an issue or sale of Common Stock for purposes
of this SECTION 3 and SECTION 4.
SECTION 4. VOTING RIGHTS
4.1 GENERAL. Except as provided in SECTIONS 4.2 and elsewhere in
this Certificate of Designation, Preferences and Rights, in the Certificate of
Incorporation of the Corporation, or in one or more other Certificates of
Designation of the Corporation, and except as otherwise required by law, the
holders of the Series C Preferred Stock shall vote with the holders of the
Common Stock and any other series of convertible Preferred Stock granted voting
rights on an "as-if-converted" basis, such that each holder of Series C
Preferred Stock shall have a number of votes equal to the number of whole
shares of Common Stock into which the Series C Preferred Stock held by such
holder is at the time convertible.
4.2. PROTECTIVE PROVISIONS. Beginning as of the date shares of Series
C Preferred Stock are first issued and outstanding:
A. And for so long as there remain issued and outstanding not less
than 4,074,674 shares of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock (subject to
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appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock or the Series E Preferred Stock), the Corporation shall not
without the affirmative vote or consent of holders representing at least 75% of
the outstanding shares of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock and the
Series E Preferred Stock, voting together as a single class, and in addition to
any vote otherwise required by the Law:
(1) Create, authorize, issue or sell any shares of capital stock or
any other securities of the Corporation, other than (a) shares of Common Stock
issued upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock; (b) shares of Common Stock which may be issued to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans, as of the date of such determination; (c) Common
Stock issuable pursuant to warrants outstanding on the Effective Date,
including the warrants issued to the purchasers of the Series C Preferred Stock
and the warrants to be issued to Chestnut Partners, and (d) pursuant to one or
more transactions (other than transactions pursuant to which an employee,
advisor, officer, director, consultant of or other person performing services
for the Corporation will be issued shares of Common Stock (or options to
purchase Common Stock) as direct or indirect compensation for services rendered
or to be rendered or otherwise in connection with their advisory or other
relationship with the Corporation) that do not in the aggregate result in an
issuance, sale or grant of shares of Common Stock or other securities
convertible into, exchangeable for or exercisable for shares of Common Stock
aggregating more than 637,625 shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), provided that
the price per share of Common Stock (determined as provided in SECTION 3) and,
if applicable, such other security, is not less than the fair market value of a
share of Common Stock and, if applicable, such other security, as determined in
good faith by the Board of Directors.
(2) Approve, authorize or permit any issuance or sale of capital
stock by a Subsidiary other than to the Corporation in the case of a wholly-
owned subsidiary. As used in this SECTION 4.2, the term "Subsidiary" shall
mean any corporation, partnership, trust or other entity of which the
Corporation and/or any of the Corporation's Subsidiaries directly or indirectly
owns and has the right to vote at the time a majority of the outstanding shares
of the voting securities of such corporation, partnership, trust or other
entity.
(3) Consolidate or merge into or with any other entity or entities,
or sell, transfer or otherwise dispose of all or substantially all of the
Corporation's assets or approve or authorize any such consolidation, merger,
sale, transfer or disposition by any Subsidiary.
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(4) Declare or pay any dividend or other distribution (as defined in
SECTION 1.2) payable in cash or property (other than a dividend payable in
shares of Common Stock on Common Stock) on the outstanding shares of capital
stock other than on the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock or stock senior to or in parity with the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock with respect to dividends
pursuant to the terms thereof that are issued in accordance with SECTION
4.2.B(3) or approve, authorize or permit the declaration or payment of any
dividend or other distribution on the outstanding capital stock of any
Subsidiary other than a wholly-owned subsidiary.
(5) Apply any of the Corporation's assets or approve, authorize or
permit any Subsidiary to apply its assets to the redemption, retirement,
repurchase or acquisition, directly or indirectly through one or more
Subsidiaries or otherwise, of any shares of capital stock of the Corporation
other than redemptions, retirements, repurchases and acquisitions of (i) shares
of capital stock made pursuant to the terms thereof that are issued in
accordance with SECTION 4.2.B(3) hereof, and (ii) shares of capital stock
approved by the Board from employees, advisors, officers, directors and
consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association with the
Corporation.
(6) Subject to SECTION 4.2.B(2) amend, alter or repeal any provision
of, or add any provision to, the Certificate of Incorporation of the
Corporation.
(7) Enter into, permit or acquiesce in any liquidation, dissolution
or winding up of the Corporation.
(8) Acquire any other business.
B. And for so long as there remain issued and outstanding any shares
of Series C Preferred Stock, without the affirmative vote or consent of holders
representing at least 66-2/3% of the outstanding shares of Series C Preferred
Stock, and in addition to any vote otherwise required by the Law:
(1) Amend, alter or repeal the rights, preferences, privileges, or
restrictions of such Series C Preferred Stock or effect any reclassification of
the Series C Preferred Stock.
(2) Amend, alter or repeal any provision of, or add any provision to,
the Certificate of Incorporation or By-laws of the Corporation if such change
could reasonably be expected to adversely affect the holders of the Series C
Preferred Stock in any respect, provided that subject to SECTION 4.2.A(1) the
immediately foregoing shall not prohibit the adoption and filing of one or more
additional Certificates of Designation for Preferred Stock not otherwise
prohibited by SECTION 4.2.B(3).
(3) Create, authorize, issue or sell (including but not limited to by
way of reclassification or in connection with the creation of any convertible
indebtedness) any shares
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of any other class or series of shares providing for (i) dividends or other
distributions on a preferred or parity basis to the Series C Preferred Stock,
(ii) dividends at a rate greater than the dividend rate for the Series C
Preferred Stock, (iii) redemption rights or (iv) liquidation privileges senior
to, or on a parity with, the Series C Preferred Stock, or senior to the Common
Stock in excess of the sum of the original purchase price thereof plus accrued
dividends.
SECTION 5. REISSUANCES
5.1 NO REISSUANCE OF SERIES C PREFERRED STOCK. No shares of Series C
Preferred Stock which have been converted into Common Stock or otherwise cease
to be outstanding shall be reissued by the Corporation; provided, however, that
each such share, after being retired and canceled, shall be restored to the
status of an authorized but unissued share of Preferred Stock without
designation as to series and may thereafter be issued as a share of Preferred
Stock not designated as Series C Preferred Stock.
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CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES D
CONVERTIBLE PREFERRED STOCK
OF
ILEX ONCOLOGY, INC.
ILEX Oncology, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Law"), does hereby certify:
A. The Certificate of Incorporation of the Corporation fixes the
total number of shares of all classes of capital stock which the Corporation
shall have the authority to issue at 60,000,000 shares, of which 20,000,000
shares shall be shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), and 40,000,000 shares shall be shares of Common Stock, par value $.01
per share ("Common Stock").
B. On November 8, 1996, the Corporation filed with the Secretary of
State of the State of Delaware its Certificate of Designation, Preferences and
Rights of Series D Convertible Preferred Stock, thereby providing for an issue
of a series of the preferred stock consisting of 199,601 shares designated as
"Series D Convertible Preferred Stock ("Series D Preferred Stock").
C. The Corporation by action of its Board of Directors and
stockholders, including the holders of its Series D Convertible Preferred
Stock, has duly authorized and approved an amendment and restatement of the
Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock such that the terms of the Series D Preferred Stock as amended
and restated shall be as set forth in this Certificate of Designation,
Preferences of the Series D Convertible Preferred Stock.
RESOLVED, that the preferences and relative participating, optional and
other special rights, and qualifications, limitations and restrictions,
thereof, of the Series D Preferred Stock that consists of 199,601 shares are
hereby amended and restated as follows:
SECTION 1. DIVIDENDS
1.1 The holders of shares of outstanding Series D Preferred Stock
shall be entitled to receive in any fiscal year, when and as declared by the
Board of Directors of the Corporation (the "Board"), out of assets of the
Corporation legally available therefor, distributions (as defined below) on a
pro rata basis in cash at the annual rate of $0.4008 per share (subject to
appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series D Preferred
Stock). Such distributions shall accrue from day to day, whether or not earned
or declared, and shall be cumulative from November 11, 1996, and shall be
payable quarterly or otherwise as the Board may from time to time determine.
Distributions may be declared and paid upon Common Stock and other shares of
the Corporation ranking junior to the Series D Preferred Stock as to
distributions in any fiscal year of the Corporation, only if full cumulative
distributions shall have been paid to or declared upon and set apart for all
shares of Series D Preferred Stock at such
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annual rate through the date of distribution. With respect to distributions
declared and paid upon Common Stock, the Series D Preferred Stock shall also be
entitled to participate in and receive distributions on an "as-if-converted"
basis. For purposes of the distributions provided for by this SECTION 1, the
Corporation's Series A Convertible Preferred Stock, $.01 par value per share
("Series A Preferred Stock"), the Corporation's Series B Convertible Preferred
Stock, $.01 par value per share ("Series B Preferred Stock"), the Corporation's
Series C Convertible Preferred Stock. $.01 par value per share ("Series C
Preferred Stock") and the Corporation's Series E Convertible Preferred Stock,
$.01 par value per share ("Series E Preferred Stock"), shall be considered
equal to, and not senior or junior to, the Series D Preferred Stock and shall
be entitled to distributions with the Series D Preferred Stock in proportion to
the relative amounts of dividends accrued on the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock. Any holder of shares of Series D
Preferred Stock whose shares of Series D Preferred Stock are converted pursuant
to SECTION 3 hereof shall, upon such conversion, forfeit and cease to have any
claim to any accrued but unpaid dividends under this SECTION 1 with respect to
such converted shares.
1.2 For purposes of this SECTION 1, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock on Common Stock, or the purchase or redemption of shares of the
Corporation (other than redemptions, retirements, repurchases or acquisitions
of Common Stock authorized pursuant to the terms of SECTION 4.2.A(5) hereof and
redemptions, retirements, repurchases or acquisitions of capital stock pursuant
to terms approved by the Board from employees, advisors, officers, directors
and consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association) for cash or
property, including any such transfer, purchase or redemption by a subsidiary
of the Corporation. Notwithstanding the foregoing, the term "distribution"
shall not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of each share of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock, which, for purposes of this SECTION 2, such
Series B Preferred Stock, Series C Preferred Stock and Series E Preferred Stock
shall be considered equal to, and not senior or junior to the Series D
Preferred Stock, shall be entitled, before any distribution or payment is made
upon any share of Common Stock, Series A Preferred Stock or any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series D Preferred Stock (but after preferential distributions or
payments required to be made on any other securities of the Corporation senior
to the Series D Preferred Stock), to be paid with respect to each share of
Series D Preferred Stock outstanding, an amount per share equal to the sum of
$5.01 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Series D Preferred Stock) (the "Series D Issue Price") plus any
dividends on a share of Series D Preferred Stock provided for by SECTION 1.1
hereof that are accrued but are unpaid through the date of distribution to the
holders
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of the outstanding shares of the Series D Preferred Stock in connection with
such liquidation, dissolution or winding up (the sum of such amounts payable
with respect to one share of the Series D Preferred Stock being sometimes
referred to as the "Series D Liquidation Preference"); provided, however, that
the consolidation or merger of the Corporation into or with any corporation or
corporations (other than a merger with another corporation in which the
Corporation is the surviving corporation and which does not result in any
reclassification or change in the terms of outstanding shares of the
Corporation's stock of any class or series, whether now or hereafter
authorized, and after which the holders of capital stock of the Corporation
immediately preceding such transaction are the holders of at least fifty-one
percent (51%) of the shares of Common Stock immediately following such
transaction (treating all securities of the Corporation convertible into or
exchangeable for shares of Common Stock as having been fully converted and
exchanged and all options, warrants and other rights to acquire shares of
Common Stock or securities convertible into or exchangeable for Common Stock as
having been fully exercised and converted or exchanged)), or the sale or
transfer by the Corporation of all or substantially all of its assets, shall be
deemed to be a liquidation for purposes of this SECTION 2 unless holders
representing not less than 66-2/3% of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock
and the Series E Preferred Stock, together as a single class, elect by written
consent not to treat such transaction as a liquidation. If upon a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(and any other preferred stock of the Corporation ranking on parity with the
Series D Preferred Stock in the event of a liquidation, dissolution or winding
up of the Corporation) shall be insufficient to permit payments in full to the
holders of Series D Preferred Stock of the Series D Liquidation Preference,
then all assets of the Corporation available for distribution to stockholders
after the Corporation has made preferential distributions or payments required
to be made on any other securities of the Corporation senior to the Series D
Preferred Stock shall be distributed ratably, in accordance with the
liquidation preference rights of the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock,
among the holders of the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock (and any
other preferred stock of the Corporation ranking on parity with the Series D
Preferred Stock in the event of a liquidation, dissolution or winding up of the
Corporation).
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or
winding up of the Corporation, immediately after the holders of Series D
Preferred Stock and any other series of Preferred Stock shall have been paid in
full any preferred stock liquidation preferences (including the Series D
Liquidation Preference and the liquidation preference for the Series A
Preferred Stock, the Series B Preferred Stock, the Series E Preferred Stock)
that they are respectively entitled to, the remaining assets of the Corporation
available for distribution shall be distributed to the holders of Common Stock
and the holders of the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock in proportion to the number of shares of Common Stock deemed to
be held on an "as-if-converted" basis.
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<PAGE> 54
2.3 TERMINATION OF SERIES D PREFERRED STOCK. In the event the
distributions provided for by this SECTION 2 are made to the holders of Series
D Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, the Series D Preferred Stock shall be retired and canceled and the
holders thereof shall cease to have any continuing interest in the Corporation
in their capacity as holders of Series D Preferred Stock.
2.4 NOTICE. Written notice of any liquidation, dissolution or
winding up and any related distribution, stating the payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telecopy to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of Series D Preferred Stock, such notice to
be addressed to each such holder at its address as shown on the records of the
Corporation. Written notice of any election by the holders of the Series D
Preferred Stock to not treat a merger, consolidation or sale or transfer of
assets under SECTION 2.1 hereof as a liquidation shall be given by the electing
holders to the Corporation not less than five days prior to the payment date
stated in the Corporation's notice.
SECTION 3. CONVERSION
The holders of Series D Preferred Stock shall have the following
conversion rights (the "Series D Conversion Rights"):
3.1 RIGHT TO CONVERT; AUTOMATIC CONVERSION
A. Subject to SECTION 3.3, each share of Series D Preferred Stock
shall be convertible at any time before a liquidating payment is made to the
holder of such Series D Preferred Stock pursuant to SECTION 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares
of Common Stock provided for below.
B. Each share of Series D Preferred Stock shall be convertible into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Series D Issue Price by the Series D Conversion
Price, determined as hereafter provided, in effect at the time of conversion,
which result will be rounded to the nearest one-hundredth of a share. The
initial Series D Conversion Price shall be $5.01 per share, provided, however,
that the Series D Conversion Price shall be subject to adjustment as set forth
in SECTION 3.3 below.
C. Each share of Series D Preferred Stock shall automatically and
immediately be converted into shares of Common Stock at the Series D Conversion
Price upon the consummation of a public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
provided that the public offering price of the Common Stock shall be at least
$6.00 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Common Stock) and the gross offering proceeds to the Corporation
and selling stockholders, if any, from such offering shall be at least
$15,000,000.
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The holders of the Series D Preferred Stock shall be given prompt
written notice of any event, including a filing by the Corporation of a
registration statement, that by itself could result in an automatic conversion
pursuant hereto.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series D
Preferred Stock shall be entitled to convert the same into shares of Common
Stock (or, in the case of an automatic conversion under SECTION 3.1.C, to
obtain the certificates for the Common Stock into which the Series D Preferred
Stock shall have been converted), such holder shall surrender the certificates
for the shares of Series D Preferred Stock, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares (or the holder shall
notify the Corporation or its transfer agent that such certificate has been
lost, stolen or destroyed and execute an agreement in form and substance
reasonably satisfactory to the Corporation to indemnify the Corporation for any
loss incurred by the Corporation in connection therewith), and shall give
written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
(A holder of Series D Preferred Stock may not effect a transfer of shares
pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and
deliver at such office to such holder of shares of Series D Preferred Stock, or
to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
provided above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the certificate
or certificates (or the indemnification agreement referred to above)
representing the shares of Series D Preferred Stock being converted (except in
the case of an automatic conversion under SECTION 3.1.C, which shall be
effective on the date of the event giving rise thereto), and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. In case the number of shares of
Series D Preferred Stock represented by the certificate or certificates
surrendered exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series D Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted.
3.3 CONVERSION PRICE ADJUSTMENTS. The Series D Conversion Price
shall be subject to adjustment from time to time as follows:
A. (1) If the Corporation shall issue or sell any Additional
Stock (as defined below), or engage in a transaction which is deemed to involve
the issuance or sale of Additional Stock, for a consideration per share less
than the Series D Conversion Price in effect immediately prior to the issuance
or sale of such Additional Stock, then such Series D Conversion Price in effect
immediately prior to each such issuance or sale shall (except as otherwise
provided in this clause (1)) be adjusted to a price determined by dividing (X)
an amount equal to the sum of (a) the product derived by multiplying the Series
D Conversion Price in effect immediately prior to such issue or sale times the
number of shares of Common Stock outstanding immediately prior to such issue or
sale, plus (b) the consideration, if any, received by or deemed to have been
received by the Corporation upon such issue or sale, by (Y) an
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<PAGE> 56
amount equal to the sum of (c) the number of shares of Common Stock outstanding
immediately prior to such issue or sale, plus (d) the number of shares of
Common Stock issued or sold or deemed to have been issued or sold in such issue
or sale. The number of shares of Common Stock outstanding for purposes of
clauses (X) and (Y) immediately above shall include any shares of Common Stock
issuable (i) upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or
the Series E Preferred Stock, (ii) upon exercise of any warrants outstanding on
the Effective Date to purchase shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), (iii) upon
the exercise of any options granted to employees, advisors, officers, directors
and consultants of, and other persons performing services for, the Corporation
in connection with their advisory or other relationship with the Corporation
pursuant to option plans approved by the Board of Directors of the Corporation,
and (iv) upon exercise and/or conversion or exchange of options, rights or
convertible or exchangeable securities as provided in SECTION 3.3.A(5).
(2) No adjustment of the Series D Conversion Price shall be made in
an amount less than one cent per share, provided that any adjustment that is
not required to be made by reason of this sentence shall be carried forward and
taken into account in any subsequent adjustment.
(3) In the case of the issuance or sale of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof and excluding any amounts paid or payable by
the purchaser for interest or dividends accrued but unpaid through the date of
purchase.
(4) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors.
(5) In the case of the issuance, grant or sale (whether directly or
by assumption on a merger or otherwise) after the Effective Date of (i) options
to purchase or rights to subscribe for Common Stock (whether or not immediately
exercisable), (ii) securities by their terms convertible into or exchangeable
for Common Stock (whether or not immediately convertible or exchangeable) or
(iii) options to purchase or rights to subscribe for such convertible or
exchangeable securities (where the shares of Common Stock issuable upon
exercise of such options or rights or upon conversion or exchange of such
securities are not excluded from the definition of Additional Stock) (whether
or not immediately exercisable convertible or exchangeable), if such options,
rights or convertible or exchangeable securities provide for a consideration
per share of Additional Stock (determined as provided in this SECTION 3.3) less
than the Series D Conversion Price (as in effect immediately prior to such
issuance, grant or sale), then the following provisions shall apply:
(a) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common
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Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)),
if any, received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options or
rights for the Common Stock covered thereby. Whenever this SECTION 3
refers to options, such terms shall include warrants.
(b) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration,
if any, received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in
the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)).
(c) In the event of any change in the number of shares of
Common Stock deliverable upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Series D Conversion Price in effect
at the time shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment that was made upon the issuance
of such options, rights or securities not converted prior to such change
or the options or rights related to such securities not converted prior
to such change had been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series D Conversion Price greater than the Series D
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series D
Preferred Stock).
(d) In the event of any change in the exercise price
deliverable upon exercise of such options or rights or the conversion or
exchange price or ratio deliverable upon or to be utilized in connection
with any such conversion of or exchange for such convertible or
exchangeable securities, the Series D Conversion Price in effect at the
time shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustment that was made upon the issuance of
such options, rights or securities not exercised, converted or exchanged
prior to such change been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series D Conversion
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Price greater than the Series D Conversion Price as in effect on the
original adjustment date immediately preceding such original adjustment
(as otherwise appropriately adjusted for stock splits, stock
combinations, stock dividends, reclassifications and similar events
affecting the Series D Preferred Stock).
(e) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the Series D Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment which
was made upon the issuance of such options, rights or securities or
options or rights related to such securities been made upon the basis of
the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or
rights related to such securities, and in any event such adjustment
shall not result in a Series D Conversion Price greater than the Series
D Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series D
Preferred Stock).
B. "Effective Date" with respect to the Series D Preferred Stock
means the date on which the Certificate of Designation establishing the Series
E Preferred Stock (the "Certificate of Designation") is filed in the office of
the Secretary of State of Delaware.
C. "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to SECTION 3.3.A(5) by the Corporation
after the Effective Date other than:
(1) Common Stock issued pursuant to a transaction described in
SECTION 3.3.D.
(2) Common Stock issued or issuable upon conversion of the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock.
(3) Common Stock issued or issuable pursuant to (i) warrants
outstanding as of the Effective Date, or (ii) options granted to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans as of the date such exclusion is being
determined.
D. In the event the Corporation should at any time or from time to
time after the Effective Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled
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to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without payment
of any consideration by such holder for the additional shares of Common Stock
or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon conversion or exercise thereof), then, as of such record
date (or the date of such dividend, distribution, split or subdivision, if no
record date is fixed), the Series D Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion
of each share shall be increased in proportion to such increase of outstanding
shares of Common Stock determined by taking SECTION 3.3.A(5) into account.
E. If the number of shares of Common Stock outstanding at any time
after the Effective Date is decreased by a combination of the outstanding
shares of Common Stock, then, as of the record date of such combination, the
Series D Conversion Price shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each such share shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
3.4 OTHER DISTRIBUTIONS. In the event the Corporation shall declare
a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in SECTION 3.3.C, then, in each
such case for the purpose of this SECTION 3.4, the holders of the Series D
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series D Preferred Stock
are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
3.5 RECAPITALIZATION. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this SECTION 3), provision shall be made (in form and substance satisfactory to
holders representing not less than 66-2/3% of the Series D Preferred Stock then
outstanding) so that the holders of the Series D Preferred Stock shall
thereafter be entitled to receive, upon conversion of the Series D Preferred
Stock, such shares or other securities or property of the Corporation or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
with respect to the rights of the holders of the Series D Preferred Stock after
the recapitalization to the end that the provisions of this Section (including
adjustments of the Series D Conversion Price then in effect and the number of
shares issuable upon conversion of shares of Series D Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
3.6 NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder
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by the Corporation, but shall at all times in good faith assist in the carrying
out of all the provisions of this Section and in the taking of all such action
as may be necessary or appropriate in order to protect the Series D Conversion
Rights of the holders of the Series D Preferred Stock against impairment;
provided that in any event, any provisions of this Section may be amended with
the approval of holders representing not less than 66-2/3% of the outstanding
shares of Series D Preferred Stock (in addition to all other approvals required
by law).
3.7 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
A. In lieu of issuing fractional shares upon a conversion of Series
D Preferred Stock, the Corporation may (but unless otherwise required by
applicable law shall not be obligated to) pay cash equal to the fraction
multiplied by the then fair market value of a share of Common Stock, as
determined by the Board. Whether or not fractional shares would be issuable
upon such conversion shall be determined on the basis of the total number of
shares of Series D Preferred Stock the holder is at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
B. Upon the occurrence of each adjustment of the Series D Conversion
Price pursuant to this Section, the Corporation, at its expense, shall promptly
compute such adjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series D Preferred Stock a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
3.8 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of its stockholders for the purpose of determining
stockholders who are entitled to approve or disapprove of any consolidation or
merger to which the Corporation is a party or who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of any class or any other securities
or property, or to receive any other right, the Corporation shall mail to each
holder of shares of Series D Preferred Stock, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution, right, merger or
consolidation and the amount, character and terms of such dividend,
distribution, right, merger or consolidation.
3.9 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series D Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series D Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series D
Preferred Stock, the Corporation shall take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose. Before taking any action which would cause an adjustment
reducing the Series D Conversion Price below the par value (if any) of the
shares of Common Stock deliverable upon conversion of the shares of Series D
Preferred Stock, the Corporation shall take any
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corporate action which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue fully paid and non-
assessable shares of Common Stock at such adjusted Series D Conversion Price.
3.10 TRANSFER TAXES, ETC. The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any similar taxes payable in
respect of the issue or delivery of shares of Common Stock upon conversions of
shares of Series D Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Series D
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
3.11 NOTICES. Any notice required by the provisions of this Section
to be given to the holders of shares of Series D Preferred Stock shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, registered or certified, and addressed to each holder of record at the
address of such holder appearing on the stock transfer books of the
Corporation.
3.12 TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition by the Corporation of any
such shares shall be considered an issue or sale of Common Stock for purposes
of this SECTION 3 and SECTION 4.
SECTION 4. VOTING RIGHTS
4.1 GENERAL. Except as provided in SECTIONS 4.2 and elsewhere in
this Certificate of Designations, Preferences and Rights, in the Certificate of
Incorporation of the Corporation, or in one or more other Certificates of
Designations of the Corporation, and except as otherwise required by law, the
holders of the Series D Preferred Stock shall vote with the holders of the
Common Stock and any other series of convertible Preferred Stock granted voting
rights on an "as-if-converted" basis, such that each holder of Series D
Preferred Stock shall have a number of votes equal to the number of whole
shares of Common Stock into which the Series D Preferred Stock held by such
holder is at the time convertible.
4.2. PROTECTIVE PROVISIONS. Beginning as of the date shares of Series
D Preferred Stock are first issued and outstanding:
A. For so long as there remain issued and outstanding not less than
4,074,674 shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar other events affecting the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock or the Series E Preferred Stock), the Corporation
shall not without the affirmative vote or consent of holders representing at
least 75% of the outstanding shares of
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Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, voting together as a
single class, and in addition to any vote otherwise required by the Law:
(1) Create, authorize, issue or sell any shares of capital stock or
any other securities of the Corporation, other than (a) shares of Common Stock
issued upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock; (b) shares of Common Stock which may be issued to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans, as of the date of such determination; (c) Common
Stock issuable pursuant to warrants outstanding on the Effective Date,
including the warrants issued to the purchasers of the Series C Preferred Stock
and the warrants to be issued to Chestnut Partners; and (d) pursuant to one or
more transactions (other than transactions pursuant to which an employee,
advisor, officer, director, consultant of or other person performing services
for the Corporation will be issued shares of Common Stock (or options to
purchase Common Stock) as direct or indirect compensation for services rendered
or to be rendered or otherwise in connection with their advisory or other
relationship with the Corporation) that do not in the aggregate result in an
issuance, sale or grant of shares of Common Stock or other securities
convertible into, exchangeable for or exercisable for shares of Common Stock
aggregating more than 637,625 shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), provided that
the price per share of Common Stock (determined as provided in SECTION 3) and,
if applicable, such other security, is not less than the fair market value of a
share of Common Stock and, if applicable, such other security, as determined in
good faith by the Board of Directors.
(2) Approve, authorize or permit any issuance or sale of capital
stock by a Subsidiary other than to the Corporation in the case of a wholly-
owned subsidiary. As used in this SECTION 4.2, the term "Subsidiary" shall
mean any corporation, partnership, trust or other entity of which the
Corporation and/or any of the Corporation's Subsidiaries directly or indirectly
owns and has the right to vote at the time a majority of the outstanding shares
of the voting securities of such corporation, partnership, trust or other
entity.
(3) Consolidate or merge into or with any other entity or entities,
or sell, transfer or otherwise dispose of all or substantially all of the
Corporation's assets or approve or authorize any such consolidation, merger,
sale, transfer or disposition by any Subsidiary.
(4) Declare or pay any dividend or other distribution (as defined in
SECTION 1.2) payable in cash or property (other than a dividend payable in
shares of Common Stock on Common Stock) on the outstanding shares of capital
stock other than on the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E
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Preferred Stock or stock senior to or in parity with the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock with respect to dividends
pursuant to the terms thereof that are issued in accordance with SECTION
4.2.B(3) or approve, authorize or permit the declaration or payment of any
dividend or other distribution on the outstanding capital stock of any
Subsidiary other than a wholly-owned subsidiary.
(5) Apply any of the Corporation's assets or approve, authorize or
permit any Subsidiary to apply its assets to the redemption, retirement,
repurchase or acquisition, directly or indirectly through one or more
Subsidiaries or otherwise, of any shares of capital stock of the Corporation
other than redemptions, retirements, repurchases and acquisitions of (i) shares
of capital stock made pursuant to the terms thereof that are issued in
accordance with SECTION 4.2.B(3) hereof, and (ii) shares of capital stock
approved by the Board from employees, advisors, officers, directors and
consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association with the
Corporation.
(6) Subject to SECTION 4.2.B(2) amend, alter or repeal any provision
of, or add any provision to, the Certificate of Incorporation of the
Corporation.
(7) Enter into, permit or acquiesce in any liquidation, dissolution
or winding up of the Corporation.
(8) Acquire any other business.
B. For so long as there remain issued and outstanding any shares of
Series D Preferred Stock, without the affirmative vote or consent of holders
representing at least 66-2/3% of the outstanding shares of Series D Preferred
Stock, and in addition to any vote otherwise required by the Law:
(1) Amend, alter or repeal the rights, preferences, privileges, or
restrictions of such Series D Preferred Stock or effect any reclassification of
the Series D Preferred Stock.
(2) Amend, alter or repeal any provision of, or add any provision to,
the Certificate of Incorporation or By-laws of the Corporation if such change
could reasonably be expected to adversely affect the holders of the Series D
Preferred Stock in any respect, provided that subject to SECTION 4.2.A(1) the
immediately foregoing shall not prohibit the adoption and filing of one or more
additional Certificates of Designations for Preferred Stock not otherwise
prohibited by SECTION 4.2.B(3).
(3) Create, authorize, issue or sell (including but not limited to by
way of reclassification or in connection with the creation of any convertible
indebtedness) any shares of any other class or series of shares providing for
(i) dividends or other distributions on a preferred or parity basis to the
Series D Preferred Stock, (ii) dividends at a rate greater than the dividend
rate for the Series D Preferred Stock, (iii) redemption rights or (iv)
liquidation
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privileges senior to, or on a parity with, the Series D Preferred Stock, or
senior to the Common Stock in excess of the sum of the original purchase price
thereof plus accrued dividends.
SECTION 5. REISSUANCES
5.1 NO REISSUANCE OF SERIES D PREFERRED STOCK. No shares of Series D
Preferred Stock which have been converted into Common Stock or otherwise cease
to be outstanding shall be reissued by the Corporation; provided, however, that
each such share, after being retired and canceled, shall be restored to the
status of an authorized but unissued share of Preferred Stock without
designation as to series and may thereafter be issued as a share of Preferred
Stock not designated as Series D Preferred Stock.
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CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES E
CONVERTIBLE PREFERRED STOCK
OF
ILEX ONCOLOGY, INC.
ILEX Oncology, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Law"), does hereby certify:
A. The Certificate of Incorporation of the Corporation fixes the
total number of shares of all classes of capital stock which the Corporation
shall have the authority to issue at 60,000,000 shares, of which 20,000,000
shares shall be shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"), and 40,000,000 shares shall be shares of Common Stock, par value $.01
per share ("Common Stock").
B. Pursuant to authority expressly conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation, said Board of Directors (the "Board") has duly authorized and
adopted the following resolution providing for an issue of a series of the
Preferred Stock to be designated "Series E Convertible Preferred Stock":
RESOLVED, that an issue of a series of the Preferred Stock of the
Corporation is hereby provided for, the designation of which shall be "Series E
Convertible Preferred Stock" ("Series E Preferred Stock"). The number of
shares of Series E Preferred Stock shall be 833,333.
FURTHER RESOLVED, that the preferences and relative participating,
optional and other special rights, and qualifications, limitations and
restrictions thereof, of the Series E Preferred Stock are hereby fixed as
follows:
SECTION 1. DIVIDENDS
1.1 The holders of shares of outstanding Series E Preferred Stock
shall be entitled to receive in any fiscal year, when and as declared by the
Board of Directors of the Corporation (the "Board"), out of assets of the
Corporation legally available therefor, distributions (as defined below) on a
pro rata basis in cash at the annual rate of $0.48 per share (subject to
appropriate adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar other events affecting the Series E Preferred
Stock). Such distributions shall accrue from day to day, whether or not earned
or declared, and shall be cumulative from December 11, 1996, and shall be
payable quarterly or otherwise as the Board may from time to time determine.
Distributions may be declared and paid upon Common Stock and other shares of
the Corporation ranking junior to the Series E Preferred Stock as to
distributions in any fiscal year of the Corporation, only if full cumulative
distributions shall have been paid to or declared upon and set apart for all
shares of Series E Preferred Stock at such annual rate through the date of
distribution. With respect to distributions declared and paid upon Common
Stock, the Series E Preferred Stock shall also be entitled to participate in
and receive distributions on an "as-if-converted" basis. For purposes of the
distributions provided for by this SECTION 1, the Corporation's Series A
Convertible Preferred Stock, $.01 par value per share
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("Series A Preferred Stock"), the Corporation's Series B Convertible Preferred
Stock, $.01 par value per share ("Series B Preferred Stock"), the Corporation's
Series C Convertible Preferred Stock, $.01 par value per share ("Series C
Preferred Stock"), and the Corporation's Series D Convertible Preferred Stock,
$.01 par value per share ("Series D Preferred Stock"), shall be considered
equal to, and not senior or junior to, the Series E Preferred Stock and shall
be entitled to distributions with the Series E Preferred Stock in proportion to
the relative amounts of dividends accrued on the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock. Any holder of shares of Series E
Preferred Stock whose shares of Series E Preferred Stock are converted pursuant
to SECTION 3 hereof shall, upon such conversion, forfeit and cease to have any
claim to any accrued but unpaid dividends under this SECTION 1 with respect to
such converted shares.
1.2 For purposes of this SECTION 1, unless the context otherwise
requires, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
Common Stock on Common Stock, or the purchase or redemption of shares of the
Corporation (other than redemptions, retirements, repurchases or acquisitions
of Common Stock authorized pursuant to the terms of SECTION 4.2.A(5) hereof and
redemptions, retirements, repurchases or acquisitions of capital stock pursuant
to terms approved by the Board from employees, advisors, officers, directors
and consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association) for cash or
property, including any such transfer, purchase or redemption by a subsidiary
of the Corporation. Notwithstanding the foregoing, the term "distribution"
shall not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
SECTION 2. LIQUIDATION PREFERENCE
2.1 LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of each share of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock, which, for purposes of this SECTION 2, such
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
shall be considered equal to, and not senior or junior to the Series E
Preferred Stock, shall be entitled, before any distribution or payment is made
upon any share of Common Stock, Series A Preferred Stock or any other class or
series of the Corporation's capital stock ranking junior as to liquidation
rights to the Series E Preferred Stock (but after preferential distributions or
payments required to be made on any other securities of the Corporation senior
to the Series E Preferred Stock), to be paid with respect to each share of
Series E Preferred Stock outstanding, an amount per share equal to the sum of
$6.00 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Series E Preferred Stock) (the "Series E Issue Price") plus any
dividends on a share of Series E Preferred Stock provided for by SECTION 1.1
hereof that are accrued but are unpaid through the date of distribution to the
holders of the outstanding shares of the Series E Preferred Stock in connection
with such liquidation, dissolution or winding up (the sum of such amounts
payable with respect to one share of the Series E Preferred Stock being
sometimes referred to as the "Series E Liquidation Preference"); provided,
however, that the consolidation or merger of the Corporation into or with any
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corporation or corporations (other than a merger with another corporation in
which the Corporation is the surviving corporation and which does not result in
any reclassification or change in the terms of outstanding shares of the
Corporation's stock of any class or series, whether now or hereafter
authorized, and after which the holders of capital stock of the Corporation
immediately preceding such transaction are the holders of at least fifty-one
percent (51%) of the shares of Common Stock immediately following such
transaction (treating all securities of the Corporation convertible into or
exchangeable for shares of Common Stock as having been fully converted and
exchanged and all options, warrants and other rights to acquire shares of
Common Stock or securities convertible into or exchangeable for Common Stock as
having been fully exercised and converted or exchanged)), or the sale or
transfer by the Corporation of all or substantially all of its assets, shall be
deemed to be a liquidation for purposes of this SECTION 2 unless holders
representing not less than 66-2/3% of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock
and the Series E Preferred Stock, together as a single class, elect by written
consent not to treat such transaction as a liquidation. If upon a liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(and any other preferred stock of the Corporation ranking on parity with the
Series E Preferred Stock in the event of a liquidation, dissolution or winding
up of the Corporation) shall be insufficient to permit payments in full to the
holders of Series E Preferred Stock of the Series E Liquidation Preference,
then all assets of the Corporation available for distribution to stockholders
after the Corporation has made preferential distributions or payments required
to be made on any other securities of the Corporation senior to the Series E
Preferred Stock shall be distributed ratably, in accordance with the
liquidation preference rights of the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock,
among the holders of Series B Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock and the Series E Preferred Stock (and any other
preferred stock of the Corporation ranking on parity with the Series E
Preferred Stock in the event of a liquidation, dissolution or winding up of the
Corporation).
2.2 OTHER DISTRIBUTIONS. Upon any liquidation, dissolution or
winding up of the Corporation, immediately after the holders of Series E
Preferred Stock and any other series of Preferred Stock shall have been paid in
full any preferred stock liquidation preferences (including the Series E
Liquidation Preference and the liquidation preference for the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock) that they are respectively entitled to, the
remaining assets of the Corporation available for distribution shall be
distributed to the holders of Common Stock and the holders of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock and the Series E Preferred Stock in proportion to
the number of shares of Common Stock deemed to be held on an "as-if-converted"
basis.
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2.3 TERMINATION OF SERIES E PREFERRED STOCK. In the event the
distributions provided for by this SECTION 2 are made to the holders of Series
E Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, the Series E Preferred Stock shall be retired and canceled and the
holders thereof shall cease to have any continuing interest in the Corporation
in their capacity as holders of Series E Preferred Stock.
2.4 NOTICE. Written notice of any liquidation, dissolution or
winding up and any related distribution, stating the payment date and the place
where said payments shall be made, shall be given by mail, postage prepaid, or
by telecopy to non-U.S. residents, not less than 20 days prior to the payment
date stated therein, to the holders of Series E Preferred Stock, such notice to
be addressed to each such holder at its address as shown on the records of the
Corporation. Written notice of any election by the holders of the Series E
Preferred Stock to not treat a merger, consolidation or sale or transfer of
assets under SECTION 2.1 hereof as a liquidation shall be given by the electing
holders to the Corporation not less than five days prior to the payment date
stated in the Corporation's notice.
SECTION 3. CONVERSION
The holders of Series E Preferred Stock shall have the following
conversion rights (the "Series E Conversion Rights"):
3.1 RIGHT TO CONVERT; AUTOMATIC CONVERSION
A. Subject to SECTION 3.3, each share of Series E Preferred Stock
shall be convertible at any time before a liquidating payment is made to the
holder of such Series E Preferred Stock pursuant to SECTION 2 hereof, at the
option of the holder thereof, at the office of the Corporation or any transfer
agent for such shares, into the number of fully paid and nonassessable shares
of Common Stock provided for below.
B. Each share of Series E Preferred Stock shall be convertible into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Series E Issue Price by the Series E Conversion
Price, determined as hereafter provided, in effect at the time of conversion,
which result will be rounded to the nearest one-hundredth of a share. The
initial Series E Conversion Price shall be $6.00 per share, provided, however,
that the Series E Conversion Price shall be subject to adjustment as set forth
in SECTION 3.3 below.
C. Each share of Series E Preferred Stock shall automatically and
immediately be converted into shares of Common Stock at the Series E Conversion
Price upon the consummation of a public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
provided that the public offering price of the Common Stock shall be at least
$6.00 per share (subject to appropriate adjustment for stock splits, stock
combinations, stock dividends, reclassifications and similar other events
affecting the Common Stock) and the gross offering proceeds to the Corporation
and selling stockholders, if any, from such offering shall be at least
$15,000,000.
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The holders of the Series E Preferred Stock shall be given prompt
written notice of any event, including a filing by the Corporation of a
registration statement, that by itself could result in an automatic conversion
pursuant hereto.
3.2 MECHANICS OF CONVERSION. Before any holder of shares of Series E
Preferred Stock shall be entitled to convert the same into shares of Common
Stock (or, in the case of an automatic conversion under SECTION 3.1.C, to
obtain the certificates for the Common Stock into which the Series E Preferred
Stock shall have been converted), such holder shall surrender the certificates
for the shares of Series E Preferred Stock, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares (or the holder shall
notify the Corporation or its transfer agent that such certificate has been
lost, stolen or destroyed and execute an agreement in form and substance
reasonably satisfactory to the Corporation to indemnify the Corporation for any
loss incurred by the Corporation in connection therewith), and shall give
written notice to the Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
(A holder of Series E Preferred Stock may not effect a transfer of shares
pursuant to conversion unless all applicable restrictions on transfer are
complied with.) The Corporation shall, as soon as practicable, issue and
deliver at such office to such holder of shares of Series E Preferred Stock, or
to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
provided above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the certificate
or certificates (or the indemnification agreement referred to above)
representing the shares of Series E Preferred Stock being converted (except in
the case of an automatic conversion under SECTION 3.1.C, which shall be
effective on the date of the event giving rise thereto), and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. In case the number of shares of
Series E Preferred Stock represented by the certificate or certificates
surrendered exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series E Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted.
3.3 CONVERSION PRICE ADJUSTMENTS. The Series E Conversion Price
shall be subject to adjustment from time to time as follows:
A. (1) If the Corporation shall issue or sell any Additional
Stock (as defined below), or engage in a transaction which is deemed to involve
the issuance or sale of Additional Stock, for a consideration per share less
than the Series E Conversion Price in effect immediately prior to the issuance
or sale of such Additional Stock, then such Series E Conversion Price in effect
immediately prior to each such issuance or sale shall (except as otherwise
provided in this clause (1)) be adjusted to a price determined by dividing (X)
an amount equal to the sum of (a) the product derived by multiplying the Series
E Conversion Price in effect immediately prior to such issue or sale times the
number of shares of Common Stock outstanding immediately prior to such issue or
sale, plus (b) the consideration, if any, received by or deemed to have been
received by the Corporation upon such issue or sale, by (Y) an
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amount equal to the sum of (c) the number of shares of Common Stock outstanding
immediately prior to such issue or sale, plus (d) the number of shares of
Common Stock issued or sold or deemed to have been issued or sold in such issue
or sale. The number of shares of Common Stock outstanding for purposes of
clauses (X) and (Y) immediately above shall include any shares of Common Stock
issuable (i) upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or
the Series E Preferred Stock, (ii) upon exercise of any warrants outstanding on
the Effective Date to purchase shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), (iii) upon
the exercise of any options granted to employees, advisors, officers, directors
and consultants of, and other persons performing services for, the Corporation
in connection with their advisory or other relationship with the Corporation
pursuant to option plans approved by the Board of Directors of the Corporation,
and (iv) upon exercise and/or conversion or exchange of options, rights or
convertible or exchangeable securities as provided in SECTION 3.3.A(5).
(2) No adjustment of the Series E Conversion Price shall be made in
an amount less than one cent per share, provided that any adjustment that is
not required to be made by reason of this sentence shall be carried forward and
taken into account in any subsequent adjustment.
(3) In the case of the issuance or sale of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof and excluding any amounts paid or payable by
the purchaser for interest or dividends accrued but unpaid through the date of
purchase.
(4) In the case of the issuance or sale of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in good faith
by the Board of Directors.
(5) In the case of the issuance, grant or sale (whether directly or
by assumption on a merger or otherwise) after the Effective Date of (i) options
to purchase or rights to subscribe for Common Stock (whether or not immediately
exercisable), (ii) securities by their terms convertible into or exchangeable
for Common Stock (whether or not immediately convertible or exchangeable) or
(iii) options to purchase or rights to subscribe for such convertible or
exchangeable securities (where the shares of Common Stock issuable upon
exercise of such options or rights or upon conversion or exchange of such
securities are not excluded from the definition of Additional Stock) (whether
or not immediately exercisable convertible or exchangeable), if such options,
rights or convertible or exchangeable securities provide for a consideration
per share of Additional Stock (determined as provided in this SECTION 3.3) less
than the Series E Conversion Price (as in effect immediately prior to such
issuance, grant or sale), then the following provisions shall apply:
(a) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common
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Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)),
if any, received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options or
rights for the Common Stock covered thereby. Whenever this SECTION 3
refers to options, such terms shall include warrants.
(b) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration,
if any, received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in
the manner provided in SECTIONS 3.3.A(3) AND 3.3.A(4)).
(c) In the event of any change in the number of shares of
Common Stock deliverable upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Series E Conversion Price in effect
at the time shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment that was made upon the issuance
of such options, rights or securities not converted prior to such change
or the options or rights related to such securities not converted prior
to such change had been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series E Conversion Price greater than the Series E
Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series E
Preferred Stock).
(d) In the event of any change in the exercise price
deliverable upon exercise of such options or rights or the conversion or
exchange price or ratio deliverable upon or to be utilized in connection
with any such conversion of or exchange for such convertible or
exchangeable securities, the Series E Conversion Price in effect at the
time shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustment that was made upon the issuance of
such options, rights or securities not exercised, converted or exchanged
prior to such change been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock
upon the exercise of any such options or rights or the conversion or
exchange of such securities and in any event such adjustment shall not
result in a Series E Conversion
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Price greater than the Series E Conversion Price as in effect on the
original adjustment date immediately preceding such original adjustment
(as otherwise appropriately adjusted for stock splits, stock
combinations, stock dividends, reclassifications and similar events
affecting the Series E Preferred Stock).
(e) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration
of any options or rights related to such convertible or exchangeable
securities, the Series E Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment which
was made upon the issuance of such options, rights or securities or
options or rights related to such securities been made upon the basis of
the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or
rights related to such securities, and in any event such adjustment
shall not result in a Series E Conversion Price greater than the Series
E Conversion Price as in effect on the original adjustment date
immediately preceding such original adjustment (as otherwise
appropriately adjusted for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Series E
Preferred Stock).
B. "Effective Date" with respect to the Series E Preferred Stock
means the date on which the Certificate of Designation establishing the Series
E Preferred Stock (the "Certificate of Designation") is filed in the office of
the Secretary of State of Delaware.
C. "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to SECTION 3.3.A(5) by the Corporation
after the Effective Date other than:
(1) Common Stock issued pursuant to a transaction described in
SECTION 3.3.D.
(2) Common Stock issued or issuable upon conversion of the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock.
(3) Common Stock issued or issuable pursuant to (i) warrants
outstanding as of the Effective Date, or (ii) options granted to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans as of the date such exclusion is being
determined.
D. In the event the Corporation should at any time or from time to
time after the Effective Date fix a record date for the effectuation of a split
or subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled
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to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without payment
of any consideration by such holder for the additional shares of Common Stock
or the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon conversion or exercise thereof), then, as of such record
date (or the date of such dividend, distribution, split or subdivision, if no
record date is fixed), the Series E Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion
of each share shall be increased in proportion to such increase of outstanding
shares of Common Stock determined by taking SECTION 3.3.A(5) into account.
E. If the number of shares of Common Stock outstanding at any time
after the Effective Date is decreased by a combination of the outstanding
shares of Common Stock, then, as of the record date of such combination, the
Series E Conversion Price shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each such share shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
3.4 OTHER DISTRIBUTIONS. In the event the Corporation shall declare
a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in SECTION 3.3.C, then, in each
such case for the purpose of this SECTION 3.4, the holders of the Series E
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Series E Preferred Stock
are convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
3.5 RECAPITALIZATION. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this SECTION 3), provision shall be made (in form and substance satisfactory to
holders representing not less than 66-2/3% of the Series E Preferred Stock then
outstanding) so that the holders of the Series E Preferred Stock shall
thereafter be entitled to receive, upon conversion of the Series E Preferred
Stock, such shares or other securities or property of the Corporation or
otherwise, to which a holder of Common Stock deliverable upon conversion would
have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
with respect to the rights of the holders of the Series E Preferred Stock after
the recapitalization to the end that the provisions of this Section (including
adjustments of the Series E Conversion Price then in effect and the number of
shares issuable upon conversion of shares of Series E Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
3.6 NO IMPAIRMENT. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder
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by the Corporation, but shall at all times in good faith assist in the carrying
out of all the provisions of this Section and in the taking of all such action
as may be necessary or appropriate in order to protect the Series E Conversion
Rights of the holders of the Series E Preferred Stock against impairment;
provided that in any event, any provisions of this Section may be amended with
the approval of holders representing not less than 66-2/3% of the outstanding
shares of Series E Preferred Stock (in addition to all other approvals required
by law).
3.7 FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS. A. In lieu
of issuing fractional shares upon a conversion of Series E Preferred Stock, the
Corporation may (but unless otherwise required by applicable law shall not be
obligated to) pay cash equal to the fraction multiplied by the then fair market
value of a share of Common Stock, as determined by the Board. Whether or not
fractional shares would be issuable upon such conversion shall be determined on
the basis of the total number of shares of Series E Preferred Stock the holder
is at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
B. Upon the occurrence of each adjustment of the Series E Conversion
Price pursuant to this Section, the Corporation, at its expense, shall promptly
compute such adjustment in accordance with the terms hereof and prepare and
furnish to each holder of shares of Series E Preferred Stock a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based.
3.8 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of its stockholders for the purpose of determining
stockholders who are entitled to approve or disapprove of any consolidation or
merger to which the Corporation is a party or who are entitled to receive
payment of any dividend or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of any class or any other securities
or property, or to receive any other right, the Corporation shall mail to each
holder of shares of Series E Preferred Stock, at least 20 days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution, right, merger or
consolidation and the amount, character and terms of such dividend,
distribution, right, merger or consolidation.
3.9 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series E Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series E Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Series E
Preferred Stock, the Corporation shall take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose. Before taking any action which would cause an adjustment
reducing the Series E Conversion Price below the par value (if any) of the
shares of Common Stock deliverable upon conversion of the shares of Series E
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the
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<PAGE> 75
Corporation may validly and legally issue fully paid and non-assessable shares
of Common Stock at such adjusted Series E Conversion Price.
3.10 TRANSFER TAXES, ETC. The Corporation shall pay any and all
documentary stamp, issue or transfer taxes, and any similar taxes payable in
respect of the issue or delivery of shares of Common Stock upon conversions of
shares of Series E Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the holder of the shares of Series E
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
3.11 NOTICES. Any notice required by the provisions of this Section
to be given to the holders of shares of Series E Preferred Stock shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, registered or certified, and addressed to each holder of record at the
address of such holder appearing on the stock transfer books of the
Corporation.
3.12 TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation, and the disposition by the Corporation of any
such shares shall be considered an issue or sale of Common Stock for purposes
of this SECTION 3 and SECTION 4.
SECTION 4. VOTING RIGHTS
4.1 GENERAL. Except as provided in SECTIONS 4.2 and elsewhere in
this Certificate of Designations, Preferences and Rights, in the Certificate of
Incorporation of the Corporation, or in one or more other Certificates of
Designations of the Corporation, and except as otherwise required by law, the
holders of the Series E Preferred Stock shall vote with the holders of the
Common Stock and any other series of convertible Preferred Stock granted voting
rights on an "as-if-converted" basis, such that each holder of Series E
Preferred Stock shall have a number of votes equal to the number of whole
shares of Common Stock into which the Series E Preferred Stock held by such
holder is at the time convertible.
4.2. PROTECTIVE PROVISIONS. Beginning as of the date shares of Series
E Preferred Stock are first issued and outstanding:
A. For so long as there remain issued and outstanding not less than
4,074,674 shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar other events affecting the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock,
the Series D Preferred Stock or the Series E Preferred Stock), the Corporation
shall not without the affirmative vote or consent of holders representing at
least 75% of the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D
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<PAGE> 76
Preferred Stock and Series E Preferred Stock, voting together as a single
class, and in addition to any vote otherwise required by the Law:
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<PAGE> 77
(1) Create, authorize, issue or sell any shares of capital stock or
any other securities of the Corporation, other than (a) shares of Common Stock
issued upon conversion of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series
E Preferred Stock; (b) shares of Common Stock which may be issued to employees,
advisors, officers, directors and consultants of, and other persons performing
services for, the Corporation in connection with their advisory or other
relationship with the Corporation pursuant to option plans approved by the
Board of Directors of the Corporation, but not to exceed 2,300,000 shares
(subject to appropriate adjustment for stock splits, stock combinations, stock
dividends, reclassifications and similar events affecting the Common Stock)
(including, without limitation, pursuant to options outstanding as of the
Effective Date) less that number of shares of Common Stock previously issued
pursuant to such option plans, as of the date of such determination; (c) Common
Stock issuable pursuant to warrants outstanding on the Effective Date,
including the warrants issued to the purchasers of the Series C Preferred Stock
and the warrants to be issued to Chestnut Partners; and (d) pursuant to one or
more transactions (other than transactions pursuant to which an employee,
advisor, officer, director, consultant of or other person performing services
for the Corporation will be issued shares of Common Stock (or options to
purchase Common Stock) as direct or indirect compensation for services rendered
or to be rendered or otherwise in connection with their advisory or other
relationship with the Corporation) that do not in the aggregate result in an
issuance, sale or grant of shares of Common Stock or other securities
convertible into, exchangeable for or exercisable for shares of Common Stock
aggregating more than 637,625 shares of Common Stock (subject to appropriate
adjustment for stock splits, stock combinations, stock dividends,
reclassifications and similar events affecting the Common Stock), provided that
the price per share of Common Stock (determined as provided in SECTION 3) and,
if applicable, such other security, is not less than the fair market value of a
share of Common Stock and, if applicable, such other security, as determined in
good faith by the Board of Directors.
(2) Approve, authorize or permit any issuance or sale of capital
stock by a Subsidiary other than to the Corporation in the case of a wholly-
owned subsidiary. As used in this SECTION 4.2, the term "Subsidiary" shall
mean any corporation, partnership, trust or other entity of which the
Corporation and/or any of the Corporation's Subsidiaries directly or indirectly
owns and has the right to vote at the time a majority of the outstanding shares
of the voting securities of such corporation, partnership, trust or other
entity.
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(3) Consolidate or merge into or with any other entity or entities,
or sell, transfer or otherwise dispose of all or substantially all of the
Corporation's assets or approve or authorize any such consolidation, merger,
sale, transfer or disposition by any Subsidiary.
(4) Declare or pay any dividend or other distribution (as defined in
SECTION 1.2) payable in cash or property (other than a dividend payable in
shares of Common Stock on Common Stock) on the outstanding shares of capital
stock other than on the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
stock senior to or in parity with the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock with respect to dividends pursuant to the terms
thereof that are issued in accordance with SECTION 4.2.B(3) or approve,
authorize or permit the declaration or payment of any dividend or other
distribution on the outstanding capital stock of any Subsidiary other than a
wholly-owned subsidiary.
(5) Apply any of the Corporation's assets or approve, authorize or
permit any Subsidiary to apply its assets to the redemption, retirement,
repurchase or acquisition, directly or indirectly through one or more
Subsidiaries or otherwise, of any shares of capital stock of the Corporation
other than redemptions, retirements, repurchases and acquisitions of (i) shares
of capital stock made pursuant to the terms thereof that are issued in
accordance with SECTION 4.2.B(3) hereof, and (ii) shares of capital stock
approved by the Board from employees, advisors, officers, directors and
consultants of, and persons performing services for, the Corporation or its
subsidiaries upon termination of employment or association with the
Corporation.
(6) Subject to SECTION 4.2.B(2) amend, alter or repeal any provision
of, or add any provision to, the Certificate of Incorporation of the
Corporation.
(7) Enter into, permit or acquiesce in any liquidation, dissolution
or winding up of the Corporation.
(8) Acquire any other business.
B. For so long as there remain issued and outstanding any shares of
Series E Preferred Stock, without the affirmative vote or consent of holders
representing at least 66-2/3% of the outstanding shares of Series E Preferred
Stock, and in addition to any vote otherwise required by the Law:
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<PAGE> 79
(1) Amend, alter or repeal the rights, preferences, privileges, or
restrictions of such Series E Preferred Stock or effect any reclassification of
the Series E Preferred Stock.
(2) Amend, alter or repeal any provision of, or add any provision to,
the Certificate of Incorporation or By-laws of the Corporation if such change
could reasonably be expected to adversely affect the holders of the Series E
Preferred Stock in any respect, provided that subject to SECTION 4.2.A(1) the
immediately foregoing shall not prohibit the adoption and filing of one or more
additional Certificates of Designations for Preferred Stock not otherwise
prohibited by SECTION 4.2.B(3).
(3) Create, authorize, issue or sell (including but not limited to by
way of reclassification or in connection with the creation of any convertible
indebtedness) any shares of any other class or series of shares providing for
(i) dividends or other distributions on a preferred or parity basis to the
Series E Preferred Stock, (ii) dividends at a rate greater than the dividend
rate for the Series E Preferred Stock, (iii) redemption rights or (iv)
liquidation privileges senior to, or on a parity with, the Series E Preferred
Stock, or senior to the Common Stock in excess of the sum of the original
purchase price thereof plus accrued dividends.
SECTION 5. REISSUANCES
5.1 NO REISSUANCE OF SERIES E PREFERRED STOCK. No shares of Series E
Preferred Stock which have been converted into Common Stock or otherwise cease
to be outstanding shall be reissued by the Corporation; provided, however, that
each such share, after being retired and canceled, shall be restored to the
status of an authorized but unissued share of Preferred Stock without
designation as to series and may thereafter be issued as a share of Preferred
Stock not designated as Series E Preferred Stock.
IN WITNESS WHEREOF, I have hereto set my hand this 9th day of December,
1996.
ILEX ONCOLOGY, INC.
By:
----------------------------------
Richard L. Love,
President
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<PAGE> 1
Exhibit 10.3
CTRC
CANCER THERAPY & RESEARCH CENTER
December 4, 1996
Mr. Richard L. Love By Telecopy
President
Ilex Oncology, Inc.
11550 IH 10 West, Suite 340
San Antonio, Texas 78230
Loan Agreement Dated As Of November 18, 1994
Dear Mr. Love:
The purpose of this letter is to evidence the agreement between Ilex
Oncology, Inc. and CTRC Research Foundation that the Loan Agreement dated as of
November 18, 1994 between Biovensa, Inc., as Borrower (which by change of its
corporate name became Ilex Oncology, Inc.) and CTRC Research Foundation, as
Lender, is terminated effective as of December 2, 1996 and that neither party
shall, after that date, have any obligation or liability to the other under the
Loan Agreement or under the Promissory Note of even date therewith in the
original principal amount of $500,000. CTRC Research Foundation acknowledges
and agrees that all indebtedness of Ilex Oncology, Inc. owed to CTRC Research
Foundation under the Loan Agreement or the Note has been paid in full.
If this letter correctly sets forth our agreement, please so indicate by
signing the enclosed copy of this letter and returning it to us.
Very truly yours,
CTRC RESEARCH FOUNDATION
By: /s/ David C. Spoor
----------------------------------------
David C. Spoor
Vice President and
General Counsel
Agreed to this 5th day of December, 1996
---------
ILEX ONCOLOGY, INC.
By: /s/ R. L. Love
----------------------------------------
Richard L. Love, President
<PAGE> 1
EXHIBIT 10.10
AGREEMENT TO USE PREMISES ON A NON-EXCLUSIVE BASIS
THIS AGREEMENT TO USE PREMISES ON A N0N-EXCLUSIVE BASIS ("Agreement") is made
and entered into on this 1 day of September, 1996, by and between Owner and
User.
WITNESSETH:
1. CERTAIN DEFINITIONS AND BASIC TERMS.
1.01 Parties, Use Fee, Term and Premises. Owner and user
hereby agree that for purposes of this Agreement, the following capitalized
terms shall mean:
Owner: CTRC RESEARCH FOUNDATION
User: ILEX ONCOLOGY, INC.
Use Fee: $2,197.80 per month.
Location: 14960 Omicron, San Antonio, Texas.
Commencement Date: September 1, 1995
Owner's Address for Notices:
CTRC Research Foundation
8122 Data point, Suite 1000
San Antonio, Texas 78229
Attention: Jeanette Hauck
Premises: One Thousand Three Hundred Thirty-Two (1,332) square
feet of space located in the Building (so called herein) at the
Location designated as Room 103, and more commonly known as the
"formulation laboratory."
User's Address for Notices:
Ilex Oncology, Inc.
14785 Omicron, Suite 101
San Antonio, Texas 78245
Attention: Richard Love
<PAGE> 2
Termination Date: The day preceding the second (2nd) yearly
anniversary of the Commencement Date.
2. DEMISE AND AGREEMENT TERM.
2.01 Demise of Premises. Subject to and upon the terms,
provisions and conditions hereinafter set forth, and each in consideration of
the duties, covenants and obligations or the other hereunder, Owner does hereby
grant to User, and User does have, the right to use the Premises on a non-
exclusive basis subject to the terms and conditions contained herein.
2.02 Term. Subject to and upon the terms and conditions set
forth herein, or in any exhibit hereto, the term of this Agreement shall
commence on the Commencement Date and shall expire on the Termination Date.
3. USE. For the laboratory testing relating to the
formulation of anti-cancer compounds and no other use.
4. USE FEE.
4.01 Covenant to Pay Use Fee. User hereby covenants and agrees
to pay the Use Fee in accordance with Section 4.02 below.
4.02 Use Fee Payments. (a) User hereby agrees to pay the Use
Fee. The Use Fee shall be due and payable on the first day of each calendar
month during each year of the initial term of this Agreement, and User hereby
agrees to so pay such rentals to Owner at Owner's address as provided herein
(or such other address as may be designated by Owner in writing from time to
time) monthly in advance.
(b) If the term of this Agreement as described above commences
on other than the first day of a calendar month or terminates on other than the
last day of a calendar month, then the installments of the Use Fee for such
month or months shall be prorated and the installment or installments so
prorated shall be paid in advance. The payment for such prorated month shall
be calculated by multiplying the monthly installment by a fraction, the
numerator of which shall be the number of days of the lease term occurring
during said commencement or termination month, as the case may be, and the
denominator of which shall be the total number of days occurring in said
commencement or termination month. Also, if the term of this Agreement
commences or terminates on other than the first day of a calendar year, the Use
Fee shall be prorated for such commencement or termination year, as the case
may be, by multiplying each by a fraction, the numerator of which shall be the
number of days of the lease term during the commencement or termination year,
as the case may be, and the denominator of which shall be 365, and the
calculation described in Section 4.02(c) shall be made as soon
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<PAGE> 3
as reasonably possible after the termination of this Agreement, Owner and User
hereby agreeing that the provisions relating to said calculation shall survive
the termination of this Agreement.
(c) User shall pay the use Fee under this Agreement at the
times and in the manner provided in this Agreement, without demand, set-off or
counterclaim. User hereby acknowledges and agrees that (i) Owner and User have
expressly negotiated that except as expressly provided under Section 6.01(c)
below, User's covenants to pay the Use Fee under this Agreement are separate
and independent from Owner's covenants to provide services and other amenities
hereunder, and (ii) had the parties not mutually agreed upon the independent
nature of User's covenants to pay the Use Fee hereunder, Owner would have
required a greater amount of Use Fee in order to enter into this Agreement.
The Use Fee shall bear interest from the date due until paid at the greater of
(1) two percent (2%) above the "prime rate" per annum of The Frost National
Bank or its successor in effect on said due date (or if the "prime rate" be
discontinued, the base reference rate then being used by The Frost National
Bank to define the rate of interest charged to commercial borrowers) or (2)
eighteen percent (18%) per annum; provided, however, in no event shall the rate
of interest hereunder exceed the maximum non-usurious rate of interest
(hereinafter called the "Maximum Rate") permitted by the applicable laws of the
State of Texas or the United States of America, whichever shall permit the
higher non-usurious rate, and as to which User could not successfully assert a
claim or defense of usury, and to the extent that the Maximum Rate is
determined by reference to the laws of the State of Texas, the Maximum Rate
shall be the indicated rate ceiling (as defined and described in Texas Revised
Civil Statutes, Article 5069-1.04, as amended) at the applicable time in
effect.
5. LEASEHOLD IMPROVEMENTS.
5.01 Premise Improvements. User shall not make or allow to be
made any alterations or physical additions (including fixtures) in or to the
Premises, or place safes, vaults or other heavy furniture or equipment within
the Premises, without first obtaining the written consent of the Owner.
5.02 Ownership of Improvements. All alterations, physical
additions, or improvements in or to the Premises (including fixtures) shall,
when made, become the property of Owner and shall be surrendered too Owner upon
termination of this Agreement, whether by lapse of time or otherwise; provided,
however, this clause shall not apply to moveable equipment or furniture owned
by User.
5.03 Indemnity. User shall indemnify and hold harmless Owner
from and against all costs (including attorneys' fees and costs of suit),
losses, liabilities, or causes of action arising out of or relating to any
alterations, additions or improvements made by User to the Premises, including
but not limited to any mechanics' or materialmen's liens asserted in connection
therewith.
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<PAGE> 4
5.04 Liens. User shall not be deemed to be the agent or
representative of Owner in making any such alterations, physical additions or
improvements to the Premises, and shall have no right, power or authority to
encumber any interest in the Premises, the Building or the Complex (so called
herein) of which the Building is a part in connection therewith. However,
should any mechanics' or other liens be filed against all or any portion of the
Complex or any interest therein (other than User's leasehold estate hereunder)
by reason of User's acts or omissions or because of a claim against User or its
contractors, User shall cause the same to be cancelled or discharged of record
by bond or otherwise within ten (10) days after notice by Owner. If User shall
fail to cancel or discharge said lien or liens, within said ten (10) day
period, which failure shall be deemed to be a default hereunder, Owner may, at
its sole option and in addition to any other remedy of Owner hereunder, cancel
or discharge the same and upon Owner's demand, User shall promptly reimburse
Owner for all costs incurred in canceling or discharging such lien or liens.
6. OWNER SERVICES.
6.01 Services. (a) Provided that no Event of Default (as
hereinafter defined) has occurred ad is continuing, Owner shall furnish to
those portions of the Premises which are occupied by User:
(i) Hot and cold domestic water at a point of supply
located at the exterior of the Premises.
(ii) Subject to curtailment as required by governmental
laws, rules or regulations, central heat and air-conditioning in
season, at such temperatures and in such amounts as are
considered by Owner to be standard, for all common laboratory
uses.
(iii) Sufficient electricity to operate (i) all common
laboratory uses and equipment and (ii) electrical lighting
service for all public areas.
(iv) Janitor service on a five (5) day per week basis.
(v) Equipment and personnel to limit access to the
Building after normal business hours; provided, however, Owner
shall have no responsibility to prevent, and shall not be liable
to User for, and shall be indemnified by User against, liability
or loss to User, its agents, employees and visitors arising out
of losses due to theft, burglary, or damage or injury to persons
or property caused by persons gaining access to the Building or
the Premises, and User hereby releases Owner from all liability
relating thereto.
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(vi) All Building standard fluorescent bulb replacement
in all areas and all incandescent bulb replacement in public
areas, toilet and rest room areas and stairwells
(vii) Pest control service as Owner deems appropriate.
(viii) Access to, and use of, Owner's hazardous waste
disposal services in connection with User's ordinary conduct of
its formulation business, which access and/or use shall at all
times comply with any and all rules and regulations which may be
adopted by Owner from time to time pertaining thereto, the
initial set of such rules being attached hereto as Exhibit "A".
(ix) Incidental use of common office equipment and
kitchen facilities.
(b) To the extent any of the services or amenities required to
be provided by Owner pursuant to the terms of this Agreement (the "Owner
Services" require electricity, gas and water supplied by public utilities,
Owner's covenants hereunder shall only impose on Owner the obligation to use
its good faith efforts to cause the applicable public utilities to furnish the
same. Failure by Owner to furnish any of the Owner Services to any extent, or
any cessation thereof, resulting from causes beyond the reasonable control of
Owner, shall not render Owner liable in any respect for damages to either
person or property, not be construed as an eviction of User, nor work an
abatement of the Use Fee nor relieve User from fulfillment of any covenant or
agreement hereof. As used herein, the phrase "causes beyond the reasonable
control of Owner" shall include, without limitation, acts of the public enemy,
restraining of government, unavailability of materials, strikes, civil riots,
floods, hurricanes, tornadoes, earthquakes and other severe weather conditions
or acts of God.
(c) In the event of a failure by Owner to provide the Owner
Services resulting from the malfunction or obsolescence of the Building
equipment or machinery, or from any other cause which is reasonably within the
control of Owner, Owner covenants and agrees to use diligent good faith efforts
to promptly repair or replace such equipment or machinery, or to rectify such
other cause, and to restore such Owner Services. User hereby agrees and
covenants that, in the event of any interruption or cessation of Owner Services
described in this Section 6.01(c), User shall have no claim for damages on
account thereof but shall be entitled to a fair and equitable abatement of the
Use Fee for so long as, and to the extent, such condition renders the Premises
unusable for User's normal operations in the event any such condition renders
the Premises unusable for more than three (3) consecutive days.
(d) User hereby acknowledges and agrees that Owner is
obligated to provide only the Owner Services under this Agreement, and that
Owner, its agents and representatives, have made no representations whatsoever
of any additional services or amenities to be provided by Owner now or in the
future under this Agreement. Notwithstanding the foregoing, User recognizes
that Owner may, at Owner's sole option, elect to provide additional services or
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amenities for the users of the Complex from time to time, and hereby agrees
that Owner's discontinuance of any of same, including any of same currently
provided or announced, shall not constitute a default of Owner under this
Agreement nor entitle User to any abatement of or reduction in the Use Fee.
6.02 Keys and Locks. Owner shall furnish User with sufficient
sets of keys for the Building corridor doors entering the Premises. Additional
keys will be furnished by Owner upon an order signed by User and at User's
expense. All such keys shall remain the property of Owner. No additional
locks shall be allowed on any door of the Premises without Owner's permission,
and User shall not make or permit to be made any duplicate keys, except those
furnished by Owner. Upon termination of this Agreement, User shall surrender
to owner all keys to any locks on doors entering or within the Premises, and
give to Owner the explanation of the combination of all locks for safes, safe
cabinets and vault doors, if any, in the Premises.
6.03 Maintenance and Repairs. Owner shall maintain the
Building in a good and operable condition, and shall make such repairs and
replacements as may be required to maintain the Building in such condition.
This Section 6.03 shall not apply to damages resulting from an exercise of
eminent domain (as to which Section 8 shall apply).
6.04 Owner Alterations or Modifications. Notwithstanding
anything herein to the contrary, Owner hereby expressly reserves the right in
its sole discretion to (a) temporarily or permanently change the location of,
close, block or otherwise alter any entrances, corridors, skywalks, tunnels,
doorways or walkways leading to or providing access to the Building or any part
thereof or otherwise restrict the use of same provided such activities do not
unreasonably impair User's access to the Premises and (b) improve, remodel, or
otherwise alter the Premises and/or the Building, and it is agreed that Owner
shall not incur any liability whatsoever to User as a consequence thereof and
such activities shall not be deemed to be a breach of any of Owner's
obligations hereunder. Owner agrees to exercise good faith in notifying User
within a reasonable time in advance of any alterations, modifications or other
actions of Owner under this Section 6.04.
7. CARE AND USE OF THE PREMISES.
7.01 Repairs by User. User shall at its own cost and expense,
(i) maintain the Premises in a clean, safe, operable, attractive condition, and
shall not commit or allow to remain any waste or damage to any portion thereof
or to the Complex, and (ii) subject to Owner's supervision, repair or replace
any damage or injury to the Premises, the Building or the Complex caused by
User, its agents, contractors, employees, invitees, or visitors. If User fails
to make such repairs or replacements promptly, Owner may, at its option, make
such repairs or replacements, and User shall repay the cost thereof plus a
charge of fifteen percent (15%) to the Owner on demand. Any damage or injury
to the Premises, the Building or its systems and (notwithstanding the
foregoing) any damage or injury which affects the Building's
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structural components or major mechanical, electrical or plumbing systems,
caused by User, its agents, contractors, employees, invitees or visitors shall
be repaired or replaced by Owner, but at User's expense plus a charge of
fifteen percent (15%).
7.02 Nuisance. User shall conduct its business and control its
agents, employees, invitees, contractors and visitors in such manner as not to
create any nuisance, or unreasonably interfere with, annoy or disturb any other
User or Owner in its operation of the Building.
7.03 Laws and Regulations; Rules of Building. User shall
comply with, and User shall cause its visitors, employees, contractors, agents
and invitees to comply with, all laws, ordinances, orders, rules and
regulations (state, federal, municipal and other agencies or bodies having any
jurisdiction thereof) relating to the use, condition or occupancy of the
Premises, and with the rules of the Building reasonably adopted and altered by
Owner from time to time for the safety, care and cleanliness of the Premises
and the Building and for preservation of good order therein, all of which
Building rules will be sent by Owner to User in writing and shall be thereafter
carried out and observed by User, its employees, contractors, agents, invitees
and visitors. No change in the rules of the Building shall be binding upon
User until Owner sends written notice of such change to User.
7.04 Specifically Prohibited Uses. User shall not (a) occupy
or use the Premises, or permit any portion of the Premises to be occupied or
used, for any business or purpose which is unlawful, disreputable or deemed to
be excessively hazardous on account of fire or other hazards given the
permitted use of the Premises, or permit anything to be done which would in any
way increase the rate of fire or liability or any other insurance coverage on
the Building and/or its contents, or (b) keep, or permit to be kept, any
substance in the Premises which might emit offensive odors into other portions
of the Building.
7.05 Surrender of the Premises. At the termination of this
Agreement, by lapse of time or otherwise, User's right to use and occupy the
Premises shall terminate and User shall deliver all keys to the Premises to
Owner, with all damage caused to the Premises or any other part of the Complex
by User or its agents or employees repaired.
7.06 Holding Over. In the event of holding over by User after
expiration or termination of this Agreement without the prior written consent
of Owner, User shall pay as liquidated damages double the amount of the Use Fee
which was payable by User immediately prior to such expiration or termination.
In the event of any unauthorized holding over, User shall also indemnify Owner
against all claims for damages by any other User to whom Owner may have agreed
to let use all or any part of the Premises effective upon the termination of
this Agreement. Any such holding over without the prior written consent of
Owners hall create a tenancy at sufferance relationship with User.
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7.07 Hazardous Substances. (a) If Hazardous Substance are
used, stored, generated, or disposed of on or in the Premises, or if the
Premises become contaminated in any manner for which User is legally liable,
User shall indemnify and hold harmless Owner from any and all claims, damages,
fines, judgments, penalties, costs, liabilities, or losses (including, without
limitation, a decrease in value of the Premises, damages caused by loss or
restriction of rentable or usable space, or any damages caused by adverse
impact on marketing of the space, and any and all sums paid for settlement of
claims, attorneys' fees, consultant, and expert fees) arising during or after
the lease term and arising as a result of that contamination by User. This
indemnification incudes, without limitation, any and all costs incurred because
of any investigation of the site or any cleanup, removal, or restoration
mandated by a federal, state, or local agency or political subdivision.
Without limiting the foregoing, which causes or permits the presence of any
Hazardous Substance in the Premises and that results in contamination of the
Premises, User shall promptly, at its sole expense, take any and all necessary
actions to return the Premises to the condition existing prior to the presence
of any such Hazardous Substance in the Premises. User shall obtain Owner's
prior written approval for any such remedial action. The indemnity obligations
of User under this Section 7.07(a) shall survive the expiration or earlier
termination of this Agreement.
(b) As used herein, "Hazardous Substance" means any substance
that is toxic, ignitable, reactive, or corrosive and that is regulated by any
local government, the State of Texas, or the United States Government.
"Hazardous Substance" includes any and all material or substances that are
defined as "hazardous waste," "extremely hazardous waste," or a "hazardous
substance" pursuant to state, federal, or local governmental law. "Hazardous
Substance" includes but is not restricted to asbestos, polychlorobiphenyls
("PCBs"), and petroleum. Notwithstanding anything in this Section 7.07(b) to
the contrary, "Hazardous Substances" shall not include materials commonly used
in the ordinary operations of User's business, provided that (i) such materials
are used and stored in the Premises in quantities ordinarily used and stored in
common laboratory space and (ii) such materials are not introduced into the
Building's plumbing systems or are not otherwise released or discharged in the
Premises or the Building; provided same shall not be deemed or construed as
limiting User's right to access the Building's Hazardous Waste disposal system
in the ordinary course of its formulation business.
(c) Any handling, use, storage, presence, disposal, and/or
generation of Hazardous Substances on the Premises by User which is consented
to by Owners hall be done in accordance with such standards and/or requirements
which Owner may promulgate from time to time including, without limitation, the
rules attached hereto as Exhibit "A".
8. CONDEMNATION. If all or any part of the Complex is taken
or condemned, or acquired under threat of condemnation, by or at the direction
of any governmental authority (a "Taking" or "Taken", as the context requires),
or if the awards payable to Owner as a result of any Taking are, in Owner's
opinion, inadequate to restore the remainder to an economically viable, quality
office building, Owner may, at its election,
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<PAGE> 9
exercisable by the giving of written notice to User within sixty (60) days
after the date of the Taking, terminate this Agreement as of the date of the
Taking or the date User is deprived of possession of the Premises (whichever is
later). If this Agreement is not terminated as a result of a Taking, Owner
shall restore the Premises remaining after the Taking to Building standard
condition. All awards, proceeds, compensation or other payments from or with
respect to any Taking of the Complex or any portion thereof shall belong to
Owner, User hereby assigning to Owner all of its right, title, interest and
claim to same.
9. DAMAGES FROM CERTAIN CAUSES. Owners shall not be liable
or responsible to User for any loss or damage to any property or person
occasioned by theft, fire, act of God, public enemy, injunction, riot, strike,
insurrection, war, court order, requisition or order of governmental body or
authority, or any cause beyond Owner's control, or for any damage or
inconvenience which may arise through repair or alteration of any part of the
Building.
10. CASUALTY. If the Premises shall be partially destroyed by
fire or other casualty so as to render the Premises untenantable in whole or in
part, the Use Fee shall abate thereafter as to the portion of the Premises
rendered untenantable until such time as the Premises are made tenable as
reasonably determined by Owner and Owner agrees to commence and prosecute such
repair work promptly and with all due diligence; provided, however, in the
event Owners shall decide not to rebuild then all rent owed up to the time of
such destruction or termination shall be paid by User and thenceforth this
Agreement shall cease and come to an end. Owner shall give User written notice
of its decisions, estimates or elections under this Section 10 within sixty
(60) days after any such damage or destruction. Notwithstanding anything
contained in this Section 10, Owner shall only be obligated to restore or
rebuild the Premises to a Building standard condition and in no event shall
Owner be required to expend more sums than received from the proceeds of any
insurance carried by Owner.
11. INSURANCE.
11.01 Insurance by Owner. Owner shall obtain and maintain
throughout the term of this Agreement the following policies of insurance:
(a) fire and extended coverage insurance on the Building
(excluding non-Building standard leasehold improvements and on all Building
standard improvements; and
(b) comprehensive general and contractual liability insurance
against claims for personal injury, death and property damage occurring in or
about the Building.
Said insurance shall be maintained with an insurance company authorized to do
business in Texas, in amounts desired by Owner and at the expense of Owner (but
with the same to be included in the operating expenses of the Building as
described in Section 4.03) and payments for losses thereunder shall be made
solely to Owner. If the annual premiums to be paid by
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Owner for casualty insurance shall exceed the standard rates because of User's
operations within or contents of the Premises or because the improvements to
the Premises are above Building standard, User shall promptly pay the excess
amount of the premium upon request by Owner (and if necessary, Owner may
allocate the insurance costs of the Building to give effect to this sentence).
Alternatively, Owner may meet its insurance coverage hereunder through self-
insurance coverage provided that the coverage thereunder is substantially
similar to the coverage which would otherwise have been provided by a third
party insurance carrier in order to comply with this Section 11.01. In the
event Owner elects to self-insure, Owner shall have the right to assess and
include within Operating Expenses the amount of the premium which would have
been payable had Owner purchased such insurance.
11.02 Insurance by User. User shall obtain and maintain
throughout the term of this Agreement the following policies of insurance:
(a) fire and extended coverage insurance, with vandalism,
malicious mischief and sprinkler leakage endorsements, on all of User's
personal property in the Premises in an amount not less than the full
replacement cost thereof;
(b) comprehensive general and contractual liability insurance
against claims for personal injury, death and property damage occurring in or
about the Premises, such insurance to afford protection to the limits of (i)
not less than $1,000,000.00 in respect of injury to or death of any number of
persons arising out of any one occurrence and (ii) $500,000.00 in respect of
any instance of property damage; and
(c) such other policy or policies of insurance as Owner may
reasonably require or as Owner is then requiring from one or more other Users
in the Building; including such environmental coverage as Owner may require.
User shall deliver to Owner, prior to the Commencement Date, certificates of
such insurance and shall, at all times during the term of this Agreement,
deliver to Owner upon request true and correct copies of said insurance
policies. The policy described in clause (b) shall (i) name Owner as an
additional insured, (ii) provide that it will not be cancelled or reduced in
coverage without thirty (30) days' prior written notice to Owner, (iii) insure
performance of all the indemnities of User contained in this Agreement, and
(iv) be primary coverage, so that any insurance coverage obtained by Owner
shall be excess thereto. User shall deliver to Owner certificates of renewal
at least thirty (30) days prior to the expiration date of each such policy and
copies of new policies at least thirty (30) days prior to terminating any such
policies. All policies of insurance required to be obtained and maintained by
the User shall be subject to the approval of Owner as to terms, coverage,
deductibles and issuer.
11.03 Waiver of Recovery and Subrogation Rights. Owner and User
each hereby waives any and all rights of recovery, claims, actions or causes of
action, against the other, its agents, servants, partners, shareholders,
officers, or employees,for any loss or damage
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that may occur to the Premises or Building, or any improvements thereto, or any
personal property of such party therein, by reason of fire, the elements, or
any other cause which could be insured against under the terms of the insurance
policies required to be maintained pursuant to Sections 11.01 and 11.02 hereof,
regardless of cause or origin, including negligence of the other party hereto,
its agents, officers, partners, shareholders, servants, or employees, and
covenants that no insurer shall hold any right of subrogation against such
other party; provided, however, the waiver set forth in this Section 11.03
shall not apply to any deductibles on insurance policies carried by Owner or to
any coinsurance penalty which Owner might sustain. If the respective insurer
of Owner and User does not permit such a waiver without an appropriate
endorsement to such party's insurance policy, then Owner and User each covenant
and agree to notify its insurer of the waiver set forth herein and to secure
from such insurer an appropriate endorsement to its respective insurance policy
with respect to such waiver.
12. HOLD HARMLESS. Owner shall not be liable to User, its
agents, servants, employees, contractors, customers or invitees for any damage
to person or property caused by any act, omission or neglect of User, its
agents, servants or employees, and User agrees to indemnify and hold Owner
harmless from all liability and claims for any such damage. User shall not be
liable to Owner, or to Owner's agents, servants, employees, contractors,
customers or invitees for any damage to person or property caused by any act,
omission or neglect of Owner, its agents, servants or employees, and Owner
agrees to indemnify and hold User harmless from all claims for such damage.
13. ENFORCEMENT OF AGREEMENT.
13.01 Default by User. The occurrence of any one or more of the
following shall constitute an "Event of Default" under this Agreement:
(a) the failure of User to pay the Use Fee as and when due
under this Agreement and the continuance of such failure for a period of five
(5) days after written notice to User;
(b) the failure of User to perform, comply with or observe any
of the other covenants or conditions and the continuance of such failure for a
period of ten (10) days after written notice to User; or, if such failure
cannot reasonably be cured within said ten (10) day period despite User's
diligent good faith efforts, the failure of User to promptly commence its
diligent good faith efforts to cure such failure within said ten (10) day
period and/or the continuance of such failure for a period of thirty (30) days
notwithstanding User's efforts to cure;
(c) the filing of a petition by or against User or any
guarantor of User's obligations under this Agreement (i) naming User as debtor
in any bankruptcy or other insolvency proceeding, (i) for the appointment of a
liquidator or receiver for all or substantially
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all of User's property or for User's interest in this Agreement, or (iii) to
reorganize or modify User's capital structure;
(d) the admission by User in writing of its inability to meet
its obligations as they become due or the making by User of an assignment for
the benefit of its creditors;
(e) the attempt by User to assign this Agreement or to sublet
all or any part of the Premises without the prior written consent of Owner in
accordance with Section 17.
13.02 Remedies of Owner. Upon any Event of Default, Owner may
exercise any one or more of the following described remedies, in addition to
all other rights and remedies provided at law or in equity:
(a) Terminate this Agreement by written notice to User and
forthwith repossess the Premises and be entitled to recover forthwith as
damages a sum of money equal to the total of (i) the cost of recovering the
Premises (including attorneys' fees and costs of suit), (ii) the cost of
removing and storing any personal property, (iii) the unpaid Use Fee earned at
the time of termination, plus interest thereon at the rate described in Section
4.04(c), (iv) the present value (discounted at the same rate) of the fair
market rental value of the Premises for said period, taking into account the
period of time the Premises will remain vacant until a new User is obtained,
and the cost to prepare the Premises for occupancy and the other costs (such as
leasing commissions and attorneys' fees) to be incurred by Owner in connection
therewith, and (v) any other sum of money and damages owed by User to owner
under this Agreement.
(b) Elect to receive liquidated damages in an amount equal to
the monthly Use Fee payable hereunder for the month during which this Agreement
is terminated times twelve (12), which amount shall be in lieu of the payment
of damages Owner may suffer by reason of such termination, duty which shall not
be in lieu of or reduce in any way any amount due from User (including accrued
Use Fee) or damages incurred by Owner due to breach by User of any covenant or
other obligation therein (whether or not liquidated) which accrued prior to the
termination of this Agreement. Nothing contained in this Agreement shall limit
or prejudice the right of Owner to prove for and obtain in any proceedings to
enforce Owner's rights hereunder, including without limitation, any proceedings
for bankruptcy or insolvency by reason of the termination of this Agreement, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater, equal to, or less than the amount
of the loss or damages referred to above.
(c) Terminate User's right of possession (but not this
Agreement) by forcible entry and detainer suit or otherwise, without thereby
releasing User from any liability hereunder and without demand or notice of any
kind to User and without terminating this Agreement. Owner shall not be
liable, nor shall User's obligations hereunder be diminished because of,
Owner's failure or refusal to re-license the Premises or collect any Use Fee
due in respect
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thereof. For the purpose of such re-licensing, Owner shall have the right to
decorate or to make any repairs, changes, alterations or additions in or to
Premises as may be reasonably necessary or desirable. In the event that (i)
Owner shall fail or refuse to re-license the Premises, or (ii) the Premises are
re-licensed and a sufficient sum shall not be realized from such-relicensing
(after first deducting therefrom, for retention by Owner, the unpaid rent due
hereunder earned by unpaid at the time of re-licensing plus interest thereon at
the rate specified in Section 4.04(c), the cost of recovering possession
[including attorneys' fees and costs of suit), all of the costs and expenses of
such decorations, repairs, changes, alterations and additions, the expense of
such re-licensing and the cost of collection of the Use Fee accruing therefrom]
to satisfy the Use Fee, then User shall pay to Owner as damages a sum equal to
the amount of such deficiency. Any such payments due Owner shall be made upon
demand therefor from time to time and User agrees that Owner may file suit to
recover any sums falling due under the terms of this Section 13.02(c) from time
to time. No delivery to or recovery by Owner of any portion due Owner
hereunder shall be any defense in any action to recover any amount not
theretofore reduced to judgment in favor of Owner, nor shall such re-licensing
be construed as an election on the part of Owner to terminate this Agreement
unless a written notice of such intention to be given to User by Owner.
Notwithstanding any such termination of User's right of possession of the
Premises. Owner may at any time thereafter elect to terminate this Agreement.
In any proceedings to enforce this Agreement under this Section 13.02(c), Owner
shall be presumed to have used its reasonable efforts to relet the Premises,
and User shall bear the burden of proof to establish that such reasonable
efforts were not used.
(d) Alter any and all locks and other security devices at the
Premises, and if it does so Owner shall not be required to provide a new key or
other access right to User unless User has cured all Events of Default;
provided, however, that in any such instance, during Owner's normal business
hours and at the convenience of Owner, and upon the written request of User
accompanied by such written waivers and releases as Owner may require, Owner
will escort User or its authorized personnel to the Premises to retrieve any
personal belongings or other property or other property of User. The
provisions of this Section 13.03(d) are intended to override and control any
conflicting provisions of the Texas Property Code.
In the event that Owner shall have taken possession of the
Premises pursuant to the authority herein granted, then Owner shall be the
right to keep in place and use all of the furniture, fixtures and equipment at
the Premises, including that which is owned by or leased to User at all times
prior to any foreclosure thereon by Owner or repossession thereof by any lessor
thereof or third party having a lien thereon. Owner shall also have the right
to remove from the Premises (without the necessity of obtaining a distress
warrant, writ or sequestration or other legal process and without being liable
for prosection or any claim for damages therefor) all or any portion os such
furniture, fixtures, equipment and other property located thereon and place
same in storage at any place within the county in which the Premises is
located; and in such event, User shall be liable to Owner for costs incurred by
Owner in connection with such removal and storage and shall also have the right
to relinquish possession of all or any portion of such furniture, fixtures,
equipment and other property to any person ("Claimant") claiming
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to be entitled to possession thereof who presents to Owner a copy of any
instrument represented to Owner by Claimant to have been executed by User (or
any predecessor or User) granting Claimant the right under various
circumstances to take possession of such furniture, fixtures, equipment or
other property, without the necessity on the part of Owner to inquire into the
authenticity of said instrument and without the necessity of Owner's making any
nature of investigation or inquiry as to the validity of the factual or legal
basis upon which Claimant purports to act; and User agrees to indemnify and
hold harmless from all costs, expense, loss, damage and liability incident to
Owner's relinquishment of possession of all or any portion of such furniture,
fixtures, equipment or other to Claimant.
13.04 Non-Waiver. Failure of Owner to declare any default
immediately upon occurrence thereof, or delay in taking any action in
connection therewith, shall not waive such default, but Owner shall have the
right to declare any such default at any time and take such action as might be
lawful or authorized hereunder, either in law or in equity.
14. ATTORNEYS' FEES. In the event either party defaults in
the performance of any of the terms, agreements or conditions contained in this
Agreement and the other party places the enforcement of this Agreement, or any
part thereof, or the collection of any rent due or to become due hereunder, or
recovery of the possession of the Premises, in the hands of any attorney who
files suit upon the same, and should such non-defaulting party prevail in such
suit, the defaulting party agrees the other party's reasonable attorneys' fees.
15. SUBORDINATION. User covenants and agrees with Owner that
this Agreement is subject and subordinate to any mortgage, deed of trust,
ground lease and/or security agreement which may now or hereafter encumber the
Building or the Land or any interest of Owner therein and/or the contents of
the Building, and to any advances made on the security thereof and to any and
all increases, renewals, modifications, consolidations, replacements and
extensions thereof. This Agreement is further subject to and subordinate to
all matters of record in Bexar County, Texas.
16. ESTOPPEL CERTIFICATE. User agrees periodically to furnish
within ten (10) days after so requested by Owner, any ground lessor or the
holder of any deed of trust, mortgage or security agreement covering the
Building, the Land, or any interest of Owner therein, a certificate signed by a
User certifying (a) that this Agreement is in full force and effect and
unmodified (or if there have been modifications, that the same is in full force
and effect as modified and stating the modifications), (b) as to the
Commencement Date and the date through which Use Fee has been paid, (c) that
User has accepted possession of the Premises and that any improvements required
by the terms of this Agreement to be made by Owner have been completed to the
satisfaction or User, (d) that except as stated in the certificate, no Use Fee
has been paid more than thirty (30) days in advance of its due date, (e) that
the address for notices to be sent to User is as set forth in this Agreement
(or has been changed by notice duly given and is set forth in certificate), (f)
that except as stated in the certificate, User, as of the date of such
certificate, has no charge, lien, or claim of offset against use Fee due or to
become due,
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(g) that except as stated in the certificate, Owner is not then in default
under this Agreement, (h) that there are no renewal or extension options,
rights of first refusal or the like in favor of User except as set forth in
this Agreement; and (i) as to such other matters as may be requested by Owner
or ground lessor or the holder of any such deed of trust, mortgage or security
agreement. Any such certificate may be relied upon by any ground lessor,
prospective purchaser, secured party, mortgagee or any beneficiary under any
mortgage or deed of trust on the Building or the Land or any party thereof or
interest of Owner therein. Should User fall to provide any such certificate
within the requisite time period Owner shall be entitled to provide such
certificate on User's behalf and user shall be bound by the contents thereof.
In order to effectuate the purposes of this Section 16, User hereby appoints
Owner, for the term of this Agreement, as User's agent and attorney-in-fact to
execute and deliver any such certificate on User's behalf should User fail to
timely comply with the terms of this Section 16.
17. NAME CHANGE. Owner and User mutually covenant and agree
that Owner reserves and shall have the right at any time and from time to time
to change the name of the Building as Owner may deem advisable, and Owner shall
not incur any liability whatsoever to User as a consequence thereof.
18. ASSIGNMENT BY OWNER. Owner covenants that User shall any
may peacefully have, hold and enjoy the Premises, subject to the other terms
hereof, provided that User pay the sums herein recited to be paid by User and
performs all of User's covenants and agreements herein contained. It is
understood and agreed that this covenant and any and all other covenants of
Owner contained in this Agreement shall be binding upon Owner and its
successors only with respect to breaches occurring during its and their
respective ownership of the Owner's interested hereunder.
19. PEACEFUL ENJOYMENT. Owner covenants that User shall and
may peacefully have, hold and enjoy the Premises, subject to the other terms
hereof, provided that User pays the sums herein recited to be paid by User and
performs all of User's covenants and agreements herein contained. It is
understood and agreed that this covenant and any and all other covenants of
Owner contained in this Agreement shall be binding upon Owner and its
successors only with respect to breaches occurring during its and their
respective ownership of the Owner's interest hereunder.
20. LIMITATION OF OWNER'S PERSONAL LIABILITY. User
specifically agrees to look solely to Owner's interest in the Building for the
recovery of any judgment against Owner, it being agreed that Owner, its
officers, directors and employees shall never be personally liable for any such
judgment. The provision contained in the foregoing sentence is not intended
to, and shall not, limit any right that User might otherwise have to obtain
injunctive relief against Owner or Owner's successors in interest of any suit
or action in connection with enforcement or collection of amounts which may
become owing or payable under or on account of insurance maintained by Owner.
-15-
<PAGE> 16
21. NOTICES. (a) Any notice or other communications to Owner
or User required or permitted to be given under this Agreement (and copies of
the same to be given to the parties as below described) must be in writing and
shall be effectively given if delivered to such party as its address for notice
set forth Section 1.01 above, or it sent by United States mail, certified or
registered, return receipt requested, to said address. Any notice mailed shall
be deemed to have been given on the regular business day next following the
date of deposit of such item in a depository of the United States Postal
Service in San Antonio, Texas. Notice effected other than by mail shall be
deemed to have been given at the time of actual delivery. Either party shall
have the right to change its address to which notices shall thereafter be sent
by giving the other written notice thereof. Additionally, User shall send
copies of all notices required or permitted to be given to Owner to each lessor
under any ground or land lease covering all or part of the Land and each holder
of a mortgage or deed of trust encumbering the Complex who notifies User in
writing of its interest and the address to which notices are to be sent.
22. MISCELLANEOUS
22.01 Waiver of Lien by User. User shall have no right, and
User hereby waives and relinquishes all rights which User might otherwise have,
to claim any nature of lien against the Building or to withhold, deduct from or
offset against any Use Fee or other sums to be paid to Owner by User.
22.02 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of Owner, and shall
be binding upon and inure to the benefit of User, its successors, and, to the
extent assignment may be approved by Owner hereunder, User's assigns.
22.03 Number and Gender. The pronouns of any gender shall
include the other genders, and either the singular or the plural shall include
the other.
22.04 Remedies Cumulative; Applicable Law. All rights and
remedies of Owner under this Agreement shall be cumulative and none shall
exclude any other rights or remedies allowed by law and this Agreement is
declared to be a Texas contract, and all of the terms thereof shall be
construed according to the laws of the State of Texas.
22.05 Amendment. This Agreement may not be altered, changed or
amended, except by an instrument in writing executed by all parties hereto.
22.06 Entire Agreement. The terms and provisions of all
Exhibits described herein and attached hereto are hereby made a part hereof for
all purposes. This agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof, and all prior correspondence,
memoranda, agreements or understandings (written or oral) with respect hereto
are merged into and superseded by this Agreement.
-16-
<PAGE> 17
22.07 Authority of User. If User is a corporation, partnership
or other entity, User warrants and represents unto Owner that (a) User is a
duly organized and existing legal entity, in good standing in the State of
Texas, (b) User has full right and authority to execute, deliver and perform
this Agreement, (c) the person executing this Agreement was authorized to do so
and (d) upon request of Owner, such person will deliver to Owner satisfactory
evidence of his or her authority to execute this Agreement on behalf of User.
22.08 Good Faith Efforts. Whenever in this Agreement there is
imposed upon Owner the obligation to use its good faith efforts, reasonably
efforts or diligence, Owner shall be required to do so only to the extent the
same is economically feasible and otherwise will not impose upon Owner extreme
financial or other business burdens.
22.09 Severability. If any term or provision of this Agreement,
or the application thereof to any person or circumstance, shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those as
to which it is invalid or unenforceable, shall not be affected thereby, and
each provision of this Agreement shall be valid and shall be enforceable to the
extent permitted by law.
22.10 No Recording. Neither this Agreement (including any
Exhibits hereto) nor any memorandum hereof shall be recorded without the prior
written consent of Owner.
22.11 Joint and Several Obligations. If more than one person
executes this Agreement as User, their obligations hereunder are joint and
several, and any act or notice of or to, or refund to, or the signature of, any
one or more of them, in relation to the renewal or termination of this
Agreement, or under or with respect to any of the terms hereof shall be fully
binding on each and all of the persons executing this Agreement as a User.
22.12 Exhibits. All Exhibits referenced in this Agreement are
incorporated herein for all purposes as if fully set forth within the text of
this Agreement.
-17-
<PAGE> 18
IN TESTIMONY WHEREOF, the parties hereto have executed this
Agreement as of the date aforesaid.
OWNER:
CTRC RESEARCH FOUNDATION
a Texas corporation
By: /s/ David J. Hirsch
---------------------------------------
Name: David J. Hirsch
-------------------------------------
Title: Chief Operating Officer
------------------------------------
USER:
ILEX ONCOLOGY, INC.
a Delaware corporation
By: /s/ Richard L. Love
---------------------------------------
Name: Richard L. Love
-------------------------------------
Title: President and Chief
Executive Officer
------------------------------------
-18-
<PAGE> 1
EXHIBIT 10.11
================================================================================
COMMERCIAL INDUSTRIAL SUBLEASE AGREEMENT
Between
TRTF/CTRCRF BUILDING CORPORATION
And
ILEX ONCOLOGY INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1: DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Affiliate: . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Commencement Date . . . . . . . . . . . . . . . . . . . . . 1
1.4 Construction of Improvements . . . . . . . . . . . . . . . . 1
1.5 Date of Lease . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Expense Reimbursements . . . . . . . . . . . . . . . . . . . 1
1.7 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.9 Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Percentage Rent . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Permitted Use . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Phase II or Phase III Facility: . . . . . . . . . . . . . . 2
1.13 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 Renewal Options . . . . . . . . . . . . . . . . . . . . . . 2
1.15 Right of First Refusal for Additional Space . . . . . . . . 2
1.16 Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2: LEASE AND LEASE TERM . . . . . . . . . . . . . . . . . . . . 3
2.1 Lease of Demised Premises for Lease Term. . . . . . . . . . 3
2.2 Delay in Commencement. . . . . . . . . . . . . . . . . . . . 3
2.3 Early Occupancy. . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Holding Over. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3: RENT AND SECURITY DEPOSIT . . . . . . . . . . . . . . . . . 4
3.1 Manner of Payment. . . . . . . . . . . . . . . . . . . . . . 4
3.2 Time of Payment. . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Percentage Rent. . . . . . . . . . . . . . . . . . . . . . . 4
3.4 "Gross Sales". . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Sales Reports, Records and Financial Statements. . . . . . . 5
3.6 Good Funds Payments. . . . . . . . . . . . . . . . . . . . . 5
3.7 Continuous Operation and Manner of Operation. . . . . . . . 6
ARTICLE 4: TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Payment by Landlord. . . . . . . . . . . . . . . . . . . . . 6
4.2 Improvements by Tenant. . . . . . . . . . . . . . . . . . . 6
4.3 Joint Assessment. . . . . . . . . . . . . . . . . . . . . . 6
4.4 Personal Property Taxes. . . . . . . . . . . . . . . . . . . 6
ARTICLE 5: INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . 6
5.1 Casualty Insurance. . . . . . . . . . . . . . . . . . . . . 6
5.2 Increase in Premiums. . . . . . . . . . . . . . . . . . . . 7
5.3 Liability Insurance. . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.4 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6: USE OF DEMISED PREMISES . . . . . . . . . . . . . . . . . . 9
6.1 Permitted Use. . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 9
6.3 Certificate of Occupancy. . . . . . . . . . . . . . . . . . 9
6.4 Signs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.5 Utility Services. . . . . . . . . . . . . . . . . . . . . . 9
6.6 Landlord's Access. . . . . . . . . . . . . . . . . . . . . . 10
6.7 Quiet Possession. . . . . . . . . . . . . . . . . . . . . . 10
6.8 Exemptions from Liability. . . . . . . . . . . . . . . . . . 10
ARTICLE 7: PROPERTY CONDITION, MAINTENANCE, REPAIRS AND
ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . 11
7.1 Property Condition. . . . . . . . . . . . . . . . . . . . . 11
7.2 Acceptance of Demised Premises. . . . . . . . . . . . . . . 11
7.3 Obligation to Repair. . . . . . . . . . . . . . . . . . . . 11
7.4 Alterations, Additions and Improvements. . . . . . . . . . . 12
7.5 Condition upon Termination. . . . . . . . . . . . . . . . . 13
ARTICLE 8: DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . 13
8.1 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.2 Partial Damage. . . . . . . . . . . . . . . . . . . . . . . 13
8.3 Substantial or Total Destruction. . . . . . . . . . . . . . 14
ARTICLE 9: CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 10: ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . 15
ARTICLE 11: DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . 15
11.1 Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.3 Mitigation and Reasonableness. . . . . . . . . . . . . . . . 17
11.4 Notice of Default. . . . . . . . . . . . . . . . . . . . . . 17
11.5 Limitation of Landlord's Liability. . . . . . . . . . . . . 17
ARTICLE 12: PROTECTION OF LENDERS . . . . . . . . . . . . . . . . . . . 18
12.1 Subordination. . . . . . . . . . . . . . . . . . . . . . . . 18
12.2 Attornment. . . . . . . . . . . . . . . . . . . . . . . . . 18
12.3 Signing of Documents. . . . . . . . . . . . . . . . . . . . 18
12.4 Estoppel Certificates. . . . . . . . . . . . . . . . . . . . 18
ARTICLE 13: ENVIRONMENTAL REPRESENTATIONS AND
INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
13.1 Tenant's Compliance with Environmental Laws. . . . . . . . . 19
13.2 Tenant's Indemnification. . . . . . . . . . . . . . . . . . 19
13.3 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 20
13.4 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 14: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 20
14.1 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 20
14.2 Interpretation. . . . . . . . . . . . . . . . . . . . . . . 21
14.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.4 Severability. . . . . . . . . . . . . . . . . . . . . . . . 21
14.5 Joint and Several Liability. . . . . . . . . . . . . . . . . 21
14.6 Incorporation of Prior Agreements; Modifications. . . . . . 21
14.7 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.8 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . 21
14.9 Venue. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 22
14.11 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.12 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 15: SPECIAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . 22
15.1 EDA Grant Requirements. . . . . . . . . . . . . . . . . . . 22
15.2 Commitment to the Texas Research Park and Relocation. . . . 26
ARTICLE 16: CITY REQUIRED PROVISIONS . . . . . . . . . . . . . . . . . . 26
EXHIBIT A FLOOR OR SITE PLAN . . . . . . . . . . . . . . . . . . . . . 28
EXHIBIT B PROPERTY DESCRIPTION . . . . . . . . . . . . . . . . . . . . 29
EXHIBIT C RENEWAL OPTIONS . . . . . . . . . . . . . . . . . . . . . . 30
EXHIBIT D RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . 33
EXHIBIT E GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBIT F EXPENSE REIMBURSEMENTS . . . . . . . . . . . . . . . . . . . 35
EXHIBIT G CONSTRUCTION OF IMPROVEMENTS . . . . . . . . . . . . . . . . 38
EXHIBIT H METHOD OF CALCULATION OF PERCENTAGE
RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
iii
<PAGE> 5
COMMERCIAL INDUSTRIAL SUBLEASE AGREEMENT
ARTICLE 1: DEFINED TERMS
As used in this Lease, the following terms set forth in this Article One
shall have the respective meanings set forth hereinbelow:
1.1 AFFILIATE: Any corporation, partnership, limited liability
company that (i) owns more than fifty (50%) percent of the common
stock of Tenant; (ii) more than fifty (50%) percent of the
ownership of which is owned by Tenant; or (iii) more than fifty
(50%) percent of the voting interest of which is owned by
shareholders of Tenant.
1.2 BASE RENT: That sum of money, which when paid monthly will fully
amortize the costs of Construction of Improvements to the
Premises (the "Construction Cost") over a twenty year period,
which twenty year period is to begin on the third anniversary of
the Commencement Date, with Base Rental being first due and
payable on the third anniversary of the Commencement Date. The
parties agree that upon request, Landlord will submit copies of
its paid invoices for both hard and soft costs of construction,
the aggregate of which will establish the Construction Cost.
Upon completion of the Construction of Improvements, Landlord
will notify Tenant of the Construction Cost and the Base Rental,
which will be paid in monthly installments in advance.
1.3 COMMENCEMENT DATE: The day Landlord completes Construction of
Improvements.
1.4 CONSTRUCTION OF IMPROVEMENTS: [See Exhibit G]
1.5 DATE OF LEASE: ______________________, 1995.
1.6 EXPENSE REIMBURSEMENTS: [See Exhibit F]
1.7 GUARANTEE: [See Exhibit E NOT APPLICABLE]
1.8 LANDLORD: TRTF/CTRCRF BUILDING CORPORATION
Address of Landlord: 14785 Omicron Drive, San Antonio, Texas,
78245
Telephone: (210) 677-6000
1.9 LEASE TERM: Fifteen (15) years and zero (0) months beginning on
Commencement Date and ending the day prior to the fifteenth
anniversary of the Commencement Date.
<PAGE> 6
1.10 PERCENTAGE RENT: Tenant will pay Landlord percentage rental
based on Gross Sales computed as set out in Exhibit H attached
hereto and made a part hereof.
1.11 PERMITTED USE: [See Section 6.1] Operation of a Good
Manufacturing Practices Pharmaceutical Manufacturing Pilot
Facility and related research, development and office uses.
1.12 PHASE II OR PHASE III FACILITY: Any future facility within the
Texas Research Park operated by Tenant or an Affiliate for the
commercial development, manufacture, or sale of the products
similar to those developed by the Good Manufacturing Practices
Plant operated in the Premises.
1.13 PREMISES:
A. Street address (including county): 14785 Omicron Drive,
Bexar County, San Antonio, Texas, 78245.
B. Floor or site plan: Being a floor area of approximately
7,200 square feet referred to as Suite 201, and being
approximately 60 by 120 feet (measured to the exterior of
outside walls and to the center of the interior walls),
and being more particularly shown in outline on the
floor/site plan attached hereto as Exhibit A. (The
aforementioned street address and the floor or site plan
shall collectively be referred to herein as the "Demised
Premises".)
C. Legal description: The legal description of the property
on which the Demised Premises is situated is more
particularly described in Exhibit B attached hereto (the
"Property").
1.14 RENEWAL OPTIONS: [Conditioned on the Prior Lease being then in
effect, See Exhibit C]
1.15 RIGHT OF FIRST REFUSAL FOR ADDITIONAL SPACE: None [See Exhibit D]
1.16 TENANT: Ilex Oncology Inc.
Address of Tenant: 14785 Omicron Drive, San Antonio, Texas, 78245
Telephone: (210) 677-6000
ARTICLE 2: LEASE AND LEASE TERM
2.1 LEASE OF DEMISED PREMISES FOR LEASE TERM. Landlord leases the
Demised Premises to Tenant and Tenant leases the Demised Premises from Landlord
for the Lease Term
2
<PAGE> 7
stated in Section 1.09. As used herein, the "Commencement Date" shall be the
date specified in Section 1.3 for the beginning of the Lease Term, unless
advanced or delayed under any provision of this Lease.
2.2 DELAY IN COMMENCEMENT. Landlord shall not be liable to Tenant if
Landlord does not deliver possession of the Demised Premises to Tenant on the
first date specified in Section 1.3 above. Landlord's nondelivery of
possession of the Demised Premises to Tenant on that date shall not affect this
Lease or the obligations of Tenant under this Lease. However, the Commencement
Date shall be delayed until possession of the Demised Premises is delivered to
Tenant. The Lease Term shall be extended for a period equal to the delay in
delivery of possession of the Demised Premises to Tenant, plus the number of
days necessary for the Lease Term to expire on the last day of a month. If
Landlord does not deliver possession of the Demised Premises to Tenant within
ninety (90) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the
ninety (90) day period ends. If Tenant gives such notice, the Lease shall be
canceled effective as of the date of its execution, and no party hereto shall
have any obligations, one to the other. If Tenant does not give such notice
within the time specified, Tenant shall have no right to cancel the Lease, and
the Lease Term shall commence upon the delivery of possession of the Demised
Premises to Tenant. If delivery of possession of the Demised Premises to
Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an
amendment to this Lease setting forth the Commencement Date and expiration date
of the Lease Term.
2.3 EARLY OCCUPANCY. If Tenant occupies the Demised Premises prior
to the Commencement Date, Tenant's occupancy of the Demised Premises shall be
subject to all of the provisions of this Lease. Early occupancy of the Demised
Premises shall not advance the expiration date of the Lease Term. Unless
provided otherwise herein, Tenant shall pay Base Rent and all other charges
specified in this Lease for the period of occupancy.
2.4 HOLDING OVER. Tenant shall vacate the Demised Premises upon the
expiration of the Lease Term or earlier termination of this Lease. Tenant
shall reimburse Landlord for and indemnify Landlord against all damages
incurred by Landlord as a result of any delay by Tenant in vacating the Demised
Premises. If Tenant does not vacate the Demised Premises upon the expiration
of the Lease Term or earlier termination of the Lease, Tenant's occupancy of
the Demised Premises shall be a "month to month" tenancy, subject to all of the
terms of this Lease applicable to a month to month tenancy, provided Rent shall
be one and one half times (1 1/2) times the Base Rent in effect as of the
expiration of the Term.
ARTICLE 3: RENT AND SECURITY DEPOSIT
3.1 MANNER OF PAYMENT. All sums payable hereunder by Tenant (the
"Rent") shall be made to the Landlord at the address designated in Section 1.7
or to such other party or address as Landlord may designate. Any and all
payments made to a designated third party for the account
3
<PAGE> 8
of the Landlord shall be deemed made to Landlord when received by said
designated third party. All sums payable by Tenant hereunder, whether or not
expressly denominated as rent, shall constitute rent for the purposes of
Section 502(b)(6) of the Bankruptcy Code and for all other purposes. The Base
Rent is the minimum rent for the Demised Premises and is subject to the terms
and conditions contained in this Lease together with the Exhibits attached
hereto, if any.
3.2 TIME OF PAYMENT. On or before the first day of each month of the
Lease, the installment of Base Rent and other sums due hereunder shall be due
and payable, in advance, without off-set, deduction or prior demand.
Percentage Rent shall be payable at the time set out in Section 3.3, below. If
the Lease Term commences or ends on a day other than the first or last day of a
calendar month, the rent for any fractional calendar month following the
Commencement Date or preceding the end of the Lease Term shall be prorated by
days.
3.3 PERCENTAGE RENT. Tenant agrees to pay Landlord Percentage Rental
on its Gross Sales on an annual basis, in arrears, by no later than April 1
during any Lease Year.
3.4 "GROSS SALES". For purposes of this Lease, annual Gross Sales
shall include the market value of all goods produced and sold, by Tenant, any
Affiliate or any Subtenant, whether for cash or otherwise, in or from the
Premises or any other facility occupied by Tenant or any Affiliate or any
Subtenant located in the Texas Research Park, including, but not limited to,
mail or telephone orders received or filled, and other deposits (offset by such
sums refunded to purchasers), orders taken, sales to employees, and sales by
any Subtenant. Each sale upon installment or credit shall be treated as a sale
for the full price in the month during which the sale was made, irrespective of
the time when Tenant receives payment. Gross sales shall not include, however,
any sums collected and paid out for any sales or excise tax imposed by any duly
constituted governmental authority, nor the amount of returns to shippers or
manufacturers nor the amount of any cash or credit refund made upon any sale if
the merchandise sold, or some part thereof, is thereafter returned by Purchaser
and accepted by Tenant or any subtenant of Tenant nor sales of Tenant's or
Subtenant's fixtures. Where only a portion of the final product produced and
sold by Tenant, any Affiliate, or any Subtenant is manufactured at the Premises
or any other facility located in the Texas Research Park, Gross Sales shall
include such portion of the sales price of the goods as is equal to the product
of the sales price of the goods times a fraction the numerator of which shall
be the cost of manufacture for the work performed on the Premises or any other
facility located in the Texas Research Park and the denominator being the total
product cost of manufacture.
3.5 SALES REPORTS, RECORDS AND FINANCIAL STATEMENTS.
(1) On or before the 15th day of each calendar month
during the term of this Lease, Tenant shall prepare and deliver to Landlord at
the place where rental is then payable a certified statement of Gross Sales
during the preceding calendar month certified to be correct by an officer of
Tenant. In addition, within ninety (90) days after the expiration of each
calendar year and within ninety (90) days after the termination of this Lease,
if this Lease should not terminate at the end of a calendar year, Tenant shall
prepare and deliver to Landlord at the
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place where rental is then payable a statement of Gross Sales from the Demised
Premises during the preceding calendar year (or partial calendar year),
certified to be correct by an independent Certified Public Accountant if Gross
Sales are in excess of $2,000,000.00. If Gross Sales are less than
$2,000,000.00, the statement may be certified by an officer of Tenant. Tenant
shall furnish similar statements for its licensees, concessionaires and
subtenants, if any. All such statements shall be in such form as the Landlord
may require; and, if requested by Landlord, Tenant shall also provide to
Landlord copies of any sales reports submitted by Tenant to the Comptroller of
the State of Texas.
(2) Tenant shall keep in the Demised Premises or at
some other location in the city where the Premises are located a permanent,
accurate set of books and records of all sales of goods and revenue derived
from business conducted in the Demised Premises or any other facility located
in the Texas Research Park, and all supporting records such as tax reports and
banking records. All such books and records shall be retained and preserved
for at least twenty-four (24) months after the end of the calendar year to
which they relate, and shall be subject to inspection and audit by Landlord and
its agents at all reasonable times.
(3) In the event that Tenant fails to deliver
statements of Gross Sales for two (2) consecutive months or in the event that
Landlord is not satisfied with the statements of Gross Sales submitted by
Tenant, Landlord shall have the right to have its auditors make a special audit
of all books and records, wherever located, pertaining to sales made in or from
the Demised Premises. If Tenant's statements are found to be incorrect to an
extent of more than five percent (5%) over the figures submitted by Tenant, or
if Tenant has failed to deliver statements, Tenant shall pay for such audit.
In addition, Tenant shall promptly pay to Landlord any deficiency which is
established by such audit.
3.6 GOOD FUNDS PAYMENTS. If, for any reason whatsoever, any two or
more payments by check from Tenant to Landlord for Rent are dishonored and
returned unpaid, thereafter, Landlord may, at Landlord's sole option, upon
written notice to Tenant, require that all future payments of Rent for the
remaining term of the Lease shall be made by cash, cashier's check, or money
order and that the delivery of Tenant's personal or corporate check will no
longer constitute payment of Rent as provided in this Lease. Any acceptance by
Landlord of a payment for Rent by Tenant's personal or corporate check
thereafter shall not be construed as a waiver of Landlord's right to insist
upon payment by good funds as set forth in this Section 3.6.
3.7 CONTINUOUS OPERATION AND MANNER OF OPERATION. Tenant shall
continuously operate the Demised Premises as a Good Manufacturing Practices
Plant.
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ARTICLE 4: TAXES
4.1 PAYMENT BY LANDLORD. Subject to the requirements for Expense
Reimbursements, Landlord shall pay the real estate taxes on the Demised
Premises.
4.2 IMPROVEMENTS BY TENANT. In the event the real estate taxes
levied against the Demised Premises for the real estate tax year in which the
Lease Term commences are increased in the current tax year or subsequent tax
years as a result of any alterations, additions or improvements made by Tenant
or by Landlord at the request of Tenant, Tenant shall pay to Landlord upon
demand the amount of such increase and continue to pay such increase during the
term of this Lease. Landlord shall use reasonable efforts to obtain from the
tax assessor or assessors a written statement of the total amount of such
increase. It is expressly agreed that the Construction of Improvements are
being done at the request of Tenant.
4.3 JOINT ASSESSMENT. If the real estate taxes are assessed against
the Demised Premises jointly with other property not constituting a part of the
Demised Premises, the real estate taxes for such years shall be equal to the
amount bearing the same proportion to the aggregate assessment that the total
square feet of building area in the Demised Premises bears to the total square
feet of building area included in the joint assessment.
4.4 PERSONAL PROPERTY TAXES. Tenant shall pay all taxes assessed
against trade fixtures, furnishings, equipment, or any other personal property
belonging to Tenant. Tenant shall use reasonable efforts to have its personal
property taxed separately from the Demised Premises, but if any of Tenant's
personal property is taxed with the Demised Premises, Tenant shall pay the
taxes for the personal property within fifteen (15) days after Tenant receives
a written statement for such personal property taxes.
ARTICLE 5: INSURANCE AND INDEMNITY
5.1 CASUALTY INSURANCE. Subject to the provisions for Expense
Reimbursements, during the Lease Term, Landlord shall maintain policies of
insurance covering loss of or damage to the Demised Premises in such amount or
percentage of replacement value as Landlord deems reasonable in relation to
age, location, type of construction and physical condition of the Demised
Premises and the availability of such insurance at reasonable rates. Such
policies shall provide protection against all perils included within the
classification of fire and extended coverage and any other perils which
Landlord deems necessary. Landlord may obtain insurance coverage for Tenant's
fixtures, equipment or building improvements installed by Tenant in or on the
Demised Premises. Tenant shall, at Tenant's expense, maintain such primary or
additional insurance on its fixtures, equipment and building improvements as
Tenant deems necessary to protect its interest. Tenant shall not do or permit
to be done anything which invalidates any such insurance policies. Any
casualty insurance which may be carried by Landlord or Tenant shall be for the
sole benefit of the party carrying such insurance and under its sole control.
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5.2 INCREASE IN PREMIUMS. Tenant shall not permit any operation or
activity to be conducted or storage or use of any volatile or any other
materials on or about the Demised Premises that would cause suspension or
cancellation of any fire and extended coverage insurance policy carried by
Landlord, or increase the premiums therefor, without the prior written consent
of Landlord. If Tenant's use and occupancy of the Demised Premises causes an
increase in the premiums for any fire and extended coverage insurance policy
carried by Landlord as of the day immediately prior to Tenant's possession of
the Demised Premises under this Lease, Tenant shall pay, as additional rental,
the amount of such increase to Landlord upon demand and presentation of written
evidence of the increase by Landlord.
5.3 LIABILITY INSURANCE. During the Lease Term, Tenant shall
maintain a policy of comprehensive public liability insurance, at Tenant's
expense, insuring Landlord against liability arising out of the ownership, use,
occupancy, or maintenance of the Demised Premises. The initial amount of such
insurance shall be at least $1,000,000 combined single-limit bodily injury and
property damage, for each occurrence, and shall be subject to periodic
increases based upon such economic factors as Landlord shall determine, in
Landlord's discretion, exercised in good faith. However, the amount of such
insurance shall not limit Tenant's liability nor relieve Tenant of any
obligation hereunder. The policy shall contain cross-liability endorsements,
if applicable, and shall insure Tenant's performance of the indemnity
provisions of Section 5.5. Such policy shall contain a provision which
prohibits cancellation or modification of the policy except upon thirty (30)
days' prior written notice to Landlord. Tenant may discharge its obligations
under this Section by naming Landlord as an additional insured under a policy
of comprehensive liability insurance maintained by Tenant and containing the
coverage and provisions described in this Section. Tenant shall deliver a copy
of such policy or certificate (or a renewal thereof) to Landlord prior to the
Commencement Date and prior to the expiration of any such policy during the
Lease Term. If Tenant fails to maintain such policy, Landlord may elect to
maintain such insurance at Tenant's expense. Tenant shall, at Tenant's
expense, maintain such other liability insurance as Tenant deems necessary to
protect Tenant.
5.4 RELEASE. EXCLUDING LANDLORD'S INTENTIONAL ACTS OR NEGLIGENT
ACTS, LANDLORD SHALL NOT BE LIABLE TO TENANT OR TO TENANT'S EMPLOYEES, AGENTS,
INVITEES OR VISITORS, OR TO ANY OTHER PERSON WHOMSOEVER, FOR ANY INJURY TO
PERSONS OR DAMAGE TO PROPERTY ON OR ABOUT THE DEMISED PREMISES OR ANY ADJACENT
AREA OWNED BY LANDLORD CAUSED BY THE NEGLIGENCE OR MISCONDUCT OF TENANT, ITS
EMPLOYEES, SUBTENANTS, LICENSEES OR CONCESSIONAIRES OR ANY OTHER PERSON
ENTERING THE DEMISED PREMISES UNDER EXPRESS OR IMPLIED INVITATION OF TENANT, OR
ARISING OUT OF THE USE OF THE DEMISED PREMISES BY TENANT AND THE CONDUCT OF ITS
BUSINESS THEREIN, OR ARISING OUT OF ANY BREACH OR DEFAULT BY TENANT IN THE
PERFORMANCE OF ITS OBLIGATIONS HEREUNDER; AND TENANT HEREBY AGREES TO INDEMNIFY
AND HOLD LANDLORD HARMLESS FROM ANY LOSS, EXPENSE OR CLAIMS ARISING OUT OF SUCH
DAMAGE OR INJURY.
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5.5 INDEMNITY. EXCLUDING LANDLORD'S INTENTIONAL ACTS OR WHERE
LANDLORD IS FOUND TO BE SOLELY LIABLE, TENANT HEREBY UNCONDITIONALLY AND
IRREVOCABLY AGREES TO INDEMNIFY, DEFEND AND HOLD LANDLORD AND LANDLORD'S
OFFICERS, AGENTS, DIRECTORS, SUBSIDIARIES, PARTNERS, EMPLOYEES, LICENSEES AND
COUNSEL HARMLESS, FROM AND AGAINST ANY AND ALL LOSS, LIABILITY, DEMAND, DAMAGE,
JUDGMENT, SUIT, CLAIM, DEFICIENCY, INTEREST, FEE, CHARGE, COST OR EXPENSE
(INCLUDING, WITHOUT LIMITATION, INTEREST, COURT COSTS AND PENALTIES, ATTORNEY'S
FEES AND DISBURSEMENTS AND AMOUNTS PAID IN SETTLEMENT, OR LIABILITIES RESULTING
FROM ANY CHANGE IN FEDERAL, STATE OR LOCAL LAW OR REGULATION OR INTERPRETATION
HEREOF) OF WHATEVER NATURE, EVEN WHEN CAUSED BY THE JOINT OR CONCURRING
NEGLIGENCE OF LANDLORD AND ANY OTHER PERSON OR ENTITY, WHICH MAY RESULT OR TO
WHICH LANDLORD AND/OR ANY OF LANDLORD'S OFFICERS, AGENTS, DIRECTORS, EMPLOYEES,
SUBSIDIARIES, PARTNERS, LICENSEES AND COUNSEL MAY SUSTAIN, SUFFER, INCUR OR
BECOME SUBJECT TO IN CONNECTION WITH OR ARISING IN ANY WAY WHATSOEVER OUT OF
THE LEASING, OPERATION, PROMOTION, MANAGEMENT, MAINTENANCE, REPAIR, USE OR
OCCUPATION OF THE DEMISED PREMISES, OR ANY OTHER ACTIVITY OF WHATEVER NATURE IN
CONNECTION THEREWITH, OR ARISING OUT OF OR BY REASON OF ANY INVESTIGATION,
LITIGATION OR OTHER PROCEEDINGS BROUGHT OR THREATENED, ARISING OUT OF OR BASED
UPON THE LEASING, OPERATION, PROMOTION, MANAGEMENT, MAINTENANCE, REPAIR, USE OR
OCCUPANCY OF THE DEMISED PREMISES, OR ANY OTHER ACTIVITY ON THE DEMISED
PREMISES. THIS PROVISION SHALL SURVIVE THE TERMINATION OF THIS LEASE. WHERE
LIABILITY IS ALLEGED TO EXIST BY REASON OF THE JOINT OR CONCURRENT NEGLIGENCE
OF THE LANDLORD AND ANY THIRD PARTY (INCLUDING TENANT), THIS INDEMNITY SHALL
NEVERTHELESS APPLY AS TO THE NEGLIGENCE OF SUCH THIRD PARTY AND LIABILITY SHALL
BE ALLOCATED BY THE TRIER OF FACT, OR AS AGREED BY LANDLORD AND TENANT.
5.6 WAIVER OF SUBROGATION. Each party hereto waives any and every
claim which arises or may arise in its favor against the other party hereto
during the term of this Lease or any renewal or extension thereof for any and
all loss of, or damage to, any of its property located within or upon, or
constituting a part of, the Demised Premises, which loss or damage is covered
by valid and collectible fire and extended coverage insurance policies, to the
extent that such loss or damage is recoverable under such insurance policies.
Such mutual waivers shall be in addition to, and not in limitation or
derogation of, any other waiver or release contained in this Lease with respect
to any loss of, or damage to, property of the parties hereto. Inasmuch as such
mutual waivers will preclude the assignment of any aforesaid claim by way of
subrogation or otherwise to an insurance company (or any other person), each
party hereby agrees immediately to give to each insurance company which his
issued to such party policies of fire and extended coverage insurance, written
notice of the terms of such mutual waivers, and to cause such insurance
policies
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to be properly endorsed, if necessary, to prevent the invalidation of such
insurance coverages by reason of such waivers.
ARTICLE 6: USE OF DEMISED PREMISES
6.1 PERMITTED USE. Tenant may use the Demised Premises only for the
permitted use stated in Section 1.11 and in accordance with the provisions of
Section 16 hereof.
6.2 COMPLIANCE WITH LAW. Tenant shall comply with all governmental
laws, ordinances and regulations applicable to the use of the Demised Premises,
and shall promptly comply with all governmental orders and directives for the
correction, prevention and abatement of nuisances and other activities in or
upon, or connected with the Demised Premises, all at Tenant's sole expense,
including any expense or cost resulting from the compliance with improvements
for handicapped or disabled persons mandated by governmental regulations.
6.3 CERTIFICATE OF OCCUPANCY. Tenant may, prior to the Commencement
Date, apply for a Certificate of Occupancy from the municipality in which the
Demised Premises are located. If Tenant is unable to obtain a Certificate of
Occupancy prior to the Commencement Date, Tenant shall have the right to
terminate this Lease by written notice to Landlord if Landlord or Tenant is
unwilling or unable to cure the defects which prevented the issuance of the
Certificate of Occupancy. Landlord may, but has no obligation to, cure any
such defects preventing the issuance of a Certificate of Occupancy, including
any repairs, installations, or replacements of any items which are not
presently existing on the Demised Premises, or which have not been expressly
agreed upon by Landlord in writing.
6.4 SIGNS. Tenant shall not place or affix any signs or other
objects upon or to the Demised Premises, including but not limited to the roof
or exterior walls of the building or other improvements thereon, or paint or
otherwise deface said exterior walls without the express written approval of
Landlord. Any signs installed by Tenant shall conform with applicable laws and
deed and other restrictions. Tenant shall remove all signs at the termination
of this Lease and shall repair any damage and close any holes caused or
revealed by such removal.
6.5 UTILITY SERVICES. Tenant shall pay the cost of all utility
services, including but not limited to initial connection charges, all charges
for gas, water, sewerage, storm water disposal, communications and electricity
used on the Demised Premises, and for all electric lights, lamps and tubes.
6.6 LANDLORD'S ACCESS. Landlord and its authorized agents shall have
the right, during normal business hours and with reasonable advance notice, to
enter the Demised Premises (a) to inspect the general condition and state of
repair thereof, (b) to make repairs required or permitted under this Lease, (c)
to show the Demised Premises or the Property to any prospective tenant or
purchaser, or (d) for any other reasonable purpose. In the event of an
emergency,
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Landlord may enter the Leased Premises at any time. During the final one
hundred fifty (150) days of the Lease Term, Landlord and its authorized agents
shall have the right to erect and maintain on or about the Demised Premises
customary signs advertising the Demised Premises for lease or for sale.
Landlord shall use reasonable efforts to minimize interference with Tenant's
operation.
6.7 QUIET POSSESSION. This Lease is a Sublease of a Lease Agreement
(the "Prior Lease") between Texas Research and Technology Foundation and
Landlord and Tenant's rights hereunder are subject, subordinate and inferior to
the rights of the Landlord under the Lease. If Tenant pays the rent and
complies with all other terms of this Lease, Tenant may occupy and enjoy the
Demised Premises for the full Lease Term, subject to the provisions of this
Sublease and the Prior Lease. Landlord covenants to keep and observe the
covenants and agreements of the Lease. Landlord agrees to obtain a
subordination, non-disturbance and attornment agreement from its Lessor under
the Prior Lease.
6.8 EXEMPTIONS FROM LIABILITY. LANDLORD SHALL NOT BE LIABLE FOR ANY
DAMAGE OR INJURY TO THE PERSON, BUSINESS (OR ANY LOSS OF INCOME THEREFROM),
GOODS, WARES, MERCHANDISE OR OTHER PROPERTY OF TENANT, TENANT'S EMPLOYEES,
INVITEES, CUSTOMERS OR ANY OTHER PERSON IN OR ABOUT THE DEMISED PREMISES,
WHETHER SUCH DAMAGE OR INJURY IS CAUSED BY OR RESULTS FROM: (A) FIRE, STEAM,
ELECTRICITY, WATER, GAS OR RAIN; (B) THE BREAKAGE, LEAKAGE, OBSTRUCTION OR
OTHER DEFECTS OF PIPES, SPRINKLERS, WIRES, APPLIANCES, PLUMBING, AIR
CONDITIONING OR LIGHTING FIXTURES OR ANY OTHER CAUSE; (C) CONDITIONS ARISING ON
OR ABOUT THE DEMISED PREMISES OR UPON OTHER PORTIONS OF ANY BUILDING OF WHICH
THE DEMISED PREMISES IS A PART, OR FROM OTHER SOURCES OR PLACES; OR (D) ANY ACT
OR OMISSION OF ANY OTHER TENANT OF ANY BUILDING OF WHICH THE DEMISED PREMISES
IS A PART. LANDLORD SHALL NOT BE LIABLE FOR ANY SUCH DAMAGE OR INJURY EVEN
THOUGH THE CAUSE OF OR THE MEANS OF REPAIRING SUCH DAMAGE OR INJURY ARE NOT
ACCESSIBLE TO TENANT. THE PROVISIONS OF THIS SECTION 6.8 SHALL NOT, HOWEVER,
EXEMPT LANDLORD FROM LIABILITY FOR LANDLORD'S NEGLIGENCE OR WILLFUL MISCONDUCT.
ARTICLE 7: PROPERTY CONDITION, MAINTENANCE, REPAIRS AND ALTERATIONS
7.1 PROPERTY CONDITION. Tenant acknowledges that the Landlord has
made no warranty or representation to Tenant with respect to the condition of
the Demised Premises, except as expressly set forth in this Lease, Landlord
represents that on the Commencement Date, the plumbing, electrical and lighting
system, exterior doors, any fire protection sprinkler system, heating system,
and air conditioning equipment in the Demised Premises are in good operating
condition.
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7.2 ACCEPTANCE OF DEMISED PREMISES. Tenant acknowledges that prior
to the Commencement Date it will make a full and complete inspection of the
Demised Premises and adjacent common areas and Tenant will be fully and
adequately aware of the existence of any defects which would interfere with
Tenant's use of the Demised Premises for their intended commercial purpose.
Landlord agrees to complete the punch list of items disclosed by such
inspections. Tenant specifically acknowledges that as a result of such
inspections and disclosure, Tenant will take possession of the Demised Premises
and will make its own determination to fully accept same in its as-is condition
as of the Commencement Date and waives any implied warranty of suitability for
commercial purposes. Upon completion Landlord shall assign all warranties from
contractors and building suppliers to Tenant and seek the approval of the
warrantors to such transfer, if applicable.
7.3 OBLIGATION TO REPAIR. Except as otherwise provided herein,
Landlord shall be under no obligation to perform any repair, maintenance or
management service in the Demised Premises or adjacent common areas. Tenant
shall be fully responsible, at its expense, for all repair, maintenance and
management services other than those which are expressly assumed by Landlord.
A. LANDLORD'S OBLIGATION TO REPAIR.
(1) Subject to the provisions of Article Eight (Damage or
Destruction) and Article Nine (Condemnation) and except for
damage caused by any act or omission of Tenant, Landlord shall
keep the foundation, roof and the structural portions of exterior
walls of the improvements of the Demised Premises in good order,
condition and repair. Landlord shall maintain the landscaping
and paving in the parking area adjacent to the Demised Premises,
but shall have the right to bill and be reimbursed by Tenant for
its allocable share of such costs. Landlord shall not be
obligated to maintain or repair windows, doors, plate glass or
the surfaces of walls. In addition, Landlord shall not be
obligated to make any repairs under this Section until a
reasonable time after receipt of written notice from Tenant of
the need of such repairs. If any repairs are required to be made
by Landlord, Tenant shall, at Tenant's sole cost and expense,
promptly remove Tenant's fixtures, inventory, equipment and other
property, to the extent required to enable Landlord to make such
repairs. Landlord's liability hereunder shall be limited to the
cost of such repairs or corrections. Tenant waives the benefit
of any present or future law which might give Tenant the right to
repair the Demised Premises at Landlord's expense or to terminate
the Lease because of the condition. Subject to reimbursement for
Tenant's allocable share thereof, Landlord shall maintain the
landscaping and parking areas adjacent to the Demised Premises.
In making repairs, Landlord will use reasonable efforts to avoid
interference with Tenant's operations. If Landlord's repairs are
of such a character as to require closure of Tenant's facilities
for more than one (1) week, rental shall be abated for such
period of closure in excess of one (1) week.
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(2) Landlord and Tenant expressly agree that all repair,
maintenance management and other services to be performed by
Landlord or Landlord's agents exclusively consist of the exercise
of professional judgment by such service providers, and Tenant
expressly waives any claims for breach of warranty against
Landlord arising from the performance of such services.
B. TENANT'S OBLIGATION TO REPAIR. Subject to the provisions
of the last sentence of Section 7.1, the preceding Section 7.3.
A, Article Eight (Damage or Destruction) and Article Nine
(Condemnation), Tenant shall, at all times, keep all other
portions of the Demised Premises in good order, condition and
repair, including but not limited to repairs (including all
necessary replacements) of the windows, plate glass, doors,
heating system, air conditioning equipment, electrical and
lighting system, fire protection sprinkler system, interior and
exterior plumbing and the interior of the building in general.
In addition, Tenant shall, at Tenant's expense, repair any damage
to any portion of the Property, including the roof, foundation,
or structural portions of exterior walls of the Demised Premises,
caused by Tenant's acts or omissions. If Tenant fails to
maintain and repair the Property as required by this Section,
Landlord may, on ten (10) days' prior written notice, enter the
Demised Premises and perform such maintenance or repair on behalf
of Tenant, except that no notice shall be required in case of
emergency, and Tenant shall reimburse Landlord for all costs
incurred in performing such maintenance or repair immediately
upon demand.
7.4 ALTERATIONS, ADDITIONS AND IMPROVEMENTS. Tenant shall not create
any openings in the roof or exterior walls, or make any alterations, additions
or improvements to the load-bearing elements of the structure of the Demised
Premises without the prior written consent of Landlord, which consent may be
withheld in the sole and absolute discretion of Landlord, whether or not
reasonably exercised. Tenant must obtain prior written consent for
nonstructural alterations, additions or improvements, but such consent shall
not be unreasonably withheld or delayed by Landlord. Tenant shall have the
right to erect or install shelves, bins, machinery, air conditioning or heating
equipment and trade fixtures, provided that Tenant complies with all applicable
governmental laws, ordinances, codes, and regulations. At the expiration or
termination of this Lease, Tenant shall, subject to the restrictions of Section
7.5 below, have the right to remove such items so installed by it, provided
Tenant is not in default at the time of such removal and provided further that
Tenant shall, at the time of removal of such items, repair in a good and
workmanlike manner any damage caused by installation or removal thereof.
Tenant shall pay for all costs incurred or arising out of alterations,
additions or improvements in or to the Demised Premises and shall not permit a
mechanic's or materialman's lien to be filed against the Demised Premises.
Upon request by Landlord, Tenant shall deliver to Landlord proof of payment
reasonably satisfactory to Landlord of all costs incurred or arising out of any
such alterations, additions or improvements.
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7.5 CONDITION UPON TERMINATION. Upon the termination of the Lease,
Tenant shall surrender the Demised Premises to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of the Lease. Tenant
shall not be obligated to repair any damage which Landlord is required to
repair under Article 8 (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Landlord's consent) prior to the termination of the Lease and to
restore the Demised Premises to its prior condition, all at Tenant's expense.
All alterations, additions and improvements which Landlord has not required
Tenant to remove shall become Landlord's property and shall be surrendered to
Landlord upon the termination of the Lease. In no event, however, shall Tenant
remove any of the following materials or equipment without Landlord's prior
written consent: any power wiring or power panels; lighting or lighting
fixtures; wail coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other heating or air
conditioning equipment; manufacturing equipment acquired by Landlord on behalf
of Tenant; fencing or security gates; or other similar building operating
equipment and decorations.
ARTICLE 8: DAMAGE OR DESTRUCTION
8.1 NOTICE. If the building or other improvements situated on the
Demised Premises should be damaged or destroyed by fire, tornado or other
casualty, Tenant shall immediately give written notice thereof to Landlord.
8.2 PARTIAL DAMAGE. If the building or other improvements situated
on the Demised Premises are damaged by fire, tornado, or other casualty but not
to such an extent that rebuilding or repairs cannot reasonably be completed
within two hundred ten (210) days from the date Landlord receives written
notification by Tenant of the happening of the damage, this Lease shall not
terminate, but Landlord shall, at its sole cost and risk, proceed forthwith and
use reasonable diligence to rebuild or repair such building and other
improvements on the Demised (other than leasehold improvements made by Tenant
or any assignee, subtenant or other occupant of the Demised Premises) to
substantially the condition in which they existed prior to such damage within
such two hundred ten (210) day period; provided, however, if the casually
occurs during the final eighteen (18) months of the Lease Term, Landlord shall
not be required to rebuild or repair such damage unless Tenant shall exercise
its renewal option (if any is contained herein) within fifteen (15) days after
the date of receipt by Landlord of the notification of the occurrence of the
damage. If Tenant does not elect to exercise its renewal option or if there is
no renewal option contained herein or previously unexercised at such time, this
Lease shall terminate at the option of Landlord and the Rent shall be abated
for the unexpired portion of this Lease, effective from the date of actual
receipt by Landlord of the written notification of the damage. If the building
and other improvements are to be rebuilt or repaired and are untenantable in
whole or in part following such damage, the monthly installments of Base Rent
payable hereunder during the period in which they are untenantable shall be
abated unless such untenantable condition is cause by Tenant, in which case
there shall be no abatement.
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8.3 SUBSTANTIAL OR TOTAL DESTRUCTION. If the building or other
improvements situated on the Demised Premises are substantially or totally
destroyed by fire, tornado, or other casualty, or to damaged that rebuilding or
repairs cannot reasonably be completed within one hundred twenty (120) days
from the date Landlord receives written notification by Tenant of the happening
of the damage, this Lease shall terminate at the option of either Landlord or
Tenant and monthly installments of Rent shall be abated for the unexpired
portion of this Lease, effective from the date of receipt by Landlord or Tenant
of such written notification. If this Lease is not terminated, the building
and the improvements shall be rebuilt or repaired and monthly installments of
Rent abated to the extent provided under Section 8.2.
ARTICLE 9: CONDEMNATION
If, during the term of this Lease or any extension or renewal thereof,
all or a substantial part of the Demised Promises are taken for any public or
quasi-public use under any governmental law, ordinance or regulation or by
right of eminent domain, or are sold to the condemning authority under threat
of condemnation, this Lease shall terminate and the monthly installments of
Rent shall be abated during the unexpired portion of this Lease, effective from
the date of taking of the Demised Premises by the condemning authority, If less
than a substantial part of the Demised Premises is taken for public or quasi-
public use under any governmental law, ordinance or regulation, or by right of
eminent domain, or is sold to the condemning authority under threat of
condemnation, Landlord, at its option, may by written notice terminate this
Lease or shall forthwith at its sole expense restore and reconstruct the
buildings and improvements (other than leasehold improvements made by Tenant or
any assignee, subtenant or other occupant of the Demised Premises) situated on
the Demised Premises in order to make the same reasonably tenantable and
suitable for the use for which the Demised Premises is leased as defined in
Section 6.1. The monthly installments of Base Rent payable hereunder during the
unexpired portion of this Lease shall be adjusted equitably. Landlord and
Tenant shall each be entitled to receive and retain such separate awards and
portions of lump sum awards as may be allocated to their respective interests
in any condemnation proceedings. The termination of this Lease shall not
affect the rights of the respective parties to such awards.
ARTICLE 10: ASSIGNMENT AND SUBLETTING
Tenant shall not, without the prior written consent of Landlord, assign
this Lease or sublet the Demised Premises or any portion thereof. If the
United States Department of Commerce approves the proposed assignment or
subletting, Landlord agrees not to unreasonably withhold its consent. Any
assignment or subletting shall be expressly subject to all terms and provisions
of this Lease, including the provisions of Section 6.1 and Section 16 of this
Lease pertaining to the use of the Demised Premises. In the event of any
assignment or subletting, Tenant shall remain fully liable for the full
performance of all Tenant's obligations under this Lease. Tenant shall not
assign
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its rights hereunder or sublet the Demised Premises without first obtaining a
written agreement from the assignee or sublessee whereby the assignee or
sublessee agrees to assume the obligations of Tenant and to be bound by the
terms of this Lease. No such assignment or subletting shall constitute a
novation. In the event of the occurrence of an event of default while the
Demised Premises is assigned or sublet, Landlord, in addition to any other
remedies provided herein or by law, may at Landlord's option, collect directly
from such assignee or subtenant all rents becoming due under such assignment or
subletting and apply such rent against any sums due to Landlord hereunder. No
direct collection by Landlord from any such assignee or subtenant shall release
Tenant from the performance of its obligations hereunder.
ARTICLE 11: DEFAULT AND REMEDIES
11.1 DEFAULT. Each of the following events shall be an event of
default under this Lease:
A. Failure of Tenant to pay any installment of the Rent or
other sum payable to Landlord hereunder on the date that same is due and
such failure shall continue for a period of thirty (30) days;
B. Failure of Tenant to comply with any term, condition or
covenant of this Lease, other than the payment of Base Rent or other sum
of money, and such failure shall not be cured within thirty (30) days
after written notice thereof to Tenant; provided, that Tenant shall not
be in default if such default cannot be cured within such thirty (30)
days and Tenant commences to cure such default within such thirty (30)
day period and thereafter diligently prosecutes the cure of such
default;
C. Tenant or any guarantor of Tenant's obligations hereunder
shall generally fail to pay its debts as they become due or shall admit
in writing its inability to pay its debts, or shall make a general
assignment for the benefit of creditors;
D. Tenant or any guarantor of Tenant's obligations hereunder
shall commence any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment
of a receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property;
E. Any case, proceeding or other action against Tenant or any
guarantor of Tenant's obligations hereunder shall be commenced seeking
to have an order for relief entered against it as debtor, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment
of a receiver, trustee, custodian or other similar official for it or
for all or any substantial part
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of its property, and Tenant (i) fails to obtain a dismissal of such
case, proceeding, or other action within sixty (60) days of its
commencement; or (ii) converts the case from one chapter of the Federal
Bankruptcy Code to another chapter; or (iii) is the subject of an order
of relief which is not fully stayed within seven (7) business days after
the entry thereof; and
F. Abandonment by Tenant of any substantial portion of the
Demised Premises or cessation of the use of the Demised Premises for the
purpose leased.
11.2 REMEDIES. Upon the occurrence of any of the events of default
listed in Section 11.1, Landlord shall have the option to pursue any one or
more of the following remedies without any prior notice or demand whatsoever:
A. Terminate this Lease, in which event Tenant shall
immediately surrender the Demised Premises to Landlord. If Tenant fails
to so surrender the Demised Premises, Landlord may, without prejudice to
any other remedy which it may have for possession of the Demised
Premises or arrearages in Rent to the extent permitted by law, enter
upon and take possession of the Demised Premises and expel or remove
Tenant and any other person who may be occupying the Demised Premises or
any part thereof, by legal process, without being liable for prosecution
or any claim for damages therefor. Tenant shall pay to Landlord on
demand the amount of all loss and damage which Landlord may suffer by
reason of such termination, whether through inability to relet the
Demised Premises on satisfactory terms or otherwise.
B. Enter upon and take possession of the Demised Premises, by
legal process, without terminating this Lease and without being liable
for prosecution or for any claim for damages therefor, and expel or
remove Tenant and any other person who may be occupying the Demised
Premises or any part thereof. Landlord may elect to release the Demised
Premises and receive the rent therefor. Tenant agrees to pay to
Landlord monthly or on demand from time to time any deficiency that may
arise by reason of any such reletting. In determining the amount of
such deficiency, the professional service fees, attorneys' fees,
remodeling expenses and other costs of reletting shall be subtracted
from the amount of rent received under such reletting.
C. Enter upon the Demised Premises in accordance with lawful
procedures, without terminating this Lease and without being liable for
prosecution or for any claim for damages therefor, and do whatever
Tenant is obligated to do under the terms of this Lease. Tenant agrees
to pay Landlord on demand for reasonable expenses which Landlord may
incur in thus effecting compliance with Tenant's obligations under this
Lease, together with interest thereon at the rate of twelve percent
(12%) per annum from the date expended until paid. Landlord shall not
be liable for any damages resulting to Tenant from such action, whether
caused by negligence of Landlord or otherwise.
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D. No re-entry or taking possession of the Demised Premises
by Landlord shall be construed as an election to terminate this Lease,
unless a written notice of such intention is given to Tenant.
Notwithstanding any such reletting or reentry or taking possession,
Landlord may, at any time thereafter, elect to terminate this Lease for
a previous default. Pursuit of any of the foregoing remedies shall not
preclude pursuit of any of the other remedies provided by law, nor shall
pursuit of any remedy herein provided constitute a forfeiture or waiver
of any monthly installment of Rent due to Landlord hereunder or of any
damages accruing to Landlord by reason of the violation of any of the
terms, provisions and covenants herein contained. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an
event of default shall not be deemed or construed to constitute a waiver
of any other violation or default. The loss or damage that Landlord may
suffer by reason of termination of this Lease or the deficiency from any
reletting as provided for above shall include the expense of
repossession and any repairs or remodeling undertaken by Landlord
following possession. Should Landlord terminate this Lease at any time
for any default, in addition to any other remedy Landlord may have,
Landlord may recover from Tenant all damages Landlord may incur by
reason of such default, including the cost of recovering the Demised
Premises and the cost of the rental then remaining unpaid.
11.3 MITIGATION AND REASONABLENESS. Landlord shall use commercially
reasonable efforts to mitigate its damages in the county of default. Any
recovery of costs and expenses shall be limited to those which are reasonable
in San Antonio, Bexar County, Texas.
11.4 NOTICE OF DEFAULT. Tenant shall give written notice of any
failure by Landlord to perform any of its obligations under this Lease to
Landlord and to any ground lessor, mortgagee or beneficiary under any deed of
trust encumbering the Demised Premises whose name and address have been
furnished to Tenant in writing. Landlord shall not be in default under this
Lease unless Landlord (or such ground lessor, mortgagee or beneficiary) fail to
cure nonperformance within thirty (30) days after receipt of Tenant's notice.
However, if such nonperformance reasonably requires more than thirty (30) days
to cure, Landlord shall not be in default if such cure is commenced within such
30-day period and thereafter diligently pursued to completion.
11.5 LIMITATION OF LANDLORD'S LIABILITY. As used in this Lease, the
term "Landlord" means only the current owner or owners of the fee title to the
Demised Premises or the leasehold estate under a ground lease of the Demised
Premises at the time in question. Each Landlord is obligated to perform the
obligations of Landlord under this Lease, but only during the time such
Landlord owns such interest or title. Any Landlord who transfers its title or
interest is relieved of all liability with respect to the obligations of
Landlord under this Lease accruing on or after the date of transfer. Tenant
may pursue its claims against a selling Landlord following a sale by such
Landlord for up to the statutory limitation period.
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ARTICLE 12: PROTECTION OF LENDERS
12.1 SUBORDINATION. This Lease is expressly made subordinate to the
Prior Lease, any existing mortgages and deeds of trust. Landlord shall have
the right to subordinate this Lease to any future ground Lease, deed of trust
or mortgage encumbering the Demised Premises, and advances made on the security
thereof and any renewals, modifications, consolidations, replacements or
extensions thereof, whenever made or recorded. Landlord's right to obtain such
a future subordination is subject to Landlord's providing Tenant with a written
Subordination, Nondisturbance and Attornment Agreement from any such ground
lessor, beneficiary or mortgagee wherein Tenant's right to peaceable possession
of the Demised Premises during the Lease Term shall not be disturbed if Tenant
pays the Rent and performs all of Tenant's obligations under this Lease and is
not otherwise in default. If any ground lessor, beneficiary, or mortgagee
elects to have this Lease superior to the lien of its ground lease, deed of
trust or mortgage and gives written notice thereof to Tenant, this Lease shall
be deemed superior to such ground lease, deed of trust or mortgage whether this
Lease is dated prior or subsequent to the date of said ground lease, deed of
trust or mortgage or the date of recording thereof. Tenant's rights under this
Lease, unless specifically modified at the time this Lease is executed, are
subordinated to any existing ground lease, deed of trust or mortgage
encumbering the Demised Premises.
12.2 ATTORNMENT. If Landlord's interest in the Demised Premises is
transferred voluntarily or involuntarily to any ground lessor, beneficiary
under a deed of trust, mortgagee or purchaser at a foreclosure sale, Tenant
shall attorn to the transferee of or successor to Landlord's interest in the
Demised Premises and recognize such transferee or successor as Landlord under
this Lease. Tenant waives the protection of any statute or rule of law which
gives or purports to give Tenant any right to terminate this Lease or surrender
possession of the Demised Premises upon the transfer of Landlord's interest.
12.3 SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instruments or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so or any estoppel certificate.
12.4 ESTOPPEL CERTIFICATES.
A. Upon Landlord's written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement certifying to
the best of Tenant's knowledge: (i) that none of the terms or
provisions of this Lease have been changed (or if they have been
changed, stating how they have been changed); (ii) that this Lease has
not been canceled or terminated; (iii) the last date of payment of the
Base Rent and other charges and the time period covered by such payment;
and (iv) that Landlord is not in default under this Lease (or, if
Landlord is claimed to be in default, stating why). Tenant shall
deliver such statement to Landlord within ten (10) days after Landlord's
request. Any such statement by Tenant may be furnished by Landlord to
any prospective purchaser or lender of the Demised Premises. Such
purchaser or lender may rely conclusively upon such statement as true
and correct.
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B. If Tenant does not deliver such statement to Landlord
within such 10-day period, Landlord, and any prospective purchaser or
lender, may conclusively presume and rely upon the following facts: (i)
that the terms and provisions of this Lease have not been changed except
as otherwise represented by Landlord; (ii) that this Lease has not been
canceled or terminated except as otherwise represented by Landlord;
(iii) that not more than one monthly installment of Base Rent or other
charges have been paid in advance; and (iv) that Landlord is not in
default under the Lease. In such event, Tenant shall be estopped from
denying the truth of such facts.
ARTICLE 13: ENVIRONMENTAL REPRESENTATIONS AND INDEMNITY
13.1 TENANT'S COMPLIANCE WITH ENVIRONMENTAL LAWS. Tenant, at Tenant's
expense, shall comply with all laws, rules, orders, ordinances, directions,
regulations and requirements of federal, state, county and municipal
authorities pertaining to Tenant's use of the Property and with the recorded
covenants, conditions and restrictions, regardless of when they become
effective, including, without limitation, all applicable federal, state and
local laws, regulations or ordinances pertaining to air and water quality,
Hazardous Material (as defined hereinafter), waste disposal, air emissions and
other environmental matters, all zoning and other land use matters, and with
any direction of any public officer or officers, pursuant to law, which shall
impose any duty upon Landlord or Tenant with respect to the use or occupation
of the Property. Tenant shall keep all records required by law regarding
transport, maintenance disposal, use and properties of any Hazardous Materials
used at the Premises and Landlord shall have the right to inspect such records
and the storage facilities within the Premises.
13.2 TENANT'S INDEMNIFICATION. IF TENANT BREACHES THE OBLIGATIONS
STATED IN THE PRECEDING SECTION OR SENTENCE, OR IF THE PRESENCE OF HAZARDOUS
MATERIAL ON THE PROPERTY CAUSED OR PERMITTED BY TENANT RESULTS IN CONTAMINATION
OF THE PROPERTY OR ANY OTHER PROPERTY, OR IF CONTAMINATION OF THE PROPERTY OR
ANY OTHER PROPERTY BY HAZARDOUS MATERIAL OTHERWISE OCCURS FOR WHICH TENANT IS
LEGALLY LIABLE TO LANDLORD FOR DAMAGE RESULTING THEREFROM, THEN TENANT SHALL
INDEMNIFY, DEFEND AND HOLD LANDLORD HARMLESS FROM ANY AND ALL CLAIMS,
JUDGMENTS, DAMAGES, PENALTIES, FINES, COSTS, LIABILITIES OR LOSSES (INCLUDING,
WITHOUT LIMITATION, DIMINUTION IN VALUE OF THE PROPERTY, DAMAGES FOR THE LOSS
OR RESTRICTION ON USE OF RENTABLE OR UNUSABLE SPACE OR OF ANY AMENITY OR
APPURTENANCE OF THE PROPERTY, AND SUMS PAID IN SETTLEMENT OF CLAIMS, ATTORNEYS'
FEES, CONSULTANT FEES AND EXPERT FEES") WHICH ARISE DURING OR AFTER THE LEASE
TERM AS A RESULT OF SUCH CONTAMINATION. THIS INDEMNIFICATION OF LANDLORD BY
TENANT INCLUDES, WITHOUT LIMITATION, COSTS INCURRED IN CONNECTION WITH ANY
INVESTIGATION OF SITE CONDITIONS OR ANY
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CLEAN-UP, REMEDIAL WORK, REMOVAL OR RESTORATION WORK REQUIRED BY ANY FEDERAL,
STATE OR LOCAL GOVERNMENT AGENCY OR POLITICAL SUBDIVISION BECAUSE OF HAZARDOUS
MATERIAL PRESENT IN THE SOIL OR GROUND WATER ON OR UNDER THE PROPERTY. WITHOUT
LIMITING THE FOREGOING, IF THE PRESENCE OF ANY HAZARDOUS MATERIAL ON THE
PROPERTY OR ANY OTHER PROPERTY CAUSED OR PERMITTED BY TENANT RESULTS IN ANY
CONTAMINATION OF THE PROPERTY, TENANT SHALL PROMPTLY TAKE ALL ACTIONS AT ITS
SOLE EXPENSE AS ARE NECESSARY TO RETURN THE PROPERTY TO THE CONDITION EXISTING
PRIOR TO THE INTRODUCTION OF ANY SUCH HAZARDOUS MATERIAL TO THE PROPERTY,
PROVIDED THAT LANDLORD'S APPROVAL OF SUCH ACTIONS SHALL FIRST BE OBTAINED. THE
FOREGOING INDEMNITY SHALL SURVIVE THE EXPIRATION OR EARLIER EXPIRATION OR
EARLIER TERMINATION OF THIS LEASE.
13.3 DEFINITIONS. For purposes of this Article 15, the term
"Hazardous Material" shall mean any pollutant, toxic substance, hazardous
waste, hazardous material, hazardous substance, or oil as defined in or
pursuant to the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Federal Clean Water Act, as amended, or any other federal, state
or local environmental law, regulation, ordinance, rule, or bylaw, whether
existing as of the date hereof, previously enforced or subsequently enacted.
13.4 SURVIVAL. The indemnities contained in this Article 15 shall
survive the expiration or earlier termination of this Lease.
ARTICLE 14: MISCELLANEOUS
14.1 FORCE MAJEURE. In the event performance by a party of any term,
condition or covenant in this Lease is delayed or prevented by any Act of God,
strike, lockout, shortage of material or labor, restriction by any governmental
authority, civil riot, flood, or any other cause not within the control of such
party, the period for performance of such term, condition or covenant shall be
extended for a period equal to the period such party is so delayed or hindered.
14.2 INTERPRETATION. The captions of the Articles or Sections of this
Lease are to assist the parties in reading this Lease and are not a part of the
terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. For convenience, each party hereto is referred to in the neuter
gender, but the masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Demised Premises with Tenant's
expressed or implied permission.
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14.3 WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provisions of this Lease or
its acceptance of late installments of Rent shall not be a waiver and shall not
estop Landlord from enforcing that provision or any other provision of this
Lease in the future. No statement on a payment check from Tenant or in a
letter accompanying a payment check shall be binding on Landlord. Landlord
may, with or without notice to Tenant, negotiate, cash, or endorse such check
without being bound to the conditions of such statement.
14.4 SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is invalid or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
14.5 JOINT AND SEVERAL LIABILITY. All parties signing this Lease as
Tenant shall be jointly and severally liable for obligations of Tenant.
14.6 INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This Lease is
the only agreement between the parties pertaining to the lease of the Demised
Premises and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
14.7 NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or shall be deemed to be
delivered, whether actually received or not, when deposited in the United
States mail, postage prepaid, registered or certified mail, return receipt
requested, addressed as stated herein. Notices to Tenant shall be delivered to
the address specified in Section 1.03 above, except that, upon Tenant's taking
possession of the Demised Premises, the Demised Premises shall be Tenant's
address for notice purposes. Notices to any other party hereto shall be
delivered to the address specified in Article One as the address for such
party. Any party hereto may change its notice address upon written notice to
the other parties.
14.8 ATTORNEYS' FEES. If on account of any breach or default by any
party hereto in its obligations to any other party hereto (including but not
limited to the Principal Broker), it shall become necessary for the
nondefaulting party to employ an attorney to enforce or defend any of its
rights or remedies hereunder, the defaulting party agrees to pay the
nondefaulting party its reasonable attorneys' fees, whether or not suit is
instituted in connection therewith.
14.9 VENUE. All obligations hereunder, including but not limited to
the payment of fees to the Principal Broker, shall be performable and payable
in the county in which the Property is located.
14.10 GOVERNING LAW. THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THIS
LEASE.
14.11 SURVIVAL. All obligations of any party hereto not fulfilled at
the expiration or earlier termination as continuing obligations of such party.
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14.12 BINDING EFFECT. This Lease shall inure to the benefit of and be
binding upon each of the parties hereto and their respective heirs,
representatives, successors and assigns; provided, however, Landlord shall have
no obligation to Tenant's successors or assigns unless the rights or interests
of such successors or assigns are acquired in accordance with the terms of this
Lease.
ARTICLE 15: SPECIAL CONDITIONS
15.1 EDA GRANT REQUIREMENTS. This Lease is of a portion of a
facility, which portion is funded in part by a grant from the United States
Department of Commerce Economic Development Administration. Consequently, the
following special conditions are included in compliance with the terms of the
grant:
A. Tenant warrants and represents that they are in compliance
with the Non-relocation Regulation set forth in 13 CFR Section 309.3,
with the project boundaries as the 2.97 acres more or less located in
Bexar County, Texas, on which this property is located. Tenant agrees
to execute Certificates of Nonrelocation on or about the date of this
Lease. Failure to provide such a Certificate of Nonrelocation or a
violation of the Nonrelocation Regulation, shall be a default under this
Lease.
B. Tenant is generally prohibited from using federal funds
for lobbying the executive or legislative branch of the Federal
Government as provided in Section 319 of Public Law 101-121, which added
Section 1352 to Chapter 13 of Title 31 of the United States Code. In
this respect, Tenant is urged to become familiar with and will comply
with the United States Department of Commerce "Interim Final Rule"
published at 15 CFR Part 28.
C. It is an absolute prerequisite to any assignment or
subletting that Tenant must first furnish for transmittal to the
Economic Development Authority of the United States Department of
Commerce properly executed Economic Development Administration forms
evidencing assurance of compliance with the Civil Rights Act of 1964 and
evidencing that occupancy will not violate the Nonrelocation
requirements of the Economic Development Associations Regulations at 13
CFR Section 309.3.
D. Tenant shall comply with all applicable Federal, state,
territorial and local laws, and, in particular, the following Federal
Public Laws, the regulations issued thereunder and Executive Orders and
Office of Management and Budget Circulars:
(1) The Public Works and Economic Development Act of
1965, P.L. 89-136, as amended (42 U.S.C. 3121, et
seq.), and regulations in 13 CFR, Chapter III;
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(2) The Davis-Bacon Act as amended (40 U.S.C. 276a to
276a (5); 42 U.S.C. 3222);
(3) The Contract Work Hours Standards Act, as amended
(40 U.S.C. 327-333);
(4) The Copeland "Anti-Kickback" Act, as amended (40
U.S.C. 276 (c); 18 U.S.C. 874);
(5) Title VI of the Civil Rights Act of 1964, as
amended (42 U.S.C. 2000d-2000d-4); Executive Orders
11114, 11246, and 11375; 41 CFR Part 60-4; P.L. 92-
65, Section 112, prohibiting sex discrimination on
programs under the Public Works and Economic
Development Act; 13 CFR Part 311 imposing civil
rights requirements on recipients; regulations
issued pursuant to the Age Discrimination Act of
1975 (42 U.S.C. 6101, et seq.); 15 CFR Part 20;
Section 504 of the Rehabilitation Act of 1973, as
amended (29 U.S.C. 794), and the implementing
regulations of the Department of Commerce in 15 CFR
8b, prohibiting discrimination against and
providing fair and equitable treatment of the
handicapped under programs or activities receiving
Federal financial assistance; and such other civil
rights legislation as is applicable;
(6) The Clean Air Act, as amended (42 U.S.C. 7401, et
seq.);
(7) The Federal Water Pollution Control Act, as amended
(33 U.S.C. 1251, et seq.);
(8) The Endangered Species Act, as amended (16 U.S.C.
1531, et seq.);
(9) The Coastal Zone Management Act of 1972, as amended
(16 U.S.c. 1451, et seq.);
(10) The Safe Drinking Water Act of 1972, as amended (42
U.S.C. 300f-j9);
(11) The Energy Conservation and Production Act
(applicable to construction of new residential and
commercial structures) (42 U.S.C. 6801, et seq.);
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(12) The Wild and Scenic Rivers Act, as amended (16
U.S.C. 1271, et seq.);
(13) The Historical and Archeological Data Preservation
Act, as amended (16 U.S.c. 469a, et seq.);
(14) Executive Order 11990, Protection of Wetlands, May
24, 1977;
(15) P.L. 90-480, as amended (42 U.S.C. 4151, et seq.),
and the regulations issued thereunder, prescribing
standards for the design and construction of any
building or facility intended to be accessible to
the public or that may result in the employment of
handicapped persons therein;
(16) The Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970, P.L. 91-646, as
amended (42 U.S.c. 4601, et seq.) and 15 CFR Part
11;
(17) The Flood Disaster Protection Act of 1973, P.L. 93-
234, as amended (42 U.S.C. 4002, et seq.), and
regulations and guidelines issued thereunder by the
Federal Emergency Management Administration (FEMA)
or the Economic Development Administration;
(18) Executive Order 11988, Floodplain Management, May
24, 1977, and regulations and guidelines issued
thereunder by the Economic Development
Administration;
(19) The National Environmental Policy Act of 1969 (P.L.
91-190); the National Historic Preservation Act of
1966 (16 U.S.C. 470 et seq.); Executive Order 11593
of May 13, 1971, and all pertinent rules and
regulations issued thereunder;
(20) The Lead-based Paint Poisoning Prevention Act (42
U.S.C. 4831) and the implementing regulation in 13
CFR 309.29;
(21) The Resource Conservation and Recovery Act of 1976,
as amended (42 U.S.C. 6901);
(22) The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended
(42 U.S.C. 9601 et seq.); and
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(23) The Drug-Free Workplace Act of 1988, P.L. 100-690,
Title V, Subtitle D, and 15 CFR Part 26 (55 FR
21678, May 25, 1990) for projects approved on or
after March 18, 1989. A Drug-Free Workplace Act
certificate is required prior to award approval.
(24) Restrictions on Lobbying, section 319 of P.L. 101-
121, 15 CFR Part 28, (55 FR 6736-6748, 2/26/90).
(25) Executive Order 12549, Debarment and Suspension,
and 15 CFR Part 26, Governmentwide Debarment and
suspension (Nonprocurement).
E. The Tenant agrees that, for the primary and any extended
term of this Lease the premises will be properly and efficiently
administered, operated and maintained, as required by Section 604 of
P.L. 89-136 (42 U.S.C. 3204), for the purpose authorized by this Lease.
Pursuant to the requirements of the Economic Development Agency, if the
Landlord determines, at any time during the primary and extended term of
this Lease, that the project is not being properly and efficiently
administered, operated and maintained, the Landlord will terminate the
Lease for cause and require the Tenant to repay the Grant Proceeds.
F. The Tenant shall abide by the pertinent Property
Management Standards set forth at 13 CFR Part 314.
G. Tenant acknowledges that the Improvements are to be
constructed with Grant Proceeds and that the Landlord and the Landlord's
landlord could be forced to repay the Grant Proceeds in the event they
breach the terms and conditions of the Economic Development
Administration grant and that Tenant has been provided with a copy of
those terms and conditions. Tenant agrees that it shall not take any
action or omit to take any action which would cause the Grant Proceeds
to be repaid and that it will cooperate with Landlord with regard to any
requirements imposed under the grant, including but not limited to
providing information to Landlord in a form satisfactory to Landlord to
enable it to meet its obligations under the grant and comply with 15 CFR
part 24, OMB Circular A-128, A-110, A-122 and A-123, and the Economic
Development Administration's booklet entitled "Requirements for Approved
Projects" to the extent they are applicable to Tenant or to the extent
that Landlord requests that Tenant supply it with information necessary
for Landlord to meet its obligations under the Economic Development
Administration's grant.
15.2 COMMITMENT TO THE TEXAS RESEARCH PARK AND RELOCATION. Tenant
agrees that rather than relocate its facilities in the event its business
requires additional expanded manufacturing facilities, it will locate such
additions, expansions and new facilities in the Texas Research Park, Bexar
County, Texas, unless: (i) environmental or governmental regulations
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prohibit pharmaceutical manufacturing; (ii) events which constitute force
majeure (as defined in this Sublease) prohibit such expansion; (iii) Texas
Research and Technology Foundation has not offered inducements to Tenant at
least equal to those it offers as inducements to companies located outside the
Texas Research Park to relocate its business inside the Texas Research Park; or
(iv) Tenant determines in good faith that for good and valid business reasons
(excluding the obligation to pay Percentage Rent) to locate a Phase II or Phase
III Facility at a location other than the Texas Research Park and pays to
Landlord a fee according to the following schedule:
<TABLE>
<S> <C>
Years 0-7 $1,000,000.00
Years 8-10 $750,000.00
Years 11-12 $500,000.00
</TABLE>
In addition, if Tenant relocates as a part of a relocation of a Phase II
or Phase III Facility, Tenant will pay Landlord up to two years of Base Rent if
a tenant acceptable to Landlord is not found to lease the Premises following
Tenant's relocation. Such payments will be due on an annual basis on the
anniversary of the Commencement Date and will be prorated for the portion of
the year during which the Premises are vacant. Tenant agrees that it will
assist the Landlord in locating a tenant for the Premises that will not result
in the Economic Development Administration to require repayment of the Economic
Development Administration Grant. If the relocation of Tenant results in the
Economic Development Administration demanding repayment of the Economic
Development Administration Grant, Tenant will also pay the amount of the
Economic Development Administration Grant on behalf of Landlord.
Tenant agrees that it will not relocate the initial operations in the
Premises unless same is done in connection with establishment of a Phase II or
Phase III facility or unless Tenant is acquired by an unrelated third party, in
which event the provisions set out above with respect to relocation shall also
be applicable to a relocation made under these latter circumstances.
For purposes of this Section 16.2, Tenant agrees that the operation of a
Phase II or Phase III Facility by any Affiliate shall be treated as the
operation of such facility by Tenant.
ARTICLE 16: CITY REQUIRED PROVISIONS
The terms of the Industrial District Non-Annexation Agreement between
Texas Research and Technology Foundation and the City of San Antonio, Texas
requires that the following be made a part of this Lease:
"This conveyance (or where applicable, lease) is made and accepted and
SUBJECT TO the following special provisions: Tenant hereby assumes and
promises to keep and perform the terms and conditions of that certain
Industrial District Non-Annexation Renewal Agreement and Fire Services
Agreement amendatory thereof executed by the City of San Antonio and
Texas Research and Technology Foundation, which Industrial District Non-
Annexation Renewal Agreement and Basic Fire Services Agreement are of
record in the Real Property Records of Bexar County, Texas, as to the
parcel conveyed. The City shall have, upon the expiration of the
deferment period, the right to exercise any or all of the following:
26
<PAGE> 31
(1) the right to refuse or to discontinue the Fire Services Agreement
to the parcel or parcels; and/or
(2) right to de-designate as part of the Industrial District the
parcel or parcels subject to these special provisions: 'Any
delay on the part of the City of San Antonio to exercise such
rights shall not constitute a waiver of such rights. The
remedies set out in this Agreement are applicable to these
special provisions. The above restriction shall be a covenant
running with the land for the period of the above referenced
Agreements'."
EFFECTIVE as of the date stated in Section 1.01 above,
TRTF/CTRCRF BUILDING CORPORATION
By: /s/ York Duncan
-----------------------------------------
Name: York Duncan
---------------------------------------
Title: President
--------------------------------------
"Landlord"
ILEX ONCOLOGY INC.
By: /s/ Richard L. Love
-----------------------------------------
Name: Richard L. Love
---------------------------------------
Title: President
--------------------------------------
"Tenant"
27
<PAGE> 32
EXHIBIT A
FLOOR OR SITE PLAN
[To be provided]
28
<PAGE> 33
EXHIBIT B
PROPERTY DESCRIPTION
[To be provided]
29
<PAGE> 34
EXHIBIT C
RENEWAL OPTIONS
PROPERTY ADDRESS OR DESCRIPTION: 14785 Omicron Drive, San Antonio, Texas,
78245
DATE OF LEASE:
1. OPTION(S) TO EXTEND TERM
Landlord hereby grants to Tenant options (the "Options") to extend the
Lease Term for three (3) additional term(s) of five (5) years each (the
"Extensions"], on the same terms, conditions and covenants set forth in the
Lease Agreement, except the rental for each such Extension must be agreed to
prior to the date of exercise of the Option in question. Each Option shall be
exercised only by written notice delivered to the Landlord at least One Hundred
Eighty (180) days before the expiration of the Lease Term or the preceding
Extension of the Lease Term. If Tenant fails to deliver Landlord notice of the
exercise of an Option within the prescribed time period, such Option and any
succeeding Options shall lapse, and there shall be no further right to extend
the Lease Term. Each Option shall be exercisable by Tenant on the express
condition that at the time of the exercise, and at all times prior to the
commencement of such Extension(s), Tenant shall not be in default under any of
the provisions of this Lease. The foregoing Option(s) are personal to Tenant
and may not be exercised by any assignee or subtenant, without the prior
written consent of Landlord.
2. CALCULATION OF RENT
The Base Rent during the Extension(s) shall be determined by one of the
following methods: [INDICATED BY CHECKING THE APPROPRIATE BOX UPON THE
EXECUTION OF THE LEASE AGREEMENT]
[ ] (a) Consumer Price Index Adjustment
[x] (b) Fair Rental Value Adjustment
[ ] (c) Fixed Rental Adjustment
A. CONSUMER PRICE INDEX ADJUSTMENT
The monthly rent during the particular Extension shall be
determined by multiplying the monthly installment of Base Rent during
the Lease Term by a fraction determined as follows:
(1) The numerator shall be the latest Index.
(2) The denominator shall be the initial Index.
If such computation would reduce, the rent for the particular
Extension, it shall be disregarded, and the rent during the immediately
preceding period shall apply instead.
30
<PAGE> 35
The Index, as defined herein, shall mean the Consumer Price Index
for Urban Consumers (all items), Dallas/Fort Worth, Texas, area (1984 =
100) published by the United States Department of Labor, Bureau of Labor
Statistics.
The initial Index shall mean the Index published for the nearest
calendar month preceding the commencement date of the Lease Term. The
latest Index shall mean the Index published for the nearest calendar
month preceding the first day of the Extension.
If a base year other than 1984 is adopted, the Index shall be
converted in accordance with the appropriate conversion factor. If the
Index is discontinued or revised, such other Index or computation with
which it is replaced shall be used in order to obtain substantially the
same result as would have been obtained it if had not discontinued or
revised.
B. FAIR RENTAL VALUE ADJUSTMENT
The Base Rent shall be increased on the first day of the
particular Extension to the "Fair Rental Value" of the Demised Premises,
determined in the following manner:
(1) If the Landlord and Tenant have not been able to
agree on the Fair Rental Value Adjustment prior to the date the
option is required to be exercised, the rent for the Extension
shall he determined as follows: Within fifteen (15) days
following the exercise of the option, Landlord and Tenant shall
endeavor in good faith to agree upon a single appraiser. If
Landlord and Tenant are unable to agree upon a single appraiser
within said fifteen (15) day period, each shall then, by written
notice to the other, given within ten (10) days after said
fifteen (15) day period, appoint one appraiser. Within ten (10)
days after the two appraisers are appointed, they shall appoint a
third appraiser. If either Landlord or Tenant fails to appoint
its appraiser within the prescribed time period the single
appraiser appointed shall determine the Fair Rental Value of the
Demised Premises. Each party shall hear the cost of the
appraiser appointed by it and the parties shall share equally the
cost of the third appraiser.
(2) The "Fair Rental Value" of the Demised Premises
shall mean the price that a ready and willing tenant would pay as
of the commencement of the Extension as monthly rent to a ready
and willing landlord of demised premises comparable to the
Demised Premises if such property were exposed for lease on the
open market for a reasonable period of time and taking into
account all of the purposes for which such property may be used
and not just the use proposed to be made of the Demised Premises
by Tenant. The Fair Rental Value of the Demised Premises shall
be the average of the two of the three appraisals which are
closest in amount, and the third appraisal shall be disregarded.
In no event shall the rent be reduced by reason of such
computation. If the Fair Rental Value is not determined prior to
the commencement of the Extension, then Tenant shall continue to
pay to Landlord the rent applicable to the Demised Premises
immediately prior to such Extension until the Fair Rental Value
is determined, and when it is determined,
31
<PAGE> 36
Tenant shall pay to Landlord within ten (10) days after receipt
of such notice the difference between the rent actually paid
by Tenant to Landlord and the new rent determined hereunder.
C. FIXED ADJUSTMENTS
The Base Rent shall be increased to the following amounts on the following
dates:
<TABLE>
<CAPTION>
Date Amount
<S> <C>
- ------------------------------------------- ------------------------------
- ------------------------------------------- ------------------------------
- ------------------------------------------- ------------------------------
- ------------------------------------------- ------------------------------
</TABLE>
INITIALS: LANDLORD: /s/ YD INITIALS: TENANT: /s/ RLL
-------------- --------------
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32
<PAGE> 37
EXHIBIT D
RIGHT OF FIRST REFUSAL
NONE
33
<PAGE> 38
EXHIBIT E
GUARANTEE
NOT APPLICABLE
34
<PAGE> 39
EXHIBIT F
EXPENSE REIMBURSEMENTS
PROPERTY ADDRESS OR DESCRIPTION: 14785 Omicron Drive, San Antonio, Texas,
78245
DATE OF LEASE:
1. EXPENSE REIMBURSEMENT
Tenant shall pay the Landlord, as additional rental hereunder, a portion
of the following expenses, as defined hereafter, incurred, levied or assessed
for or against the Demised Premises: [Check those that are to apply. Boxes not
checked do not apply.]
[x] Ad Valorem Taxes
[x] Insurance Premiums
[x] Common Area Maintenance Charges (CAM)
[x] Operating Expenses
(herein collectively called "Reimbursement")
2. EXPENSE REIMBURSEMENT LIMITATIONS
The amount of Tenant's Reimbursement obligation shall be determined by
one of the following methods: [Check only the one applicable box]
[ ] Base Year/Expense Stop Adjustment
[x] Pro Rata Adjustment
[ ] Fixed Amount Adjustment
The calculation for each of said methods is set forth under Section 4 below.
3. EXPENSE REIMBURSEMENT PAYMENTS
Tenant agrees to pay the applicable Reimbursement within thirty (30)
days after receiving an invoice therefor from Landlord. If at any time during
the Lease Term or any renewals or extensions Landlord has reason to believe
that at some time within the immediately succeeding 12-month period Tenant will
owe Landlord a payment pursuant to this provision, Landlord may direct Tenant
to pay monthly an estimated portion of the projected future amount. Tenant
agrees that any such payment directed by Landlord shall be due and payable
monthly on the same day that the Base Rent is due. Any Reimbursement relating
to partial calendar years shall be prorated accordingly.
35
<PAGE> 40
4. DEFINITIONS
A. AD VALOREM TAXES: All general real estate taxes, general and
special assessments, parking surcharges, rent taxes, and other similar
governmental charges levied against the Property for each calendar year.
B. INSURANCE PREMIUMS: All insurance premiums attributable to the
Property, including, but not limited to, premiums for fire, casualty, and
extended coverage, liability coverage, and loss of rents coverage.
C. COMMON AREA MAINTENANCE CHARGES: All costs of the ownership,
operation, and maintenance of the common area, including, but not limited to,
those costs for security, lighting, painting, cleaning, inspecting, and
repairing which may be incurred by Landlord, in its discretion, including a
reasonable allowance for Landlord's overhead and management. The term "common
area" is defined as that part of the Property intended for the common use of
all tenants, including, but not limited to, the parking areas, landscaping,
loading areas, sidewalks. malls, promenades (enclosed or otherwise), public
rest rooms, meeting rooms, corridors, and curbs. Common area maintenance shall
not include depreciation on Landlord's original investment, cost of tenant
improvements, real estate brokers' fees, and interest or depreciation on
capital investments.
D. OPERATING EXPENSES: All costs of management, operation, and
maintenance of the Property, including, but not limited to, wages, salaries,
janitorial services, maintenance, repairs, and cost of utilities. Operating
expenses shall not include depreciation on Landlord's original investment, cost
of tenant improvements, real estate brokers' fee, and interest or depreciation
on capital investments.
E. BASE YEAR/EXPENSE STOP ADJUSTMENT: If the Landlord's ad valorem
taxes, insurance premiums, common area maintenance charges and/or operating
expenses for the Property for any calendar year during the term hereof or
during any extension of this lease increase over (1) such amounts paid by
Landlord for the Base Year _______, or (2) $____________ per square foot per
year [choose one], Tenant agrees to pay its share of such increase based on the
square footage contained in the Demised Premises in proportion to the square
footage of leasable area of the Property.
F. PRO RATA ADJUSTMENT: Tenant shall pay to Landlord its pro rata
share of the total amount of Landlord's insurance premiums, ad valorem taxes,
common area maintenance charges, and/or operating expenses for any calendar
year during the term hereof and during any extension of this lease. Tenant's
pro rata share of such amount shall be based on the square footage contained in
the Demised Premises in proportion to the square footage of the leasable area
of the Property.
G. FIXED AMOUNT ADJUSTMENT: Tenant shall pay as additional rent
the following monthly amounts as Tenant's Reimbursement to Landlord for the
ad valorem taxes, insurance premiums, common area maintenance charges, and/or
operating expenses assessed or levied against the Property:
36
<PAGE> 41
<TABLE>
<S> <C> <C>
Ad Valorem Taxes $ -0- per month
-------------
Insurance Premiums $ 750 per month
-------------
Common Area Maintenance Charges $ 360 per month
-------------
Operating Expenses $ 145 per month
-------------
</TABLE>
INITIALS: LANDLORD: /s/ YD INITIALS: TENANT: /s/ RLL
-------------- --------------
4/7/95
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37
<PAGE> 42
EXHIBIT G
CONSTRUCTION OF IMPROVEMENTS
PROPERTY ADDRESS OR DESCRIPTION: 14785 Omicron Drive, San Antonio, Texas,
78245
DATE OF LEASE:
1. CONSTRUCTION OF IMPROVEMENTS:
A. Landlord agrees to construct (or complete) a building and other
improvements upon the Demised Premises in accordance with detailed Plans and
Specifications to be prepared forthwith by Landlord and delivered to Tenant.
Upon approval by Tenant, two or more sets of said Plans and Specifications
shall be signed by both parties, with one signed set retained by Tenant.
Changes to said Plans and Specifications thereafter shall be made only by
written addenda signed by both parties. Tenant agrees that its approval of the
plans shall constitute its agreement that: (i) Tenant waives any and all
claims that it has or may have regarding design defects or the adequacy of the
Plans and Specifications; and (ii) the Improvements if constructed in
accordance with the Plans and Specifications will be suitable for Tenant's
commercial purposes.
B. Upon approval of said Plans and Specifications, Landlord shall
forthwith begin construction and pursue same to completion with reasonable
diligence in a good and workmanlike manner.
2. COMPLETION DATE:
A. It is estimated by Landlord that the building and other
improvements shall be completed by October 1, 1995.
B. Landlord shall notify Tenant in writing when construction has
been completed. Tenant shall thereupon inspect the building and other
improvements, and if same have in fact been completed in accordance with the
Plans and Specifications, the Lease Term shall begin upon the date of
completion with Base Rent due and payable as provided in Article Three of the
Lease.
C. If the building and other improvements have not in fact been
completed in accordance with the Plans and Specifications, written notification
of the items deemed incomplete shall be given by Tenant to Landlord immediately
following inspection. Landlord shall forthwith proceed to finish the
incomplete items, and the lease term shall begin upon the date that such items
are in fact complete.
D. Completion, as used herein, shall mean substantial completion.
Substantial completion shall mean at such time as the Landlord obtains a
Certificate of Occupancy issued by the local municipal authorities whose
jurisdiction includes the Demised Premises, and is the stage when the
construction is sufficiently complete in accordance with the Plans and
Specifications that the Tenant can occupy or utilize the Demised Premises for
its intended use, except for minor "punch list" items remaining to be
completed.
38
<PAGE> 43
3. LETTER OF ACCEPTANCE: Tenant agrees to execute and deliver to
Landlord, a Letter of Acceptance, addressed to Landlord and signed by Tenant
(or iis authorized representative) acknowledging that construction has been
completed in accordance with the Plans and Specifications and acknowledging the
Commencement Date of the Lease Term.
4. TAKING OF POSSESSION: The taking of possession of the Demised
Premises by Tenant shall be deemed conclusively to be acknowledgment by Tenant
that construction has been completed in accordance with Plans and
Specifications (except for latent defects) and that the Lease Term has begun as
of the date of completion.
5. FAILURE TO COMPLETE: In the event that the building and other
improvements have not been completed in accordance with the Plans and
Specifications by January 9, 1997, or by such date as extended by application
of Section 15.1, Tenant shall have the right and option to terminate this Lease
by giving written notice of Tenant's intention to terminate as of a certain
date not less than fifteen (15) days prior to said certain date. If the
building and other improvements have not been completed by said certain date
and all punch list items corrected or completed by said date, this lease shall,
at the option of Tenant, terminate with no further liability of one party to
the other.
INITIALS: LANDLORD: /s/ YD INITIALS: TENANT: /s/ RLL
-------------- --------------
4/7/95
-------------- -------
39
<PAGE> 44
EXHIBIT H
METHOD OF CALCULATION OF PERCENTAGE RENTAL
During the first two years of the Lease, the obligation to pay
Percentage Rent will only arise after Tenant has made two million dollars
($2,000,000.00) in Gross Sales during such year. Once Tenant has made two
million dollars ($2,000,000.00) in Gross Sales in such lease year, it will owe
Percentage Rent of three percent (3%) on the initial two million dollars
($2,000,000.00) of Gross Sales, and two percent (2%) of Gross Sales greater
than two million dollars ($2,000,000.00), but less than five million dollars
($5,000,000.00) and one percent (1%) of Gross Sales in excess of five million
dollars ($5,000,000.00) up to Gross Sales of one hundred million dollars
($100,000,000.00).
During the third year of the Lease, the obligation to pay Percentage
Rent will only arise after Tenant has made one and one-half million dollars
($1,500,000.00) in Gross Sales during that year. Once Tenant has made one and
one-half million dollars ($1,500,000.00) in Gross Sales, it will owe percentage
rental of three percent (3%) of all Gross Sales in excess of one and one-half
million dollars ($1,500,000.00) up to two million dollars ($2,000,000.00). If
Gross Sales exceed two million dollars ($2,000,000.00), it will owe three
percent (3%) of all Gross Sales on the initial two million dollars
($2,000,000.00) and two percent (2%) of all Gross Sales greater than two
million dollars ($2,000,000.00), but less than five million dollars
($5,000,000.00) and one percent (1%) of all Gross Sales in excess of five
million dollars ($5,000,000.00) up to Gross Sales of one hundred million
dollars ($100,000,000.00).
During the fourth year of the Lease, and for any year thereafter during
the primary term of this Lease, Tenant shall pay Percentage Rent for each year
of the Lease of three percent (3%) of all Gross Sales up to two million dollars
($2,000,000.00), two percent (2%) of all Gross Sales greater than two million
dollars ($2,000,000.00) and less than five million dollars ($5,000,000.00), and
one percent (1%) of all Gross Sales in excess of five million dollars
($5,000,000.00) up to Gross Sales of one hundred million dollars
($100,000,000.00).
Once the obligation to pay Percentage Rent arises during any year during
the primary term of this Lease, Tenant shall pay Percentage Rental for prior
months of that year in accordance with the foregoing method of calculation.
INITIALS: LANDLORD: /s/ YD INITIALS: TENANT: /s/ RLL
-------------- --------------
4/7/95
-------------- -------
40
<PAGE> 1
EXHIBIT 10.13
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is effective as of the 31st day of March, 1995,
by and among Burroughs Wellcome Co. ("B.W. Co."), having an address at 3030
Cornwallis Road, Research Triangle Park, North Carolina 27709, U.S.A., The
Wellcome Foundation Limited ("WFL"), having an address at Unicorn House, 160
Euston Road, London NW1 2BP England and Ilex Oncology Inc. ("Ilex"), formerly
known as Biovensa Inc., having an address at 14785 Omicron Drive, San Antonio,
Texas 78245-3217, U.S.A.
WHEREAS, B.W. Co. owns all right, title and interest in certain patent
rights and has the right to use certain known-how relating to the Compound (as
herein defined) in the U.S. (as herein defined);
WHEREAS, WFL owns all right, title and interest in certain patent
rights and has the right to use certain known-how relating to the Compound in
the Non-U.S. Territory (as herein defined);
WHEREAS, Ilex desires to obtain licenses under such patent rights and
know-how to make, have made, use and sell the Compound and products containing
the Compound; and
WHEREAS, B.W. Co. and WFL are willing to grant such licenses to Ilex;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, the parties hereto mutually agree as
follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or the plural, shall have the following meanings:
1.1 "Affiliate" means any corporation or entity which controls, is
controlled by, or is under common control with a party to this Agreement. A
corporation or entity shall be regarded as in control of another corporation if
it owns or directly or indirectly controls at least [**] percent ([**]) of the
voting stock of the other corporation, or (i) in the absence of the ownership
of at least [**] percent ([**]) of the voting stock of a corporation or (ii) in
the case of a non-corporate entity, if it possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
such corporation or non-corporate entity, as applicable. Notwithstanding the
foregoing, the parties acknowledge and agree that an Affiliate of B.W. Co. and
WFL shall be deemed to include, for all purposes, Burroughs Wellcome (India)
Limited.
1.2 "Agreement" means this License Agreement.
1.3 "Base Currency" means (i) Dollars, with respect to sales of
Products in the U.S. and royalties payable to B.W. Co. thereon; and (ii)
Sterling, with respect to sales of Products in the Non-U.S. Territory and
royalties payable to WFL thereon.
1.4 "B.W. Co. Know-How" means all technical information and data,
whether or not patentable, which is owned by B.W. Co. as of the Effective Date
and which is reasonably necessary to manufacture the Compound or to use the
Compound in the Field, including all regulatory filings, clinical trial data,
synthesis and analytical procedures and reference standards.
1.5 "B.W. Co. Patent Rights" means all patents and patent
applications owned by B.W. Co. as of the Effective Date, and any and all
patents that may issue from said patent applications which contain claims
covering the manufacture or use of the Compound, including any and all
divisions, continuations, continuations-in-part, extensions, substitutions,
renewals, confirmation, supplementary protection certificates, registrations,
revalidations, reissues or additions of or to any of the aforesaid
<PAGE> 2
patents and patent applications. The B.W. Co. Patent Rights are set forth on
Appendix I, attached hereto and made a part hereof.
1.6 "Compound" means the chemical known as piritrexim isethionate,
having the chemical structure set forth on Appendix II attached hereto and made
a part hereof.
1.7 "Dollars" or "$" means United States Dollars.
1.8 "Effective Date" means the date appearing at the beginning of
this Agreement.
1.9 "Europe" means all countries which are Member States, from
time to time, of the European Economic Area.
1.10 "FDA" means the United States Food and Drug Administration or
any successor entity.
1.11 "Field" means the treatment or prophylaxis of cancer in humans
and conditions other than cancer which are associated with cancer or the
treatment or prophylaxis of cancer in humans.
1.12 "First Commercial Sale" means the date on which Ilex or a
sublicensee first transfers title to a Product to a Third Party for monetary
consideration.
1.13 "IND" means an Investigational New Drug application or any
equivalent successor application.
1.14 "Know-How" means, collectively, the B.W. Co. Know-How and the
WFL Know-How.
1.15 "Letter Agreement" means the letter agreement between B.W. Co.
and Ilex dated June 13, 1994.
1.16 "NDA" means a New Drug Application or any equivalent successor
application.
1.17 "Net Sales," with respect to any Produce containing the
Compound as the sole active ingredient, means the gross sales (i.e., gross
invoice prices) of such Product billed by Ilex and its sublicensees to Third
Party customers, less: (i) actual credited allowances to such Third Party
customers for spoiled, damaged, outdated and returned Product and for
allowances in lieu of returned Product following price increases; (ii) the
amounts of customary trade and cash discounts, to the extent such trade and
cash discounts are not deducted by Ilex or its sublicensees at the time of
invoice in order to arrive at the gross invoice prices; (iii) all
transportation and handling charges, sales taxes, excise taxes, use taxes,
value added taxes, other similar taxes, or import/export duties actually paid;
and (iv) all other invoiced allowances and adjustments actually credited to
customers including, but not limited to, rebates paid to Third Parties payors,
whether during the specific royalty period, as defined in Section 5.1, or not.
1.18 "Net Sales" with respect to any Product containing one or more
active ingredients in addition to the Compound, means the gross sales of such
Product billed by Ilex and its sublicensees to Third Party customers, less all
the allowances, adjustments, discounts, taxes, duties and other charges
referred to in clauses (i) and (iv) of Section 1.17, multiplied by a fraction,
the numerator of which shall be the manufacturing cost or acquisition cost, as
applicable, of the Compound included in such Product and the denominator of
which shall be the manufacturing cost or acquisition cost, as applicable, of
all active ingredients in such Product, including the Compound. These costs
shall be computed using the standard cost accounting procedures of Ilex in
accordance with generally accepted accounting principles (i.e., GAAP).
1.19 "Patent Rights" means, collectively, the B.W. Co. Patent
Rights and the WFL Patent Rights.
-2-
<PAGE> 3
1.20 "Product" means the Compound or any product containing the
Compound as an active ingredient, which is (i) covered by a Valid Claim or (ii)
made or developed using the Know-How.
1.21 "Registration" means in relation to any Product such approvals
by government authorities in a country (including price approvals) as may be
legally required before such Product may be commercialized in such country.
1.22 "Sterling" or "L." means English Pounds Sterling.
1.23 "Technology" means the Patent Rights together with all
Know-How related or pertaining to the Field.
1.24 "Territory" means the U.S. and Non-U.S. Territory.
1.25 "Non-U.S. Territory" means the entire world excluding the U.S.
1.26 "Third Party" means any party other than Ilex, B.W. Co., WFL,
their respective Affiliates and Ilex's sublicensees.
1.27 "U.S." means the United States of America, its territories and
possessions.
1.28 "Valid Claim" means a claim of an issued and unexpired patent
included within the Patent Rights which has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise.
1.29 "WFL Know-How" means all technical information and data,
whether or not patentable, which is owned by WFL and its Affiliates (other than
B.W. Co.) as of the Effective Date and which is reasonably necessary to
manufacture the Compound or to use the Compound in the Field, including all
regulatory filings, clinical trial data, synthesis and analytical procedures
and reference standards.
1.30 "WFL Patent Rights" means all patents and patent applications
owned by WFL and its Affiliates (other than B.W. Co.) as of the Effective Date
and any and all patents that may issue from said patent applications which
contain claims covering the manufacture or use of the Compound, including any
and all divisions, continuations, continuations-in-part, extensions,
substitutions, renewals, confirmations, supplementary protection certificates,
registrations, revalidations, reissues or additions of or to any of the
aforesaid patents and patent applications. The WFL Patent Rights are set forth
on Appendix III, attached hereto and made a part hereof.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
Each party hereto represents and warrants to the other that it is free
to enter into this Agreement and to carry out its obligations hereunder,
including, in the case of B.W. Co. and WFL, the right to grant the license
granted by it pursuant to Article 3 hereof. Except as set forth in this
Article 2, B.W. Co. and WFL make no representations or warranties with respect
to the Patent Rights or the Know-How.
ARTICLE 3. GRANT
3.1 B.W. Co. License. Subject to the provisions of Section 3.3 in
respect of the exclusive license granted in this Section 3.1, B.W. Co. hereby
grants to Ilex, under the B.W. Co. Patent Rights and the B.W. Co. Know-How, an
exclusive license in the U.S. in the Field with a right to sublicense, to make,
have made, use and sell Products.
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<PAGE> 4
3.2 WFL License. Subject to the provisions of Section 3.3 in
respect of the exclusive license granted in this Section 3.3, WFL hereby grants
to Ilex, under the WFL Patent Rights and the WFL Know-How, an exclusive license
in the Non-U.S. Territory in the Field with a right to sublicense, to make,
have made, use and sell Products.
3.3 Reservation of Rights. Both B.W. Co. and WFL hereby reserve
the perpetual, royalty-free right to practice the Patent Rights and to use the
Know-How for research purposes including, but not limited to, the right to
make, have made, use and sell Products in the Field for research purposes.
ARTICLE 4. LICENSE FEE
4.1 License Fee. As partial consideration for the licenses
granted hereunder, Ilex will pay B.W. Co. and WFL a total sum of $[**] in
the following installments:
(i) $[**] within ten (10) days after execution of this
Agreement;
(ii) $[**] on the first anniversary of the Effective
Date; and
(iii) $[**] on the second anniversary of the Effective
Date.
4.2 Payment. Payment of each installment of the License Fee shall
be made in Dollars directly to B.W. Co. Thereafter, B.W. Co. and WFL shall
mutually agree as to the allocation of the License Fee between them.
ARTICLE 5. ROYALTIES
5.1 Earned Royalties. Subject to adjustment as set forth in
Section 5.2, Ilex shall pay (i) B.W. Co. a royalty on Net Sales of Products in
the U.S. and (ii) WFL a royalty on Net Sales of Products in the Non-U.S.
Territory, each at the royalty rate of [**] ([**]) on Net Sales of Products in
the respective Territories in a calendar year, except as provided below.
Royalties shall be paid in respect of Net Sales of Products in a given
country of the Territory for a period of ten (10) years from the date of First
Commercial Sale of the first Product in such country. Thereafter, royalties
shall be paid in respect of a given Product only so long as the manufacture,
sale or use of such Product in such country would, but for the license granted
herein, infringe a Valid Claim. With respect to countries where all Valid
Claims expire before the 10-year period, the royalty rate on Net Sales of
Products shall be reduced as [**] ([**]) for the remainder of the 10-year
period. Notwithstanding the foregoing, however, with respect to Europe only,
royalties on Net Sales of a given Product which are payable only by virtue of
clause (ii) of Section 1.20 shall be payable on a country-by-country basis
commencing with the first commercial sale of such Product in such country and
ending on the earlier of (x) the date on which the Know-How used to make and
develop such Product becomes published or generally known to the public through
no fault on the part of Ilex or its Affiliates or sublicensees or (y) the
eighth (8th) anniversary of the commercial sale of the first Product in such
country.
5.2 Third Party Sales.
(i) With respect to any country in which Patent Rights do
not exist, if (a) a product containing the Compound as an active ingredient for
use in the Field is introduced by a Third Party (a "Competitive Product") and
(b) sales by such Third Party exceed the applicable percentage set forth below
of unit sales of Ilex and its sublicensees of Products in such country in any
calendar quarter, then the royalty rates specified in Section 5.1 applicable to
sales by Ilex and its sublicensees of Products in such country during such
calendar quarter shall be adjusted as set forth below:
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<PAGE> 5
<TABLE>
<CAPTION>
% Third Party Unit Sales ("X") %
-
Reduction in Section 5.1 Royalty Rates
--------------------------------------
<S> <C>
X less than or equal to [**]% [**]%
[**]% less than X less than [**]% [**]%
X greater than or equal to [**]% [**]%
</TABLE>
By way of example only, if in a given calendar quarter a Third Party's unit
sales of a Competitive Product in a country were [**] percent ([**]%) of
the unit sales by Ilex and its sublicensees of Products in such country for the
same calendar quarter, the royalty rates applicable to such sales by Ilex and
its sublicensees during such calendar quarter would be [**] percent
([**]%).
(ii) For purposes of this Section 5.2, Third Party unit
sales shall be measured by the sales reported by IMS America Ltd. of Plymouth
Meeting, Pennsylvania and its affiliates ("IMS") or another independent
marketing firm selected and paid by Ilex and reasonably acceptable to B.W. Co.
or WFL, as applicable, depending on the countries in which the royalty rate
reduction is being sought. Ilex shall furnish to B.W. Co. or WFL, as
applicable, copies of reports of IMS or such other auditing firm for the
relevant calendar quarter(s), together with Ilex's royalty reports and payments
for the relevant quarters.
5.3 Accrual of Royalties. No royalty shall be payable on a
Product made, sold or used for tests or development purposes or distributed as
samples. No royalties shall be payable on sales among Ilex and its
sublicensees, but royalties shall be payable on the initial subsequent sale by
Ilex or its sublicensees to a Third Party. No multiple royalty shall be
payable because the manufacture, use or sale of a Product is covered by more
than one Valid Claim or is subject to both Know-How and a Valid Claim.
5.4 Third Party Royalties. If Ilex, its sublicensees and either
B.W. Co. (in respect of the U.S.) or WFL (in respect of any country in the
Non-U.S. Territory), agree that Ilex or its sublicensees are required to pay
royalties to any Third Party because the manufacture, use or sale of a Compound
contained in a given Product infringes any patent or other intellectual
property rights of such Third Party in a given country, Ilex or its
sublicensees may deduct from royalties thereafter due to B.W. Co. or WFL, as
applicable, with respect to Net Sales of such Product in such country up to
[**] percent ([**]%) of the royalties or such other fees paid to such
Third Party, subject to the limitation in the immediately following sentence.
in no event shall the royalties due to B.W. Co. or WFL, as applicable, on such
Net Sales of such Product in such country on account of any reduction pursuant
to this Section 5.4 be thereby reduced by more than [**] percent
([**]%) of the royalties which otherwise would have been due hereunder on such
Net Sales of such Product in such country.
ARTICLE 6. ROYALTY REPORTS AND ACCOUNTING
6.1 Royalty Reports; Records. During the term of this Agreement,
llex shall furnish to B.W. Co., in respect of Net Sales of Products in the
U.S., and to WFL, in respect of Net Sales of Products in the Non-U.S.
Territory, a written report or reports covering each calendar quarter (a
"Royalty Period") showing (i) the Net Sales of all products in the U.S. or the
Non-U.S. Territory, as applicable, during the Royalty Period; (ii) the
royalties, payable in the Base Currency, which shall have accrued hereunder in
respect of such sales; (L[i) withholding taxes, if any, required by law to be
deducted in respect of such sales; and (iv) the exchange rates used in
determining the amount of the royalties payable in the Base Currency. With
respect to sales of Products invoiced in the Base Currency, the Net Sales and
royalty payable shall be expressed in such Base Currency. With respect to
sales of Products invoiced in a currency other than the Base Currency, the Net
Sales and royalty payable shall be expressed in the domestic currency of the
party making the sale together with the Base Currency equivalent of the royalty
payable, calculated using the simple average of the exchange rates published in
the London Financial Times under the heading "World Value of the Pound" on the
last day of each month during the Royalty Period in which the London Financial
Times' Guide is published (currently Tuesdays). If any sublicensee makes any
sales invoiced in a currency other than its domestic currency, the Net Sales
shall be converted
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<PAGE> 6
to its domestic currency in accordance with the sublicensee's normal accounting
principles. llex shall furnish to B.W. Co. or WFL, as applicable, appropriate
evidence of payment of any tax or other amount required by applicable laws or
regulations to be deducted from any royalty payment. Reports shall be due on
the sixtieth (60th) day following the close of each respective calendar
quarter. Ilex shall keep accurate records in sufficient detail to enable the
royalties payable hereunder to be determined. Ilex shall be responsible for
all royalties and late payments that are due to B.W. Co. and WFL but have not
been paid by Ilex's sublicensees to Ilex.
6.2 Right to Audit. Upon the written request of B.W. Co. or WFL
(the "Auditing Party"), at its expense and not more than once in each calendar
year (i.e., once for B.W. Co. and for WFL), Ilex shall permit an independent
public accountant, selected by the Auditing Party, and acceptable to Ilex (the
"Auditor"), which acceptance shall not be unreasonably refused, to have access
during normal business hours to those records of Ilex as may be reasonably
necessary to verify the accuracy of the royalty reports furnished by Ilex to
B.W. Co. and/or WFL pursuant to Section 6.1 of this Agreement in respect of any
calendar year ending not more than forty-eight (48) months prior to the date of
such request. Ilex shall include in each sublicense granted by it pursuant to
this Agreement a provision requiring the sublicensee to keep and maintain
records of sales made pursuant to such sublicense and to grant access to such
records by the Auditor. If the Auditor's report shows any underpayment of
royalties, within thirty (30) days after Ilex's receipt of such report, Ilex
shall remit to the Auditing Party (i) the amount of such underpayment and (ii)
if such underpayment exceeds [**] percent ([**]) of the total royalties owed to
the Auditing Party for the calendar year then being audited, the reasonable and
necessary fees and expenses of the Auditor, subject to reasonable
substantiation thereof. Any overpayment of royalties shall be fully creditable
against future royalties payable to the Auditing Party in subsequent Royalty
Periods.
6.3 Confidentiality of Records. The Auditing Party agrees that
all information subject to review under this Article 6 or under any sublicensee
agreement is confidential and that it and its accountant shall retain all such
information in confidence in accordance with the provisions of Article 12
hereof. At Ilex's request, the Auditor shall execute a confidentiality
agreement with respect to the information subject to review under this Article
6.
ARTICLE 7. ROYALTY AND OTHER PAYMENTS
7. 1 Payment Due Dates. Royalties shown to have accrued in each
royalty report provided for under Article 6 of this Agreement shall be due and
payable on the date such royalty report is due. Payment of royalties in whole
or in part may be made in advance of such due date.
7.2 Currency Restrictions. Except as hereinafter provided in this
Section 7.2, all royalties due shall be paid in the Base Currency of the party
to which they are owed. If at any time legal restrictions prevent the prompt
remittance of part or all royalties with respect to any country of the
Territory where the Products are sold, Ilex shall have the right and option to
make such payments by depositing the amount thereof in local currency to B.W.
Co.'s or WFL's account in a bank or depository in such country.
7.3 Interest. Royalties and other payments required to be paid by
Ilex pursuant to this Agreement shall, if overdue, bear interest at a per annum
rate of eighteen percent (18%) or the maximum rate allowed by law, whichever is
less, until paid. The payment of such interest shall not preclude B.W. Co. or
WFL from exercising any other rights it may have because any payment is
overdue.
ARTICLE 8. DEVELOPMENT AND MARKETING PROGRAM
8. 1 Development Program. Ilex shall, at its expense, use its best
efforts (i) to conduct a research and development program in the U.S. relating
to the use of the Product for the treatment of cancer (the "Development
Program"); and (ii) if, in Ilex's opinion, the results of the Development
Program so justify, to seek Registration for such Product in the U.S.
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<PAGE> 7
8.2 Fulfillment: Termination.
(i) llex's best efforts obligations set forth in this
Article 8 shall be deemed to have been fulfilled if Ilex (a) files an NDA for
Registration of a Product in the U.S. within sixty (60) months after the
Effective Date and (b) commences marketing such Product in the U.S. within
twelve (12) months following Registration. The time periods specified in
clauses (a) or (b) above shall be subject to a one-time extension at Ilex's
election, of up to 12 months in consideration of a fee of $ [**] , payable
prior to the extension of such time periods specified in clauses (a) or (b)
above (the "Extension Fee"). The Extension Fee shall be payable to B.W. Co.
for allocation between B.W. Co. and WFL as they mutually agree.
(ii) In the event that Ilex falls to meet either deadline
set forth in Subsection 8.2(i) above, B.W. Co. may, upon at least sixty (60)
days' prior written notice, terminate this Agreement, unless within such sixty
(60) day period, Ilex meets such deadline or elects to extend such deadline to
the extent and in the manner permitted under section 8.2(i) above.
8.3 Non-U.S. Development. No later than the filing by Ilex of an
NDA for a Product in the U.S., Ilex shall use reasonable efforts to enter into
a sublicense agreement with one or more Third Parties for development and
marketing outside the U.S. Such sublicense agreement shall require such Third
Party or Third Parties to use their best efforts (i) to obtain Registration for
such Product in such other countries of the Territory as Ilex or such Third
Party or Third Parties deem appropriate, and (ii) upon obtaining Registration
far the Product in a particular country, to proceed in due course with the
commercial introduction and marketing of such Product in such country. Ilex
may, in any event, undertake the foregoing responsibilities directly in lieu of
contracting with one or more Third Parties.
8.4 Progress Reports. Until commercial introduction of the first
Product, Ilex will provide a semiannual report to B.W. Co. and WFL summarizing
Ilex's activities related to the development of the Products and securing of
the requisite Registrations during the semiannual period covered by such
report.
ARTICLE 9. PATENT RIGHTS
9. 1 Patent Prosecution and Maintenance. B.W. Co. and WFL shall
use reasonable efforts to prosecute their respective patent applications within
the Patent Rights, to obtain patents thereon and to maintain any such patents
during the term hereof using patent counsel of their choice. Notwithstanding
the foregoing, at any time after the second anniversary of the Effective Date,
B.W. Co. or WFL, as applicable, shall have the right to discontinue the
prosecution of any such patent application or to abandon any such patent. If,
after the second anniversary of the Effective Date, B W. Co. or WFL decides to
abandon or allow to lapse any patent application or patent within the Patent
Rights in any country of the Territory, it shall inform Ilex and Ilex shall be
given the opportunity to prosecute such patent application and/or to maintain
such patent at its own expense.
9.2 Status of Patent Rights. Upon request, B.W. Co. or WFL, as
applicable, shall promptly advise Ilex as to the status of any patent
applications and patents included within its Patent Rights and, to the extent
it has not previously done so, shall promptly provide Ilex with relevant
documentation relating to such patent applications and patents including, but
not limited to, copies thereof.
9.3 Patent Prosecution Costs.
(i) Ilex shall reimburse B.W. Co. and WFL for the
reasonable out-of-pocket expenses incurred by each in the performance of its
obligations pursuant to Section 9.1. B.W. Co. and WFL shall each invoice Ilex
for such expenses on or before April 30 and October 31 of each year with
respect to those out-of-pocket expenses each has incurred for the six (6) month
period ending on the last day of the immediately preceding August or February.
Such invoice shall itemize, in reasonable detail, the expenses which have been
incurred on a country-by-country basis. Payment of each invoice shall be due
net thirty (30) days after its date.
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<PAGE> 8
(ii) Ilex reserves the right to terminate its obligations
pursuant to Subsection 9.3(i) with respect to any patent application or patent
included in the Patent Rights in any country or countries upon at least sixty
(60) days' prior written notice to B.W. Co. in respect of the U.S. or WFL in
respect of the Non-U.S. Territory. After the date specified in such notice on
which Ilex's obligations to pay patent prosecution or maintenance costs
terminate, such patent application and/or patent shall no longer be included in
the Patent Rights in those countries in which llex has exercised its right to
terminate such obligations.
ARTICLE 10. THIRD PARTY INFRINGEMENT
In the event that Ilex becomes aware that a product containing the
Compound for use in the Field is being made, used or sold in the Territory and
it believes that such product infringes a Valid Claim, it shall promptly advise
B.W. Co. or WFL, as applicable, of all the relevant facts and circumstances
known by it in connection with the infringement. B.W. Co., in respect of the
U.S., or WFL, in respect of the Non-U.S. Territory, shall have the right to
enforce such Patent Rights against such infringement, at its own expense. In
the event that (i) B.W. Co. or WFL, as applicable, shall fail, within sixty
(60) days after receiving notice from Ilex, either (a) to terminate such
infringement or (b) to institute an action to prevent continuation thereof and,
thereafter, to prosecute such action diligently, or (ii) B.W. Co. or WFL
earlier notifies Ilex that it does not plan to terminate the infringement or
institute such action, then Ilex shall have the right to do so at its own
expense. B.W. Co. and WFL shall cooperate with Ilex in such effort including
being joined as a party to such action, if necessary. Any damages or costs
recovered by B.W. Co. or WFL in connection with any action filed by it
hereunder, after first reimbursing B.W. Co. or WFL for its out-of-pocket costs
and expenses of litigation, shall be equally divided by Ilex and B.W. Co. or
WFL, as applicable. Any damages or costs recovered in connection with any
action filed by Ilex hereunder, after first reimbursing Ilex for its
out-of-pocket costs and expenses of litigation, shall be deemed to be Net Sales
of Products in the calendar year actually received by Ilex and royalties shall
be payable by Ilex to B.W. Co. or WFL thereon in accordance with the terms of
this Agreement.
ARTICLE 11. INDEMNIFICATION; INSURANCE
11.1 Indemnification by Ilex. Ilex agrees to indemnify and hold
B.W. Co., WFL, their Affiliates, directors, officers, employees and agents
harmless from and against any liabilities or damages or expenses in connection
therewith (including reasonable attorneys' fees and costs and other expenses of
litigation) resulting from (i) claims arising out of Ilex's or its
sublicensees' testing, use, manufacture or sale of the Products; or (ii) the
successful enforcement (i.e., a judgment issued by a court of competent
jurisdiction against Ilex, unappealable or unappealed by Ilex within the time
allowed therefor) by B.W. Co. or WFL of its indemnification rights set forth in
clause (i) of this Section 11.1.
11.2 Indemnification Procedures. A party (the "indemnitee") which
intends to claim indemnification under this Article 11 shall promptly notify
Ilex (the "indemnitor") in writing of any action, claim or liability in respect
of which the indemnitee or any of its Affiliates, directors, officers,
employees or agents intend to claim such indemnification. The indemnitee
shall permit, and shall cause its Affiliates, directors, officers, employees
and agents to permit, the indemnitor, at its discretion, to settle any such
action, claim or liability and agrees to the complete control of such defense
or settlement by the indemnitor; provided, however, that such settlement does
not adversely affect the indemnitee's rights hereunder or impose any
obligations on the indemnitee in addition to those set forth herein in order
for it to exercise such rights. No such action, claim or liability shall be
settled without the prior written consent of the indemnitor and the indemnitor
shall not be responsible for any legal fees or other costs incurred other than
as provided herein. The indemnitee and its Affiliates, directors, officers,
employees and agents shall cooperate fully with the indemnitor and its legal
representatives in the investigation and defense of any action, claim or
liability covered by this indemnification. The indemnitee shall have the
right, but not the obligation, to be represented by counsel of its own
selection and expense.
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<PAGE> 9
11.3 Insurance.
(i) Ilex shall take out and maintain at its own expense,
during the term of this Agreement, and for a minimum of two (2) years following
the expiration, termination or cancellation of this Agreement, product
liability coverage from an insurance company or companies reasonably
satisfactory to B.W. Co. and WFL. During the clinical development of Products,
such coverage shall be at least [**] per occurrence. Promptly upon
commercial introduction of the initial Product, the parties shall negotiate in
good faith an increase in such coverage. The insurance policy relating to such
coverage shall name B.W. Co. and WFL as additional insureds by way of
endorsement or otherwise as their respective interests may appear.
(ii) Within thirty (30) days after the Effective Date,
Ilex shall cause to be delivered to B.W. Co. and WFL an insurance certificate
evidencing the insurance coverage required by Subsection 11.3(i). Such
insurance certificate shall name B.W. Co. and WFL as additional insureds as
their respective interests may appear.
ARTICLE 12. CONFIDENTIALITY
12.1 Treatment of Confidential Information. Except as otherwise
provided in this Article 12, during the term of this Agreement and for a period
of five (5) years thereafter:
(i) Ilex will retain in confidence and use only for
purposes of this Agreement any information and data supplied by or on behalf of
B.W. Co. or WFL to Ilex under this Agreement; and
(ii) B.W. Co. and WFL will retain in confidence and use
only for purposes of this Agreement any information and data supplied by or on
behalf of Ilex to B.W. Co. or WFL under this Agreement.
For purposes of this Agreement, all such information and data which a
party is obligated to retain in confidence shall be called "Information." All
information and data disclosed by B.W. Co. to Ilex pursuant to the Letter
Agreement shall be deemed to have been disclosed hereunder.
12.2 Right to Disclose. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under this
Agreement or any rights which survive termination or expiration hereof, a party
may disclose Information to its Affiliates, sublicensees (actual and
prospective), investors (actual and prospective), consultants, outside
contractors and clinical investigators on condition that such entities or
persons agree (i) to keep the Information confidential for at least the same
time periods and to the same extent as each party is required to keep the
Information confidential and (ii) to use the Information only for such purposes
as such party is entitled to use the Information. Each party or its Affiliates
or, if applicable, its sublicensees may disclose such Information to government
or other regulatory authorities to the extent that such disclosure (a) is
reasonably necessary to obtain patents or authorizations, to conduct clinical
trials and to market commercially the Product, provided such party is otherwise
entitled to engage in such activities under this Agreement or (b) is otherwise
required by applicable laws or regulations.
12.3 Release From Restrictions. The obligation not to disclose
Information shall not apply to any part of such Information that (i) is or
becomes patented, published or otherwise part of the public domain other than
by acts of the party obligated not to disclose such Information (for purposes
of this Article 12, the "receiving party") or its Affiliates or sublicensees in
contravention of this Agreement; (ii) is disclosed to the receiving party or
its Affiliates or sublicensees by a Third Party, provided such Information was
not obtained by such Third Party directly or indirectly from the other party
under this Agreement; (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party or its Affiliates or
sublicensees, provided such Information was not obtained, directly or
indirectly, from the other party under this Agreement or under an obligation of
confidence; (iv) results from research and development by the receiving party
or its Affiliates or sublicensees independent of
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<PAGE> 10
disclosures from the other party under this Agreement; (v) has been approved
for publication by the parties hereto; or (vi) is Product-related information
which is reasonably required to be disclosed in connection with the marketing
of the Product.
12.4 Confidentiality of Agreement. Except as otherwise required by
law or applicable regulation or the terms of this Agreement or otherwise
mutually agreed upon by the hereto, each party shall treat as confidential the
terms, conditions and existence of this Agreement. Notwithstanding the
foregoing, a party may disclose such terms, conditions and existence to an
Affiliate or, in the case of Ilex, a sublicensee, which agrees to be bound by
the terms of this Section 12.4 to the same extent as such party.
12.5 Right to Publication. B.W. Co. and WFL agree that Ilex shall
have the right to publish or to present publicly (collectively, a
"Publication") the results of any research, work or other development performed
pursuant to this Agreement by or on behalf of Ilex (collectively, the
"Results"). Ilex agrees to submit any proposed Publication to B.W. Co. and WFL
for their review at least thirty (30) days prior to submission or presentation
of such Publication. If B.W. Co. or WFL requests a delay in submission or
presentation based on patent considerations, Ilex agrees to delay such
submission or presentation for a period not to exceed ninety (90) days from the
date of such request. Ilex further agrees to give due consideration to any
comments made by B.W. Co. or WFL with respect to such Publication but, except
as set forth in the immediately following sentence, Ilex shall determine the
content of the Publication. Nothing in this Section 12.5 shall be construed to
allow Ilex to publish or otherwise disclose any Information disclosed by B.W.
Co. or WFL.
ARTICLE 13. TERM; TERMINATION
13.1 Term; Termination. Unless terminated sooner pursuant to
Section 8.2, 13.2, 13.3 or 14.2, this Agreement shall become effective as of
the Effective Date and shall continue in full force and effect until the
expiration of Ilex's obligation to pay royalties hereunder; at which time,
notwithstanding anything to the contrary contained herein, all rights licensed
to Ilex herein shall be deemed to be converted to a fully paid, non-exclusive,
irrevocable, royalty free license of the Technology in the Territory to make,
have made, use, sell and have sold Products incorporating, utilizing or
otherwise commercially exploiting the Technology in the Field. Upon expiration
or termination of this Agreement with respect to one or more countries of the
Territory, the rights and obligations of the parties with respect to such
country or countries shall cease, except as follows:
(i) the rights and obligations of the parties under
Article 11 shall survive termination or expiration;
(ii) upon expiration or termination for any reason, the
obligations of confidentiality and use of Information under Article 12 shall
survive for the period provided therein;
(iii) upon termination, Ilex's obligations under Sections
13.4, 13.5 and 13.6 shall survive; and
(iv) expiration or termination of this Agreement shall not
relieve the parties of any other obligation accruing prior to such termination.
13.2 Termination by Ilex. Ilex may terminate this Agreement in its
entirety at any time upon at least ninety (90) days' prior written notice to
B.W. Co. and WFL.
13.3 Termination For Cause.
(i) B.W. Co. may terminate this Agreement in the U.S.
and/or WFL may terminate this Agreement in the Non-U.S. Territory upon the
occurrence of any of the following:
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<PAGE> 11
(a) upon or after the bankruptcy, insolvency,
dissolution or winding up of Ilex (other than dissolution or
winding up for the purposes of reconstruction or
amalgamation);
(b) upon or after the breach of any material
provision of this Agreement by Ilex if such breach is not
cured within thirty (30) days after B.W. Co. and/or WFL gives
Ilex written notice thereof, it being understood that if such
breach relates solely to Ilex's obligations in the U.S., then
this Agreement may be terminated only as to the U.S. by B.W.
Co.; and, if such breach relates solely to Ilex's obligations
in the Non-U.S. Territory, then this Agreement may be
terminated only as to the Non- U.S. Territory by WFL; or
(c) upon the abandonment by Ilex of the
development of the Products. As used in this clause (c), the
term "abandonment," in respect of development of the Products,
shall mean that Ilex or its sublicensees have failed for a
period of six (6) or more consecutive months to conduct any
development, testing, regulatory or manufacturing activity
reasonably necessary in order to prepare and file such
Registration for such Product in the U.S., unless such failure
was due to (x) reasons beyond its or their control (such as
circumstances of the type described in Article 19 hereof) or
(y) the failure by B.W. Co. or WFL to perform its obligations
hereunder. Ilex shall give B.W. Co. and WFL prompt written
notice of the abandonment of the development of the Products.
(ii) Ilex may terminate this Agreement:
(a) in the U.S., upon or after (x) the
bankruptcy, insolvency, dissolution or winding up of B.W. Co.
(other than dissolution or winding up for the purposes of
reconstruction or amalgamation) or (y) the breach of any
material provision of this Agreement by B.W. Co. if such
breach is not cured within thirty (30) days after Ilex gives
B.W. Co. written notice thereof; and
(b) in the Non-U.S. Territory, upon or after (x)
the bankruptcy, insolvency, dissolution or winding up of WFL
(other than dissolution or winding up for purposes of
reconstruction or amalgamation) or (y) the breach of any
material provision of this Agreement by WFL if such breach is
not cured within thirty (30) days after Ilex gives WFL written
notice thereof.
13.4 Ilex's Obligations Upon Termination. Upon termination (but
not expiration) of this Agreement for any reason, (i) Ilex shall promptly pay
to B.W. Co. any amounts due under the terms of this Agreement including License
Fees and Royalty Fees which have accrued as of the date of termination (ii)
Ilex agrees to cooperate fully with B.W. Co. and WFL, or their respective
nominees, to transfer or to hand over to B.W. Co. and WFL or their respective
nominees, health registrations and sales registrations regarding the Products
in the country or countries in which termination has occurred and (iii) in the
event of termination with respect to all countries of the Territory, Ilex shall
return to B.W. Co. and WFL all copies of the Information supplied by either
hereunder, except that Ilex's legal department may retain one copy of the
Information for purposes of determining the scope of its obligations hereunder.
13.5 Disposition of Product. Upon termination of this Agreement
with respect to all countries of the Territory, IIex shall provide B.W. Co. and
WFL with a written inventory of all the Products (in the form of raw materials,
work-in-process and finished goods) in its and its sublicensees' possession and
shall have the right to dispose of such Products within six (6) months
thereafter, subject to fulfillment of its royalty obligations relating thereto.
Notwithstanding the foregoing, upon termination of this Agreement in all
countries of the Territory, Ilex shall promptly return or destroy, at B.W.
Co.'s election, any materials supplied by B.W. Co. pursuant to Section 14.2.
-11-
<PAGE> 12
13.6 Sublicensees Upon Termination. If any party terminates the
Agreement and sublicensees are not then in default under the terms of their
sublicensee agreements hereunder, B.W. Co. and WFL shall have the right (but
not the obligation) to assume and continue such sublicense agreements with
payments thereunder being made by the sublicensees directly to B.W. Co. or to
WFL, as the case may be, without any further obligations on the part of Ilex
with respect thereto.
ARTICLE 14. TRANSFER TO ILEX; ILEX'S OBLIGATIONS
14.1 Transfer of Know-How. Within the ninety (90) day period
following the Effective Date, each of B.W. Co. and WFL shall make available to
Ilex all of the B.W. Co. Know-How or WFL Know-How as the case may be, and B.W.
Co. shall assign to Ilex IND 30,692 for the Compound. Ilex shall acknowledge
acceptance of such assignment to the FDA promptly after it is made by B.W. Co.
14.2 Transfer of Clinical Trial and Bulk Material.
(i) Within ninety (90) days after the Effective Date, as
far as it has not already done so pursuant to the Letter Agreement or
otherwise, B.W. Co. will deliver to Ilex the existing B.W. Co. inventory of the
formulated Compound to be used as clinical trial material. The quantity of
formulated Compound in B.W. Co.'s existing inventory which it can deliver
pursuant to this Subsection 14.2(i) will be approximately 25,000 capsules of
the 100mg unit size and approximately 10,000 capsules of the 25mg unit size of
formulated Compound (which total is inclusive of any quantities of formulated
Compound delivered by B.W. Co. to Ilex prior to the Effective Date). In
addition to the foregoing, within ninety (90) days after the Effective Date,
B.W. Co. shall deliver to Ilex approximately 100 kilograms of bulk Compound.
All shipments shall be F.O.B. San Antonio, Texas.
THE FORMULATED COMPOUND AND THE BULK COMPOUND SHALL BE SUPPLIED "AS
IS" AND NEITHER B.W. CO. NOR WFL MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT THERETO.
(ii) In the event B.W. Co. does not deliver at least
ninety percent (90%) of the respective quantities of formulated Compound and
bulk Compound specified in clause (i) above to Ilex within ninety (90) days of
the Effective Date, Ilex's sole and exclusive remedy shall be to terminate this
Agreement by giving B.W. Co. written notice thereof, which notice must be
given, if at all, within thirty (30) days after expiration of the ninety (90)
day period set forth above. In the event of such termination, B.W. Co. shall
refund all amounts paid by Ilex pursuant to Article 4. In the event Ilex does
not terminate this Agreement within such ninety (90) day period, its right to
terminate pursuant to this clause (ii) and B.W. Co.'s obligation to supply
pursuant to Subsection 14.2(i), to the extent it has not previously done so,
shall each cease.
14.3 Ilex's Obligations.
(i) Ilex acknowledges that it has been informed by B.W.
Co. that the repass dating for certain batches of the formulated Compound which
B.W. Co. has supplied to Ilex has expired or is about to expire. Ilex agrees
that on or before April 30 of each year, commencing with April 30, 1995, it
shall conduct, or cause to be conducted, quality assurance testing of
formulated Compound which it intends to use after the next succeeding May 31 to
determine whether such formulated Compound meets the specifications set forth
in B.W Co.'s IND 30,692, as determined in accordance with the analytical
methodology set forth therein. Ilex shall provide B.W. Co. with a copy of the
results of each quality assurance test promptly after such test results are
received. In the event the test results indicate that such formulated Compound
no longer meets such specifications, Ilex agrees not to use any remaining
formulated Compound previously supplied by B.W. Co. in any clinical trials and
shall promptly notify any of Ilex's clinical investigators to return any
formulated Compound then in their possession.
(ii) Ilex agrees that it shall bear all responsibility for
use of any formulated Compound which it manufactures or has manufactured from
the bulk Compound delivered by B.W. Co. pursuant to
-12-
<PAGE> 13
Subsection 14.2(i). Ilex agrees not to use any such formulated Compound in any
clinical trials or otherwise in humans unless the results of its quality
assurance testing indicate that such formulated Compound meets the
specifications set forth in B.W. Co. 's IND 30,692, as determined in accordance
with the analytical methodology set forth therein.
ARTICLE 15. ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by Ilex
without the written consent of B.W. Co. and WFL; provided, however that Ilex
may, without such consent, assign this Agreement in connection with the
transfer or sale of all or substantially all of its business related to the
Products or in the event of its merger or consolidation with another company.
Any purported assignment in violation of the preceding sentence shall be void.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement. No assignment shall relieve Ilex of responsibility for the
performance of any accrued obligation which Ilex then has hereunder.
ARTICLE 16. PATENT MARKING
Ilex agrees to mark all Products made, used or sold under the terms of
this Agreement, or their containers, in accordance with applicable patent
marking laws.
ARTICLE 17. REGISTRATION OF LICENSES
Ilex agrees to register or give required notice concerning this
Agreement, through itself or through a sublicensee, in each country of the
Territory where there exists a Valid Claim and an obligation under law to so
register or give notice, to pay all costs and legal fees connected therewith
and shall otherwise comply with all national laws applicable to this Agreement.
ARTICLE 18. PATENT TERM EXTENSION
Ilex hereby agrees to cooperate fully with B.W. Co., WFL and their
Affiliates in obtaining an extension of the term of any patent included within
the Patent Rights under the applicable laws of any country including, but not
limited to, the Drug Price Competition and Patent Term Restoration Act of 1984.
Ilex agrees to execute such documents and to take such additional actions as
B.W. Co., WFL or any of their Affiliates may reasonably request in connection
therewith. Ilex further agrees promptly (and in any event within ten (10)
days) to provide B.W. Co. and WFL with a copy of each product registration
certificate which Ilex receives in respect of a Product in any country for
purposes of B.W. Co. or WFL, as applicable, seeking such an extension.
ARTICLE 19. FORCE MAJEURE
A party shall not be held liable or responsible to another party nor
be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement, other than an
obligation to make a payment, when such failure or delay is caused by or
results from fires, floods, embargoes, government regulations, prohibitions or
interventions, wars, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
ARTICLE 20. SEVERABILITY
Each party hereby expressly agrees and contracts that it is not the
intention of any party to violate any public policy, statutory or common laws,
rules, regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries; that if
any word, sentence, paragraph, clause or combination thereof in this Agreement
is found by a court or executive body with judicial powers having jurisdiction
over this Agreement or any of the parties
-13-
<PAGE> 14
hereto in a final unappealed order, to be in violation of any such provisions
in any country or community or association of countries, such words, sentences,
paragraphs, clauses or combination shall be inoperative in such country or
community or association of countries and the remainder of this Agreement shall
remain binding upon the parties hereto.
ARTICLE 21. NOTICES
Any notice required or permitted to be given hereunder shall be in
writing and shall be deemed to have been properly given if delivered in person,
or if mailed by registered or certified mall (return receipt requested),
postage prepaid, or by facsimile (and promptly confirmed by such registered or
certified mail), to the addresses given below or such other addresses as may be
designated in writing by the parties from time to time during the term of this
Agreement. Any notice sent by registered or certified mail as aforesaid shall
be deemed to have been given when mailed.
In the case of Ilex: Ilex Oncology Inc.
14785 Omicron Drive
San Antonio, Texas 78245-3217
Attention: President
Facsimile No.: (210) 677-6009
In the case of B.W. Co.: Burroughs Wellcome, Co.
3030 Cornwallis Road
Research Triangle Park, NC 27709
Attention: Company Secretary
Facsimile No.: (919) 315-8376
In the case of WFL: The Wellcome Foundation Limited
P.O. Box 129
UNICORN HOUSE
160 Euston Road
London NWl 2BP
England
Attention: Secretary
Facsimile No.: 011-44-171-387-3976
ARTICLE 22. GOVERNING LAW
This Agreement, to the extent it relates or applies to the U.S., shall
be governed by and construed in accordance with the laws of the State of North
Carolina, exclusive of its choice-of-law rules. This Agreement, to the extent
it relates or applies to the Non-U.S. Territory, shall be governed by the laws
of England, exclusive of its choice-of-law rules.
ARTICLE 23. ARBITRATION
Except for any disputes relating to Article 11, all disputes arising
in connection with this Agreement shall be finally settled under (i) the
Commercial Arbitration Rules of the American Arbitration Association, with
respect to disputes between Ilex and B.W. Co. or (ii) the Rules of Conciliation
and Arbitration of the International Chamber of Commerce, with respect to
disputes between Ilex and WFL. With respect to disputes between Ilex and B.W.
Co., arbitration shall take place in Raleigh, North Carolina, if demanded by
B.W. Co., or San Antonio, Texas, if demanded by Ilex. With respect to disputes
between Ilex and WFL, arbitration shall take place in London, England, if
demanded by Ilex, or San Antonio, Texas, if demanded by WFL.
-14-
<PAGE> 15
ARTICLE 24. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. The parties hereto may alter any of the
provisions of this Agreement, but only by a written instrument duly executed by
both parties hereto. B.W. Co. and Ilex agree that the Letter Agreement is
hereby terminated.
ARTICLE 25. WAIVER
The failure of a party to enforce at any time for any period any of
the provisions hereof shall not be construed as a waiver of such provisions or
of the rights of such party thereafter to enforce each such provision.
ARTICLE 26.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same document.
ARTICLE 27. CAPTIONS
The captions to the several Articles and Sections hereof are not a
part of this Agreement, but are merely guides or labels to assist in locating
and reading the several Articles and Sections hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
ILEX ONCOLOGY INC. BURROUGHS WELLCOME CO.
By: By:
------------------------------- -----------------------------
Name: Name:
----------------------------- ---------------------------
Title: Title:
---------------------------- --------------------------
THE WELLCOME FOUNDATION LIMITED
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
-15-
<PAGE> 16
APPENDIX I
B.W. CO. U.S. PATENT RIGHTS
<TABLE>
<CAPTION>
FILING NO. FILING DATE GRANT NO. GRANT DATE EXPIRY DATE
<S> <C> <C> <C> <C>
228164 23 Jan 1981 4,372,957 08 Feb 1983 13 Jun 2000
509547 12 Jun 1984 4,661,490 28 Apr 1987 28 Apr 2004
786725 15 Oct 1985 4,959,474 25 Sep 1990 25 Sep 2007
125721 30 Nov 1987 4,897,395 30 Jan 1990 30 Jan 2007
152837 05 Feb 1988 4,818,759 04 Apr 1989 05 Feb 2008
</TABLE>
<TABLE>
<CAPTION>
PATENT NO. EXP. DATE BW CO. CASE NO. CLAIMED
<S> <C> <C> <C>
4,372,957 06/13/00 PBO305-C Treatment of psoriasis with piritrexim or a
pharmaceutically acceptable salt thereof.
4,661,490 04/28/04 PBO305-C-Div-C Treatment of leukemia, carcinoma or sarcoma in a mammal
with piritrexim or a pharmaceutically acceptable salt
thereof.
4,818,759 02/05/08 PBO504 Treatment of rheumatoid arthritis with piritrexim or a
pharmaceutically acceptable salt thereof.
4,897,395 01/30/07 PBO305-C-Div-C3 Treatment of leukemia, carcinoma, sarcoma or lymphoma in
a human using piritrexim or a pharmaceutically
acceptable salt thereof.
4,959,474 09/25/07 PBO-308-C2 Piritrexim PER SE and pharmaceutically acceptable salts
thereof.
</TABLE>
-16-
<PAGE> 17
APPENDIX II
Piritrexim isethionate or
2,4-Diamino-6(2,5-dimethoxybenzyl)-5-methylpyrido-(2,3-d)pyrimidine:
has a molecular weight of: 451.50
and the formula: C(17)H(19)N(5)O(2)C(2)H(6)O(4)S
-17-
<PAGE> 18
APPENDIX III
WFL PATENT RIGHTS
WFL Case No. PBO 305
<TABLE>
<CAPTION>
COUNTRY FILING NO. FILING DATE GRANT NO. GRANT DATE EXPIRY DATE
<S> <C> <C> <C> <C>
Austria A313880V12 13 Jun 1980 377985 28 May 1985 15 Oct 2002
Australia 5927580 13 Jun 1980 532842 15 Mar 1984 13 Jun 1996
Belgium 80103325.9 13 Jun 1980 0021292 09 Mar 1983 13 Jun 2000
(EPO)
Canada 354009 13 Jun 1980 1132137 21 Sep 1982 21 Sep 1999
Switzerland 80103325.9 13 Jun 1980 0021292 09 Mar 1983 13 Jun 2000
(EPO)
Germany 80103325.9 13 Jun 1980 P3062268.5 09 Mar 1983 13 Jun 2000
(EPO)
Denmark 254780 13 Jun 1980 157451 21 May 1990 13 Jun 2000
Europe 80103325.9 13 Jun 1980 0021292 09 Mar 1983 13 Jun 2000
Finland 801912 13 Jun 1980 66866 10 Dec 1984 13 Jun 2000
France 80103325.9 13 Jun 1980 0021292 09 Mar 1983 13 Jun 2000
(EPO)
Great Britain 80103325.9 13 Jun 1980 0021292 09 Mar 1983 13 Jun 2000
(EPO)
Hungary 149480 13 Jun 1980 184787 06 Feb 1984 13 Jun 2000
Ireland 122080 13 Jun 1980 49992 23 Apr 1986 13 Jun 2000
Israel 60307 13 Jun 1980 60307 30 May 1984 13 Jun 2000
Italy 48968A80 13 Jun 1980 1146940 19 Nov 1986 13 Jun 2000
Japan 8005980 13 Jun 1980 1456317 09 Sep 1988 13 Jun 2000
Netherlands 80103325.9 13 Jun 1980 0021292 09 Mar 1983 13 Jun 2000
(EPO)
New Zealand 194045 13 Jun 1980 194045 21 Feb 1985 13 Jun 1996
Sweden 80103325.9 13 Jun 1980 80103325.9 09 Mar 1983 03 Jun 2000
(EPO)
Malaysia 591985 01 Jun 2000 13 Jun 2000
South Africa 803539 13 Jun 1980 803539 27 Jan 1982 13 Jun 2000
WFL Case No. PBO 308
- --------------------
(none)
</TABLE>
-18-
<PAGE> 19
WFL Case No. PBO 504
<TABLE>
<CAPTION>
COUNTRY FILING NO. FILING DATE GRANT NO. GRANT DATE EXPIRY DATE
<S> <C> <C> <C> <C> <C>
Austria (EPO) 88300959.9 05 Feb 1988 E70977 02 Jan 1992 05 Feb 2008
Australia 1135788 05 Feb 1988 606128 23 May 1991 05 Feb 2004
Belgium 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
(EPO)
Canada 558216 05 Feb 1988 1302273 02 Jun 1992 05 Jun 2009
Switzerland 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
(EPO)
Germany 88300959.9 05 Feb 1988 P3867251.0 02 Jan 1992 05 Feb 2008
(EPO)
Europe 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
Spain (EPO) 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
France (EPO) 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
Great Britian 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
(EPO)
Greece (EPO) 88300959.9 05 Feb 1988 E920400302 02 Jan 1992 05 Feb 2008
Italy (EPO) 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
Japan 2556488 05 Feb 1988
Luxembourg 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
(EPO)
Netherlands 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
(EPO)
Sweden 88300959.9 05 Feb 1988 0279565 02 Jan 1992 05 Feb 2008
(EPO)
South Africa 880830 05 Feb 1988 880830 25 Oct 1989 05 Feb 2008
</TABLE>
-19-
<PAGE> 1
EXHIBIT 10.14
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is effective as of the 31st day of March, 1995,
by and among Burroughs Wellcome Co. ("B.W. Co."), having an address at 3030
Cornwallis Road, Research Triangle Park, North Carolina 27709, U.S.A., The
Wellcome Foundation Limited ("WFL"), having an address at Unicorn House, 160
Euston Road, London NWl 2BP England and Ilex Oncology Inc. ("Ilex") formerly
known as Biovensa Inc., having an address at 14785 Omicron Drive, San Antonio,
Texas 78245-3217, U.S.A.
WHEREAS, B.W. Co. has the right to use certain know-how relating to
the Compound (as herein defined) in the U.S. (as herein defined);
WHEREAS, WFL has the right to use certain know-how relating to the
Compound in the Non-U.S. Territory (as herein defined);
WHEREAS, Ilex desires to obtain licenses under such know-how to make,
have made, use and sell the Compound and products containing the Compound; and
WHEREAS, B.W. Co. and WFL are willing to grant such licenses to Ilex;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, the parties hereto mutually agree as
follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or the plural, shall have the following meanings:
1.1 "Affiliate" means any corporation or entity which controls, is
controlled by, or is under common control with a party to this Agreement. A
corporation or entity shall be regarded as in control of another corporation if
it owns or directly or indirectly controls at least [**] percent ([**]) of the
voting stock of the other corporation, or (i) in the absence of the ownership
of at least [**] percent ([**]) of the voting stock of a corporation or (ii) in
the case of a non-corporate entity, if it possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
such corporation or non-corporate entity, as applicable. Notwithstanding the
foregoing, the parties acknowledge and agree that an Affiliate of B.W. Co. and
WFL shall be deemed to include, for all purposes, Burroughs Wellcome (India)
Limited.
1.2 "Agreement" means this License Agreement.
1.3 "Base Currency" means (i) Dollars, with respect to sales of
Products in the U.S. and royalties payable to B.W. Co. thereon; and (ii)
Sterling, with respect to sales of Products in the Non-U.S. Territory and
royalties payable to WFL thereon.
1.4 "B.W. Co. Know-How" means all technical information and data,
whether or not patentable, which is owned by B.W. Co. as of the Effective Date
and which is reasonably necessary
<PAGE> 2
to manufacture the Compound or to use the Compound in the Field, including all
regulatory filings, clinical trial data, synthesis and analytical procedures
and reference standards.
1.5 "Compound" means the chemical known as oxypurinol, having the
chemical structure set forth on Appendix I attached hereto and made a part
hereof.
1.6 "Dollars" or "$" means United States dollars.
1.7 "Effective Date" means the date appearing at the beginning of
this Agreement.
1.8 "Europe" means all countries which are Member States, from
time to time, of the European Economic Area.
1.9 "FDA" means the United States Food and Drug Administration or
any successor entity.
1.10 "Field" means the treatment or prophylaxis of cancer in humans
and conditions other than cancer which are associated with cancer or the
treatment or prophylaxis of cancer in humans.
1.11 "First Commercial Sale" means the date on which Ilex or a
sublicensee first transfers title to a Product to Third Party for monetary
consideration.
1.12 "IND" means an Investigational New Drug application or any
equivalent successor application.
1.13 "Know-How" means, collectively, the B.W. Co. Know-How and the
WFL Know-How.
1.14 "Letter Agreement" means the letter agreement between B.W. Co.
and Ilex dated June 13, 1994.
1.15 "NDA" means a New Drug Application or any equivalent successor
application.
1.16 "Net Sales," with respect to any Product containing the
Compound as the sole active ingredient, means the gross sales (i.e., gross
invoice prices) of such Product billed by Ilex and its sublicensees to Third
Party customers, less: (i) actual credited allowances to such Third Party
customers for spoiled, damaged, outdated and returned Product and for
allowances in lieu of returned Product following price increases; (ii) the
amounts of customary trade and cash discounts, to the extent such trade and
cash discounts are not deducted by Ilex or its sublicensees at the time of
invoice in order to arrive at the gross invoice prices; (iii) all
transportation and handling charges, sales taxes, excise taxes, use taxes,
value added taxes, other similar taxes, or import/export duties actually paid;
and (iv) all other invoiced allowances and adjustments actually credited to
customers including, but not limited to, rebates paid to Third Party payors,
whether during the specific royalty period, as defined in Section 5.1, or not.
1.17 "Net Sales," with respect to any Product containing one or
more active ingredients in addition to the Compound, means the gross sales of
such Product billed by Ilex and its sublicensees to Third Party customers, less
all the allowances, adjustments, discounts, taxes, duties
-2-
<PAGE> 3
and other charges referred to in clauses (i) through (iv) Section 1.16,
multiplied by a fraction, the numerator of which shall be the manufacturing
cost or acquisition cost, as applicable, of the Compound included in such
Product and the denominator of which shall be the manufacturing cost or
acquisition cost, as applicable, of all active ingredients in such Product,
including the Compound.
1.18 "Product" means the Compound or any product containing the
Compound as an active ingredient, which is made or developed using the
Know-How.
1.19 "Registration" means in relation to any Product such approvals
by government authorities in a country (including price approvals) as may be
legally required before such Product may be commercialized in such country.
1.20 "Sterling" or "L" means English Pounds Sterling.
1.21 "Territory" means the U.S. and Non-U.S. Territory.
1.22 "Non-U.S. Territory" means the entire world excluding the U.S.
1.23 "Third Party" means any party other than Ilex, B.W. Co., WFL,
their respective Affiliates and Ilex's sublicensees.
1.24 "U.S." means the United States of America, its territories and
possessions.
1.25 "WFL Know-How" means all technical information and data,
whether or not patentable, which is owned by WFL and its Affiliates (other than
B.W. Co.) as of the Effective Date and which is reasonably necessary to
manufacture the Compound or to use the Compound in the Field, including all
regulatory filings, clinical trial data, synthesis and analytical procedures
and reference standards.
ARTICLE 2. REPRESENTATIONS & WARRANTIES
Each party hereto represents and warrants to the other that it is free
to enter into this Agreement and to carry out its obligations hereunder,
including, in the case of B.W. Co. and WFL, the right to grant the license
granted by it pursuant to Article 3 hereof. Except as set forth in this
Article 2, neither B.W. Co. nor WFL make any representations or warranties with
respect to the Know-How.
ARTICLE 3. GRANT
3.1 B.W. Co. License. Subject to the provisions of Section 3.3 in
respect of the exclusive license granted in this Section 3.1, B.W. Co. hereby
grants to Ilex, under the B.W. Co. Know-How, an exclusive license in the U.S.
in the Field with a right to sublicense, to make, have made, use and sell
Products.
3.2 WFL License. Subject to the provisions of Section 3.3 in
respect of the exclusive license granted in this Section 3.2, WFL hereby grants
to Ilex, under the WFL Know-How, an exclusive license in the Non-U.S. Territory
in the Field with a right to sublicense, to make, have made, use and sell
Products.
-3-
<PAGE> 4
3.3 Reservation of Rights. Both B.W. Co. and WFL hereby reserve
the perpetual, royalty-free right to use the Know-How for research purposes
including, but not limited to, the right to make, have made, use and sell
Products in the Field for research purposes.
ARTICLE 4. LICENSE FEE
4.1 License Fee. As partial consideration for the licenses
granted hereunder, Ilex will pay B.W. Co. and WFL a total sum of $[**]
([**]).
ARTICLE 5. ROYALTIES
5.1 Earned Royalties. Subject to adjustment as set forth in
Section 5.2, Ilex shall pay (i) B.W. Co. a royalty on Net Sales of Products in
the U.S. and (ii) WFL a royalty on Net Sales of Products in the Non-U.S.
Territory, each at the royalty rate of [**] percent ([**]%) on Net
Sales of Products in the respective Territories in a calendar year.
Royalties shall be paid in respect of Net Sales of Products in a given
country of the Territory for a period of ten (10) years from the date of First
Commercial Sale of the first Product in such country. Notwithstanding the
foregoing, however, with respect to Europe only, royalties on Net Sales of a
given Product shall be payable on a country-by-country basis commencing with
the first commercial sale of such Product in such country and ending on the
earlier of (i) the date on which the Know-How used to make and develop such
Product becomes published or generally known to the public through no fault on
the part of Ilex or its Affiliates or sublicensees or (ii) the eighth (8th)
anniversary of the commercial sale of the first Product in such country.
5.2 Credits Against Royalties. The costs incurred by Ilex in the
implementation and maintenance of the Program referred to in Section 8.1 hereof
("Program Costs") may be credited by Ilex against earned royalties payable
pursuant to Section 5.1 hereof; provided, however, that (i) Program Costs shall
be documented to the reasonable satisfaction of B.W. Co., (ii) with respect to
any particular Royalty Period, the amount of such credit for Program Costs
shall not exceed [**] percent ([**]%) of the Royalties which would
otherwise be payable, and (iii) Program Costs which are not ultimately credited
against earned royalties during the term of this Agreement shall lapse and be
of no further value or consequence.
5.3 Accrual of Royalties. No royalty shall be payable on a
Product made, sold, or used for tests or development purposes or distributed as
samples. No royalties shall be payable on sales among Ilex and its
sublicensees, but royalties shall be payable on the initial subsequent sale by
Ilex or its sublicensees to a Third Party.
5.4 Third Party Royalties. If Ilex, its sublicensees and either
B.W. Co. (in respect of the U.S.), or WFL (in respect of any country in the
Non-U.S. Territory), agree that Ilex or its sublicensees are required to pay
royalties to any Third Party because the manufacture, use or sale of a Compound
contained in a given Product infringes any patent or other intellectual
property rights of such Third Party in a given country, Ilex or its
sublicensees may deduct from royalties thereafter due to B.W. Co. or WFL, as
applicable, with respect to Net Sales of such Product in such country up to
[**] percent ([**]%) of the royalties or such other fees paid to such
Third Party, subject to the limitation in the immediately following sentence.
In no event shall the
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royalties due to B.W. Co. or WFL, as applicable, on such Net Sales of such
Product in such country on account of any reduction pursuant to this Section
5.4 be thereby reduced by more than [**] percent ([**]%) of the
royalties which otherwise would have been due hereunder on such Net Sales of
such Product in such country.
ARTICLE 6. ROYALTY REPORTS AND ACCOUNTING
6.1 Royalty Reports; Records. During the term of this Agreement,
Ilex shall furnish to B.W. Co., in respect of Net Sales of Products in the
U.S., and to WFL, in respect of Net Sales of Products in the Non-U.S.
Territory, a written report or reports covering each calendar quarter (a
"Royalty Period") showing (i) the Net Sales of all Products in the U.S. or the
Non-U.S. Territory, as applicable, during the Royalty Period; (ii) the
royalties, payable in the Base Currency, which shall have accrued hereunder in
respect of such sales; (iii) withholding taxes, if any, required by law to be
deducted in respect of such sales; and (iv) the exchange rates used in
determining the amount of the royalties payable in the Base Currency; and (v)
Program Costs incurred in connection with the obligations of Ilex contained in
Sections 8.1 and 5.2 hereof. With respect to sales of Products invoiced in the
Base Currency, the Net Sales and royalty payable shall be expressed in such
Base Currency. With respect to sales of Products invoiced in a currency other
than the Base Currency, the Net Sales and royalty payable shall be expressed in
the domestic currency of the party making the sale together with the Base
Currency equivalent of the royalty payable, calculated using the simple average
of the exchange rates published in the London Financial Times under the heading
"World Value of the Pound" on the last day of each month during the Royalty
Period in which the London Financial Times' Guide is published (currently
Tuesdays). If any sublicensee makes any sales invoiced in a currency other
than its domestic currency, the Net Sales shall be converted to its domestic
currency in accordance with the sublicensee's normal accounting principles.
Ilex shall furnish to B.W. Co. or WFL, as applicable, appropriate evidence of
payment of any tax or other amount required by applicable laws or regulations
to be deducted from any royalty payment. Reports shall be due on the sixtieth
(60th) day following the close of each respective calendar quarter. Ilex shall
keep accurate records in sufficient detail to enable the royalties payable
hereunder to be determined. Ilex shall be responsible for all royalties and
late payments that are due to B.W. Co. and WFL but have not been paid by Ilex
's sublicensees to Ilex.
6.2 Right to Audit. Upon the written request of B.W. Co. or WFL
(the "Auditing Party"), at its expense and not more than once in each calendar
year (i.e., once for B.W. Co. and once for WFL), Ilex shall permit an
independent public accountant, selected by the Auditing Party, and acceptable
to Ilex (the "Auditor"), which acceptance shall not be unreasonably refused, to
have access during normal business hours to those records of Ilex as may be
reasonably necessary to verify the accuracy of the royalty reports furnished by
Ilex to B.W. Co. and/or WFL pursuant to Section 6.1 of this Agreement in
respect of any calendar year ending not more than forty-eight (48) months prior
to the date of such request. Ilex shall include in each sublicense granted by
it pursuant to this Agreement a provision requiring the sublicensee to keep and
maintain records of sales made pursuant to such sublicense and to grant access
to such records by the Auditor. If the Auditor's report shows any underpayment
of royalties, within thirty (30) days after Ilex's receipt of such report, Ilex
shall remit to the Auditing Party (i) the amount of such underpayment and (ii)
if such underpayment exceeds [**] percent ([**]) of the total royalties owed to
the Auditing Party for the calendar year then being audited, the reasonable and
necessary fees and expenses of the Auditor, subject to reasonable
substantiation thereof. Any overpayment of royalties shall be fully creditable
against future royalties payable to the Auditing Party in subsequent Royalty
Periods.
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6.3 Confidentiality of Records. The Auditing Party agrees that
all information subject to review under this Article 6 or under any sublicense
agreement is confidential and that it and its accountant shall retain all such
information in confidence in accordance with the provisions of Article 10
hereof. At Ilex's request, the Auditor shall execute a confidentiality
agreement with respect to the information subject to review under this Article
6.
ARTICLE 7. ROYALTY AND OTHER PAYMENTS
7.1 Payment Due Dates. Royalties shown to have accrued in each
royalty report provided for under Article 6 of this Agreement shall be due and
payable on the date such royalty report is due. Payment of royalties in whole
or in part may be made in advance of such due date.
7.2 Currency Restrictions. Except as hereinafter provided in this
Section 7.2, all royalties due shall be paid in the Base Currency of the party
to which they are owed. If at any time legal restrictions prevent the prompt
remittance of part or all royalties with respect to any country of the
Territory where the Products are sold, Ilex shall have the right and option to
make such payments by depositing the amount thereof in local currency to B.W.
Co.'s or WFL's account in a bank or depository in such country.
7.3 Interest. Royalties and other payments required to be paid by
Ilex pursuant to this Agreement shall, if overdue, bear interest at a per annum
rate of eighteen percent (18%) or the maximum rate allowed by law, whichever is
less, until paid. The payment of such interest shall not preclude B.W. Co. or
WFL from exercising any other rights it may have because any payment is
overdue.
ARTICLE 8. COMPASSIONATE PLEA PROGRAM
8.1 Compassionate Plea Program. The parties acknowledge that B.W.
Co. has established, implemented and conducted a compassionate plea program
with respect to the Product (the "Program"). The parties additionally
acknowledge that B.W. Co.'s reputation in the medical, oncology or
pharmaceutical communities or the public in general would be unduly harmed if
the Program were to be discontinued. Therefore, as additional consideration
for entering into this Agreement, Ilex agrees that it shall, at its own
expense, use its best efforts to diligently continue the Program to the same
extent as is currently conducted by B.W. Co.
8.2 Termination. In the event that Ilex fails to continue the
Program in conformance with Section 8.1 hereof, B.W. Co. may, upon at least
thirty (30) days' prior written notice, terminate this Agreement, unless within
such thirty (30) day period, Ilex were to implement the Program to the
satisfaction of B.W. Co. Upon such a termination, Ilex shall immediately
deliver to B.W. Co. all of Ilex's inventory of the formulated Compound and the
bulk Compound at Ilex's expense.
ARTICLE 9. INDEMNIFICATION; INSURANCE
9.1 Indemnification by Ilex. Ilex agrees to indemnify and hold
B.W. Co., WFL, their Affiliates, directors, officers, employees and agents
harmless from and against any liabilities or damages or expenses in connection
therewith (including reasonable attorneys' fees and costs and other expenses of
litigation) resulting from (i) claims arising out of Ilex's or its
sublicensees' testing, use, manufacture or sale of the Products; or (ii) the
successful enforcement (i.e., a judgment issued
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by a court of competent jurisdiction against Ilex, unappealable or unappealed
by Ilex within the time allowed therefor) by B.W. Co. or WFL of its
indemnification rights set forth in clause (i) of this Section 9.1.
9.2 Indemnification Procedures. A party (the "indemnitee") which
intends to claim indemnification under this Article 11 shall promptly notify
Ilex (the "indemnitor") in writing of any action, claim or liability in respect
of which the indemnitee or any of its Affiliates, directors, officers,
employees or agents intend to claim such indemnification. The indemnitee shall
permit, and shall cause its Affiliates, directors, officers, employees and
agents to permit, the indemnitor, at its discretion, to settle any such action,
claim or liability and agrees to the complete control of such defense or
settlement by the indemnitor; provided, however, that such settlement does not
adversely affect the indemnitee's rights hereunder or impose any obligations on
the indemnitee in addition to those set forth herein in order for it to
exercise such rights. No such action, claim or liability shall be settled
without the prior written consent of the indemnitor and the indemnitor shall
not be responsible for any legal fees or other costs incurred other than as
provided herein. The indemnitee and its Affiliates, directors, officers,
employees and agents shall cooperate fully with the indemnitor and its legal
representatives in the investigation and defense of any action, claim or
liability covered by this indemnification. The indemnitee shall have the
right, but not the obligation, to be represented by counsel of its own
selection and expense.
9.3 Insurance.
(i) Ilex shall take out and maintain, at its own expense, during
the term of this Agreement, and for a minimum of two (2) years following the
expiration, termination or cancellation of this Agreement, product liability
coverage from an insurance company or companies reasonably satisfactory to B.W.
Co. and WFL. During the clinical development of Products, such coverage shall
be at least [**] per occurrence. Promptly upon commercial introduction of
the initial Product, the parties shall negotiate in good faith an increase in
such coverage. The insurance policy relating to such coverage shall name B.W.
Co. and WFL as additional insureds by way of endorsement or otherwise as their
respective interests may appear.
(ii) Within thirty (30) days after the Effective Date, Ilex shall
cause to be delivered to B.W. Co. and WFL an insurance certificate evidencing
the insurance coverage required by Subsection 11.3(i). Such insurance
certificate shall name B.W. Co. and WFL as additional insureds as their
respective interests may appear.
ARTICLE 10. CONFIDENTIALITY
10.1 Treatment of Confidential Information. Except as otherwise
provided in this Article 10, during the term of this Agreement and for a period
of five (5) years thereafter:
(i) Ilex will retain in confidence and use only for purposes of
this Agreement any information and data supplied by or on behalf of B.W. Co. or
WFL to Ilex under this Agreement; and
(ii) B.W. Co. and WFL will retain in confidence and use only for
purposes of this Agreement any information and data supplied by or on behalf of
Ilex to B.W. Co. or WFL under this Agreement.
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<PAGE> 8
For purposes of this Agreement, all such information and data which a
party is obligated to retain in confidence shall be called "Information." All
information and data disclosed by B.W. Co. to Ilex pursuant to the Letter
Agreement shall be deemed to have been disclosed hereunder.
10.2 Right to Disclose. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under this
Agreement or any rights which survive termination or expiration hereof, a party
may disclose Information to its Affiliates, sublicensees (actual and
prospective), investors (actual and prospective), consultants, outside
contractors and clinical investigators on condition that such entities or
persons agree (i) to keep the Information confidential for at least the same
time periods and to the same extent as each party is required to keep the
Information confidential and (ii) to use the Information only for such purposes
as such party is entitled to use the Information. Each party or its Affiliates
or, if applicable, its sublicensees may disclose such Information to government
or other regulatory authorities to the extent that such disclosure (a) is
reasonably necessary to obtain patents or authorizations, to conduct clinical
trials and to market commercially the Product, provided such party is otherwise
entitled to engage in such activities under this Agreement or (b) is otherwise
required by applicable laws or regulations.
10.3 Release From Restrictions. The obligation not to disclose
Information shall not apply to any part of such Information that (i) is or
becomes patented, published or otherwise part of the public domain other than
by acts of the party obligated not to disclose such Information (for purposes
of this Article 10, the "receiving party") or its Affiliates or sublicensees in
contravention of this Agreement; (ii) is disclosed to the receiving party or
its Affiliates or sublicensees by a Third Party, provided such Information was
not obtained by such Third Party directly or indirectly from the other party
under this Agreement; (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party or its Affiliates or
sublicensees, provided such Information was not obtained, directly or
indirectly, from the other party under this Agreement under an obligation of
confidentiality; (iv) results from research and development by the receiving
party or its Affiliates or sublicensees independent of disclosures from the
other party under this Agreement; (v) has been approved for publication by the
parties hereto; or (vi) is Product-related information which is reasonably
required to be disclosed in connection with the marketing of the Product.
10.4 Confidentiality of Agreement. Except as otherwise required by
law or applicable regulation or the terms of this Agreement or otherwise
mutually agreed upon by the hereto, each party shall treat as confidential the
terms, conditions and existence of this Agreement. Notwithstanding the
foregoing, a party may disclose such terms, conditions and existence to an
Affiliate or, in the case of Ilex, a sublicensee, which agrees to be bound by
the terms of this Section 10.4 to the same extent as such party.
10.5 Right to Publication. B.W. Co. and WFL agree that Ilex shall
have the right to publish or to present publicly (collectively, a
"Publication") the results of any research, work or other development performed
pursuant to this Agreement by or on behalf of Ilex (collectively, the
"Results"). Ilex agrees to submit any proposed Publication to B.W. Co. and WFL
for their review at least thirty (30) days prior to submission or presentation
of such Publication. If B.W. Co. or WFL requests a delay in submission or
presentation based on patent considerations, Ilex agrees to delay such
submission or presentation for a period not to exceed ninety (90) days from the
date of such request. Ilex further agrees to give due consideration to any
comments made by B.W. Co. or WFL with respect to such Publication but, except
as set forth in the immediately following sentence,
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<PAGE> 9
Ilex shall determine the content of the Publication. Nothing in this Section
10.5 shall be construed to allow Ilex to publish or otherwise disclose any
Information disclosed by B.W. Co. or WFL.
ARTICLE 11. TERM; TERMINATION
11.1 Term; Termination. Unless terminated sooner pursuant to
Section 8.2, 11.2 or 12.2, this Agreement shall become effective as of the
Effective Date and shall continue in full force and effect until the expiration
of Ilex's obligation to pay royalties hereunder; at which time, notwithstanding
anything to the contrary contained herein, all rights licensed to Ilex herein
shall be deemed to be converted to a fully paid, non-exclusive, irrevocable,
royalty free license of the Know-How in the Territory to make, have made, use,
sell and have sold Products incorporating, utilizing or otherwise commercially
exploiting the Technology in the Field. Upon expiration or termination of this
Agreement with respect to one or more countries of the Territory, the rights
and obligations of the parties with respect to such country or countries shall
cease, except as follows:
(i) the rights and obligations of the parties under Article 9
shall survive termination or expiration;
(ii) upon expiration or termination for any reason, the obligations
of confidentiality and use of Information under Article 10 shall survive for
the period provided therein;
(iii) upon termination, Ilex's obligations under Sections 11.3, 11.4
and 11.5 shall survive; and
(iv) expiration or termination of this Agreement shall not relieve
the parties of any other obligation accruing prior to such termination.
11.2 Termination For Cause.
(i) B.W. Co. may terminate this Agreement in the U.S. and/or WFL
may terminate this Agreement in the Non-U.S. Territory upon the occurrence of
any of the following:
(a) upon or after the bankruptcy, insolvency,
dissolution or winding up of Ilex (other than dissolution or
winding up for the purposes of reconstruction or
amalgamation);
(b) such breach is not cured within thirty (30)
days after B.W. Co. and/or WFL gives Ilex written notice
thereof, it being understood that if such breach relates
solely to Ilex's obligations in the U.S., then this Agreement
may be terminated only as to the U.S. by B.W. Co.; and, if
such breach relates solely to Ilex's obligations in the
Non-U.S. Territory, then this Agreement may be terminated
only as to the Non-U.S. Territory by WFL; or
(ii) Ilex may terminate this Agreement:
(a) in the U.S., upon or after (x) the
bankruptcy, insolvency, dissolution or winding up of B.W. Co.
(other than dissolution or winding up for the purposes of
reconstruction or amalgamation) or (y) the breach of any
material provision of this
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Agreement by B.W. Co. if such breach is not cured within
thirty (30) days after Ilex gives B.W. Co. written notice
thereof; and
(b) in the Non-U.S. Territory, upon or after (x)
the bankruptcy, insolvency, dissolution or winding up of WFL
(other than dissolution or winding up for purposes of
reconstruction or amalgamation) or (y) the breach of any
material provision of this Agreement by WFL if such breach is
not cured within thirty (30) days after Ilex gives WFL written
notice thereof.
11.3 Ilex's Obligations Upon Termination. Upon termination (but
not expiration) of this Agreement for any reason, (i) Ilex shall promptly pay
to B.W. Co. any amounts due under the terms of this Agreement including License
Fees and Royalty Fees which have accrued as of the date of termination, (ii)
Ilex agrees to cooperate fully with B.W. Co. and WFL, or their respective
nominees, to transfer or to hand over to B.W. Co. and WFL or their respective
nominees, health registrations and sales permissions regarding the Products in
the country or countries in which termination has occurred and (iii) in the
event of termination with respect to all countries of the Territory, Ilex shall
return to B.W. Co. and WFL all copies of the Information supplied by either
hereunder, except that Ilex's legal department may retain one copy of the
Information for purposes of determining the scope of its obligations hereunder.
11.4 Disposition of Product. Upon termination of this Agreement
with respect to all countries of the Territory, Ilex shall provide B.W. Co. and
WFL with a written inventory of all the Products (in the form of raw materials,
work-in-process and finished goods) in its and its sublicensees' possession and
shall have the right to dispose of such Products within six (6) months
thereafter, subject to fulfillment of its royalty obligations relating thereto.
Notwithstanding the foregoing, upon termination of this Agreement in all
countries of the Territory, Ilex shall promptly return or destroy, at B.W.
Co.'s election, any materials supplied by B.W. Co. pursuant to Section 12.2.
11.5 Sublicensees Upon Termination. If any party terminates the
Agreement and sublicensees are not then in default under the terms of their
sublicensee agreements hereunder, B.W. Co. and WFL shall have the right (but
not the obligation) to assume and continue such sublicense agreements with
payments thereunder being made by the sublicensees directly to B.W. Co. or to
WFL, as the case may be, without any further obligations on the part of Ilex
with respect thereto.
ARTICLE 12. TRANSFER TO ILEX; ILEX'S OBLIGATIONS
12.1 Transfer of Know-How.
Within the ninety (90) day period following the Effective Date, each
of B.W. Co. and WFL shall make available to Ilex all of the Know-How, or the
WFL Know-How, as the case may be, and B.W. Co. shall assign to Ilex IND 3362
for the Compound. Ilex shall acknowledge acceptance of such assignment to the
FDA promptly after it is made by B.W. Co. cep
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12.2 Transfer of Clinical Trial and Bulk Material.
(i) Within ninety (90) days after the Effective Date, as far as
it has not already done so pursuant to the Letter Agreement or otherwise, B.W.
Co. will deliver to Ilex the existing B.W. Co. inventory of the formulated
Compound, if any, to be used as clinical trial material. The quantity of
formulated Compound in B.W. Co.'s existing inventory which it can deliver
pursuant to this Subsection 12.2(i) will be approximately 150,000 capsules of
the 100mg unit size of formulated Compound (which total is inclusive of any
quantities of formulated Compound delivered by B.W. Co. to Ilex prior to the
Effective Date). In addition to the foregoing, within ninety (90) days after
the Effective Date, B.W. Co. shall deliver to Ilex approximately 100 kilograms
of bulk Compound. All shipments shall be F.O.B. San Antonio, Texas.
THE FORMULATED COMPOUND AND THE BULK COMPOUND SHALL BE SUPPLIED "AS IS" AND
NEITHER B.W. CO. NOR WFL MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT
THERETO.
(ii) In the event B.W. Co. does not deliver at least [**] percent
([**]) of the respective quantities of formulated Compound and bulk Compound
specified in clause (i) above to Ilex within ninety (90) days of the Effective
Date, Ilex's sole and exclusive remedy shall be to terminate this Agreement by
giving B.W. Co. written notice thereof, which notice must be given, if at all,
within thirty (30) days after expiration of the ninety (90) day period set
forth above. In the event Ilex does not terminate this Agreement within such
ninety (90) day period, its right to terminate pursuant to this clause (ii) and
B.W. Co.'s obligation to supply pursuant to Subsection 12.2(i), to the extent
it has not previously done so, shall each cease.
12.3 Ilex's Obligations.
(i) Ilex acknowledges that it has been informed by B.W. Co. that
the repass dating for certain batches of the formulated Compound which B.W. Co.
has supplied to Ilex has expired or is about to expire. Ilex agrees that on or
before April 30 of each year, commencing with April 30, 1995, it shall conduct,
or cause to be conducted, quality assurance testing of formulated Compound
which it intends to use after the next succeeding May 31 to determine whether
such formulated Compound meets the specifications set forth in B.W. Co.'s IND
3362, as determined in accordance with the analytical methodology set forth
therein. Ilex shall provide B.W. Co. with a copy of the results of each
quality assurance test promptly after such test results are received. In the
event the test results indicate that such formulated Compound no longer meets
such specifications, Ilex agrees not to use any remaining formulated Compound
previously supplied by B.W. Co. in any clinical trials and shall promptly
notify any of Ilex's clinical investigators to return any formulated Compound
then in their possession.
(ii) Ilex agrees that it shall bear all responsibility for use of
any formulated Compound which it manufactures or has manufactured from the bulk
Compound delivered by B.W. Co. pursuant to Subsection 12.2 (i). Ilex agrees
not to use any such formulated Compound in any clinical trials or otherwise in
humans unless the results of its quality assurance testing indicate that such
formulated Compound meets the specifications set forth in B.W. Co.'s IND 3362,
as determined in accordance with the analytical methodology set forth therein.
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ARTICLE 13. ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by Ilex
without the written consent of B.W. Co. and WFL; provided, however, that Ilex
may, without such consent, assign this Agreement in connection with the
transfer or sale of all or substantially all of its business related to the
Products or in the event of its merger or consolidation with another company.
Any purported assignment in violation of the preceding sentence shall be void.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement. No assignment shall relieve Ilex of responsibility for the
performance of any accrued obligation which Ilex then has hereunder.
ARTICLE 14. REGISTRATION OF LICENSES
Ilex agrees to register or give required notice concerning this
Agreement, through itself or through a sublicensee, in each country of the
Territory where there exists an obligation under law to so register or give
notice, to pay all costs and legal fees connected therewith and shall otherwise
comply with all national laws applicable to this Agreement.
ARTICLE 15. FORCE MAJEURE
A party shall not be held liable or responsible to another party nor
be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement, other than an
obligation to make a payment, when such failure or delay is caused by or
results from fires, floods, embargoes, government regulations, prohibitions or
interventions, wars, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
ARTICLE 16. SEVERABILITY
Each party hereby expressly agrees and contracts that it is not the
intention of any party to violate any public policy, statutory or common laws,
rules, regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries; that if
any word, sentence, paragraph, clause or combination thereof in this Agreement
is found by a court or executive body with judicial powers having jurisdiction
over this Agreement or any of the parties hereto in a final unappealed order,
to be in violation of any such provisions in any country or community or
association of countries, such words, sentences, paragraphs, clauses or
combination shall be inoperative in such country or community or association of
countries and the remainder of this Agreement shall remain binding upon the
parties hereto.
ARTICLE 17. NOTICES
Any notice required or permitted to be given hereunder shall be in
writing and shall be deemed to have been properly given if delivered in person,
or if mailed by registered or certified mail (return receipt requested),
postage prepaid, or by facsimile (and promptly confirmed by such registered or
certified mail), to the addresses given below or such other addresses as may be
designated in writing by the parties from time to time during the term of this
Agreement. Any notice sent by registered or certified mail as aforesaid shall
be deemed to have been given when mailed.
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In the case of Ilex:
Ilex Oncology Inc.
14785 Omicron Drive
San Antonio, Texas 78245-3217
Attention: President
Facsimile No.: (210) 677-6009
In the case of B.W. Co.:
Burroughs Wellcome Co.
3030 Cornwallis Road
Research Triangle Park, NC 27709
Attention: Company Secretary
Facsimile No.: (919) 315-8376
In the case of WFL:
The Wellcome Foundation Limited
P.O. Box 129
UNICORN HOUSE
160 Euston Road
London NWl 2BP
England
Attention: Secretary
Facsimile No.: 011-4471-387-3976
ARTICLE 18. GOVERNING LAW
This Agreement, to the extent it relates or applies to the U.S., shall
be governed by and construed in accordance with the laws of the State of North
Carolina, exclusive of its choice-of-law rules. This Agreement, to the extent
it relates or applies to the Non-U.S. Territory, shall be governed by the laws
of England, exclusive of its choice-of-law rules.
ARTICLE 19. ARBITRATION
Except for any disputes relating to Article 9, all disputes arising in
connection with this Agreement shall be finally settled under (i) the
Commercial Arbitration Rules of the American Arbitration Association, with
respect to disputes between Ilex and B.W. Co. or (ii) the Rules of Conciliation
and Arbitration of the International Chamber of Commerce, with respect to
disputes between Ilex and WFL. With respect to disputes between Ilex and B.W.
Co., arbitration shall take place in Raleigh, North Carolina, if demanded by
B.W. Co., or San Antonio, Texas, if demanded by Ilex. With respect to disputes
between Ilex and WFL, arbitration shall take place in London, England, if
demanded by Ilex, or San Antonio, Texas, if demanded by WFL.
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ARTICLE 20. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire understanding of the parties with respect to
the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. The parties hereto may alter any of the
provisions of this Agreement, but only by a written instrument duly executed by
both parties hereto. B.W. Co. and Ilex agree that the Letter Agreement is
hereby terminated.
ARTICLE 21. WAIVER
The failure of a party to enforce at any time for any period any of
the provisions hereof shall not be construed as a waiver of such provisions or
of the rights of such party thereafter to enforce each such provision.
ARTICLE 22. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same document.
ARTICLE 23. CAPTIONS
The captions to the several Articles and Sections hereof are not a
part of this Agreement, but are merely guides or labels to assist in locating
and reading the several Articles and Sections hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
ILEX ONCOLOGY INC. BURROUGHS WELLCOME CO.
By: /s/ RICHARD L. LOVE By: /s/ CHRIS A. RALLIS
---------------------------------- -------------------------------
Print Name: Richard L. Love Print Name: Chris A. Rallis
-------------------------- ------------------
Title: President Title: Vice President
------------------------------- ----------------------------
Planning and Business
Development
THE WELLCOME FOUNDATION LIMITED
By: ILLEGIBLE
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
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APPENDIX I
Oxypurinol is a structural analog of the natural purine base xanthine
and the principal metabolite of allopurinol, a xanthine oxidase inhibitor that
acts on purine metabolism.
The molecular formula for oxypurinol is C(5)H(4)N(4)O(2).
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EXHIBIT 10.15
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is effective as of the 1st day of
November , 1993, by and among Burroughs Wellcome Co. ("B.W. Co."), having an
address at 3030 Cornwallis Road, Research Triangle Park, North Carolina 27709,
U.S.A., The Wellcome Foundation Limited ("WFL"), having an address at Unicorn
House, 160 Euston Road, London NW1 2BP England and CTRC Research Foundation
("CTRC"), having an address at 14960 Omicron, San Antonio, Texas 78245-3217,
U.S.A.
WHEREAS, B.W. Co. owns all right, title and interest in
certain patent rights and has the right to use certain know-how relating to the
Compound (as herein defined) in the U.S. (as herein defined);
WHEREAS, WFL owns all right, title and interest in certain
patent rights and has the right to use certain know-how relating to the
Compound in the Non-U.S. Territory (as herein defined);
WHEREAS, CTRC desires to obtain licenses under such patent
rights and know-how to make, have made, use and sell the Compound and products
containing the Compound; and
WHEREAS, B.W. Co. and WFL are willing to grant such licenses
to CTRC;
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises and covenants set forth herein, the parties hereto mutually
agree as follows:
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ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms, whether used
in the singular or the plural, shall have the following meanings:
1.1 "Affiliate" means any corporation or entity which
controls, is controlled by, or is under common control with a party to this
Agreement. A corporation or entity shall be regarded as in control of another
corporation if it owns or directly or indirectly controls at least [**]
percent ([**]) of the voting stock of the other corporation, or (i) in the
absence of the ownership of at least [**] percent ([**]) of the voting stock of
a corporation or (ii) in the case of non-corporate entity, if it possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such corporation or non-corporate entity, as
applicable.
1.2 "Agreement" means this License Agreement.
1.3 "Base Currency" means (i) Dollars, with respect to
sales of Products in the U.S. and royalties payable to B.W. Co. thereon; and
(ii) Sterling, with respect to sales of Products in the Non-U.S. Territory and
royalties payable to WFL thereon.
1.4 "B.W. Co. Know-How" means all technical information
and data, whether or not patentable, which is owned by B.W. Co. as of the
Effective Date and which is reasonably necessary to manufacture the Compound or
to use the Compound
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in the Field, including all regulatory filings, clinical trial data, synthesis
and analytical procedures and reference standards.
1.5 "B.W. Co. Patent Rights" means all patents and patent
applications owned by B.W. Co. as of the Effective Date, and any and all
patents that may issue from said patent applications which contain claims
covering the manufacture or use of the Compound, including any and all
divisions, continuations, continuations-in-part, extensions, substitutions,
renewals, confirmations, supplementary protection certificates, registrations,
revalidations, reissues or additions of or to any of the aforesaid patents and
patent applications. The B.W. Co. Patent Rights are set forth on Appendix I,
attached hereto and made a part hereof.
1.6 "Compound" means the chemical known as crisnatol
mesylate, having the chemical structure set forth on Appendix II attached
hereto and made a part hereof.
1.7 "Dollars" or "$" means United States dollars.
1.8 "Effective Date" means the date appearing at the
beginning of this Agreement.
1.9 "Europe" means all countries which are Member States,
from time to time, of the European Community.
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1.10 "FDA" means the United States Food and Drug
Administration or any successor entity.
1.11 "Field" means the treatment and/or prophylaxis of
cancer in humans.
1.12 "IND" means an Investigational New Drug application
or any equivalent successor application.
1.13 "Know-How" means the B.W. Co. Know-How and the WFL
Know-How.
1.14 "Letter Agreement" means the letter agreement between
B.W. Co. and CTRC dated December 14, 1992, pursuant to which CTRC obtained
supplies of clinical trial material from B.W. Co. and commenced a clinical
trial of a Product.
1.15 "NDA" means a New Drug Application or an equivalent
successor application.
1.16 "Net Sales," with respect to any Product containing
the Compound as the sole active ingredient, means the gross sales (i.e., gross
invoice prices) of such Product billed by CTRC and its sublicensees to Third
Party customers, less: (i) actual credited allowances to such Third Party
customers for spoiled, damaged, outdated and returned Product and for
allowances in lieu of returned Product following price
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increases; (ii) the amounts of customary trade and cash discounts, to the
extent such trade and cash discounts are not deducted by CTRC or its
sublicensees at the time of invoice in order to arrive at the gross invoice
prices; (iii) all transportation and handling charges, sales taxes, excise
taxes, use taxes or import/export duties actually paid; and (iv) all other
invoiced allowances and adjustments actually credited to customers including,
but not limited to, rebates paid to Third Party payors, whether during the
specific royalty period or not.
1.17 "Net Sales," with respect to any Product containing
one or more active ingredients in addition to the Compound, means the gross
sales of such Product billed by CTRC and its sublicensees to Third Party
customers, less all the allowances, adjustments, discounts, taxes, duties and
other charges referred to in Section 1.16, multiplied by a fraction, the
numerator of which shall be the manufacturing cost or acquisition cost, as
applicable, of the Compound included in such Product and the denominator of
which shall be the manufacturing cost or acquisition cost, as applicable, of
all active ingredients in such Product, including the Compound.
1.18 "Patent Rights" means the B.W. Co. Patent Rights and
the WFL Patent Rights.
1.19 "Product" means the Compound or any product
containing the Compound as an active ingredient, (excluding, however, any in
vivo or in vitro diagnostic products) which is (i) covered by a Valid Claim or
(ii) made or developed using the Know-How.
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1.20 "Registration" means in relation to any Product such
approvals by government authorities in a country (including price approvals) as
may be legally required before such Product may be commercialized in such
country.
1.21 "Sterling" or "L." means English Pounds Sterling.
1.22 "Territory" means the U.S. and Non-U.S. Territory.
"Non-U.S. Territory" means the entire world excluding the U.S.
1.23 "Third Party" means any party other then CTRC, B.W.
Co., WFL, their respective Affiliates and CTRC's sublicensees.
1.24 "U.S." means the United States of America, its
territories and possessions.
1.25 "Valid Claim" means a claim of an issued and
unexpired patent included within the Patent Rights which has not been held
unenforceable, unpatentable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not been admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise.
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1.26 "WFL Know-How" means all technical information and
data, whether or not patentable, which is owned by WFL and its Affiliates
(other than B.W. Co.) as of the Effective Date and which is reasonably
necessary to manufacture the Compound or to use the Compound in the Field,
including all regulatory filings, clinical trial data, synthesis and analytical
procedures and reference standards.
1.27 "WFL Patent Rights" means all patents and patent
applications owned by WFL and its Affiliates (other than B.W. Co.) as of the
Effective Date and any and all patents that may issue from said patent
applications which contain claims covering the manufacture or use of the
Compound, including any and all divisions, continuations,
continuations-in-part, extensions, substitutions, renewals, confirmations,
supplementary protection certificates, registrations, revalidations, reissues
or additions of or to any of the aforesaid patents and patent applications.
The WFL Patent Rights are set forth on Appendix III, attached hereto and made a
part hereof.
ARTICLE 2. WARRANTIES
Each party hereto represents and warrants to the other that it
is free to enter into this Agreement and to carry out is obligations hereunder,
including, in the case of B.W. Co. and WFL, the right to grant the license
granted by it pursuant to Article 3 hereof. Except as set forth in this
Article 2, B.W. Co. and WFL make no warranties with respect to the Patent
Rights or the Know-How.
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ARTICLE 3. GRANT
3.1 B.W. Co. License. Subject to the provisions of
Section 3.3 in respect of the exclusive license granted in this Section 3.1,
B.W. Co. hereby grants to CTRC, under the B.W. Co. Patent Rights and the
Know-How, an exclusive license in the U.S. in the Filed and a non-exclusive
license in the U.S. outside the Field, with a right to sublicense, to make,
have made, use and sell Products.
3.2 WFL License. Subject to the provisions of Section
3.3 in respect of the exclusive license granted in this Section 3.2, WFL hereby
grants to CTRC, under the WFL Patent Rights and the Know-How, an exclusive
license in the Non-U.S. Territory in the Field and a nonexclusive license in
the Non-U.S. Territory outside the Field, with a right to sublicense, to make,
have made, use and sell Products.
3.3 Reservation of Rights. Both B.W. Co. and WFL hereby
reserve the perpetual, royalty-free right to practice the Patent Rights and to
use the Know-How for research purposes including, but not limited to, the right
to make, have made, use and sell Products in the Field for research purposes.
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ARTICLE 4. LICENSE FEE
4.1 License Fee. As partial consideration for the
licenses granted hereunder, CTRC will pay B.W. Co. and WFL a total sum of
$[**] in the following installments:
(i) $[**] within ten (10) days after execution
of this Agreement; and
(ii) $[**] on the first anniversary of the
Effective Date.
4.2 Payment. Payment of each installment of the License
Fee shall be made in Dollars directly to B.W. Co. B.W. Co. and WFL shall
mutually agree as to the allocation of the License Fee between them.
ARTICLE 5. ROYALTIES
5.1 Earned Royalties.
(i) Subject to adjustment as set forth in Section
5.2, CTRC shall pay B.W. Co. a royalty on Net Sales of Products in the U.S. and
WFL a royalty on Net Sales of Products in the Non-U.S. Territory at the
following royalty rates:
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(a) [**] percent ([**]%) on the
first $[**] of Net Sales of Products in the Territory in a calendar
year; and
(b) [**] percent ([**]%) on that
portion of Net Sales of Products in the Territory in excess of
$[**] in a calendar year.
Royalties shall be paid in respect of Net Sales of Products in a given country
of the Territory for a period of eight (8) years from the date of first
commercial sale of the first Product in such country. Thereafter, royalties
shall be paid in respect of a given Product only so long as the manufacture,
sale or use of such Product in such country would, but for the license granted
herein, infringe a Valid Claim. Notwithstanding the foregoing, however, with
respect to Europe only, royalties on Net Sales of a given Product which are
payable only by virtue of clause (ii) of Section 1.19 shall be payable on a
country-by-country basis commencing with the first commercial sale of such
Product in such country and ending on the earlier of (x) the date on which the
Know-How used to make and develop such Product becomes published or generally
known to the public through no fault on the part of CTRC or its Affiliates or
sublicensees or (y) the eighth (8th) anniversary of the commercial sale of the
first Product in such country.
(ii) For purposes of determining whether Net Sales
in a given calendar year have exceeded [**] all Net Sales in currencies
other than Dollars shall be converted into Dollars in accordance with the
provisions of Section 6.1.
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5.2 Third Party Sales.
(i) With respect to any country in which Patent
Rights do not exist, if (a) a product containing the Compound as an active
ingredient for use in the Field (a "Competitive Product") is introduced by a
Third Party and (b) sales by such Third Party exceed the applicable percentage
set forth below of unit sales of CTRC and its sublicensees of Products in such
country in any calendar quarter, then the royalty rates specified in Section
5.1 applicable to sales by CTRC and its sublicensees of Products in such
country during such calendar quarter shall be adjusted as set forth below:
<TABLE>
<CAPTION>
% of Third Party Unit Sales ("X") % Reduction in Section 5.1 Royalty Rates
<S> <C>
X is less than or equal to [**]% [**]%
[**]% is less than X is less than [**]% [**]%
X is greater than or equal to [**]% [**]%
</TABLE>
By way of example only, if in a given calendar quarter a Third Party's unit
sales of a Competitive Product in a country were [**] percent ([**]%)
of the unit sales by CTRC and its sublicensees of Products in such country for
the same calendar quarter, the royalty rates applicable to such sales by CTRC
and its sublicensees during such calendar quarter would be [**] percent
([**]%) for sales to which Subsection 5.1(i)(a) applies and [**] percent
([**]%) for sales to which Subsection 5.1(i)(b) applies.
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(ii) For purposes of this Section 5.2, Third Party
unit sales shall be measured by the sales reported by IMS America Ltd. of
Plymouth Meeting, Pennsylvania and its affiliates ("IMS") or another
independent marketing firm selected and paid by CTRC and reasonably acceptable
to B.W. Co. or WFL, as applicable, depending on the countries in which the
royalty rate reduction is being sought. CTRC shall furnish to B.W. Co. or WFL,
as applicable, copies of reports of IMS or such other auditing firm for the
relevant calendar quarter(s), together with CTRC's royalty reports and payments
for the relevant quarters.
5.3 Accrual of Royalties. No royalty shall be payable on
a Product made, sold, or used for tests or development purposes or distributed
as samples. No royalties shall be payable on sales among CTRC and its
sublicensees, but royalties shall be payable on the initial subsequent sale by
CTRC or its sublicensees to a Third Party. No multiple royalty shall be
payable because the manufacture, use or sale of a Product is covered by more
than one Valid Claim or is subject to both Know-How and a Valid Claim.
5.4 Third Party Royalties. If CTRC or its sublicensees
determine, after discussion with B.W. Co. in respect of the U.S. or WFL in
respect of any country in the Non-U.S. Territory, that it or they are required
to pay royalties to any Third Party because the manufacture, use or sale of a
Compound contained in a given Product infringes any patent or other
intellectual property rights of such Third Party in a given country, CTRC or
its sublicensees may deduct from royalties thereafter due to B.W. Co. or WFL,
as applicable, with respect to Net Sales of such Product in such country up to
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[**] percent ([**]%) of the royalties or such other fees paid to such
Third Party, subject to the limitation in the immediately following sentence.
In no event shall the royalties due to B.W. Co. or WFL, as applicable, on such
Net Sales of such Product in such country on account of any reduction pursuant
to this Section 5.4 be thereby reduced by more than [**] percent ([**]%)
of the royalties which otherwise would have been due hereunder on such Net
Sales of such Product in such country.
ARTICLE 6. ROYALTY REPORTS AND ACCOUNTING
6.1 Royalty Reports; Records. During the term of this
Agreement, CTRC shall furnish to B.W. Co., in respect of Net Sales in the U.S.,
and to WFL, in respect of Net Sales of Products in the Non-U.S. Territory, a
written report or reports covering each calendar quarter (a "royalty period")
showing (i) the Net Sales of all Products in the U.S. or the Non-U.S.
Territory, as applicable, during the royalty period; (ii) the royalties,
payable in the Base Currency, which shall have accrued hereunder in respect of
such sales; (iii) withholding taxes, if any, required by law to be deducted in
respect of such sales; and (iv) the exchange rates used in determining the
amount of the royalties payable in the Base Currency. With respect to sales of
Products invoiced in the Base Currency, the Net Sales and royalty payable shall
be expressed in such Base Currency. With respect to sales of Products invoiced
in a currency other than the Base Currency, the Net Sales and royalty payable
shall be expressed in the domestic currency of the party making the sale
together with the Base Currency equivalent of the royalty payable, calculated
using the simple average of the exchange rates published in the
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London Financial Times under the heading "World Value of the Pound" on the last
day of each month during the royalty period in which the London Financial
Times' Guide is published (currently Tuesdays). If any sublicensee makes any
sales invoiced in a currency other than its domestic currency, the Net Sales
shall be converted to its domestic currency in accordance with the
sublicensee's normal accounting principles. CTRC shall furnish to B.W. Co. or
WFL, as applicable, appropriate evidence of payment of any tax or other amount
required by applicable laws or regulations to be deducted from any royalty
payment. Reports shall be due on the sixtieth (60th) day following the close
of each respective calendar quarter. CTRC shall keep accurate records in
sufficient detail to enable the royalties payable hereunder to be determined.
CTRC shall be responsible for all royalties and late payments that are due to
B.W. Co. and WFL but have not been paid by CTRC's sublicensees to CTRC.
6.2 Right to Audit. Upon the written request of B.W. Co.
or WFL (the "auditing party"), at its expense and not more than once in each
calendar year (i.e., once for B.W. Co. and once for WFL), CTRC shall permit an
independent public accountant, selected by the auditing party, and acceptable
to CTRC, which acceptance shall not be unreasonably refused, to have access
during normal business hours to those records of CTRC as may be reasonably
necessary to verify the accuracy of the royalty reports furnished by CTRC to
B.W. Co. and/or WFL pursuant to Section 6.1 of this Agreement in respect of any
calendar year ending not more than forty-eight (48) months prior to the date of
such request. CTRC shall include in each sublicense granted by it pursuant to
this Agreement a provision requiring the sublicensee to keep and maintain
records of sales made pursuant to such sublicense and to grant access to such
records by the
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auditory party's independent public accountant, as applicable. If such
independent public accountant's report shows any underpayment of royalties,
within thirty (30) days after CTRC's receipt of such report, CTRC shall remit
to the auditing party (i) the amount of such underpayment and (ii) if such
underpayment exceeds [**] percent ([**]) of the total royalties owed to the
auditing party for the calendar year then being audited, the reasonable and
necessary fees and expenses of such independent public accountant performing
the audit, subject to reasonable substantiation thereof. Any overpayment of
royalties shall be fully creditable against future royalties payable to the
auditing party in subsequent royalty periods.
6.3 Confidentiality of Records. The auditing party
agrees that all information subject to review under this Article 6 or under any
sublicense agreement is confidential and that it and its accountant shall
retain all such information in confidence.
ARTICLE 7. ROYALTY AND OTHER PAYMENTS
7.1 Payment Due Dates. Royalties shown to have accrued
in each royalty report provided for under Article 6 of this Agreement shall be
due and payable on the date such royalty report is due. Payment of royalties
in whole or in part may be made in advance of such due date.
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7.2 Currency Restrictions. Except as hereinafter
provided in this Section 7.2, all royalties due shall be paid in the Base
Currency of the party to which they are owed. If at any time legal
restrictions prevent the prompt remittance of part or all royalties with
respect to any country of the Territory where the Products are sold, CTRC shall
have the right and option to make such payments by depositing the amount
thereof in local currency to B.W. Co.'s or WFL's account in a bank or
depository in such country.
7.3 Interest. Royalties and other payments required to
be paid by CTRC pursuant to this Agreement shall, if overdue, bear interest at
a per annum rate of eighteen percent (18%) or the maximum rate allowed by law,
whichever is less, until paid. The payment of such interest shall not preclude
B.W. Co. or WFL from exercising any other rights it may have because any
payment is overdue.
ARTICLE 8. DEVELOPMENT AND MARKETING PROGRAM
8.1 Development Program. CTRC shall, at its expense, use
its best efforts (i) to conduct a research and development program in the U.S.
relating to the use of the Product for the treatment of cancer (the
"Development Program"); and (ii) if, in CTRC's opinion, the results of the
Development Program so justify, to seek Registration for such Product in the
U.S.
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8.2 Fulfillment; Termination.
(i) CTRC's best efforts obligations set forth in
this Article 8 shall be deemed to have been fulfilled if CTRC (a) files an NDA
for Registration of a Product in the U.S. within sixty (60) months after the
Effective Date and (b) commences marketing such Product in the U.S. within
twelve (12) months following Registration. The time periods specified in
clauses (a) and (b) above shall each be subject to one twelve (12) month
extension, at CTRC's election, by payment to B.W. Co. of [**] for each such
extension, such payments to be made within the first thirty (30) days of each
such extension.
(ii) In the event that CTRC fails to meet either
deadline set forth in Subsection 8.2(i) above, B.W. Co. may, upon at least
sixty (60) days' prior written notice, terminate this Agreement, unless within
such sixty (60) day period, CTRC meets such deadline.
8.3 Non U.S. Development. No later than the filing by
CTRC of an NDA for a Product in the U.S., CTRC shall use reasonable efforts to
enter into a sublicense agreement with one or more Third Parties for
development and marketing outside the U.S. Such sublicense agreement shall
require such Third Party or Third Parties to use their best efforts (i) to
obtain Registration for such Product in such other countries of the Territory
as CTRC or such Third Party or Third Parties deem appropriate, and (ii) upon
obtaining Registration for the Product in a particular
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country, to proceed in due course with the commercial introduction and
marketing of such Product in such country.
8.4 Progress Reports. Until commercial introduction of
the first Product, CTRC will provide a semiannual report to B.W. Co. and WFL
summarizing CTRC's activities related to the development of the Products and
securing of the requisite Registrations during the semiannual period covered by
such report.
ARTICLE 9. PATENT RIGHTS
9.1 Patent Prosecution and Maintenance. B.W. Co. and WFL
shall use reasonable efforts to prosecute their respective patent applications
within the Patent Rights, to obtain patents thereon and to maintain any such
patents during the term hereof using patent counsel of their choice.
Notwithstanding the foregoing, at any time after the second anniversary of the
Effective Date, B.W. Co. or WFL, as applicable, shall have the right to
discontinue the prosecution of any such patent application or to abandon any
such patent. If, after the second anniversary of the Effective Date, B.W. Co.
or WFL decides to abandon or allow to lapse any patent application or patent
within the Patent Rights in any country or the Territory, it shall inform CTRC
and CTRC shall be given the opportunity to prosecute such patent application
and/or to maintain such patent at its own expense.
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9.2 Status of Patent Rights. Upon request, B.W. Co. or
WFL, as applicable, shall promptly advise CTRC as to the status of any patent
applications and patents included within its Patent Rights and, to the extent
it has not previously done so, shall promptly provide CTRC with relevant
documentation relating to such patent applications and patents including, but
not limited to, copies thereof.
9.3 Patent Prosecution Costs.
(i) CTRC shall reimburse B.W. Co. and WFL for the
reasonable out-of-pocket expenses incurred by each in the performance of its
obligations pursuant to Section 9.1. B.W. Co. and WFL shall each invoice CTRC
for such expenses on or before April 30 and October 31 of each year with
respect to those out-of-pocket expenses each has incurred for the six (6) month
period ending on the last day of the immediately preceding August or February.
Such invoice shall itemize, in reasonable detail, the expenses which have been
incurred on a country-by-country basis. Payment of each invoice shall be due
net thirty (30) days after its date.
(ii) CTRC reserves the right to terminate its
obligations pursuant to Subsection 9.3(i) with respect to any patent
application or patent included in the Patent Rights in any country or countries
upon at least sixty (60) days' prior written notice to B.W. Co. in respect of
the U.S. or WFL in respect of the Non-U.S. Territory. After the date specified
in such notice on which CTRC's obligations to pay patent prosecution or
maintenance costs terminate, such patent application and/or patent shall
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no longer be included in the Patent Rights in those countries in which CTRC has
exercised its right to terminate such obligations.
ARTICLE 10. THIRD PARTY INFRINGEMENT
In the event that CTRC becomes aware that a product
containing the Compound for use in the Field is being made, used or sold in the
Territory and it believes that such product infringes a Valid Claim, it shall
promptly advise B.W. Co. or WFL, as applicable, of all the relevant facts and
circumstances known by it in connection with the infringement. B.W. Co., in
respect of the U.S., or WFL, in respect of the Non-U.S. Territory, shall have
the right to enforce such Patent Rights against such infringement, at its own
expense. In the event that (1) B.W. Co. or WFL, as applicable, shall fail,
within sixty (60) days after receiving notice from CTRC, either (a) to
terminate such infringement or (b) to institute an action to prevent
continuation thereof and, thereafter, to prosecute such action diligently, or
(ii) B.W. Co. or WFL earlier notifies CTRC that it does not plan to terminate
the infringement or institute such action, then CTRC shall have the right to do
so at its own expense. B.W. Co. and WFL shall cooperate with CTRC in such
effort including being joined as a party to such action, if necessary. Any
damages or costs recovered by B.W. Co. or WFL in connection with any action
filed by it hereunder, after first reimbursing B.W. Co. or WFL for its
out-of-pocket costs and expense of litigation, shall be equally divided by CTRC
and B.W. Co. or WFL, as applicable. Any damages or costs recovered in
connection with any action filed by CTRC hereunder, after first reimbursing
CTRC for its out-of-pocket costs
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and expenses of litigation, shall be deemed to be Net Sales of Products in the
calendar year actually received by CTRC and royalties shall be payable by CTRC
to B.W. Co. or WFL thereon in accordance with the terms of this Agreement.
ARTICLE 11. INDEMNIFICATION; INSURANCE
11.1 Indemnification by CTRC. CTRC agrees to indemnify
and hold B.W. Co., WFL, their Affiliates, directors, officers, employees and
agents harmless from and against any liabilities or damages or expenses in
connection therewith (including reasonable attorneys' fees and costs and other
expenses of litigation) resulting from (i) claims arising out of CTRC's or its
sublicensees' testing, use, manufacture or sale of the Products; or (ii) the
successful enforcement (i.e., a judgment issued by a court of competent
jurisdiction against CTRC, unappealable or unappealed by CTRC within the time
allowed therefor) by B.W. Co. or WFL of its indemnification rights set forth in
clause (i) of this Section 11.1.
11.2 Indemnification Procedures. A party (the
"indemnitee") which intends to claim indemnification under this Article 11
shall promptly notify CTRC (the "indemnitor") in writing of any action, claim
or liability in respect of which the indemnitee or any of its Affiliates,
directors, officers, employees or agents intend to claim such indemnification.
The indemnitee shall permit, and shall cause its Affiliates, directors,
officers, employees and agents to permit, the indemnitor, at its discretion, to
settle any such action, claim or liability and agrees to the complete control
of such
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defense or settlement by the indemnitor; provided, however, that such
settlement does not adversely affect the indemnitee's rights hereunder or
impose any obligations on the indemnitee in addition to those set forth herein
in order for it to exercise such rights. No such action, claim or liability
shall be settled without the prior written consent of the indemnitor and the
indemnitor shall not be responsible for any legal fees or other costs incurred
other than as provided herein. The indemnitee and its Affiliates, directors,
officers, employees and agents shall cooperate fully with the indemnitor and
its legal representatives in the investigation and defense of any action, claim
or liability covered by this indemnification. The indemnitee shall have the
right, but not the obligation, to be represented by counsel of its own
selection and expense.
11.3 Insurance.
(i) CTRC shall take out and maintain, at its own
expense, during the term of this Agreement, and for a minimum of two (2) years
following the expiration, termination or cancellation of this Agreement,
product liability coverage from an insurance company or companies reasonably
satisfactory to B.W. Co. and WFL. During the clinical development of Products,
such coverage shall be at least $ [**] per occurrence. Promptly upon
commercial introduction of the initial Product, the parties shall negotiate in
good faith an increase in such coverage. The insurance policy relating to such
coverage shall name B.W. Co. and WFL as additional insureds by way of
endorsement or otherwise as their respective interests may appear.
-22-
<PAGE> 23
(ii) Within thirty (30) days after the Effective
Date, CTRC shall cause to be delivered to B.W. Co. and WFL an insurance
certificate evidencing the insurance coverage required by Subsection 11.3(i).
Such insurance certificate shall name B.W. Co. and WFL as additional insureds
as their respective interests may appear and shall include a certification that
such insurance coverage includes contractual coverage for CTRC's liability
under this Agreement.
ARTICLE 12. CONFIDENTIALITY
12.1 Treatment of Confidential Information. Except as
otherwise provided in this Article 12, during the term of this Agreement and
for a period of five (5) years thereafter:
(1) CTRC will retain in confidence and use only
for purposes of this Agreement any information and
data supplied by or on behalf of B.W. Co. or WFL to
CTRC under this Agreement; and
(ii) B.W. Co. and WFL will retain in confidence
and use only for purposes of this Agreement any
information and data supplied by or on behalf of CTRC
to B.W. Co. or WFL under this Agreement.
For purposes of this Agreement, all such information and data
which a party is obligated to retain in confidence shall be called
"Information." All information
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<PAGE> 24
and data disclosed by B.W. Co. to CTRC pursuant to the Letter Agreement shall
be deemed to have been disclosed hereunder.
12.2 Right to Disclose. To the extent it is reasonably
necessary or appropriate to fulfill its obligations or exercise its rights
under this Agreement or any rights which survive termination or expiration
hereof, a party may disclose Information to its Affiliates, sublicensees
(actual and prospective), consultants, outside contractors and clinical
investigators on condition that such entities or persons agree (i) to keep the
Information confidential for at least the same time periods and to the same
extent as each party is required to keep the Information confidential and (ii)
to use the Information only for such purposes as such party is entitled to use
the Information. Each party or its Affiliates or, if applicable, its
sublicensees may disclose such Information to government or other regulatory
authorities to the extent that such disclosure (a) is reasonably necessary to
obtain patents or authorizations, to conduct clinical trials and to market
commercially the Product, provided such party is otherwise entitled to engage
in such activities under this Agreement or (b) is otherwise required by
applicable laws or regulations.
12.3 Release From Restrictions. The obligation not to
disclose Information shall not apply to any part of such Information that (i)
is or becomes patented, published or otherwise part of the public domain other
than by acts of the party obligated not to disclose such Information (for
purposes of this Article 12, the "receiving party") or its Affiliates or
sublicensees in contravention of this Agreement; (ii) is disclosed to the
receiving party or its Affiliates or sublicensees by a Third Party,
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<PAGE> 25
provided such Information was not obtained by such Third Party directly or
indirectly from the other party under this Agreement; (iii) prior to disclosure
under this Agreement, was already in the possession of the receiving party or
its Affiliates or sublicensees, provided such Information was not obtained,
directly or indirectly, from the other party under this Agreement; (iv) results
from research and development by the receiving party or its Affiliates or
sublicensees independent of disclosures from the other party under this
Agreement; (v) has been approved for publication by the parties hereto; or (vi)
is Product-related information which is reasonably required to be disclosed in
connection with the marketing of the Product.
12.4 Confidentially of Agreement. Except as otherwise
required by law or applicable regulation or the terms of this Agreement or
otherwise mutually agreed upon by the parties hereto, each party shall treat as
confidential the terms, conditions and existence of this Agreement.
Notwithstanding the foregoing, a party may disclose such terms, conditions and
existence to an Affiliate or, in the case of CTRC, a sublicensee, which agrees
to be bound by the terms of this Section 12.4 to the same extent as such party.
12.5 Right to Publication. B.W. Co. and WFL agree that
CTRC shall have the right to publish or to present publicly (collectively, a
"Publication") the results of any research, work or other development performed
pursuant to this Agreement by or on behalf of CTRC (collectively, the
"Results"). CTRC agrees to submit any proposed Publication to B.W. Co. and
WFL for their review at least thirty (30) days prior to submission or
presentation of such Publication. If B.W. Co. or WFL requests
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<PAGE> 26
a delay in submission or presentation based on patent considerations, CTRC
agrees to delay such submission or presentation for a period not to exceed
ninety (90) days from the date of such request. CTRC further agrees to give
due consideration to any comments made by B.W. Co. or WFL with respect to such
Publication but, except as set forth in the immediately following sentence,
CTRC shall determine the content of the Publication. Nothing in this Section
12.5 shall be construed to allow CTRC to publish or otherwise disclose any
Information disclosed by B.W. Co. or WFL.
ARTICLE 13. TERM; TERMINATION
13.1 Term; Termination. Unless terminated sooner pursuant
to Section 8.2, 13.2, 13.3, 13.4 or 14.2, this Agreement shall become effective
as of the Effective Date and shall continue in full force and effect until the
expiration of CTRC's obligation to pay royalties hereunder. Upon expiration or
termination of this Agreement with respect to one or more countries of the
Territory, the rights and obligations of the parties with respect to such
country or countries shall cease, except as follows:
(i) the rights and obligations of the parties
under Article 11 shall survive termination or
expiration;
(ii) upon expiration or termination for any
reason, the obligations of confidentiality and use of
Information under Article 12 shall survive for the
period provided therein;
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<PAGE> 27
(iii) upon termination, CTRC's obligations under
Sections 13.4 and 13.5 shall survive; and
(iv) expiration or termination of this Agreement
shall not relieve the parties of any other obligation
accruing prior to such termination.
13.2 Termination by CTRC. CTRC may terminate this
Agreement in its entirety at any time upon at least ninety (90) days' prior
written notice to B.W. Co. and WFL.
13.3 Termination For Cause.
(i) B.W. Co. may terminate this Agreement in the
U.S. and/or WFL may terminate this Agreement in the Non-U.S. Territory upon the
occurrence of any of the following:
(a) upon or after the bankruptcy,
insolvency, dissolution or winding up of CTRC
(other than dissolution or winding up for the
purposes of reconstruction or amalgamation);
(b) upon or after the breach of any
material provision of this Agreement by CTRC
if such breach is not cured within thirty
(30) days after B.W. Co. and/or WFL gives
CTRC
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<PAGE> 28
written notice thereof, it being understood
that if such breach relates solely to CTRC's
obligations in the U.S., then this Agreement
may be terminated only in the U.S. by B.W.
Co.; and, if such breach relates solely to
CTRC's obligations in the Non-U.S.
Territory, then this Agreement may be
terminated only in the Non-U.S. Territory by
WFL; or
(c) upon the abandonment by CTRC of the
development of the Products. As used in this
clause (c), the term "abandonment," in
respect of development of the Products, shall
mean that CTRC or its sublicensees have
failed for a period of six (6) or more
consecutive months to conduct any
development, testing, regulatory or
manufacturing activity reasonably necessary
in order to prepare and file such
Registration for such Product in the U.S.,
unless such failure was due to (x) reasons
beyond its or their control (such as
circumstances of the type described in
Article 19 hereof) or (y) the failure by B.W.
Co. or WFL to perform its obligations
hereunder. CTRC shall give B.W. Co. and WFL
prompt written notice of the abandonment of
the development of the Products.
(ii) CTRC may terminate this Agreement:
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<PAGE> 29
(a) in the U.S., upon or after (x) the
bankruptcy, insolvency, dissolution or
winding up of B.W. Co. (other than
dissolution or winding up from the purposes
of reconstruction or amalgamation) or (y) the
breach of any material provision of this
Agreement by B.W. Co. if such breach is not
cured within thirty (30) days after CTRC
gives B.W. Co. written notice thereof; and
(b) in the Non-U.S. Territory, upon or
after (x) the bankruptcy, insolvency,
dissolution or winding up of WFL (other than
dissolution or winding up for purposes or
reconstruction or amalgamation) or (y) the
breach of any material provision of this
Agreement by WFL if such breach is not cured
within thirty (30) days after CTRC gives WFL
written notice thereof.
13.4 CTRC's Obligations Upon Termination. Upon
termination (but not expiration) of this Agreement for any reason, (i) CTRC
agrees to cooperate fully with B.W. Co. and WFL, or their respective nominees,
to transfer or to hand over to B.W. Co. and WFL or their respective nominees,
health registrations and sales permissions regarding the Products in the
country or countries in which termination has occurred and (ii) in the event of
termination with respect to all countries of the Territory, CTRC shall return
to B.W. Co. and WFL all copies of the Information supplied by either
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<PAGE> 30
hereunder, except that CTRC's legal department may retain one copy of the
Information for purposes of determining the scope of its obligations hereunder.
13.5 Disposition of Product. Upon termination of this
Agreement with respect to all countries of the Territory, CTRC shall provide
B.W. Co. and WFL with a written inventory of all the Products (in the form of
raw materials, work-in-process and finished goods) in its and its sublicensees'
possession and shall have the right to dispose of such Products within six (6)
months thereafter, subject to fulfillment of its royalty obligations relating
thereto. Notwithstanding the foregoing, upon termination of this Agreement in
all countries of the Territory, CTRC shall promptly return or destroy, at B.W.
Co.'s election, any materials supplied by B.W. Co. pursuant to Section 14.2.
ARTICLE 14. TRANSFER TO CTRC; CTRC OBLIGATIONS
14.1 Transfer of Know-How.
Within ninety (90) days following the Effective Date
and, in the case of B.W. Co., as far as it has not already done so under the
Letter Agreement or otherwise, B.W. Co. and WFL shall supply CTRC with all the
Know- How, including the assignment of B.W. Co.'s IND 25,803 for the Compound.
CTRC shall acknowledge acceptance of such assignment to the FDA promptly after
it is made by B.W. Co.
-30-
<PAGE> 31
14.2 Transfer of Clinical Trial and Bulk Material.
(i) Within ninety (90) days after the Effective
Date, as far as it has not already done so pursuant to the Letter Agreement or
otherwise, B.W. Co. will deliver to CTRC the existing B.W. Co. inventory of the
formulated Compound to be used as clinical trial material. The quantity of
formulated Compound in B.W. Co.'s existing inventory which it can deliver
pursuant to this Subsection 14.2(i) will be approximately eleven thousand
(11,000) vials of formulated Compound (which total is inclusive of any
quantities of formulated Compound delivered by B.W. Co. to CTRC prior to the
Effective Date). In addition to the foregoing, within ninety (90) days after
the Effective Date, B.W. Co. shall deliver to CTRC twenty-two hundred (2200)
grams of bulk Compound and eleven hundred and sixty (1160) grams of chrysene
aldehyde. All shipments shall be F.O.B. San Antonio, Texas.
(ii) All formulated Compound provided B.W. Co.
shall, at the time of shipment, meet the specifications set forth in B.W. Co.'s
IND 25,803 for the Compound, as determined in accordance with the analytical
methodology set forth therein. EXCEPT AS STATED IN THE IMMEDIATELY PRECEDING
SENTENCE, THE FORMULATED COMPOUND, THE BULK COMPOUND AND THE CHRYSENE ALDEHYDE
SHALL BE SUPPLIED "AS IS" AND B.W. CO. MAKES NO WARRANTIES, EXPRESS OR IMPLED,
WITH RESPECT THERETO.
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<PAGE> 32
(iii) In the event B.W. Co. does not deliver at
least ninety percent (90%) of the respective quantities of formulated Compound,
bulk Compound and chrysene aldehyde specified in clause (i) above to CTRC
within ninety (90) days of the Effective Date, CTRC's sole and exclusive remedy
shall be to terminate this Agreement by giving B.W. Co. written notice thereof,
which notice must be given, if at all, within thirty (30) days after expiration
of the ninety (90) day period set forth above. In the event of such
termination, B.W. Co. shall refund all amounts paid by CTRC pursuant to Article
4. In the event CTRC does not terminate this Agreement within such ninety (90)
day period, its right to terminate pursuant to this clause (iii) and B.W. Co.'s
obligation to supply pursuant to Subsection 14.2(i), to the extent it has not
previously done so, shall each cease.
14.3 CTRC's Obligations.
(i) CTRC acknowledges that it has been informed
by B.W. Co. that the repass dating of all formulated Compound which B.W. Co.
has supplied to CTRC prior to the Effective Date or is obligated to supply
after the Effective Date pursuant to Subsection 14.2(i) is May 31, 1994. CTRC
agrees that on or before April 30 of each year, commencing with April 30, 1994,
it shall conduct, or cause to be conducted, quality assurance testing of
formulated Compound which it intends to use after the next succeeding May 31 to
determine whether such formulated Compound meets the specifications set forth
in B.W. Co.'s IND 25,803, as determined in accordance with the analytical
methodology set forth therein. CTRC shall provide B.W. Co. with a copy of the
results of each quality assurance test promptly after such test results are
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<PAGE> 33
received. In the event the test results indicate that such formulated Compound
no longer meets such specifications, CTRC agrees not to use any remaining
formulated Compound previously supplied by B.W. Co. in any clinical trials and
shall promptly notify any of CTRC's clinical investigators to return any
formulated Compound then in their possession.
(ii) CTRC agrees that it shall bear all
responsibility for use of any formulated Compound which it manufactures or has
manufactured from the bulk Compound and chrysene aldehyde delivered by B.W. Co.
pursuant to Subsection 14.2(i). CTRC agrees not to use any such formulated
Compound in any clinical trials or otherwise in humans unless the results of
its quality assurance testing indicate that such formulated Compound meets the
specifications set forth in B.W. Co.'s IND 25,803, as determined in accordance
with the analytical methodology set forth therein.
ARTICLE 15. ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by
CTRC without the written consent of B.W. Co. and WFL; provided, however, that
CTRC may, without such consent, assign this Agreement in connection with the
transfer or sale of all or substantially all of its business or in the event of
its merger or consolidation with another company. Any purported assignment in
violation of the preceding sentence shall be void. Any permitted assignee
shall assume all obligations of its assignor under
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<PAGE> 34
this Agreement. No assignment shall relieve CTRC of responsibility for the
performance of any accrued obligation which CTRC then has hereunder.
ARTICLE 16. PATENT MARKING
CTRC agrees to mark all Products made, used or sold under the
terms of this Agreement, or their containers, in accordance with applicable
patent marking laws.
ARTICLE 17. REGISTRATION OF LICENSES
CTRC agrees to register or give required notice concerning
this Agreement, through itself or through a sublicensee, in each country of the
Territory where there exists a Valid Claim and an obligation under law to so
register or give notice, to pay all costs and legal fees connected therewith
and shall otherwise comply with all national laws applicable to this Agreement.
ARTICLE 18. PATENT TERM EXTENSION
CTRC hereby agrees to cooperate fully with B.W. Co., WFL and
their Affiliates in obtaining an extension of the term of any patent included
within the Patent Rights under the applicable laws of any country including,
but not limited to,
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<PAGE> 35
the Drug Price Competition and Patent Term Restoration Act of 1984. CTRC
agrees to execute such documents and to take such additional actions as B.W.
Co., WFL or any of their Affiliates may reasonably request in connection
therewith. CTRC further agrees promptly (and in any event within ten (10)
days) to provide B.W. Co. and WFL with a copy of each product registration
certificate which CTRC receives in respect of a Product in any country for
purposes of B.W. Co. or WFL, as applicable, seeking such an extension.
ARTICLE 19. FORCE MAJEURE
A party shall not be held liable or responsible to another
party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement, other
than an obligation to make a payment, when such failure or delay is caused by
or results from fires, floods, embargoes, government regulations, prohibitions
or interventions, wars, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
-35-
<PAGE> 36
ARTICLE 20. SEVERABILITY
Each party hereby expressly agrees and contracts that it is
not the intention of any party to violate any public policy, statutory or
common laws, rules, regulations, treaty or decision of any government agency or
executive body thereof of any country or community or association of countries;
that if any word, sentence, paragraph, clause or combination thereof in this
Agreement is found by a court or executive body with judicial powers having
jurisdiction over this Agreement or any of the parties hereto in a final
unappealed order, to be in violation of any such provisions in any country or
community or association of countries, such words, sentences, paragraphs,
clauses or combination shall be inoperative in such country or community or
association of countries and the remainder of this Agreement shall remain
binding upon the parties hereto.
ARTICLE 21. NOTICES
Any notice required or permitted to be given hereunder shall
be in writing and shall be deemed to have been properly given if delivered in
person, or if mailed by registered or certified mail (return receipt
requested), postage prepaid, or by facsimile (and promptly confirmed by such
registered or certified mail), to the addresses given below or such other
addresses as may be designated in writing by the parties from time to time
during the term of this Agreement. Any notice sent by registered or certified
mail as aforesaid shall be deemed to have been given when mailed.
-36-
<PAGE> 37
In the case of CTRC:
CTRC Research Foundation
14960 Omicron
San Antonio, Texas 78245-3217
Attention: President
Facsimile No.: (210) 271-1740
In the case of B.W. Co.:
Burroughs Wellcome Co.
3030 Cornwallis Road
Research Triangle Park, NC 27709
Attention: Company Secretary
Facsimile No.: (919) 315-8376
In the case of WFL:
The Wellcome Foundation Limited
P.O. Box 129
UNICORN HOUSE
160 Euston Road
London NW1 2BP
England
Attention: Secretary
Facsimile No.: 011-4471-387-3976
ARTICLE 22. GOVERNING LAW
This Agreement, to the extent it relates or applies to the
U.S., shall be governed by and construed in accordance with the laws of the
State of North Carolina, exclusive of its choice-of-law rules. This Agreement,
to the extent it relates or applies to the Non-U.S. Territory, shall be
governed by the laws of England, exclusive of its choice-of-law rules.
-37-
<PAGE> 38
ARTICLE 23. ARBITRATION
Except for any disputes relating to Article 11, all disputes
arising in connection with this Agreement shall be finally settled under (i)
the Commercial Arbitration Rules of the American Arbitration Association, with
respect to disputes between CTRC and B.W. Co. or (ii) the Rules of Conciliation
and Arbitration of the International Chamber of Commerce, with respect to
disputes between CTRC and WFL. With respect to disputes between CTRC and B.W.
Co., arbitration shall take place in Raleigh, North Carolina, if demanded by
CTRC, or San Antonio, Texas, if demanded by B.W. Co. With respect to disputes
between CTRC and WFL, arbitration shall take place in London, England, if
demanded by CTRC, or San Antonio, Texas, if demanded by WFL.
ARTICLE 24. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made part of this Agreement. The parties hereto may
alter any of the provisions of this Agreement, but only by a written instrument
duly executed by both parties hereto. B.W. Co. and CTRC agree that the Letter
Agreement is hereby terminated.
-38-
<PAGE> 39
ARTICLE 25. WAIVER
The failure of a party to enforce at any time for any period
any of the provisions hereof shall not be construed as a waiver of such
provisions or of the rights of such party thereafter to enforce each such
provision.
ARTICLE 26. COUNTERPARTS
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same document.
ARTICLE 27. CAPTIONS
The captions to the several Articles and Sections hereof are
not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
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<PAGE> 40
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the Effective Date.
CTRC RESEARCH FOUNDATION BURROUGHS WELLCOME CO.
By: By:
---------------------------- ----------------------------
Title: Title:
------------------------- -------------------------
THE WELLCOME FOUNDATION LIMITED
By:
----------------------------
Title:
-------------------------
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<PAGE> 41
APPENDIX II
Crisnatol Mesylate
-41-
<PAGE> 42
APPENDIX I
B.W. Co.
Patents and Patent Applications
<TABLE>
<CAPTION>
Patent No. Filing Date Serial No. Issue Date Expiring Date
---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C>
4,719,048 10/18/84 663,039 1/12/88 1/12/05
4,810,727 8/6/87 83,238 3/7/89 3/7/06
</TABLE>
-42-
<PAGE> 43
APPENDIX III
WFL
Patents and Patent Applications
<TABLE>
<CAPTION>
Country Filing No. Filing Date Grant No. Grant Date Expiry Date
**************************************************************************************************
<S> <C> <C> <C> <C> <C>
Austria (EPO) 84105585.8 16 May 1984 E28857 12 Aug 1987 16 May 2004
Australia 2809884 16 May 1984 572509 04 Oct 1988 16 May 2000
Australia 1305288 16 May 1984 599215 29 Oct 1990 16 May 2000
Belguim (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Canada 454514 16 May 1984 1222750 09 Jun 1987 09 Jun 2004
Switzerland (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Czechoslovakia PV364584 16 May 1984 273314 27 Jan 1992 16 May 1999
Cyprus 1486 03 May 1989 16 May 2004
Germany (EPO) 84105585.8 16 May 1984 P3465296.5 12 Aug 1987 16 May 2004
Spain 532512 16 May 1984 532512 24 Sep 1985 24 Sep 2005
Finland 841966 16 May 1984 85263 25 Mar 1992 16 May 2004
France (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Great Britain (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Gibraltar 324 12 Apr 1989 16 May 2004
Greece 74735301463 16 May 1984 82278 13 Dec 1984 17 May 1999
Hong Kong 4501989 01 Jun 1989 16 May 2004
Hungary 188684 16 May 1984 197875 02 Nov 1990 16 May 2004
Ireland 120384 16 May 1984 16 May 2004
Israel 71851 16 May 1984 71851 01 Apr 1988 16 May 2004
Italy (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Japan 9965584 16 May 1984 1638418 31 Jan 1992 16 May 2004
Japan 14424690 16 May 1984
Kenya P38731989 12 Jul 1989 16 May 2004
Rep of Korea (South) 842647 16 May 1984 43148 23 Jul 1991 16 May 1999
Luxembourg (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Monaco 1705851595 16 May 1984 1705851595 09 May 1985 16 May 2004
Malaysia PI8702734 30 Sep 1987 MY102121A 31 Mar 1992 31 Mar 2007
Netherlands (EPO) 84105585.8 16 May 1984 0125702 12 Aug 1987 16 May 2004
Norway 841954 16 May 1984 157416 16 Mar 1988 16 May 2004
New Zealand 208168 16 May 1984 208168 16 Jun 1988 16 May 2000
Philippines 30683 16 May 1984 22265 01 Jul 1988 01 Jul 2005
Pakistan 20284 16 May 1984 129292 16 Sep 1986 17 May 1999
Portugal 78586 16 May 1984 78586 18 Sep 1986 18 Sep 2001
Russia 3744951.04 16 May 1984 1535377 07 Jan 1990 16 May 2004
Sweden (EPO) 84105585.8 16 May 1984 84105585.8 12 Aug 1987 16 May 2004
Singapore 22389 29 May 1989 16 May 2004
Taiwan 7311928 16 May 1984 22257 01 Apr 1985 31 Mar 2000
South Africa 843708 16 May 1984 843708 29 Jan 1986 16 May 2004
</TABLE>
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<PAGE> 1
EXHIBIT 10.16
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
AMENDMENT AND AGREEMENT
WITH RESPECT TO
LICENSE AGREEMENT
THIS AMENDMENT AND AGREEMENT effective as of October 5, 1996,
(hereinafter, the "Amendment") amends the License Agreement effective as of
November 1, 1993, by and among Burroughs Wellcome Co. ("B.W. Co."), The
Wellcome Foundation Limited ("WFL"), and CTRC Research Foundation ("CTRC")
(hereinafter, the "Original Agreement") and sets forth certain other
acknowledgements, consents and other agreements with respect to the Original
Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the Original Agreement, CTRC obtained from B.W.
Co. and WFL, an exclusive worldwide license to certain patent rights, know-how
and other rights related to the chemical compound known as crisnatol mesylate;
WHEREAS, pursuant to an Assignment of Rights and Assets, effective as
of November 18, 1994, CTRC assigned and transferred to its wholly-owned
subsidiary Biovensa, Inc., ("Biovensa"), all of the rights and obligations of
CTRC contained in or arising out of, the Original Agreement;
WHEREAS, by virtue of an Amended Certificate of Authority of Biovensa,
filed with the Secretary of State of the State of Texas on January 18, 1995,
Biovensa formally changed its name to ILEX Oncology, Inc. ("Ilex"), and as such
Ilex is the legal successor-in-interest to all the rights and obligations of
CTRC contained in, or arising out of, the Original Agreement;
WHEREAS, by virtue of Articles of Amendment to the Articles of
Incorporation of B.W. Co., filed with the Secretary of State of the State of
North Carolina on October 31, 1995, B.W. Co. formally changed its name to Glaxo
Wellcome, Inc. ("GW"), and as such GW is the legal successor-in-interest to all
the rights and obligations of B.W. Co. contained in, or arising out of, the
Original Agreement;
WHEREAS, Ilex now desires to sublease certain of its rights and
obligations contained in the Original Agreement to Janssen Pharmaceutica, N.V.,
a Belgium corporation ("Janssen"), pursuant to a Development and License
Agreement (hereinafter, the "Janssen Sublicense");
WHEREAS, Article 24 of the Original Agreement provides that the
parties may alter the provisions of the Original Agreement by a written
instrument duly executed by each of the parties thereto, and
WHEREAS, each of Ilex, GW and WFL desire to amend the Original
Agreement, as more particularly set forth herein, and each of Ilex, GW and WFL
desire to provide
<PAGE> 2
for certain other agreements with respect to the Original Agreement and the
Janssen Sublicense.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants set forth herein, Ilex, GW, WFL and Janssen
hereby agree as follows:
SECTION 1 - DEFINITIONS, ACKNOWLEDGEMENTS & CONSENT
1.1 Unless otherwise specifically defined herein, each term used
herein which is defined in the Original Agreement shall have the meaning
assigned to such term in the Original Agreement.
1.2 Each of Ilex, GW, WFL and Janssen acknowledge and agree that
GW is the legal successor-in-interest to all the rights and obligations of B.W.
Co. contained in, or arising out of, the Original Agreement, and that therefore
each and every reference to B.W. Co. in the Original Agreement shall instead be
deemed to be to GW.
1.3 Each of Ilex, GW, WFL and Janssen acknowledge and agree that
Ilex is the legal successor-in-interest to all the rights and obligations of
CTRC contained in, or arising out of, the Original Agreement, and that
therefore each and every reference to CTRC in the Original Agreement shall
instead be deemed to be to Ilex.
1.4 Ilex hereby represents and warrants to GW and WFL that on
November 18, 1994, CTRC assigned and transferred to Biovensa, and Biovensa
accepted and assumed from CTRC, all the rights and obligations of CTRC
contained in, or arising out of, the Original Agreement. In reliance upon the
representation and warranty made in the preceding sentence, each of GW and WFL
hereby consent to the assignment by CTRC to Biovensa, and the corresponding
acceptance and assumption by Biovensa, of all of CTRC's rights and obligations
contained in, or arising of, the Original Agreement.
SECTION 2 - ADDITIONAL USES
Ilex, GW and WFL agree that Article 3 of the Original Agreement is
hereby amended by adding the following provisions as new Article 3.4:
"3.4 Additional Uses Outside the Field. If Ilex or its
Affiliates, sublicensees or assignees discover a use, indication or
potential use or indication of the Product which is outside the scope
of the Field (such use, indication or potential use or indication
being hereinafter referred to as an "Additional Use"), Ilex and its
Affiliates, sublicensees or assignees (as applicable) shall promptly
notify GW in writing of such Additional Use of the Product. for a
period of forty-five (45) days from the date of the written notice of
Additional Use (the "Exercise Period"), Ilex may submit a written
proposal to GW with respect to the negotiation of a license by GW to
Ilex of the rights related to such Additional
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<PAGE> 3
Use (such written proposal to be hereinafter referred to as a
"Proposal of Terms"). The Proposal of Terms shall contain terms and
conditions which are commercially reasonable. If Ilex shall fail to
deliver a Proposal of Terms to GW within the Exercise Period, then in
such event, Ilex shall have no further rights with respect to such
Additional Use. Upon the receipt by GW of a Proposal of Terms from
Ilex within the Exercise Period, GW agrees that for a one hundred and
twenty (120) day period beginning on the date of receipt by GW of such
Proposal of Terms (the "Negotiation Period"), GW shall negotiate in
good faith with Ilex concerning a license to Ilex of the rights
related to the Additional Use which is the subject of such Proposal of
Terms. If the parties are unable to execute an agreement within the
Negotiation Period, then in such event, for a period of one (1) year
following the end of the Negotiation Period, GW shall not offer to
license the rights with respect to such Additional Use to any other
Third Party on terms which are less favorable to GW in material
respects than the terms offered to Ilex during the Negotiation Period.
SECTION 3 - CERTAIN REPRESENTATIONS
Each of GW and WFL hereby represent to Janssen that, as of the date
hereof, the Original Agreement is in full force and effect. Each of GW and WFL
acknowledge that Ilex has informed GW that Ilex proposes to enter into the
Janssen Sublicense. Each of GW and WFL represent that, to the best of their
knowledge, as of the date hereof, Ilex is not in material breach of the
Original Agreement.
SECTION 4 - MODIFICATION OF DILIGENCE EXTENSIONS
Ilex, GW and WFL hereby agree that the last sentence in Article 8.2(i)
of the Original Agreement is hereby deleted in its entirety and the following
is hereby substituted in lieu thereof.
"The time periods specified in clauses (a) and (b) above shall each be
subject to three (3) twelve (12) month extensions, at Ilex's election,
by payment to GW of [**] ($ [**] ) for the first such
twelve (12) month extension, and by payment to GW of [**]
($ [**] ) for the second such twelve (12) month extension, and by
payment to GW of [**] Dollars ($ [**] ) for the third
such twelve (12) month extension, such payments to be made within the
first thirty (30) days of each extension."
SECTION 5 - RIGHTS UPON TERMINATION
Each of Ilex, GW WFL and Janssen agree that in the event that Ilex
breaches any of the provisions in the Original Agreement and fails to cure such
breach within the period of time allotted in the Original Agreement, and GW and
WFL, as a result thereof, terminate the Original Agreement, and Janssen is not
in default of any of its obligations contained in the Janssen Sublicense, then
in such case Janssen shall
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<PAGE> 4
have a period of thirty (30) days after such termination to fully cure such
breach of the Original Agreement. In the event that Janssen fully cures such
breach within such thirty (30) day period, Janssen shall have the right to
assume that Original Agreement and Janssen's name shall be substituted for Ilex
in the Original Agreement, provided, however, that if Janssen shall exercise
its right to assume the Original Agreement pursuant to this provision, Janssen
shall by virtue of such exercise, and without further action, accept and assume
all of Ilex's responsibilities, liabilities and obligations that are stated in,
arise out of, or are associated with, the Original Agreement, including without
limitation, the responsibilities, liabilities and obligations set out in
Article 11 of the Original Agreement.
SECTION 6 - MODIFICATION OF NON-U.S. DEVELOPMENT OBLIGATIONS
Ilex, GW and WFL hereby agree that Article 8.3 of the Original
Agreement is hereby deleted in its entirety and the following provision
inserted in lieu thereof.
"8.3 Non-U.S. Development. No later than the filing by
Ilex of an NDA for a Product in the U.S., Ilex shall use reasonable
efforts to enter into a sublicense agreement with one or more Third
Parties for development and marketing outside the U.S. Such
sublicense agreement shall require such Third Party or Third Parties
to use reasonable efforts, commensurate with the efforts it would
normally exercise for products of similar potential sales volume and
consistent with its overall business strategy."
SECTION 7 - NOTICES
Ilex, GW and WFL hereby agree that the address for CTRC which appears
in Article 21 of the Original Agreement is hereby deleted in its entirety and
the following is hereby substituted in lieu thereof.
"ILEX Oncology, Inc.
14785 Omicron Drive, Ste. 101
San Antonio, Texas 78245-3222
Attn: President
Fax: (210) 677-6009"
Ilex, GW and WFL hereby agree that the address for B. W. Co. which
appears in Article 21 of the Original Agreement is hereby deleted in its
entirety and the following is hereby substituted in lieu thereof:
"Glaxo Wellcome Inc.
Five Moore Drive
Research Triable Park
North Carolina 27709
Attn: General Counsel
Fax: (919) 483-0265"
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<PAGE> 5
SECTION 8 - EFFECT OF AMENDMENT
Unless specifically amended or modified by this Amendment, the terms
of the Original Agreement shall remain in full force and effect.
SECTION 9 - ENTIRE AGREEMENT; COUNTERPARTS
This Amendment and the Original Agreement, as modified by this
Amendment, contain the entire understanding of the parties hereto and represent
a complete and exclusive statement of agreement with respect to the subject
matter contained herein. This Amendment may be executed in any number of
counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date indicated above.
ILEX ONCOLOGY INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
GLAXO WELLCOME INC.
By:
-------------------------------------------
Name: Dean J. Mitchell
Title: Vice President -
Business Development and Planning
General Manager -
Specialty Divisions
THE WELLCOME FOUNDATION LTD.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
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<PAGE> 6
JANSSEN PHARMACEUTICA, N.V.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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<PAGE> 1
EXHIBIT 10.17
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
This License Agreement ("Agreement") is made and entered into on this
______ day of ___________, 1995 (the "Effective Date"), by and between (a)
Ilex Oncology Inc., a Delaware corporation ("Ilex"), and (b) Marion Merrell Dow
Inc., a Delaware corporation and its subsidiaries Merrell Dow Pharmaceuticals
Inc., a Delaware corporation, and Marion Merrell Dow France Et Cie, a French
Societe en Nom Collectif, having a business address at 16 rud d'Ankara, 67009
Strasbourg Cedex, France (hereinafter collectively referred to as "MMD").
W I T N E S S E T H :
WHEREAS, MMD owns and has carried out development activities with
respect to Eflornithine for cancer related indications and for the treatment of
various infections and owns patent rights and technology related thereto;
WHEREAS, Ilex is interested in developing, licensing and marketing
pharmaceutical preparations containing Eflornithine;
WHEREAS, MMD desires to grant to Ilex and Ilex desires to acquire an
exclusive license to use the Technology with the right to develop, to make,
have made, use, sell, market or otherwise commercially exploit Products within
the Territory;
NOW, THEREFORE, in consideration of the mutual premises and
obligations hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto stipulate and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Affiliates" shall mean any Person that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with the Person, but only for so long as the relationship
exists. "Control" means ownership of at least [**] of the shares of stock
entitled to vote for the election of directors in the case of a corporation,
and at least [**] of the voting power or interests in profits in the case of a
business entity other than a corporation.
1.2 "Effective Date" shall have the meaning given such term in the
first paragraph of this Agreement.
1.3 "Eflornithine" shall mean the chemical compound
a-difluoromethylornithine and its pharmaceutically acceptable salts, and
pharmaceutical preparations containing the same. Eflornithine is also known as
"2- (difluoromethyl) ornithine" and "DFMO" and "2-(difluoromethyl) - 2,5 -
diaminopentanoic acid".
1.4 "Field of Interest" shall mean all uses of Eflornithine for
the treatment of cancer and for the treatment of various infections, excluding
the treatment of Trypanosoma brucei gambiense and rhodensiense infections
("African sleeping sickness") in the Territory.
<PAGE> 2
1.5 "First Commercial Sale" shall mean the date on which Ilex or a
sublicensee first transfers title to a Licensed Patented Product or License
Product to an independent third party for monetary consideration.
1.6 "GAAP" shall mean generally acceptable accounting principles
for the United States.
1.7 "Ilex" shall mean Ilex Oncology Inc. and any of its
Affiliates.
1.8 "Licensed Patented Product" shall mean any product within the
Field of Interest which is made, used, marketed or sold in any country within
the Territory where the manufacture, use or sale of such product is covered by
at least one Valid Claim.
1.9 "Licensed Product" shall mean any product within the Field of
Interest which is made, used, marketed or sold using all or any part of the
Technology and which is not covered under "Licensed Patented Product".
1.10 "MMD" shall mean, collectively, (i) Marion Merrell Dow Inc., a
Delaware corporation, (ii) its subsidiaries Merrell Dow Pharmaceuticals Inc., a
Delaware corporation, and Marion Merrell Dow France Et Cie, a French Societe en
Nom Collectif and (iii) each direct or indirect subsidiary of Marion Merrell
Dow Inc. and each other entity controlled by Marion Merrell Dow Inc.
1.11 "Net Sales" means the amount invoiced for sales by Ilex and
its sublicensees of Licensed Products or Licensed Patented Products in the
Territory, MINUS discounts (including discounts applicable to sales under
programs for indigents), allowances, rebates, credits, and adjustments to
customers (including but not limited to refunds for rejected or damaged goods
or out dated goods); freight, packing and insurance (to the extent included in
the invoice price); and taxes and duties (the extent included in the invoice
price). Notwithstanding the preceding sentence, if a Licensed Patented Product
or Licensed Product is sold in conjunction with or includes Royalty Bearing
Components and is not invoiced separately, Net Sales for purposes of
determining royalties payable under this Agreement shall be calculated as the
product obtained by using whichever of the following formulas is applicable:
(i) If both the Licensed Patented Product or Licensed
Product and the Royalty Bearing Components included in the combination
products are sold separately by Ilex or its sublicensees, multiplying
Net Sales of the combination products by the fraction A/(A+B), where
"A" is the invoice price during the royalty paying period in question
of the Licensed Product or Licensed Patented Product if sold
separately and "B" is the invoice price of the Royalty Bearing
Components in the combination products if sold separately.
(ii) If Section 1.11(i) does not apply, multiplying Net
Sales of such combination products by the fraction C/(C+D), where "C"
is the per unit cost of the Licensed Patented Product or Licensed
Product portion of the combination products and "D" is the per unit
cost of the Royalty Bearing Components in the combination products.
These costs shall be computed using the standard cost accounting
procedures of Ilex in accordance with GAAP.
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<PAGE> 3
1.12 "Patent Rights" shall mean United States Patent and patent
applications listed in Schedule 1.12, and any and all divisions, reissues,
re-examinations, renewals, continuations, continuations-in-part, extensions,
and additions thereto, and all counterpart applications in other countries
within the Territory, and all patents, inventor's certificates, utility models
and the like issuing therefrom to the extent, but only to the extent, that they
cover the manufacture, use or sale of Eflornithine within the Field of
Interest.
1.13 "Royalty Bearing Components" shall mean all components,
devices or products which are sold in conjunction with or are included as a
part of a Licensed Patented Product or Licensed Product and for which either
(i) Ilex must license and pay a royalty to an unrelated third party or (ii)
Ilex owns a patent covering the component, device or product in the appropriate
country where such component, product or device is sold.
1.14 "Sub-Territory One" means, collectively, the territory
comprised of Canada and those countries included within the European Economic
Community.
1.15 "Sub-Territory Two" means, collectively, the territory
comprised of Mexico, the Central American countries and the South American
countries.
1.16 "Sub-Territory Three" means, collectively, the territory
comprised of Australia, New Zealand, Japan and the Asian Pacific Rim countries
other than Japan.
1.17 "Technology" shall mean and includes the Patent Rights
together with all copyrights, information, data, improvements, know-how, trade
secrets, processes, formulas, drawings, writings, notes, records, compilations,
methods, techniques, products, procedures, preparations, usage information or
materials, pre-clinical and clinical trial data, IND's listed on Schedule 8.1
hereto relating to the treatment of cancer, whether or not patentable, to the
extent owned by MMD.
1.18 "Territory" shall mean the entire world.
1.19 "Valid Claim" shall mean a claim of an unexpired patent or
patent application in the Patent Rights which has not lapsed or been abandoned
or declared invalid or unenforceable by a court or other body with appropriate
authority or administrative agency, from which no appeal can be or is taken.
ARTICLE 2
GRANT OF EXCLUSIVE LICENSE
2.1 Subject to the terms and conditions hereof, effective as of
the Effective Date, MMD hereby grants to Ilex an exclusive license, with a
right to sub-license and sue for infringement, to use the Technology in the
Field of Interest to develop, make and have made, use, sell and market and
otherwise commercially exploit Licensed Products and Licensed Patented Products
in the Territory.
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<PAGE> 4
2.2 Subject to and in accordance with the arrangements existing
and being negotiated between MMD and the World Health Organization ("WHO"), and
subject to a mutually acceptable agreement between MMD and WHO, MMD grants a
non- exclusive, royalty free right to Ilex to supply bulk License Product or
Licensed Patent Product to WHO at Ilex's cost for use in the treatment of late
stage Trypanosoma brucei gambiense and rhodensiense infections ("African
sleeping sickness").
ARTICLE 3
CONSIDERATION
3.1 In consideration of the grant of the licenses specified in
Article 2, Ilex agrees to pay MMD the following nonrefundable, noncreditable
payments:
(i) $[**] upon execution of this Agreement.
(ii) $[**] upon filing of the first New Drug
Application ("NDA") with the United States Food and Drug
Administration ("FDA") for the Licensed Patented Product or Licensed
Product.
(iii) $[**] upon FDA approval of the first NDA filed for
the Licensed Patented Product or Licensed Product.
(iv) $[**] upon the first anniversary of FDA approval
of the first NDA filed for the Licensed Patented Product or Licensed
Product.
(v) $[**] on the second anniversary of FDA approval of
the first NDA filed for the Licensed Patented Product or Licensed
Product.
(vi) $[**] upon receipt of final marketing approval for
the Licensed Patented Product or Licensed Product in Canada and in at
least three European countries included within Sub-Territory One.
(vii) $[**] upon receipt of final marketing approval for
the Licensed Patented Product or Licensed Product in any country
included within Sub-Territory Two.
(viii) $[**] upon receipt of final marketing approval for
the Licensed Patented Product or Licensed Product in any country
included within Sub-Territory Three.
3.2 In consideration of the grant of the exclusive license
specified in Section 2.1, Ilex also agrees to pay MMD a royalty of:
(i) [**] of the Net Sales received for Licensed
Patented Product.
(ii) [**] of Net Sales received for a Licensed Product;
provided, however, such royalty on a Licensed Product shall be reduced
to [**] in each country when the first unlicensed generic competitor
begins sales in such country; and provided, further, that such
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<PAGE> 5
royalty shall only be payable for a period of 15 years from the First
Commercial Sale of a Licensed Product or Licensed Patented Product.
3.3 No multiple royalty shall be payable to MMD because any
Licensed Patented Product or Licensed Product is covered by more than one
patent or uses more than one aspect of the Technology.
3.4 In the event that Ilex is required to pay a royalty to a third
party other than an Affiliate of Ilex in order to make, have made, use, sell,
market or otherwise commercially exploit Licensed Product or License Patent
Product in any country in the Territory because of a third party patent in such
country which dominates a Licensed Product or a Licensed Patented Product,
[**] of such third party royalty shall be creditable against royalty due MMD
hereunder in such country by reducing up to [**] of the amount of royalty paid
to MMD hereunder by [**] of the amount so paid to the third party. In the
event Ilex is unable to credit the entire creditable amount of royalty paid to
any such third party in any given calendar year hereunder, the remaining
uncredited portion such third party royalty shall be credited against royalty
due for five years after such calendar year or the termination of this
Agreement, whichever occurs first.
ARTICLE 4
DEVELOPMENT PLAN; DILIGENCE
4.1 Ilex will prepare and implement a development plan as follows:
(i) within 12 months after the Effective Date, Ilex will
prepare and provide to MMD a detailed plan for obtaining government
approvals for the commercialization of the Licensed Patented Product
in such major countries within Territory as Ilex shall determine in
the exercise of its business judgment;
(ii) during the course of Ilex's development of the
Licensed Patented Product, Ilex may revise the development plan as it
may deem necessary in the exercise of its reasonable business and
scientific judgment, and Ilex will promptly advise MMD of any major
revisions to the development plan; and
(iii) the development plan will provide for concentration
of initial efforts in the United States.
4.2 Ilex will use its reasonable efforts to accomplish the
following:
(i) file a United States NDA with the FDA for the
Licensed Patented Product within 72 months after the Effective Date;
(ii) file, directly or through sublicensees, applications
for marketing approval of the Licensed Patented Product in Canada and
in at least three major market European countries included in
Sub-Territory One within 24 months after FDA approval of the NDA for
the Licensed Patented Product, whether filed by individual country or
pursuant to a multi-country CPMP filing (for purposes of this
subclause "major market European countries" means any of France,
Germany, Italy, Spain and the United Kingdom);
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<PAGE> 6
(iii) file, directly or through sublicensees, applications
for marketing approval of the Licensed Patented Product in at least
one country in Sub-Territory Two within 36 months after FDA approval
of the NDA for the Licensed Patented Product; and
(iv) file, directly or through sublicensees, applications
for marketing approval of the Licensed Patented Product in at least
one country in Sub-Territory Three within 48 months after FDA approval
of the NDA for the Licensed Patented Product.
4.3 If Ilex does not make a filing for marketing approval in a
particular sub-Territory as specified in Section 4.2(i), (ii), (iii) and (iv)
(other than as a result of a breach by MMD of its material obligations
hereunder, in which case the period for such filing shall be extended so long
as such breach continues), Ilex may pay to MMD, on or before date specified for
such filing, the payment corresponding to its receipt of marketing approval for
such sub- Territory as set out in Section 3.1(iii), (vi), (vii) and (viii),
respectively, and on MMD's receipt of such payment, the date specified for such
filing shall be extended for a period of 12 months. Any payment made under
this Section 4.3 of the fees set out under Section 3.1(iii), (vi), (vii) and
(viii) in connection with a 12-month extension under this Section 4.3 shall
constitute advance payment of such fees and no further payments shall
thereafter be required under Section 3.1(iii), (vi), (vii) and (viii) upon
Ilex's actual receipt of the relevant marketing approval.
4.4 If Ilex does not make a filing for marketing approval in a
particular sub-Territory within 12 months after the expiration of the
respective time periods specified in Section 4.2(i), (ii), (iii) and (iv)
(after giving full effect to any applicable extension of any such time period
pursuant to Section 4.3), then MMD may elect to terminate this Agreement with
respect to the affected sub-Territory by giving Ilex written notice thereof
within 90 days after the expiration of such 12-month period (provided that if
the delay in making the filing is caused by a breach by MMD of its material
obligations hereunder, then the period for such filing shall be extended so
long as such breach continues). If MMD does not, for whatever reason, so elect
to terminate this Agreement with respect to an affected sub-Territory within
such 90-day period, such right to terminate shall lapse as to the affected
sub-Territory. If MMD does properly elect to terminate this Agreement as to an
affected sub-Territory within such 90-day period, MMD will have a royalty-free
right to obtain and use data generated by Ilex hereunder in such terminated
sub-Territory.
4.5 Ilex will provide MMD with annual written reports of its
progress in developing and marketing the Licensed Patented Product until final
marketing approval for the Licensed Patented Product has been received for
United States, the United Kingdom, France, Germany, Italy, Canada and Japan.
The first such report will be provided 12 months after the Effective Date.
ARTICLE 5
ACCOUNTING AND RECORDS
5.1 Ilex shall keep and maintain and shall cause all its
sublicensees to keep and maintain records of sales and deductible expenses made
pursuant to the license granted hereunder. Such records shall be open to
inspection at any reasonable time within three years after the royalty period
to which such records relate, by an independent certified accountant or an
internal MMD auditor selected by MMD and approved by Ilex, which approval shall
not be unreasonably withheld. The accountant shall have the right to examine
the records which relate to the computation of the royalties
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<PAGE> 7
to be paid under this Agreement and report the findings of such examination of
records to MMD solely to the extent of reporting the accuracy of the reports
and payments made by Ilex, including the amount of any discrepancy, if any.
Such examination, however, shall not occur more than one time per year. A copy
of any report provided to MMD by the accountant shall be given concurrently to
Ilex. Any accountant so selected shall sign, at Ilex's request, an appropriate
agreement with Ilex to keep confidential all information obtained as a result
of such examination of records. MMD shall pay all costs of such examination;
provided, however, if the examination by the accountant reveals an underpayment
by Ilex by more than [**]% of the amount actually owing to MMD during any three
month reporting period, then the entire cost of the examination by the
accountant shall be paid by Ilex.
5.2 Within 60 days after March 31, June 30, September 30 and
December 31 of each year during the term of this Agreement following
commencement of sales of a Licensed Product or Licensed Patented Product, Ilex
shall prepare and deliver to MMD a true and accurate report, giving such
particulars of the business conducted by Ilex and its sublicensees during the
preceding three month period as is required to make the calculations required
hereunder.
5.3 With each such report delivered, Ilex shall pay to MMD all
amounts, if any, due under this Agreement. If no payments are due, Ilex shall
so report.
5.4 All payments required in this Agreement shall be paid in
United States dollars to the address applicable under Section 15.9 of this
Agreement or to such other place as the party receiving payment may reasonably
designate consistent with applicable laws and regulations.
5.5 Royalty on any sales subject to royalty in any country outside
the United States shall be calculated on Net Sales in such country as expressed
in United States dollars in accordance with Ilex's standard accounting
procedures used for Ilex's reporting of income to its stockholders and for
other external reporting, which shall comply with GAAP.
5.6 Ilex and its sublicensees shall use their best efforts to
convert the royalty or other payments due MMD on sales in any country to United
States dollars; provided, however, that if conversion to and transfer of United
States dollars cannot be made in any country for any reason, at the election of
Ilex or its sublicensee (as applicable), payment of royalty (i) may be made in
the currency of the country in which such sales are made and deposited in MMD's
name in a bank designated by MMD in any such country; or (ii) the obligation of
Ilex or its sublicensees to pay royalty on such Net Sales shall be suspended
until such conversion and transfer of all funds by Ilex or its sublicensees
becomes possible.
5.7 If any country limits the royalty rate or amount payable from
Ilex to MMD on account of Net Sales of Licensed Products or Licensed Patented
Products in such country, the royalty payable hereunder shall not exceed the
maximum amount payable under applicable laws, regulations or administrative
rulings of such country.
5.8 All income taxes assessed or imposed against or required to be
withheld from royalty payments due MMD shall be deducted from amounts payable
hereunder and shall be paid to appropriate fiscal or tax authorities on behalf
of MMD. Tax receipts received by Ilex evidencing payment of such taxes shall
be forwarded to MMD.
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<PAGE> 8
ARTICLE 6
WARRANTIES, REPRESENTATIONS, INDEMNITY AND INSURANCE
6.1 MMD represents and warrants to Ilex;
(i) That it is the owner of the Technology; that the use
of the Technology does not infringe any patent or intellectual
property right belonging to MMD (other than those licensed hereunder)
or any third party nor has it been misappropriated nor is there any
misuse by MMD of trade secrets, know-how or confidential information
of another; and that there is no claim or action pending or, to MMD's
knowledge, threatened against MMD relating to the Technology;
(ii) That other than the grants set forth herein or on
Schedule 8.1 hereto, the Technology is free and clear of all liens,
mortgages, assignments, encumbrances, pledges, options, restrictions
or licenses on the Technology.
6.2 That it is a corporation duly organized and validly exists
under the state of Delaware and is qualified to do business and is in good
standing in all of the states as the nature of its business and properties
require;
(i) that it has all necessary right, power and authority
to enter into this Agreement and to grant the licenses provided
herein; that it has duly and validly executed and delivered this
Agreement and that this Agreement constitutes a valid and binding
obligation of MMD enforceable in accordance with its terms; and that
it is not and will not be a party to any agreements or commitments
with any third party which conflicts in a material respect with this
Agreement.
6.3 Ilex represents and warrants to MMD:
(i) That it is a corporation duly organized under the
laws in the state of Delaware and is qualified to do business in good
standing in all states as the nature of its business and properties
require;
(ii) That it has all necessary right, power and authority
to enter into this Agreement; that its execution, delivery and
performance of this Agreement and the consideration herein set forth
have been duly authorized by all necessary corporate action; and that
it has duly and validly executed and delivered this Agreement and that
this Agreement constitutes a valid and binding obligation of Ilex
enforceable in accordance with its terms.
6.4 Ilex agrees to indemnify and hold MMD and its officers,
employees, agents and representatives harmless from any liabilities, costs and
expenses (including attorney's fees and expenses), obligations or causes of
action arising out of or related to any breach of the representations and
warranties made by Ilex herein.
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<PAGE> 9
6.5 MMD agrees to indemnify and hold Ilex and its officers,
employees, agents and representatives harmless from any liabilities, costs and
expenses (including attorney's fees and expenses), obligations or causes of
action arising out of or related to any breach of the representations and
warranties made by MMD herein.
6.6 Ilex agrees to protect, defend, indemnify and hold MMD and its
officers, employees, agents and representatives harmless from and against, and
to pay any and all losses, liabilities, claims, demands, causes of action,
lawsuits, or other proceedings (whether in contract, tort, strict liability or
otherwise), fines, assessments, damages or any other amounts of whatever nature
which MMD or its officers, employees, agents and representatives may sustain or
incur, including all attorney's fees and court costs, as a consequence of any
third party's (including, but not limited to, Ilex's officers, directors,
employees, agents, consultants, representatives or servants) claims and demands
arising from the use, testing, operation, sale or manufacture of the
Technology, the Licensed Products or the Licensed Patented Products by Ilex or
its sub-licensees.
6.7 In seeking indemnification under Section 6.6, MMD shall
promptly notify Ilex in writing of any such claim, lawsuit, loss or cause of
action for which indemnity is sought and MMD shall permit Ilex to control any
litigation in the settlement of any such claim, lawsuit, loss, or cause of
action. MMD shall cooperate fully in every proper way in the defense and
settlement thereof. After MMD has received notice of Ilex's election to assume
the defense of said action, then Ilex will not be liable to MMD under Section
6.6 for any legal of other expenses subsequently incurred by MMD in connection
with the defense thereof unless: (i) MMD, in any action, has reasonably
concluded that there may be a legal defenses available to it which are
different from or additional to those available to Ilex, in which case MMD
shall have the right to select separate counsel to assume said legal defenses
and to otherwise participate in the defense of said action on behalf of MMD; or
(ii) Ilex has authorized the employment of counsel at the expense of Ilex. MMD
shall also have the right at its own expense to be represented by counsel of
its own choice in any such proceeding, provided that Ilex has control over the
defense.
6.8 During the term of this Agreement, Ilex will maintain general
liability and products liability insurance coverage as follows: (i) as to
general liability insurance, coverage in an aggregate amount of at least [**]
at all times during the term of this Agreement, and (ii) as to products
liability insurance, coverage in an aggregate amount of at least [**] at
all times during which clinical studies are conducted involving Eflornithine,
which coverage shall be increased to an aggregate amount of at least [**]
upon the commencement of marketing of Eflornithine. Ilex shall obtain
appropriate riders or endorsement to add MMD as an additional named insured and
to require the carrier to provide MMD with no less than 30 days written notice
of any change in the terms of coverage of the policy or its cancellation.
ARTICLE 7
PROTECTION OF PROPERTY RIGHTS
7.1 MMD shall pay all costs incident to the filing, prosecution,
issuance and maintenance of all Patent Rights in the Territory.
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<PAGE> 10
7.2 MMD agrees to prosecute with good faith and due diligence all
such patent applications and to take all actions necessary to maintain and
enforce the Patent Rights and proprietary rights in and to the Technology.
7.3 In the event that MMD decides:
(i) not to file any continuing applications in Patent
Rights; or
(ii) not to continue prosecution of a patent application
in Patent Rights to issuance; or
(iii) not to maintain (or to abandon) any patent or patent
application in Patent Rights;
in any country, MMD shall timely notify Ilex in writing in order that Ilex may
file said application or continue said prosecution or maintenance of such
patent application at its own expense. Ilex shall be entitled to credit its
reasonable out-of-pocket expenses of filing, prosecuting and maintaining such
patent or patent application against one- half of the royalty due under Section
3.2(i) with respect to such country.
7.4 MMD agrees to keep Ilex fully informed of prosecutions
pursuant to this Article 7 including submitting to Ilex copies of all official
actions and responses thereto.
7.5 The parties hereto agree to use all reasonable efforts to keep
confidential the confidential information in the Technology together with any
and all documentation and other physical manifestations or embodiments
including the same, except to the extent such information is or becomes:
(i) at the time of its disclosure or thereafter becomes
part of the public domain without fault of the receiving party; or
(ii) was in the possession of the receiving party or its
Affiliates prior to disclosure by the disclosing party and was not
acquired directly or indirectly from any third party under obligation
of confidentiality to the disclosing party; or
(iii) subsequent to disclosure, is obtained from a third
party not subject to a contractual or fiduciary obligation for
confidentiality to the disclosing party or its Affiliates; or
(iv) is required to be disclosed by the receiving party
pursuant to a court order or is information which Ilex believes is
necessary for it to disclose in order for it to carry out its
obligations hereunder, in which cases Ilex will use its reasonable
efforts to limit such disclosure to that required by law and to
maintain confidentiality of the disclosed information to the extent
reasonably practical.
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<PAGE> 11
7.6 The provisions of Section 7.5 shall not, in any event, prevent
or inhibit disclosure by Ilex of such information as Ilex may, in its
reasonable judgment, deem necessary or appropriate to implement this Agreement,
including disclosure of information to regulatory agencies or to consultants,
investigators, contractors, licensees, sublicensees, investors and joint
venturers of Ilex or to responsible prescribers and purchasers of Eflornithine;
provided that, where reasonably practical, Ilex shall require that any person
to whom disclosure of confidential information is made be obligated to maintain
the confidentiality thereof.
7.7 In the event of a required disclosure under Section 7.5(vi)
above, the party subject to such legally required disclosure shall give the
other party advance notice of the information affected and shall use its
reasonable efforts to maintain confidentiality to the extent reasonably
practical. Such required disclosure shall not operate to release the
disclosing party from its obligations of confidentiality with respect to the
information so disclosed except to the extent of permitting said required
disclosure to be made as required, and to the extent such required disclosure
results in the information entering the public domain.
7.8 It is understood that information in the Technology applicable
to applications of the Technology outside of the Field of Interest is
information which MMD remains free to license to third parties (including the
WHO) outside the Field of Interest, and nothing herein shall be deemed to
prevent or inhibit MMD from disclosing such information in connection with
licensing or other transactions outside the Field of Interest; provided that
MMD shall take reasonable steps to ensure that confidential information which
relates to the application of the Technology in the Field of Interest remains
confidential and, where reasonably practical, MMD shall require that any person
to whom disclosure of confidential information is made be expressly obligated
to maintain the confidentiality thereof.
7.9 MMD shall provide Ilex notice of, and an opportunity to
discuss, the possibility of Ilex's direct or indirect participation in any
proposed licensing of the Technology by MMD to third parties outside the Field
of Interest.
ARTICLE 8
TRANSFER OF TANGIBLE MATERIAL
8.1 MMD will transfer to Ilex all technology, know how and data
available to MMD and which relates to and is reasonably necessary or useful for
Ilex (or a reasonably skilled manufacturer and developer of pharmaceuticals) to
develop Eflornithine in the Field of Interest, including, without limitation,
copies of documents listed in Schedule 8.1 and third party information which
MMD is free to disclose (as indicated on Schedule 8.1). This transfer shall
include information on MMD's process technology for the chemical manufacture of
Eflornithine, formulation technology, clinical trial data, data in MMD's
Investigational New Drug Application ("IND"), all in the Field of Interest, and
preclinical data required for development of Eflornithine in the Field of
Interest. It is understood that two formulations were developed by MMD for
clinical trials, oral solutions and injectable solutions. MMD will also
request its contract formulator, Taylor Pharmacal, to work with Ilex, at Ilex's
request. Such information and documentation will be made available to Ilex on
a mutually acceptable schedule; provided, however, said transfer of information
shall be accomplished within 30 days after the Effective Date.
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<PAGE> 12
8.2 In addition to assistance in the transfer of technology, MMD
will provide Ilex with technical assistance in chemical manufacturing of
Eflornithine in a total amount of up to 16 person days at mutually agreed times
and locations during the first one year period following the Effective Date.
8.3 Ilex understands that MMD has discontinued its development of
Eflornithine. The information documents in the Technology are in accordance
with the standards of data collection used by MMD as of the dates the data
therein was obtained. MMD's interpretations and conclusions drawn therefrom
were made in good faith and in the exercise of MMD's scientific judgment as of
the dates of the documents contained therein. Ilex understands that not all
the health registration fields are current or active, and that the Eflornithine
manufacturing know how is that previously used by MMD to produce Eflornithine
in its manufacturing site at the batch sizes and in the equipment used at said
site, and that it may not be directly applicable to other manufacturing
contexts without further work. Ilex also understands that such information
will not be sufficient without further research and development by Ilex to
obtain health authority approval to commercialize Eflornithine in the Field of
Interest. Ilex is relying on its own evaluation of the information provided to
its affiliate, IDD, and the other information transferred or provided to Ilex
hereunder and on its own medical and scientific expertise in using the same in
its development and commercialization of Eflornithine.
8.4 MMD will transfer to Ilex, for use as clinical supplies for
clinical development, its entire supply of Eflornithine oral solution, mutually
agreed amounts of bulk Eflornithine compound and Eflornithine injection
solution, excluding supplies necessary for MMD to fulfill its existing
obligations and commitments with WHO and the National Cancer Institute, and to
meet requests for humanitarian aid for Trypanosomiasis treatment, less the 50
grams of bulk Eflornithine transferred to Ilex prior to the date hereof. The
supply to be delivered to Ilex shall be the equivalent of at least 100 Kg of
Eflornithine and shall meet the specifications in MMD's IND No. 18,911
submitted to the FDA on June 24, 1981 for oral Eflornithine for activity
against tumor growth.
8.5 To the extent permitted by law or regulation, MMD will allow
Ilex to cross-reference MMD's IND's and NDA's and corresponding foreign
regulatory files for Eflornithine in support of Ilex's IND's (and corresponding
foreign regulatory filings in the Territory) for Eflornithine in the Field of
Interest. To the extent permitted by law or regulation, MMD will transfer to
Ilex those Eflornithine IND's which are entirely within the Field of Interest.
Some Eflornithine regulatory filings are inactive and some African filings
outside the Field of Interest have been sent to WHO.
8.6 Each party agrees to promptly report to the other party any
adverse reactions or any side effects which are observed with Eflornithine,
whether or not a causal connection is believed likely, so that the other party
may comply with its reporting obligations to FDA or other regulatory agencies.
The parties will develop a mutually agreed procedure for exchanging such
reports.
8.7 Up to an aggregate maximum payment of $[**], Ilex will
reimburse MMD for its out-of-pocket costs for the following:
(i) the transfer of technology, know-how and data as
provided under Sections 8.1 and 8.2 of this Agreement;
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<PAGE> 13
(ii) the transfer of existing supplies of Eflornithine
clinical supplies under Section 8.4;
(iii) any other mutually agreed upon actions required of
MMD under this Agreement; and
(iv) MMD's fully absorbed standard cost of producing the
Eflornithine clinical supply material transferred to Ilex in
accordance with Section 8.1 and including the 50 grams of bulk
Eflornithine transferred to Ilex prior to the date hereof.
8.8 MMD or its Affiliates shall pay the cost of packaging and
shipping supplies of Eflornithine pursuant to Section 8.4 to Ilex at its
location in San Antonio, Texas. Title and risk of loss shall pass to Ilex upon
delivery.
8.9 Within 60 days after receipt, Ilex shall inspect each shipment
of Eflornithine supplies. Any goods which have not been rejected in writing
within such 60-day period shall be deemed accepted by Ilex. If any portion
thereof does not conform to the specifications referred to in Section 8.4, Ilex
shall, within 60 days of receipt of this shipment, notify MMD in writing of
such condition. Thereafter, MMD shall have 60 days to examine any rejected
materials. If MMD agrees that the rejected material does not meet the
applicable specifications, Ilex shall be entitled to a refund of that portion
of the purchase price paid per kilogram, valued at MMD's full absorbed standard
cost as set forth in Section 8.7(iv) above, to MMD corresponding to the
rejected quantity of material.
8.10 Ilex shall inspect for obvious damage or defects, such as
deformed, unsealed, or otherwise visibly damaged containers, etc. as soon as
reasonably practical after receipt of any shipment.
8.11 If the parties disagree as to whether or not the rejected
material met specifications when delivered, the rejected material shall be
analyzed by an independent laboratory agreed upon by the parties. The
determination of such laboratory shall be final and binding, and the party
found to have been in error shall bear the cost of the services of the
independent laboratory. If MMD is determined to have been in error, Ilex shall
be entitled to a refund of the purchase price per kilogram of rejected
Eflornithine supplies valued at MMD's full absorbed standard cost set forth in
Section 8.7(iv) above.
8.12 MMD warrants that, at the time of delivery to Ilex hereunder,
(i) the Eflornithine clinical supplies supplied by it hereunder shall meet the
specifications therefor referred to in Section 8.4 and shall have been
manufactured to be suitable for clinical testing, i.e., in compliance with
applicable Good Manufacturing practices regulations in effect at the time of
manufacture; and (ii) MMD shall convey good title to the goods supplied
hereunder free from any lawful security interest, lien or encumbrance. MMD'S
WARRANTIES SET FORTH IN THIS SECTION 8.12 ARE ITS EXCLUSIVE WARRANTIES TO ILEX
WITH RESPECT TO THE CLINICAL SUPPLIES, AND ARE GIVEN AND ACCEPTED IN LIEU OF
ANY AND ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
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<PAGE> 14
8.13 The parties agree that under no circumstances will MMD be
obligated to manufacture additional quantities of Eflornithine or any other
material.
ARTICLE 9
DEFENSE OF INFRINGEMENT CLAIMS
9.1 If a claim or action is asserted that Ilex's manufacture, use
or sale of Licensed Patented Product or Licensed Product in the Field of
Interest infringes upon the patent rights of a third party in the Territory,
which patent has a claim or claims which dominate a patent in the MMD Patent
Rights licensed hereunder, then Ilex will give prompt written notice to MMD of
any third party formal complaint, answer or other request for judicial or
administrative relief or action (a "Suit") with respect thereto, and MMD shall
have the right to conduct the defense of any such Suit and Ilex may participate
at its option and expense. MMD shall advise Ilex in writing, within 90 days
after Ilex's notice, whether it intends to defend such Suit at its expense.
During such 90-day period, Ilex may, in consultation with MMD, take such action
as it deems necessary to defend against such Suit. If MMD elects not to so
defend or to otherwise dispose of such Suit, Ilex may defend such Suit. Ilex
shall be permitted to credit against one-half the royalties payable to MMD
under Section 3.2 with respect to Net Sales in the country where such Suit is
prosecuted, for reasonable out-of-pocket costs of defending such Suit during
the time such Suit or appeal based thereon is pending or undecided and for a
period of five years after the expiration of rights to continue such an appeal.
ARTICLE 10
PROSECUTION OF INFRINGEMENT CLAIMS
10.1 If MMD becomes aware of any infringement or potential
infringement of any of the Technology in the Field of Interest by third parties
in the Territory, then MMD shall promptly notify Ilex in writing of all details
available with respect to such infringement. If, in the sole judgment of Ilex,
such infringement is or reasonably threatens to be material, Ilex, at its
expense, shall have the right to (a) obtain a discontinuance of said infringing
operations; or (b) bring Suit itself against the third party, bringing such
Suit in the name of Ilex or, if required by the law of the forum, in the name
of MMD or joining MMD as a party plaintiff. If Ilex brings Suit in its own
name, MMD agrees to execute such legal papers as are necessary and to take such
other action, at Ilex's expense, as required for the prosecution of such Suit
as may be requested by Ilex. Ilex shall be entitled to receive and retain all
recoveries from such Suit. The prosecution, settlement or abandonment of any
Suit under this Section 10.1 shall be at Ilex's discretion, provided that Ilex
shall not have any right to surrender any of MMD's rights to the Technology.
In the event of infringement of any of the Technology in the Field of Interest
by third parties in the Territory, Ilex may elect to pay royalties under
Section 3.2(ii) with respect to Net Sales of Licensed Patented Product in the
country in which such unlicensed infringement occurs until such time as the
unlicensed infringement ceases, which payment shall be in lieu of any royalties
otherwise payable under Section 3.2(i) during such period with respect to such
Net Sales.
ARTICLE 11
INDEPENDENT CONTRACTOR STATUS
11.1 It is agreed that the relationship of Ilex to MMD in the
performance of this Agreement is as an independent contractor and that Ilex is
not an agent of MMD. Ilex agrees to
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<PAGE> 15
refrain from representing itself as being the agent of MMD in performing or
acting pursuant to this Agreement. Ilex shall not have the power or authority
to bind or otherwise commit MMD and shall not attempt to do so.
ARTICLE 12
TERM AND TERMINATION
12.1 Subject to the terms and conditions of this Agreement, this
Agreement and the licenses granted under Article 2 shall continue until the
later of (i) the expiration of the last of the Patent Rights to expire and (ii)
15 years after the First Commercial Sale; at which time, all rights licensed to
Ilex in Article 2 shall be deemed to be converted to a fully paid, exclusive,
irrevocable, royalty free license of the Technology in the Territory to make,
have made, use, sell and have sold Licensed Products and Licensed Patented
Products incorporating, utilizing, or otherwise commercially exploiting the
Technology in the Field of Interest.
12.2 This Agreement shall be terminated automatically in any one or
more of the following circumstances:
(i) in the event that the assets of Ilex are seized or
attached, in conjunction with any action against them by any third
party, and such seizure or attachment is not abated within 90 days; or
(ii) in the event that Ilex is dissolved, or that a sale
of all or substantially all of the assets of Ilex pursuant to a
liquidation not approved in writing by MMD is made.
12.3 MMD may terminate this Agreement if Ilex fails to perform any of
its material obligations under this Agreement and fails to remedy said breach
within 30 days (or such additional period as may be reasonably necessary to
remedy such failure, provided that Ilex diligently pursues such remedy) after
being given written notice of the specific failure or default and termination
by MMD.
12.4 Ilex, upon 90 days prior written notice to MMD, may terminate
this Agreement with or without cause.
12.5 In the event this Agreement is terminated under Sections 12.2,
12.3 or 12.4:
(i) Ilex shall have 120 days to complete the manufacture
and 240 days to complete sale or license of any Licensed Patented
Products and Licensed Products in stock or in the course of
manufacture at the time of termination, all subject, however, to
payments of royalty and accounting as provided herein, even if such
royalty obligations arise from transactions subsequent to the
effective date of termination;
(ii) Ilex's obligation to pay royalties and its obligation
to keep records and to allow a final audit will survive any
termination; and
(iii) Except as expressly provided herein, no party
hereunder shall be discharged or relieved from any liability or
obligation existing prior to such termination.
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<PAGE> 16
ARTICLE 13
GOVERNMENTAL REGULATIONS
13.1 The parties will cooperate to obtain all governmental and
regulatory approvals required in the Territory to enable this Agreement to
become effective, and to enable any payment hereunder be made and any other
obligation to be observed or performed. Ilex shall be responsible for
obtaining approvals and fulfilling all governmental formalities with respect to
exportation/importation of the Technology or FDA regulation; provided, however,
upon Ilex's request, MMD will provide all reasonable assistance in obtaining
approvals and for fulfilling all governmental formalities. Ilex will not
knowingly export or re-export, directly or indirectly, any Technology or other
information or technical data or the direct product of such Technology received
from MMD or its Affiliates in violation of any governmental regulations which
may be applicable, including the provisions of the United States Export Control
Regulations, 15 C.F.R. Part 768 et seq.
ARTICLE 14
ASSIGNMENT AND LICENSING
14.1 Except in connection with the sale of substantially all of the
assets related to its Eflornithine business, neither MMD nor Ilex may assign or
attempt to assign any rights under this Agreement without the prior written
approval of the other, which approval will not be unreasonably withheld. Ilex
may, however, sublicense its rights under the Agreement without any prior
approval by MMD; provided, however, Ilex shall remain responsible for the
payment of royalties on sublicensee sales and performance by sublicensees of
applicable obligations hereunder.
ARTICLE 15
MISCELLANEOUS
15.1 All claims, disputes, controversies and other matters in
question arising out of or relating to this Agreement shall be settled in
accordance with the provisions of Schedule 15.1 attached hereto, and judgment
may be entered upon the arbitration award in any court having jurisdiction
thereof. Notwithstanding the foregoing, either party may seek in-term
injunctive from any court of competent jurisdiction.
15.2 Without further consideration, MMD hereby agrees to execute
and deliver, and MMD agrees to cause its officers, employees, and agents to
execute and deliver, such other instruments and to take such other action as
Ilex hereunder may reasonably request to more effectively convey and transfer
to and vest in Ilex, and to put Ilex in possession of, the rights granted
hereunder, and to assist Ilex in the recordation of same as necessary, all in
such form and substance as Ilex may reasonably request and at its expense.
15.3 This Agreement shall be binding upon and shall inure to the
benefit of the legal representatives, successors and permitted assigns and
licensees of the parties hereto.
15.4 This Agreement shall be deemed to have been made under, and
shall be construed and interpreted in accordance with the laws of the State of
Texas. No conflicts-of-law rule or law which might refer such construction and
interpretation to the laws of another state, republic, or country shall be
considered.
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<PAGE> 17
15.5 All parties hereby especially agree in contract that neither
party intends to violate any public policy, statutory or common law, rule,
regulation, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries; that if any
word, sentence, paragraph or clause or combination thereof of this Agreement is
found, by a court or executive body with judicial powers having jurisdiction
over this Agreement or any of its parties hereto, in a final unappealed order
to be in violation of any such provision in any country or community or
association of countries, such words, sentences, paragraphs or clauses or
combination shall be inoperative in such country or community or association of
countries, and the remainder of this Agreement shall remain binding upon the
parties hereto.
15.6 The terms and conditions herein contained constitute the
entire agreement between the parties and supersede all previous communications
whether oral or written between the parties hereto with respect to the subject
matters hereof, and no previous agreement or understanding varying or extending
the same shall be binding upon either party hereto.
15.7 The parties covenant and agree that if either party fails or
neglects for any reason to take advantage of any of the terms provided for the
termination of this Agreement or if either party, having the right to declare
this Agreement terminated, shall fail to do so, any such failure or neglect by
either party shall not be a waiver or be deemed or be construed to be a waiver
of any cause for the termination of this Agreement subsequently arising, or as
a waiver of any of the terms, covenants or conditions of this Agreement or of
the performance thereof. None of the terms, covenants and conditions of this
Agreement may be waived by either party except by its written consent.
15.8 No amendment or modification to this Agreement shall be
effective unless it is in writing and signed by duly authorized representatives
of all parties.
15.9 All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by certified mail (return receipt requested) or sent by reputable
overnight delivery service, cable, telegram, facsimile transmission or telex to
the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
IF TO ILEX:
Ilex Oncology Inc.
14960 Omicron Drive
San Antonio, Texas 78245-3217
Telephone: 210 677-8000
Facsimile: 210 677-0058
Attention: President
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IF TO MMD:
Marion Merrell Dow Inc.
9300 Ward Parkway
Kansas City, MO 64114-0480
Telephone: 816 966-4000
Facsimile: 816 966-3811
Attention: Vice President - Operations
Marion Merrell Dow Inc.
2110 East Galbraith Road
Cincinnati, OH 45215-6300
Telephone: 513 948-7967
Facsimile: 513 948-4681
Attention: General Patent Counsel
15.10 The parties acknowledge that each party and its counsel have
received and revised this Agreement and that normal rules of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
or exhibits thereto.
[Signatures on Next Page]
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<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
multiple originals by their duly authorized officers and representatives.
MARION MERRELL DOW, INC.
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
MERRELL DOW PHARMACEUTICALS INC.
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
MARION MERRELL DOW FRANCE ET CIE
By
----------------------------------
Name
--------------------------------
Title
-------------------------------
ILEX ONCOLOGY INC.
By
----------------------------------
Richard L. Love,
President and CEO
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<PAGE> 20
SCHEDULE 1.12
PATENT RIGHTS
UNITED STATES PATENTS AND PATENT APPLICATIONS
<TABLE>
<CAPTION>
MMD PATENT NO./ SUBJECT/TITLE ISSUE DATE/ EXPIRATION
DOCKET NO. APPLICATION SERIAL FILING DATE
NO.
<S> <C> <C> <C> <C>
M8830 4,413,141 2-(DIFLUROMETHYL) -2,5- 11/1/83 11/1/00
DIAMINOPENTANOLIC ACID
M883AE SN 403531 METHOD OF CONTROLLING TUMOR GROWTH Filed 3/14/95 NA
RATE
M1281G SN 358649 USE OF ODC INHIBITORS, DECARBAZINE, Filed NA
AND INTERFERON IN THE TREATMENT OF 12/19/94
MALIGNANT MELANOMA
M1076A 4,399,151 METHOD OF INHIBITING THE GROWTH OF 8/16/83 8/16/00
PROTOZOA
35155B 5,002,879 TREATMENT OF TUMORS WITH AUTOLOGOUS 3/26/1991 3/26/08
LAK CELL, INTERLEUKIN-2 AND AN
ORNITHINE DECARBOXYLASE INHIBITOR
31381A 4,499,072 IMPROVED PROCESS FOR TREATING 2/12/85 2/12/02
DISEASES WITH ODC INHIBITORS
(conjunctive therapy with
Interferon)
</TABLE>
FOREIGN PATENTS AND PATENT APPLICATIONS
Foreign Patents and Applications Listed in the Attached Computer
Printouts for MMD Docket
Numbers M883 and M883A (three pages independently
numbered 1-3), M1076 (three pages
pages independently numbered 1-3) and M1281
(three pages independently numbered 1-3)
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<PAGE> 1
EXHIBIT 10.18
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
DEVELOPMENT AND LICENSE AGREEMENT
AGREEMENT, made as of this 11th day of October, 1996 by and between ILEX
ONCOLOGY INCORPORATED, a company organized under Texas law, having its
principal office at 14785 Omicron, Ste. 101, San Antonio, Texas 78245-3201
(hereinafter called "ILEX");
ON THE ONE HAND,
AND:
JANSSEN PHARMACEUTICA, N.V., a Belgium corporation having its principal place
of business at Turnhoutseweg 30, 2340 Beerse, (hereinafter called "JANSSEN");
ON THE OTHER HAND,
(ILEX and JANSSEN are each referred to herein by name or as a "Party" or,
collectively, as "Parties").
WITNESSETH:
A. WHEREAS, ILEX has an on-going research program in the field of oncology
and has developed a certain candidate compound referred to as crisnatol,
and has developed certain inventions, proprietary materials and know-how
with respect thereto;
B. WHEREAS, ILEX has exclusive licenses to certain patent rights and know-
how concerning the compound crisnatol in the United States and other
territories pursuant to a License Agreement dated November 1, 1993 with
Burroughs
<PAGE> 2
Wellcome Co. and The Wellcome Foundation Limited (the "BW AGREEMENT")
and has the ability to grant sublicenses thereunder;
C. WHEREAS, ILEX wishes to continue the ongoing development on crisnatol
for the purposes of developing a pharmaceutical product for the
treatment of cancer in humans;
D. WHEREAS, JANSSEN has been engaged in research efforts focused on the
development of pharmaceutical products and has certain research and
development capabilities to support the further development of crisnatol
and to manufacture, market and sell the product;
E. WHEREAS, JANSSEN is prepared to collaborate with ILEX in a program for
the development of crisnatol and to undertake a program for the
manufacture and sale of crisnatol, provided that JANSSEN is able to
obtain a license under the PATENT RIGHTS and KNOW-HOW (as hereinafter
defined) with exclusivity to protect its investment in such program;
F. WHEREAS, ILEX recognizes that JANSSEN requires such a license in order
to justify the investment in funding and personnel needed to develop and
market products developed hereunder and is willing to grant such rights.
G. WHEREAS, in connection herewith, JOHNSON & JOHNSON Development
Corporation, an AFFILIATE of JANSSEN, has agreed to make an investment
of $ [**] in ILEX, pursuant to a Share Purchase Agreement executed
contemporaneously herewith;
NOW, THEREFORE, in consideration of the premises and the performance of the
covenants herein contained, IT IS AGREED AS FOLLOWS:
ARTICLE 1. DEFINITIONS
<PAGE> 3
For the purposes of this agreement (hereinafter called the "LICENSE
AGREEMENT"), and solely for such purposes, the terms hereinafter set forth
shall have the following respective meanings:
1.1 "AFFILIATE" or "AFFILIATES" shall mean any corporation(s) or
organization(s) which directly or indirectly CONTROLS, is (are)
CONTROLLED by, or is (are) under common CONTROL with JANSSEN or ILEX, as
the case may be.
1.2 "COMPOUND" shall mean the chemical known as crisnatol mesylate, having
the chemical structure set forth on Appendix A attached hereto and made
a part hereof.
1.3 "CONTROL", "CONTROL(S)" or "CONTROLLED" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of the entity, whether through the ownership of
voting securities, by contract or otherwise.
1.4 "COST OF GOODS" means the cost of LICENSED PRODUCT inventory sold and
other manufacturing related costs with respect to the LICENSED PRODUCT.
These costs shall be defined as the sum of the applicable expenditures
incurred directly in bringing goods acquired and/or manufactured to
their existing condition or location. Cost of Goods Sold shall be
calculated in the manner set forth in Appendix B. In the event LICENSED
PRODUCT is sold in the form of combination products containing one or
more EXTRINSIC PRODUCTS, such EXTRINSIC PRODUCT component shall not be
included in the calculation of COST OF GOODS hereunder.
1.5 "DEVELOPMENT" shall mean INITIAL DEVELOPMENT and FULL DEVELOPMENT.
<PAGE> 4
1.6 "DEVELOPMENT PLAN" shall mean the plan for DEVELOPMENT of a LICENSED
PRODUCT attached hereto as APPENDIX C, and any and all amendments
recommended by the PMT and approved by JANSSEN pursuant to Article
3.1.2.2(b) hereof.
1.7 "EFFECTIVE DATE" shall mean the date at the head of this LICENSE
AGREEMENT.
1.8 "EXTRINSIC PRODUCT" shall mean an active ingredient other than the
COMPOUND or other components in a convenience package of kit format
containing COMPOUND, or other components in non-consumable devices
containing COMPOUND (such as, for example, implantable pumps or
electronic stimulators; however, items such as, for example, disposable
transdermal patches or prefilled syringes shall constitute consumable
devices).
1.9 "EUROPEAN MAJOR MARKET COUNTRIES" shall mean the United Kingdom,
Germany, France, Italy and Spain.
1.10 "FDA" shall mean the United States Food and Drug Administration.
1.11 "FIELD" shall mean the treatment and/or prophylaxis of cancer in humans.
1.12 "FULL DEVELOPMENT" shall mean all work necessary to carry out the
development plan for the purpose of filing MARKETING AUTHORIZATION
APPLICATIONS in the United States and Europe for the LICENSED PRODUCT in
the LEAD INDICATION.
1.13 "ILEX CHANGE IN CONTROL" shall mean any transaction or series of related
transactions in which (i) a pharmaceutical or biotechnology company with
annual worldwide sales or Five Hundred Million United States Dollars
($500,000,000) or more acquires or becomes the beneficial owner of more
than thirty-three percent (33%) of the outstanding voting securities of
ILEX or the surviving
<PAGE> 5
entity of any such transaction, whether by merger, consolidation,
reorganization, tender offer or other means or (ii) ILEX is liquidated.
1.14 "ILEX KNOW-HOW" shall mean all (i) information, not generally known to
the public, including all experience, data, formulas, procedures,
methods, models, assays and results, and including all chemical,
pharmacological, toxicological, clinical, analytical and quality control
data, and (ii) all PROPRIETARY MATERIALS which, in the case of (i) or
(ii), are (a) licensed to ILEX pursuant to the BW AGREEMENT or are
otherwise now in possession or hereafter developed or acquired during
the term of this LICENSE AGREEMENT by ILEX, or to which ILEX has rights
to grant licenses, which are useful in the development, manufacture or
use of LICENSED PRODUCT or (b) developed by ILEX in performance of the
DEVELOPMENT PROGRAM.
1.15 "INITIAL DEVELOPMENT" shall mean that portion of the DEVELOPMENT PLAN up
to and including the completion of a stochastic curtailment analysis of
the ongoing PHASE III study for the LEAD INDICATION according to the
DEVELOPMENT PLAN.
1.16 "JANSSEN KNOW-HOW" shall mean (i) such information, not generally known
to the public, including all experience, data, formulas, procedures,
methods, models, assays and results, and including all chemical,
pharmacological, toxicological, clinical, analytical and quality control
data, and (ii) all PROPRIETARY MATERIALS which in the case of either (i)
or (ii), are developed in the performance of the DEVELOPMENT program and
to which JANSSEN has rights to grant licenses, which JANSSEN discloses
to ILEX under this LICENSE AGREEMENT. Notwithstanding the foregoing,
JANSSEN
<PAGE> 6
KNOW-HOW shall not include the subject matter covered by any published
patent or patent application.
1.17 "LEAD INDICATION" shall mean the treatment of glioblastoma multiforma.
1.18 "LICENSED PRODUCT" shall mean the COMPOUND or any product containing the
COMPOUND as an active ingredient, (excluding, however, any in vitro or
in vitro diagnostic products);
(i) the manufacture, USE or SALE of which is covered by a
VALID CLAIM of the PATENT RIGHTS or that is SOLD by JANSSEN an
AFFILIATE of JANSSEN under conditions or circumstances which, if
unlicensed, would amount to infringement or contributory
infringement or inducement of infringement of the PATENT RIGHTS;
or
(ii) is made by or developed by JANSSEN through use of the ILEX
KNOW-HOW.
1.19 "MARKETING AUTHORIZATION" shall mean all allowances and approvals
(including pricing and reimbursement approvals) granted by the
appropriate federal, state and local regulatory agencies, departments,
bureaus or other governmental entities within a country necessary to
market and SELL LICENSED PRODUCT.
1.20 "MARKETING AUTHORIZATION APPLICATION" shall mean an application and all
supplements filed pursuant to the requirements of the appropriate
federal, state and local regulatory agencies, departments, bureaus or
other governmental entities within a country, including all documents,
data and other information concerning the LICENSED PRODUCT which are
necessary for or included in, an application for approval to market and
SELL LICENSED PRODUCT in such country. In the case of the United
States, MARKETING
<PAGE> 7
AUTHORIZATION APPLICATION shall mean a New Drug Application filed
pursuant to the requirements of the FDA as more fully defined in 21 CFR
Section 314.50 et seq.
1.21 "NET SALES," with respect to any LICENSED PRODUCT containing the
Compound as the sole active ingredient, means the gross sales (i.e.,
gross invoice prices) or such LICENSED PRODUCT billed by JANSSEN and its
AFFILIATES and SUBLICENSEES to the Third Party customers, less; (i)
actual credited allowances to such Third Party customers, less; (i)
actual credited allowances to such Third Party customers for spoiled,
damaged, outdated and returned LICENSED PRODUCT and for allowances in
lieu of returned LICENSED PRODUCT following price increases; (ii) the
amounts of customary trade and cash discounts, to the extent such trade
and cash discounts are not deducted by JANSSEN, its AFFILIATES its
SUBLICENSEES at the time of invoice in order to arrive at the gross
invoice prices; (iii) all transportation and handling charges, sales
taxes, excise taxes, use taxes or import/export duties actually paid;
and (iv) all other invoiced allowances and adjustments actually credited
to customers including, but not limited to, rebates paid to Third Party
payors, whether during the specific royalty period or not.
With respect to any LICENSED PRODUCT containing one or more active
ingredients in addition to the Compound, means the gross sales of such
LICENSED PRODUCT billed by JANSSEN, its AFFILIATES and its SUBLICENSEES
to Third Party customers, less all the allowances, adjustments,
discounts, taxes, duties and other charges referred to in this Section
1.22, multiplied by a fraction, the numerator of which shall be the
manufacturing cost or acquisition cost, as applicable, of the Compound
included in such LICENSED
<PAGE> 8
PRODUCT and the denominator of which shall be the manufacturing or
acquisition cost as applicable, of all active ingredients in such
LICENSED PRODUCT, including the Compound.
1.22 "PATENT RIGHTS" shall mean (i) the B.W. Co. and WFL patents and patent
applications listed in Appendix D under which ILEX is licensed pursuant
to the BW AGREEMENT and any and all patents that may issue from said
patent applications which contain claims covering the manufacture or use
of the COMPOUND, including any and all divisions, continuations,
continuations-in-part, extensions, substitution, renewals,
confirmations, supplementary protective certificates, registrations,
revalidations, reissues or additions or to any of such patents or patent
applications (ii) any other patents or patent applications containing
one or more claims covering a LICENSED PRODUCT, processes, products and
intermediates useful for its production, its compounding into final
product form, and formulations thereof, or the use or sale thereof,
owned or controlled by ILEX, or to which ILEX has rights and under which
ILEX has the right, at any time while this Agreement is in effect, to
grant licenses to in accordance with this Agreement, subject to any pre-
existing third party or government rights therein.
1.23 "PHASE III" shall mean that portion of the DEVELOPMENT PLAN which
provides for continued trials of LICENSED PRODUCT on sufficient numbers
of patients to established the safety and efficacy of a LICENSED PRODUCT
to support MARKETING AUTHORIZATION in the proposed indication. In
addition, PHASE III shall include the completion of all other
development work on animal toxicity, metabolism, drug substance and drug
product formulation
<PAGE> 9
and manufacturing development necessary to support MARKETING
AUTHORIZATION.
1.24 "PLAN COSTS" shall mean all out-of-pocket, direct and allocated expenses
ordinary and necessary to the execution of the DEVELOPMENT PLAN. Such
expenses include: (i) out-of-pocket costs, which include payments to
Third Parties for supplies, materials, and contracted outside services,
(ii) direct labor costs which include the compensation, benefits and
travel costs of ILEX employees required to carry out the DEVELOPMENT
PLAN; (iii) ILEX research and development department overhead which is
an allocation of general operating expenses such as depreciation, rent,
utilities, taxes, insurance and administrative salaries; (iv) allocated
ILEX general and administrative overhead which includes administrative
costs such as legal, information services, human resources and general
management, but excluding business development, licensing and marketing.
PLAN COSTS shall be accumulated in accordance with generally accepted
accounting principles. Allocations shall be handled on a consistent
basis.
1.25 "PMT" shall mean the Project Management Team.
1.26 "PROPRIETARY MATERIALS" shall mean any composition of matter, including
any of the following:
(i) any nucleotide sequence including DNA and RNA structures;
(ii) genes;
(iii) vectors or constructs including plasmids, phages or
viruses;
(iv) host organisms including bacteria, fungi, algae, protozoa
and hybridomas;
<PAGE> 10
(v) any eukaryotic or prokaryotic cell lines or expression
systems or development strains thereof;
(vi) antibodies;
(vii) recombinant proteins; or
(viii) chemical compounds; or
(ix) formulations or delivery devices; or
(x) any other chemical or biological material or micro-
organism.
1.27 "PROCESS OPTIMIZATION DEVELOPMENT PLAN" shall mean the plan for scale-up
and optimization of the chemical manufacturing process for the COMPOUND
attached hereto as APPENDIX E.
1.28 "SELLER" shall mean one who SELLS.
1.29 "SOLD", "SALE", "SALES", "SELL", "SELLING" and "SELLS" shall refer to
the act of selling or disposing of for value.
1.30 "SUBLICENSEE" shall mean a third party to whom JANSSEN has extended a
sublicense under Article 2.2 hereof.
1.31 "USE", "USES" and "USED" shall refer to the act of using for any
commercial purposes whatsoever.
1.32 "VALID CLAIM" shall mean a claim of an issued, unexpired patent within
the PATENT RIGHTS or a claim being prosecuted in a pending application
within the PATENT RIGHTS. A claim of an issued, unexpired patent shall
be presumed to be valid unless and until it has been held to be invalid
by a final judgment of a court of competent jurisdiction from which no
appeal can be or is taken. For the purposes of royalty determination
and payment under Article 5 hereof, any claim being prosecuted in a
pending patent application shall be deemed to be the equivalent of a
valid claim of an issued, unexpired patent.
<PAGE> 11
ARTICLE 2. LICENSES
2.1 Subject to the limited research license retained by the Licensor under
Article 3.3 of the B.W. AGREEMENT, ILEX hereby grants to JANSSEN and
JANSSEN hereby accepts for ILEX, upon the terms and conditions herein
specified, a worldwide exclusive license or sublicense, as applicable,
in the FIELD, under the PATENT RIGHTS and ILEX KNOW-HOW to develop,
make, have made, USE, SELL and have SOLD, LICENSED PRODUCTS.
2.2 The license granted under Article 2.1 shall remain exclusive (i) as to
the PATENT RIGHTS, for their respective lives on a country-by-country
basis, and (ii) as to the ILEX KNOW-HOW, until the termination of
JANSSEN's obligation to make royalty payments under Article 5.2 hereof,
at which time the license under the ILEX KNOW-HOW shall automatically
become a fully paid, exclusive license. Notwithstanding the foregoing,
however, with respect to any country of the European Union, the license
granted under Article 2.1 to the ILEX KNOW-HOW shall remain exclusive
until the earlier of (i) the date on which the ILEX KNOW-HOW becomes
published or generally known to the public through no fault on the part
of JANSSEN, its AFFILIATES or SUBLICENSEES or (ii) the tenth (10th)
anniversary of the first commercial sale of the first LICENSED PRODUCT
in any country of the European Union, at which time the license under
the ILEX KNOW-HOW shall automatically become a fully paid, non-exclusive
license.
2.2 The license and sublicenses granted hereunder shall include the right to
grant sub-licenses to AFFILIATES and third party SUBLICENSEES, provided
that JANSSEN agrees to be responsible for the performance hereunder by
its AFFILIATES and SUBLICENSEES to which the license and rights shall
have
<PAGE> 12
been extended. JANSSEN may sell LICENSED PRODUCTS through its
AFFILIATES or agents in any country.
2.3 If JANSSEN, ILEX or any of their sublicensees, AFFILIATES or assignees
discover a use, indication or potential use or indication of the
LICENSED PRODUCT which is outside the scope of the FIELD (such use,
indication or potential use or indication being referred to as an
"Additional Use"), the party discovering such Additional Use shall
notify the other in writing and JANSSEN and ILEX shall promptly meet to
discuss the submission of a written proposal to Glaxo Wellcome Inc. to
obtain the rights to such Additional Use pursuant to the terms of the BW
AGREEMENT as amended October 5, 1996. At JANSSEN's option, any rights
obtained by ILEX to such Additional Use shall inure to the benefit of
JANSSEN and such Additional Use shall be included in the license
hereunder, under the same terms and conditions as a LICENSED PRODUCT in
the FIELD, unless otherwise agreed to by the parties in writing.
2.3 No other, further or different license or right, except as expressly
provided in Article 2 hereof, is hereby granted or implied.
ARTICLE 3. DEVELOPMENT AND COMMERCIALIZATION
3.1 DEVELOPMENT
3.1.1 Development Program
(a) Promptly following execution of this LICENSE AGREEMENT,
ILEX shall use its best efforts based on ILEX's reasonable
business judgment, to execute the DEVELOPMENT PLAN and to
carry out the activities for FULL DEVELOPMENT of the
LICENSED PRODUCT so that JANSSEN can launch the LICENSED
PRODUCT in the United States and Europe no later than the
<PAGE> 13
second quarter of the year 2000. In the course of such
efforts ILEX shall, under the direction of JANSSEN as
coordinated by the PMT as set forth in Article 3.1.2
hereto, take appropriate steps including the following:
(i) Establish and maintain a program reasonably
designed, funded and resourced to complete PHASE
III trials on the LICENSED PRODUCT for the LEAD
INDICATION;
(ii) Proceed following successful completion of PHASE
III trials, other associated studies and all other
work which the PMT reasonably deems to be required,
to prepare and compile the necessary regulatory
documentation for inclusion in a filing of
MARKETING AUTHORIZATION APPLICATIONS in the United
States and Europe for the LICENSED PRODUCT for the
LEAD INDICATION. In the case of Europe, the filing
may be based on the EC multistate procedure or
individual filings in at least the EUROPEAN MAJOR
MARKET COUNTRIES.
(b) In carrying out the DEVELOPMENT PLAN, ILEX shall make
available the number of qualified "full time equivalents"
of its scientific, engineering, manufacturing and other
personnel specified in the DEVELOPMENT PLAN, and shall
take such steps as it deems necessary, in order to perform
its obligations in accordance with the terms hereof. ILEX
shall use its best based on its reasonable business
judgment efforts to carry out the DEVELOPMENT PLAN in
accordance with the agreed upon time
<PAGE> 14
and event schedule, in consultation with the PMT. JANSSEN
shall have the right to control and direct performance of
the DEVELOPMENT PLAN through the PMT, and shall have the
right to approve any material agreement with third parties
to be made by ILEX related to performance of the
DEVELOPMENT PLAN hereunder which approval shall not be
unreasonably withheld.
(c) MARKETING AUTHORIZATION APPLICATIONS shall be compiled by
ILEX based on information generated during the FULL
DEVELOPMENT program. At JANSSEN's option, MARKETING
AUTHORIZATION APPLICATIONS shall either be filed by
JANSSEN or filed by ILEX and transferred to JANSSEN.
JANSSEN shall own all such MARKETING AUTHORIZATIONS.
JANSSEN shall exercise reasonable efforts, commensurate
with the efforts it would normally exercise for products
of similar potential sales volume and consistent with its
overall business strategy to obtain MARKETING
AUTHORIZATION for LICENSED PRODUCT in such countries as
JANSSEN deems appropriate. JANSSEN shall prosecute such
submissions and file the necessary reports and responses
to requests fromt he pertinent regulatory authorities.
ILEX shall prepare supporting documentation requested by
JANSSEN. ILEX shall further assist JANSSEN with the
preparation of supporting data to apply for and pursue
MARKETING AUTHORIZATION APPLICATIONS.
3.1.2 Management
<PAGE> 15
3.1.2.1 The PMT
Promptly after THE EFFECTIVE DATE HEREOF, the parties shall
establish the PMT. The PMT shall be formed from a number of
representatives of ILEX and a number of representatives of
JANSSEN to be agreed upon by the parties from time to time. One
of the JANSSEN members of the PMT, chosen at the sole discretion
of JANSSEN, shall serve as chair of the PMT. Regardless of the
number of representatives form each party on the PMT, each party
shall present one consolidated view and have one vote on any
issue in dispute. All decisions of the PMT must be unanimous.
If the PMT fails to reach unanimous agreement on any matter
before it for consideration, the matter shall be submitted to the
Chief Executive of ILEX and the President of JANSSEN RESEARCH
FOUNDATION for resolution. If the dispute is not so resolved,
then the President of JANSSEN RESEARCH FOUNDATION shall have the
final decision. Meetings of the PMT shall be held at least
quarterly and may be called by either party with not less than
ten (10) working days notice to the other unless such notice is
waived, and meetings shall be held as agreed to by the parties
from time-to-time. The PMT may be convened, polled or consulted
from time to time by means of telecommunication or
correspondence. Each party will disclose to the other proposed
agenda items reasonably in advance of each meeting of the PMT.
Each party shall bear its own costs for participation in the PMT.
3.1.2.2 Functions of the PMT
The PMT shall be responsible for coordinating the management of
the DEVELOPMENT of LICENSED PRODUCTS performed under the
<PAGE> 16
provisions of this LICENSE AGREEMENT. In carrying out this
function, the PMT will:
(a) coordinate and oversee activities to be undertaken under
the DEVELOPMENT PLAN and specify the details under which
the DEVELOPMENT PLAN shall be carried out;
(b) review progress of the performance of the DEVELOPMENT PLAN
at lest monthly during the first six (6) months of
DEVELOPMENT and thereafter at least quarterly, and
recommend changes or modifications to the DEVELOPMENT
PLAN, including budgets and deadlines, which shall be
subject to approval by the Janssen Research Management
Board. The DEVELOPMENT PLAN shall be updated at least
annually;
(c) submit progress reports to JANSSEN as to the performance
of THE DEVELOPMENT PLAN, the first such report to be
submitted two (2) months following the EFFECTIVE DATE and
at three (3) month intervals thereafter until the SALE of
LICENSED PRODUCT is approved and LICENSED PRODUCT is being
marketed on a regular commercial basis. Minutes of
meetings of the PMT may serve as such progress reports;
(d) attempt to settle disputes or disagreements between the
parties regarding the performance of the DEVELOPMENT PLAN;
(e) review any material agreements with third parties to be
made by ILEX related to performance of the DEVELOPMENT
PLAN hereunder prior to submission to JANSSEN for their
approval;
<PAGE> 17
(f) review progress of the overall development of the LICENSED
PRODUCT, including activities outside of the DEVELOPMENT
PLAN and keep the parties informed to the progress
thereof;
(g) perform such other functions as are appropriate to further
the purposes of this LICENSE AGREEMENT as determined by
the parties.
ILEX shall designate a single project coordinator whose duties
shall be to oversee matters arising under the DEVELOPMENT PLAN
and to facilitate the communication of study results. Such
project coordinator shall be responsible for day-to-day worldwide
coordination of the DEVELOPMENT PLAN and to facilitate
communication between the parties relating to the DEVELOPMENT
PLAN.
3.1.2.3 Information and Access
ILEX and JANSSEN shall provide the PMT, its members and
authorized representatives with reasonable access during regular
business hours to all records and documents relating to the
performance of this Agreement which it reasonably may request in
order to perform its obligations hereunder; provided that if such
documents are under a bona fide obligation of confidentiality to
a third party, ILEX and JANSSEN, as the case may be, may withhold
access thereto to the extent necessary to satisfy such
obligation.
3.1.3 Development Funding
(a) Following the EFFECTIVE DATE hereof, JANSSEN shall reimburse ILEX
for all PLAN COSTS incurred by ILEX in connection with the
activities carried out by ILEX during INITIAL DEVELOPMENT up to a
<PAGE> 18
maximum amount of [**] Dollars ($ [**] ). All costs
required to complete INITIAL DEVELOPMENT in accordance with the
DEVELOPMENT PLAN as attached hereto in excess of such amount
shall be for ILEX's account. All costs associated with
modifications to the DEVELOPMENT PLAN or associated with work
requested by JANSSEN and not included in the DEVELOPMENT PLAN
shall be for JANSSEN's account.
(b) During the period of INITIAL DEVELOPMENT, both ILEX and JANSSEN
will work cooperatively to reduce the COST OF GOODS to an amount
equal to or less than [**] percent ([**]%) of ESTIMATED
NET SALES by optimizing (i) the chemical manufacturing process
and (ii) the formulation of LICENSED PRODUCT. ILEX will be
responsible for optimizing and scale-up of the chemical
manufacturing process for compound in accordance with the PROCESS
OPTIMIZATION DEVELOPMENT PLAN, which shall be completed by March
1, 1997. JANSSEN will be responsible for optimizing the
formulation for LICENSED PRODUCT. ILEX will actively assist
JANSSEN in JANSSEN's efforts to optimize the formulation for
LICENSED PRODUCT and JANSSEN will actively assist ILEX's efforts
to optimize and scale-up the chemical manufacturing process for
COMPOUND. JANSSEN will reimburse ILEX for its costs incurred
prior to March 1, 1997 associated with ILEX's performance of the
PROCESS OPTIMIZATION DEVELOPMENT PLAN up to an amount equal to
[**] Dollars ($ [**] ). Costs shall be defined in the
same manner as PLAN COSTS.
<PAGE> 19
(c) Following the period of INITIAL DEVELOPMENT, provided JANSSEN has
not elected to terminate this LICENSE AGREEMENT in accordance
with the provisions of Article 17.1, the parties shall proceed
with FULL DEVELOPMENT and JANSSEN shall reimburse ILEX for all
PLAN COSTS associated with FULL DEVELOPMENT, up to a maximum
amount for all DEVELOPMENT costs, including INITIAL DEVELOPMENT,
of [**] Dollars ($ [**] ). All costs required to
complete DEVELOPMENT in accordance with the DEVELOPMENT PLAN as
attached hereto in excess of such amount shall be for ILEX's
account. Costs related to modifications to the DEVELOPMENT PLAN
or work performed by, or requested by JANSSEN for developing the
LICENSED PRODUCT in excess of the work defined in the DEVELOPMENT
PLAN which result from additional requirements of Health
Authorities in one or more countries or for post-marketing
studies, or for other reasons shall be borne by JANSSEN.
(d) JANSSEN shall pay ILEX for PLAN COSTS and costs associated with
manufacturing optimization and scale-up activities performed by
ILEX pursuant to Article 3.1.3(b) hereof on a monthly basis.
ILEX shall invoice JANSSEN monthly for PLAN COSTS incurred during
the preceding month. JANSSEN shall pay such invoices by the end
of the month immediately following the month in which it receives
ILEX's invoices.
3.1.4 Recordkeeping and Audit
ILEX will maintain complete and accurate records which are relevant to
its execution of the DEVELOPMENT PLAN and manufacturing optimization
<PAGE> 20
activities pursuant to the SCALE-UP DEVELOPMENT PLAN, including records
concerning the expenditures associated therewith. ILEX shall maintain
all records relating thereto, including raw data, patient case reports,
microscope slides of tissues and the like in good order in the event
that the FDA or other regulatory authorities wish to inspect such data
as part of the regulatory approval of a LICENSED PRODUCT or as part of
their continuing oversight of the development and marketing of the
LICENSED PRODUCT. Such records shall be open during regular business
hours for a period of two (2) years from creation of individual records
for examination at JANSSEN's expense for the sole purpose of verifying
whether such expenditures are in accordance with the agreed DEVELOPMENT
PLAN as administered by the PMT; provided however, that such right may
not be exercised more than once in any calendar year. JANSSEN shall be
entitled to a credit against future PLAN COST payments or a refund for
any expenditures which such audit reveals were not made in accordance
with the DEVELOPMENT PLAN as administered by the PMT.
3.1.5 Transfer of Know-How
Upon completion of FULL DEVELOPMENT, or otherwise upon JANSSEN's
request, ILEX agrees to use its best efforts to assure the complete
transfer to JANSSEN of all existing ILEX KNOW-HOW reasonably necessary
for JANSSEN to manufacture, USE and SELL LICENSED PRODUCT and otherwise
fulfill the purposes of this Agreement ILEX shall provide JANSSEN with
such supporting documentation necessary for JANSSEN to obtain MARKETING
AUTHORIZATION for LICENSED PRODUCT for the LEAD INDICATION or any other
indication for LICENSED PRODUCT and shall provide JANSSEN with
appropriate regulatory letters of reference and certificates necessary.
<PAGE> 21
Thereafter during the term of this Agreement, any additional ILEX KNOW-
HOW relating to the FIELD developed by ILEX and which ILEX has the right
to disclose to JANSSEN shall be disclosed within a reasonable time of
its receipt or development. JANSSEN shall be free to use such ILEX
KNOW-HOW received hereunder for the purposes of this Agreement as it, in
its sole discretion, deems appropriate.
3.2 COMMERCIALIZATION
3.2.1 Once a LICENSED PRODUCT has been approved for marketing, JANSSEN
shall be responsible, at its sole discretion, for the promotion,
advertising and SELLING of LICENSED PRODUCT under this LICENSE
AGREEMENT. In doing so, JANSSEN shall exercise reasonable
efforts, commensurate with the efforts it would normally exercise
for products with similar potential sales volume and consistent
with its overall business strategy.
3.2.2 Notwithstanding any other provision hereunder, JANSSEN makes no
representation or warranty that it will develop or market any
LICENSED PRODUCT covered by this Agreement unless JANSSEN
determines, in its sole discretion, that such development and
marketing is economically or technically justified, or, if
JANSSEN does develop or market any of the LICENSED PRODUCTS, that
such LICENSED PRODUCT shall be the exclusive means by which
JANSSEN or its AFFILIATES will participate in the field in which
the LICENSED PRODUCT is marketed. In the event JANSSEN decides
not to market any LICENSED PRODUCT hereunder, it shall promptly
notify ILEX and shall terminate this LICENSE AGREEMENT, pursuant
to Article 17 hereof. Furthermore,
<PAGE> 22
all business decisions including, without limitation, the design,
sale, price and promotion of LICENSED PRODUCTS covered under this
Agreement and the decision whether to sell a LICENSED PRODUCT
shall be within the sole discretion of JANSSEN. ILEX
acknowledges that JANSSEN or its AFFILIATES may now or in the
future develop or acquire products for the treatment, diagnosis
and prevention of disease in the field in which LICENSED PRODUCTS
are developed or marketed.
ARTICLE 4. LICENSE FEES
4.1 In consideration of the rights and licenses granted to JANSSEN under
this Agreement, JANSSEN shall pay ILEX an initial license fee of
[**] Dollars ($ [**] ) within ten (10) Days of the EFFECTIVE
DATE.
4.2 In addition, JANSSEN shall pay to ILEX, subject to Article 17, Milestone
License Fees in amounts and times as follows:
(i) in the event INITIAL DEVELOPMENT is completed with 50
evaluable patients prior to March 1, 1997, and provided
JANSSEN has not terminated this LICENSE AGREEMENT in
accordance with Article 17.1 hereof: [**]
Dollars ($ [**] );
(ii) within thirty(30) days of the first filing of a MARKETING
AUTHORIZATION APPLICATION in the United States for the
LEAD INDICATION: [**] Dollars ($ [**] );
(iii) within thirty (30) days of the filing of MARKETING
AUTHORIZATION APPLICATIONS in the first country of the
EUROPEAN MAJOR MARKET COUNTRIES for the LEAD INDICATION:
[**] Dollars ($ [**] );
<PAGE> 23
(iv) within thirty (30) days of the first filing of a MARKETING
AUTHORIZATION APPLICATION in Japan for the LEAD
INDICATION: [**] Dollars ($ [**] );
(v) within thirty (30) days of the receipt of the first
MARKETING AUTHORIZATION permitting commercial sale of
LICENSED PRODUCT for the LEAD INDICATION in the United
States: [**] Dollars ($ [**] );
(vi) within thirty (30) days of receipt of MARKETING
AUTHORIZATION permitting commercial sale of LICENSED
PRODUCT for the LEAD INDICATION in the first country of
the EUROPEAN MAJOR MARKET COUNTRIES: [**]
Dollars ($ [**] );
(vii) within thirty (30) days of the receipt of the first
MARKETING AUTHORIZATION permitting commercial sale of
LICENSED PRODUCT for the LEAD INDICATION in Japan:
[**] Dollars ($ [**] );
(viii) within thirty (30) days of the receipt of the first
MARKETING AUTHORIZATION permitting commercial sale of
LICENSED PRODUCT for one additional indication other than
the LEAD INDICATION in the United States:
[**] Dollars ($ [**] );
(ix) within thirty (30) days of the receipt of the first
MARKETING AUTHORIZATION permitting commercial sale of
LICENSED PRODUCT for one additional indication other than
the LEAD
<PAGE> 24
INDICATION in the first country of the EUROPEAN MAJOR
MARKET COUNTRIES: [**] Dollars
($ [**] );
(x) within thirty (30) days of the receipt of the first
MARKETING AUTHORIZATION permitting commercial sale of
LICENSED PRODUCT for one additional indication other than
the LEAD INDICATION in Japan: [**] Dollars
($ [**] ).
ARTICLE 5. ROYALTIES, RECORDS AND REPORTS
5.1 For the rights and privileges granted under this LICENSED AGREEMENT,
JANSSEN shall pay to ILEX, subject to Article 17, earned royalties on
the NET SALES of all LICENSED PRODUCTS that are SOLD by or for JANSSEN
or AFFILIATES or SUBLICENSEES under this LICENSE AGREEMENT. The royalty
rate shall increase or decrease in accordance with the following formula
as a result of changes in the COST OF GOODS made as a result of
optimizing the formulation and bulk production of LICENSED PRODUCT:
(a) for all sales in a calendar year up to and including
[**] Dollars ($ [**] ), a royalty based on the
Actual Cost of Goods Percentage (ACOG%, as defined below
in paragraph 5.1(d)) as follows:
(i) where the ACOG% is [**] percent ([**]%) or
less: a royalty of [**] percent ([**]%);
(ii) where the ACOG% is [**] percent ([**]%) or
more: a royalty of [**] percent ([**]%);
<PAGE> 25
(iii) where the ACOG% is between [**] percent ([**]%)
and [**] percent ([**]%): a royalty
calculated in accordance with the following
formula:
[**]
wherein AR is the adjusted royalty rate, and AR1 is
the Royalty Rate Adjustment for Cost of Goods
Percentage Changes, calculated as set forth in
Article 5.1(d).
(b) for all sales in a calendar year greater than
[**] Dollars ($ [**] ), up to and including
[**] Dollars ($ [**] ), a royalty based on the
ACOG% as follows:
(i) where the ACOG% is [**] percent ([**]%) or
less: a royalty of [**] percent ([**]%);
(ii) where the ACOG% is [**] percent ([**]%) or
more: a royalty of [**] percent ([**]%);
(iii) where the ACOG% is between [**] percent ([**]%)
and [**] percent ([**]%): a royalty
calculated in accordance with the following
formula:
[**]
wherein AR is the adjusted royalty rate, and AR is
the Royalty Rate Adjustment for Cost of Goods
Percentage Changes, calculated as set forth in
Article 5.1(d).
(c) for all sales in a calendar year exceeding
[**] Dollars ($ [**] ), a royalty based on
the ACOG% as follows:
<PAGE> 26
(i) where the ACOG% is [**] percent ([**]%) or
less: a royalty of [**] percent ([**]%);
(ii) where the ACOG% is [**] percent ([**]%) or
more: a royalty of [**] percent ([**]%);
(iii) where the ACOG% is between [**] percent
([**]%) and [**] percent ([**]%): a
royalty calculated in accordance with the following
formula:
[**]
wherein AR is the adjusted royalty rate, and AR is
the Royalty Rate Adjustment for Cost of Goods
Percentage Changes, calculated as set forth in
Article 5.1(d).
(d) As used herein, the Actual Cost of Goods Percentage
(ACOG%) is calculated in accordance with the formula:
ACOG% = [**] where ACOG is the Actual COST OF
GOODS and RP is the Reference Net Sales Price as defined
below. The Royalty Rate Adjustment for Cost of Good
Percentage Changes (AR) shall be calculated in accordance
with the following formula:
[**]
wherein RCOG is the Reference Cost of Goods, ACOG is the
Actual COST OF GOODS and RP is the Reference Net Sales
Price. The Reference Net Sales Price (RP) is $ [**] and
the Reference Cost of Goods (RCOG) equals $ [**] and
reflects the projected Net Sales Price and COST OF GOODS
of the current contemplated base therapy using [**] cycles
of [**] grams of COMPOUND per cycle ([**] cycle -
[**] ). Should the required
<PAGE> 27
dose not equal [**] grams COMPOUND per cycle for [**]
cycles, but rather some other dose, the Reference Cost of
Goods and Reference Net Sales Price shall be adjusted
accordingly to reflect such change. The Actual Cost of
Goods (ACOG) shall be calculated based on the same base
therapy as set forth above and shall be adjusted annually
at the beginning of each calendar year by taking the
average COST OF GOODS sold for the previous calendar year.
Thus, by way of non-limiting example, if the Actual Cost
of Goods is reduced to $ [**] and the Reference Net
Sales Price is $ [**] , the Actual Cost of Goods
Percentage (ACOG%) will be [**]% and paragraph (iii)
above will apply in each instance. AR(1) will be: [**]
and the Royalty Rate under paragraph (a)(iii) above will be
[**] .
5.2 Earned royalty shall be paid pursuant to Article 5.1 hereof on all
LICENSED PRODUCTS, on a country-by-country basis for eight (8) years
from first commercial sale of the first LICENSED PRODUCT in such
country. Thereafter, royalties shall be paid in respect of a given
LICENSED PRODUCT until the expiration of the last to expire of the
PATENT RIGHTS containing a VALID CLAIM covering the LICENSED PRODUCT in
such country. Notwithstanding the foregoing, however, with respect to
any country of the European Union, royalties on NET SALES of LICENSED
PRODUCT which are payable only by virtue of the ILEX KNOW-HOW shall be
payable commencing from the date of first commercial sale of the first
LICENSED PRODUCT in such country and ending on the earlier of (i) the
date on which the ILEX KNOW-HOW becomes
<PAGE> 28
published or generally known to the public through no fault on the part
of JANSSEN, its AFFILIATES or SUBLICENSEES or (ii) the eighth (8th)
anniversary of the first commercial sale of the first LICENSED PRODUCT
in such country.
5.3 Earned royalty shall be paid pursuant to Article 5.1 hereof on all
LICENSED PRODUCTS SOLD under this LICENSE AGREEMENT; however, the earned
royalty payable on a given LICENSED PRODUCT made hereunder shall not
become due and owing until such LICENSED PRODUCT is SOLD. The earned
royalty for any particular LICENSED PRODUCT shall be due upon the first
bona fide arm's length SALE thereof and any subsequent SALE of such
LICENSED PRODUCT by other than JANSSEN, an AFFILIATE or SUBLICENSEE
shall be royalty free.
5.4 Notwithstanding the provisions of Article 5.3 hereof, in the case of
transfers or SALES of any LICENSED PRODUCT between JANSSEN and an
AFFILIATE or SUBLICENSEES or between AFFILIATES, one and only one
royalty shall be payable thereon and such royalty shall become payable
upon the final SALE thereof to a third party.
5.5 For the purposes of reporting and making payments of earned royalties
under this LICENSE AGREEMENT, the manufacture, SALE or USE of LICENSED
PRODUCTS by any AFFILIATE, or SUBLICENSEE to which the license and
rights shall have been extended shall be considered the manufacture,
SALE or USE of such LICENSED PRODUCT by JANSSEN and any such AFFILIATE
or SUBLICENSEE may make the pertinent reports and royalty payments
specified in this Article 5 hereof directly to ILEX on behalf of
JANSSEN; otherwise, such reports and payments on account of SALES of
LICENSED
<PAGE> 29
PRODUCTS by each AFFILIATE and SUBLICENSEE shall be made by JANSSEN;
and, in ny event the SALES of LICENSED PRODUCT by each such AFFILIATE
shall be separately shown in the reports to ILEX if such information is
readily available to JANSSEN.
5.6 ILEX hereby agrees, at the request of JANSSEN, to grant direct licenses
containing the same terms, conditions and provisions as this Agreement
to any AFFILIATE under LICENSED PATENTS and ILEX KNOW-HOW to make, have
made, use, sell and have sold LICENSED PRODUCTS. Any such licensed
AFFILIATE shall thereafter report NET SALES directly to ILEX and the
activities of any such AFFILIATE shall not be includable in any reports
made by JANSSEN to ILEX.
5.7 JANSSEN shall keep full, true and accurate books of account containing
all particulars in accordance with JANSSEN'S normal accounting
procedures then in effect for the purpose of showing the amount payable
to ILEX by way of royalty as aforesaid or by way of any other provision
hereunder. Said books of account shall be kept at JANSSEN's principal
place of business. Said books and the supporting data shall be
maintained and kept open during reasonable business hours, for four (4)
years following the end of the calendar year to which they pertain (and
access shall not be denied thereafter, if reasonably available), to the
inspection of an independent certified public accountant retained by
ILEX and reasonably acceptable to JANSSEN for the purpose of verifying
JANSSEN's royalty statements, or JANSSEN's compliance in other respects
with this LICENSE AGREEMENT, but this right to inspect may not be
exercised more than one in any year and once a calendar year is audited,
it may not be re-audited. Said accountant shall disclose to ILEX only
information relating solely
<PAGE> 30
to the accuracy of the royalty reports and the royalties paid under this
Agreement. Names of customers and other confidential information shall
not be disclosed to ILEX by such independent accountant. Such
accountant shall be retained at ILEX'S sole expense.
5.8 As soon as possible after the first day of January, April, July and
October of each year, and in no event later than forty-five (45) days
after each such date, JANSSEN shall deliver to ILEX a true and accurate
report, in respect of LICENSED PRODUCTS SOLD by JANSSEN, AFFILIATES, and
SUBLICENSEES and the NET SALES due during the preceding three (3) months
("Accounting Period") under this LICENSE AGREEMENT showing (i) the NET
SALES of all LICENSED PRODUCTS in the United States or the Non-U.S.
Territory, as applicable; during the Accounting Period; (ii) the
royalties which have accrued hereunder in respect of such sales (iii)
withholding taxes, if any, required by law to be deducted in respect of
such sales; and (iv) the exchange rates used in determining the amount
of royalties payable.
ILEX will then promptly deliver an invoice to JANSSEN in a form
acceptable to JANSSEN. Within thirty (30) days of receipt of such
invoice, JANSSEN shall pay to ILEX the royalty and any other payments
due under this LICENSE AGREEMENT for the period covered by such report.
If no royalties are due, it shall be so reported. Royalties shall be
paid to ILEX in United States Dollars at ILEX'S office specified for
the purposes of giving notice in Article 22 hereof.
5.9 The remittance of royalties payable on sales outside the United States
will be payable to ILEX in United States Dollars equivalents at the
official rate of exchange of the currency of the country from which
<PAGE> 31
the royalties are payable as quoted by The Wall Street Journal, New York
Edition, for the day upon which the transfer of funds for the royalty
payment is made. If the transfer or the conversion into United States
Dollar equivalents in any such instance is not lawful or possible, the
payment of such part of the royalties as is necessary shall be made by
the deposit thereof, in the currency of the country where the sales were
made on which the royalty was based, to the credit and account of ILEX
or its nominee in any commercial bank or trust company of its choice
located in that country, prompt notice of which shall be given by
JANSSEN to ILEX.
5.10 In any country where the rate of royalty is limited by law, the royalty
payment shall be made to ILEX at the highest rate permitted by law or
allowed for tax deductibility purposes in that county for licenses of
the type herein granted provided that such rate is equal to or less than
the rate specified in this LICENSE AGREEMENT.
5.11 Any tax required to be withheld on royalties payable to ILEX under the
laws of any foreign country shall be promptly paid by JANSSEN for and on
behalf of ILEX to the appropriate governmental authority, and JANSSEN
shall furnish ILEX with proof of payment of such tax together with
official or other appropriate evidence issued by the appropriate
governmental authority sufficient to enable ILEX to support a claim for
income tax credit in respect of any sum so withheld. Any such tax
required to be withheld shall be an expense of and borne by ILEX.
5.12 JANSSEN'S obligation to make payments of royalties under this Article
shall be waived an excused to the extent that the statutes, laws, codes,
or government regulations of the country from which such payments are to
be paid prohibit or prevent such payments.
<PAGE> 32
ARTICLE 6. CONFIDENTIALITY
6.1 Disclosures of confidential and proprietary information hereunder by
either party to the other shall be made in writing (or promptly
confirmed in writing if made in another form), and shall be clearly
market "Confidential". Such confidential information shall be
safeguarded by the recipient, shall not be disclosed to third parties
and shall be made available only to recipient's employees or independent
contractors who agree in writing to equivalent conditions and who have a
need to know the information for the purposes specified under this
Agreement. All confidential information shall remain the property of
the disclosing party and be returned to the disclosing party within
thirty (30) days of termination of this Agreement except for one (1)
copy which may be retained by the receiving party for purposes of
determining its legal rights hereunder. Notwithstanding the foregoing
however, JANSSEN may retain confidential information of ILEX upon normal
expiration of this LICENSE AGREEMENT pursuant to Article 16. These
mutual obligations of confidentiality shall apply for a period of five
(5) years after the termination of this Agreement, but such obligations
shall not apply to any information that:
(i) is published or hereafter becomes generally available to the public
other than by reason of any default with respect to a confidentiality
obligation under this Agreement; or
(ii) was already known to the recipient as evidenced by prior written
documents in its possession; or
(iii) is disclosed to the recipient by a third party who is not in default of
any confidentiality obligation to the disclosing party hereunder; or
(iv) is developed by or on behalf of the receiving party, without reliance on
confidential information received hereunder; or
<PAGE> 33
(v) is provided to third parties under appropriate terms and conditions
including confidentiality provisions equivalent to those in this
Agreement for consulting, manufacturing development, manufacturing,
external testing nd marketing trials with respect to the products
covered by this Agreement; or
(vi) is used with the consent of the disclosing party (which consent shall
not be unreasonably withheld) in applications for patents or copyrights
under the terms of this Agreement; or
(vii) has been approved in writing for publication by the disclosing party; or
(viii) is required to be disclosed in compliance with applicable laws or
regulations in connection with the manufacture or sale of products
covered by this Agreement; or
(ix) is otherwise required to be disclosed in compliance with applicable laws
or regulations or order by a court or other regulatory body having
competent jurisdiction; or
(x) is product-related information which is reasonably required to be
disclosed in connection with marketing of products covered by this
Agreement.
6.2 Notwithstanding any provision herein to the contrary, with respect to
any confidential information disclosed to ILEX under the BW AGREEMENT
and identified as such, JANSSEN agrees to comply with the
confidentiality provisions of the BW AGREEMENT with respect thereto.
The parties recognize the importance of publishing the information
developed in the FULL DEVELOPMENT Program under the provisions of this
Agreement. Accordingly, ILEX agrees to provide JANSSEN with a copy of
any proposed written or oral paper, abstract, or public presentation
concerning LICENSED PRODUCTS at least sixty (60) days before submission
to a journal and at least ninety (90) days
<PAGE> 34
prior to an anticipated actual publication date for its consent to
publish. JANSSEN will endeavor to provide its consent within sixth (60)
days of receipt of such request to publish. The failure of JANSSEN to
respond to such a request within such sixth (60) day period shall be
deemed to be an approval of such request and ILEX shall then be free to
publish such paper, abstract or presentation.
ARTICLE 7. ADVERSE EVENT REPORTING
ILEX shall promptly inform JANSSEN in writing within twenty-four (24)
hours of its receipt of any information which it receives regarding or
related to any serious, unexpected adverse reaction to LICENSED PRODUCT.
Each party shall comply with each Adverse Drug Experience reporting
requirement of it in the United States Federal Food Drug and Cosmetic
Act, as amended (22 US Section 301 et seq.) and the similar requirements
of international regulatory authorities. In addition, on an on-going
basis, each party agrees to make a good faith effort to promptly provide
the other party with any additional information in its possession which
indicates adverse effects in humans associated with LICENSED PRODUCT.
The obligations of this Article shall survive termination of this
Agreement as to LICENSED PRODUCT continued to be sold by JANSSEN.
ARTICLE 8. PATENT FILING, PROSECUTION AND MAINTENANCE
8.1 Title to all know-how, proprietary materials or patents claiming
inventions made solely by an employee of a Party in the course of
performing the DEVELOPMENT PLAN shall be owned by such Party, subject to
the license provisions of Article 2 hereunder. Title to all know-how,
proprietary materials or patents claiming inventions made jointly by
employees of ILEX and JANSSEN
<PAGE> 35
shall be jointly owned by ILEX and JANSSEN, subject to the license
provisions of Article 2 hereunder. The laws of the United States with
respect to joint ownership of inventions shall apply in all
jurisdictions. Each Party shall be responsible for filing patent
applications on inventions made solely by an employee of a Party hereof.
The Parties shall mutually agree on mutually acceptable outside counsel
for the filing of any jointly owned patent applications and shall
equally share the expenses associated therewith.
8.2 ILEX shall ensure that all patents and patent applications owned or
controlled by ILEX within the PATENT RIGHTS are diligently filed,
maintained and prosecuted. Further with respect to the B.W. Co. and WFL
patents and patent applications listed in Appendix D, ILEX agrees to
exert reasonable efforts to ensure that such patents are diligently
maintained. ILEX agrees to request from B.W. Co. and WFL, and to
provide JANSSEN with documentary evidence concerning the maintenance and
payment of taxes on such patents. ILEX does not represent or warrant
that patents on any such patent applications will be obtained and ILEX
shall in its sole discretion be responsible for determining whether to
abandon any or all of said patent applications.
8.3 With respect to all patents and patent applications owned or controlled
by ILEX, ILEX agrees to promptly provide JANSSEN with copies of:
1. All patent applications included in PATENT RIGHTS;
2. All prior art searches in its possession related to said patent
applications and the subject matter of this License Agreement;
and
3. All correspondence to and from the United States Patent and
Trademark Office related to said patent applications as well as
all requested
<PAGE> 36
correspondence relating to corresponding national and
international patent applications.
8.4 JANSSEN shall have the right to consult with ILEX regarding the content
of said patent applications, prior art searches and correspondence, and
to comment thereon. ILEX shall consider all such comments offered by
JANSSEN, it being agreed, however, that all final decisions respecting
conduct of the prosecution of said patent applications shall rest solely
in the discretion of ILEX.
8.5 Within nine (9) months of the initial filing date of any patent
application, or at least three (3) months prior to entering the national
phase of any International Patent Application within the PATENT RIGHTS,
ILEX shall consult with JANSSEN and request a list of foreign countries
where such patent application shall be filed. ILEX shall file patent
applications in those foreign countries which may be designated in
writing by JANSSEN and JANSSEN shall be permitted to consult with ILEX
in the selection of foreign patent counsel and in the preparation and
prosecution of said foreign patent applications.
8.6 In the event ILEX decides to abandon or allow to lapse any of the B.W.
Co. or WFL patents or patent applications listed in Appendix D, it shall
inform JANSSEN and JANSSEN shall be given the opportunity to prosecute
such patent application and/or maintain such patent at its own expense
and JANSSEN shall receive a royalty credit for any expenses associated
therewith. With respect to any patents or patent applications owned or
controlled by ILEX other than the B.W. Co. or WFL patents (the "ILEX
patents"), ILEX shall promptly notify JANSSEN in the event ILEX decides
not to file, to abandon or discontinue prosecution or maintenance of any
such ILEX patents. Such notification will be given as early as possible
which in no event will be less than
<PAGE> 37
sixty (60) days prior to the date on which said application(s) will
become abandoned. JANSSEN shall have the option, exercisable upon
written notification to ILEX, to assume full responsibility for the
filing, prosecution or maintenance of the affected ILEX patents or
patent application(s), in which event all such affected patents or
patent application(s) shall be promptly assigned by ILEX to JANSSEN and
all royalty obligations with respect to said ILEX patents or patent
applications shall cease.
8.7 JANSSEN shall co-operate with ILEX, and ILEX agrees to diligently seek
any extension under the U.S. Drug Price Competition and patent Term
Restoration Act of 1984, the Supplementary Certificate of Protection of
the Member States of the European Community or other similar measure in
any other country that is available or that becomes available in respect
of the term of any patent within the PATENT RIGHTS including any patent
that may issue on a patent application within the PATENT RIGHTS.
JANSSEN shall diligently advise ILEX in a timely manner of approval by
the Food and Drug Administration of the United States of America to USE,
SELL or market LICENSED PRODUCTS or any other governmental approval
obtained by or on behalf of JANSSEN or an AFFILIATE that is pertinent to
any such extension and JANSSEN shall supply ILEX with any pertinent
information and data in its possession or control or that is in the
possession or control of any AFFILIATE or SUBLICENSEE and shall
cooperate fully in assisting ILEX to obtain any such extension that it
may seek and JANSSEN shall supply ILEX in a timely manner with any
information and data and any supporting affidavits or documents required
to comply with 35 US 156 Extension of Patent Term (and any successor
legislation) and any administrative rules or regulation thereunder or
required to comply with any
<PAGE> 38
corresponding laws and regulations that are or shall be in effect in any
country within the PATENT RIGHTS, all without further consideration.
JANSSEN shall require its AFFILIATES to comply with this Article 8.7.
ARTICLE 9. INFRINGEMENT
9.1 (a) In the event that there is infringement on a commercial scale by
a third party of any patent licensed to JANSSEN hereunder,
JANSSEN shall notify ILEX in writing to that effect, including
with said written notice evidence establishing a prima facie case
of infringement by such third party. If, prior to the expiration
of one hundred and twenty (120) days from the date of said
notice, ILEX obtains a discontinuance of such infringement or
suit is brought against the third party infringer either by ILEX
or its Licensor under the B.W. AGREEMENT, then the obligation of
JANSSEN to pay royalties under such licensed patent shall
continue unabated. Such party bringing suit shall bear all the
expenses of any suit brought by it. In the event damages or
other monies are awarded or received in settlement of such suit,
ILEX and such Licensor shall be entitled to deduct an amount to
cover their out-of-pocket expenses, including attorneys fees,
incurred for such suit. JANSSEN shall be entitled to receive
[**] percent ([**]%) of the balance of any recoveries.
JANSSEN will cooperate with ILEX in any such suit and shall have
the right to consult with ILEX and be represented by its own
counsel at its own expense.
(b) If, after the expiration of said one hundred and twenty (120)
days from the date of said notice, ILEX has not overcome the
prima facie case of infringement, obtained a discontinuance of
such infringement, or suit has
<PAGE> 39
not been brought against the third party infringer, then
JANSSEN shall have the right, after such one hundred twenty (120)
da notice period, but not the obligation, to bring suit against
such infringer and join ILEX and its Licensor under the B.W.
AGREEMENT as a party plaintiff, provided that JANSSEN shall bear
all the expenses of such suit. Any damages or other monies
awarded or received in settlement of such suit shall first be
used to reimburse JANSSEN for its out-of-pocket costs and
expenses of litigation, and the remainder shall be retained by
JANSSEN subject only to the payment of royalties thereupon as
required under the terms of the B.W. AGREEMENT. ILEX will
cooperate with JANSSEN in any suit for infringement of a licensed
patent brought by JANSSEN against a third party, and shall have
the right to consult with JANSSEN and to participate in and be
represented by independent counsel in such litigation at its own
expense. JANSSEN shall incur no liability to ILEX as a
consequence of such litigation or any unfavorable decision
resulting therefrom, including any decision holding any patent in
the PATENT RIGHTS invalid or unenforceable.
(c) During the pendency of any suit for infringement brought by
JANSSEN , JANSSEN shall continue to pay ILEX royalties
corresponding to the royalties ILEX must pay pursuant to the B.W.
AGREEMENT. Any additional royalties payable which accrue during
the pendency of any suit for infringement brought by JANSSEN
shall be held in escrow by JANSSEN until a final decision is
rendered by a court of competent jurisdiction from which no
appeal can be or is taken. In the event the patent under which
such royalties are payable is held to be invalid, the
<PAGE> 40
accrued royalties shall be retained by JANSSEN to offset
litigation expenses. In the event the validity of the patent is
upheld, the accrued royalties shall be paid to ILEX, and any
damages or other monies awarded or received in settlement of such
suit shall be retained by JANSSEN subject to the payment of
royalties pursuant to the B.W. AGREEMENT as hereinbefore
addressed.
9.2 In the event either party hereto shall initiate or carry on legal
proceedings to enforce the PATENT RIGHTS against an alleged infringer,
as provided herein, the other party hereto shall fully co-operate with
the party initiating or carrying on such proceedings.
9.3 ILEX warrants that it is presently aware of no enforceable issued
patents owned by a third party which would be infringed by reason of the
manufacture, use or sale of any LICENSED PRODUCT. In the event JANSSEN
is charge with such infringement by a third party, JANSSEN shall have
the right to defend against such charge of infringement and, during the
period in which such litigation is pending, JANSSEN shall have the right
to apply up to [**] percent ([**]%) of the royalties, license
fees or milestone payments due ILEX on development or sales of the
allegedly infringing LICENSED PRODUCT against its litigation expenses.
If, as a result of judgment in the litigation or settlement with the
third party, JANSSEN is required to pay royalties or other monies to
such third party, JANSSEN may thereafter deduct from the amount of
royalties, license fees or milestone payments due ILEX on NET SALES or
DEVELOPMENT of the JANSSEN may thereafter deduct from the amount of
royalties, license fees or milestone payments due ILEX on NET SALES or
DEVELOPMENT of the LICENSED PRODUCT charged to infringe, an amount which
is the lesser of
<PAGE> 41
[**] percent ([**]%) of all sums actually paid by JANSSEN to
such third party or [**] percent ([**]%) of all royalty or
other payments otherwise payable to ILEX on the NET SALES or DEVELOPMENT
of such LICENSED PRODUCT, provided however, that in no event shall the
royalties payable by JANSSEN hereunder to ILEX be less than the amount
ILEX is required to pay B.W. Co. and WFL under the terms of the B.W.
AGREEMENT.
ARTICLE 10. PUBLICITY
10.1 Except as required by law or applicable regulation or the terms of this
LICENSE AGREEMENT or otherwise mutually agreed to by the Parties, each
Party shall treat as confidential the terms, conditions and existence of
this LICENSE AGREEMENT. Notwithstanding the foregoing, a party may
disclose the terms, conditions and existence to an AFFILIATE or
SUBLICENSEE which agrees to be bound by this Article 10 to the same
extent as such Party.
10.2 In the absence of specific agreement between the Parties, neither
parties, neither Party shall, without the prior written consent of the
other Party (which consent shall not be unreasonably withheld or
delayed), originate any publicity, news release or public announcement,
written nor oral, whether to the public or press, relating to this
Agreement, including its existence, the subject matter to which it
relates, performance under it or any of its terms or to any amendment
hereto, excepting only such announcements as in the opinion of counsel
for the Party making such announcement is required by law to be made.
Any such announcements shall be factual and as brief as possible. If a
party decides to make an announcement required by law, it will give the
other Party 10 business days' advance written notice, where possible, of
the text of the announcement so that the other Party will
<PAGE> 42
PAGES 36 THROUGH 40 ARE NOT INCLUDED
<PAGE> 43
14.3 Each respective Indemnitee and Indemnitor hereunder hereby agrees to
cooperate in the defense of any such claim, lawsuit or action.
Indemnitee further agrees to make available to Indemnitor its employees,
document and expertise in the mutual defense of such action. Indemnitee
hereby agrees to immediately notify Indemnitor within five (5) days of
Indemnitee's receipt thereof of any claim, lawsuit or action which is
within the scope of Indemnitor's undertaking. Failure to provide such
notification shall terminate Indemnitor's obligation as to such lawsuit,
claim or action. Indemnitor shall bear no responsibility for any
expenses incurred by Indemnitee prior to such notice.
14.4 The respective Indemnitor hereunder shall control the management of any
such claim, lawsuit or action, including, without limitation, the
selection of counsel, trial strategy, and determination of the
appropriateness and reasonableness of any settlement.
ARTICLE 15. BANKRUPTCY
All rights and licenses granted under or pursuant to this Agreement by
each Party are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of Title 11, U.S. code (the "Bankruptcy Code"), licenses
of rights to "intellectual property" as defined under Section 101(6) of
the Bankruptcy Code. The Parties agree that JANSSEN, shall retain and
may fully exercise all of its rights and elections under the Bankruptcy
Code. ILEX agrees, during the term of this Agreement, to create and
maintain current copies or, if not amenable to copying, detailed
descriptions or other appropriate embodiments, of all such intellectual
property. ILEX further agrees that in the event of the commencement of
a bankruptcy proceeding by or against it under the Bankruptcy Code,
JANSSEN shall be entitled to a complete duplicate of (or complete access
to, as appropriate)
<PAGE> 44
any such intellectual property and all embodiments of such intellectual
property, and same, if not already in its possession shall be promptly
delivered to JANSSEN (a) upon such commencement of a bankruptcy
proceeding upon written request therefor by JANSSEN, unless ILEX elects
to continue to perform all of its obligations under this Agreement or
(b) if not delivered under (a) above, upon the rejection of this
Agreement by or on behalf of ILEX upon written request therefor by
JANSSEN.
ARTICLE 16. DURATION
16.1 This Agreement shall commence upon the EFFECTIVE DATE and shall, unless
sooner terminated pursuant to any other provision of this Agreement,
continue in full force and effect for as long as royalties are payable
according to the provisions of Article 5 herein. Pursuant to Article
2.2 hereof, on a country-cy-country basis, once JANSSEN has paid
royalties for the full period under which such royalty payments are due
under Articles 5.1 and 5.2 hereunder, JANSSEN and its AFFILIATES shall
have a fully paid-up, irrevocable license under the ILEX KNOW-HOW to
make, have made, USE, SELL and HAVE SOLD LICENSED PRODUCTS.
ARTICLE 17. TERMINATION
17.1 Notwithstanding any other provision herein, within thirty (30) days of
completion of INITIAL DEVELOPMENT or, if INITIAL DEVELOPMENT is not
completed by March 1, 1997, at any time thereafter prior to April 1,
1997, JANSSEN may immediately terminate this LICENSE AGREEMENT in its
entirety for any reason. In such event, JANSSEN shall pay ILEX for its
expenses associated with termination of the PHASE III study, up to a
maximum of [**] Dollars ( [**] ). Thereafter,
JANSSEN may
<PAGE> 45
terminate this LICENSE AGREEMENT in its entirety at any time during FULL
DEVELOPMENT upon three (3) months' written notice to ILEX, at no further
expense to JANSSEN beyond any expenses incurred during such three (3)
month notice period.
17.2 Notwithstanding any other provision herein, upon completion of FULL
DEVELOPMENT, JANSSEN may terminate this LICENSE AGREEMENT on a country-
by-country basis or in its entirety for any reason upon three (3)
months' written notice to ILEX.
17.3 Notwithstanding any other provisions of this Agreement, either party, at
its option, may terminate this Agreement on ninety (90) days prior
written notice served by one party should the other party fail to comply
with or perform its obligations hereunder, unless such failure or non-
performance is corrected within the ninety (90) day period following
notification, or such extended period as shall be agreed between the
parties.
17.4 Should a party commit an act of bankruptcy, be declared bankrupt,
voluntarily file or have filed against it a petition for bankruptcy or
reorganization unless such petition is dismissed within sixth (60) days
of filing, enter into an arrangement for the benefit of creditors, enter
into a procedure of winding up to dissolution or should a Trustee or
Receiver be appointed for its business assets or operations, the other
party shall be entitled to terminate this LICENSE AGREEMENT forthwith by
giving written notice to the first party.
17.5 Subject to Article 18.3(ii), failure to terminate this Agreement
following breach or failure to comply with this Agreement shall not
constitute a waiver of a party's defenses, rights or causes of action
arising from such or any future breach or noncompliance.
<PAGE> 46
ARTICLE 18. RIGHTS AND OBLIGATIONS UPON TERMINATION
18.1 In the event this LICENSE AGREEMENT is terminated in its entirety by
JANSSEN in accordance with Articles 17.1 and 17.2 hereunder, or by ILEX
under Article 17.3 or 17.4 hereunder, JANSSEN undertakes:
(a) to deliver to ILEX any ILEX KNOW-HOW or JANSSEN KNOW-HOW in its
possession;
(b) not to use the ILEX KNOW-HOW as long as it has to be kept
confidential pursuant to Article 6 hereunder;
(c) to terminate its rights under the PATENT RIGHTS;
(d) to transfer, at ILEX's written request, all MARKETING
AUTHORIZATIONS and regulatory filings to ILEX or its designee;
and
(e) to transfer to ILEX responsibility for and control of ongoing
DEVELOPMENT work being performed by JANSSEN, including contracts
with Third Parties for such work, in an expeditious and orderly
manner with the costs for such work assumed by ILEX as of the
date of notice.
18.2 In the event of (a) a material default by ILEX, or (b) an ILEX CHANGE IN
CONTROL under Article 19.2 hereof, then, JANSSEN, at its option, may (i)
elect to terminate this LICENSE AGREEMENT in its entirety, or (ii)
terminate the provisions of Articles 3.1.1, 3.1.2 and 3.1.3. and
continue the LICENSE AGREEMENT. In the event of termination in its
entirety under (i) above, all rights and licenses to the PATENT RIGHTS
and ILEX KNOW-HOW shall revert to ILEX. In the event of partial
termination under (ii) above, all provisions of this LICENSE AGREEMENT
shall survive except Articles 3.1.1, 3.1.2, and 3.1.3. and JANSSEN shall
be entitled to use all ILEX KNOW-HOW and other
<PAGE> 47
information generated under this LICENSE AGREEMENT, and shall have an
exclusive, worldwide license under the PATENT RIGHTS and ILEX KNOW-HOW,
to make, have made, USE, SELL and HAVE SOLD LICENSED PRODUCTS for the
remaining duration of this LICENSE AGREEMENT, provided however, that in
the event of a material default by ILEX, all further payments due ILEX
under Articles 4 and 5 hereof shall be reduced by [**] percent ([**]).
Further, in either event of (a) or (b) above, ILEX will provide JANSSEN
with all reasonable assistance to transfer the ILEX KNOW-HOW and enable
JANSSEN to continue DEVELOPMENT and to make, have made, USE, SELL and
HAVE SOLD LICENSED PRODUCT.
18.3 Termination of this Agreement for any reason shall be without prejudice
to:
(i) ILEX'S right to receive all payments accrued and unpaid on the
effective date of such termination; and
(ii) Any other remedies which either party may then or thereafter have
hereunder or otherwise, provided however, that ILEX's remedies
shall be limited to those recited in Articles 17.3 and 18.1
should JANSSEN fail to perform under Article 3, particularly
Article 3.2.1, and, as a result JANSSEN shall not be liable to
ILEX under any contract, negligence, strict liability or other
legal or equitable theory for any incidental or consequential
damages for failure to perform under Article 3.
18.4 Articles 6, 7, 10, 14, 15 and 20 shall survive the expiration and any
termination of the LICENSE AGREEMENT for any reason.
ARTICLE 19. ASSIGNMENT
19.1 This Agreement or any interest herein shall not be assigned or
transferred, in whole or in part, by either party hereto without the
prior written consent of the
<PAGE> 48
other party hereto. However, without securing such prior written
consent, but subject to Article 19.2 hereof, either party may assign
this Agreement to an AFFILIATE or a successor of all or substantially
all of its business to which this Agreement relates provided, that no
such assignment shall be binding and valid until and unless the assignee
shall have assumed in a writing, delivered to the non-assigning party,
all of the duties and obligations of the assignor, and, provided,
further, that the assignor shall remain liable and responsible to the
non-assigning party hereto for the performance and observance of all
such duties and obligations.
19.2 This LICENSE AGREEMENT shall be binding upon, and inure to, the benefit
of the parties hereto, to the benefit of any permitted assignee or
successor to substantially the entire assets of JANSSEN to which this
LICENSE AGREEMENT relates, and to the benefit of any permitted assignee
or successor to substantially the entire assets of ILEX to which this
LICENSE AGREEMENT relates. If, at any time during the term of this
LICENSE AGREEMENT, an ILEX CHANGE IN CONTROL occurs, JANSSEN shall have
the right, upon notice, to terminate this LICENSE AGREEMENT, partially
or in its entirety, and the provisions of Article 18.2 shall apply.
JANSSEN shall also have the right, whether or not it elects to terminate
this LICENSE AGREEMENT in whole or in part, to require that all steps it
may reasonably specify be taken to prevent disclosure of its
confidential information to any such acquiror or assignee in any way
deemed adverse to its interests.
ARTICLE 20. DISPUTE RESOLUTION
20.1 Any controversy or claim arising out of or relating to the Agreement, or
the parties' decision to enter into this Agreement, or their breach
thereof, shall be
<PAGE> 49
settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association with a panel of three (3)
arbitrators. The Arbitrators shall be selected from the National Panel
of Arbitrators of the American Arbitration Association. Each party
shall select one arbitrator and the two selected arbitrators shall
select the third arbitrator. If the two selected arbitrators cannot
agree on a third arbitrator then the American Arbitration Association
shall select said arbitrator from the National Panel of Arbitrators.
All arbitrators shall be selected from a pool of independent arbitrators
who are willing to serve within 45 days of receipt of the request to do
so. Each Party shall make its appointment within twenty (20) days of
receipt of the request for Arbitration and the third member shall be
selected by the two other members within ten (10) days of the selection
of the first two panel members.
20.2 The parties shall be entitled to discovery not to exceed four (4) months
from the date of filing of the notice of arbitration of all documents
and information reasonably necessary for a full understanding of any
legitimate issue raised in the arbitration. They may use all methods of
discovery including but not limited to depositions, requests for
admissions and requests for production of documents. The time periods
for compliance shall be set by the arbitrator who may also set
reasonable limits on the scope of such discovery and shall not permit
either party to take in excess of five depositions except in exceptional
circumstances and for good cause shown. The Federal Rules of Evidence
shall govern the admissibility of evidence in the arbitration
proceeding. The proceeding shall be confidential and the arbitrator
shall issue appropriate protective orders to safeguard both parties'
confidential information.
<PAGE> 50
20.3 The arbitrator shall not award punitive damages to either party and the
parties shall be deemed to have waived any right to such damages. The
arbitrator shall render his or her decision within thirty (30) days of
completion of the hearing and, in rendering his or her decision, shall
apply the substantive law of the State of New Jersey except the
interpretation of and enforcement of this provision shall be governed by
the Federal Arbitration Act. Arbitration shall take place in the City
of New York. The fees of the arbitrator and the American Arbitration
Association shall be split equally between the parties. Any judgment
upon the award rendered by the arbitrator may be entered in any count
having jurisdiction thereof, and shall not be subject to being vacated
and shall not be appealable.
ARTICLE 21. MANUFACTURE AND SUPPLY
JANSSEN shall have the exclusive right to manufacture or have
manufactured LICENSED PRODUCT. In the event JANSSEN decides to out-
source the manufacture of LICENSED PRODUCT in bulk form, it shall
request a bid from ILEX. Such bid shall be considered if ILEX is able
to produce LICENSED PRODUCT in bulk form at a competitive price and
according to JANSSEN's specifications, and in a manner which meets the
requirements for United States and European sales, including cGMP
requirements, but any final decision concerning out-sourcing of
manufacture shall be solely at JANSSEN's discretion.
ARTICLE 22. GENERAL
22.1 Before signing this LICENSE AGREEMENT the parties have had numerous
conversations, including preliminary discussions, formal negotiations
and informal conversations at meals and social occasions, and have
generated correspondence and other writings, in which the parties
discussed the
<PAGE> 51
transaction which is the subject of this LICENSE AGREEMENT and their
aspirations for its success. In such conversations and writings,
individuals representing the parties may have expressed their judgments
and beliefs concerning the intentions, capabilities, and practices of
the parties, and may have forecasted future events. The parties
recognize that such conversations and writings often involve an effort
by both sides to be positive and optimistic about the prospects for the
transaction. It is also recognized, however, that all business
transactions contain an element of risk, as does the transaction
contemplated by this LICENSE AGREEMENT and that it is normal business
practice to limit the legal obligations of contracting parties to only
those promises and representations which are essential to their
transaction so as to provide certainty as to their respective future
rights and remedies. Accordingly, it is agreed that this LICENSE
AGREEMENT, including the Appendices hereto attached, (and the
accompanying Stock Purchase Agreement) constitutes the entire agreement
and understanding between the parties as to the legal undertakings
hereunder. All prior negotiations, representations, agreements,
contracts, offers and earlier understandings of whatsoever kind, whether
written or oral between ILEX and JANSSEN in respect of this LICENSE
AGREEMENT, are superseded by, merger into, extinguished by and
completely expressed by this LICENSE AGREEMENT. No aspect, part or
wording of this LICENSE AGREEMENT may be notified except by mutual
agreement between ILEX and JANSSEN taking the form of an instrument in
writing signed and dated by duly authorized representatives of both ILEX
and JANSSEN.
<PAGE> 52
22.2 All communications, reports, payments and notices required by this
License agreement by one party to the other shall be addressed to the
parties at their respective addresses set forth below or to such other
address as requested by either party by notice in writing to the other.
If to ILEX:
ILEX ONCOLOGY, INC.
14785 Omicron, Suite 101
San Antonio, Texas 78245-3201
Attention: __________________________
Telefax No.: (210) 677-6010
If to JANSSEN:
JANSSEN PHARMACEUTICA, N.V.
Turnhoutseweg 30,
2340 Beerse, Belgium
ATTENTION: President, JRF
Telefax No.: (32 + 14) 60-28-41
With a copy to:
Chief Patent Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08903
Telefax No.: (908) 524-2808
All such notices, reports, payments and communications shall be made in
writing and shall be deemed given if delivered personally or by telefax
(receipt verified)
<PAGE> 53
to the numbers set forth above or by registered or certified mail
(return receipt requested), postage prepaid, or sent by express courier
service and shall be considered made as of the date sent or when
received by telefax.
22.3 All matters affecting the interpretation, validity, and performance of
this Agreement shall be governed by the internal laws of the State of
Delaware without regard to its conflict of law principles, except as to
any issue which by Delaware law depends upon the validity, scope of
enforceability of any patent within the PATENT RIGHTS, which issue shall
be determined in accordance with the applicable patent laws of the
country of such patent.
22.4 Should any part or provision of this Agreement be held unenforceable or
in conflict with the law of any jurisdiction, the validity of the
remaining part or provisions shall not be affected by such holdings.
22.5 Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
22.6 The waiver by either party, whether express or implied, of any
provisions of this Agreement, or of any breach or default of either
party, shall not be construed to be a continuing waiver of such
provision, or of any succeeding breach or default or of a waiver of any
other provisions of this Agreement.
22.7 Notwithstanding anything to the contrary in this LICENSE AGREEMENT,
nothing herein contained shall be construed as a representation by ILEX
that the PATENT RIGHTS can be or will be used to prevent the importation
by a third party hereto of a product into or the SALE or USE by a third
party hereto of a product in any country within the PATENT RIGHTS where
such product
<PAGE> 54
shall have been placed in commerce under circumstances which preclude
the use of the PATENT RIGHTS to prevent such importation or SALE or USE
by reason of any applicable law or treaty.
22.8 As used in this LICENSE AGREEMENT, singular includes the plural and
plural includes the singular, wherever so required by the context. The
headings appearing at the beginning of the numbered Articles hereof have
been inserted for convenience only and do not constitute a part of this
LICENSE AGREEMENT.
22.9 Nothing herein shall be deemed to create an agency, joint venture or
partnership between the parties hereto.
22.10 Notwithstanding any other provisions of this LICENSE AGREEMENT, neither
of the parties hereto shall be liable in damages or have the right to
terminate this LICENSE AGREEMENT for any delay or default in performing
hereunder if such delay or default is caused by conditions beyond its
control including, but not limited to acts of GOD, governmental
restrictions, wars, or insurrections, strikes, floods, work stoppages
and/or lack of materials, and any time for performance hereunder shall
be extended for the actual time of delay caused by such occurrence;
provided, however, that the party suffering such delay or default shall
notify the other party in writing of the reasons for the delay or
default and shall diligently seek to correct such conditions. If such
reasons for delay or default continuously exist for six (6) months, this
LICENSE AGREEMENT may be terminated by the other party.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly
executed this LICENSE AGREEMENT on the date(s) indicated below, to be effective
the day and year first above written.
<PAGE> 55
For and on Behalf of ILEX ONCOLOGY INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
Date:_________________________________
For and on Behalf of JANSSEN PHARMACEUTICA, N.V.
By:___________________________________
Name: Gustaaf Van Reet, Ph.D.
Title: Managing Director
Date:_________________________________
<PAGE> 1
EXHIBIT 10.19
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into
effective July 1, 1996 ("Effective Date"), by and between Sother Limited
("SOTHER"), a Channel Island corporation having its principal place of business
at 16 Dumares Q Street, ST Helier, Jersey, JE2 3RL Channel Islands; and ILEX
Oncology, Inc. ("ILEX"), a Delaware corporation having its principal place of
business at 14785 Omicron Drive, San Antonio, Texas 78245.
WITNESSETH
WHEREAS, SOTHER is the developer or owner of the Technology; and
WHEREAS, SOTHER desires to grant to ILEX and ILEX desires to acquire an
exclusive, worldwide license with the right to sub-license to make, use,
market, sell, manufacture and otherwise commercially exploit the Products in
the Field of Interest; and
NOW, THEREFORE, in consideration of the mutual promises and obligations
hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Confidential Information" shall mean any proprietary and secret
ideas, proprietary technical information, know-how and proprietary commercial
information or other similar proprietary information; provided, however,
Confidential Information shall not include information which:
(a) has been published or otherwise made available to the
general public other than by any act in breach of this Agreement; or
(b) is disclosed by an unrelated third party without any
obligation of confidentiality; or
(c) was in the possession of the receiving party prior to
disclosure by the disclosing party hereunder and was not acquired
directly or indirectly from any third party under obligation of
confidentiality to the disclosing party;
-1-
<PAGE> 2
(d) is required by law, court or governmental order to be
disclosed; provided that the discloser shall not disclose such
information prior to giving the other party reasonable notice to afford
the other party an opportunity to object to such disclosure; or
(e) is required to be disclosed during the filing or
prosecution of a patent; or
(f) is required by law or governmental regulation to obtain
regulatory approval for use or Sale as contemplated by this Agreement;
or
(g) is disclosed in the course of a Sale of a Product as
contemplated in this Agreement.
1.2 "Field of Interest" shall mean all uses of the Technology for the
treatment or prophylaxis of: (i) cancer in humans; (ii) conditions or diseases
which are associated with cancer in humans; and (iii) conditions and diseases
associated with the treatment or prophylaxis of cancer in humans.
1.3 "Improvements" shall mean all improvements, advancements,
modifications, revisions, changes, developments and alterations that: (i)
relate to or pertain to the Patent Rights or the Field of Interest, (ii)
improve the efficacy of applications of the Technology including, without
limitation, improvements in methods, treatment regimes, treatment sites,
uptake, stability, metabolism, delivery and pharmacokinetics, and (iii) are
made, developed owned, licensed or acquired by SOTHER during the term of this
Agreement.
1.4 "Net Manufacturing Revenues" shall mean the gross revenue
received by ILEX for manufacturing Products for third parties less: (i) the
direct material costs; (ii) the direct labor costs; and (iii) [**]
percent ([**]%) of the direct material costs and direct labor costs.
1.5 "Net Sales" shall mean the gross revenue (other than Sub-Licensee
Receipts) received by ILEX from Sales of Products less the following:
(a) any credits or refunds actually granted to
customers for the return of Products previously Sold;
(b) any separately identified sales, excise, value added, use,
turnover or similar taxes and any duties and other such governmental
charges imposed upon the importation or Sales of Products;
(c) any separately identified charges for transportation,
shipping, handling or insurance which are directly associated with Sales
of Products;
-2-
<PAGE> 3
(d) any customary, trade, quantity or cash discounts actually
allowed and taken;
(e) in the event that ILEX is required to pay a royalty to an
unrelated third party in order to make, use, sell, manufacture or
commercially exploit Products in any country, the amount of such
royalties actually paid to such third party; and
(f) in the event that ILEX is successful in litigation under
Article 9 and the monetary recovery is insufficient to cover ILEX's
expenses of such litigation, then ILEX's uncovered expenses of such
litigation up to a maximum of U.S. $ [**] ( [**] DOLLARS
U.S.); provided, however, such deduction, in any quarter shall not
exceed an amount which would decrease the royalties payable in such
quarter by more than [**]% of the royalties due prior to such
deduction.
Notwithstanding the foregoing, if a Product is sold in conjunction with
or includes Royalty Bearing Components, Net Sales for purposes of determining
royalties payable under this Agreement shall be calculated as the product
obtained by using whichever of the following formulas is applicable:
(i) If both the Product and the Royalty Bearing Components
included in the combination products or service are also sold separately
(by ILEX or others), multiplying Net Sales of the combination products
or service by the fraction A/(A+B), where "A" is the price during the
royalty paying period in question of the Product if sold separately and
"B" is the price of the Royalty Bearing Components in the combination
products or service if sold separately.
(ii) If Section 1.5.1 does not apply, multiplying Net Sales of
such combination products or service by the fraction C/(C+D), where "C"
is the per unit cost of the Product portion of such combination products
or service and "D" is the per unit cost of the Royalty Bearing
Components in such combination products or service, such costs being
arrived at using the standard cost accounting procedures of ILEX, which
will be in accordance with generally accepted accounting principles.
1.6 "Patent Rights" shall mean all patent applications, information
and discoveries covered by patents whether in the United States, Argentina, or
other foreign countries which are owned or licensed by SOTHER that may issue
from SOTHER's patent applications and all divisions, continuations,
continuations-in-part, re-examinations, renewals and extensions thereof, and
any letters of patents at issue thereon which are applicable to the
manufacture, use or sale of farnesyl transferase inhibitors within the Field of
Interest within the Territory. All Patent Rights shall be listed on Schedule
1, which schedule shall be updated from time to time.
-3-
<PAGE> 4
1.7 "Person" shall mean an individual, corporation, partnership,
joint venture, trust, unincorporated organization, university, college or a
governmental or any agency or political subdivision thereof.
1.8 "Product" shall mean any product or service, the manufacture, use
or Sale of which would, if not licensed under this Agreement, be within the
scope of any of the Patent Rights.
1.9 "Royalty Bearing Components" shall mean all components, devices
or products that are sold in conjunction with or are included as a part of a
Product and for which either (i) ILEX must license and pay a royalty to an
unrelated third party or (ii) ILEX owns a patent, or a patent application that
is being diligently prosecuted, covering the component, device or product in
the appropriate territory where such component, product or device is sold.
1.10 "Sale"/"Sold"/"Sell" shall mean the sale, rent, lease, marketing,
exchange or otherwise commercial exploitation transfer of a Product, but shall
not include any distribution of Products for clinical testing or promotional or
marketing purposes in which no profit is derived from such distribution.
1.11 "Sub-Licensee Receipts" shall mean all revenue received by ILEX
from Products sold by sub-licensees.
1.12 "Technology" shall mean and include the Patent Rights, together
with any and all copyrights, Improvements, information, data, know-how, trade
secrets, processes, formulas, patterns, drawings, writings, notes, records,
compilations, programs, materials, devices, systems, methods, techniques,
products, procedures, preparations, usage information or materials, models, and
prototypes, whether or not patentable, which (i) relate or pertain to the Field
of Interest; (ii) have been licensed, acquired, made or developed by SOTHER;
and (iii) relate to farnesyl transferase inhibitors.
1.13 "Territory" shall mean the whole world.
ARTICLE 2
GRANT OF EXCLUSIVE LICENSE
2.1 Subject to the terms and conditions hereof, effective as of the
Effective Date, SOTHER hereby grants to ILEX a worldwide, exclusive license
with the right to sublicense to the Technology with rights to develop, make and
have made, use, sell, manufacture, market and otherwise commercially exploit
Products in the Field of Interest.
-4-
<PAGE> 5
ARTICLE 3
CONSIDERATION
3.1 In consideration of the grant of the exclusive license specified
in Section 2.1, ILEX shall pay SOTHER a licensing fee equal to the reasonable
expenses incurred by SOTHER in filing any patent under the Patent Rights. This
fee, however, shall only be payable after (i) the patent has issued; and (ii)
ILEX has confirmed the activity of a Product in ILEX's laboratories.
3.2 In consideration of the grant of the exclusive license specified
in Section 2.1, ILEX agrees to pay SOTHER a royalty of (i) [**] percent
([**]%) of Net Sales on Product sold by ILEX; (ii) [**] percent
([**]%) of all Sub-Licensee Receipts and (iii) [**] percent ([**]%)
of Net Manufacturing Revenues.
3.3 Notwithstanding Section 3.2, no royalty shall be due on any money
or services received by ILEX for payments received for research and development
contracts related to the development of Products.
3.4 If the license granted hereunder becomes non-exclusive in any
country by operation of law in such country and SOTHER licenses any third party
in such country on terms more favorable than those contained herein, SOTHER
shall promptly notify ILEX and ILEX, in its sole discretion, shall be entitled
to pay royalty to SOTHER on Net Sales of Products Sold in such country on the
same terms as the non-exclusive licensee in such country from the effective
date of the third party license.
3.5 Notwithstanding Section 3.2, no multiple royalties shall be
payable to SOTHER because any Product is covered by (i) more than one patent
within the Technology or (ii) is covered by more than one royalty payable under
Sections 3.2(i), (ii) or (iii). In such case, ILEX shall pay the single
royalty which produces the highest income for SOTHER.
3.6 In the event that ILEX is required to pay a royalty to a third
party in order to manufacture or Sell Products in any country, [**]% of such
third party royalties shall be creditable against the royalty due SOTHER in
such country by reducing the amount of royalty paid to SOTHER by the amount so
paid to the third party.
3.7 All payments required in this Agreement shall be paid in United
States dollars, delivered in accordance with Section 16.7 of this Agreement or
at such other place as the party receiving payment may reasonably designate
consistent with applicable laws and regulations.
3.8 Royalty on any manufacturing or Sales subject to royalty in any
country outside the United States shall be calculated on Net Sales, Sub-
Licensee Receipts or Net Manufacturing Revenues in such country as expressed in
United States dollars in accordance with Generally Accepted Accounting
Principals (GAAP).
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3.9 ILEX shall use its best efforts to convert the royalty or other
payments due SOTHER on manufacturing or Sales in any country to United States
dollars; provided, however, that if conversion to and transfer of United States
dollars cannot be made in any country for any reason, payment of royalty at
SOTHER's option (i) can be made in the currency of the country in which such
manufacturing or Sales are made, deposited in SOTHER's name in a bank
designated by SOTHER in any such country; or (ii) ILEX's obligation to pay
royalty on such Net Sales, Sub-Licensee Receipts or Net Manufacturing Revenues
shall be suspended until such conversion and transfer of all funds by ILEX
becomes possible.
3.10 If any country limits the royalty rate or amount payable on
account of Net Sales, Sub-Licensee Receipts or Net Manufacturing Revenues in
such country, the royalty payable hereunder shall not exceed the maximum amount
payable under applicable laws, regulations or administrative rulings of such
country.
3.11 All taxes assessed or imposed against or required to be withheld
from any royalty payments due SOTHER shall be deducted from amounts payable
hereunder and shall be paid to appropriate fiscal or tax authorities on behalf
of SOTHER. Tax receipts received by ILEX evidencing payment of such taxes
shall be forwarded to SOTHER.
ARTICLE 4
ACCOUNTING AND RECORDS
4.1 The royalties during each calendar quarter shall be computed each
calendar quarter ending on March 31, June 30, September 30 and December 31, and
shall be paid no later than sixty (60) calendar days after the end of each
calendar quarter.
4.2 With each royalty payment, ILEX shall furnish to SOTHER a written
accounting report for the royalty, stating by country in which the Products
were Sold, the total number of units of each Product Sold by ILEX, the unit
price for each Product Sold, the Net Sales, Sub-license Receipts, Net
Manufacturing Revenues, the royalties due and the royalties paid.
4.3 ILEX shall keep and maintain records of Sales and deductible
expenses made pursuant to the license granted hereunder. Such records shall be
open to inspection upon reasonable notice and during normal business hours of
ILEX at any reasonable time within two (2) years after the royalty period to
which such records relate, by an independent certified accountant selected by
SOTHER and approved by ILEX, which approval shall not be unreasonably withheld.
The accountant shall have the right to examine the records which relate to the
computation of the royalties to be paid under this Agreement and report the
findings of such examination of records to SOTHER solely to the extent of
reporting the accuracy of the reports and payments made by ILEX, including the
amount of any discrepancy, if any. Such examination, however, shall not occur
more than one time per year. A copy of any report provided to SOTHER by the
accountant shall be given concurrently to ILEX. Any accountant
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so selected shall sign, at ILEX's request, an appropriate agreement with ILEX
to keep confidential all information obtained as a result of such examination
of records. All costs of such audit shall be borne solely by SOTHER; provided,
however, if the examination by the accountant reveals an underpayment by ILEX
by more than of the amount actually owing to SOTHER during any six month
reporting period, then the entire cost of the examination by the accountant
shall be paid by ILEX.
4.4 All royalties which are not timely paid by ILEX shall bear
interest at the prime rate of Bank One, Texas N. A. or the maximum allowable
lawful interest rate, whichever is less. Nothing in this section shall be
deemed to permit or excuse any late payment by ILEX.
ARTICLE 5
WARRANTIES AND REPRESENTATIONS
5.1 SOTHER represents and warrants to ILEX:
(a) that it is the owner, inventor or licensee of the
Technology and that the ideas or concepts were not taken from any third
person or party and that it is entitled to enter into this Agreement and
convey the rights granted hereunder;
(b) that other than the grant set forth herein, the Technology
is free and clear of all liens, mortgages, assignments, encumbrances,
pledges, options, restrictions or licenses on the Technology within the
Field of Interest;
(c) that the use of the Technology does not infringe any
patent, trademark or copyright belonging to SOTHER (other than those
licensed hereunder) or any third party nor has it been misappropriated
nor is there any misuse by SOTHER of trade secret, know-how or
confidential information of another;
(d) that there are no claim or actions pending or threatened
against SOTHER or any of its affiliates relating to the Technology;
(e) that it is a corporation duly organized under the laws of
Argentina and is qualified to do business and is in good standing in all
countries as the nature of its business and properties require;
(f) that it has all necessary right, power and authority to
enter into this Agreement and to grant the assignments and licenses
provided herein;
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(g) that it is not and will not be a party to any agreement or
commitment with any third party which would impair, interfere with or
infringe upon the rights it granted hereunder;
(h) that it has duly and validly executed and delivered this
Agreement and that this Agreement constitutes the valid and binding
obligation of SOTHER, enforceable in accordance with its terms.
5.2 ILEX represents and warrants that:
(a) it is a corporation duly organized under the laws of the
State of Delaware and is qualified to do business in good standing in
all states as the nature of its business and properties is required; and
(b) its execution, delivery, and performance of this Agreement
and the consideration herein set forth have been duly authorized by all
necessary corporate action.
(c) that it has all necessary right, power and authority to
enter into this Agreement and to grant the assignments and licenses
provided herein;
(d) that it is not and will not be a party to any agreement or
commitment with any third party which would impair, interfere with or
infringe upon the rights it granted hereunder;
ARTICLE 6
INDEMNITY
6.1 ILEX agrees to indemnify and hold SOTHER and its officers,
trustees, employees, agents and representatives harmless from any liabilities,
costs and expenses (including attorneys' fee and expenses), obligations or
causes of actions arising out of or related to any breach of the
representations and warranties made by ILEX herein.
6.2 SOTHER agrees to indemnify and hold ILEX and its officers,
trustees, employees, agents and representatives harmless from any liabilities,
costs and expenses (including attorneys' fee and expenses), obligations or
causes of actions arising out of or related to any breach of the
representations and warranties made by SOTHER herein.
6.3 In seeking indemnification under this Article 6, the indemnified
party shall promptly notify the indemnifying party in writing of any such
claim, lawsuit, loss or cause of action for which indemnity is sought and the
indemnified party shall permit the indemnifying party to control any litigation
and the settlement of any such claim, lawsuit, loss or cause of
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action. The indemnified party shall cooperate fully in every proper way in the
defense and settlement thereof. After the indemnified party has received
notice of the indemnifying party's election to assume the defense of said
action, the indemnifying party will not be liable to the indemnified party
under this Article 6 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof unless: (i) the
indemnified party, in any action, has reasonably concluded that there may be
legal defenses available to it which are different from or additional to those
available to the indemnifying party, in which case the indemnified party shall
have the right to select separate counsel to assume said legal defenses and to
otherwise participate in the defense of said action on behalf of the
indemnified party, or (ii) the indemnifying party has authorized the employment
of counsel at the expense of the indemnifying party. The indemnified party
shall also have the right, at its own expense, to be represented by counsel of
its own choice in any such proceedings; provided, however, the indemnifying
party has control over the defense.
ARTICLE 7
PROTECTION OF PROPERTY RIGHTS
7.1 SOTHER and ILEX agree to use all reasonable efforts to keep
confidential the Confidential Information together with any and all
documentation and other physical manifestations or embodiments thereof;
provided, however, ILEX may, to the extent it deems necessary or appropriate,
disclose the Technology to potential licensees, purchasers, investors, joint
venturers and the like, but ILEX agrees to use its best efforts to make such
disclosures subject to a satisfactory confidentiality agreement.
7.2 SOTHER has paid and will continue to pay all costs associated
with the filing, prosecution and maintenance of the Patent Rights.
7.3 Subject to the provisions of Section 7.6, SOTHER shall have sole
right and responsibility for deciding whether to file U.S., Argentina and/or
foreign patent applications, continue or abandon prosecution of any such
applications or to maintain or abandon any such application or patent regarding
the Technology licensed hereunder.
7.4 SOTHER agrees to prosecute with good faith and due diligence all
such applications and to take all actions necessary to maintain and enforce the
patents and proprietary rights in and to the Technology.
7.5 SOTHER agrees to prepare and dispatch for foreign filings within
such period of time as will result in the application of the "one year
convention" as to retroactive filing date, proper applications for foreign
letters patent.
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7.6 In the event that SOTHER decides not to file any or all U.S.,
Argentina and/or foreign applications or to continue prosecution of a patent
application to issuance or maintain any U.S., Argentina or foreign patent
application or patent, SOTHER shall timely notify ILEX in writing in order that
ILEX may file U.S. and/or said foreign applications and/or continue said
prosecution or maintenance of such patent applications or patents at ILEX's
expense, without any lapse in any rights thereunder. All rights in such patent
application or patent shall remain with SOTHER, provided, however, ILEX shall
be able to deduct such expenses from any royalties due on a country by country
basis.
7.7 SOTHER agrees to keep ILEX fully informed, at SOTHER's expense,
of prosecutions pursuant to this Article 7, including submitting to ILEX copies
of all official actions and responses thereto. SOTHER shall consult ILEX
regarding any abandonment of the prosecution of the patents in the Patent
Rights.
7.8 Each party agrees to cooperate with the other party to whatever
extent is necessary to procure patent protection of any rights, including fully
agreeing to execute any and all documents to give the other party the full
benefit of the licenses granted herein.
ARTICLE 8
PUBLICITY AND PUBLICATION RIGHTS
8.1 Unless otherwise specified in this Agreement, neither party shall
disclose the terms and provisions of this Agreement, nor use the name,
logotypes or symbols of the other party or the name of any employee or staff of
a party for publication or advertising purposes except with the written consent
of the other party; provided, however, each party shall be allowed to disclose
any information, including the terms of this Agreement if such party's counsel
deems it necessary or appropriate to comply with applicable laws, rules and
regulations.
ARTICLE 9
PATENT INFRINGEMENT
9.1 If the manufacture, Sale or use of Products within the Field of
Interest results in a claim for patent infringement against ILEX, or its
sublicensees, the party to this Agreement first having notice of such claim
shall promptly notify the other party in writing, which notice shall set forth
the facts of such claim in reasonable detail. ILEX shall have the primary
right, at its expense, to conduct and control the defense of any such claim,
using counsel of its choice. SOTHER shall have the right, at its expense, to
be represented by independent counsel in any such proceeding, subject to ILEX's
right of control. ILEX shall have the right to settle any claim under this
Section 9.1.
9.2 Notice of Infringement. Each party shall promptly notify the
other party of any alleged infringement of the Technology, within the Field of
Interest and of any available
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evidence of such infringement. If any party other than ILEX or its
sublicensees infringes Patent Rights in any country, ILEX may institute patent
infringement litigation in its own name or in the name of SOTHER. If ILEX
obtains any monetary recovery in such a suit, ILEX shall first reimburse itself
and SOTHER for the full expenses of litigation from such recovery. The balance
remaining of such recovery shall first be used to reimburse SOTHER for royalty
due to infringement(s) as of the date thereof, and any remaining monies shall
be retained by ILEX. SOTHER shall cooperate fully in the prosecution of any
such suit. If such suit must include SOTHER as a party, SOTHER will permit it
to be joined in such suit. SOTHER shall have the right to be represented by
counsel of its choosing in any such action if joined as a party, such
representation to be at SOTHER's expense subject to reimbursement from any
monetary recovery in such suit of an amount not to exceed one-half of the total
full expenses of litigation.
9.3 Defense. In the event that a declaratory judgment action
alleging invalidity, unenforceability or noninfringement of any of the
Technology within the Field of Interest shall be brought against either party,
SOTHER shall have the right not the obligation to defend such action; provided,
however, that if SOTHER determines at any time that it does not desire to
defend such action, SOTHER shall promptly so advise ILEX, and ILEX shall then
have the right to defend such action on SOTHER's behalf at ILEX's cost and
expense, including attorney's fees.
9.4 Cooperation. In any suit either party may commence or defend
pursuant to its rights under this Agreement in order to enforce or defend the
validity or enforceability of the Technology, the other party shall, at the
request and expense of the party initiating or defending such suit, cooperate
in all respects and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information, samples,
specimens and the like.
ARTICLE 10
MARKETING/MARKING
10.1 ILEX shall use its reasonable best efforts to market Products
with respect to which it, in the exercise of its reasonable business judgment,
decides to pursue commercialization.
10.2 ILEX shall make reasonable efforts to mark all Products which
incorporate Patent Rights with appropriate notice of patent coverage.
10.3 ILEX shall undertake at its expense the responsibility to apply
for Government approval in the Territory, including carrying out and keeping
records of preclinical and clinical testing for approval by the FDA and other
government agencies. ILEX shall at its expense keep SOTHER informed, at least
every two-months of the results of the preclinical and clinical activities
related to the Product. Such information should include any information in
ILEX's
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possession that is required to obtain government approval to make, market and
sell the Product in countries of the territory where ILEX, pursuant to Section
13.2, does not sell Product.
ARTICLE 11
INDEPENDENT CONTRACTOR STATUS
11.1 SOTHER and ILEX hereby acknowledge and agree that each is an
independent contractor; that neither party shall be considered to be the agent,
representative, master, or servant of the other for any purpose; and that
neither party has any authority to enter into contract, assume any obligation,
or make any representation or warranty on behalf of the other. Nothing in this
relationship between SOTHER and ILEX shall be construed to create any joint
venture, partnership, fiduciary relationship, or similar relationship between
the parties.
ARTICLE 12
ASSIGNMENT AND SUBLICENSING
12.1 ILEX may sublicense any rights or obligations to any part of the
Technology under this Agreement; provided however that ILEX shall be
responsible for the reporting and payment of all royalties on Products Sold by
such sublicensees.
12.2 ILEX may not assign or attempt to assign its rights or
obligations under this Agreement without the prior written approval of SOTHER,
which approval will not be unreasonably withheld; provided, however, ILEX shall
be able to assign all of its rights or obligations under this Agreement in
connection with the sale of all of its business associated with this Agreement.
12.3 SOTHER may not assign or license or attempt to assign or license
its rights or obligations under this Agreement without the prior written
approval of ILEX, which approval will not be unreasonably withheld.
ARTICLE 13
TERM AND TERMINATION
13.1 Unless sooner terminated as otherwise provided herein, the
licenses granted herein shall terminate on the expiration of the last issued
patent to expire in the Patent Rights. In the event that (i) no patent in the
Patent Rights issues by the fifth anniversary of the Effective Date of this
Agreement or all Patent Rights expire or are held unpatentable, invalid or
unenforceable in an agency or judicial proceeding from which no appeal has been
or can be taken, then the licenses granted herein shall become paid-up, and no
further royalties under Article 3 shall be owed by ILEX for Sales of Products
occurring after such anniversary.
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13.2 SOTHER may terminate this Agreement in the event of any of the
following circumstances:
(a) ILEX is ordered or adjudged bankrupt, or placed in the
hands of a receiver and such receivership is not abated within 90 days.
(b) ILEX fails to perform any of its material obligations
under this Agreement and fails to remedy said breach within 60 days
after being given written notice of the specific failure or default and
termination by SOTHER.
(c) ILEX decides to not or does not diligently pursue
preclinical testing within six months from the Effective Date of this
Agreement or diligently continue said testing until conclusive results
are obtained to the satisfaction of the parties or until three years
have elapsed since such tests were begun by ILEX, whichever date is
sooner.
13.3 SOTHER may terminate this Agreement for a specific country in the
Territory the event (i) ILEX decides to not or does not diligently pursue
marketing and selling a Product in such country, (ii) the activity of the
Product has been confirmed by ILEX or another appropriate party, and (iii)
government approval has been received in such country. Prior to such
termination, SOTHER shall provide ILEX at least two months written
notification, such notification shall include a statement of SOTHER's intent
and the specific country.
13.4 ILEX may terminate this Agreement by giving thirty (30) days
written notice to SOTHER. Upon termination under this Section 13.3: (i) all
licenses under Article 2 shall terminate; and (ii) each party shall return the
other party's Confidential Information and shall, subject to Section 7.1,
maintain the confidentiality of all confidential information.
13.5 Upon termination of this Agreement for any reason, ILEX shall
have 180 days to complete the Sale of any Products in stock or in the course of
manufacture at the time of termination, subject to payment of royalty as
provided in Article 3.
13.6 If this agreement terminates under Sections 13.2 or 13.3, ILEX,
for such countries where the Agreement is terminated, shall assign any
trademarks it used to market the product in such countries.
13.7 Except as expressly provided by this Agreement, termination shall
not relieve any party of any obligation or liability existing before
termination. Nothing in this Section 13.5 should be construed as limiting
either party's ability to pursue alternative exploitation of the Technology if
this Agreement is terminated.
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ARTICLE 14
MANUFACTURING RIGHTS
14.1 ILEX shall have the right to manufacture for SOTHER all of
SOTHER's needs for Products used within the Field of Interest within the
Territory. Further, SOTHER agrees to purchase [**] percent ([**]) of
its Product needs from ILEX if, in SOTHER's reasonable business judgment, it is
commercially feasible.
ARTICLE 15
GOVERNMENT COMPLIANCE
15.1 During the term of this Agreement, SOTHER shall be responsible
for complying with all foreign registrations necessary for the transfer of the
right in this Agreement, including the filing and registration of such
agreement in Argentina or any other foreign country.
ARTICLE 16
MISCELLANEOUS TERMS
16.1 ASSIGNMENT
Without further consideration, each party shall, and shall cause its
agents and legal representatives to, execute and deliver to the other party
such other instruments, and to take such other action, and assist the other
party in such manner as the other party may reasonably request to more
effectively convey and transfer and vest in and to put each party in possession
of the rights granted hereunder and to assist each party in the recordation of
same as necessary.
16.2 INUREMENT
This Agreement shall be binding upon and shall inure to the benefit of
each party's successors and assigns.
16.3 EXPENSES
Other than as provided herein, each party is responsible for its own
expenses related to the execution of this Agreement.
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16.4 CHOICE OF LAW
This Agreement shall be deemed to have been made under and shall be
construed and interpreted in accordance with the laws of the State of Delaware.
No conflicts-of-law rule or law which might refer such construction and
interpretation to the laws of another state, republic or country shall be
considered.
16.5 ENTIRE AGREEMENT
The terms of this Agreement constitute the entire agreement between the
parties and supersedes all previous communications, written or oral, related to
the subject matter of this document. No previous agreement or understanding
varying or extending the terms of this Agreement shall be binding upon either
party.
16.6 AMENDMENTS
No amendment or modification to this Agreement shall be effective unless
it is in writing and signed by duly authorized representatives of the parties.
16.7 NOTICE
All notices, statements and reports required or contemplated herein by
one party to the other shall be in writing and shall be delivered personally or
by telecopy (receipt confirmed) to such party or shall be sent by reputable
express delivery service or by certified mail, postage prepaid, with return
receipt requested.
If to ILEX:
To: ILEX Oncology, Inc.
14785 Omicron Drive
San Antonio, Texas 78245
Attention: Tim Williamson
Telephone: (210) 677-6080
Facsimile: (210) 677-6009
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with a copy to:
Thomas D. Paul
Fulbright & Jaworski, L.L.P.
1301 McKinney St., Suite 5100
Houston, Texas 77010-3095
Telephone: (713) 651-5325
Facsimile: (713) 651-5105
If to SOTHER:
To: SOTHER LIMITED
Lopez y Planes 1025
Acassuso
Buenos Aires 1640, Argentina
Attention: Salvador Bruno, M.D.
Telephone: 54-1-732-8075
Facsimile: 54-1-732-3075
with a copy to:
Boris Noviks & Associates
Av. Federico Lacroze 2252 6th floor "A"
1426
Buenos Aires, Argentina
Attention: Eduardo A. McCallum
Telephone: 54-1-777-2400
Facsimile: 54-1-777-3483
Either party hereto may change the address to which notices to such
party are to be sent by giving notice to the other party at the address and in
the manner provided above. All notices shall be deemed given on the day when
actually delivered as provided above (if delivered personally or by telecopy)
or on the day showing on the return receipt (if delivered by express delivery
service or by mail).
16.8 SEVERABILITY
Both parties hereby especially agree in contract that neither party
intends to violate any public policy, statutory or common law, rule,
regulation, treaty or decision of any government
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<PAGE> 17
agency or executive body thereof of any country or community or association of
countries; that if any word, sentence, paragraph or clause or combination
thereof of this Agreement is found, by a court or executive body with judicial
powers having jurisdiction over this Agreement or any of its parties hereto, in
a final unappealed order to be in violation of any such provision in any
country or community or association of countries, such words, sentences,
paragraphs or clauses or combination shall be inoperative in such country or
community or association of countries, and the remainder of this Agreement
shall remain binding upon the parties hereto.
16.9 WAIVER
The parties covenant and agree that if either party fails or neglects
for any reason to take advantage of any of the terms provided for the
termination of this Agreement or if either party, having the right to declare
this Agreement terminated, shall fail to do so, any such failure or neglect by
either party shall not be a waiver or be deemed or be construed to be a waiver
of any cause for the termination of this Agreement subsequently arising, or as
a waiver of any of the terms, covenants or conditions of this Agreement or of
the performance thereof. None of the terms, covenants and conditions of this
Agreement can be waived by either party except by its written consent.
16.10 HEADINGS
The Article, section and paragraph headings are for convenience only and
are not a part of this Agreement.
IN WITNESS OF THIS AGREEMENT, the parties have executed and delivered
this Agreement in multiple originals, by their duly authorized officers and
representatives on the respective dates shown below, but effective as of the
Effective Date.
ILEX ONCOLOGY, INC. SOTHER LIMITED
By: By:
---------------------------------- -------------------------------------
Name: Name:
-------------------------------- -----------------------------------
Title: Title:
------------------------------- ----------------------------------
Date: Date:
-------------------------------- -----------------------------------
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SCHEDULE 1
PATENT RIGHTS
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EXHIBIT 10.20
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
This Agreement (the "Agreement") effective as of November 18, 1994
between Rhone-Poulenc Rorer S.A., a corporation organized and doing business
under the laws of the Republic of France, with offices at 20 Avenue Raymond
Aron, 92165 Antony Cedex, France (hereinafter referred to as "Licensor"), and
Biovensa Inc., a corporation organized and doing business under the laws of the
State of Delaware, U.S.A., with offices at 14960 Omicron, San Antonio, Texas
78245-3217 (hereinafter referred to as "Licensee").
WITNESSETH
WHEREAS, Licensor is the owner of all rights to a novel
topoisomerase-I/II inhibitor known as Intoplicine (RP 60475);
WHEREAS, Licensee is desirous of developing, manufacturing, using and
selling Intoplicine utilizing Licensor's rights under the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the covenants, conditions, and
undertakings hereinafter set forth, the parties agree as follows:
1. Definitions
1.1 "Affiliate" of a party means any corporation or other business
entity that directly or indirectly controls, is controlled by, or is under
common control with such party. As used herein the term control means
possession of the power to direct, or cause the direction of, the management
and policies of a corporation or entity by reason of any ownership interest
therein.
1.2 "Compound" means
11-(3-dimethylaminopropylamino)-3-hydroxy-9-methyl-7 H-benzo [e] pyrido [4,3-b]
indole, dimethanesulfonate [known as RP 60475].
1.3 "Effective Date" shall mean the date first set forth above.
1.4 "FDA" means the United States Food and Drug Administration.
1.5 "IND" shall mean an Investigational New Drug Application to
the FDA.
1.6 "Know-How" means all proprietary information and technology,
including trade secret information, developments, discoveries, methods,
techniques, clinical and pre-clinical data, toxicology, pharmacology data, and
other information owned by, licensed by, or developed by Licensor, whether or
not patentable, relating to the Compound or the Product or any improvements
thereof, presently known to Licensor, or generated by or on behalf of Licensor,
including such rights which Licensor may have to information developed by third
empowered to grant a license for such rights.
<PAGE> 2
1.7 "Net Sales" means the gross amount invoiced by Licensee, its
Affiliates or its permitted sublicensees, to unaffiliated third parties for all
sales of product less (a) trade and/or quantity discounts actually allowed and
taken, (b) credits for claims, allowances, retroactive price reductions or
returned goods, (c) prepaid freight and insurance charges billed to customer,
(d) sales taxes, tariffs, duties or other governmental charges actually paid in
connection with the sale (but excluding what is commonly known as income
taxes), and (e) brokerage, commissions and other fees paid to others for or in
connection with sales of Product.
In the event of the sale of Product containing the Compound in
combination with other active ingredients, the New Sales for such Product shall
be determined by multiplying what would otherwise be the New Sales of such
Product by a fraction, the numerator of which shall be t he cost of the
Compound contained therein and the denominator of which shall be t he total
cost of all active ingredients contained therein, the cost of each to be
determined by using the standard cost formula of Licensee.
1.8 "Patent Rights" means any and all patents and patent
applications in the Territory owned by or licensed to Licensor or its
Affiliates or under which Licensor is empowered to grant licenses, the subject
matter of which is necessary of useful in the manufacture, use, lease and/or
sale of the Compound intermediates used in the production of the Compound or
Product including, but not limited to, the patents listed on Exhibit A attached
hereto and including any and all reissues, extensions, substitutions,
continuations or divisions thereof.
1.9 "Product" means one or more finished pharmaceutical
formulations containing the Compound in any dosage form for human use.
1.10 "Territory" means all the countries, territories and
jurisdictions of the world.
1.11 "North America" shall mean Canada, its territories and
possessions, the United States of America, its territories and possessions
(including the Commonwealth of Puerto Rico) and the United Mexican States.
1.12 "Valid Claim" means a claim which, but for the license granted
hereunder, would be infringed by Licensee's manufacture, use or sale of a
Product, and which is in an unexpired issued patent included within the Patent
Rights which has not been held invalid or unenforceable by a decision of a
court of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been admitted to be invalid by the owner
through reissue or disclaimer.
2. Grant of Rights
2.1 License: Sublicense. Subject to Article 2.2 below, Licensor
grants to Licensee a sole and exclusive (even as to Licensor) non-transferable
license under the Know-How and the Patent Rights for the commercial
manufacture, use, and sale of the
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<PAGE> 3
Compound and the Product in the Territory. Licensor further grants Licensee
the right to grant sublicenses under the Know-How and the Patent Rights to
third parties, subject to Licensor's written approval of each sublicensee,
which approval shall not be unreasonably withheld.
2.2 Selection of Japanese Partner. Licensor reserves the right to
determine the partner in Japan for any sublicense of rights to develop and
market the Product in Japan. Licensor will consult with Licensee with respect
to such choice of partner, and will assist Licensee in the preparation and
negotiation of a sublicense, provided, however, that the terms and conditions
of such sublicense must be acceptable to Licensor before it becomes effective.
3. Transfer of Product Rights
3.1 Transfer of IND. Immediately following the execution of this
Agreement, Licensor shall transfer the IND for the Product to Licensee, and all
reports and data in connection therewith.
3.2 Transfer of Know-How. Licensor shall use its reasonable
efforts in implementing expeditiously the transfer of all other Know-How to
Licensee. Where Licensor has already conducted development of pre-registration
activities, Licensor shall cooperate with Licensee to obtain the benefit of
such prior work.
3.3 Licensor's Use. It is expressly agreed that, notwithstanding
any provisions herein, Licensor is free to use the Compound, Patent Rights,
Know-How and Products for its own research purposes, for example, as a research
tool or standard, without any compensation due to Licensee. Licensee shall
have the right to approve any publication relating to such by Licensor.
Licensor agrees to submit such publication to Licensee for its approval at
least sixty (60) days prior to submission to the publisher.
4. Due Diligence
4.1 Regulatory Matters. Licensee shall be responsible for and
shall bear all expenses for clinical trials of the Product and for all
regulatory submissions of the Product to the health authorities in the
Territory.
4.2 Due Diligence. Licensee shall use all reasonable bes efforts
and due diligence to conduct the clinical development of the Product and to
register, launch and commercialize the Product in all major countries of the
Territory. In this regard, Licensee agrees to create a development plan which
will be discussed and agreed upon by the parties and will be attached to and
will become a part of this Agreement.
Licensee's best efforts obligations as set forth in this Article 4
shall be deemed to have been fulfilled if Licensee: (a) creates a development
plan within twelve (12) months after the Effective Date; (b) files an NDA for
Registration of the Product in the U.S. within sixty (60) months after the
Effective Date; and, (c) commences marketing
-3-
<PAGE> 4
such Product in the U.S. within twelve (12) months following Registration. The
time periods specified in clauses (a), (b) and (c) above shall each be subject
to one twelve (12) month extension at Licensee's election.
In the event that Licensee fails to meet the deadlines set forth in
this Article 4, Subsection 4.2, Licensor may, upon at least sixty (60) days'
prior written notice, terminate this Agreement, unless, within such sixty (60)
day period, Licensee meets such deadline.
4.3 Reports. At least every six months, and upon written request
of Licensor, Licensee shall deliver a written report to Licensor summarizing
Licensee's development and registration activities with the Product in the
Territory.
5. Royalty
5.1 Royalty Amount. In consideration for the rights granted and
transferred by Licensor set forth in Articles 2 and 3 above, Licensee shall pay
to Licensor a royalty of [**] percent ([**]%) of the Net Sales of the
Product in the Territory, subject to Article 6 below.
5.2 Reports. Licensee shall send quarterly reports to Licensor
within sixty (60) days after the end of each calendar quarter following the
first commercial sale of the Product, stating in each such report the New
Sales of Product sold by Licensee and all of its sublicensees on a
country-by-country basis during such calendar quarter.
5.3 Payments. Concurrently with the making of each such report,
Licensee shall pay to the Licensor royalties in U.S. Dollars at the royalty
rate specified in Article 5.2 above. Where sales are made in a currency other
than U.S. Dollars, the exchange rate to be used shall be the exchange rate for
buying U.S. Dollars in force on the last business day of the reporting period,
as reported by The Wall Street journal, or on another basis mutually agreed
upon by both parties in writing. If governmental regulations prevent
remittances from a foreign country with respect to sales of Product made in
that country, the royalties may be deposited into an account of Licensor in
such country according to the written instructions of Licensor until such
remittances are again possible.
5.4 Taxes. Any tax with respect to such royalties required to be
withheld by Licensee under the laws of any country for the account of Licensor,
shall be promptly paid by Licensee for and on behalf of Licensor to the
appropriate governmental authority, and Licensee shall furnish Licensor with
proof of payment of such tax together with official or other appropriate
evidence issued by the governmental authority. Any such tax actually paid
shall be deducted from the royalty payment in question.
5.5 Accounting and Records. Licensee and its Affiliates and
permitted sublicensees will keep complete, true and accurate books of account
and records for the
-4-
<PAGE> 5
purpose of showing the derivation and calculation of all royalties payable to
Licensor under this Article. Such books and records will be kept at Licensee's
principal place of business for at least three (3) years following the end of
the calendar quarter to which they pertain, and will be made available at
reasonable times for inspection by a representative of Licensor for t he
purpose of verifying Licensee's royalty statements, or Licensee's compliance in
other respects with this Agreement upon reasonable request by Licensor;
provided however, that Licensee shall not be ob ligated to submit to more than
two such inspections by Licensor in any calendar year. The representative will
be obliged to treat as confidential all relevant matters.
5.6 Cost of Inspection. Such inspection shall be at the expense
of Licensor, unless an error of more than [**] percent [**] in the amount of
royalties owed for any given calendar quarter is discovered in the course of
any such inspection, whereupon all inspection costs shall be paid by Licensee.
6. Licensor's Option for North America
6.1 Option. Licensee hereby grants Licensor an option to obtain
an exclusive right to market the Product in North America. Within sixty (60)
days after completion of Phase II trials by Licensee in the United States,
Licensee shall notify Licensor of the results of such trials. Licensor shall
then have sixty (60) days after receipt of such notice to exercise this option
by written notification to Licensee. In the event that Licensor exercises such
option, this Agreement shall be terminated with respect to North America, and
the parties shall in good faith negotiate and enter into a separate agreement
which shall include the following terms:
(a) Licensor shall have exclusive marketing rights for the Product
for North America;
(b) Net profits resulting from such marketing shall be split
between the parties [**] percent ([**]%) to Licensor and
[**] percent ([**]%) to Licensee;
(c) Losses shall be borne by Licensor and carried forward to be
offset against future profits prior to any
allocation of profits between the parties;
(d) Neither party shall receive any reimbursement or credit in the
profit-sharing calculation for any of its respective research and
development or registration expenses relating to North America prior
to exercise of the option;
(e) Licensee shall manufacture, or have manufactured, and supply
to Licensor its requirements, and Licensor shall purchase from
Licensee its requirements of Product for North America at a price
which shall be equal to Licensee's cost;
(f) No further royalties shall be due from either party for North
America;
-5-
<PAGE> 6
(g) The contract shall include clear elements of control by
Licensor to enable Licensor to recognize and consolidate all sales of
the Product in North America; and
(h) Licensor may assign its rights resulting from exercise of the
option to one or more Affiliates.
7. Term and Termination
7.1 The term of this Agreement shall commence as of the Effective
Date and shall continue in full force and effect on a country-by-country basis
for so long as Licensee conducts development, registration or commercial
activities with respect to the Product in any country of the Territory.
7.2 Termination for Cause. Either party may terminate this
Agreement for cause. Cause for such termination shall be deemed to exist when
there has been a material breach by either party or any of the terms of this
Agreement, and not in breach, the party in breach has failed to cure such
breach. Such termination rights shall be in addition to and not in substitutio
for any other remedies that maybe available to the party serving such notice
against the party in default. Termination pursuant to this Article shall not
relieve the party in default from liability and damages to the other party for
breach. Waiver by any party of a single default or a succession of defaults
shall not deprive such party of any right to terminate this Agreement arising
by reason of any subsequent default.
7.3 Termination upon Insolvency. Either party may, upon giving
notice of termination, immediately terminate this Agreement upon receipt of
notice that the other party has become insolvent or has suspended business or
has filed a voluntary petition or any answer admitting the jurisdiction of the
U.S. Bankruptcy Court or a foreign equivalent thereof, or has consented to an
involuntary petition pursuant to any reorganization or insolvency law of any
jurisdiction, or has made an assignment for the benefit of creditors or has
applied for or consented to the appointment of a receiver or trustee for a
substantial party of its property.
7.4 Effect of Termination
(a) Accrued Obligations. Termination of this Agreement for any
reason shall not release either party hereto from any liability which at the
time of such termination has already accrued to the other party or which is
attributable to a period prior to such termination, nor preclude either party
from pursuing all rights and remedies it may have hereunder or at law or in
equity with respect to any breach of the Agreement.
(b) Stock on Hand. In the event this agreement is terminated with
respect to Licensee for any reason, subject to Article 5, Licensee and its
respective Affiliates and Sublicensees shall have the right to sell or
otherwise dispose of the stock of Product subject to this Agreement then on
hand.
-6-
<PAGE> 7
(c) Survival. Articles 5, 8, 9 and 13 shall survive the
expiration and any termination of this Agreement for any reason.
(d) Reversion of License. Upon termination of this Agreement for
any reason, all rights in and to the Compound, the Product, the Know-How, and
the Patent Rights, shall revert to Licensor, and Licensee shall: (i) return to
Licensor all documents received from Licensor pursuant to this Agreement and
all documents related to development of Product in Licensee's possession, (ii)
transfer ownership of any registrations, pending or approved, related to the
Product to Licensor, and (iii) assign to Licensor all sublicenses granted
hereunder.
7.5 Termination by the Licensee. The Licensee shall have the
right on written notice to terminate this Agreement with respect to any one or
more of the countries within the Territory if in its judgment the Product does
not meet efficacy, safety or other requirements such as commercial viability,
as determined by Licensee. In the event of any such termination, all of the
rights conferred upon the Licensee by the Licensor according to this Agreement
for the countries for which such termination would apply shall revert to the
Licensor.
8. Indemnity
8.1 Indemnity. Licensee agrees to indemnify, hold harmless and
defend Licensor, its officers and employees against any and all claims, suits,
losses, damage, costs, fees, and expenses asserted by third parties, both
government and private, resulting from or arising out of the manufacture,
distribution, use, testing or sale or other disposition by Licensee of the
Compound and the Product.
8.2 Procedure. Licensor shall promptly notify Licensee in writing
of any claim of indemnification under this Article 8, and Licensee shall have
the right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties. The indemnity shall not apply to amounts
pain in settlement of any claim or action unless Licensee has given its
consent, which consent shall not be withheld unreasonably. Licensor shall
cooperate fully with Licensee and its legal representatives in the
investigation of any action, claim or liability covered by this indemnity.
9. Insurance
9.1 Insurance. Licensee shall maintain in force for the term of
this Agreement and for a period of ten (10) years following its termination at
its sole cost and expense, with reputable insurance companies, general
liability insurance and product liability insurance coverage in an amount
reasonably sufficient to protect against liability under Article 8 above. The
Licensor shall have the right to ascertain from time to time that such coverage
exists, such right to be exercised in a reasonable manner.
10. Representations and Warranties
-7-
<PAGE> 8
10.1 Representations and Warranties of Licensor. Licensor
represents and warrants that:
(a) As of the Effective Date, it is the sole owner of t he Patent
Rights and has the right to grant the exclusive licenses described herein;
(b) Those patents contained in the Patent Rights with a designated
issue number on Exhibit A have issued, and are, to the best knowledge of
Licensor, valid and enforceable;
(c) It has all requisite authority to enter into this Agreement,
and it is not aware of any impediment that would inhibit the ability to fulfill
its obligations under this Agreement;
(d) There is no legal, administrative, arbitration or other action
or proceeding or governmental investigation pending or, to the knowledge of
Licensor, threatened against Licensor, or against any officer, director or
employee thereof, which, if adversely determined, might call into question the
validity of this Agreement or which might restrict transactions contemplated by
this Agreement;
(e) It has no knowledge of any fact which would reasonably tend to
show that any patent contained in the Patent Rights materially infringes the
valid property rights of any third person; and
(f) Licensor makes no warranties that any additional patent will
issue on applications within the Patent Rights. Licensor makes no other
warranties, express or implied as to any matter whatsoever, including, without
limitation, the condition of any invention or Product that is the subject of
this Agreement, or the merchantability or fitness for a particular purpose of
any such invention or Product. Licensor shall not be liable for any direct,
consequential damages suffered by Licensee to use the Compound and/or any
Product resulting from the use of the Compound or Product.
10.2 Representations and Warranties of Licensee. Licensee hereby
represents and warrants that:
(a) It has requisite authority to enter into this Agreement, and
it is not aware of any impediment that would inhibit the ability to fulfill its
obligation is under this Agreement; and
(b) There is no legal, administrative, arbitration or other action
or proceeding or governmental investigation pending or, to the knowledge of
Licensee, threatened against Licensee, or against any officer, director or
employee thereof, which, if adversely determined, might call into question the
validity of this Agreement or which might restrict transactions contemplated by
this Agreement.
11. Trademarks
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<PAGE> 9
11.1 Ownership of Trademarks. Licensee shall, at its sole expense,
apply for and own the trademark or trademarks to be used in connection with the
Products in the Territory. Licensee shall be responsible to maintain and renew
such trademark registrations during the term of this Agreement and shall t ake
any such actions at its expense against any infringement or threatened
infringement of the trademarks. Upon the termination of this Agreement due to
discontinuation of development or marketing by Licensee or due to breach by
Licensee, Licensee shall transfer the trademark rights in the Territory to
Licensor or its designee.
12. Patent Prosecution and Infringement
12.1 Maintenance and Prosecution: Licensor. Licensor shall pay all
costs associated with the prosecution and maintenance of all patents and patent
applications relating to the Patent Rights. Licensor shall keep Licensee
currently informed of all steps taken or to be taken with regard to such
prosecution and maintenance. Licensor shall furnish Licensee with copies of
all patents and pending patent applications promptly after execution of this
Agreement and of all future patent applications promptly after filing. In the
event that Licensor elects or has elected not to file applications in any
country or countries in the Territory or not to continue to prosecute any
applications, including an application involved in an appeal or opposition
proceeding, or not to maintain any patent or patent application, Licensor shall
so advise Licensee in time to enable Licensee to take appropriate action and
Licensee shall be entitled to file such applications or take such other action
at its expense and to own such resultant patents.
12.2 Maintenance and Prosecution: Licensee. In the event Licensee
elects to take any steps or any of the actions set forth i Article 12.1 with
respect to an application for a patent, Licensee shall keep Licensor currently
advised of all steps taken or to be taken in t he prosecution of all
applications for patents relating to the Compound and/or Product and shall
furnish Licensor with copies of all such patent applications or other relevant
documents promptly. If Licensee is entitled to and does file the application,
the rights to the patent applications and patent shall belong to the Licensee.
In the event that the Licensee elects not to file applications in any country
or countries in the Territory or not to continue to prosecute any application,
including an application involved in an appeal or opposition proceeding, or not
to maintain any patent or patent application by failure to pay any required
annuity, renewal or working fee, Licensee shall so advise Licensor in time to
enable Licensor to take appropriate action. Licensor shall be entitled to file
such applications or take such other action at its expense and to own such
resultant patents.
12.3 Infringement Actions. Licensor and Licensee shall promptly
notify each other of any alleged infringement of any of the Patent Rights which
may come to its attention. Licensee may undertake reasonable efforts to obtain
a discontinuance of the aforesaid infringement or unauthorized use, or
Licensee shall at its option bring suit against such infringer or unauthorized
user.
-9-
<PAGE> 10
If Licensee fails to obtain a discontinuance of said infringement or
unauthorized use and/or elects not to bring suit against such third party, then
Licensee shall give notice in writing to Licensor of its election not to bring
suit within ten (10) days of such election. Licensor may, but is not required
to, (i) obtain a discontinuance of the alleged infringing operation or
unauthorized use or (ii) bring suit against such third party within six (6)
months of the date of receipt by Licensee of the aforesaid notice. Any suit by
Licensor shall be either in the name of Licensor, or in the name of Licensee,
or jointly by Licensee and Licensor, as may be required by the law of the
forum.
It is understood and agreed that the party that institutes a suit or
action shall bear solely all costs and expenses associated therewith and shall
be entitled to retain and keep any and all sums received, obtained, collected
or recovered whether by judgment, settlement or otherwise, as a result of such
suit. Provided, however, that, if a settlement involves the granting by
Licensee of rights hereunder to a third party, Licensee shall pay to Licensor
[**] percent [**] of all monetary settlement or damages received.
12.4 Infringement of Third Party Patent. Each party shall notify
the other promptly in the event of the receipt of notice of any action, suit or
claim alleging infringement by the Product of any patent held by a third party.
The parties shall meet to determine how the lawsuit will be handled. Both
Licensor and Licensee shall participate in the suit and shall each bear [**]
percent [**] of all costs and expenses related thereto.
12.5 Transfer to Sublicensee. The rights and obligations of
Licensee under this Article 12 may be transferred by Licensee to a permitted
sublicensee on a country by country basis, upon notice to Licensor.
13. Confidentiality
13.1 Confidential Information. Each party and its Affiliates shall
keep confidential and not disclose or use, except in strict compliance with the
provisions of this Agreement, any confidential or proprietary information
received from the other, except for:
(a) Any information which at the time of disclosure is part of the
public knowledge or literature, or thereafter becomes part of the public
knowledge or literature otherwise than by unauthorized disclosure by the
receiving party;
(b) Any disclosure of information to the FDA or other relevant
authorities for the purpose of achieving registration or marketing of the
Product;
(c) Any information which at the time of disclosure or acquisition
was in the party[s possession as evidenced by its written records;
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<PAGE> 11
(d) Any information which becomes available to the party from
another source not bound to secrecy to the disclosing party with respect to
such information;
(e) Disclosure to third parties under provisions of
confidentiality similar to those contained in this Agreement for the purpose of
development or marketing of Product; and
(f) Any disclosure of information required by law.
14. Miscellaneous
14.1 Waiver It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
14.2 Assignment This Agreement is binding upon and shall inure to
the benefit of the Licensor, its successors and assigns. However, this
Agreement shall be personal to Licensee and it is not assignable by Licensee to
any other entity without the written consent of Licensor except to an Affiliate
or to the successor to, or assignee of all or substantially all of the business
or assets of License.
14.3 Independent Contractors. The relationship of the parties is
that of independent contractors. Neither party is or shall hold itself out to
be the agent, partner or joint venturer of the other for any purpose as a
result of this Agreement or the transactions contemplated thereby.
14.4 Compliance with Laws. In exercising its rights under this
Agreement, Licensee shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this Agreement.
14.5 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and deemed to have been properly given
if delivered in person or mailed by first-class certified mail to the other
party at the appropriate address as set forth below or to such other addresses
as may be designated in writing by the parties from time to time during the
term of this Agreement.
LICENSEE:
Biovensa S.A.
14960 Omicron
San Antonio, Texas 78245-3217
United States of America
Attention:
LICENSOR:
Rhone-Poulenc Rorer S.A.
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<PAGE> 12
20 Avenue Raymond Aron
92165 Antony Cedex
France
Attention: General Counsel
14.6 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
14.7 Force Majeure. Nonperformance of any party (except for
payment obligations) shall be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, governmental acts or
orders or restrictions, failure of suppliers, or any other reason where
failure to perform i beyond the reasonable control and not caused by the
negligence, intentional conduct or misconduct of the nonperforming party.
14.8 Governing Laws. This Agreement and any dispute arising from
the performance or breach hereof shall be interpreted and construed in
accordance with the laws of the Republic of France.
14.9 Entire Agreement. This Agreement constitutes the entire
agreement, both written and oral, between the parties with respect to the
subject matter hereof and supersedes all previous agreements between the
parties with respect to the matters contained herein. No amendment or
modification of this Agreement shall be binding upon either party unless
approved in writing by an authorized representative of each of the parties.
14.10 Publicity. The parties shall only make such disclosures
regarding the existence of an terms of this Agreement as are mutually agreed.
IN WITNESS WHEREOF, the parties have Executed this Agreement, by their
respective officers hereunto duly authorized, the day and year first above
written.
BIOVENSA INC.
BY:
------------------------------------------------------------
NAME: Timothy J. Williamson
Title: Senior Vice President, Marketing & Business Development
RHONE-POULENC RORER S.A.
BY:
------------------------------------------------------------
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<PAGE> 13
NAME: Manfred Karobath, M.D.
Title: Senior Vice President, Rhone-Poulenc Rorer Inc. &
President, Rhone-Poulenc Rorer Corporate Research
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<PAGE> 14
EXHIBIT A
PATENT APPLICATIONS AND REGISTRATIONS
<TABLE>
<CAPTION>
Country Application Number Issue No.
- ------- ------------------ --------
<S> <C> <C>
United States US 5 091 388
Canada CA 2 018 280
Japan J 90 148 448
South Korea KR 90 8285
Ireland IE 90 1999
Portugal PT 94 285
Hungary HU 206 502
South Africa ZA 90 4289
Australia AU 623 266
New Zealand NZ 233 934
France FR 2 647 788
</TABLE>
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<PAGE> 1
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
AGREEMENT
This Agreement, effective Nov. 25, 1996 ("Effective Date") by and
between Hoffmann-La Roche Inc., a New Jersey corporation having offices at 340
Kingsland Street, Nutley, New Jersey 0711 0 ("ROCHE NUTLEY"), F. Hoffmann-La
Roche Ltd., Grenzacherstrasse 124, CH-4070 Basel, Switzerland ("ROCHE BASEL")
(hereinafter, ROCHE NUTLEY and ROCHE BASEL, individually or collectively, are
referred to as "ROCHE") and ILEX Oncology Inc., a corporation having offices at
14785 Omicron, Ste. 101, San Antonio, Texas ("ILEX").
WHEREAS, ROCHE NUTLEY owns in the United States of America patent
rights for 1,25-dihydroxy-16-ene-23-yne-cholecalciferol, known as Ro 23-7553,
("Compound");
WHEREAS, ROCHE BASEL owns in countries outside of the U.S.A. patent
rights for the Compound;
WHEREAS, ILEX is desirous of obtaining a license under ROCHE's patent
rights for the Compound; and
WHEREAS, ROCHE is willing to grant to ILEX certain rights under such
patent rights upon the terms and conditions set forth below.
NOW, THEREFORE, intending to be legally bound and upon the terms,
conditions, and mutual covenants contained herein, ROCHE and ILEX agree as
follows:
Article I
Definitions
1.1 "Affiliate" shall mean:
a) an organization [**] percent or more of the voting stock of
which is owned and/or controlled directly or indirectly by
either party to this AGREEMENT;
b) an organization which directly or indirectly owns and/or
controls [**] percent or more of
<PAGE> 2
the voting stock of either party to this AGREEMENT;
c) an organization which is directly or indirectly under common
control with either party to this AGREEMENT through common
share holdings.
It is, however, provided that the term AFFILIATE shall not include Genentech
Inc., 460 Point San Bruno Boulevard, South San Francisco, California, U.S.A.,
unless ROCHE, in its sole discretion, notifies ILEX that Genentech shall be so
considered an AFFILIATE and Genentech agrees to be bound by the terms and
obligations of this AGREEMENT.
1.2 "Field" shall mean the treatment, prevention or prophylaxis of cancer.
1.3 "Information" shall mean any and all data, know-how, information of a
proprietary or confidential nature that are owned or controlled by any
party hereto during the term of this AGREEMENT.
1.4 "ROCHE Know-How" shall mean all factual knowledge and proprietary
information held by ROCHE as of the Effective Date as trade secrets
which alone or when accumulated gives one having possession thereof an
ability to study, test, produce, formulate or market Compound which
one would otherwise not have known how to study, test, produce,
formulate or market.
1.5 "ILEX Know-How" shall mean all factual knowledge and proprietary
information in the control or possession of ILEX during the term of
this Agreement which alone or when accumulated gives one having
possession thereof an ability to study, test, produce, formulate or
market Compound which one would otherwise not have known how to study,
test, produce, formulate or market.
-2-
<PAGE> 3
1.6 "Licensed Patent" shall mean United States Patent No. 5,145,846,
issued September 8, 1992 and all reissues, renewals, continuations,
and extensions thereof, as well as its corresponding patents/patent
applications in Non-US Territory (as hereinafter defined) as set forth
in Appendix A, reissues, renewals, continuations, and extensions
thereof.
1.7 "Licensed Product" shall include any product containing Compound for
which the making, having made, using, offering for sale, selling or
importing in the Field, absent this Agreement, would infringe a Valid
Claim.
1.8 "Major Market Country" shall mean Japan, France, Germany, Italy, Spain
or the United Kingdom.
1.9 "Non Major Market Countries" shall mean any country other than France,
Germany, Japan, Italy, Spain or the United Kingdom.
1.10 "Negotiation Period" shall extend from the Effective Date to two and
one-half (2 1/2) years after the Effective Date or completion of Phase
I studies in the U.S.A., whichever is earlier.
1.11 "Net Sales" shall mean gross sales of Licensed Product to third
parties, excluding sales to Affiliates or sublicensees, made by ILEX
or its Affiliates or sublicensees, less deductions for chargebacks,
rebates and credits or allowances, including those incurred or granted
on account of returns, price adjustments or rejections of Licensed
Product previously sold.
1.12 "Non-U.S. Territory" shall mean all countries worldwide except the
U.S.A.
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<PAGE> 4
1.13) "U.S.A." shall mean the United States of America and its territories
and its possessions.
1.14 "Valid Claim" shall mean a claim in any unexpired issued Licensed
Patent which has not been disclaimed or held invalid by a decision
beyond the right of review or otherwise rendered unenforceable.
1.15 For the terms defined in this Section and used in this Agreement
generally, the singular shall include the plural and vice versa.
Article 2
Grant
2.1 a) ROCHE NUTLEY grants to ILEX an exclusive license, under the
Licensed Patent and ROCHE Know-How to make, have made, use,
sell, offer for sale, and import Licensed Product in the Field
within the U.S.A.
b) ROCHE BASEL grants to ILEX an exclusive license under the
Licensed Patent and ROCHE Know-How to make, have made, use,
sell, offer for sale, and import Licensed Product in the Field
within the Non-U.S. Territory.
2.2 Subject to the prior written consent of ROCHE, ILEX shall be permitted
to grant sublicenses to third parties under this Agreement, which
consent shall not be unreasonably withheld.
2.3) ROCHE retains the worldwide rights to make, have made, use, sell,
offer for sale and import
-4-
<PAGE> 5
Compound outside the Field and to use ROCHE Know-How.
2.4 If in any given country, ILEX receives approval to market a Licensed
Product and markets a Licensed Product in the Field, then at any time
one party believes that the Compound or Licensed Product being sold by
the other party is being used in that country for the use reserved to
such first party, the parties agree to negotiate in good faith an
appropriate methodology including the selection of an independent
third party source to determine the percent of each party's sales in
that country of Compound or Licensed Product which is being used for
the indication reserved to the other party, and equitable remuneration
of the parties.
Article 3
Payments
3.1 ILEX agrees to pay ROCHE Nutley:
a) [**] due and payable to ROCHE within (30) thirty days of the
Effective Date of this Agreement;
b) [**] due and payable to ROCHE upon the first completion of
Phase I clinical trials in the USA or any Major Market Country;
c) [**] upon the first completion of Phase III clinical trials in
the USA or any Major Market Country;
-5-
<PAGE> 6
d) [**] upon the first approval by an appropriate government
regulatory authority of a new drug application directed to
Licensed Product in the USA or any Major Market Country; and
e) a royalty of [**] ([**]%) of Net Sales of Licensed
Product sold in the U.S.A. and in the Non-US Territory.
f) At ROCHE's option, ROCHE shall advise ILEX that payments
otherwise due and payable to ROCHE Nutley under Section 3.1(e)
of this Agreement shall be due and payable by ILEX to ROCHE
Basel.
3.2 The royalty due under Sections 3.1(e) and (f) shall be reduced to [**]%
on a country by country basis during the time period that ROCHE sells
a Vitamin 3 analog in the Field.
3.3 In the event that ILEX grants a sublicense to a third party, all of
the terms and conditions of this Agreement shall apply to such
sublicensee to the same extent as they apply to ILEX. ILEX assumes
full responsibility for the performance of all obligations so imposed
on its sublicensees under this Agreement and will itself pay and
account to ROCHE for all payments due under this Agreement which may
accrue by reason of the actions or operations of any of such ILEX's
sublicensees.
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<PAGE> 7
Article 4
Rights of First Negotiation
4.1 During the Negotiation Period, ROCHE shall have a right of first
negotiation for an agreement to develop and commercialize the Licensed
Product. The terms of such an agreement shall be negotiated in good
faith by the parties. Upon expiration of the Negotiation Period, ILEX
shall provide ROCHE with all the data in ILEX's possession relating to
Compound and Licensed Product. Within 45 days of ROCHE's receipt of
such data, ROCHE shall notify ILEX of its interest in entering into
such an agreement.
4.2 In the event that ILEX receives an unsolicited proposal from a third
party regarding the development and commercialization of the Licensed
Product during the Negotiation Period, and ILEX is sufficiently
interested in pursuing negotiations with such third party, ILEX shall
notify ROCHE of same and shall provide all data in its possession
relating to Compounds to ROCHE. Within 45 days of ROCHE's receipt of
such data, ROCHE shall notify ILEX of its interest in entering into
negotiations for the development and commercialization of Licensed
Product.
4. a) In the event ROCHE considers licensing a follow-up Vitamin D3
analog in the Field to a third party and ILEX has successfully
developed and commercialized Licensed Product, ILEX shall have
a right of first negotiation for an agreement to develop and
commercialize such follow-up Vitamin D3 analog, provided that
ROCHE is under no obligation of any kind to any other third
party to offer such Vitamin D3 analog.
4. b) If, within five years after the Effective Date, Roche
considers licensing a follow up Vitamin D3 analog in the Field
to a third party and ILEX has not successfully developed and
commercialized Licensed Product but is diligently developing
Licensed Product, ILEX
-7-
<PAGE> 8
shall have a right of first negotiation for an agreement to
develop and commercialize such follow-up Vitamin D3 analog,
provided that ROCHE is under no obligation of any kind to any
other third party to offer such Vitamin D3 analog.
Article 5
Efforts
5.1 ILEX shall use its Best Efforts to obtain approval in the U.S.A. and
Major Market countries to market a Licensed Product. As used herein,
"Best Efforts" shall mean that ILEX is performing its obligations in a
sustained manner consistent with the efforts major pharmaceutical
companies devote to significant products derived from internal
research programs. ILEX shall provide to ROCHE no less frequently
than annually a summary written report concerning the status and
results of the clinical studies of Licensed Product and ILEX's
progress in obtaining approval from the U.S. FDA and appropriate
regulatory authorities in the Major Market countries of a new drug
application to market Licensed Product.
5.2 ILEX shall promptly notify ROCHE of
a) the date of filing the IND in the U.S.A and all Major Market
Countries;
b) the date of completion of Phase I studies in the U.S.A. and
all Major Market Countries;
c) the date of entry into phase II clinical trial in the U.S.A.
and all Major Market Countries, more precisely the date on
which the Compound is first shipped for such study;
-8-
<PAGE> 9
d) the date of entry into Phase Ill clinical trial in the U.S.A.
and all Major Market Countries, more precisely, the date on
which the Compound is first shipped for such study;
e) the date of filing the application for the registration of the
Licensed Product in the U.S.A. and all Major Market Countries;
and
f) the date of obtaining approval by the appropriate regulatory
authority of a new drug application in the U.S.A and all Major
Market Countries.
5.3 ILEX shall inform ROCHE on a continuous basis of the status of
development, registration, marketing approval in Non-US Territories
and Non Major Market Countries.
Article 6
Reports and Recordkeeping
6.1 a) ILEX shall pay amounts owing ROCHE NUTLEY under Section 3.1(e)
with respect to any given calendar year basis. Except as
otherwise directed, all amounts owing to ROCHE NUTLEY under
this Agreement shall be paid in U.S. dollars to ROCHE NUTLEY
at the address provided in Section 6.3. All amounts owing
under Section 3.1(e) shall be due and received by ROCHE NUTLEY
on or before the forty fifth (45th) day following the end of
each calendar quarter ending on March 31, June 30, September
30, and December 31. All royalties owing in currencies other
than U.S. dollars shall be converted at the rate
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<PAGE> 10
shown in the Federal Reserve Noon Valuation - Value of Foreign
Currencies on the day preceding the payment as due.
b) ILEX shall prepare a full accounting on a country-by-country
basis showing how any amounts owing to ROCHE NUTLEY under
Section 3.1(e) have been calculated and shall submit such full
accounting to ROCHE NUTLEY on the date of each such payment.
This full accounting shall include at least the following:
i) compilation of gross sales of Licensed Product and
the allowable deductions therefrom;
ii) Net Sales and the calculation of royalties payable to
ROCHE NUTLEY; and
iii) the currency exchange rates for each country used to
convert to U.S. dollars sales made in currencies
other than U.S. dollars.
In the event no payment is owed to ROCHE NUTLEY, a statement
setting forth that fact shall be supplied to ROCHE NUTLEY on
the date each such payment would have been payable.
6.2 a) ILEX shall make all payments under this Agreement by wire
transfer to the following account:
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<PAGE> 11
To ROCHE NUTLEY: Hoffmann-La Roche Inc.
Account No. 00008045 at
Citibank N.A.
399 Park Avenue
New York, New York 10043
Citibank ABA Routing No. 021000089
or any other place or bank account or wire transfer address as
ROCHE may designate in writing.
b) ILEX shall send all accountings under this Agreement to the
following address:
To ROCHE NUTLEY: Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Attention: Senior Accounting Specialist
Licensing & Corporate Accounts
or any other address as ROCHE may designate in writing.
6.3 ILEX shall keep books and records under recognized accounting practice
sufficient to verify the accuracy and completeness of ILEX's
accounting referred to in Article 6. Such books and records shall be
preserved for a period not less than three (3) years after the period
for which the records apply.
6.4 ROCHE shall have, upon thirty (30) days notice to ILEX, the right to
review and copy all books and records described in Section 6.3 at a
single U.S.A. location to verify and audit the accuracy of ILEX's
accounting. ILEX shall take all steps necessary so that ROCHE can,
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<PAGE> 12
within thirty (30) days of its notice, review and copy all books and
records described in Section 6.3 at a single U.S.A. location to verify
and audit the accuracy of ILEX's accounting. Such review may be
performed by an employee of ROCHE as well as by any attorney or
registered CPA designated by ROCHE during regular business hours at
ROCHE's expense. Any such registered CPA designated by ROCHE shall be
bound to the confidentiality obligations of Article 8. Should ROCHE,
after examining such records and books, determine that the royalties
payable hereunder were underpaid, ILEX shall immediately remit to
ROCHE all such royalties which previously were underpaid and if such
royalties were under paid by more than [**] ([**] percent), ILEX shall
reimburse ROCHE for its costs related to such examination.
Article 7
Warranties
7.1 ROCHE NUTLEY warrants and represents that it has the entire right,
title, and interest in and to the Licensed Patent in the U.S.A. and
ROCHE BASEL warrants and represents that it has the entire right,
title, and interest in and to the Licensed Patent in the Non-U.S.
Territory.
7.2 All parties to this Agreement warrant and represent to each other that
they have the full right and authority to enter into this Agreement,
and that no party is aware of any impediment which would inhibit its
ability to perform the terms and conditions of this Agreement.
However, nothing in this Agreement shall be construed as:
(i) a warranty or representation by ROCHE as to the
validity or scope of any Licensed Patent;
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<PAGE> 13
(ii) a warranty or representation by ROCHE that anything
made, used, sold, offered for sale, imported, or
otherwise disposed of under the license granted in
this Agreement will or will not infringe patents of
third parties;
(iii) an obligation by ROCHE to bring or prosecute actions
or suits against third parties for infringement of
Licensed Patent;
(iv) a conferment by implication, estoppel or otherwise by
ROCHE to ILEX of any license or other right under any
patent, except the license expressly granted to ILEX
herein; or
(v) a conferment by implication, estoppel or otherwise by
ROCHE to ILEX of any license or other right to use,
in advertising, publicity or otherwise, of any name,
trade name, trademark, or any contraction,
abbreviation or simulation thereof.
7.3 ROCHE makes no representations, extends no warranties of any kind,
either express or implied, and assumes no responsibilities whatsoever
with respect to manufacture, sale, lease, use, importation, or other
disposition of Licensed Product by ILEX.
7.4 a) ILEX shall defend, indemnify and hold harmless ROCHE, its
managers, directors, officers, employees, and agents from and
against any and all losses, costs, damages, expenses, fees
and/or liabilities resulting from claims, lawsuits and/or
judgments, which
-13-
<PAGE> 14
are incurred or asserted as a result of ILEX's use,
manufacture, promotion, sale or other disposition of any
Licensed Product. The above indemnification shall not apply
to the extent that any actual or alleged loses, costs,
damages, expenses, fees and/or liabilities are specifically
and approximately due to ROCHE's negligence.
b) Notwithstanding the above, ROCHE at all times reserves the
right to retain counsel of its own at its own cost to defend
ROCHE's interests.
Article 8
Confidentiality
8.1 For a period of seven (7) years from the date of receipt of
Information by the receiving party, the receiving party shall hold any
and all Information in strict confidence, except information that the
receiving party can prove:
a) is in the receiving party or Affiliate's possession at the
time of disclosure by the disclosing party and was not
acquired, directly or indirectly, from the disclosing party,
b) at the time of disclosure by the disclosing party, is or
thereafter becomes public knowledge through no fault of the
receiving party,
c) at any time after the disclosure by the disclosing party is
lawfully made available to the receiving party by a third
party free of any binder of secrecy,
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<PAGE> 15
d) is developed by the receiving party or its Affiliates after
its disclosure independently from Information, or
e) is requested to be disclosed on account of a governmental or
court proceeding or order or governmental regulation, provided
that advance notice is given to the other party.
Notwithstanding the above, ILEX shall have the right to use the Information for
the purpose of filing and maintaining the NDA and other registration dossiers
as well as for making and selling Licensed Product.
Article 9
Term and Termination
9.1 The license granted herein begins on the Effective Date, and unless
terminated earlier pursuant to this Article 9, shall be valid until
the expiration date of the last-to-expire Licensed Patent (including
any extension thereof) containing a Valid Claim covering Licensed
Product or ten years after the date of first commercial sale of
Licensed Product in a country, whichever period is longer.
9.2 ILEX shall have the right to terminate this Agreement in its entirety
upon ninety (90) days prior written notice given to ROCHE.
9.3 If ILEX shall at any time default in the making of any payment
hereunder or if either party shall commit any breach of any material
provision of this Agreement and shall fail to remedy
-15-
<PAGE> 16
any such default or breach within ninety (90) days after notice
thereof by the other party, the other party may, at its option,
terminate this Agreement in its entirety, or on a country-by-country
basis, by providing notice to the other party, such termination to be
effective immediately.
9.4 Either party may terminate this Agreement at any time with immediate
effect by written notice to the other party if the other party is
declared bankrupt or insolvent, or if a receiver is appointed, or any
procedures are commenced, voluntarily or involuntarily, by or against
a party under any bankruptcy or similar law, or in the near future it
is reasonably anticipated that the party is to be dissolved,
liquidated or bankrupt.
9.5 Termination of this Agreement for any reason shall be without
prejudice to:
a) ROCHE's right to receive all payments accrued under this
Agreement prior to the effective date of such termination and
to obtain performance of any obligations provided for in this
Agreement which survive termination by their terms or by fair
interpretation of this Agreement; and
b) Any remedies which either party may then or thereafter have
under this Agreement.
9.6 ILEX shall notify ROCHE NUTLEY for the U.S.A. and ROCHE BASEL for
countries in the Non-U.S. Territory of the amount of Licensed Product
remaining in its inventories on the date of termination or expiration
under Section 9.1 and will be permitted to sell such inventory,
provided
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<PAGE> 17
that ILEX pays and reports royalties to ROCHE on such inventory in
accordance with the terms of this Agreement.
9.7 Upon termination of this Agreement under Sections 9.2, 9.3 or 9.4,
ILEX shall return to ROCHE all Information and ROCHE Know-How in
ILEX's possession or control in whatever form it may exist and shall
not use any and all such Information and ROCHE Know-How without
ROCHE's express written consent. ROCHE shall have a worldwide right
to use, free of charge, ILEX Know-How and ILEX Information relating to
Compound or Licensed Product.
Article 10
Notices
10.1 All notices provided for in this Agreement shall be in writing and
shall be considered properly given if sent by registered mail,
telecopier, telex, or by personal courier delivery to the respective
address of each party as follows:
If to ROCHE NUTLEY:
Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Attention: Corporate Secretary
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<PAGE> 18
If to ROCHE BASEL:
F. Hoffmann-La Roche Ltd
Grenzacherstrasse 124
CH - 4070 Basel
Switzerland
Attention: Corporate Law
If to ILEX:
ILEX Oncology Inc.
14785 Omicron, Ste. 101
San Antonio, Texas
Attention:
or to any other address as a party may designate.
Article 11
Dispute Resolution
11.1 The parties agree that any dispute, claim or controversy arising out
of or relating to the interpretation, performance or breach of this
Agreement (the "Dispute") shall be resolved in the following fashion:
a) The parties shall meet and attempt, in good faith, to settle
any Dispute, however, failing an agreement on the resolution
of such Dispute within ten (10) business days (the "Initial
Period"), then such Dispute shall be referred for resolution
to designated senior executives of both parties who have the
authority to settle the Dispute but who are not directly
involved in the subject transaction.
At the conclusion of the Initial Period, the disputing party
invoking this dispute resolution
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<PAGE> 19
procedure shall give written notice to the other party and the
receiving party shall, within ten (10) business days submit a
written response. The notice and response shall include (i) a
statement of each party's position and a summary of evidence
and arguments supporting its position, and (ii) the name and
title of the senior executive who shall represent that party.
b) If the Dispute has not been resolved within [thirty 30)] days
of the disputing party's notice, or if the party receiving
such notice will not meet within said [thirty (30)] days,
either party may initiate non-binding mediation of the
Dispute. The parties shall agree on a mediator.
Within ten (10) days of the initiation of the mediation, both
parties shall submit to the mediator written statements of no
more than twenty (20) pages in length, with no more than
thirty (30) pages of pre-existing exhibits or attachments
which sets forth a statement of each party's position and the
evidence and arguments supporting its position. Within twenty
(20) days of the receipt of these statements, the mediator
shall schedule the first mediation session, with such sessions
regularly continuing thereafter.
c) If the Dispute has not been resolved pursuant to the aforesaid
mediation procedure within thirty (30) days of the date set
for the first mediation session, or if either party will not
participate in a mediation, the Dispute shall be settled by
arbitration in accordance with the rules of the American
Arbitration Association, by three arbitrators, of whom each
party shall appoint, one, with the third being selected by
agreement of the first two. The
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<PAGE> 20
arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. Sections 1-16, and judgment upon the award
rendered by the Arbitrator(s) may be entered by any court
having competent jurisdiction thereof. The place of
arbitration shall be Newark, New Jersey. The arbitrator(s)
are not empowered to award damages in excess of actual
damages.
All deadlines specified in this Article 11 may be extended by
mutual agreement of the parties.
d) The provisions of this Article 11 shall not apply to any issue
of the patentability, enforceability or infringement of any
patent claim. If, in any dispute resolution proceeding, any
issue shall arise concerning validity, scope, enforceability
or infringement of any claim, such proceeding shall assume the
validity, scope, enforceability or infringement of all patent
claims. In any event, the dispute resolution proceeding shall
not be delayed in order to obtain or allow either party to
obtain judicial resolution of such issue, unless an order
staying such proceeding shall be entered by a court of
competent jurisdiction. Neither party shall raise any issue
concerning the validity, construction, enforceability or
effect of any patent licensed under this Agreement in any
proceeding to enforce a final arbitration award hereunder or
in any other proceeding arising out of such arbitration.
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<PAGE> 21
Article 12
Miscellaneous
12.1 This exclusive license is personal to ILEX, and ILEX shall have no
right to assign, or otherwise transfer or share its rights, without
the written consent of ROCHE, which consent shall not be unreasonably
withheld providing, however, ILEX may assign this license as past of
the sale of substantially all of its business to an Affiliate of ILEX.
Any attempted assignment or transfer thereof without such consent
shall be void.
12.2 This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey; it has been drafted on the basis
of mutual understanding and neither party shall be prejudiced as the
drafter thereof. Any delay in enforcing a party's rights under this
Agreement or any waiver by a party as to a particular default or other
matter shall not constitute a waiver of a party's right to the future
enforcement of its rights under this Agreement, except in the case of
an express written and signed waiver as to a particular matter for a
particular period of time.
12.3 Except as required by law, neither party shall use the name of the
other party in any publicity release without the prior written
permission of such other party, which shall not be unreasonably
withheld. The other party shall have a reasonable opportunity to
review and comment on any such proposed publicity release. ROCHE
shall however be entitled to disclose the name of ILEX and the terms
and conditions of this Agreement to the extent necessary to further
license the Licensed Patent. Except as required by law or permitted
elsewhere in this Agreement, neither party shall publicly disclose the
terms and conditions of this Agreement, unless expressly authorized to
do so
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<PAGE> 22
in advance by the other party.
12.4 The relationship between ROCHE and ILEX is that of independent
contractors. ROCHE and ILEX are not joint ventures, partners,
principle and agent, master and servant, or employer and employee, and
have no relationship other than as independent contracting parties.
The parties shall have no power to bind or obligate another party in
any manner.
12.5 In the event that any provision of this Agreement is held by a court
of competent jurisdiction to be unenforceable because it is invalid or
in conflict with any law of any relevant Jurisdiction, the validity of
the remaining provisions shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular provisions held to be
unenforceable.
12.6 All covenants, agreements, representations and warranties made
hereunder shall be deemed to have been relied upon notwithstanding any
previous or subsequent investigation and shall survive the execution
of this Agreement. The parties have not relied on any agreements.
representations or warranties not contained herein.
12.7 Headings in this Agreement are for convenience only and shall not be
interpreted as having any substantive meaning.
12.8 This instrument constitutes the entire agreement between the parties
with respect to the subject matter and supersedes all previous
agreements. This Agreement may be changed only in a writing
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<PAGE> 23
signed by all parties to the Agreement.
12.9 The persons signing on behalf of ROCHE and ILEX warrant and represent
that they have authority to execute this Agreement on behalf of the
party for whom they have signed.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by the duly authorized persons.
ILEX ONCOLOGY, INC. HOFFMAN-LA ROCHE INC.
By: By:
------------------------------- ----------------------------------
Name: Name:
----------------------------- --------------------------------
Title: Title:
---------------------------- -------------------------------
Date: Date:
----------------------------- --------------------------------
F. HOFFMAN-LA ROCHE LTD
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
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<PAGE> 24
APPENDIX A
<TABLE>
<CAPTION>
COUNTRY PATENT/SERIAL NO.
<S> <C>
Argentina 247551
Australia 662139
Austria E 74350
Belgium 325279
Bulgaria 98544
Canada 1337529
Chile 37567
Denmark 169945
Europe 325279
Finland 90764
France 325279
Germany 58901056
Great Britain 325279
Greece 3004786
Hungary 201007
Ireland 60921
Israel 88989
Italy 325279
Japan 2031627
</TABLE>
-24-
<PAGE> 25
APPENDIX A (-CONTINUED-)
<TABLE>
<CAPTION>
COUNTRY PATENT/SERIAL NO.
<S> <C>
Korea (South) 514/89
Luxembourg 325279
Monaco 90.1998
Netherlands 325279
New Zealand 227641
Norway 175429
Pakistan 131597
Philippines 25605
Portugal 89486
Slovenia P 8910117
South Africa 23/89
Spain 325279
Sweden 89100974
Switzerland 325279
Taiwan NI 44342
Uruguay 13476
U.S.A. 5,145,846
Venezuela 77/89
Yugoslavia 47298
</TABLE>
-25-
<PAGE> 1
EXHIBIT 10.22
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AND DEVELOPMENT AGREEMENT
THIS AGREEMENT, effective as of the 1st day of October, 1992 (the "Effective
Date"), is by and between Sterling Winthrop Inc. of 90 Park Avenue, New York,
New York, 10016, U.S.A., (hereinafter call "Sterling," which expression
includes its subsidiaries, successors and assignees) and the CTRC Research
Foundation of 8122 Datapoint Drive, Suite 600, San Antonio, Texas, 78229,
U.S.A. (hereinafter called "CTRC," which expression includes its subsidiaries,
successors and assignees).
WITNESSETH:
WHEREAS, Sterling is engaged in pharmaceutical research and development
activities directed to the discovery, development and commercialization of
cancer therapy agents; and
WHEREAS, CTRC's mission includes acceleration of the discovery, development and
clinical use of therapeutic agents for the treatment of human cancers; and
WHEREAS, CTRC has Commercial Rights to a Product for the treatment of human
cancers, which Product and Commercial Rights are more fully described on
Exhibit A and incorporated herein ("The Product"); and
WHEREAS, Sterling has exercised its option to obtain a license to develop and
market the Product;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Sterling and CTRC agree as follows:
ARTICLE I. DEFINITIONS
1.1 Unless plainly stated otherwise, all defined terms in the Research
Collaboration Agreement and Option Agreement, dated October 1, 1992, shall have
the same meaning in this Agreement.
a. "ACQUISITION COSTS" shall mean those necessary out-of-pocket
costs (applicable to the Field of Use) incurred or paid by CTRC to Third
Parties from whom Commercial Rights are acquired, to obtain Commercial Rights
to any Licensed Product or Licensed Technology including any licensing fees,
future royalty, milestone or other payment obligations.
b. "ANNIVERSARY DATE" shall mean January 1, 1994, and every
January 1st thereafter throughout the term of this Agreement, including any
extensions thereof.
c. "BUSINESS DAY" shall mean a day on which banks are open for
business in New York, USA.
<PAGE> 2
d. COMMERCIAL RIGHTS" shall mean CTRC's legal right by patent,
contract, agreement, copyright, trademark, or other means to make, have made,
use, sell or have sold in any country any compound, material technology or
know-how within the Field of Use for commercial purposes, including Inventions,
Know-How or Products.
e. "CTRC AFFILIATE" shall mean any present or future firm,
company, joint venture or other entity which directly or indirectly is
controlled by or is under the common control of CTRC. "Control" shall mean the
legal power to direct or cause the direction of the general management and
policies of such entity whether through ownership of at least [**] percent
[**] of voting securities, by contract or otherwise.
f. 'CTRC INFORMATION" shall mean information developed or
otherwise acquired by or for CTRC, including all animal and human laboratory
and clinical data, technical information, Know-How, inventions, techniques,
processes, technology, systems, formulae, results of experimentation, designs,
statistics and records pertaining to products and technology subject to
Sterling's option set forth in the Option Agreement, and all information
relating to the contents of the Research Collaboration Agreement, including
Data Information Packages, necessary to effectuate the grant of license to
Sterling, including CTRC's exclusive property as provided in Article 3.7 of the
Research Collaboration Agreement.
g. "DATA/INFORMATION PACKAGES" shall mean those documents which
CTRC shall submit to Sterling in accordance with Article 2.4 of the Option
Agreement, and generally will be in the following product/technology
categories:
(i) Products which have been tested in human clinical
trials. Data/Information packages will include summaries of and
access to all regulatory filings, clinical studies to date and a
description of all Commercial Rights.
(ii) Products which are, in CTRC's opinion, suitable for
human clinical evaluation. The Data/Information Package is intended
to be of such content and quality as to be suitable for filing of an
Investigational New Drug Application (IND) with the Food and Drug
Administration (FDA) with the reasonable expectation of initiating
Phase I clinical trials in human volunteers, and will also include a
description of all Commercial Rights.
(iii) Technology which may be applied in the research and
development of products within the Field of Use. For a technology to
be offered for license, there should exist one or more Patent
Applications and scientific data to indicate that the technology can
immediately be applied to the discovery and development of Products
within the Filed of Use. Notwithstanding the above, non-patented
technology, including know-how, may make up, in whole or in part, a
Data/Information Package.
<PAGE> 3
h. "FIELD OF USE" shall mean all applications of a Licensed
Product of Licensed Technology in the treatment and/or mitigation of cancer
i. "FIST COMMERCIAL SALE" shall mean the first commercial sale
in any country after the date the New Drug Application (NDA), Product License
Agreement (PLA) or equivalent application for a Licensed Product is approved.
j. "FUNDING PERIOD" shall mean each twelve (12) month calendar
period during which Sterling makes payments under Article III of the Research
Collaboration Agreement. The first such funding period shall actually
encompass fifteen (15) months, from October 1, 1992 to December 31, 1993.
k. "INVENTION" shall mean any invention or discovery (whether or
not patented or patentable) in the Field of Use which is originated or
conceived or first reduced to practice, arising out of the performance of the
Research collaboration Agreement.
l. "KNOW-HOW" shall mean all technical and other information
arising from the Research Program, including, but not limited to, all data,
results of experiments, formulae, specifications, procedures, tests, compounds,
cell lines, cultures, constructs, vectors, development strains,
micro-organisms, assay systems, assay protocol and assay supporting material,
fermentation and purification material and techniques.
m. "LICENSE" shall mean a license to a Licensed Product or
Licensed Technology under Research Collaboration Agreement.
n. "LICENSE AND DEVELOPMENT AGREEMENT" shall mean an agreement
executed between the parties providing the terms under which a Licensed Product
or Licensed Technology shall be licensed and developed, and which shall comply
with the provisions of Articles 4.2 and 4.3 of the Option Agreement.
o. "LICENSED PRODUCT" shall mean a Product upon which Sterling
has exercised its option under the Option Agreement.
p. "LICENSED TECHNOLOGY" shall mean a technology or Know-How
upon which Sterling has exercised its option under the Option Agreement.
q. "NET SALES" shall mean the total of all charges invoiced to
customers by Sterling, any Sterling Affiliate, and/or its sub-licensees for
Licensed Product less: (a) normal trade and cash discounts actually allowed;
(b) credits or refunds actually allowed for spoiled, damaged, out-dated, or
returned goods; (c) sales and other excise taxes imposed and paid directly with
respect to the sales; (d) transportation costs paid on behalf of the customer;
and (e) commissions and rebates; provided, however, that sales between Sterling
and any Affiliate shall not be included in such computations. No sales of
Licensed Product to any person(s) shall be counted more than once i the
calculation of Net Sales.
<PAGE> 4
r. "OPTION AGREEMENT" shall mean the agreement between CTRC and
Sterling dated October 1, 1992, a copy of which is attached as Exhibit I, as
amended April 1, 1994, a copy of which is attached as Exhibit II.
s. "PARTIES" shall mean CTRC and Sterling.
t. "PATENT APPLICATIONS" shall mean any patent applications with
respect to an Invention.
u. "PATENTS" shall mean any patents containing a Valid Claim,
granted on or pursuant to Patent Applications, including any continuations,
renewals, extensions or re-issues or any divisions thereof.
v. "PRODUCT(S)" shall mean all products which embody, in part or
whole, the Inventions, Patents, Patent Applications or Know-How.
w. "PROGRAM COUNCIL" shall mean the committee composed of members
designated by Sterling and CTRC, whose duties are set forth in Article II of
the Research Collaboration Agreement.
x. "RESEARCH COLLABORATION AGREEMENT" shall mean the Agreement
between CTRC and Sterling, dated October, 1, 1992, a copy of which is attached
as Exhibit III, as amended April 1, 1994, a copy of which is attached as
Exhibit IV.
y. "RESEARCH PROGRAM" shall mean the research and preclinical
development program being or to be carried out by CTRC and Sterling as agreed
to between the Parties. Any clinical development to be carried out by CTRC and
Sterling shall be subject to a separate License and Development Agreement.
z. "STERLING AFFILIATE" shall mean any present or future firm,
company or joint venture or other entity which directly or indirectly controls,
is controlled by or is under the common control of Sterling. "Control" shall
mean the legal power to direct or cause the direction of at least [**] percent
[**] of voting securities, by contract or otherwise. For the purposes of this
Agreement, "Sterling Affiliate" shall also include Elf-Sanofi S.A. and all
companies formed by the Joint Venture of Sterling and Elf-Sanofi S.A.
aa) "STERLING INFORMATION" shall mean any and all information and
technology which is applied to or derived from activities conducted by or on
behalf of Sterling with respect to ny compounds, materials, technologies, or
Know-How, the rights to which are owned by Sterling. Excluded from this
definition is that information which is incorporated in any Joint Invention or
CTRC Invention.
bb) "STERLING PROJECTS" shall men any work under the Research
Program on compounds, materials, technologies, or Know-How, the rights to which
are owned by Sterling, and to which Sterling controls the decisions on funding
and program protocols.
<PAGE> 5
cc) "THIRD PARTY" shall mean a person or entity which is not a
Party or a CTRC Affiliate or Sterling Affiliate.
dd) "VALID CLAIM" shall mean a claim of an issued Patent relating
to a Licensed Product or CTRC Information held by CTRC during the existence of
the Patent together with any renewals or extensions thereof or a claim of a
Patent Application, which claim has not been declared or rendered invalid by
reexamination, re-issue, disclaimer or unappealable final judgment of a court
of competent jurisdiction. If no Patent has issued within fifteen (15) years
after the earliest filing date of an application, then the claims of such
application will not be considered valid.
1.2 Additionally, the following words and phrases shall have the following
meanings:
a. "DEVELOPMENT PLAN" shall mean the plan described in Schedule
B to this Agreement and incorporated herein.
b. "EFFECTIVE DATE", as used in this Agreement, the Research
Collaboration Agreement, the Option Agreement, or any other License and
Development Agreement shall refer to the Agreement in which the term is used,
unless plainly stated otherwise.
c. "FULLY ALLOCATED COSTS" shall mean the total direct and
indirect costs attributable to a given project. Indirect costs shall mean
those general and administrative costs of CTRC, both internal and external,
which are not specifically attributable to a given project, but which are
accounted to each project using a formula derived from CTRC's standard
allocating method. Such costs shall be calculated and invoiced to Sterling on
a monthly basis.
d. "LICENSE YEAR" shall mean the twelve (12) month period
following the effective date of any License and Development Agreement, and each
succeeding twelve (12) month period during the pendency of the License, until
the date of First Commercial Sale of Product.
e. "PHS AGREEMENT" means the license agreement between CTRC and
the United States Public Health Service, dated September 8, 1991, a copy of
which is attached hereto as Exhibit V.
f. "THE PRODUCT," for purposes of this Agreement, shall mean the
Licensed Product know as MGBG, with its attendant Commercial Rights, as more
fully described in Schedule A to this Agreement. With respect to any other
License and Development Agreement, it shall mean the Licensed Product described
in a similar attachment to that particular agreement.
ARTICLE 2 - WARRANTY
CTRC represents and warrants that as the owner of the Commercial
Rights in and to The Product, as more specifically set forth in Exhibit A
attached hereto, that it
<PAGE> 6
has the sole right to grant licenses for such Commercial Rights, and that it
has not granted licenses thereunder to any other person or entity. CTRC
represents and warrants that, to its knowledge, no rights of a Third Party are
infringed or breached by the grant of this License to Sterling.
ARTICLE 3 - GRANT
3.1 Subject to their terms and conditions of this Agreement and the PHS
Agreement, CTRC hereby grants to Sterling, and Sterling accepts, an exclusive
worldwide license to make, have made, use or sell The Product, together with
its related CTRC Information, in the Filed of Use. CTRC agrees to transfer to
Sterling ownership of all regulatory documents, product inventory or other
tangible materials which CTRC has in its possession and which are required for
Sterling to effectuate this grant.
3.2 Sterling agrees to abide by the terms of the PHS Agreement.
3.3 Sterling shall have the right to grant sub-licenses in accordance with
Section 2.3 of the Option Agreement. In addition, Sterling shall be
responsible for the operations of its sub-licensee, as if the operations were
carried out by Sterling, including the payment of applicable licensing fees,
milestone payments, and royalties, whether or not paid to Sterling by the
sub-licensee. In no event shall CTRC be entitled to receive duplicative
licensing fees, milestone payments or royalties from sub-licensee and Sterling.
ARTICLE 4 - LICENSING FEES, MILESTONE PAYMENTS AND ROYALTIES
4.1 LICENSING FEE: Sterling has paid to CTRC a Licensing Fee of
[**] dollars ($ [**] ), which amount has been determined pursuant to
Article 4.4 of the Option Agreement. The intended use of The Product is for
treatment of patients with non-Hodgkin's lymphoma, prostrate cancer and head
and neck cancers.
4.2 MILESTONE PAYMENTS: Upon achievement of any development or
commercialization milestone as described in this Article 4.2, Sterling will pay
to CTRC a Milestone Payment as specified below:
a. Upon the filing of the first Investigational New Drug
Application ("IND") by Sterling or CTRC for The Product in each of the U.S.,
the first major country (France, Germany or the United Kingdom) of the European
Economic Community (EC), or Japan, Sterling will pay to CTRC a Milestone
Payment of [**] dollars ($ [**] ), ($ [**] maximum);
b. Upon the filing of the first New Drug Application ("NDA"),
Product License Application ("PLA"), or equivalent by Sterling or CTRC for The
Product in each of the U.S., the first major country of the EC, or Japan,
Sterling will pay to CTRC a Milestone Payment of [**] dollars
($ [**] ), ($ [**] maximum); and
<PAGE> 7
c. Upon receipt by Sterling or CTRC of an approval to sell The
Product in the U.S., the first major country of the EC, or Japan, for each new
approved indication (new tumor type), for a maximum of two such indications,
Sterling will pay to CTRC a milestone payment of [**] dollars
($ [**] ) for each such indication ($ [**] maximum).
d. Sterling will pay to CTRC a bonus payment (in addition to any
other payments under this or any other Agreement) upon receipt of an approval
to sell The Product in the U.S. The amount of such bonus payment will be based
on the date of receipt of such approval as follows:
(i) [**] dollars ($ [**] ) if The Product
is approved for sale within three (3) years of Sterling's written
exercise of its Option to license The Product; or
(ii) If The Product is approved more than three (3) years
after Sterling's written exercise of its Option to license, a payment
of [**] dollars ($ [**] ) per month for each month ahead of
the anticipated approval date set forth in the Development Plan, up to
a maximum of [**] dollars ($ [**] ).
4.3 Certain payments made to CTRC under Articles 4.1 and 4.2 above shall
be credited to Sterling's funding commitment of the Research Program, as
provided in Article III of the Research Collaboration Agreement, or any
amendments thereto.
4.4 ROYALTIES: Whether sold by Sterling, a Sterling Affiliate, an
assignee, or sub-licensee, Sterling will pay to CTRC a royalty on Net Sales of
The Product as follows:
(a) For sales of The Product in countries covered by a
Valid Claim or for which market exclusivity has been obtained de facto
and by statutory or regulatory grant or decree, such as the drug Price
competition and Patent Term Restoration Acto of 1984, 21 United States
Code Section 505(j) (or foreign counterpart), CTRC will be paid a
royalty as follows:
ROYALTY IN PERCENT
ANNUAL NET SALES OF ANNUAL NET SALES
---------------- -------------------
[S] [C]
$[**] to [**] [**]%
$[**] to [**] [**]%
in excess of $[**] [**]%
such royalties will be paid until the last to expire of all Valid
Claims or market exclusivity determinations for The Product.
or
<PAGE> 8
(b) For sales of The Product in countries not covered by
a Valid Claim or de facto and legal market exclusivity obtained by
statutory or regulatory grant or decree, CTRC will be paid a royalty
not to exceed [**] ([**]%) percent. Such royalties will be
paid until ten (10) years after the date of First Commercial Sale in
that country for The Product.
4.5 COMPETITION: The parties understand that a competitive version of
The Product may be presently available for sale in certain EC countries.
Consequently, at the time an NDA or equivalent application for The Product is
first filed in the U.S., Japan, or the EC as set forh in Section 4.2(b), the
Parties will review the competitive situation to determine in good faith if the
remaining milestone payments and royalties set forth in this Article 4 are
still appropriate and would provide a fair return to Sterling in view of
economic conditions existing at that time in each particular market. In the
event that the Parties in good faith agree that such payments and rates are no
longer appropriate, the parties will negotiate a reasonable reduction of the
remaining payments and rates set forth therein, taking into account the
particular market where sale of The Product is contemplated.
4.6 MINIMUM ROYALTIES: Minimum annual royalties of [**]
dollars ($ [**] ) shall be payable on a quarterly basis beginning at the end
of the second full calendar quarter following the date of the First Commercial
Sale in the United States of The Product. Quarterly minimum royalty payments
shall be made at the end of each calendar quarter thereafter, and shall be in
amounts equal to the difference between the royalty actually accrued as
determined by this Agreement, and the minimum quarterly royalty of
[**] dollars ($ [**] ).
4.7 Starting with the firs calendar quarter ending at least sixty (60)
days after the First Commercial Sale of Product, Sterling shall make written
financial reports and royalty payments to CTRC within thirty (30) days after
the end of each calendar quarter. Such reports shall state the number,
description and aggregate Net Sales of The Product during such completed
calendar quarter, and the resulting calculation pursuant to Article 4.3 above
of earned royalty payments due to CTRC for such completed calendar quarter.
With each such report, Sterling shall include payment due to CTRC of all
royalties for the calendar quarter covered by such report. The remittance of
royalties payable on Net Sales of The Product shall be made to CTRC at the
official rate of exchange of the currency of the country from which the
royalties are payable, as quoted by the Wall Street Journal (or in the event
there is no Wall Street Journal quote for such currency, the rate of exchange
shall be established by the issuer of such currently) for the last Business Day
of the calendar quarter in which the royalties are payable, less any
withholding or transfer taxes which are applicable. Sterling shall supply CTRC
with proof of payment of such taxes paid on CTRC's behalf and shall cooperate
with CTRC in obtaining credit or refund of any such taxes. The parties shall
cooperate with each other in making lawful arrangements in the event royalties
payable by Sterling are earned in a country whose currency is blocked on
exchange into U.S. dollars. Whenever any payment hereunder shall be stated to
be due on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
<PAGE> 9
4.8 Sterling shall promptly notify CTRC in writing of all submissions to
appropriate regulatory authorities for approvals to sell The Product in any
country (other than those submitted by CTRC), of the date such approvals are
granted, and the date of First Commercial Sale of The Product under this
Agreement. Upon request, Sterling shall provide to CTRC copies of such
approvals, and reasonable access to such submission.
4.9 Sterling shall keep true and accurate records and books of accounts
containing all data necessary for the calculation of the royalties payable to
CTRC under this Agreement. Such records and books of account for the prior
three (3) year period shall be made available at Sterling's principal office in
the United States on reasonable notice at all reasonable times during
Sterling's normal business hours for inspection by an independent auditor on
behalf of CTRC or by an authorized officer of CTRC.
ARTICLE V - DEVELOPMENT RESPONSIBILITIES AND COSTS
5.1 Sterling hereby assigns to CTRC, and CTRC accepts, subject to the
terms and conditions of this Agreement, the responsibility for implementing the
Development Plan for The Product, up to and including obtaining FDA marketing
approval for The Product. Upon receipt of such approval, but not sooner
(unless otherwise agreed by the Parties), CTRC shall transfer and assign to
Sterling all pre-approval regulatory documents necessary for marketing the
product, including the IND and NDA for The Product. Upon request, CTRC will
provide Sterling with a right of cross reference to all such regulatory
documents in order to further Sterling's development efforts for The Product.
5.2 CTRC will use its best efforts to perform the work outlined in the
Development Plan, in accordance with the terms of this Agreement, and shall
provide Sterling with reasonable access to and copies of all data and documents
reflecting work performed under the Development Plan.
5.3 CTRC shall have the right to subcontract certain duties under the
Development Plan. In the event CTRC does subcontract any such duties, it shall
be responsible for the subcontractor with the applicable terms of this
Agreement, including but not limited to Article VI and Article 11.4.
5.4 CTRC shall notify the Program Council prior to entering into any
subcontracts requiring an expenditure of [**] dollars ($ [**] ) or
more in any License Year.
5.5 Sterling shall reimburse CTRC for its Fully Allocated Costs incurred
in implementing the Development Plan, in accordance with Exhibit B, within
thirty (30) days of receipt of an invoice, which shall be issued by CTRC on a
monthly basis.
5.6 CTRC shall report on its progress in implementing the Development
Plan, including its performance against budget, at quarterly meetings during
the period in
<PAGE> 10
which The Product is being developed. Such development activities will be
supervised by the Program Council, which shall among other things, coordinate
development activities between the parties, including the exchange of
information and documents, establish project teams, and coordinate
responsibilities for regulatory filings and communications with regulatory
agencies.
5.7 The Program council, on an annual basis, will review and modify the
Development Plan and adjust the budget as appropriate. If the parties fail to
each mutual agreement on a change to the Development Plan, Sterling will make
the final decision on such change; provided that prospective modifications to
the Development Plan which may cause the Development Plan budget to increase or
decrease by more than [**] percent ([**]%) of CTRC's external costs or
contractual obligations from then current levels shall only be made with the
prior written consent of CTRC. Both parties will exercise their discretion
under this paragraph in good faith. Notwithstanding the foregoing, Sterling
shall have the right, based upon its good faith determination, to unilaterally
terminate or suspend the Development Plan in view of safety considerations
relating to Product testing or use, without further obligation to CTRC under
this Agreement.
5.8 Sterling shall reimburse CTRC for its Acquisition Costs for The
Product, as listed in Exhibit D, within thirty (30) days after receiving an
invoice from CTRC. Such payments will be in addition to any payments required
under Articles 4.1, 4.2, 4.4 and 4.6.
5.9 In the event that Sterling exercises its right to terminate, suspend
or discontinue the Development Plan, in accordance with Section 5.7 or 8.3,
then Sterling agrees to reimburse CTRC for its reasonable and necessary costs
incurred during the winding down period, which period will in no event extend
longer than twelve (12) months from the date of suspension. Such costs shall
include, but no be limited to, those non-cancelable contracts and commitments
which CTRC has entered into in contemplation of this agreement. CTRC shall use
its best efforts to minimize any such costs incurred by virtue of cancellation.
ARTICLE VI - CONFIDENTIALITY AND SECURITY
In addition to the provisions of Article IV and Article V of the
Research Collaboration Agreement, which are incorporated herein by reference,
the parties agree as follows:
6.1 It is understood that CTRC Information is proprietary and
confidential. Sterling hereby agrees to maintain the confidentiality of all
such CTRC Information.
6.2 It is understood that Sterling Information is proprietary and
confidential. CTRC hereby agrees to maintain the confidentiality of all such
Sterling Information.
<PAGE> 11
6.3 The Parties' obligations of confidentiality with respect to CTRC
Information and Sterling Information shall expire ten (10) years from the date
of receipt of the information.
6.4 The parties agree that they shall each use their best efforts to
ensure that Third Parties with whom they may contract to perform duties, as
permitted by this Agreement, shall abide by the provisions of this Article VI.
6.5 The parties acknowledge the right of CTRC to publication or oral
presentation of the results of any research, work or development done pursuant
to this Agreement. CTRC agrees that it will give Sterling an opportunity to
review any publication or presentation at least thirty (30) days prior to the
expected publication or presentation date, and consult with CTC with respect to
such publication or presentation date, and consult with CTRC with respect to
such publication or presentation. Nothing in this Agreement shall be construed
to prevent CTRC from publishing substantially all of the results of the
research conducted under this License which would be useful or beneficial to
the interested public.
ARTICLE VII - PATENT PROSECUTION
7.1 Upon execution of this Agreement, Sterling shall reimburse CTRC for
its reasonable out-of-pocket costs incurred (prior to the Effective Date) for
preparation, filing, prosecution and maintenance of any Patent Application(s)
pertaining to The Product. All such cost reimbursements shall be fully
creditable against future earned royalties from The Product.
7.2 Sterling will be responsible for all preparation, filing, prosecution
and maintenance of Patents or Patent Applications covering The Product, at its
expense, after the Effective Date. CTRC shall cooperate with Sterling in all
such activities and agrees to have executed by its employees appropriate
documents submitted by Sterling to obtain, perfect or maintain title, and to
cause such employees to furnish information and date in their possession
reasonably necessary to maintain such Patents in accordance with the provisions
of this Agreement.
7.3 CTRC shall have the right to consult with Sterling regarding the
content of said Patent Applications, prior art searches and correspondence, and
to comment thereon. Sterling shall consider all such comments offered by CTRC,
it being agreed, however, that all final decisions respecting conduct of the
prosecution of said Patent Applications shall reset solely in the discretion of
Sterling.
ARTICLE VII - DILIGENCE
8.1 Sterling shall use reasonable diligence according to usual business
practices to develop, manufacture and commercialize The Product in the U.S.,
major countries of the EC, and Japan, subject to all then existing regulatory
and economic conditions. Sterling shall earnestly and in good faith endeavor
to develop and market the product
<PAGE> 12
within a reasonable time after the Effective ate, in amounts sufficient to meet
the anticipated market demand therefor. In this regard, Sterling shall provide
CTRC with semi-annual written reports demonstrating Sterling's good faith
efforts (other than efforts by CTRC) to meet the diligence requirement, the
first such report to be provided twelve (12) months after the Effective Date.
8.2 With respect to The Product, Sterling shall be deemed to have met its
diligence obligations under this Article VIII if it has met its funding
obligations under Exhibit B, or agreed modifications thereof.
8.3 Sterling shall promptly give written notice to CTRC in the event that
funding falls below the agreed minimum level for any License Year, as set forth
in Exhibit B, and Sterling has not paid to CTRC such shortfall within thirty
(30) days after the end of the License Year. Sterling shall also give written
notice if a decision is made to discontinue the development and/or
commercialization of a Licensed Product in either of the U. S., major countries
of the EC, ( as defined in Section 4.20), or Japan (individually the
"Territory" or collectively the "Territories"). Upon either such notice, CTRC
shall have the first option, or if the parties are unable to reach agreement on
such buy-back provisions, Sterling shall have a period not to exceed 180 days
from that point of refusal or disagreement to sub- license The product to a
Third Party, provided that CTRC shall have a right to match any bona fide
offers from such Third Party. If Sterling does not sub-license The Product
within 180 days, and if CTRC does not buy back such rights, the license will
terminate and all Commercial Rights for The Product in such discontinued
territory will revert to CTRC.
8.4 If The Product has been approved for commercial sale in any country
and all required milestone payments have been made to CTRC, Sterling shall have
no obligation to make The Product available to CTRC for license or re-purchase
should Sterling seek to out-license or sell The Product for any reason.
ARTICLE IX - INFRINGEMENT
9.1 ENFORCEMENT. In the event that CTRC or Sterling determines that a
Third Party is making, using or selling The Product in any country, and within
the scope of a Valid Claim in that country, the parties shall have a period of
sixty (60) days from the date of such notice of alleged infringement to agree
between themselves whether and under what conditions and procedures to enforce
the infringed-upon Patent. If the parties do not agree, Sterling shall have
the first right to bring, at its own expense, an infringement action against
any Third Party. If Sterling does not proceed with a particular patent
infringement action within sixty (60) days thereafter, CTRC, after notifying
Sterling in writing, shall be entitled to institute proceedings against such
infringer at its own expense.
9.2 DEFENSE. In the event that Sterling or a Sterling affiliate or a
sub-licensee is sued by a Third Party charging infringement of a Patent because
of the manufacture, use, or sale by Sterling or a Sterling Affiliate or sub-
licensee of The Product, or in the
<PAGE> 13
event a Third Party brings an action to obtain a declaration of Patent
invalidity against CTRC and/or Sterling, each party will promptly notify the
other; and
(i) The named defendant(s) shall have the first right to
defend said action(s) at its or their own cost and expense and to
control ensuing litigation; or
(ii) If the named defendant(s) elect not to defend the
action(s), the other party may elect to defend the action(s) at its
own cost and expense and to control the ensuing litigation.
9.3 MUTUAL PROVISIONS. In both enforcement and defense actions the
following shall apply:
(i) The party conducting the suit shall have full control
over its conduct, but the other party will reasonably assist and
cooperate in such litigation upon request and be reimbursed for
reasonable out-of- pocket expenses incurred while providing any
requested assistance to the requesting party.
(ii) Any recovery as a result of litigation and settlement
thereof and any damages awarded shall be the property of the party
bearing the financial responsibility for such litigation.
(iii) Any royalties required to be paid by Sterling to a
Third Party as a result of such litigation or settlement thereof shall
be subtracted from the total of all charges in the determination of
Net Sales in the country of such action in the calculation of
royalties payable to CTRC.
ARTICLE X - TERM AND TERMINATION
10.1 This Agreement shall commence on the Effective Date and shall remain
in full force and effect on a country by country basis until the last to expire
of Valid Claims for The Product or, in the event of no Valid Claims, for a
period of ten (10) years from First Commercial Sale of The Product on a country
by country basis, whichever is later. Upon such expiration, Sterling will have
a fully paid-up license to make, use and sell The Product; provided however,
either party may terminate this Agreement prior to the end of the ten (10) year
period on three (3) months notice, but only in the event that any of the
following circumstances arise:
(i) The other party is in material breach or default with
respect to any material term or provision hereof and fails to cure
same within sixty (60) days after written notification thereof;
(ii) The other party is adjudicated bankrupt, has filed
against it any petition under bankruptcy, insolvency or similar law,
which is not dismissed
<PAGE> 14
within sixty (60) days, has a receiver appointed for its business or
property, or makes a general assignment for the benefit of creditors;
or
10.2 Subsequent to regulatory approval to market The Product in a given
country, but prior to the end of the period described in Article 10.1, if
Sterling, a Sterling Affiliate, sub-licensee or assignee, at its discretion
elects to terminate the commercialization or sale of The Product in that
country, then CTRC may terminate this Agreement solely as to that county, on
three (3) months notice.
10.3 Termination of this Agreement shall not affect Sterling's obligations
under Articles IV or VI hereof, nor any other rights of either party accrued
prior to such termination.
ARTICLE XI - WARRANTIES AND INDEMNIFICATIONS
11.1 Sterling hereby represents that as of the date of this Agreement, it
has the full right and authority to enter into and perform this Agreement, and
that Sterling is free of any duties or obligations to Third Parties which may
conflict with the terms of this Agreement.
11.2 CTRC hereby represents that as of the date of this Agreement, it has
the full right and authority to enter into and perform this Agreement, and that
CTRC is free of any duties or obligations to Third Parties which may conflict
with the terms of this Agreement.
11.3 Except as set forth in Article 11.4, each Party to this Agreement
shall be responsible for its own acts relating to the performance of its duties
and obligations hereunder. Neither Party shall be liable to the other for
costs, expenses, liability, damages and claims for any injury or death to
persons or damage to or destruction of property or other loss arising out of or
in connection with use of The Product by either Party, but his provision shall
not relieve either Party of the consequences of its own negligence.
11.4 Sterling hereby indemnifies and holds harmless CTRC, its subsidiaries
and CTRC Affiliates from any claim by Third Parties arising out of the use of
The Product in clinical trials, provided that such use was conducted in
accordance with applicable laws and regulations, the applicable Study Protocol
and in the absence of gross negligence or willful misconduct by CTRC. Where
CTRC is the sponsor of such clinical trials, Sterling shall have final approval
of all Protocols and informed Consents for such trials. CTRC shall give
written notice to Sterling of any claims as soon as reasonably possible, and
provide assistance to Sterling in its handling of the claim. Sterling, and/or
its insurers, shall take over such claim and may defend or settle it in its
discretion.
11.5 Neither CTRC nor any of its subsidiaries or CTRC Affiliats assume any
responsibility for the manufacture or product specifications or end-use of The
Product if manufactured by or for or sold by Sterling or by any sub-licensee or
Sterling Affiliate,
<PAGE> 15
with the exception of any of The Product manufactured by CTRC. All warranties
in connection with Teh Product made by Sterling (or its sub-licensee or
Sterling Affiliate involved) as manufacturer and/or seller shall not directly
or impliedly obligate CTRC or any of its subsidiaries or other CTRC Affiliates,
with the exception of any of The Product manufactured by CTRC. Sterling hereby
indemnifies and holds harmless CTRC, its subsidiaries and CTRC Affiliate,
except for gross negligence or willful misconduct of another party, from any
claim by Third Parties alleging that The Product or its manufacture,
recommended use, delivery or operating performance has failed to comply with
any warranty or contract between Sterling (or the sub-licensee, or Sterling
Affiliate) and such Third Party, with the exception of any of The Product
manufactured by CTRC. Sterling warrants and represents that under its
self-insurance program it has sufficient funds to honor the indemnities in this
Article XI.
11.6 In no event shall CTRC or Sterling be liable to the other for any
incidental or consequential damages including, but not limited to, loss of
profit or revenues or other indirect damages, whether a claim for such
liability or damages is premised upon breach of contract, breach or warranty,
fulfillment of warranty, negligence, strict liability, misrepresentation, fraud
indemnity or any other theories of liability.
11.7 CTRC and Sterling each warrants that it will comply with all
applicable laws and regulations in connection with its performance of this
Agreement, including the Food, Drug and Cosmetic Act and the Animal Health
Welfare Act.
ARTICLE XII - INDEPENDENT CONTRACTOR
In the performance of this Agreement, the status of CTRC, including
its employees and agents, shall be that of independent contractors and not as
employees, agents, or fiduciaries of Sterling and as such have no right to make
commitments for or on behalf of Sterling.
ARTICLE XIII - GOVERNING LAW AND ARBITRATION
13.1 This Agreement is to be read and construed in accordance with and be
governed by laws of the State of New York.
13.2 The parties agree that all disputes, controversies or claims that may
arise between them (including their agents and employees) arising out of the
operation of this agreement, shall be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration award shall be final and binding on all parties,
and may include attorney's fees and costs to the prevailing party. The
arbitration shall be held in San Antonio, Texas, U.S.A.
<PAGE> 16
ARTICLE XIV - NOTICE
Any notice or other document required to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if left at or
sent by First class, registered, express or ail mail to a party at the address
set out below for such party or such other address as the party may from time
to time designate by written notice to the other:
Address of Sterling
Sterling Winthrop Inc.
90 Park Avenue
New York, New York 10016 U.S.A.
Attention: President
Sterling Winthrop Pharmaceuticals
Research Division
Facsimile Number: 215/889-8867
and
General Counsel, Sterling Winthrop Inc.
Facsimile Number: 212/907-3084
Address of CTRC
CTRC Research Foundation
8122 Datappoint, Suite 600
San Antonio, Texas 78229 U.S.a.
Attention: Chief Operating Officer, CTRC
Facsimile Number: 210/692-9823
ARTICLE XV - ASSIGNMENT
15.1 Subject to the provisions of Articles 15.2 and 15.3, no Party to this
Agreement shall assign to any Third Party the benefit and/or burden of this
Agreement without the prior written consent of the other, which consent shall
not be unreasonably withheld.
15.2 CTRC shall be entitled, with the consent of Sterling which shall not
be unreasonably withheld, to assign, transfer, or in any manner provide, in
whole or part, the benefit and/or burden of this Agreement to a subsidiary or
CTRC Affiliate or the University of Texas Health Science Center at San Antonio
("UTHSCSA"); provided that such CTRC Affiliate, subsidiary or UTHSCSA
undertakes and agrees in writing to assume, observe and perform the rights and
powers and/or duties and obligations of CTRC under the provisions of this
Agreement being assigned, transferred or otherwise provided.
<PAGE> 17
15.3 Sterling shall be entitled, without consent, to assign, transfer, or
in any manner provide, in whole or part, the benefit and/or burden of this
Agreement to a subsidiary or Sterling Affiliate. In addition, Sterling may
without consent assign, transfer, or in any manner provide, in whole or part,
the benefit and/or burden of this Agreement to any Sterling Affiliate or
company with which it may merge or form a joint venture with respect to its
pharmaceutical oncology assets; provided that such Sterling affiliate or other
company undertakes and agrees in wiritng to assume, observe and perform the
rights and powers and/or duties and obligations of Sterling under the
provisions of this Agreement being assigned, transferred or otherwise provided.
ARTICLE XVI - MISCELLANEOUS
16.1 ENTIRE AGREEMENT AND INTEGRATION. This Agreement, the Research
Collaboration Agreement, and the Option Agreement constitute the full and
complete agreement and understanding between the Parties and supersede any and
all prior written and oral agreements with respect to The Product. The terms
and conditions of the Research Collaboration Agreement and Option Agreement, to
the extent applicable, shall be incorporated into the provisions of this
Agreement; provided however that in the event of any conflict or inconsistency,
the terms and conditions of this Agreement shall govern. This Agreement may
not be modified or amended without a written instrument executed by CTRC and
Sterling.
16.2 FORCE MAJEURE. Neither party shall be liable for any delay or
default in performance hereunder due to any cause beyond its reasonable
control, including but not limited to acts of God or the public enemy; laws,
regulations, acts or requests of any government or any government officer or
agent purporting to act under duly constituted authority; wars, floods, fires,
storms, strikes, lockouts, interruptions of transportation, freight embargoes,
or failures, exhaustion or unavailability on the open market or delays in
delivery of material, equipment or services necessary to the performance of any
provision hereof; or happening of any unforeseen act, misfortune or casualty by
which performance hereunder is delayed or prevented. The provisions of the
Article 16.2 shall not relieve either party of the obligation to make promptly
when due any monetary payment hereunder and shall not be applicable to
financial difficulties of either party or to the inability of either party to
obtain financing.
16.3 WAIVER. Sterling or CTRC may, by an instrument in writing, extend the
time for or waive the performance of any of the obligations of the other or
waive compliance by the other with any of the convenats or conditions contained
in this Agreement. Any such waiver of a condition or a covenant shall not be
deemed as a waiver of any subsequent breach or default.
16.4 SEVERABILITY. If any term or provision of this Agreement or the
application thereof to any party, person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to any party, person or circumstance
other than those as to which it is held
<PAGE> 18
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 19
IN WITNESS whereof the parties have entered into this Agreement by their duly
authorized officers the day and year first written above.
CTRC RESEARCH FOUNDATION
NAME:_____________________________
TITLE:____________________________
DATE:_____________________________
STERLING WINTHROP INC.
NAME:_____________________________
TITLE:____________________________
DATE:_____________________________
<PAGE> 1
EXHIBIT 10.23
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
RESEARCH COLLABORATION AGREEMENT
BETWEEN THE
CTRC
RESEARCH FOUNDATION
AND
SANOFI
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II--RESEARCH PROGRAM/PROGRAM COUNCIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III--CONSIDERATION - TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - OPTION RIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V--CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI--PUBLICATION AND PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII--TERMINATION OR EXTENSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII--INVENTIONS AND PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IX--WARRANTIES AND INDEMNIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE X--INDEPENDENT CONTRACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE M--ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XIII--GOVERNING LAW AND ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XIV--NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE XIV--MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
LIST OF CTRC RESEARCH PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
EXHIBIT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
RESEARCH BUDGET SANOFI DIRECTED PROJECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
2
<PAGE> 3
RESEARCH COLLABORATION AGREEMENT
THIS AGREEMENT, effective as of December 12, 1995 (the "Effective Date") is by
and between SANOFI, a French corporation (societe anonyme), having its
principal place of business at 32-34 rue Marbeuf, 75008 France (hereinafter
called SANOFI, which expressions includes its affiliates, subsidiaries,
successors and assignees), represented by its President, Jean- Francois DEHECQ
and the CTRC RESEARCH FOUNDATION of 8122 Datapoint, Suite 600, San Antonio,
Texas 78229, U.S.A., Texas non profit corporation (hereinafter called "CTRC",
which expression includes its successors and assignees) represented by Chief
Operating Officer, Institute for Drug Development, Mr. David HIRSCH.
WHEREAS STERLING WINTHROP Inc. (STERLING) and CTRC have previously
entered into a Research Collaboration Agreement and an Option Agreement dated
October 1, 1992;
WHEREAS STERLING and CTRC have entered into an Amendment 1 to the
Research Collaboration Agreement and an Amendment 1 to the Option Agreement,
both to the purpose of extending these Agreements through December 31, 1996,
and making certain changes to the rights and obligations of the Parties for
said calendar year 1996;
WHEREAS, CTRC and STERLING have entered into a License and Development
Agreement dated as of October 1, 1992 concerning the anticancer compound known
as MGBG,
WHEREAS STERLING, CTRC and BIOVENSA (which has changed its name to
ILEX Oncology Inc. (ILEX)) have entered into a Consent, Acknowledgement and
Waiver Agreement dated September 1994 in which CTRC, with STERLING's prior
consent, has assigned to ILEX and ILEX has accepted to assume various assets,
rights and obligations, including those of CTRC under the "MGBG License and
Development Agreement" and those of CTRC concerning the anti-cancer compound
known as Crisnatol Mesylate (Crisnatol Project);
WHEREAS SANOFI has acquired STERLING and subsequently SANOFI has
acquired all rights and obligations pertaining to the aforementioned
Agreements, and SANOFI has decided to discontinue the Crisnatol Project;
WHEREAS CTRC and SANOFI (jointly called the Parties) are desirous of
entering into a new Research Collaboration Agreement (the Agreement) which
reflects, the Parties' current needs and abilities and which, subject to terms
and conditions of this Agreement replaces and supersedes all prior Agreements
including the above mentioned Amendments between the Parties. Subsequently
SANOFI, according to the terms and conditions set forth under article IV of
this Agreement may decide, at its discretion, to enter into a License Agreement
and will study, on a case by case basis, the possibility to provide CTRC with a
related development work plan which shall be agreed upon between the Parties.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
SANOFI and CTRC agree as follows:
ARTICLE I -- DEFINITIONS
1.1 The following words and phrases shall have the following meanings:
1) (( ACQUISITION COSTS )) shall mean those necessary out-of-pockets
costs (applicable to the Field of Use)
3
<PAGE> 4
incurred or paid by CTRC to third party from whom Commercial Rights are
acquired, to obtain Commercial Rights to any Licensed Compound or Licensed
Technology including any licensing fees, future royalty, milestone or other
payment obligations.
2) (( ANALOGUE AND COUNTERPART )) shall mean all members of a chemical
class covered by a composition of matter patent, with respect to a Lead
Compound.
3) (( ANNIVERSARY DATE )) shall mean January 1, 1996 and every January
1st thereafter throughout the term of this Agreement, including extensions
thereof.
4) (( BUSINESS DAY )) shall mean a day on which banks are open for
business in Paris, France.
5) (( COMMERCIAL RIGHTS )) shall mean CTRC's legal right by patent,
contract, agreement, copyright, trademark, or other means to make, have made,
sell or have sold in any country any Compound, material, technology or know-how
within the Field of Use for commercial purposes, including Inventions, Know-How
or Compounds. Effective January 1, 1996 Commercial Rights shall be limited to
Commercial Rights arising from the Research Program.
6) (( COMPOUND(S) )) shall mean all agents, substances or materials which
embody, in part or whole, the Inventions, Patents, Patent Application or
Know-How.
7) (( CTRC AFFILIATE )) shall mean any present or future firm, company,
joint venture or other entity which directly or indirectly is controlled by or
is under the common control of CTRC. "Control" shall mean the legal power to
direct or cause the direction of the general management and policies of such
entity whether through ownership of at least [**] percent of voting
securities, by contract or otherwise.
8) (( CTRC INFORMATION )) shall mean information developed or otherwise
acquired by or for CTRC, including all animal and human laboratory and clinical
data, technical information, Know-How, inventions, techniques, processes,
technology, systems, formulae, results of experimentation, designs, statistics
and records which pertain to Compounds and Technology that are subject to
SANOFI's Option Right set forth in this Agreement, and all information relating
to the contents of this Agreement, including Data Information Packages, which
is necessary to effectuate the grant of license to SANOFI. Effective January
1, 1996 CIRC Information sham be limited to CTRC Information arising from the
Research Program.
9) (( DATA/INFORMATION PACKAGES )) shall mean those documents which CTRC
shall submit to SANOFI in accordance with the terms of this Agreement, if
SANOFI decides to exercise its Option Right, (described under article IV of
this Agreement) and generally will be in the following Compound/Technology
categories:
(i) Compounds which have been tested in human clinical trials.
Data/Information packages will include summaries of and access to all
regulatory filings, clinical studies to date, a description of all
Commercial Rights, preclinical data, clinical, manufacturing and
controls data and all regulatory correspondence.
(ii) Compounds which are, in CTRC's opinion, suitable for human
clinical evaluation. The Data/Information Package is intended to have
such content and quality as to be suitable for filing of an
Investigation New Drug Application (IND) with the Food and Drug
Administration (FDA) with the reasonable expectation of initiating
Phase I clinical trials in human volunteers, and will also include a
description of all Commercial Rights.
(iii) Technology which may be applied in the research and
development of Compounds within the Field of Use. For Technology to
be offered for license there should exist one or more Patent or Patent
Applications and scientific data to indicate that the technology can
immediately be applied to the discovery
4
<PAGE> 5
and development of Compounds within the Field of Use.
Notwithstanding, the above, non-patented technology, including
know-how, may make up, in whole or in part, a Data/Information
Package.
10) ((DATE OF FIRST INVENTION )) shall mean the date as listed in the
scientific notebook code signifying the day in which the concept was first
developed and described.
11) (( FIELD OF USE )) shall mean all applications of a Licensed Compound
or Licensed Technology in the treatment and/or mitigation of cancer in humans.
12) (( FIRST COMMERCIAL SALE )) shall mean the first commercial sale in
any country after the date the New Drug Application (NDA), Compound License
Agreement (CLA) or equivalent application for a Licensed Compound is approved.
13) (( FULL PROJECT FUNDING )) is defined as the funding for the total
costs to support each project as outlined in the Research Project Plan. Full
SANOFI funding is defined as the Full Project Funding outlined in the Research
Project minus external grants.
14) (( FUNDING PERIOD )) shall mean each twelve (12) month calendar
period during which SANOFI makes payments under Article III of this Agreement.
The first Funding Period shall start January 1st, 1996 to December 31, 1996.
15) (( INVENTION )) shall mean any invention or discovery (whether or not
patented or patentable) in the Field of Use which is originated or conceived or
first reduced to practice. Effective January 1, 1996, Inventions shall be
limited to inventions or discoveries (whether or not patented or patentable)
arising from the Research Program.
16) (( KNOW-HOW )) shall mean all technical and other information arising
from the Research Program, including, but not limited to all data, and
information related to, results of experiments, formulae, specification,
procedures, tests, Compounds, cell lines, cultures, constructs, vectors,
development strains, micro-organisms, assay systems, assay protocol and assay
supporting material, fermentation and purification material and techniques.
17) (( LEAD COMPOUND )) shall mean those Compounds emerging from the
Research Program designated by the Program Council for advance scientific
evaluation.
18) (( LICENSE )) shall mean an exclusive license to a Licensed Compound
or Licensed Technology under this Agreement.
19) (( LICENSE AGREEMENT )) shall mean an agreement executed between the
Parties which sets forth the terms under which a Licensed Compound or Licensed
Technology shall be licensed, which agreement shall comply with the provisions
of this Agreement.
20) (( DEVELOPMENT AGREEMENT )) shall mean an agreement executed between
the Parties which sets forth the terms under which a Licensed Compound or
Licensed Technology shall be developed, which agreement shall comply with the
provisions of this Agreement.
21) (( LICENSED COMPOUND )) shall mean a Compound upon which SANOFI has
exercised its Option Right under this Agreement.
22) (( LICENSED TECHNOLOGY )) shall mean a technology or Know-How upon
which SANOFI has exercised its Option Right under this Agreement.
23) (( NET SALES )) shall mean the total of all charges invoiced to
customers by SANOFI, any SANOFI
5
<PAGE> 6
Affiliate, and/or its sub-licensees for Licensed Compound less: (a) normal
trade and cas discounts actually allowed; (b) credits or refunds actually
allowed for spoiled, damaged, out-dated, or returned goods; (c) sales and other
excise taxes imposed and paid directly with respect to the sales; (d)
transportation costs paid on behalf of the customer; and (e) commissions and
rebates; provided, however, that sales between SANOFI and any Affiliate shall
not be included in such computations. No sales of Licensed Compound to any
person(s) shall be counted more than once in the calculation of Net Sales.
24) (( PATENT APPLICATIONS )) shall mean any patent applications with
respect to an Invention.
25) (( PATENTS )) shall mean any patents containing a Valid Claim, granted
on or pursuant to Patent applications, including any continuations, renewals,
extensions or re-issues or any divisions thereof.
26) (( RESEARCH PROGRAM )) shall mean the research and pre-clinical
development program as defined in the Research Program attached hereto under
Exhibit A, funded by SANOFI and agreed to by the Parties, being as defined in
the Research Program Plan.
27) (( RESEARCH PROGRAM PLAN )) shall mean a yearly research plan
outlining the goals/objectives, costs, potential funding sources (both SANOFI
requested and external grants), milestones, timelines, and status of
intellectual property.
28) (( SANOFI AFFILIATE )) shall mean any present or future firm, company
or joint venture or other entity which directly or indirectly controls, is
controlled by or is under the common control of SANOFI. "Control" shall mean
the legal power to direct or cause the direction of the general management and
policies of such entity whether through ownership of at least [**]
percent of voting securities, by contract or otherwise.
29) (( SANOFI INFORMATION )) shall mean any and all information and
technology which is applied to or derived from activities conducted by or on
behalf of SANOFI with respect to any Compounds, materials, technologies, or
Know-How, the rights to which are owned by SANOFI.
30) (( SANOFI PROJECTS )) shall mean any work under the Research Program
on Compounds, materials, technologies, or Know-How, the rights to which are
owned by SANOFI, and to which SANOFI controls the decisions on funding and
program protocols.
31) (( TECHNOLOGY )) shall mean all processes, methodologies, tools and
procedures used to develop and/or analyze compounds including but not limited
to cell lines, cultures, constructs, vectors, development strains,
micro-organisms, assay systems, assay protocol and assay supporting material
fermentation and purification material and techniques.
32) (( VALID CLAIM )) shall mean a claim of an issued Patent relating to a
Licensed Compound or CTRC Information held by CTRC during the existence of the
Patent together with any renewals or extensions thereof or a claim of a Patent
Application, which claim has not been declared or rendered invalid by
re-examination, re-issue, disclaimer or unappealable final judgment of a court
of competent jurisdiction. If no Patent has issued within fifteen (15) years
after the earliest filing date of an application, then the claims of such
application will not be considered valid.
ARTICLE II -- RESEARCH PROGRAM/PROGRAM COUNCIL
2.1 During the term of this Agreement, CTRC shall conduct or procure the
conduct of the Research Program under the direction and responsibility of the
Program Council as outlined in the Research Program approved by the
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<PAGE> 7
Program Council.
2.2 During the period of tills Agreement, CTRC shall provide to SANOFI a
written progress report on its work under the Research Program in the preceding
three (3) month period within twenty (20) working days after the conclusion of
such period.
2.3 CTRC and SANOFI shall each designate two (2) representatives to a
council to plan and oversee all scientific and technical matters relating to
the Research Program (the (( Program Council))). The Program Council will
approve budgets and priorities for the work to be conducted under this
Agreement, in accordance with the allocation formula set forth in Article III.
The representatives will elect a chairperson who will schedule at least two (2)
meetings per year, prepare meeting agendas and issue minutes for each meeting.
The Parties will use good faith efforts to reach a consensus on decisions
affecting the Research Program budget and project priorities.
However failing to reach a consensus, it is understood that CTRC shall have a
tie breaking vote for any budget decision up to an amount of [**]
dollars and that SANOFI shall have a tie breaking vote for
any budget decision over [**] dollars. The Program
Council representatives will deal in good faith at all times in attempting to
reach Agreement.
2.4 Upon reasonable notice to CTRC, SANOFI's representative(s) shall have
the fight to visit, at reasonable intervals, CTRC's research sites and
observe CTRC's activities under the Research Program.
2.5 Upon or prior to the execution of this Agreement CTRC will submit to
SANOFI a proposed Research Program including a written list of all current and
proposed research projects within the Field of Use being conducted by CTRC,
which proposal shall contain the approximate funding requirements for each
research project to be considered by SANOFI for funding in calendar year 1996,
said list being attached under Exhibit A. SANOFI will select the projects it
wishes to fired according to the provisions in Article M and so notify CTRC in
writing prior to November 15, 1995. Projects selected by SANOFI, including
SANOFI Projects, shall constitute the Research Program for 1996. Parties
should proceed according to the same terms in 1996 in order to set forth
funding in calendar year 1997.
2.6 Any Acquisition Costs in excess of [**] ($[**]) dollars shall be
discussed and approved with the Program Council prior to being incurred or paid
by CTRC.
During the term of this Agreement and at SANOFI's request, CTRC agrees to the
extent that it is authorized to do so, to review with SANOFI on a confidential
basis New Research Projects (as defined below) in the Field of Use which are
not encumbered by other Parties and which are not included in the Research
Program. In the event SANOFI wishes to fund any of the New Research Projects
or to license, or obtain an Option Right to license CTRC's proprietary rights
to such projects, CTRC agrees to enter into good faith negotiations with SANOFI
to effect such an agreement.
2.7 Current and proposed Research Projects submitted by CTRC to SANOFI for
its review every year shall come with a brief research plan (5-6 pages)
outlining the goals/objectives, costs, potential funding sources (both SANOFI
requested and external grants), milestones, timelines, and status of
intellectual property.
2.8 CTRC agrees to give SANOFI a first right of review of afl new research
projects (New Research Project) in the Field of Use to which CTRC has the legal
right to develop, make, have made, sell or have sold and which were not
mentioned in the Research Program. The New Research Projects will be
introduced at Program Council meetings. SANOFI has a maximum of ninety (90)
days to review such research project and make the following decisions:
7
<PAGE> 8
a) SANOFI does not fund said New Research Project; in which event
this New Research Project is unencumbered and CTRC has right to find
additional source of funding; however it is understood that CTRC will
inform SANOFI of any firm offer from third parties and will provide
SANOFI with an additional thirty (30) days to reconsider its decision
to fund this New Research Project.
b) SANOFI agrees to fully fund this New Research Project; in which
event, SANOFI shall then have all rights in the New Research Project
according to the terms and obligations of this Agreement;
c) Parties agree to partial SANOFI funding and obtainment of a
mutually agreed third party co-funder. It is understood that SANOFI
shall be part of all negotiations between CTRC and additional
co-funder of such New Research Projects, and rights and royalties
assigned to SANOFI will be negotiated based on the percentage of
SANOFI's funding under said New Research Projects. Terms and
conditions of said SANOFI's participation to such negotiations shall
be mutually agreed upon between the Parties prior the entering into
discussions with such third party co-funder.
After January 1, 1997, if SANOFI decides to fiend a New Research Project, which
is at the discovery level (the project has not reached the development stage and
as such is not ready to go to the FDA for IND), then SANOFI shall pay to CTRC an
exclusive entrance fee of [**] ($ [**] ) dollars according to the terms of
payment as stated under Article HI. It is agreed between the Parties that said
entrance fee shall be spent to support investment of said New Research Project.
2.9 With respect to projects which have previously been funded by SANOFI
(i.e. pre-clinical development or discovery projects to which CTRC has or may
acquire Commercial Rights), but which have ceased to be funded by SANOFI, then
no later than ninety (90) days after being presented to the Program Council,
the Commercial Rights for such projects, to the extent not otherwise subject to
any rights of SANOFI which preexist this Agreement, shall be excluded from
SANOFI's Option Right.
Ninety (90) days after the presentation of such project to the Program Council,
CTRC shall be free, under suitable confidentiality restrictions, to commence
negotiations with third party with respect to said Commercial Rights to such
projects and SANOFI shall have no further rights in such projects.
2.10. The Program Council shall also be in charge of designating the Lead
Compounds.
2.11. It is understood that CTRC will keep specific note books relating to
the Research Program or any New Research Project proposed to SANOFI, which
shall be received by SANOFI or authorized representatives from time to time
upon two weeks advance written notice by SANOFI to CTRC.
ARTICLE III--CONSIDERATION - TERMS OF PAYMENT
3.1 In consideration of the carrying out of CTRC's general research
responsibilities under the Research Program, and in consideration of the other
duties and obligations of CTRC under this Agreement, and subject to the
termination provisions of Article VII herein, SANOFI shall provide funding to
CTRC with in the amount of [**] ($ [**]) dollars for basic research and
preclinical discovery research in fields related to oncology for 1996, and
SANOFI shall provide funding to CTRC in the amount of [**] ($[**] ) dollars
for basic research and preclinical discovery research in fields related to
oncology for 1997.
3.1.1 Payments by SANOFI to CTRC over the term of the Agreement will be
according to the following schedule:
<TABLE>
<S> <C>
January 1, 1996 $[**]
April 1, 1996 $[**]
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C>
July 1, 1996 [**]
October 1, 1996 [**]
January 1, 1997 [**]
April 1, 1997 [**]
July 1, 1997 [**]
October 1, 1997 [**]
</TABLE>
CTRC shall submit an invoice to SANOFI within 30 days prior to each
payment due date.
3.1.2 a) During the Funding Period beginning January 1, 1996 and ending
December 31, 1996:
i) SANOFI Projects-The Parties, through the Program
Council, will first allocate up to [**] dollars
($ [**] ) for each Funding Period to SANOFI Projects.
SANOFI shall control, in its discretion, the planning and
expenditure of such funds.
ii) Other projects-The Parties, through the Program
Council, will allocate [**] dollars ($ [**] ) plus
any of the [**] ($ [**] ) dollars not dedicated to
SANOFI Projects for calendar year 1996 to fund other research
projects including New Research Projects selected by SANOFI to
be included in the Research Program.
During such a period of time, all payments due under this Agreement
i.e. Option Fee, Licensing Fee and Milestone Payment, as well as under
the MGBG License and Development Agreement, except bonus payments, if
any, shall be credited to SANOFI's funding commitment under this
Agreement for 1996, up to a maximum credit of [**]
dollars ($ [**] ). In the event the amount due for such
fees and payments exceeds the maximum credit in said period of time,
CTRC, shall then issue a separate invoice for such excess to SANOFI,
which amount shall be payable by SANOFI within thirty (30) days.
b) During the Funding Period beginning January 1, 1997 and ending
December 31, 1997:
i) SANOFI Projects SANOFI will have discretionary
control in planning and expenditure of up to [**]
dollars ($ [**] ) of the base funding support (
[**] dollars ($ [**] )) for use in
support of pre-clinical research or other research and
development work on SANOFI owned or licensed Compounds and/or
Technology.
Subject to prior express and written consent of SANOFI on a
corresponding estimates provided by CTRC, SANOFI agrees to pay
on a fee-for-service, basis any work conducted by CTRC on
SANOFI owned Compounds/Technology that exceeds [**]
dollars ($ [**] ).
If the SANOFI budget is less than [**]
dollars ($ [**] ), the residual will be allocated to CTRC
research projects. If the amount spent during the fiscal year
is less than [**] dollars ($ [**] ), then:
a) a time credit will be issued to SANOFI if due to delays at
CTRC, or b) be allocated to CTRC New Research Project(s) if
due to delays by SANOFI including changes in priorities issued
at the request of SANOFI.
ii) Other projects The Parties will allocate [**]
dollars ($ [**] ) plus any of the [**]
dollars ($ [**] ) not dedicated to SANOFI Projects for
calendar year 1997 to fund other projects including New
Research Projects selected by SANOFI to be included in the
Research Program. Allocation of funding will be made by the
Program Council.
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c) SANOFI will provide CTRC a research budget for SANOFI directed
research at the beginning of each calendar year (January 1) outlining
its research requests. The first such budget is to be attached
hereinafter under Exhibit B.
3.2 On or after January 1, 1997, the entrance fee of [**]
dollars ($ [**] ) shall be paid to CTRC according to the terms of payment as
stated herein for CTRC New Research Project(s) which are incorporated into the
Research Program.
3.3 SANOFI shall always have the Option to prepay any payments under this
Agreement.
3.4 Save and except licensing and milestones fees, to be paid under a
License Agreement and/or a Development Agreement if any, funds received from
SANOFI, including funds received in case SANOFI decides to enter into a New
Research Project(s) shall be exclusively expended by CTRC in support of the
Research Program and in the conduct of the other duties and obligations of CTRC
under this Agreement.
3.5 Except as otherwise set forth in this Agreement, data, results,
reports and all information contained therein prepared solely by or on behalf
of SANOFI, by a party other than CTRC, which relates to the Research Program,
(including New Research Projects in cases SANOFI decides to enter into it)
including but not limited to SANOFI information, shall remain or become the
exclusive property of SANOFI as well as all data generated on SANOFI Projects.
Except as otherwise set forth in this Agreement, data, results, reports and all
information contained therein prepared by or on behalf of CTRC, in
contemplation of or as a result of performance of this Agreement to the
exclusion of the Research Program, including but not limited to CTRC
Information, shall remain or become the exclusive property of CTRC.
3.6 Notwithstanding other provisions of this Agreement, all Know-How may
be used by either party without restrictions, for non commercial research
purposes only (except for work conducted on SANOFI Projects).
ARTICLE IV - OPTION RIGHT
4.1 GRANT OF OPTION
4.1.1 Upon execution of this Agreement CTRC hereby grants to SANOFI, from
January first 1996 an exclusive option right during the term of this Agreement
as well as during a period of thirty-six (36) months following the termination
of this Agreement to evaluate CTRC Information and obtain a license to any
Commercial Rights which may have accrued under any Research Program, or New
Research Project(s) ((( Option Right ))).
4.1.2 If SANOFI decides to invoke its Option Right or if CTRC decides to
submit to SANOFI for its consideration relative to SANOFI's Option Right a
commercially viable Compound and/or Technology, CTRC shall then provide SANOFI
with a Data/Information Package relative to the Compound or Technology subject
to the Option Right.
a) Upon receipt of a Data/Information Package, SANOFI may
exercise the Option Right by providing to CTRC a written notice of its
intent to exercise its Option Right within the sixty (60) day period,
with respect to its interest in obtaining a license to use CTRC
Information regarding the subject Compound, material, technology or
Know-How, or to support any additional work needed to complete the
Data/Information Package.
If additional time is needed for SANOFI's review or evaluation of a
Data/Information Package, SANOFI
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shall notify CTRC before expiration of the sixty (60) day review
period and state its reasons for seeking an extension of the review
period. If SANOFI's reasons are acceptable to CTRC, which acceptance
will not be unreasonably withheld, the Parties will agree on a
reasonable extension of the review period.
b) If SANOFI elects not to exercise by written notice its Option
Right to license Commercial Rights described in a Data/Information
Package of suitable content and quality, then CTRC, subject to the
terms and conditions of this Agreement shall be free to offer for
license to any third party such Commercial rights, or pursue it for
its own account.
c) In the event that such Data/Information Package, which in the
reasonable exercises of both Parties' judgment, and according to the
knowledge of the pharmaceutical industry state of the art, meets the
criteria of Article 1.1.8., is not of acceptable content and quality
to SANOFI in the reasonable exercise of scientific judgment, SANOFI
may elect to postpone a decision on the exercise of its Option Right
until sufficient work has been completed to provide the
Data/information necessary to meet the criteria of Article 1.1.8.
Such program, subject to SANOFI's express written consent on the cost
of such program, shall be fully funded by SANOFI, and funding which
shall represent the aggregate present value of such funding shall be
fully creditable against future royalties from that Licensed Compound
or Licensed Technology, and SANOFI's Option Right shall be extended
through the funding period.
d) If SANOFI is presented with a Data/Information package which
CTRC believes in good faith to be of suitable content and quality to
meet the criteria of Article 1. 1. 8., but SANOFI believes to be
incomplete or not of acceptable content or quality and SANOFI
expressly declines to fund additional work necessary for such
Data/Information Package, then CTRC may offer such Data/Information
Package to any third party for license and funding support, or pursue
it for its own account. Data/Information packages offered to third
party may not include any of the SANOFI Information without the
written consent of SANOFI, which Agreement shall be granted at
SANOFI's sole discretion.
4.1.3 For all Lead Compounds designated by the Program Council and resulting
from the Research Program or New Research Project(s), entering development and
for which SANOFI decides to exercise its Option Right, the Parties will
negotiate, develop and execute a mutually agreeable written License Agreement,
and Development Agreement as the case may be, SANOFI must exercise its Option
Right for a License Agreement, and Development Agreement as the case may be no
later than the PM submission of said Compound(s).
Notwithstanding any other provision contained herein, if SANOFI decides to
exercise its Option Right with respect to a Lead Compound, then CTRC shall not
grant any license to a third party regarding an Analogue and Counterpart to
said Lead Compound except as may be expressly authorized in the License
Agreement or Development Agreement, as the cas may be.
4.1.4 Upon SANOFI's written notice to CTRC to exercise its Option Right and
the payment of license fees as further described, CTRC will grant to SANOFI an
exclusive, world-wide right and license, with the right to grant sub-licenses,
to possess and utilize such CTRC Information as is necessary for the
development and commercialization of Licensed Compounds or Licensed
technologies in the Field of Use. Such right and license includes exclusive
licenses within the Field of Use under any Patents, Patent Applications,
continuations, continuations in-part and foreign equivalents of same owned by
or assigned to CTRC pertaining to Licensed Compounds or Licensed Technologies.
4.1.5 SANOFI, which shall retain the full authority and responsibility for
defining and conducting the development of a Licensed Compound or Licensed
Technology, shall be entitled, at its discretion, to provide development work
to CTRC according to SANOFI currents and anticipated needs. SANOFI
acknowledges that
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CTRC possesses expertise in the field of oncology compound development and
accordingly SANOFI, on a case by case basis, will in good faith consider the
opportunity, to enter into a Development Agreement with CTRC.
If Parties so decide the Development Agreement and therefore development work
plan shall be as mutually agreed between the Parties. In case the Parties
cannot agree on the tenons of a Development Agreement or a development work
plan SANOFI shall be entitled to enter into such development work with any
third party of its choice. It is understood that SANOFI agrees to use all
reasonable efforts and diligence to diligently develop the Licensed Compound or
the Licensed Technology according to SANOFI's current business strategy.
4.2 EXERCISE OF OPTION RIGHT.
4.2.1 EXERCISE OF OPTION RIGHT ON COMPOUND(S):
(a) Following SANOFI's written notification of its exercise of its Option
Right for a Licensed Compound, and payment of the license fee as provided
hereinafter, the Parties shall negotiate in good faith and execute a License
Agreement, and/or a Development Agreement, if any, for such compound.
(b) The License Agreement, and/or the Development Agreement if any, shall
contain, among other provisions relative to, (i) an agreed development plan, in
case a Development Agreement is entered into), (h) reimbursement and assumption
by SANOFI of Acquisition Costs, (iii) diligence requirements, (iv) development
responsibilities if any, of the Parties and the Program Council, and (v)
provisions for termination, licensing fees, milestone payments and royalties,
as set forth hereinafter.
c) The License Agreement, and/or the Development Agreement if any, shall
be executed within one hundred and twenty (120) days of written exercise of
SANOFI's Option Right. In the event that Parties are unable to reach an
Agreement with respect to particular substantive term or terms of the License
Agreement and/or Development Agreement if any, the Parties agree that the
dispute shall be resolved by reference to the immediately preceding, License
Agreement and/ or Development Agreement, if any, executed between the Parties.
(d) The License shall be effective upon payment of the license fee as
provided hereinafter, regardless of whether the License Agreement, and
Development Agreement if any, has been formally executed by the Parties. In
the event, the Parties are unable to agree to a written Agreement after
utilizing the procedure of Section 4.2. 1 (c) above, the Parties shall submit
the matter to binding alterative dispute resolution mechanism (as selected by
the Parties) to resolve such differences; or, at SANOFI's written request, CTRC
shall return the license fee to SANOFI. In such event, CTRC, with respect to
the terms of this Agreement, shall be free to offer such Commercial Rights to a
third party or pursue it on its own account, without further obligation to
SANOFI.
4.2.2 EXERCISE OF OPTION ON TECHNOLOGY:
(a) Following SANOFI's written notification of its intent to exercise its
Option Right for Technology, the Parties shall negotiate in good faith in order
to execute License Agreement, and/or Development Agreement as the case may be,
for such Technology.
(b) In agreeing to the terms of the License Agreement and/or Development
Agreement for the Technology, the Parties will consider, among other things,
competing technologies, the potential market for the Technology or services
enabled by the Technology, and the costs/benefit of the resulting Technology or
services. The Agreement shall contain provisions for licensing fees, if any,
reimbursement of Acquisition Costs, development responsibilities if any, and
provisions for milestone payments and royalties, as set forth hereinafter.
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(c) The License Agreement, and/or Development Agreement as the case may
be, for a Licensed Technology will be executed within one hundred twenty (120)
days of written notice of SANOFI's intent to exercise its Option Right. Upon
execution of such Agreement, SANOFI shall pay the license fee, if any, for such
Licensed Technology.
(d) If the Parties are unable to reach an Agreement on a License
Agreement, and/or Development Agreement if any, for such Technology, after good
faith negotiations, as set forth above, then CTRC shall be free to negotiate
with third party with respect to such Technology; provided that, the terms of
any technology license offered to any third party by CTRC may not materially
differ from the terms offered to SANOFI.
4.3. FEES, MILESTONES, PAYMENTS AND ROYALTIES.
4.3.1. LICENSING FEE: The licensing fees, which shall be paid upon due
execution, of the corresponding License Agreement and which are inclusive of
the fees under a Development Agreement if any, to be paid by SANOFI to CTRC are
as follows:
(a) [**] dollars ($ [**] ) for a Licensed Compound if
the leading indication as specified in the corresponding License Agreement
and/or Development Agreement if any, is used in the treatment of breast,
colorectal or non-small cell lung cancer (hereinafter Major Indications); or
(b) [**] dollars ($ [**] ) for a Licensed Compound
if the leading indication, as specified in the corresponding License Agreement,
and/or Development Agreement, if any, is intended for use in the treatment of
any cancer, other than breast, colorectal or non-small cell lung, up to a
maximum of two such indications for a Licensed Compound;or
(c) For Licensed Technology, the Parties will negotiate in good faith
appropriate licensing fees, if any, considering competing technologies, the
potential market for the services enabled by the Technology, and the
cost/benefit of the resulting services.
(d) Licensing Fees on Analogues and Counterparts to Licensed Compounds,
which shall be paid by SANOFI to CTRC upon due execution of an appropriate
Licensing Agreement, Development Agreement and/or amendment thereto, if any,
are as follows:
(i) [**] ($ [**] ) dollars for Analogues and Counterparts
to a Licensed Compound for such indication as agreed between the Parties in the
corresponding. License Agreement, and Development Agreement, if any, and
(ii) Based upon the type of indication, [**] dollars
($ [**] ) for Major Indication, or [**] dollars
($ [**] ) for other indications, will be paid at the time of receipt of NDA
approval or equivalent for said Analogues and Counterparts to Licensed
Compound.
(e) The total amount of Licensing Fee to be paid by SANOFI shall in no
case exceed [**] dollars ($ [**] ) for each Compound or
Technology. Example: If SANOFI exercises its Option Right to license a
Compound or Technology which is intended for the treatment of breast cancer, as
well another indication such as prostate cancer, CTRC is entitled only to a
license fee of the Major Indications that being [**] dollars
($ [**] ) for breast cancer. No additional license fee need to be paid by
SANOFI for the indication of prostate cancer.
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4.3.2. MILESTONE PAYMENTS: Upon achievement of any development or
commercialization defined hereinafter, SANOFI will pay to CTRC a Milestone
Payment as specified below:
a) Upon the first pre-NDA meeting as agreed upon between the
Parties, pre-CLA, or equivalent by SANOFI or CTRC for each Licensed
Compound in each of the U.S., Japan or one of the first major
countries of the European Union (EU) (i.e. France, United Kingdom,
Germany), SANOFI will pay to CTRC a global lump sum Milestone Payment
of [**] dollars ($ [**] ); and
b) Upon receipt by SANOFI or CTRC of an approval to sell
commercially each Licensed Compound or Licensed Technology in the
U.S., Japan or the first major country of the EU for each new approved
indication, for a maximum of two such indications, SANOFI will pay to
CTRC a milestone payment according to following principles:
<TABLE>
<S> <C>
1st (US or Japan or first Major EU Country) $ [**] ($)
2nd $ [**] ($)
3rd $ [**] ($)
</TABLE>
The total amount of milestone payments per Licensed Compound or Licensed
Technology to be paid by SANOFI shall in no case exceed [**]
dollars ($ [**] ).
4.3.3. ROYALTIES.
a) For each Licensed Compound sold by SANOFI, Affiliate or sub-licensee,
SANOFI will pay to CTRC royalty payments of [**] percent ([**]) (said royalty be
inclusive of any license fee or royalty which may be incurred by CTRC) on Net
Sales of such Compound as follows. Such royalties will be paid until the last
to expire of all Valid Claims for that Licensed Compound or market exclusivity
for that Licensed Compound winch has been obtained by statutory or regulatory
grant or decree, such as the Drug Price Competition and Patent Term Resolution
Act of 1984 or foreign counterpart. However it is understood that for each
Licensed Compound not covered by a Valid Claim or market exclusivity such
royalties will be paid until ten (10) years after the date of First Commercial
Sale for that Licensed Compound.
b) For each Licensed Technology covered by one or more Valid Claims, the
Parties will negotiate in good faith an appropriate royalty, taking into
consideration competing technologies, the potential market for the Technology
or services enabled by the technology and the cost/benefit of the resulting
Technology or services. Such royalties will be paid until the last to expire
of all Valid Claims for that Licensed Technology or market exclusivity for that
Licensed Technology which has been obtained by statutory or regulatory grant or
decree, such as the Drug Price Competition and Patent Term Resolution Act of
1984 or foreign counterpart. However it is understood that for each Licensed
Technology not covered by a Valid Claim or market exclusivity such royalties
will be paid until ten (10) years after the date of First Commercial Sale for
that Licensed Technology.
c) Starting with the first calendar quarter ending at least sixty (60)
days after the First Commercial Sale of a Licensed product meaning a Licensed
Compound or Licensed Technology (Licensed Product), SANOFI shall make written
financial reports and royalty payments to CTRC within thirty (30) days after
the end of each calendar quarter. Such reports shall state the number,
description and aggregate Net Sales of Licensed Compounds and/or Technologies,
as the case may be, during such completed calendar quarter, and the resulting
calculation of earned royalty payments due to CTRC for such completed calendar
quarter. With each such report SANOFI shall include payment due to CTRC of all
royalties for the calendar quarter covered by such report. The remittance of
royalties payable on Net Sales of Licensed Compounds and/or Technologies, as
the case may be, shall be made to CTRC at the official rate of exchange of the
currency of the country from which the
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royalties are payable, as quoted by the Wall Street Journal (or in the event
there is no Wall Street Journal quote for such currency, the rate of exchange
shall be established by the issuer of such currency) for the last business day
of the calendar quarter in which the royalties are payable; less any
withholding or transfer taxes which are applicable. SANOFI shall supply CTRC
with proof of payment of such taxes paid on CTRC's behalf and shall cooperate
with CTRC in obtaining credit or refund of any such taxes. The Parties shall
cooperate with each other in making lawful arrangements in the event royalties
payable by SANOFI are earned in a country whose currency is blocked on exchange
into U.S. Dollars. Whenever any payment hereunder shall be stated to be due
on a day that is not a business day such payment shall be made on the
immediately succeeding business day.
d) SANOFI shall promptly notify CTRC in writing of all submissions to
appropriate regulatory authorities for approvals to sell Licensed Products in
any country ; of the date such approvals are granted : and the date of the
First Commercial Sale of such Licensed Compounds and/or Technologies, as the
case may be, under this Agreement.
e) SANOFI shall keep true and accurate records and books of accounts
containing all data necessary for the calculation of the royalties payable to
CTRC under this Agreement. Such records and books of account for the prior
three (3) year period shall be made available at SANOFI's principal office in
FRANCE on reasonable notice at all reasonable times during SANOFI's normal
business hours for inspection by an independent auditor on behalf of CTRC or by
an authorized office or CTRC.
4.4. CTRC IN-LICENSED COMPOUNDS
Compounds that are in-licensed to CTRC and then are offered to SANOFI as
potential co-development candidates, shall have a written License Agreement,
and Development Agreement plan as the case may be, with a specific and
appropriate milestone and royalty schedule to be negotiated in good faith
between the Parties.
4.5. REIMBURSEMENT
CTRC agrees to reimburse SANOFI for costs under Research Programs which have
been funded after the date of the First Invention which relate to Compound(s)
and/or Technology for which SANOFI has decided not to exercise its Option Right
which Compound(s) and/or Technology have been licensed by CTRC.
The amount of reimbursement to be paid by CTRC to SANOFI shall be equal to the
total amount by which SANOFI funded the costs after the Date of First
Invention, for said Compound or Technology, said amount being adjusted for
inflation and SANOFI shall only be reimbursed to the extent that CTRC receives
royalties on the marketed Compounds or Technology, but not to exceed, [**] per
cent ([**]) per year of world-wide Net Sales of said Compounds and Technology
and CTRC shall obligated to pay SANOFI upon its receipt of payment of its
royalties for said Compound or Technology.
ARTICLE V--CONFIDENTIALITY
5.1 CTRC and SANOFI recognize that the conduct of the Research Program may
require the transfer of Confidential Information between the Parties.
It is therefore agreed that each Party shall retain in confidence the
Confidential Information of the other Party during the term of this Agreement
and for a period of ten (10) years from the date of receipt of the information.
Each Party shall not use such Confidential Information for any purpose except
as permitted in this Agreement and shall not disclose such Confidential
Information to any Third Party, other than Affiliates, or third party who agree
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to be bound by similar confidentiality provisions as contained in this article,
except as permitted by this Agreement.
5.2 The term (( Confidential Information )) as used herein in the case of
documentary information, shall mean that documentary information which is
marked as confidential at the time when it is given to the receiving party.
Confidential Information which is originally orally disclosed and identified as
confidential shall include only that information which is identified as
Confidential Information by written communication from the disclosure to the
recipient sent within thirty (30) days after it is originally disclosed in
oral, non-tangible form.
5.3 The term "Confidential Information" shall not include:
a) Information which was in the public domain at the time of
disclosure;
b) Information which after disclosure, becomes part of the public
domain through publication or otherwise, except by breach of
this Agreement;
C) Information which the recipient can demonstrate based on
written records was already in its possession prior to its
disclosure under this Agreement; or
d) Information which any Party receives from an independent third
party which has the right to disclose it to such Party.
5.4 The obligations of confidentiality set forth herein shall not apply to
any information to the extent that such information:
a) Is required to be disclosed by order of a court of law or
appropriate government agency or otherwise required by law;
b) Is submitted to governmental agencies to facilitate the
issuance of marketing approvals for Licensed Compounds or
Licensed Technologies;
c) Is reasonably required to be disclosed to third party such as
patent agents in the filing, prosecution and issuance of
Patents as permitted under the terms of this Agreement;
d) Has been approved for publication by the Parties; or
e) Is Compound-related information which is reasonably required
to be disclosed in connection with marketing or sublicensing
activities with respect to Compounds.
ARTICLE VI-PUBLICATION AND PUBLICITY
6.1 The right of publication or oral presentation, including the results
from the Research Program related to this Agreement, shall be subject to prior
review and approval by the SANOFI's publication procedure committee (the
Committee), in order to review for concerns such as potential Confidential
Information or patentable information. Such review will be completed within
thirty (30) days from the date of receipt by the Committee of publication
demand, and such approval will not unreasonably be withheld.
Failure by the Committee to act within thirty (30) days of receipt of a
publication or presentation proposal shall be deemed an approval by the
Committee. After approval, Patent Application filings by either Party shall be
the responsibility of the respective Party.
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6.2 CTRC and SANOFI agree that they will not make any public
announcements, press releases or otherwise publicize the contents of this
Agreement, the relationship of the Patties hereunder, or any work to be
conducted hereunder without first obtaining prior written approval of the other
party. Further, no party shall use the name of the other party in any form of
publicity, advertising or promotion without the written permission of that
party.
ARTICLE VII--TERMINATION OR EXTENSION
7.1 This Agreement shall terminate on December 31, 1997, unless earlier
terminated or extended for an additional one (1) year period by mutual written
Agreement of the Parties. It is however understood that if Parties intend to
extend this Agreement under the same terms and conditions as set forth herein
such extension decision shall be agreed upon in writing no later than ninety
(90) days before the aforementioned termination date.
7.2 If the Parties decide to modify terms and conditions of this
Agreement, prior to its termination in order to effectuate an extension and/or
renewal of this Agreement, seventy-five (75) days prior to the termination date
of this Agreement, the Parties shall mutually consent in writing to extensions
of this Agreement. The terms and conditions of such extensions are to be
negotiated and agreed upon by the Parties within forty-five days (45) of such
mutual consent, but in no event later than seventy-five (75) days after the
such mutual consent.
7.3 Either SANOFI or CTRC may terminate this Agreement by notice in
writing to the other if the other commits a material breach of this Agreement
which, in the case of a breach capable of remedy, shall not have been remedied
within thirty (30) days of the receipt by the other of notice identifying the
breach and requiring its remedy.
7.4 If CTRC suffers a substantial inability to perform its obligations
under this Agreement, the Parties will meet in good faith to determine if such
deficiencies can be corrected in a reasonable period of time. If no reasonable
correction is available, then SANOFI will have the right, upon three (3) months
notice to terminate this Agreement. The Parties will, in good faith, decide if
termination can be accomplished sooner, in a manner which will not disrupt
CTRC's future business.
7.5 In the event of termination of this Agreement, the rights and
obligations of the Parties which have accrued up to such time shall survive and
remain enforceable, including, but not limited to Articles IV, V, VI, VIII of
this Agreement.
ARTICLE VIII-INVENTIONS AND PATENTS
8.1 SANOFI Inventions
CTRC recognizes that the SANOFI's Information and/or broadly speaking all
materials furnished by SANOFI if any under this Agreement are the sole and
exclusive property of SANOFI, and accordingly CTRC agrees to use said SANOFI's
Information and/or materials only to perform its obligations under the present
Agreement.
All Inventions developed solely by SANOFI or with a third party shall be the
sole and exclusive property of SANOFI. The industrial exploitation by SANOFI,
if any, will, therefore, not entitle CTRC to any royalties or other
indemnities. In any such case SANOFI shall be the sole and exclusive owner of
the results generated by this Agreement on SANOFI's Information/Projects.
8.2 Joint Inventions- All Inventions developed jointly by CTRC and SANOFI
shall be the property of CTRC and SANOFI, subject to the provisions of this
Agreement and the Option Agreement. If SANOFI exercises its Option
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Right, SANOFI, at its discretion shall be responsible for filing and
prosecuting all Patent Applications for afl Joint Inventions. Alteratively,
SANOFI can fund such costs through the Research Program Funding. If SANOFI
elects not to prosecute a potentially patentable Joint Invention, then CTRC, at
its discretion and expense, may seek patent protection for such Invention.
CTRC and SANOFI each grants to the other a non-exclusive, royalty free,
world-wide license to use such Joint Inventions for each party's own research
purposes.
8.3 CTRC Inventions- All Inventions developed solely by CTRC shall be the
property of CTRC subject to the provisions of the SANOFI Option Right. CTRC
agrees to prepare a record of invention in writing of any Invention made within
the Field of Use, and arising from the Research Program which is potentially
patentable and shall submit same to SANOFI for notification and review. CTRC
shall be responsible, at its discretion, for filing and prosecuting Patent
Applications for all CTRC Inventions. If CTRC elects not to prosecute a
potentially patentable Invention, then SANOFI, at its discretion and expense,
may seek patent protection for such Invention.
8.4 CTRC agrees to have executed by its employees or any contractors or
individuals working on Research Program, appropriate documents submitted by
SANOFI to obtain, perfect or maintain title to CTRC Inventions and Joint
Inventions. CTRC agrees also to cause its employees to furnish information and
data in their possession reasonably necessary to maintain such Patents in
accordance with the provisions of this Agreement.
8.5 The Program Council will coordinate mutual patent strategy between the
Parties in order to effectuate the purposes of this Agreement and the possible
License Agreement, it being understood that with regard to CTRC Inventions,
CTRC shall bear cost related to patent application, divisions, continuations or
reissue thereof.
8.6 Subject to the confidentiality provisions of this Agreement, SANOFI
and/or any other third party duly appointed by SANOFI, shall be entitled within
thirty (30) days from the date of execution of this Agreement to perform a
intellectual property review of the current work of CTRC under the Research
Program. All such visits shall be of reasonable duration during normal
business hours upon two weeks advance written notice by SANOFI to CTRC.
ARTICLE IX-WARRANTIES AND INDEMNIFICATIONS
9.1 Each party hereby represents that as of the date of this Agreement it
has the full right and authority to enter into and perform this Agreement, and
that each party is free of any duties or obligations to third party which may
conflict with the terms of this Agreement.
9.2 Each party shall defend, indemnity, and hold harmless the other party
and as much as they are concerned its affiliates from any and all claims,
losses, expenses, costs or damages arising from or related to any breach of a
party's obligations, or any negligent act, fault, or omissions of said party
under this Agreement. However SANOFI shall not be liable to CTRC or its
affiliates, nor shall CTRC be liable to SANOFI or its affiliates, for any
indirect incidental or consequential damages, including but not limited to loss
of profit, benefits or goodwill.
9.3 Both Parties, SANOFI and CTRC represent and warrant to the other party
that the Inventions, Know-How results, data, documents, trademark, copyrights
and information provided by each party and used in performance of this
Agreement, do not infringe any third party copyrights or other industrial
property rights.
Accordingly, each party shall defend, indemnity, hold ham-Jess and protect the
other party against any and all claims which might be based on the alleged
infringement of third party copyrights or other industrial property rights as a
consequence of the use and/or disposal in any manner of the Inventions,
Know-How results, data, documents, trademark, copyrights and information
provided by said party under this Agreement.
9.4 CTRC and SANOFI each warrants that it will comply with all applicable
laws and regulations in connection
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with its performance of this Agreement, including the Food, Drug and Cosmetic
Act and the Animal Health Welfare Act.
ARTICLE X-INDEPENDENT CONTRACTOR
In the performance of this Agreement, the status of CTRC, including its
employees and agents, shall be that of independent contractors and not as
employees, agents, or fiduciaries of SANOFI and as such have no right to make
commitments for or on behalf of SANOFI.
ARTICLE XI--ASSIGNMENT
11.1 Subject to the provision of Article 11.2 and 11.3 below, no party to
this Agreement shall assign to any third party the benefit and/or burden of
this Agreement without the prior written consent of the other, which consent
shall not be unreasonably withheld.
11.2 CTRC shall be entitled, with the consent of SANOFI which shall not be
unreasonably withheld, to assign, transfer, or in any manner provide, in whole
or part, the benefit and/or burden of this Agreement to a subsidiary or CTRC
Affiliate or the University of Texas Health Science Center at San Antonio.
Provided that such CTRC Affiliate, subsidiary, or UTHSCSA undertakes and agrees
in writing to assume, observe, and perform the rights and powers and/or duties
and obligations of CTRC under the provisions of this Agreement, being assigned,
transferred or otherwise provided.
11.3 SANOFI shall be entitled, with prior notice to CTRC, to assign,
transfer, or in any manner provide, in whole or part, the benefit and/or burden
of this Agreement to any subsidiary or SANOFI Affiliate or company with which
it may merge or form a joint venture with provided that such SANOFI Affiliate
or other company undertakes and agrees in writing to assume, observe and
perform the rights and powers and/or duties and obligations of SANOFI under the
provisions of this Agreement being assigned, transferred or otherwise provided.
SANOFI shall be entitled, with CTRC's prior consent, which shall not be
unreasonably withheld, to assign, transfer, or in any manner provide, in whole
or part, the benefit and/or burden of this Agreement to a third party.
ARTICLE XII--GOVERNING LAW AND ARBITRATION
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the state of New-York.
Any dispute arising in connection with or out of the performance or the
interpretation of this Agreement, which the Parties cannot settle amicably
shall be finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce, which Rules are deemed to be incorporated by
reference into this clause.
The Board of arbitrators which shall convene in New-York (USA and shall be
conducted in English language, shall be made of three arbitrators, each party
shall appoint one arbitrator of its choice, and third arbitrator shall be
designated by the two other arbitrators.
19
<PAGE> 20
ARTICLE XIII--NOTICE
13.1 Any notice or other document to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if left at or sent by
mail by: a) First class, registered, express or air mail, or b) Telex,
facsimile or other electronic media to a party at the address or facsimile
number set out below for such party or such other address as the party may from
time to time designate by written notice to the other:
Address of SANOFI
SANOFI RECHERCHE,
371 rue du Professeur J. BLAYAC
34184 Montpellier Cedex 04 FRANCE
Attention: Pierre GROS
Copy to: Legal Department
SANOFI PHARMA
78-84 Avenue Raspail
94255 - GENTILLY Cedex, FRANCE
Address of CTRC
CTRC Research Foundation
8122 Datapoint, Suite 1000
San Antonio, Texas 78229 U.S.A.
Attention: Mr. David J. HIRSCH
Copy to:
David BUTLER
Cox & Smith Incorporated
112 E. Pecan, Suite 1800
San Antonio, Texas 78205
ARTICLE XIV--MISCELLANEOUS
14.1 ENTIRE AGREEMENT.
This Agreement, and its Exhibits, and any License Agreement, and Development
Agreement as the case may be, executed contemporaneously herewith, embody and
set forth the entire Agreement and understanding of the Parties and supersede
all prior oral and written Agreements, understanding or arrangements relating
to the subject matter of this Agreement, it being understood that all
Invention, Know-How, Technology in the Field of Use, arising out of the
previous Research Collaboration Agreement signed between the Parties October 1,
1992 and for which SANOFI is otherwise entitled to exercise its Option Right
under said agreement shall be covered by this Agreement.
14.2 AMENDMENT.
This Agreement shall not be modified or amended without a written instrument
executed by CTRC and SANOFI.
14.3 WAIVER.
No failure or delay on the part of any Party hereto to exercise any right or
remedy under this Agreement shall be
20
<PAGE> 21
construed or shall operate as a waiver thereof, neither shall any single or
partial exercise of any right or remedy, under this Agreement preclude the
exercise of any other right or remedy not preclude the further exercise of such
right or remedy as the case may be.
14.4 SEVERABILITY.
If any term or provision of this Agreement or the application thereof to any
party, person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to any party, person or circumstance other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be void and enforced to the fullest
extent permitted by law.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement:
SANOFI
BY MR. JEAN-FRANCOIS DEHECQ BY MR. GERARD LE FUR
TITLE PRESIDENT TITLE DIRECTOR RESEARCH & DEVELOPMENT
DATE: DATE:
----------------------------- --------------------------------
CTRC
BY: MR. DAVID HIRSCH
TITLE CHIEF OPERATING OFFICER
DATE:
----------------------------
21
<PAGE> 22
EXHIBIT A
LIST OF CTRC RESEARCH PROJECT
22
<PAGE> 23
CTRC/IDD RESEARCH PROJECT PROPOSALS - 1996
<TABLE>
<CAPTION>
PRINCIPLE SANOFI $ 1996
PROJECT PROPOSAL INVESTIGATOR(S) DECISION FUNDING
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
To Identify Novel Telomerase Inhibitors S-F. Chen Fund
from the Sanofi Winthrop Library
Automated Telomerase Inhibitor Assay & D. Sun Fund
Associated Purificaiton of Telomerase
Design Nucleoside/Nucleotide Analog as S-F. Chen Not Funded ---
Telomerase Inhibitors
Rational Approach to the Design of M. Salazar & L. Hurley Fund
Telomerase Inhibitors
Characterization of the Telomerase B. Windle Fund Pending Revision
Target
Telomerase & Telomerase in Primary and D. Von Hoff Fund
Metastic Human Tumors
Evaluation of Sanofi Compounds in Viro D. Dexter Fund as Sanofi Directed ---
Project
Development of New In Vivo Models D. Dexter Fund as Sanofi Directed ---
Project
Evaluation of Sanofi Directed Research S-F. Chen Fund as Sanofi Directed ---
Compounds Using Various In Vivo Studies Project
Evaluation of Sanofi Winthrop Compounds D. Von Hoff Fund as Sanofi Directed ---
in the Human Tumor Cloning Assay Project
Oxaliplatin-Induces Lesions in Cellular J. Woynarowski Fund as Sanofi Directed ---
DNA Project
Optimizing the Antitumor Activity of D. Von Hoff Fund Pending Revision & ILEX
MGBG Approval
Induction of Apotosis by MGBG D. Von Hoff Fund with Revision & ILEX
Approval
Exploitation of Novel Leads in the L. Hurley Not Funded ---
Naphthalimide Series (AB Series) of
Compounds
Topoisomerase II Inhibitors Based on S. Kerwin & L. Hurley Not Funded ---
Breaking the Symmetry of
Quinobenzoxazine-Mg2+2:2 Dimers
Targeting of a Unique Subgroup of PT- L. Hurley Fund with Revision
DNA Lesions: The Rational Design of a
New Platinum Chemotherapeutic Agent
BCL-2 as a Target for DNA-Reactive J. Woynarowski Not Funded ---
Agents
DNA Topoisomerase I-targeted Therapy S-F. Chen Fund
for Prostate Cancer
Transcription Complexes as Targets for G. Das Not Funded ---
Selective Intervention of Specific Gene
Expression
Extrachromosomal DNA J. McGill & G. Eckhardt Not Funded ---
Human Helicase and Ligase as Novel D. Sun Not Funded ---
Targets
GRAND TOTAL $
</TABLE>
23
<PAGE> 24
EXHIBIT B
RESEARCH BUDGET SANOFI DIRECTED PROJECTS
25
<PAGE> 25
1996 SANOFI DIRECTED RESEARCH AT CTRC/IDD
<TABLE>
<CAPTION>
Project (brief description of studies) Unit Costs Cost per Project
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NEUROPEPTIDE RECEPTOR ANTAGONIST
In Vitro MTT Combination Assays - 6 compounds x 4 cell lines @$531 $
New In Vitro Model Development - 3 new models @$1,985
Receptor Studies - 4 compounds, 2 cell lines @5,000 (subcontracted)
In Vivo Evaluations - 2 xenografts, 4 compounds; separately
NEUROPEPTIDE RECEPTOR ANTAGONIST PROJECT SUBTOTAL
MDR REVERSING AGENTS
In Vitro MTT Combination Assays - 5 cell lines @$500
New In Vitro Model Development - 3 new models @$1,985
In Vivo Evaluations - 3 compounds, 2 xenografts, 2 murines,
simultaneously
MDR REVERSING AGENT PROJECT SUBTOTAL
OXALIPLATIN
Mechanism of Action Studies - J. Woynarowski proposal
In Vivo Evaluations - 4 xenografts, combination studies @$23,667
OXALIPLATIN PROJECT SUBTOTAL
CLOPIDOGREL ENANTIOMER
In Vivo Evaluations - 1 xenograft, 1 murine, 1 compound
CLOPIDOGREL ENANTIOMER PROJECT SUBTOTAL
ELASTASE INHIBITOR
In Vivo Evaluations - 1 xenograft, 1 murine, 1 compound
ELASTASE INHIBITOR PROJECT SUBTOTAL
IN LICENSE CANDIDATES
In Vitro MTT Combination Assays - 3 compounds, 3 cell lines @$500
In Vitro Clonogenic Combin. Assays - 3 compounds, 3 cell lines @$1,526
In Vivo Evaluations - 3 compounds, 2 xenografts, 2 murines; separately
IN LICENSE CANDIDATES PROJECT SUBTOTAL
THIOXANTHONE ANALOGUES
In Vivo Evaluations - 2 compounds in 3 xenografts
THIOXANTHONE ANALOGUES PROJECT SUBTOTAL
HUMAN STEM CELL EVALUATIONS
Yearly Volume - 6 compounds in 200 evaluable tumors, 1-hour and
continuous exposure @$37
HUMAN STEM CELL EVALUATIONS PROJECT SUBTOTAL
CONTINGENCY FUNDING FOR PRICE ADJUSTMENTS/UNFORSEEN WORK
GRAND TOTAL
</TABLE>
26
<PAGE> 1
EXHIBIT 10.24
CONSENT, ACKNOWLEDGMENT AND
WAIVER AGREEMENT
This CONSENT, ACKNOWLEDGMENT AND WAIVER AGREEMENT (the "Agreement")
dated as of September__, 1994 is entered into by and among CTRC Research
Foundation, a Texas not-for-profit corporation ("CTRC"), Sterling Winthrop
Inc., ("Sterling"), and Biovensa Inc., a Delaware corporation ("Biovensa").
RECITALS
WHEREAS, CTRC's mission includes the discovery, initial development
and testing of therapeutic agents and pharmaceutical products for the treatment
of human cancers;
WHEREAS, Sterling, which is in the process of being acquired by
Sanofi, is involved in the development, manufacture and sale of agents and
pharmaceutical products intended for the treatment of human cancers and is
expected to continue such activities both directly and possibly through its
affiliation with Sanofi after its acquisition by Sanofi;
WHEREAS, Biovensa is a wholly-owned subsidiary of CTRC and was
established to engage in the manufacture and commercial development of
therapeutic agents and pharmaceutical products for the treatment of human
cancers;
WHEREAS, CTRC and Sterling have entered into the Option Agreement,
dated as of October 1, 1992 and amended effective as of April 1, 1994, attached
as Exhibit A hereto (the "Option Agreement"), which Option Agreement provides
Sterling an exclusive option for a designated period to obtain a license to
certain commercial rights of CTRC;
WHEREAS, CTRC and Sterling have entered into the Research
Collaboration Agreement, dated as of October 1, 1992 and amended effective as
of April 1, 1994, attached as Exhibit B hereto (the "Research Collaboration
Agreement"), which Research Collaboration Agreement provides that CTRC and
Sterling shall undertake various cooperative research program activities;
WHEREAS, CTRC and Sterling have entered into that License and
Development Agreement dated as of October 1, 1992 concerning the cancer
compound known as MGBG and attached as Exhibit C hereto (the "MGBG License and
Development Agreement"); and
WHEREAS, in connection with the development of Biovensa's business,
(i) CTRC intends to assign to Biovensa and Biovensa intends to assume various
assets, rights and obligations, including those of CTRC under the MGBG License
and Development Agreement and those of CTRC concerning the anticancer compound
known as Crisnatol Mesylate ("Crisnatol") under the Option Agreement, and
Sterling wishes to consent and
<PAGE> 2
agree to such assignments; and (ii) CTRC, Sterling and Biovensa wish to
acknowledge their understanding and agree, except with respect to the compound
Crisnatol, that the terms and provisions of the Option Agreement and Research
Collaboration Agreement shall not be applicable to or otherwise binding upon
Biovensa.
NOW THEREFORE, in consideration of the premises contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties hereby agree as follows:
1. Consent to Assignment and Assumption. Pursuant to Article XV
of the MGBG License and Development Agreement and Article 5.2 of the Option
Agreement, Sterling hereby consents to the assignment by CTRC to Biovensa, and
the corresponding assumption by Biovensa of all of CTRC's rights, obligations
and commitments, including but not limited to all rights of CTRC to receive
compensation and royalties and reimbursement for expenses, arising under the
MGBG License and Development Agreement, and relating to the compound Crisnatol
arising under the Option Agreement. Biovensa agrees that effective as of the
date hereof it will perform all obligations of CTRC under the MGBG License and
Development Agreement and with respect to the compound Crisnatol under the
Option Agreement, and Sterling agrees that effective as of the date hereof it
will make all payments and reimbursements thereunder directly to Biovensa.
2. Acknowledgment and Waiver of Sterling. Sterling acknowledges
that, except for any rights exclusively concerning Crisnatol arising under the
Option Agreement, it does not have and shall not and will not have any rights
or options pursuant to the Option Agreement, the Research Collaboration
Agreement or otherwise with respect to the therapeutic agents, (collectively,
the "Designated Agents, Products and Activities") or with respect to
therapeutic agents, pharmaceutical products and other products and activities
of Biovensa the pursuit or investigation of which is commenced by Biovensa
after the date hereof (collectively, the "Prospective Agents, Products and
Activities"). Effective as of the date hereof, Sterling hereby waives any and
all rights, entitlements and options that might be construed to exist now or in
the future in favor of it under the Option Agreement or Research Collaboration
Agreement relating to the Designated Agents, Products and Activities and any
Prospective Agents, Products and Activities and hereby releases Biovensa from
any and all terms and conditions of such agreements that might be deemed
applicable to it.
3. Acknowledgment of Biovensa. Biovensa acknowledges and agrees
that it shall not acquire or develop any of CTRC's Commercial Rights (as that
term is defined in the Option Agreement) in violation of Sterling's rights
pursuant to the Option Agreement and the Research Collaboration Agreement.
4. Miscellaneous.
4.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
without giving effect to
2
<PAGE> 3
any choice or conflict of law provisions or rules (whether of the State of New
York or otherwise) that would cause the application of the laws of any
jurisdiction other than the State of New York.
4.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and their successors and
assigns, however, except as otherwise provided below, no party may assign its
rights, interests or obligations hereunder without the prior written consent of
the other parties. Notwithstanding the foregoing prohibition on assignments,
Sterling shall be permitted to assign its rights, interests or obligations
hereunder to Sanofi or any affiliate thereof without the consent of any other
party hereto.
4.3 Execution in counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument.
4.4 Titles and Headings. The titles and headings to sections
contained herein are for purposes of reference only, and shall not affect the
provision hereof.
4.5 Amendment and Modification. The terms of this Agreement may
be amended, modified, waived or supplemented only by mutual consent set forth
in a writing duly signed by the parties hereto.
4.6 Severability. In case any of the provisions contained in this
Agreement are found to be invalid, illegal or unenforceable in any respect, any
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision has been limited or modified (consistent
with its general intent) to the extent necessary so that it shall be valid,
legal and enforceable, or if it shall not be possible to so limit or modify
such invalid or illegal or unenforceable provision or part of a provision, this
Agreement shall be construed as if such invalid or illegal or unenforceable
provision or part of a provision had never been contained herein.
3
<PAGE> 4
IN WITNESS HEREOF, CTRC, Sterling and Biovensa have caused this
Agreement to be executed by their duly authorized officers as of the date set
forth above.
CTRC RESEARCH FOUNDATION
- ------------------------------------
By:
---------------------------------
Title:
------------------------------
STERLING WINTHROP, INC.
- ------------------------------------
By:
---------------------------------
Title:
------------------------------
BIOVENSA INC.
- ------------------------------------
By:
---------------------------------
Title:
------------------------------
4
<PAGE> 5
ANNEX I
DESIGNATED AGENTS, PRODUCTS AND ACTIVITIES
Products to be assigned from CTRC Research Foundation to Biovensa, Inc.:
o Dihydro - 5 - azacytidine
Products identified in the business plan of Biovensa, Inc. that may be acquired
in the future:
o Difluoromethylornithine
o Oxypurinol
o Spirogermanium
o Oral camptothecin
o Piritrexim*
- ----------------------
* An option to license Piritrexim will be granted to Sterling by
Biovensa; the option will be evidenced by an option agreement to be entered
into by Sterling and Biovensa, which agreement will provide, among other
things, that (i) no option fee will be required, (ii) no licensing fee will be
required and (iii) no milestone payment for filing an IND will be required.
5
<PAGE> 6
EXHIBIT A
OPTION AGREEMENT
6
<PAGE> 7
AMENDMENT I
(to Option Agreement)
THIS AMENDMENT TO THE OPTION AGREEMENT, effective as of the 1st day of April,
1994, is by and between Sterling Winthrop Inc. of 90 Park Avenue, New York, New
York 10016 U.S.A. (hereinafter called "Sterling," which expression includes its
subsidiaries, successors and assignees) and the CTRC Research Foundation of
8122 Datapoint, Suite 600, San Antonio, Texas, 78229, U.S.A., a not-for-profit
Texas corporation (hereinafter "CTRC," which expression includes its
subsidiaries, successors and assignees).
WITNESSETH:
WHEREAS, Sterling and CTRC have entered into the Option Agreement (attached
hereto as Exhibit 1) effective as of the 1st day of October, 1992;
WHEREAS, Sterling and CTRC wish to extend the term of the Option Agreement by
one year through December 31, 1996;
WHEREAS, Sterling and CTRC agree to make certain changes to the rights and
obligations of the parties in calendar year 1996;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Sterling and CTRC agree to amend the Option Agreement as follows:
ARTICLE I - DEFINITIONS
Replace paragraph d) with the following:
d) "COMMERCIAL RIGHTS" shall mean CTRC's legal right by patent,
contract, agreement, copyright, trademark, or other means to
make, have made, sell or have sold in any country any
compound, material, technology or know-how within the Field of
Use for commercial purposes, including Inventions, Know-How or
Products. Effective January 1, 1996, Commercial Rights shall
be limited to Commercial Rights arising from the Research
Program.
Replace paragraph e) with the following:
e) "CTRC AFFILIATE" shall mean any present or future firm,
company, joint venture or other entity which directly or
indirectly is controlled by or is under the common control of
CTRC. "Control" shall mean the legal power to direct or cause
the direction of the general management and policies of such
entity whether through ownership of at least fifty-one (51%)
percent of voting securities, by contract or otherwise.
7
<PAGE> 8
Replace paragraph j) with the following:
j) "INVENTION" shall mean any invention or discovery (whether or
not patented or patentable) in the Filed of Use which is
originated or conceived or first reduced to practice.
Effective january 1, 1996, Inventions shall be limited to
inventions or discoveries (whether or not patented or
patentable) arising from the Research Program.
Delete paragraph u) and reletter paragraphs v) through dd) sequentially.
ARTICLE II - GRANT OF OPTION
Replace Article 2.1 with the following:
2.1 Upon execution of this Agreement and payment of the option fee
according to Article 4.1, CTRC hereby grants to Sterling an exclusive
option (hereinafter the Option) for a period of fifty-one (51) months
from the Effective Date (October 1, 1993) to evaluate CTRC Information
and obtain a license to any Commercial Rights.
ARTICLE IV - FEES, MILESTONE PAYMENTS AND ROYALTIES
Replace Article 4.1 with the following:
4.1 OPTION FEE: Upon execution of this Agreement and payment of
the first of four annual option payments of five hundred thousand
($500,000) dollars, CTRC shall grant to Sterling the exclusive option
set forth in Article 2.1 for the period beginning with the Effective
Date and ending fifty-one (51) months therefrom. The total Option Fee
for this fifty-one (51) month term is two million ($2,000,000)
dollars. During the term of this Agreement, Sterling's exclusive
Option will remain in effect so long as Sterling pays the annual
option fee which shall be due no later than the annual Anniversary
Date of this Agreement.
ARTICLE V - ASSIGNMENT
Replace Article 5.2 with the following:
5.2 CTRC shall be entitled, with the consent of Sterling which
shall not be unreasonably withheld, to assign, transfer, or in any
manner provide, in whole or part, the benefit and/or burden of this
Agreement to a subsidiary or CTRC Affiliate or the University of Texas
Health Science Center at San Antonio; provided that such CTRC
Affiliate, subsidiary, or UTHSCSA undertakes and agrees in writing to
assume, observe and perform the rights and powers and/or duties and
obligations of CTRC under the provisions of this Agreement, being
assigned, transferred or otherwise provided.
8
<PAGE> 9
EFFECT OF AGREEMENT
The parties agree that nothing herein is intended to supersede or
modify any of the rights and obligations of the Parties in effect or which have
accrued during the initial term of the Option Agreement except for CTRC's
assignment rights as described in Article 5.2.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment I:
STERLING WINTHROP INC.
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
CTRC RESEARCH FOUNDATION
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
9
<PAGE> 1
Exhibit 10.25
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
DRUG DEVELOPMENT PROJECT AGREEMENT
THIS AGREEMENT is effective as of the 1st day of April, 1993, between
CTRC RESEARCH FOUNDATION ("CTRC RESEARCH") located at 14960 Omicron, San
Antonio, Texas 78245 and MGI PHARMA, INC. located at Suite 300 E, Opus Center,
9900 Bren Road East, Minneapolis, Minnesota 55343-9667 ("SPONSOR"), for the
purpose of conducting a project to develop a more effectual process to
synthesize 4-hydroperoxycyclophosphamide ("4-HC") and the synthesis of 4-HC to
be used for drug development purposes (the "PROJECT"). CTRC RESEARCH and
SPONSOR agree as follows:
1. SERVICES
1.1. CTRC RESEARCH agrees to use its best efforts to conduct the
PROJECT, as an independent contractor, substantially in accordance with the
Workplan described in Exhibit 1 as attached hereto ("WORKPLAN"), sa the same
may be superseded or amended from time to time with the consent of SPONSOR and
CTRC RESEARCH, but subject to CTRC RESEARCH policy, applicable laws and
regulations. The PROJECT will be supervised by Alexander L. Weis, Ph.D.
("Project Manager") with assistance from associates and colleagues as may be
required.
1.2 SPONSOR agrees to engage the services of CTRC RESEARCH to conduct
the PROJECT on the terms hereinafter set forth. CTRC RESEARCH understands and
agrees that the PROJECT is being conducted for SPONSOR for the purpose of (i)
developing a more effectual process to synthesize 4-HC and (ii) conducting drug
development activities involving 4-HC. CTRC RESEARCH further understands and
agrees that the PROJECT shall be owned solely and exclusively by SPONSOR and
shall remain the exclusive property of SPONSOR and that CTRC RESEARCH shall
have no right, title or interest in or the PROJECT, except as provided by this
Agreement.
1.3 CTRC RESEARCH shall provide SPONSOR with progress reports on a
regular basis, including telecommunication, on-site visits to CTRC RESEARCH
facilities, sharing of technical information such as Drug Master Files and
Batch Production Records, and shall also consult with SPONSOR at such times and
provide such additional reports and other information as SPONSOR may reasonably
request.
1.4. CTRC shall, at the option of SPONSOR which option is exercisable
at the end of the initial Term and any Renewal Term of this Agreement, provide
consulting services to SPONSOR regarding the process of synthesizing 4-HC as
developed through the PROJECT. The consulting services shall include advising
MGI on the techniques used in synthesizing 4-HC.
<PAGE> 2
2. COMPENSATION
2.1. In consideration for performance of Phase One of the PROJECT by
CTRC RESEARCH during 1993, SPONSOR shall pay to CTRC RESEARCH the aggregate
amount of $ [**] , which sum is hereby acknowledged as received by CTRC
RESEARCH.
2.2. CTRC RESEARCH's compensation for Phase Two of the PROJECT shall
be determined as follows:
For each 100 gram of 4-HC which is ordered by SPONSOR, up to a total of
300 grams, CTRC RESEARCH shall be paid the following amounts:
(i) First 100 grams - $ [**] ;
--------
(ii) Second 100 grams - $ [**] ; and
--------
(iii) Third 100 grams - $ [**] .
--------
[**] percent ([**]%) of the charges for each order shall be due and
payable upon authorization by SPONSOR as evidenced by issuance of a
purchase order, [**] percent ([**]%) when half of the material in
the order has been produced and the remaining [**] percent ([**]%)
upon delivery of the remainder of the order of 4-HC.
For any orders of 4-HC above the 300 gram level for MGI's non-commercial
drug development purposes, SPONSOR shall first negotiate with CTRC
RESEARCH in good faith for a mutually acceptable amount of reimbursement
for CTRC RESEARCH, which compensation shall not exceed [**] per
gram. If CTRC RESEARCH does not provide further services under Phase
Two of the PROJECT, this Agreement shall continue as specified in
Section 3.1 of this Agreement.
The provisions of this Section 2.2 and of this Agreement
notwithstanding, CTRC RESEARCH agrees and understands that the 4-HC produced
under this Agreement is to be used for the purpose of preparing and submitting
an NDA to the FDA and that any and all obligations of SPONSOR to purchase 4-HC
from CTRC RESEARCH are for such purpose, and, that furthermore, nothing in this
Agreement shall be construed to require SPONSOR to purchase more grams of 4-HC
(including the 300 grams identified in this Section 2.2) from CTRC RESEARCH
under this Agreement than are reasonably required to secure such FDA approval.
2.3. The compensation enumerated in Sections 2.1 and 2.2 is for
services specified in the Work Plan. Further services of CTRC RESEARCH related
to 4-HC which are requested by SPONSOR will be provided by CTRC RESEARCH at an
amount of compensation to be mutually agreed by the parties, which agreement
shall constitute an amendment to this Agreement and shall be evidenced by a
written amendment as provided in Section 11.2.
2.4. For consulting services as specified in Section 1.4 of this
Agreement, SPONSOR shall pay to CTRC RESEARCH the sum of [**] Dollars
($ [**] ) per year which sum is due and payable at the beginning of each
Renewal Term.
<PAGE> 3
3. TERM
3.1. This Agreement shall be for a period of three (3) years beginning
on the effective date of this Agreement, but shall sooner terminate (i) at the
option of SPONSOR, upon thirty (30) days written notice to terminate this
Agreement which is exercisable by SPONSOR after it has ordered and received
delivery of the 300 grams of 4-HC as discussed in Section 2.2 or (ii) upon the
effective date of or the date as otherwise provided in the agreement between
CTRC RESEARCH and SPONSOR as provided for in Section 4 (the "Initial Term").
This Agreement may be extended beyond the Initial Term of this Agreement for up
to five (5) successive one (1) year terms ("Renewal Terms") upon the option of
SPONSOR to obtain consultant services from CTRC RESEARCH as provided in Section
1.4. To exercise its option to obtain consultant services at the end of the
Initial Term of this Agreement or any Renewal Term, SPONSOR shall provide
written notice to CTRC RESEARCH at least ten (10) days prior to the end of the
Initial Term or the Renewal Term.
3.2. Notwithstanding the foregoing, either party may terminate this
Agreement following thirty (30) days prior written notice if the other party
shall fail to perform any material obligation imposed on it pursuant to this
Agreement provided the non-performing party has not cured such breach of this
Agreement prior to the expiration of he thirty (30) day period.
3.3. In the event of early termination of this Agreement by SPONSOR
during the Initial Term, for reasons other than a default by CTRC RESEARCH of
its obligations under this Agreement SPONSOR shall be liable for all reasonable
costs directly related to the PROJECT incurred by CTRC RESEARCH at the time of
such termination, but in no event shall SPONSOR be liable for a total amount in
excess of the total consideration payable by SPONSOR pursuant to Section 2.
SPONSOR shall pay CTRC RESEARCH for such costs within thirty (30) days of
receipt of an invoice for the same, which invoice shall include supporting
documentation sufficient to establish the costs incurred.
3.4. CTRC shall, upon the expiration or early termination of this
Agreement, or at any time upon the request of SPONSOR, immediately return and
deliver to SPONSOR any and all Confidential Information (as defined herein) and
all material developed therefrom and all information, material, data, samples,
work product, drug product and results related to the PROJECT provided CTRC
RESEARCH may retain a copy thereof for its use consistent with the terms of
this Agreement.
4. PRODUCTION AGREEMENT
4.1. At such time as SPONSOR determines that it needs quantities of 4-
HC for purposes other than drug development purposes, CTRC RESEARCH and SPONSOR
agree to negotiate in good faith toward the execution of a definitive,
commercially reasonable agreement pursuant to which CTRC RESEARCH will provide
at least [**] percent ([**]%) of SPONSOR's requirements of 4-HC beyond the
requirements contemplated by this Agreement. In conducting these negotiations,
SPONSOR shall be considered as acting in good faith even though it bargains for
reasonable time, quality and production requirements. During these
negotiations, CTRC RESEARCH must be able to demonstrate to SPONSOR its ability
to comply with reasonable
<PAGE> 4
requirements of SPONSOR regarding quality, time and production for the
production of 4-HC. Such agreement shall also require that all of the product
provided to SPONSOR shall be synthesized at a facility of CTRC RESEARCH or its
affiliate (as defined in Section 4) meeting all applicable requirements of the
United States Food and Drug Administration for GMP manufacturing facilities.
4.2. Should CTRC RESEARCH and SPONSOR be unable to reach a definitive
agreement after the completion of good faith negotiations, SPONSOR may seek to
obtain a good faith, bona fide preliminary offer, proposal or bid (the "Bid")
from a third party to synthesize 4-HC for SPONSOR which Bid contains at least
the essential elements for an agreement to synthesize 4-HC. CTRC RESEARCH
shall have the option to match the Bid upon the same terms and conditions as
proposed by the third party as they relate to the provision of at least [**]
percent ([**]%) of SPONSOR's requirements of 4-HC for non-research purposes.
SPONSOR shall provide CTRC RESEARCH written notice of the terms of and
conditions of he Bid and CTRC RESEARCH shall have thirty (30) days to exercise
its option to match the Bid to synthesize the 4-HC by providing written notice
to SPONSOR. Nothing in this Section 4, however, shall prevent SPONSOR from
entering into an agreement with a third party for the remaining [**] percent
([**]%) of SPONSOR's 4-HC requirements.
4.3. CTRC RESEARCH shall have the right to assign the rights in this
Section 4 to an affiliate of CTRC RESEARCH, Lipitek, Inc. (provided it is owned
in whole or in part by Alexander L. Weis, Ph.D.) or a third party which is
approved by SPONSOR. An affiliate of CTRC RESEARCH shall be any entity that
directly or indirectly, through one or more intermediaries, in whole or in
part, is owned/controlled by, or is under common ownership/control with CTRC
RESEARCH. For the affiliate to be considered to be "owned/controlled" or
"under common ownership/control", the amount of ownership or control of the
affiliate must be at least [**] percent ([**]%) and the affiliate
must have Richard L. Love or a SPONSOR approved substitute, as a part of its
management team.
4.4. This Section shall survive the termination of this Agreement for
a period of three (3) days.
5. INDEMNIFICATION
5.1. CTRC RESEARCH shall, to the extent permitted under the laws of
the State of Texas, indemnify and hold harmless SPONSOR, its directors,
officers, agents, and employees from any liability, expense, cost, damage and
loss resulting from any willful misconduct or negligent acts or omissions of
CTRC RESEARCH, its officers, agents or employees, relating to the activities to
be carried out pursuant to this Agreement.
5.2 SPONSOR shall indemnify and hold harmless CTRC RESEARCH, its
directors, officers, agents, and employees from any liability, expense, cost,
damage and loss arising from the use, testing, research or marketing of 4-HC
(clinical or otherwise), except for any liability, expense, cost, damage and
loss which results from the willful misconduct or negligent acts or omissions
of CTRC RESEARCH. for any 4-HC delivered by CTRC RESEARCH pursuant to this
Agreement, the actions of CTRC RESEARCH in synthesizing the 4-HC in accordance
with
<PAGE> 5
the specifications of this Agreement shall not constitute willful misconduct or
negligent acts or omissions for purposes of this Agreement.
5.3. SPONSOR shall, at SPONSOR's expense, defend and hold harmless
CTRC RESEARCH against any and all claims that 4-HC infringes upon or
appropriates any patent or other proprietary right. SPONSOR shall pay all
costs, damages and reasonable attorney's fees that the court finally awards as
a result of such a claim.
6. CONFIDENTIALITY
6.1. During the term of this Agreement and for a period of five (5)
years after termination of this Agreement, CTRC RESEARCH shall, except as may
be authorized by this Agreement, maintain the confidentiality of any
confidential or secret knowledge, information or material, whether developed by
CTRC RESEARCH, SPONSOR, or by others, which CTRC RESEARCH has acquired or
become acquainted with as a direct result of this Agreement and the PROJECT,
including any trade secrets, confidential or secret designs, processes,
formulae, plans, devices or material (whether or not patented or patentable),
any customer or supplier lists, any confidential or secret development or
research work, or any other confidential or secret aspects of the business of
SPONSOR (collectively, "Confidential Information"). CTRC RESEARCH hereby
acknowledges that the Confidential Information constitutes a unique and
valuable asset of SPONSOR and represent a substantial investment of time and
expense, and such Confidential Information shall not be disclosed or used other
than as contemplated by this Agreement. The foregoing obligations of
confidentiality shall not apply to any knowledge or information that (a) was
known to CTRC RESEARCH prior to SPONSOR's disclosing it; (b) was generally
known to the public prior to SPONSOR's disclosing it; (c) becomes generally
known to the public through no fault of CTRC RESEARCH, (d) is acquired from a
third party, without violation of this Section 6; (e) is required to be
disclosed to a governmental authority to obtain or maintain regulatory
approval; or (f) was independently developed by CTRC RESEARCH without the use
of or reliance on any Confidential Information, as shown by written records
prepared contemporaneously with such independent development. CTRC RESEARCH
recognizes that a violation of this Section 6.1 will result in injury to
SPONSOR, the extent to which is impossible to ascertain and as such, SPONSOR
will be entitled to an injunction restraining and enjoining CTRC RESEARCH from
violating or continuing to violate this Section 6.1.
6.2. The parties have signed a Mutual Secrecy Agreement in the form
attached hereto as Exhibit II. This Agreement shall supersede and shall
operate in lieu of the terms and conditions of said Mutual Secrecy Agreement.
7. INVENTIONS AND PATENTS
7.1. CTRC RESEARCH will promptly disclose in writing to SPONSOR
complete information concerning each and every invention, discovery,
improvement, device, design, apparatus, practice, process, method or product,
whether patentable or not, made, developed, perfected, devised, conceived or
first reduced to practice by CTRC RESEARCH, either solely or in collaboration
with others, during the terms of this Agreement whether or not during regular
<PAGE> 6
working hours, relating directly to the PROJECT (hereinafter referred to as
"Developments"). CTRC RESEARCH to the extent that CTRC RESEARCH has the legal
right to do so, hereby acknowledges that any and all of such Developments are
the property of SPONSOR, and CTRC RESEARCH hereby assigns and agrees to assign
to SPONSOR any and all of CTRC RESEARCH's right, title and interest in and to
any and all of such Developments, except that CTRC Research hereby retains the
following licenses:
(i) an assignable, non-exclusive, royalty-free license to use and
practice such Developments for research and non-research
purposes, provided such Developments are not used to produce 4-HC
for commercial purposes; and
(ii) an assignable, non-exclusive, royalty-free license, which shall
be effective upon termination of this Agreement, to utilize and
practice such Developments for non-research purposes, including
the right to produce 4-HC.
7.2. As to any future Developments made by CTRC RESEARCH which relate
directly to the PROJECT and which are first conceived or reduced to practice
during the term of this Agreement, but which are claimed for any reason to
belong to an entity or person other than SPONSOR, CTRC RESEARCH will promptly
disclose the same in writing to SPONSOR. If SPONSOR makes claim of ownership
to such Development, the rights (if any) of CTRC RESEARCH will be settled by
arbitration in accordance with Section 11.5 hereof.
7.3. The provisions of Sections 7.1 and 7.2 shall not apply to any
Development meeting the following conditions: (a) such Development was made
without the use of any equipment, supplies, or trade secret information of
SPONSOR; and (b) such Development does not result from any work performed by
CTRC RESEARCH for SPONSOR under this Agreement.
7.4 Upon request and without further compensation therefor, but at no
expense to CTRC RESEARCH, and whether during the term of this Agreement, or
thereafter, CTRC RESEARCH will do all lawful acts, including, but not limited
to, the execution of papers and lawful oaths and the giving of testimony, that
in the opinion of SPONSOR, its successors and assigns, may be reasonably
necessary or desirable in obtaining, sustaining, reissuing, extending and
enforcing United States and foreign Letters Patent, including, but not limited
to, design patents, on any and all of such Developments, and for perfecting,
affirming and recording SPONSOR's complete ownership and title thereto, and to
cooperate otherwise in all proceedings and matters relating thereto.
7.5. CTRC RESEARCH will keep complete, accurate and authentic
accounts, notes and records of all Developments in the manner and form
reasonably requested by SPONSOR. Such accounts, notes, data and records shall
be the property of SPONSOR, and, upon its request, CTRC RESEARCH will promptly
surrender the original of the same to it or, if not previously surrendered upon
its request or otherwise, CTRC RESEARCH will surrender the original of the same
to SPONSOR upon the termination of this Agreement. CTRC RESEARCH shall have
the right to retain a copy of all accounts, notes and records of all
Developments which are created pursuant to this Agreement.
<PAGE> 7
7.6. Except as contained in this Agreement, no license under any
SPONSOR patent is granted to CTRC RESEARCH hereby.
8. INDEPENDENT CONTRACTOR
Subject to Section 1 hereof, SPONSOR will not have the right to direct
or control the activities of CTRC RESEARCH performing the services provided
herein, and CTRC RESEARCH shall perform services hereunder only as an
independent contractor, and nothing herein shall be construed to be
inconsistent with the relationship or status. Under no circumstances shall
CTRC RESEARCH be considered to be an employee or agent of SPONSOR. This
Agreement shall not constitute, create or in any way be interpreted as a joint
venture, partnership or formal business organization of any kind.
9. NON-COMPETITION COVENANT
CTRC RESEARCH covenants and agrees that, except as provided for in any
agreement which may be negotiated between the parties as specified in Section
4, during the term of this Agreement, CTRC RESEARCH shall not directly or
indirectly engage in competition with SPONSOR in any manner or capacity (e.g.,
as a supplier, advisor, consultant, manufacturer, principal, agent, partner,
stockholder, independent contractor, member of any association or otherwise) by
engaging in the synthesis of 4-HC for any purpose except research being
conducted by CTRC RESEARCH. The geographic scope of this covenant shall be the
entire world. CTRC RESEARCH further agrees that during the term of this
Agreement and thereafter, it will not, directly or indirectly, assist any other
person or entity in carrying out, directly or indirectly, any activity that
would be prohibited by this Section 9 if such activity were carried out by CTRC
RESEARCH.
10. NOTICES
All notices of every kind and description whatsoever required or
permitted under this Agreement shall be in writing and shall be deemed to have
been received when personally delivered or when mailed through the U.S. Postal
Service, postage prepaid, as evidenced by a postmark certificate of mailing, or
by similar means for delivery, such as a signed receipt acknowledging personal
delivery, to the party to whom delivery shall be made at the respective
addresses set out below:
If to CTRC RESEARCH: Anita I. Busquets
Institute for Drug Development
14960 Omicron
San Antonio, Texas 78245
If to SPONSOR: Attention: Charles C. Muscoplat, Ph.D.
Executive Vice President, New Business
MGI PHARMA, INC.
Suite 300 E., Opus Center
9900 Bren Road East
Minneapolis, Minnesota 55343-9667
<PAGE> 8
11. MISCELLANEOUS
11.1. In the event of acts of God, action of the elements, war,
invasion, civil commotion, insurrection, labor disturbance, fire, floor,
earthquake, or government restriction, or intervention which is beyond the
control of CTRC RESEARCH which renders performance under this Agreement
impossible or economically impractical, failure on that account during each
period shall be excused during such period or periods of inability to perform.
11.2. This Agreement, together with the attached exhibits and
schedules, constitutes the entire understanding between the parties as of the
date of the execution of this Agreement with respect to the subject matter
hereof and shall supersede any prior agreements or understandings (whether oral
or written) between the parties hereto relating to the subject matter hereof
and may be modified only by a written instrument duly executed by each party's
authorized representative. If either party shall on any occasion fail to
perform any provision of this Agreement and the other party shall not enforce
that provision, the failure to enforce on that occasion shall not prevent
enforcement on any other occasion.
11.3. If any provision of this Agreement is held invalid by any law,
rule, order or regulation of any government or by the final determination of
any state or federal court, such invalidity shall not affect the enforceability
of any other provision not held to be invalid, and such invalidity shall not
affect the enforceability of such provision in any jurisdiction where such
provision has not been held to be invalid. In furtherance of and not in
limitation of the foregoing, it is expressly agreed that should the duration of
or geographical scope of, or activities covered by, the non-competition
covenant of Section 9 to be determined to be in excess of that which is valid
or enforceable under applicable law, then such Section 9 shall be construed to
cover that duration or scope or those activities which may be validly or
enforceably be covered.
11.4. Neither party, except as otherwise provided in this Agreement,
shall assign this Agreement or its rights and obligations hereunder without the
prior written consent of the other party, provided, however, that this
Agreement may be assigned by CTRC RESEARCH to a successor or assignee of its
services upon prior written notice to SPONSOR, and SPONSOR may assign this
Agreement to any entity or person that directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with SPONSOR, or to any successor in interest of SPONSOR resulting from the
merger, consolidation or sale of all or substantially all of the assets of
SPONSOR, without the prior consent of CTRC RESEARCH.
11.5. This Agreement shall be governed by the laws of the State of
Texas. All disputes arising under this Agreement which cannot be settled by
mutual consent of the parties shall be submitted to arbitration in accordance
with the rules of the American Arbitration Association, the costs and expenses
of which arbitration shall be borne by the party against which a decision is
rendered.
<PAGE> 9
11.6. Notwithstanding the termination of this Agreement, Sections 4.1-
4.4, 5.1-5.3, 6.1, 7.1-7.5 and 8 shall survive the termination of this
Agreement and shall be binding and enforceable as may be provided in said
sections.
11.7. CTRC RESEARCH is on notice that SPONSOR may utilize the goods to
be purchased hereunder in the manufacture of products destined for sale to the
U.S. Government or a U.S. Government financed project. Unless exempt
therefrom, CTRC RESEARCH agrees to comply with the Executive Order 11246, the
Rehabilitation Act of 1973, including amendments thereto, and all rules and
regulations issued thereunder. Unless exempt, this contract is subject to the
Equal Opportunity Clause set forth in 41 C.F.R. Section 60-1.4 and the
Affirmative Action Clauses set forth in 41 C.F.R. Section Section 60-250.4,
741.4. Those clauses are hereby incorporated by reference.
11.8. Paragraph readings and captions used herein are for convenience
of reference only and shall not be used in the construction or interpretation
of this Agreement. This Agreement has been jointly prepared on the basis of
the mutual understanding of the parties and shall not be construed against
either party by reason of such party's being the drafter hereof.
11.9. No right, express or implied, is granted by this Agreement to
either party to use in any manner the trademarks or the name of the other or
any other trade name, service mark, or trademark owned by or licensed to the
other in connection with the performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date written above.
CTRC RESEARCH FOUNDATION
By: /s/ Richard L. Love
----------------------------------
Richard L. Love
Chief Operating Officer
By: /s/ Alexander L. Weis
---------------------------------
Alexander L. Weis, Ph.D.
Project Manager
Date: December 2, 1993
-------------------------------
<PAGE> 10
MGI PHARMA, INC.
By:
---------------------------------
Its Executive Vice President
--------------------------
Date: December 28, 1993
-------------------------------
<PAGE> 11
EXHIBIT I
WORKPLAN
SYNTHESIS OF 4-HYDROPEROXYCYCLOPHOSPHAMIDE
PHASE ONE
CTRC's Institute for Drug Development ("IDD"), under the leadership of
Dr. Alex Weis, will undertake to develop a scalable process to make and purify
4-hydroperoxycyclophosphamide (4-HC). The specific objectives will be:
1. In calendar year 1993 develop a process which will reproducibly yield 20
to 30 grams of 4-HC to a purity of at least 98.5% and which can be
scaled for eventual production of 5 to 10 kg per year.
2. Provide MGI Pharma with 20 grams of 4-HC, produced in IDD's labs under
Good Manufacturing Practices (GMP), by November 1, 1993.
3. In collaboration with MGI Pharma, prepare a DMF which shall be available
to MGI Pharma upon request.
4. In connection with the intent to prepare for on-going GMP synthesis at
IDD, the following specific tasks will be performed:
o IDD will allow MGI to inspect IDD's facilities and procedures.
o IDD will establish and maintain a Type I DMF for the manufacture
of 4-HC and will ensure that the DMF coverage extends to other
subcontracted facilities (e.g. Lipitek, Inc.), utilized by IDD.
o IDD will provide letter of access to IDD's DMF at MGI's request.
o IDD is to manufacture drug substance utilizing raw materials that
have been released per MGI supplied raw material specifications,
and pursuant to MGI supplied Master Formula/Batch Record(s).
o IDD is to be responsible for the procurement, testing and
maintaining inventory of raw materials, for the manufacture of
the drug substance and for providing required documentation
related to same. IDD will maintain original documentation of raw
material receipt, testing and drug substance synthesis. IDD will
provide reserve samples of each batch of drug substance to MGI
and may maintain reserve samples for IDD use.
o IDD to specify the significant steps in the manufacturing process
and will identify tests and control parameters for the precursor
and the ozonolysis product.
<PAGE> 12
o IDD to outline a validation of the precursor and of the
ozonolysis to be provided to MGI. MGI will then generate the
protocol and document the execution of the protocol by IDD.
o IDD is to complete the characterization of the drug substance to
include the following tests on a lot identified by MGI, NMR, and
TLC.
o IDD is to develop solubility profiles in at least 3 solvents.
o IDD is to provide detail of purification and characterization of
ozonolysis performed at 0 deg. C and -40 deg. C (test for robust
synthesis).
o IDD to provide a detailed flow chart to include process steps,
equipment, and scale of the synthesis process.
o IDD is to describe any modifications and changes made to the
synthesis and characterizations of resultant products.
o IDD to recommend the characterization of the Reference Standard,
provide the complete documentation of the manufacture of the
standard per an approved batch record, and assist MGI in
characterization of standard.
o IDD to provide rationale and explanation of controls of the
Pivotal Step identified as Ozonolysis and the Key Intermediate
identified as the Precursor, Tri-substituted Phosphate according
to the format provided by MGI.
o IDD and MGI will collaborate to write a scientific discussion
that will describe the applicable stages in drug substance
manufacture where the following apply:
where the BPC can be identified and quantified, and where
yields can be calculated
where a contaminant, impurity, or other substance likely
to adversely affect the BPC molecule is first identified
and subsequent attempts are made to remove it
where an attempt is made to separate a mixture of
different forms of the same molecule and isolate a desired
form
o IDD agrees that lots will not be commingled at IDD without MGI's
express permission.
o IDD to commit to provide batch records and associated
documentation for all attempts and drug substance synthesis
failures.
<PAGE> 13
o IDD to propose optimization and scale-up evaluations within 6
months of manufacture of the first 20 gram batch. MGI will
recommend the lot sizes desired.
o IDD to store under refrigerated conditions 40 mgs per assay for 3
HPLC assays for each drug substance synthesis attempt as reserve
samples and for impurity profile information.
o IDD to recommend which solvents, intermediates, etc. are
appropriate for the reserve sample program, (dependent on
stability and significance).
o MGI will accept delivery of drug substance only after the lot has
met all drug substance specification requirements, and MGI has
received an executed batch record approved by IDD's Quality
Assurance representative and MGI Quality Assurance. Any
investigations initiated as a result of the drug substance
manufacturing process must receive review and approval by IDD and
MGI prior to release and acceptance by MGI.
o MGI will be responsible for the release testing of the drug
substance, and providing release documentation to IDD.
o MGI to prepare a BOM for the materials utilized in the
manufacture of the drug substance, and IDD to identify grade and
method of raw material testing, as well as reserve sample
requirements of the above.
o MGI will provide the raw material specifications, test methods
and perform the testing and release.
o MGI will specify samples for testing and will provide lot number
and expiration dating period for each lot.
o MGI will be responsible for the release of the drug substance
product.
o MGI will provide shipping destination information for drug
substance.
o MGI is to retain sole ownership of all drug substance product,
including but not limited to manufactured lots, experimental
lots, reserve samples and other samples maintained by IDD.
PHASE TWO
o IDD will produce up to 300 grams of 4-HC for MGI Pharma under
Good Manufacturing Practices, which will be synthesized by IDD
upon receipt of a purchase order from MGI Pharma which shall be
in a minimum lot size of 100 grams.
<PAGE> 14
o Provided that IDD is requested to produce 4-HC on an on-going
basis, IDD will evaluate and recommend reprocessing steps that
may be undertaken which will meet the drug substance
specifications, and provide the manufacturing process for same.
IDD estimates that this task will be addressed in 1994.
o IDD to attempt to manufacture via the drug substance synthesis,
the related compounds and provide the resultant material to MGI
for analysis.
<PAGE> 1
EXHIBIT 10.27
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
NIH Office of Technology Transfer 910221 - September 8, 1991
NATIONAL INSTITUTES OF HEALTH
ALCOHOL, DRUG ABUSE AND MENTAL HEALTH ADMINISTRATION
CENTERS FOR DISEASE CONTROL
PATENT LICENSE AGREEMENT -- EXCLUSIVE
COVER PAGE
For OTT internal use only:
Patent License Number: ________________
Serial Numbers of Licensed Patents: 06/410,965
Licensee: Cancer Therapy and Research Center
CRADA Number (if applicable): ___________
Additional Remarks:________________________________________
___________________________________________________________
This Patent License Agreement, hereinafter referred to as the "Agreement"
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix
A (Patent or Patent Application), Appendix B (Fields of Use and Territory),
Appendix C (Royalties) and Appendix D (Modifications). This Cover Page serves
to identify the Parties to this Agreement:
(1) the National Institutes of Health ("NIH") or the Centers for Disease
Control (CDC), or the Alcohol, Drug Abuse and Mental Health Administration
("ADAMHA"), hereinafter singly or collectively referred to as "PHS," agencies
of the United States Public Health Service within the Department of Health and
Human Services ("DHHS"); and
(2) The person, corporation or institution identified on the Signature
Page, having offices at the address indicated on the Signature Page,
hereinafter referred to as "LICENSEE."
<PAGE> 2
NIH Office of Technology Transfer 910221 - September 8, 1991
PHS PATENT LICENSE AGREEMENT -- EXCLUSIVE
PHS and LICENSEE agree as follows:
1. BACKGROUND
1.01 In the course of conducting biomedical and behavioral
research, PHS investigators conceived and reduced to practice inventions that
may have commercial applicability.
1.02 By assignment of rights from PHS employees and other
inventors, DHHS, on behalf of the United States Government, owns the
intellectual property rights claimed in any United States and foreign patent
applications or patents corresponding to the assigned inventions. DHHS also
owns any tangible embodiments of these inventions actually reduced to practice
by PHS.
1.03 The Assistant Secretary for Health of DHHS has delegated to
PHS the authority to enter into this Agreement for the licensing of rights to
these inventions under the patent law, 35 U.S.C. Sections 200-212 and the
Federal Technology Transfer Act of 1986, 15 U.S.C. Section 3710a.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the commercial development of
products and processes for public use and benefit.
2. DEFINITIONS
2.01 Licensed Patent Rights refers collectively to identified claim
subject matter in:
(a) U.S. patent applications and patents listed in
Appendix A, divisionals and continuations of these
applications, and their counterpart foreign patent
applications;
(b) any other foreign patent applications and patents
listed in Appendix A;
(c) U.S. and counterpart foreign patents issued from the
patent applications in (a) and (b) above;
(d) U.S. continuation-in-part patent applications and
counterpart foreign patent applications, and the resulting
patents, only to the extent that their claims are encompassed
by the identical claim in (a) and (b) above; and
1
<PAGE> 3
NIH Office of Technology Transfer 910221 - September 8, 1991
(e) any reissues, reexaminations and extensions of U.S.
patents described in (a), (c), and (d) above.
2.02 Licensed Product(s) means tangible materials which, in the
course of manufacture, use or sale would, in the absence of this Agreement,
infringe one or more claims of the Licensed Patent Rights that have not been
held invalid or unenforceable by an unappealed or unappealable judgment of a
court of competent jurisdiction.
2.03 Licensed Process(es) means processes which, in the course of
being practiced would, in the absence of this Agreement, infringe one or more
claims of the Licensed Patent Rights that have not been held invalid or
unenforceable by an unappealed or unappealable judgment of a court of competent
jurisdiction.
2.04 Licensed Territory means the geographical area identified in
Appendix B.
2.05 Net Sales means the total gross receipts for sales of Licensed
Products or practice of Licensed Processes by LICENSEE, its Affiliates, or
sublicensees, and from leasing, renting, or otherwise making Licensed Products
available to others without sale or other dispositions, whether invoiced or
not, less returns and allowances actually granted, packing costs, insurance
costs, freight out, taxes or excise duties imposed on the transaction (if
separately invoiced), and wholesaler and cash discounts in amounts customary in
the trade. No deductions shall be made for commissions paid to individuals,
whether they be with independent sales agencies or regularly employed by
LICENSEE, its Affiliates, or sublicensees, and on their payroll, or for the
cost of collections.
2.06 Net Sales Price means the Net Sales divided by the quantity of
Licensed Product sold or Licensed Process practiced.
2.07 Combined Product means a product that contains a Licensed
Product along with at least one other active component or ingredient not
covered by the Licensed Patent Rights.
2.08 First Commercial Sale means the initial transfer by LICENSEE,
its Affiliates or sublicensees, of Licensed Products in exchange for cash or
some equivalent to which value can be assigned for the purpose of determining
Net Sales, and First Commercial Use means the initial practice of a Licensed
Process by LICENSEE, its Affiliates or sublicensees.
2.09 Affiliate means any corporation or other business entity
controlled by, controlling, or under common control with LICENSEE. For this
purpose, "control" means direct or indirect beneficial ownership of at least
[**] percent of the voting stock, or at least [**] percent interest
in the income of such corporation or other business.
2
<PAGE> 4
NIH Office of Technology Transfer 910221 - September 8, 1991
2.10 Government means the United States Government.
2.11 Licensed Fields of Use means the fields of use identified in
Appendix B.
2.12 Exclusive Commercialization License means that PHS will not
grant further licenses for commercial exploitation of the Licensed Patent
Rights in the Licensed Fields of Use in the Licensed Territory, so long as the
LICENSEE complies with the terms of this Agreement.
3. GRANT OF RIGHTS
3.01 PHS hereby grants and LICENSEE accepts, subject to the terms
and conditions of this Agreement, an Exclusive Commercialization License under
the Licensed Patent Rights in the Licensed Territory to make and have made, to
use and have used and to sell and have sold any Licensed Products in the
Licensed Fields of Use and to practice and have practiced any Licensed
Processes in the Licensed Fields of Use.
3.02 This Agreement is effective when signed by all parties and
shall extend to the expiration of the last to expire of the Licensed Patent
Rights unless sooner terminated as provided in Article 13 below.
3.03 PHS agrees, if such materials are available to PHS, to provide
LICENSEE with samples of the materials claimed in the Licensed Patent Rights
and to replace such materials in the event of their unintentional destruction.
LICENSEE shall not distribute or release these materials to others except to
further the purposes of this Agreement.
3.04 This Agreement confers no license or rights by implication,
estoppel or otherwise under any patent applications or patents of PHS other
than Licensed Patent Rights regardless of whether such patents are dominant or
subordinate to Licensed Patent Rights. PHS shall endeavor to notify LICENSEE of
any improvement or related patent applications and patents that may become
available for licensing.
3.05 The research results of PHS investigators generally are
disseminated freely through publication in the scientific literature and
presentations at public fora. PHS reserves the right to provide the data or
research products developed in Government laboratories to third parties for
research purposes.
3.06 PHS acknowledges that information related to the Licensed
Patent Rights may be of assistance to LICENSEE in its commercialization
efforts. Accordingly, PHS will consider reasonable requests by LICENSEE for
access to the inventors of the Licensed Patent Rights.
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4. SUBLICENSING
4.01 LICENSEE may enter into sublicensing agreements under the
Licensed Patent Rights.
4.02 LICENSEE agrees that any sublicenses granted by it shall
provide that the obligations to PHS of Paragraphs 5.01, 5.02, 5.04, 7.01, 7.02,
9.01, 12.05, and 14.07-14.10 of this Agreement shall be binding upon the
sublicensee as if it were a party to this Agreement. LICENSEE further agrees to
attach copies of these Paragraphs to all sublicense agreements.
4.03 Any sublicenses granted by LICENSEE shall provide for the
termination of the sublicense, or the conversion to a license directly between
such sublicensees and PHS, at the option of the sublicensee, upon termination
of this Agreement under Article 13. Such conversion is contingent upon
acceptance by the sublicensee of the remaining provisions of this Agreement.
4.04 LICENSEE agrees to forward to PHS a copy of each fully
executed sublicense agreement postmarked within sixty (60) days of the
execution of such agreement, and further agrees to forward semiannually to PHS,
along with the royalty reports of LICENSEE to PHS under Article 10, a copy of
such reports received by LICENSEE from its sublicensees during the preceding
half year period under the sublicense as shall be pertinent to a royalty
accounting to PHS by LICENSEE for activities under the sublicenses.
5. STATUTORY REQUIREMENTS, RESERVED GOVERNMENT
RIGHTS AND PHS REQUIREMENTS
5.01 PHS reserves on behalf of the Government an irrevocable,
nonexclusive, nontransferable, royalty-free license for the practice of all
inventions licensed under the Licensed Patent Rights throughout the world by or
on behalf of the Government and on behalf of any foreign government or
international organization pursuant to any existing or future treaty or
agreement to which the Government is a signatory.
5.02 LICENSEE agrees that products used or sold in the United
States embodying Licensed Products or produced through use of Licensed
Processes shall be manufactured substantially in the United States, unless a
written waiver is obtained in advance from PHS.
5.03 LICENSEE acknowledges that PHS may enter into a future
Cooperative Research and Development Agreement ("CRADA") under the Federal
Technology Transfer Act of 1986 that relates to the subject matter of this
Agreement. LICENSEE agrees not to unreasonably deny requests for sublicense or
cross license rights from such future collaborators with PHS when acquiring
such derivative rights is necessary in order to make a CRADA project feasible.
PHS will endeavor to give LICENSEE a
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NIH Office of Technology Transfer 910221 - September 8, 1991
reasonable opportunity to join as a party to the proposed CRADA prior to its
initiation, and to obtain reciprocal patent rights in any resultant inventions.
5.04 DHHS has responsibility for funding basic biomedical research,
for funding medical treatment through programs such as Medicare and Medicaid,
for providing direct medical care and, more generally, for protecting the
health and safety of the public. Because of these responsibilities, and the
public investment in the research that culminated in the Licensed Patent
Rights, PHS may require LICENSEE to submit documentation in confidence showing
a reasonable relationship between the pricing of a Licensed Product, the public
investment in that product and the health and safety needs of the public. This
paragraph shall not restrict the right of LICENSEE to price a Licensed Product
or Licensed Process so as to obtain a reasonable profit for its sale or use.
This Paragraph 5.04 does not permit PHS or any other government agency to set
or dictate prices for Licensed Products or Licensed Processes.
5.05 PHS reserves the right to grant nonexclusive licenses to make
and to use the inventions defined by the Licensed Patent Rights for purposes of
research involving the inventions themselves, and not for purposes of
commercial manufacture or in lieu of purchase if the inventions are available
as commercial products for research purposes. The purpose of this research
license is to encourage basic research, whether conducted at an academic or
corporate facility. In order to safeguard the Licensed Patent Rights, however,
PHS shall obtain the consent of LICENSEE before granting to commercial entities
a research license or providing to them research samples of the materials
claimed in the Licensed Patent Rights, which consent shall not be unreasonably
withheld. Any such license shall be limited to research for non- commercial
purposes.
6. ROYALTIES AND REIMBURSEMENT
6.01 LICENSEE agrees to pay to PHS a noncreditable, nonrefundable
License Issue Royalty as set forth in Appendix C within thirty (30) days from
the date that this Agreement becomes effective.
6.02 LICENSEE agrees to pay to PHS a nonrefundable Minimum Annual
Royalty as set forth in Appendix C. The Minimum Annual Royalty is due and
payable on January 1 of each calendar year, and may be credited against any
Earned Royalty due for sales made in that year. The Minimum Annual Royalty due
for the first calendar year of this Agreement may be prorated according to the
fraction of the calendar year remaining between the effective date of this
Agreement and the next subsequent January 1.
6.03 LICENSEE agrees to pay PHS Earned Royalties as set forth in
Appendix C.
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6.04 LICENSEE agrees to pay PHS Benchmark Royalties as set forth in
Appendix C.
6.05 LICENSEE agrees to pay PHS Sublicensing Royalties as set forth
in Appendix C.
6.06 A claim of a patent application licensed under this Agreement
shall cease to fall within the Licensed Patent Rights for purposes of computing
the Minimum Annual Royalty and Earned Royalty payments in any given country on
the earliest of the dates that it: (a) has been abandoned but not continued, or
(b) has been pending (including the pendency time of any parent cases) but not
allowed for more than six (6) years from its effective filing date; but shall
be reinstated for purposes of computing these royalty payments on the date that
a patent issues thereon. A claim of a patent licensed under this Agreement
shall cease to fall within the Licensed Patent Rights for the purpose of
computing the Minimum Annual Royalty and Earned Royalty payments in any given
country on the earliest of the dates that: (a) the patent expires, (b) the
patent is no longer maintained by the Government, or (c) all claims of the
Licensed Patent Rights have been held to be invalid or unenforceable by an
unappealed or unappealable decision of a court of competent jurisdiction or
administrative agency.
6.07 No multiple royalties shall be payable because any Licensed
Products or Licensed Processes are covered by more than one of the Licensed
Patent Rights.
6.08 If the LICENSEE sells a Combined Product, the Net Sales Price
for purposes of earned royalty determination under this Article 6 shall be the
market price of the Licensed Product content of the Combined Product when sold
separately. If the Licensed Product is not sold separately, then Net Sales
Price upon which a royalty is paid shall be the greater of (a) the market price
at which the Licensed Product reasonably could be sold as a separate item, or
(b) Net Sales Price of the Combined Product multiplied by a factor 1/x where x
is the number of active components or ingredients contained in the Combined
Product up to a maximum of x-3.
6.09 On sales of Licensed Products between LICENSEE and its
Affiliates, or on sales made in other than an arm's length transaction, the Net
Sales Price attributed under this article 6 to such a transaction shall be that
which would have been received in an arm's length transaction, based on sales
of like quantity and quality products on or about the time of such transaction.
6.10 LICENSEE agrees to reimburse PHS, within sixty (60) days of
their submission of a statement and request for reimbursement, for all
reasonable expenses previously incurred by PHS in the preparation, filing,
prosecution and maintenance of Licensed Patent Rights and further agrees to
reimburse PHS within sixty (60) days after written notice for all such future
expenses. [**] percent of the cumulated amount of such reimbursement may
be credited against Royalties due under Paragraph 6.03, however, the net
royalty payment in any calendar year may not be lower than the
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Minimum Annual Royalty specified in Appendix B. LICENSEE may elect to surrender
its rights in any country of the Licensed Territory under any Licenses Patent
Rights upon sixty (60) days written notice to PHS and owe no reimbursement
obligation under this Paragraph for subsequent patent-related expenses incurred
in that country. LICENSEE may pursue intellectual property rights at its own
expense in countries requested by LICENSEE where the PHS chooses not to seek
such protection.
7. REASONABLE BEST EFFORTS
7.01 LICENSEE shall use its reasonable best efforts to introduce
the Licensed Products into the commercial market or apply the Licensed
Processes to commercial use as soon as practicable, consistent with sound and
reasonable business practices and judgment. LICENSEE agrees to apply at least
the same level of effort that it applies to the commercial development of its
own products and processes. The efforts of a sublicensee shall be considered
the efforts of LICENSEE.
7.02 Upon the First Commercial Sale of Licensed Products or the
First Commercial Use of Licensed Processes, until the expiration of this
Agreement, LICENSEE shall use its reasonable best efforts to keep Licensed
Products and Licensed Processes available to the public.
8. DOMESTIC AND FOREIGN PATENT FILING,
PROSECUTION AND MAINTENANCE
8.01 PHS agrees to take responsibility for, but to consult with the
LICENSEE in, the preparation, filing, prosecution and maintenance of any and
all patent applications or patents included in the Licensed Patent Rights and
shall furnish copies of relevant patent-related documents to LICENSEE. PHS may
agree to permit LICENSEE to handle the prosecution of some or all of the
Licensed Patent Rights.
8.02 Each party shall provide to the other prompt notice as to all
matters that come to its attention that may affect the preparation, filing,
prosecution or maintenance of the Licensed Patent Rights and permit each other
to provide comments and suggestions with respect to the preparation, filing,
and prosecution of Licensed Patent Rights, which comments and suggestions shall
be considered by the other party.
9. RECORD KEEPING
9.01 LICENSEE agrees to keep, and to require that its Affiliates
and sublicensees keep, accurate and correct records of Licensed Products made,
used or sol and Licensed Processes practiced under this Agreement appropriate
to determine the amount of royalties due PHS. Such records shall be retained
for at least three (3) years following a given reporting period. They shall be
available during normal business hours for inspection at the expense of PHS by
an accountant or other designated auditor selected by PHS for the sole purpose
of verifying reports and payments
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hereunder. The accountant shall only disclose to PHS information relating to
the accuracy of reports and payments made under this Agreement. If an
inspection shows an underreporting or underpayment in excess of ten percent
(10%) for any twelve (12) month period, then LICENSEE shall reimburse PHS for
the cost of the inspection.
10. REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
10.01 Prior to signing this Agreement, LICENSEE has provided to PHS
a written commercialization plan under which LICENSEE intends to bring the
subject matter of the Licensed Patent Rights into commercial use upon execution
of this Agreement. The written commercialization plan is hereby incorporated by
reference into this Agreement. The plan indicates the amount of funding, number
and kind of personnel and time estimated for each phase of development of the
Licensed Products and Licensed Processes. The plan also includes statements of
commitments and estimated application dates to obtain any necessary regulatory
approvals, ultimate projections of sales and proposed marketing efforts. Based
on this plan, performance benchmarks are determined.
10.02 LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the commercialization
plan of Paragraph 10.01 for each of the Licensed Fields of Use within sixty
(60) days after December 31 of each calendar year. These progress reports shall
include, but not be limited to: progress on research and development, status of
applications for regulatory approvals, manufacturing, sublicensing, marketing
and sales during the preceding calendar year, as well as plans for the present
calendar year. If reported progress differs from that projected in the
commercialization plan submitted and benchmarks determined under Paragraph
10.01, LICENSEE shall explain the reasons for such differences. LICENSEE may
propose amendments in any such annual report to the plan submitted under
Paragraph 10.01, acceptance of which by PHS may not unreasonably be denied.
LICENSEE agrees to provide any additional data reasonably required by PHS to
evaluate LICENSEE's performance. LICENSEE may amend the plan of Paragraph 10.01
at any time and shall do so at the request of PHS to address any Licensed
Fields of Use not specifically addressed in the plan originally submitted.
10.03 LICENSEE shall report to PHS the date of the First Commercial
Sale of Licensed Products or the First Commercial Use of Licensed Processes in
each country in the Licensed Territory within thirty (30) days of such
occurrence.
10.04 LICENSEE shall submit to PHS within sixty (60) days after each
calendar half year ending June 30 and December 31, a royalty report setting
forth for the preceding half year period the amount of the Licensed Products
sold or Licensed Processes practiced by LICENSEE, its Affiliates and
sublicensees in each country within the Licensed Territory, the Net Sales, and
the amount of royalty accordingly due. With each such royalty report, LICENSEE
shall submit payment of the earned royalty due. If no earned royalties are due
to PHS for any reporting period, the written
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report shall so state. The royalty report shall be certified as correct by an
authorized officer of LICENSEE and shall include a detailed listing of all
deductions made under Paragraph 2.05 to determine the Net Sales or made under
Article 6 to determine royalties due.
10.05 Royalties due under Article 6 shall be paid in U. S. dollars
in Bethesda, Maryland or at such other place as PHS may reasonably designate,
consistent with the laws and regulations controlling in any foreign country.
For conversion of foreign currency to U. S. dollars, the conversion rate shall
be the rate quoted in the Wall Street Journal on the day that the payment is
due. All checks and bank drafts shall be drawn on United States banks and shall
be payable to NIH/Patent Licensing. Any loss of exchange, value, taxes or other
expenses incurred in the transfer or conversion to U. S. dollars shall be paid
entirely by LICENSEE.
10.06 Late charges will be applied to any overdue payments as
required by the U. S. Department of Treasury in the Treasury Fiscal
Requirements Manual, Section 8020.20. The payment of such late charges shall
not prevent PHS from exercising any other rights it may have as a consequence
of the lateness of any payment.
10.07 All plans and reports required by this Article 10 shall be
treated by PHS as commercial and financial information obtained from a person
and as privileged and confidential and not subject to disclosure under the
Freedom of Information Act, 5 U.S.C. Section 552.
11. INFRINGEMENT AND PATENT ENFORCEMENT
11.01 PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement, as well as any facts which may affect
the validity, scope or enforceability of the Licensed Patent Rights of which
either Party becomes aware.
11.02 LICENSEE is empowered pursuant to this Agreement and the
provisions of Chapter 29 of Title 35, United States Code or other statutes to:
(a) bring suit in its name, at its own expense, and on its own behalf for
infringement of presumably valid claims in a Licensed Patent; (b) in any such
suit, to enjoin infringement and to collect for its use, damages, profits and
awards of whatever nature recoverable for such infringement; and (c) settle any
claim or suit for infringement of the Licensed Patent Rights--provided,
however, that PHS and appropriate Government authorities shall have a
continuing right to intervene in such suit. LICENSEE shall take no action to
compel the Government either to initiate or to join in any such suit for patent
infringement unless such action is ultimately necessary to avoid dismissal of
its suit. Should the Government be made a party to any such suit by motion or
any other action of LICENSEE, LICENSEE shall reimburse the Government for any
costs, expenses or fees which the Government incurs as a result of such motion
or other action, including
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any and all costs incurred by the Government in opposing any such joinder
motion. Upon LICENSEE's payment of all costs incurred by the Government as a
result of LICENSEE's joinder motion or other action, these actions by LICENSEE
will not be considered a default in the performance of any material obligation
under this Agreement. In any event, LICENSEE agrees to keep PHS reasonably
apprised of the status and progress of any litigation. Before LICENSEE
commences an infringement action, LICENSEE shall notify PHS and give careful
consideration to the views of PHS an to any potential effects of the litigation
on the public health in deciding whether to sue.
11.03 In any infringement action commenced under Paragraph 11.02,
the expenses including costs, fees, attorney fees and disbursements, shall be
paid by LICENSEE. Up to fifty (50) percent of such expenses may be credited
against the royalties payable to PHS under the Licensed Patent Rights in the
country in which such a suit is filed. In the event that fifty (50) percent of
such expenses exceed the amount of royalties withheld by LICENSEE in any
calendar year, the expenses in excess may be carried over as a credit on the
same basis into succeeding calendar years. A credit against litigation
expenses, however, may not reduce the royalties due in any calendar year to
less than the Minimum Annual Royalty. Any recovery made by LICENSEE, through
court judgment or settlement, first shall be applied to reimburse PHS for
royalties withheld as a credit against litigation expenses and then to
reimburse LICENSEE for its litigation expense. Any remaining recoveries shall
be shared equally by LICENSEE and PHS.
11.04 PHS shall cooperate fully with LICENSEE in connection with an
infringement action initiated under Paragraph 11.02. PHS agree promptly to
provide access to all necessary documents and to render reasonable assistance
in response to a request by LICENSEE.
11.05 PHS shall have the right to sue for infringement of the
Licensed Patent Rights in the event that LICENSEE elects not to do so under
Paragraph 11.02.
11.06 In the event that a declaratory judgment action alleging
invalidity or non-infringement of any of the Licensed Patent Rights shall be
brought against LICENSEE or raised by way of counterclaim or affirmative
defense in an infringement suit brought by LICENSEE under Paragraph 11.02,
LICENSEE is empowered pursuant to this Agreement and the provisions of Chapter
29 of Title 35, United States Code or other statutes to: (a) defend the suit
in its own name, at its own expense, and on its own behalf for presumably valid
claims in the Licensed Patent Rights; (b) in any such suit, ultimately to
enjoin infringement and to collect for its use, damages, profits and awards of
whatever nature recoverable for such infringement; and (c) settle any claim or
suit for declaratory judgment involving the Licensed Patent Rights--provided,
however, that PHS and appropriate Government authorities shall have a
continuing right to intervene in such suit. LICENSEE shall take no action to
compel the Government authorities either to initiate or to join in any such
declaratory judgment
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action unless such action is ultimately necessary to avoid dismissal of its
suit. Should the Government be made a party to any such suit by motion or any
other action of LICENSEE, LICENSEE shall reimburse the Government for any
costs, expenses or fees which the Government incurs as a result of such motion
or other action. Upon LICENSEE's payment of all costs incurred by the
Government as a result of LICENSEE's joinder motion or other action, these
actions by LICENSEE will not be considered a default in the performance of any
material obligation under this Agreement. If LICENSEE elects not to defend
against such declaratory judgment action, PHS, at its option, may do so at its
own expense. In any event, LICENSEE agrees to keep PHS reasonably apprised of
the status and progress of any litigation. Before LICENSEE commences an
infringement action, LICENSEE shall notify PHS and give careful consideration
to the views of PHS and to any potential effects of the litigation on the
public health in deciding whether to sue.
12. NEGATION OF WARRANTIES AND INDEMNIFICATION
12.01 PHS offers no warranties other than those specified in
Article 1.
12.02 PHS does not warrant the validity of the Licensed Patent
Rights, and makes no representations whatsoever with regard to the scope of the
Licensed Patet Rights, or that the Licensed Patet Rights may be exploited
without infringing other patents or other intellectual property rights of third
parties.
12.03 PHS MAKE NO WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE of any subject matter defined by the claims
of the Licensed Patent Rights or of any material provided to LICENSEE under
Paragraph 3.03.
12.04 PHS does not represent that they will commence legal actions
against third parties infringing the Licensed Patent Rights.
12.05 LICENSEE shall defend, indemnify and hold PHS and its
employees, students, fellows, agents and consultants harmless from and against
all liability, demands, damages, expenses and losses, including but not limited
to death, personal injury, illness or property damage in connection with or
arising out of (a) the use by LICENSEE, its Affiliates and sublicensees,
directors, employees or third parties of any Licensed Patent Rights, or (b) the
design, manufacture, distribution or use of any Licensed Products, Licensed
Processes or materials provided under Article 3.03, or other products or
processes developed in connection or arising out of the Licensed Patent Rights.
LICENSEE agrees to maintain a liability insurance program consistent with sound
business practice.
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13. TERMINATION AND MODIFICATION OF RIGHTS
13.01 In the event that LICENSEE is in default in the performance of
any material obligations under this Agreement, and if the default has not been
remedied within ninety (90) days after the date of notice in writing of such
default, PHS may terminate this Agreement by written notice.
13.02 At least 30 days prior to filing a petition in bankruptcy
LICENSEE must inform PHS of its intention to file the petition in bankruptcy or
of a third party's intention to file an involuntary petition in bankruptcy.
13.03 In the event that LICENSEE becomes insolvent, makes an
assignment of Licensed Patent Rights for the benefits of creditors, files a
petition in bankruptcy, has such a petition filed against it, notifies PHS of
its intention to file the petition in bankruptcy, or notifies PHS of a third
party's intention to file an involuntary petition in bankruptcy, PHS shall have
the right to terminate this Agreement by giving LICENSEE written notice.
Termination of this Agreement is effective upon Licensee's receipt of the
written notice.
13.04 LICENSEE shall have a unilateral right to terminate this
Agreement and/or any licenses in any country by giving PHS sixty (60) days
written notice to that effect.
13.05 PHS shall specifically have the right to terminate or render
this Agreement nonexclusive as to any Licensed Fields of Use, if LICENSEE: (1)
has not used reasonable best efforts under the circumstances to put the
Licensed Products or Licensed Processes into commercial use in the country or
countries where licensed, directly or through a sublicense; (2) has not
achieved the benchmarks established in the commercialization plan of Paragraph
10.01 as may be modified under Paragraph 10.02; (3) after commercial use
commences, is not keeping Licensed Products or Licensed Process reasonably
available to the public; (4) cannot reasonably satisfy unmet health and safety
needs; or (5) cannot reasonably justify a failure to comply with the domestic
production requirement of Paragraph 5.02 unless waived. In making this
determination, PHS will take into account the normal course of such commercial
development programs conducted with sound and reasonable business practices and
judgment and the annual reports submitted by LICENSEE under Paragraph 10.02.
Prior to invoking this right, PHS shall give written notice to LICENSEE
providing LICENSEE specific notice of and a ninety (90) day opportunity to
satisfy PHS's concerns as to the previous items (1) to (5). If LICENSEE fails
to satisfy or reasonably begin to rectify such concerns within the ninety (90)
day period, PHS may terminate this AGREEMENT or render this AGREEMENT
nonexclusive to any Licensed Fields of Use.
13.06 When the public health and safety so require, and after
written notice to LICENSEE providing LICENSEE a sixty (60) day opportunity to
respond, PHS shall
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have the right to require LICENSEE to grant sublicenses to responsible
applicants, on reasonable terms, in any Licensed Fields of Use under the
Licensed Patent Rights that are not being adequately commercially exploited by
LICENSEE, or adequately addressed in the commercialization plan of Paragraph
10.01 as amended under Paragraph 10.02, unless LICENSEE can reasonably
demonstrate that such a sublicense would be contrary to sound and reasonable
business practice or that the granting of the sublicense would not materially
increase the availability to the public of the subject matter of the Licensed
Patent Rights. PHS will not require the granting of a sublicense unless the
responsible applicant has first negotiated in good faith with LICENSEE.
13.07 PHS reserves the right according to 35 U.S.C. Section
209(f)(4) to terminate or modify this Agreement if it is determined that such
action is necessary to meet requirements for public use specified by Federal
regulations issued after the date of the license and such requirements are not
reasonably satisfied by LICENSEE.
13.08 Within thirty (30) days of receipt of written notice of PHS's
unilateral decision to modify or terminate this Agreement, LICENSEE may,
consistent with the provisions of 37 C.F.R. Section 404.11, appeal the
decision by written submission to the Assistant Secretary for Health or
designee. The Assistant Secretary for Health or designee's decision shall be
the final agency decision. LICENSEE may thereafter exercise any and all
administrative or judicial remedies that may be available.
13.09 Within ninety (90) days of termination of this AGREEMENT under
this Article 13 or expiration under Paragraph 3.02, a final report shall be
submitted by LICENSEE. Any royalty payments and unreimbursed patent expenses
due to PHS become immediately due and payable upon termination or modification.
If terminated under Article 13, sublicensees may elect to convert their
sublicenses to direct licenses with PHS pursuant to Paragraph 4.03.
13.10 Paragraphs 4.03, 6.07, 9.01, 10.05, 10.06, 12.05 and 13.09 of
this Agreement shall survive termination of this AGREEMENT.
14. GENERAL PROVISIONS
14.01 Neither Party may waive or release any of its rights or
interests in this Agreement except in writing. The failure of either Party to
assert a right hereunder or to insist upon compliance with any term or
condition of this Agreement shall not constitute a waiver of that right or
excuse a similar subsequent failure to perform any such term or condition by
the other party.
14.02 This Agreement constitutes the entire agreement between the
parties relating to the subject matter of the Licensed Patent Rights, and all
prior negotiations, representations, agreements and understandings are merged
into, extinguished by and completely expressed by this Agreement.
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14.03 The provisions of this Agreement are severable, and in the
event that any provision of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of law, such determination shall not
in any way affect the validity or enforceability of the remaining provisions of
this Agreement.
14.04 If either Party desires a modification to this Agreement, the
Parties shall, upon reasonable notice of the proposed modification by the Party
desiring the change, confer in good faith to determine the desirability of such
modification. No modification will be effective until a written amendment is
signed by the signatories to this Agreement or their designees.
14.05 The construction, validity, performance and effect of this
Agreement shall be governed by Federal law as applied by the Federal Courts in
the District of Columbia.
14.06 All notices required or permitted by this Agreement shall be
given by prepaid registered or certified mail properly addressed to the other
Party at the address designated on the following signature page, or to such
other address as may be designated in writing by such other Party and shall be
effective as of the date of the postmark of such notice.
14.07 This Agreement shall not be assigned by LICENSEE except (a)
with the prior written consent of PHS, such consent to be reasonably given; or
(b) as part of a sale or transfer of substantially the entire business of
LICENSEE relating to operations which concern this Agreement.
14.08 LICENSEE agrees in its practice of the Licensed Patent Rights
to comply with all applicable Public Health Service and NIH/ADAMHA regulations
and guidelines including, for example, those relating to research involving
human or animal subjects or recombinant DNA.
14.09 LICENSEE acknowledges that it is subject to and agrees to
abide by the United States laws and regulations (including the Export
Administration Act of 1979 and Arms Export Control Act) controlling the export
of technical data, computer software, laboratory prototypes, biological
material and other commodities. The transfer of such items may require a
license from the cognizant agency of the U. S. Government or written assurances
by LICENSEE that it shall not export such items to certain foreign countries
without prior approval of such agency. PHS neither represent that a license is
or is not required or that, if required, it shall be issued.
14.10 LICENSEE agrees to mark the Licensed Products or their
packaging sold in the United States with all applicable U. S. patent numbers
and similarly to indicate "Patent Pending" status. All Licensed Products
manufactured in, shipped to or sold in other countries shall be marked in such
a manner as to preserve PHS patent right in such countries.
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14.11 by entering into this Agreement, PHS does not directly or
indirectly endorse any product or service provided, or to be provided, by
LICENSEE whether directly or indirectly related to this Agreement. LICENSEE
shall not state or imply that this Agreement is an endorsement by the
Government, PHS, any other Government organizational unit, or any Government
employee. Additionally, LICENSEE shall not use the names of NIH or ADAMHA or
their employees in any advertising, promotional or sales literature without the
prior written consent of PHS.
14.12 The Parties agree to attempt to settle amicably any
controversy or claim arising under this Agreement or a breach of the Agreement,
except for appeals of modification or termination decisions provided for in
Article 13. LICENSEE agrees first to appeal any such unsettled claims or
controversies to the Director of NIH, whose decision shall be considered the
final agency decision. Thereafter, LICENSEE may exercise any administrative or
judicial remedies that may be available.
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PHS PATENT LICENSE AGREEMENT - EXCLUSIVE
SIGNATURE PAGE
FOR PHS:
- --------------------------------------- ------------------------------
Reid G. Adler, J.D. Date
Director, Office of Technology Transfer
National Institutes of Health
Mailing Address for Notices:
Director
Office of Technology Transfer
Box OTT
National Institutes of Health
Bethesda, Maryland 20892
FOR LICENSEE (The undersigned expressly certifies or affirms that the contents
of any statements of LICENSEE made or referred to in this document are truthful
and accurate.)
- ------------------------------ ------------------------------
Name Date
- ------------------------------
Title
Mailing Address for Notices:
- ------------------------------
- ------------------------------
- ------------------------------
<PAGE> 18
NIH Office of Technology Transfer 910221 - September 8, 1991
APPENDIX A - PATENT OR PATENT APPLICATION
PATENT OR PATENT APPLICATION:
U.S. Patent No. 4,520,031, issued May 28, 1985 (serial Number 06/410,965, filed
August 24, 1982) entitled "Method for Reducing Toxic Effects of Methyl-Glyoxal
Bis-Guanylhydrazone"
<PAGE> 19
NIH Office of Technology Transfer 910221 - September 8, 1991
APPENDIX B - LICENSED FIELDS OF USE AND TERRITORY
LICENSED TERRITORY:
United States of America, its territories, possessions and commonwealths.
LICENSED FIELDS OF USE:
A method for reducing the toxic effects of methyl-glyoxal bis-guanylhydrazone
in a patient encompassed within the scope of a claim in the Licensed Patent.
<PAGE> 20
NIH Office of Technology Transfer 910221 - September 8, 1991
APPENDIX C - ROYALTIES
ROYALTIES:
LICENSEE agrees to pay to PHS a noncreditable, nonrefundable License
Issue Royalty in the amount of ($ [**] ).
LICENSEE agrees to pay to PHS a nonrefundable Minimum Annual Royalty
in the amount of ($ [**] ) which will be credited towards
earned royalties.
LICENSEE agrees to pay PHS Earned Royalties as follows:
Licensee shall pay NIH a royalty on the Net Sales of Licensee and its
included affiliates and Sublicensees of [**] ([**] %).
LICENSEE agrees to pay PHS Benchmark Royalties as follows:
Licensee agrees to pay PHS Sublicensing Royalties as follows:
[**] ([**] %) of Net Sales of Licensed Products
<PAGE> 21
NIH Office of Technology Transfer 910221 - September 8, 1991
APPENDIX D - MODIFICATIONS
PHS and LICENSEE agree to the following modifications to the Articles and
Paragraphs of this Agreement:
1. Add the following language to the end of Paragraph 6.02:
"The Minimum Annual Royalty due for the first calendar year of this
Agreement may be prorated according to the fraction of the calendar
year remaining between the effective date of this Agreement and the
next subsequent January 1, and is due and payable within sixty (60)
days of the effective date of this Agreement, with the royalty report
required in Section 10.04 of this Agreement."
2. Add paragraph 6.11 as follows:
"If licensee sells a licensed product to an affiliate or sublicense
for resale, royalties will only be due on final sales by sublicensee
or affiliate."
3. Replace paragraph 7.01 with the following language:
"LICENSEE shall use its reasonable best efforts to introduce the
Licensed Products into the commercial market or apply the Licensed
Processes to commercial use as soon as practicable, consistent with
sound and reasonable business practices and judgment. "Reasonable best
efforts" for the purposes of this provision shall include, but not be
limited to, adherence to the Commercial Development Plan (defined in
Paragraph 10.01) and performance of the Benchmarks (defined in
Paragraph 10.01 and set forth in Appendix E). LICENSEE agrees to apply
at least the same level of effort that it applies to the commercial
development of its own products and processes. The efforts of a
sublicensee shall be considered the efforts of LICENSEE.
4. Replace paragraph 10.01 with the following language:
Prior to signing this Agreement, LICENSEE has provided to PHS a
written commercialization plan ("Commercial Development Plan") under
which LICENSEE intends to bring the subject matter of the Licensed
Patent Rights into commercial use upon execution of this Agreement.
The Commercial Development Plan is hereby incorporated by reference
into this Agreement. The plan indicates the amount of funding, number
and kind of personnel and time estimated for each phase of development
of the Licensed Products and Licensed Processes. The plan also
includes statements of commitments and estimated application dates to
obtain any necessary regulatory approvals, ultimate projections of
sales and proposed marketing efforts. Based on this plan,
<PAGE> 22
NIH Office of Technology Transfer 910221 - September 8, 1991
performance benchmarks ("Benchmarks") have been determined and are
attached hereto as Appendix E.
5. Replace paragraph 10.02 with the following language:
LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the Commercial
Development Plan for each of the Licensed Fields of Use within sixty
(60) days after December 31 of each calendar year. These progress
reports shall include, but not be limited to: progress on research
and development, status of applications for regulatory approvals,
manufacturing, sublicensing, marketing and sales during the preceding
calendar year, as well as plans for the present calendar year. If
reported progress differs from that projected in the Commercial
Development Plan and Benchmarks, LICENSEE shall explain the reasons
for such differences. LICENSEE may propose amendments in any such
annual report to the plan submitted under Paragraph 10.01, acceptance
of which by PHS may not unreasonably be denied. LICENSEE agrees to
provide any additional data reasonably required by PHS to evaluate
LICENSEE's performance. LICENSEE may amend the Commercial Development
Plan at any time, and shall do so at the request of PHS, to address
any Licensed Fields of Use not specifically addressed in the plan
originally submitted. LICENSEE may amend the Benchmarks at any time
upon written consent by PHS. PHS shall not unreasonably withhold
approval of any request of LICENSEE to extend the time periods of this
schedule if such request is supported by a reasonable showing by
LICENSEE of due diligence toward bringing the Licensed Products to the
point of practical application.
6. Replace Paragraph 13.05 with the following language:
PHS shall specifically have the right to terminate or render this
Agreement nonexclusive as to any Licensed Fields of use, if LICENSEE:
(1) has not used reasonable best efforts under the circumstances to
put the Licensed Products or Licensed Processes into commercial use in
the country or countries where licensed, directly or through a
sublicensee; (2) has not achieved the Benchmarks as may be modified
under Paragraph 10.02; (3) after commercial use commences, is not
keeping Licensed Products or Licensed Processes reasonably available
to the public; (4) cannot reasonably satisfy unmet health and safety
needs; or (5) cannot reasonably justify a failure to comply with the
domestic production requirement of Paragraph 5.02 unless waived. Prior
to invoking this right, PHS shall give written notice to LICENSEE
providing LICENSEE specific notice of and a ninety (90) day
opportunity to satisfy PHS's concerns as to the previous item (1) to
(5). If LICENSEE fails to satisfy or reasonably begin to rectify such
concerns within the ninety (90) day period, PHS may terminate this
AGREEMENT or render this AGREEMENT nonexclusive to any Licensed Fields
of Use.
<PAGE> 23
NIH Office of Technology Transfer 910221 - September 8, 1991
APPENDIX E-BENCHMARKS
BENCHMARKS:
Licensee shall apply for orphan drug status for licensed field use in
1992.
Licensee shall initiate NDA directed studies for of use in the second
half of 1992.
Licensee shall submit NDA to the FDA for field of use in 1994.
Licensee shall launch product for field of use in within six months
after receiving marketing approval by the FDA.
<PAGE> 1
Exhibit 10.28
AGREEMENT FOR SERVICES
I. AGREEING PARTIES:
This Agreement is entered into by and between ILEX Oncology Inc. (ILEX)
a subsidiary of CTRC RESEARCH FOUNDATION (Foundation) and THE UNIVERSITY
OF TEXAS HEALTH SCIENCE CENTER AT SAN ANTONIO (University).
II. SERVICES TO BE PERFORMED:
ILEX wishes to utilize the services of Jinee Rizzo, Ph.D. (academic
appointment of Instructor, Department of Pharmacology) to conduct
pharmacology studies in collaboration with the ILEX Oncology Inc.
III. PAYMENT FOR SERVICES:
An amount not to exceed $57,845 for salary and staff benefits will be
paid by the Foundation on a monthly prorated basis upon receipt of
billings from the Health Science Center based on actual expenditures.
IV. TERMS OF AGREEMENT:
This Agreement covers the period beginning February 15, 1995, and ending
February 15, 1996.
V. TERMINATIONS:
This Agreement will terminate on February 15, 1996, unless renewed as
mutually agreed by the parties.
VI. SIGNATURES:
THE UNIVERSITY OF TEXAS HEALTH ILEX ONCOLOGY INC.
SCIENCE CENTER AT SAN ANTONIO (subsidiary of the
CTRC Research Foundation)
/s/ R. B. Price /s/ Richard L. Love
---------------------------- ------------------------------
R.B. Price, Executive Vice Richard L. Love
President for Administration President/CEO
and Business Affairs
2/13/95 3/1/95
---------------------------- ------------------------------
Date Date
<PAGE> 1
Exhibit 10.37
ILEX ONCOLOGY, INC.
14785 OMICRON DRIVE
SAN ANTONIO, TEXAS 78245-3217
Mr. Richard L. Love
24 Eton Green Circle
San Antonio, Texas 78257
Re: Employment Agreement
Mr. Love:
ILEX Oncology, Inc., formerly known as Biovensa Inc. (the "Company") and
you have entered into an Employment Agreement dated as of November 2, 1994 (the
"Agreement"). In order to clarify certain aspects of that Agreement, the
Company and you have determined that Section 8.7 of the Agreement should be
amended and restated in its entirety to read as follows:
"8.7 IRS CONTINGENCY. Notwithstanding anything contained herein to
the contrary, the Company and the Employee agree that they shall
negotiate in good faith to reach an equitable adjustment to the
provisions of this Agreement in the event that (a) the United States
Internal Revenue Service notifies the Cancer Therapy and Research
Foundation of South Texas ("CTRF") and/or CTRC Research Foundation
("CTRC"), or any affiliate thereof, that it will not rule that the
establishment and operation of the Company will not adversely affect
CTRF's, CTRC's or any such affiliate's status as an exempt organization
under Section 501(c)(3) of the Internal Revenue Code, or the Internal
Revenue Service otherwise asserts that the establishment and operation
of the Company may adversely affect CTRF's, CTRC's or any such
affiliate's status as an exempt organization under Section 501(c)(3) of
the Internal Revenue Code, (b) a private ruling is not requested, and
CTRF, CTRC and/or any affiliate thereof are unable to obtain from
qualified tax counsel an opinion satisfactory to each of them to the
effect that the establishment and operation of Seller will not adversely
affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code or (c)
the Company fails to receive at least three million dollars ($3,000,000)
by June 30, 1996 from the sale to persons other than CTRF, CTRC and
their affiliates of its common or preferred stock. If the Company and
the Employee cannot reach such an agreement within ninety (90) days
subsequent to the occurrence of such an event, this Agreement shall
automatically terminate as of the expiration of that ninety (90) day
period."
The remaining terms of the Agreement shall not be affected by this
letter, and shall remain in full force and effect.
<PAGE> 2
Please acknowledge your agreement to the aforementioned amendment by
executing this letter in the space provided below.
Sincerely yours,
ILEX Oncology, Inc.
/s/ Gary V. Woods
------------------------------------------
By: Gary V. Woods
Its: Chairman
Agreed and accepted to April 4 , 1995
---------
/s/ R. L. Love
--------------------------------
Richard L. Love
<PAGE> 1
Exhibit 10.38
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Agreement") is entered
into effective as of the ____ day of September, 1995, by and between Richard L.
Love ("Employee") and Ilex Oncology Inc., a Delaware corporation (formerly
known as Biovensa, Inc.) (the "Company").
WHEREAS, the Company and Employee have previously entered into an
Employment Agreement dated as of November 2, 1994, as amended as of April 4,
1995 as to Section 8.7 (as amended, the "Existing Agreement");
WHEREAS, the parties desire to amend certain provisions of the Existing
Agreement and, as hereinafter set forth;
NOW, THEREFORE, in consideration of $500, the agreement of certain
investors to purchase shares of Series B Convertible Preferred Stock of the
Company for a purchase price of $6,500,000 and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Section 5.2(a) of the Existing Agreement is hereby amended to
read in its entirety as follows:
"(a) During Employee's employment hereunder and for a period of
one year after any termination of such employment for any reason,
including, without limitation, by Employee or by the Company, Employee
shall not engage, anywhere in the world, whether directly or indirectly,
as principal, owner, officer, director, agent, employee, consultant or
partner, in the research, development, manufacture or commercialization
of products that compete with the Company's products or programs
("Restricted Activities"), provided that the foregoing shall not
restrict Employee from engaging in any Restricted Activities which the
Company directs Employee to undertake or which the Company are otherwise
expressly authorizes. The foregoing shall not restrict Employee from
owning less than 5% of the outstanding capital stock of any company
which engages in Restricted Activities, provided that Employee is not
otherwise involved with such company as an officer, director, agent,
employee or consultant."
2. The provisions of Articles 5 and 6 of the Existing Agreement (as
amended hereby) shall survive any termination of the Existing Agreement (as
amended hereby), such survival to be in accordance with the terms of such
Articles and the "term of this Agreement" as used therein shall refer to the
term of the provisions of such Articles.
3. As amended by this Agreement, the Existing Agreement shall
continue in full force and effect.
[signatures on next page]
<PAGE> 2
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year indicated above.
ILEX ONCOLOGY INC.
By /s/ Gary Woods
-----------------------------------
Name Gary Woods
---------------------------------
Title Chairman, ILEX Board
of Directors
--------------------------------
/s/ Richard L. Love
-------------------------------------
Richard L. Love
-2-
<PAGE> 1
Exhibit 10.40
ILEX ONCOLOGY, INC.
14785 OMICRON DRIVE
SAN ANTONIO, TEXAS 78245-3217
Mr. Alexander L. Weis
12718 Oldwick Road
San Antonio, Texas 78230
Re: Employment Agreement
Mr. Weis:
ILEX Oncology, Inc., formerly known as Biovensa Inc. (the "Company") and
you have entered into an Employment Agreement dated as of November 2, 1994 (the
"Agreement"). In order to clarify certain aspects of that Agreement, the
Company and you have determined that Section 8.7 of the Agreement should be
amended and restated in its entirety to read as follows:
"8.7 IRS CONTINGENCY. Notwithstanding anything contained herein to
the contrary, the Company and the Employee agree that they shall
negotiate in good faith to reach an equitable adjustment to the
provisions of this Agreement in the event that (a) the United States
Internal Revenue Service notifies the Cancer Therapy and Research
Foundation of South Texas ("CTRF") and/or CTRC Research Foundation
("CTRC"), or any affiliate thereof, that it will not rule that the
establishment and operation of the Company will not adversely affect
CTRF's, CTRC's or any such affiliate's status as an exempt organization
under Section 501(c)(3) of the Internal Revenue Code, or the Internal
Revenue Service otherwise asserts that the establishment and operation
of the Company may adversely affect CTRF's, CTRC's or any such
affiliate's status as an exempt organization under Section 501(c)(3) of
the Internal Revenue Code, (b) a private ruling is not requested, and
CTRF, CTRC and/or any affiliate thereof are unable to obtain from
qualified tax counsel an opinion satisfactory to each of them to the
effect that the establishment and operation of Seller will not adversely
affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code or (c)
the Company fails to receive at least three million dollars ($3,000,000)
by June 30, 1996 from the sale to persons other than CTRF, CTRC and
their affiliates of its common or preferred stock. If the Company and
the Employee cannot reach such an agreement within ninety (90) days
subsequent to the occurrence of such an event, this Agreement shall
automatically terminate as of the expiration of that ninety (90) day
period."
The remaining terms of the Agreement shall not be affected by this
letter, and shall remain in full force and effect.
<PAGE> 2
Please acknowledge your agreement to the aforementioned amendment by
executing this letter in the space provided below.
Sincerely yours,
ILEX Oncology, Inc.
/s/ R. L. Love
------------------------------------------
By: Richard L. Love
Its: President
Agreed and accepted to April 10 , 1995
----------
/s/ Alexander L. Weis
--------------------------------
Alexander L. Weis
<PAGE> 1
Exhibit 10.41
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Agreement") is entered
into effective as of the ____ day of September, 1995, by and between Alexander
L. Weis, Ph.D. ("Employee") and Ilex Oncology Inc., a Delaware corporation
(formerly known as Biovensa, Inc.) (the "Company").
WHEREAS, the Company and Employee have previously entered into an
Employment Agreement dated as of November 2, 1994, as amended as of April 10,
1995 as to Section 8.7 and as of September 14, 1995 as to Section 5.1 (as
amended, the "Existing Agreement");
WHEREAS, the parties desire to amend certain provisions of the Existing
Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of $500, the agreement of certain
investors to purchase shares of Series B Convertible Preferred Stock of the
Company for a purchase price of $6,500,000 and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Section 4.1 of the Existing Agreement is hereby amended to read
in its entirety as follows:
"4.1 TERMINATION BY THE COMPANY WITHOUT CAUSE. Subject to the
provisions of this Section, this Agreement may be terminated by the
Company without cause upon 30 days prior written notice thereof given to
Employee. In the event of termination pursuant to this Section, the
Company shall pay Employee, within 15 days of such termination, (a) his
base salary earned pro rata to the date of such termination, plus (b) a
lump-sum payment equal to one full year of his then effective annual
base salary under Section 3.1 (unless Employee makes an election to
receive, in lieu of a lump-sum payment under clause (b) above, either
(i) limited accelerated vesting of his stock options as provided in
Section 4.5(a)(ii) or (ii) an end to the Restriction Period (defined in
Section 5.2(a)) as of the date of termination as provided in Section
5.2(a))."
2. The following provisions are added to the end of Section 5.2(a):
"Notwithstanding the foregoing, in the event of any termination
of this Agreement pursuant to Section 4.1, the period during which the
non-competition provisions of this Section 5.2(a) shall be applicable
(the "Restriction Period") shall be extended for a period of one year
from the date of termination of this Agreement, unless Employee elects
to have the Restriction Period end as of the date of such termination.
Any such election by Employee must be made, if at all, by Employee
giving the Company notice thereof within 10 days after the date of such
termination. If Employee makes any such election, the
<PAGE> 2
Restriction Period shall end on the date of termination of this
Agreement pursuant to Section 4.1, and Employee will not have the right
to receive, and the Company will not have the obligation to pay, certain
severance compensation as set forth in Section 4.1."
3. The provisions of Articles 5 and 6 of the Existing Agreement (as
amended hereby) shall survive any termination of the Existing Agreement (as
amended hereby), such survival to be in accordance with the terms of such
Articles and the "term of this Agreement" as used therein shall refer to the
term of the provisions of such Articles.
4. As amended by this Agreement, the Existing Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year indicated above.
ILEX ONCOLOGY INC.
By /s/ Richard L. Love
-----------------------------------
Richard L. Love,
President and CEO
/s/ Alexander L. Weis
-------------------------------------
Alexander L. Weis, Ph.D.
-2-
<PAGE> 1
EXHIBIT 10.47
ILEX ONCOLOGY, INC.
1995 STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Purposes of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Scope of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Stock Subject to the Program; Adjustments Upon
Changes in Capitalization . . . . . . . . . . . . . . . . . . . . . 4
6. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Compliance with Other Laws and Regulations . . . . . . . . . . . . . 9
9. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10. Amendment or Termination of Program . . . . . . . . . . . . . . . . 10
11. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
ILEX ONCOLOGY, INC.
1995 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
1.1. The purposes of the ILEX Oncology, Inc. 1995 Stock Option Plan
are (a) to assist ILEX Oncology, Inc. in attracting and retaining in the employ
of the Company and any Subsidiaries individuals of outstanding competence, and
(b) to provide performance incentives for officers, executives, key employees
of and advisors and independent consultants to the Company and any
Subsidiaries.
2. DEFINITIONS
Unless otherwise required by the context, the terms used in this Plan
shall have the meanings indicated in this Section 2. Except where context
indicates otherwise, the use of the masculine shall include the feminine, and
the use of the singular shall include the plural.
"Beneficiary": As applied to a participant in the Plan, a person or
entity (including a trust or the estate of the participant) designated in
writing by the participant on such forms as the Committee may prescribe to whom
an Option may pass in the event of the death of the participant. If, at the
death of a participant, there shall not be any living person or entity in
existence so designated, the term "Beneficiary" shall mean the legal
representative of the participant's estate.
"Board or Board of Directors": The Board of Directors of the Company.
"Committee": The Option Committee of the Board of Directors or such
other committee as may be designated by the Board of Directors under Section
4.1 to administer the Plan.
"Common Stock": The common stock of the Compass, $.01 par value, or
such other class of shares or other securities as may be applicable in
accordance with Sections 5.1 and 5.2.
"Company": ILEX Oncology, Inc., a Delaware corporation, its successors
and assigns.
"Consultant": An advisor or independent consultant to the Company
who, in the opinion of the Committee, is in a position to make significant
contributions to the Company or a Subsidiary. Should the Company under Section
8 of the Plan elect to register any of the shares of Common Stock covered by
the Plan pursuant to Section 12 of the Securities Exchange Act of 1934, then as
of the effective date of such registration, a non-employee director on the
Company's Board of Directors shall not be considered a Consultant eligible to
receive Options under the Plan.
"Incentive Stock Option": A form of stock option which, by specific
provision of the Internal Revenue Code of 1986, as amended, is not subject to
federal income tax at
1
<PAGE> 4
the time of its grant or exercise and is issuable only to employees of the
corporation granting the option or a parent or subsidiary of such corporation.
"Key Employee": An employee of the Company or of a Subsidiary
regularly employed on a full-time basis, including an officer or director if he
is such an employee, who, in the opinion of the Committee, is in a position to
make significant contributions to the Company or a Subsidiary.
"Market Value": As applied to a specific date and unless otherwise
specifically defined in the text of the Plan, (i) the average of the high and
low sale prices of the Common Stock for such date as reported on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") system (or, if
no such sales were reported for such date, on the next preceding date for which
such sales were reported), or (ii) if the price of Common Stock is not reported
on the NASDAQ system or any other national exchange, the fair market value as
determined in good faith by the Committee.
"Option" or "Stock Option": An option to purchase shares of Common
Stock granted under Section 6. 1.
"Optionee": A Key Employee or Consultant who has received an Option
or Options under the Plan.
"Permanent Disability": The permanent incapacity of a participant in
the Plan to perform the usual duties of his employment by reason of physical or
mental impairment. For this purpose, "Permanent Disability" shall be deemed to
exist if Optionee is unable by reason of material physical or mental impairment
to perform the duties of his regular position with the Company and is not
expected to recover from his disability within a period of six months from the
commencement of the disability. If at any time Optionee has claimed to be
permanently disabled, a physician acceptable to both Optionee and the Committee
(which acceptances shall not be unreasonably withheld) shall be retained by the
Committee and shall examine Optionee. Optionee shall cooperate fully with the
physician. If the physician determines that Optionee is permanently disabled,
the physician shall deliver to the Committee a certificate certifying both that
Optionee is permanently disabled and the date upon which the condition of
permanent disability commenced. The determination of the physician shall be
conclusive. For purposes of Options that are Incentive Stock Options,
Permanent Disability shall be interpreted in a manner that is consistent with
Internal Revenue Code Section 22(e)(3).
"Plan": The ILEX Oncology, Inc. 1995 Stock Option Plan, as amended
from time to time.
"Restricted Stock": Shares of Common Stock issued or transferred
subject to restrictions precluding a sale or other disposition for a period of
time (other than as specifically may be permitted) and requiring, as a
condition to retention, compliance with any other terms and conditions that may
be imposed by the Committee.
2
<PAGE> 5
"Retirement": The termination of a participant's employment with the
Company and its Subsidiaries due to and consistent with the retirement policies
of the Company and its Subsidiaries.
"Rule 16b-3": As applied on a specific date, Rule 16b-3 of the
General Rules and Regulations under the Securities Exchange Act of 1934 as then
in effect or any other provision that may have replaced such Rule and be then
in effect.
"Subsidiary": Any corporation or other form of business association
of which shares (or other ownership interests) having more than 50% of the
voting power are owned or controlled, directly or indirectly, by the Company.
"Supplement": Rules of general application consistent with the Plan
adopted by the Committee as a supplement thereto for the administration or
implementation of the Plan or a portion thereof.
3. SCOPE OF THE PLAN
The Plan shall apply to the Company and to any Subsidiaries which have
not been specifically excluded by the Board of Directors.
4. ADMINISTRATION
4.1. The Plan shall be administered by a committee of two or more
persons selected by the Board of Directors from its own membership, which shall
be the Option Committee of the Board of Directors unless another committee of
the Board shall be designated by the Board. Should the Company under Section 8
of the Plan elect to register any of the shares of Common Stock covered by the
Plan pursuant to Section 12 of the Securities Exchange Act of 1934, no member
of the Committee shall be eligible to participate in the Plan and no person
shall be appointed to or shall serve as a member of the Committee unless at the
time of such appointment and service such person shall be a "disinterested
person," as defined in Rule 16b-3. Until changed by the Board of Directors,
the Committee shall consist of the following directors: Robert V. West, Jr.,
M.D., Ruskin Norman, M.D., and George Ensley.
4.2. The Committee shall have full power to interpret and
administer the Plan and full authority to act in determining who shall be
participants in the Plan, the number of Options to be granted to each
participant, and the conditions, form, manner, time and terms of payment under
such Options. The interpretation by the Committee of the terms and provisions
of the Plan and the administration thereof, and all action taken by the
Committee, shall be final, binding and conclusive on the Company, its
stockholders, Subsidiaries, all participants and employees, and upon their
respective Beneficiaries, successors and assigns, and upon all other persons
claiming under or through any of them.
4.3. The Committee may adopt such rules, regulations and
Supplements, not inconsistent with the provisions of the Plan, as it deems
necessary (a) to determine participation in the Plan, the amount to be granted
to each participant and the conditions, form, manner, time and terms of payment
under such Options and (b) to
3
<PAGE> 6
administer the Plan, and may amend or revoke any such rule, regulation or
Supplement.
4.4. No member or former member of the Committee or of the
Company's Board of Directors shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted hereunder.
To the maximum extent permitted by applicable law, each member or former member
of the Committee or of the Company's Board of Directors shall be indemnified
and held harmless by the Company against any cost or expense (including
reasonable fees and expenses of counsel) or liability (including any sum paid
in settlement of a claim with the approval of the Company), arising out of any
act or omission to act in connection with the Plan, unless arising out of such
member's or former member's own fraud or bad faith. Such indemnification shall
be in addition to any rights of indemnification the members or former members
may have as directors or under the by-laws of the Company.
5. STOCK SUBJECT TO THE PROGRAM; ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION
5.1. The aggregate number of shares of Common Stock which may be
issued or transferred under the Plan shall not exceed 2,000,000, subject to
Sections 5.2 and 6.2(l). Such shares may be authorized but unissued shares of
Common Stock, shares of treasury stock or shares purchased for the Plan under
Section 7.5.
5.2. The existence of outstanding Options shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights of the
Common Stock, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares
or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Common Stock outstanding,
without receiving compensation for it in money, services or property, then (a)
the number, class and per share price of shares of stock subject to outstanding
Options under this Plan shall be appropriately adjusted in a manner as to
entitle an optionee to receive upon exercise of an Option, for the same
aggregate cash consideration, the same total number and class or classes of
shares as he would have received had he exercised his Option in full
immediately prior to the event requiring the adjustment; and (b) the number and
class of shares then reserved for issuance under this Plan shall be adjusted by
substituting for the total number and class of shares of stock then reserved
for the number and class or classes of shares of stock that would have been
received by the owner of an equal number of outstanding shares of Common Stock
as the result of the event requiring the adjustment.
If the Company merges or consolidates with another corporation,
whether or not the Company is a surviving corporation, or if the Company is
liquidated or sells or otherwise disposes of substantially all its assets while
unexercised Options remain
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<PAGE> 7
outstanding under the Plan, (a) subject to the provisions of clause (c) below,
after the effective date of the merger, consolidation, liquidation, sale or
other disposition, as the case may be, each holder of an outstanding Option
shall be entitled, upon exercise of an Option, to receive, in lieu of shares of
Common Stock, the number and class or classes of shares of stock or other
securities or property to which the holder would have been entitled if,
immediately prior to the merger, consolidation, liquidation, sale or other
disposition, the holder had been the holder of record of a number of shares of
Common Stock equal to the number of shares as to which the Option may be
exercised.
Except as expressly provided before in this Plan, the issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services either
upon direct sale or upon the exercise of rights or warrants to subscribe for
shares, or upon conversion of shares or obligations of the Company convertible
into shares or other securities, shall not affect, and no adjustment by reason
of it shall be made with respect to, the number or price of shares of Common
Stock then subject to outstanding Options.
6. STOCK OPTIONS
6.1. GRANTS OF OPTIONS.
(a) The form or forms of Options and the number of shares of
Common Stock to be made subject to such Options shall be
determined by the Committee. Any or all Options granted to
Key Employees under the Plan may be in the form of Incentive
Stock Options, as determined by the Committee. Incentive
Stock Options may be granted by the Committee in substitution
for any Stock Option heretofore or hereafter granted to Key
Employees under the Plan or under any prior stock option plans
of the Company, and such substitution shall not be deemed the
grant of a new or additional Option for any purpose under the
Plan or otherwise, to the extent permitted by applicable law.
(b) Subject to the adjustment provisions of Section 5.2, the
maximum number of shares of Common Stock which may be issued
or transferred to a participant subject to Stock Options shall
not exceed such number as shall be fixed by the Committee from
time to time.
(c) Notwithstanding anything in the Plan to the contrary, the
aggregate Market Value (determined on the date the Option is
granted) of the Common Stock for which any Key Employee may be
granted Incentive Stock Options in the calendar year in which
such Options are first exercisable (under all plans of the
Company or any Subsidiary which provide for the granting of
Incentive Stock Options) shall not exceed $100,000.
Consultants may not be granted Incentive Stock Options.
6.2. OPTION PROVISIONS. Options shall be subject to the following
provisions:
(a) Options may be granted only to Key Employees and Consultants
selected by the Committee.
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<PAGE> 8
(b) The Option price per share of Common Stock shall be determined
by the Committee, but shall not be less than 100% of the
Market Value thereof on the date the Option is granted.
(c) The expiration date of each Option shall be established by the
Committee at the time the Option is granted, but such date
shall not be later than 10 years from the date the Option is
granted. Except as required with respect to Incentive Stock
Options under Section 422 of the Internal Revenue Code of
1986, as amended, the Committee may extend the term of an
Option which has a term of less than 10 years for a period
ending not later than 10 years from the date of the Option
grant and such extension shall not be deemed the grant of a
new or additional Option for any purpose under the Plan or
otherwise. The extension of the term of an Option shall be
subject to the consent of the holder of the Option and may be
made at any time prior to the expiration of the Option.
Incentive Stock Options may not be granted more than 10 years
after the Plan is adopted by the stockholders of the Company.
(d) Options may be exercised as to all or any portion of the
shares of Common Stock subject to the Option while the
original Optionee has a relationship with the Company which
confers eligibility to be granted Options, but not later than
the expiration date specified in such Option.
(e) Options granted to a Key Employee shall not be affected by any
change in the nature of the Key Employee's employment so long
as he continues to be employed by the Company or a Subsidiary.
Approved leaves of absence shall not be considered a
termination or interruption of full-time employment for any
purpose of the Plan.
(f) Each Option shall terminate if and when the Optionee shall
cease to be an employee of or advisor or consultant to the
Company or its Subsidiaries, except as follows (subject to the
provisions of the Internal Revenue Code and applicable
regulations of the U.S. Treasury Department concerning
Incentive Stock Options):
(i) If an Optionee dies while an employee of the Company
or a Subsidiary, his Option may be exercised to the
extent that the Optionee could have done so at the
date of his death by his Beneficiary, at any time, or
from time to time, within one year after the date of
the Optionees death but not later than the expiration
date specified in such Option.
(ii) If an Optionees employment by the Company or a
Subsidiary shall terminate because of Permanent
Disability, such employee may exercise his Option, to
the extent that he could have done so at the date of
his termination of employment, at any time, or from
time to time, within one year of such termination but
not later than the expiration date specified in such
Option.
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<PAGE> 9
(iii) If an Optionees employment by the Company or a
Subsidiary shall terminate due to Retirement, the
Optionee may exercise any Option to the extent that
he could have done so at the date of his termination
of employment, at any time, or from time to time,
within one year of such Retirement (three months in
the case of an Incentive Stock Option) but not later
than the expiration date specified in such Option.
(iv) Except as provided in the following provisions of
this Section 6.2(f), if the Optionees employment by
the Company or a Subsidiary shall terminate for any
reason other than death, Permanent Disability or
Retirement, he may exercise his Option, to the extent
that he could have done so at the date of his
termination of employment, at any time, or from time
to time, within three months of the date of
termination of his employment but not later than the
expiration date specified in such Option.
(v) Notwithstanding anything in the Plan to the contrary,
if an Optionees employment is terminated for cause,
his ability to exercise such Option shall terminate
on the date of his termination of employment. For
this purpose, termination for "cause" shall include
termination for reason of (i) Optionees conviction
for, or plea of nolo contendere to, a felony, (ii)
Optionees commission of an act involving
self-dealing, fraud or personal profit materially
injurious to the Company or a Subsidiary, (iii)
Optionees commission of an act of willful misconduct
or gross negligence in the conduct of his employment
duties to the Company or a Subsidiary, (iv) habitual
absenteeism or tardiness on the part of Optionee with
respect to his employment with the Company or a
Subsidiary, (v) Optionees breach or violation of any
material internal policies or rules of the Company or
a Subsidiary concerning the purchase and sale of that
entity's common stock or other securities by
employees of the Company or a Subsidiary, and (vi)
Optionees breach of any material provision of any
written employment agreement between Optionee and the
Company or a Subsidiary. The Committee shall
determine in its sole discretion whether a
termination was made for cause.
(vi) Notwithstanding anything in the Plan to the contrary,
the Committee may at any time with the consent of a
majority of the disinterested directors of the
Company's Board of Directors terminate an Option if
it shall, in the reasonable exercise of its judgment,
find that the Optionee has disclosed without the
written consent of an authorized officer of the
Company, to any person not employed by or engaged to
render services to the Company or a Subsidiary, any
material confidential information of the Company or a
Subsidiary or has engaged in material competition
with the Company or any Subsidiary or in any
activities otherwise contrary to the best interests
of the Company or a Subsidiary. The right to
exercise the Option has been granted, and the
compensation to be
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<PAGE> 10
realized in the event of exercise has been provided,
upon the express understanding that the Optionee
shall refrain from engaging in any activities
contrary to the best interests of the Company.
(g) If any Optionee is not an employee of the Company or a
Subsidiary, but rather is a Consultant to the Company or a
Subsidiary, the following provisions shall apply as if the
Optionee were an employee of the Company or a Subsidiary:
(i) Section 6.2(f)(i) shall apply if the Consultant
relationship terminates because of the Optionees
death.
(ii) Section 6.2(f)(ii) shall apply if the Consultant
relationship terminates because of the Optionees
Permanent Disability.
(iii) Section 6.2(f)(iii) shall apply if the Consultant
relationship terminates because of the Optionees
retirement.
(iv) Section 6.2(f)(iv) shall apply if the Consultant
relationship terminates for any other reason than the
Optionees death, Permanent Disability or retirement.
(v) Notwithstanding paragraphs (f)(i) through (f)(iv),
above, Section 6.2(f)(v) shall apply if the
Consultant relationship is terminated by the Company
or a Subsidiary for cause.
(vi) Section 6.2(f)(vi) shall apply as written.
(h) Subject to the provisions of Sections 6.2(c), (d), (e), (f)
and (g) and of the Option agreement pursuant to which an
Option is granted, Options may be exercised, in whole or in
part, at any time during the term of the Option, except that
no Option shall be exercisable prior to the date six months
after date of grant of the Option.
(i) An Option shall be considered exercised under the Plan on the
date written notice is mailed (postage prepaid) or delivered
to the Secretary of the Company advising of the exercise of a
particular Option and transmitting payment of the Option price
for the shares involved, but this provision shall not preclude
exercise of an Option by any other proper legal method.
(j) Options are not transferable other than by will or by the laws
of descent and distribution, and during a participant's
lifetime are exercisable only by the Optionee or by his or her
guardian or legal representative.
(k) The Committee may place such conditions and restrictions on
the exercise of Options and on the transferability of shares
of Common Stock received upon exercise of an Option, in
addition to those contained herein, as it shall deem
appropriate and, without limiting the generality of the
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<PAGE> 11
foregoing, may provide in the Option grant that shares of
Common Stock issued or transferred upon exercise of the Option
shall be shares of Restricted Stock subject to forfeiture upon
failure to comply with such conditions and restrictions.
(l) Following the death of a participant, and upon the request of
the Beneficiary, the Company may at its election, (i) at any
time while the Option may be exercised, purchase the Option at
a price equal to the difference between the Market Value, on
the date such request is mailed (postage prepaid) or delivered
to the Secretary of the Company, of the shares of Common Stock
subject to exercise and the Option price of such shares of
Common Stock, or (ii) within thirty days following the
exercise of an Option, purchase the shares of Common Stock so
acquired at their Market Value on the date of exercise. The
number of shares of Common Stock purchased by the Company
shall be considered issued and transferred for purposes of
Sections 5.1 and 6.2(c).
(m) No shares of Common Stock shall be issued or transferred upon
exercise of an Option until full payment therefor has been
made. Such payment shall be made in cash. A holder of an
Option shall have none of the rights of a stockholder until
shares of Common Stock are issued or transferred as the result
of the exercise of such Option. The proceeds received by the
Company from the sale of Common Stock pursuant to the Plan
shall be available for general corporate purposes.
7. GENERAL PROVISIONS
7.1. Neither the adoption of the Plan nor its operation, nor any
booklet or other document describing or referring to the Plan, or any part
thereof, (a) shall confer upon any employee any right to continue in the employ
of the Company or any Subsidiary or shall in any way affect the right and power
of the Company or any Subsidiary to dismiss or otherwise terminate the
employment of any employee at any time for any reason with or without cause, or
(b) shall confer upon any advisor or consultant to the Company or any
Subsidiary any right to continue in such capacity or shall in any way affect
the right of the Company to terminate the advisory or consulting relationship
at any time for any reason with or without cause. If the Company or any
Subsidiary shall terminate the employment or advisory or consulting
relationship of a participant for any reason, whether or not for cause, neither
the Company nor such Subsidiary shall incur any liability to the participant
due to the inability of the participant by reason of such termination to
exercise thereafter any Option, to receive any grant under the Plan or to be
eligible thereafter for any grant under the Plan.
7.2. By accepting any benefits under the Plan, each participant and
each person claiming under or through him shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, all provisions of
the Plan and any action or decision under the Plan by the Company, the Board of
Directors or the Committee.
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<PAGE> 12
7.3. Appropriate provision shall be made for all taxes which the
Company requires to be withheld in connection with the exercise of Options,
under the laws of any governmental authority, whether Federal, state or local
and whether domestic or foreign. The Committee may in its discretion permit a
participant to elect at any time, but in no event later than six months prior
to the exercise of any Option, to have a portion of the shares subject to such
exercise withheld by the Company for the purpose of satisfying any tax
withholding under Federal, state or local tax laws.
7.4. No rights under the Plan shall be assignable, either
voluntarily (except as may specifically be permitted for gifts of Restricted
Stock), or involuntarily by way of encumbrance, pledge, attachment, levy or
charge of any nature (except as may be required by state or federal law).
Notwithstanding anything in the Plan to the contrary, a participant may
designate a Beneficiary to receive an Option in the event of the participant's
death.
7.5. Nothing in the Plan shall require the Company or any
Subsidiary to segregate or set aside any funds or other property for the
purpose of paying Common Stock upon the exercise of Options. No participant,
Beneficiary or other person shall have any right, title or interest in any
amount awarded under the Plan prior to payment thereof, or in any property of
the Company or its Subsidiaries or affiliated corporations.
7.6. It is contemplated that the Company, although under no legal
obligation to do so, may from time to time purchase shares of Common Stock for
the purpose of paying an Option, or for the purpose of replacing shares issued
or transferred in payment of an Option. All shares so purchased shall, unless
and until transferred in payment of such Option, be at all times the property
of the Company available for any corporate purpose, and no participant or
employee or Beneficiary, individually or as a group, shall have any right,
title or interest in any shares of Common Stock so purchased.
7.7. Headings are given to the sections of the Plan solely as a
convenience to facilitate reference; neither such headings nor numbering or
paragraphing shall be deemed in any way material or relevant to the
construction of the Plan or any provision thereof.
7.8. The use of the masculine gender shall also include within its
meaning the feminine. The use of the singular shall include within its meaning
the plural and vice versa.
8. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Company to sell and
deliver shares of Common Stock under such Options, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. If at any time the
Committee shall determine in its discretion that the listing, registration or
qualification of the shares covered by the Plan upon any national securities
exchange or under any state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the sale or purchase of shares under the Plan, no shares will
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<PAGE> 13
be delivered unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained, or otherwise provided
for, free of any conditions not acceptable to the Committee. If shares are not
required to be registered, but are exempt from registration, upon exercising
all or any portion of an Option, the Company may require each Optionee (or any
person acting under Section 6.2(f)(i)), to represent that the shares are being
acquired for investment only and not with a view to their sale or distribution,
and to make such other representations deemed appropriate by counsel to the
Company. Stock certificates evidencing unregistered shares acquired upon
exercise of Options shall bear any legend required by applicable state
securities laws and a restrictive legend substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER WILL NOT REQUIRE REGISTRATION UNDER SUCH
ACT OR UNDER THE SECURITIES LAWS OF ANY STATE.
9. EFFECTIVE DATE
The Plan shall become effective if and when, but not until, it is
approved by the stockholders of the Company.
10. AMENDMENT OR TERMINATE
10.1. The Board of Directors may at any time and from time to time
modify, revise or amend the Plan in such respects as the Board of Directors may
deem advisable in order that the Options granted hereunder may conform to any
changes in the law or in any other respect that the Board of Directors may deem
to be in the best interests of the Company; provided, however, that without
approval by the stockholders of the Company voting the proper percentage of its
voting power, no such amendment shall make any change in the Plan for which
stockholder approval is required in order to comply with (i) Rule 16b-3, (ii)
the Internal Revenue Code of 1986, as amended, or regulatory provisions dealing
with Incentive Stock Options, (iii) any rules for listed companies promulgated
by any national stock exchange on which the Company's Common Stock is traded or
(iv) any other applicable rule or law. All Options granted under the Plan
shall be subject to the terms and provisions of the Plan and any amendment,
modification or revision of the Plan shall be deemed to amend, modify or revise
all Options outstanding under the Plan at the time of the amendment,
modification or revision.
10.2. The Board of Directors may, by resolution adopted by a
majority of the entire Board of Directors, at any time terminate the Plan or
any portion thereof.
10.3. No amendment or termination of the Plan or any portion thereof
by the Board of Directors or the stockholders shall, without the consent of a
participant,
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<PAGE> 14
adversely affect any award previously made or any Option or any other rights
previously granted to him.
11. APPLICABLE LAW
This Plan and all rights hereunder shall be governed, construed and
administered in accordance with the laws of the State of Texas.
12
<PAGE> 1
EXHIBIT 10.48
ILEX ONCOLOGY, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This 1996 Non-Employee Director Stock Option Plan
(the "Plan") of ILEX Oncology, Inc., a Delaware corporation (the "Company"), is
adopted for the benefit of the directors of the Company who at the time of
their service are not employees or consultants of the Company or any of its
subsidiaries ("Non-Employee Directors"), and is intended to advance the
interests of the Company by providing the Non-Employee Directors with
additional incentive to serve the Company by increasing their proprietary
interest in the success of the Company.
2. Administration. The Plan shall be administered by a committee
of the Board of Directors of the Company (the "Committee"), the members of
which shall consist solely of directors who are employees of the Company. For
the purposes of the Plan, a majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought
before that meeting. In addition, the Committee may take any action otherwise
proper under the Plan by the affirmative vote, taken without a meeting, of a
majority of its members. No member of the Committee shall be liable for any
act or omission of any other member of the Committee or for any act or omission
on his own part, including but not limited to the exercise of any power or
discretion given to him under the Plan, except those resulting from his own
gross negligence or willful misconduct. Except as otherwise expressly provided
for herein, all questions of interpretation and application of the Plan, or as
to options granted hereunder (the "Options"), shall be subject to the
determination, which shall be final and binding, of a majority of the whole
Committee. Notwithstanding the above, the selection of Non-Employee Directors
to whom Options are to be granted, the number of shares subject to any Option,
the exercise price of any Option and the term of any Option shall be as
hereinafter provided and the Committee shall have no discretion as to such
matters.
3. Option Shares. The stock subject to the Options and other
provisions of the Plan shall be shares of the Company's Common Stock, $.01 par
value (or such other par value as may be designated by act of the Company's
stockholders) (the "Common Stock"). The total amount of the Common Stock with
respect to which Options may be granted shall not exceed in the aggregate
300,000 shares; provided, that the class and aggregate number of shares which
may be subject to the Options granted hereunder shall be subject to adjustment
in accordance with the provisions of Paragraph 12 hereof. Such shares may be
treasury shares or authorized but unissued shares.
In the event that any outstanding Option for any reason shall expire
or terminate by reason of the death of the optionee or the fact that the
optionee ceases to be a director, the surrender of any such Option, or any
other cause, the shares of Common Stock allocable to the unexercised portion of
such Option may again be subject to an Option under the Plan.
4. Grant of Options. Subject to the provisions of Paragraph 16
and the availability under the Plan of a sufficient number of shares of Common
Stock that may be issuable upon the exercise of outstanding Options, there
shall be granted to each Non-Employee Director as of October 18, 1996, and each
Non-Employee Director as of the date he is first elected as a director of the
Company, an Option to purchase 30,000 shares of Common Stock at a purchase
price per share of Common Stock (the "Option Price") equal to the fair market
value of the Common Stock as defined in Paragraph 7 hereof as of the date of
grant. Upon the receipt by a Non-Employee Director of an option pursuant to
the Plan, such Non-Employee Director shall no longer be eligible to receive an
option pursuant to the provisions of the Plan.
<PAGE> 2
No Option shall be granted pursuant to the Plan after October 18, 2006.
5. Duration of Options. Each Option granted under the Plan shall
be exercisable for a term of ten years from the date of grant, subject to
earlier termination as provided in Paragraph 9 hereof.
6. Amount Exercisable. All Options granted pursuant to the Plan
shall vest and become exercisable as follows:
(a) Beginning on the last day of the calendar month following the
calendar month of the date of grant, an Option may be
exercised for up to one-forty-eighth of the shares subject to
the Option;
(b) On the last day of each succeeding calendar month, the Option
may be exercised for up to an additional one-forty-eighth of
the shares subject to the Option, so that after the expiration
of the last day of the forty-eighth calendar month following
the calendar month of grant, the Option shall be exercisable
in full; and
(c) To the extent not exercised, installments shall be cumulative
and may be exercised in whole or in part until the Option
expires on the tenth anniversary of the date of grant.
Notwithstanding anything to the contrary in the Plan, this Option will
become exercisable in full upon a "change in control." For purposes of this
Section, a "change in control" shall arise if, at any time while the Optionee
is a member of the Company's Board of Directors any one or more of the
following events occurs:
(i) The Company is merged, consolidated or
reorganized into or with another corporation, or other entity
and, as a result thereof, less than 50% of the outstanding
stock or other capital interests of the surviving, resulting
or acquiring corporation, person, or other entity is owned, in
the aggregate, by the stockholder or stockholders of the
Company immediately prior to such merger, consolidation or
reorganization; or
(ii) The Company sells all or substantially all of
its business or assets (or both) to any other corporation,
person, or other entity, less than 50% of the outstanding,
voting stock or other capital interests of which are owned, in
the aggregate, by the stockholders of the Company, directly or
indirectly, immediately prior to or after such sale.
7. Exercise of Options. An optionee may exercise such optionee's
Option by delivering to the Company a written notice stating (i) that such
optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of stock with respect to which such Option
is to be exercised, (iii) the address to which the certificate representing
such shares of stock should be mailed, and (iv) the social security number of
such optionee. In order to be effective, such written notice shall be
accompanied by (i) payment of the Option Price of such shares of stock and (ii)
if applicable, payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Each such payment shall be made by cashier's check drawn on a national banking
association and payable to the order of the Company in United States dollars.
-2-
<PAGE> 3
If, at the time of receipt by the Company of such written notice, (i)
the Company has unrestricted surplus in an amount not less than the Option
Price of such shares of stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred stock of the Company have been fully paid and (iii) the acquisition
by the Company of its own shares of stock for the purpose of enabling such
optionee to exercise such Option is otherwise permitted by applicable law and
without any vote or consent of any stockholder of the Company, then such
optionee may deliver to the Company, in payment of the Option Price of the
shares of stock with respect to which such Option is exercised, (x)
certificates registered in the name of such optionee that represent a number of
shares of stock legally and beneficially owned by such optionee (free of all
liens, claims and encumbrances of every kind) and having a fair market value on
the date of receipt by the Company of such written notice that is not greater
than the Option Price of the shares of stock with respect to which such Option
is to be exercised, such certificates to be accompanied by stock powers duly
endorsed in blank by the record holder of the shares of stock represented by
such certificates, with the signature of such record holder guaranteed by a
national banking association (or, in lieu of such certificates, other
arrangements for the transfer of such shares to the Company which are
satisfactory to the Company) and (y) if the Option Price of the shares of stock
with respect to which such Options are to be exercised exceeds such fair market
value, a cashier's check drawn on a national banking association and payable to
the order of the Company in an amount, in United States dollars, equal to the
amount of such excess plus the amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Notwithstanding the provisions of the immediately preceding sentence, the
Committee, in its sole discretion, may refuse to accept shares of stock in
payment of the Option Price of the shares of stock with respect to which such
Option is to be exercised and, in that event, any certificates representing
shares of stock that were received by the Company with such written notice
shall be returned to such optionee, together with notice by the Company to such
optionee of the refusal of the Committee to accept such shares of stock. The
Company may, at its option and upon approval by the Board of Directors of the
Company, retain shares of Common Stock which would otherwise be issued upon
exercise of an Option to satisfy any withholding tax liability that may result
from the exercise of such Option, which shares shall be valued for such purpose
at their then fair market value. If, at the expiration of seven business days
after the delivery to such optionee of such written notice from the Company,
such optionee shall not have delivered to the Company a cashier's check drawn
on a national banking association and payable to the order of the Company in an
amount, in United States dollars, equal to the Option Price of the shares of
stock with respect to which such Option is to be exercised, such written notice
from the optionee to the Company shall be ineffective to exercise such Option.
As promptly as practicable after the receipt by the Company of (i)
such written notice from the optionee, (ii) payment, in the form required by
the foregoing provisions of this Paragraph 7, of the Option Price of the shares
of stock with respect to which such Option is to be exercised, and (iii)
payment, if required, in the form required by the foregoing provisions of this
Paragraph 7, of an amount necessary to satisfy any withholding tax liability
that may result from the exercise of such Option, a certificate representing
the number of shares of stock with respect to which such Option has been so
exercised, reduced, to the extent applicable by the number of shares retained
by the Company to pay any required withholding tax, such certificate to be
registered in the name of such optionee, provided that such delivery shall be
considered to have been made when such certificate shall have been mailed,
postage prepaid, to such optionee at the address specified for such purpose in
such written notice from the optionee to the Company.
For purposes of this Paragraph 7, the "fair market value" of a share
of stock as of any particular date shall mean the closing sale price of a share
of Common Stock on that date as
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<PAGE> 4
reported by the principal national securities exchange on which the Common
Stock is listed if the Common Stock is then listed on a national securities
exchange, or if the Common Stock is not so listed, the average of the bid and
asked price of a share of Common Stock on that date and reported in the
National Association of Securities Dealers Automated Quotation system (the
"NASDAQ System"); provided that if no such closing price or quotes are so
reported on that date or if in the discretion of the Committee another means of
determining the fair market value of a share of stock at such date shall be
necessary or advisable, the Committee may provide for another means for
determining such fair market value, including a determination in good faith by
the Committee of the fair market value as of the date of grant.
8. Transferability of Options. Options shall not be transferable
by the optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by him.
9. Termination. Except as may be otherwise expressly provided
herein, each Option, to the extent it shall not previously have been exercised,
shall terminate on the earlier of the following:
(a) On the last day within the three month period commencing on
the date on which the optionee ceases to be a member of the
Company's Board of Directors, for any reason other than the
death, disability or retirement of the optionee, during which
period the optionee shall be entitled to exercise all Options
fully vested as described in Paragraph 6 by the optionee on
the date on which the optionee ceased be a member of the
Company's Board of Directors;
(b) On the last day within the one year period commencing on the
date on which the optionee ceases to be a member of the
Company's Board of Directors because of permanent disability,
during which period the optionee shall be entitled to exercise
all Options fully vested as described in Paragraph 6 by the
optionee on the date on which the optionee ceased to be a
member of the Company's Board of Directors because of such
disability;
(c) On the last day within the one year period commencing on the
date of the optionee's death while serving as a member of the
Company's Board of Directors, during which period the executor
or administrator of the optionee's estate or the person or
persons to whom the optionee's Option shall have been
transferred by will or the laws of descent or distribution,
shall be entitled to exercise all Options in respect of the
number of shares that the optionee would have been entitled to
purchase had the optionee exercised such Options on the date
of his death;
(d) On the last day within the one year period commencing on the
date an optionee retires from the Board of Directors of the
Company in accordance with the Company's retirement policy,
during which period the optionee, or the executor or
administrator of the optionee's estate or the person or
persons to whom such Option shall have been transferred by the
will or the laws of descent or distribution in the event of
the optionee's death within such one year period, as the case
may be, shall be entitled to exercise all Options in respect
of the number of shares that the optionee would have been
entitled to purchase had the optionee exercised such Options
on the date of such retirement; and
(e) Ten years after the date of grant of such Option.
-4-
<PAGE> 5
10. Requirements of Law. The Company shall not be required to
sell or issue any shares under any Option if the issuance of such shares shall
constitute a violation by the optionee or the Company of any provisions of any
law or regulation of any governmental authority. Each Option granted under the
Plan shall be subject to the requirements that, if at any time the Board of
Directors of the Company or the Committee shall determine that the listing,
registration or qualification of the shares subject thereto upon any securities
exchange or under any state or federal law of the United States or of any other
country or governmental subdivision thereof, or the consent or approval of any
governmental regulatory body, or investment or other representations, are
necessary or desirable in connection with the issue or purchase of shares
subject thereto, no such Option may be exercised in whole or in part unless
such listing, registration, qualification, consent, approval or representation
shall have been effected or obtained free of any conditions not acceptable to
the Board of Directors. If required at any time by the Board of Directors or
the Committee, an Option may not be exercised until the optionee has delivered
an investment letter to the Company. In addition, specifically in connection
with the Securities Act of 1933 (as now in effect or hereafter amended), upon
exercise of any Option, the Company shall not be required to issue the
underlying shares unless the Committee has received evidence satisfactory to it
to the effect that the holder of such Option will not transfer such shares
except pursuant to a registration statement in effect under such Act or unless
an opinion of counsel satisfactory to the Company has been received by the
Committee to the effect that such registration is not required. Any
determination in this connection by the Committee shall be final, binding and
conclusive. In the event the shares issuable on exercise of an Option are not
registered under the Securities Act of 1933, the Company may imprint on the
certificate for such shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an opinion of
counsel satisfactory, in form and substance to the Corporation, that
registration is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) and, in the event any shares are so registered, the Company
may remove any legend on certificates representing such shares. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or the issuance of shares pursuant thereto to comply
with any law or regulation of any governmental authority.
11. No Rights as Stockholder. No optionee shall have rights as a
stockholder with respect to shares covered by his Option until the date of
issuance of a stock certificate for such shares; and, except as otherwise
provided in Paragraph 12 hereof, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date of issuance of
such certificate.
12. Changes in the Company's Capital Structure. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights of the Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
-5-
<PAGE> 6
If the Company shall effect a subdivision or consolidation of shares
or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Common Stock outstanding,
without receiving compensation for it in money, services or property, then (a)
the number, class and per share price of shares of stock subject to outstanding
Options under this Plan shall be appropriately adjusted in a manner as to
entitle an optionee to receive upon exercise of an Option, for the same
aggregate cash consideration, the same total number and class or classes of
shares as he would have received had he exercised his Option in full
immediately prior to the event requiring the adjustment; and (b) the number and
class of shares then reserved for issuance under this Plan shall be adjusted by
substituting for the total number and class of shares of stock then reserved
for the number and class or classes of shares of stock that would have been
received by the owner of an equal number of outstanding shares of Common Stock
as the result of the event requiring the adjustment.
If the Company merges or consolidates with another corporation,
whether or not the Company is a surviving corporation, or if the Company is
liquidated or sells or otherwise disposes of substantially all its assets while
unexercised Options remain outstanding under the Plan, (a) subject to the
provisions of clause (c) below, after the effective date of the merger,
consolidation, liquidation, sale or other disposition, as the case may be, each
holder of an outstanding Option shall be entitled, upon exercise of an Option,
to receive, in lieu of shares of Common Stock, the number and class or classes
of shares of stock or other securities or property to which the holder would
have been entitled if, immediately prior to the merger, consolidation,
liquidation, sale or other disposition, the holder had been the holder of
record of a number of shares of Common Stock equal to the number of shares as
to which the Option may be exercised.
Except as expressly provided before in this Plan, the issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services either
upon direct sale or upon the exercise of rights or warrants to subscribe for
shares, or upon conversion of shares or obligations of the Company convertible
into shares or other securities, shall not affect, and no adjustment by reason
of it shall be made with respect to, the number or price of shares of Common
Stock then subject to outstanding Options.
13. Amendment or Termination of Plan. The Board of Directors may
at any time and from time to time modify, revise or amend the Plan in such
respects as the Board of Directors may deem advisable in order that the Options
granted hereunder may conform to any changes in the law or in any other respect
that the Board of Directors may deem to be in the best interests of the
Company; provided, however, that without approval by the stockholders of the
Company voting the proper percentage of its voting power, no such amendment
shall make any change in the Plan for which stockholder approval is required in
order to comply with (i) Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, (ii) any rules for listed companies promulgated by any national stock
exchange on which the Company's Common Stock is traded or (iii) any other
applicable rule or law. All Options granted under the Plan shall be subject to
the terms and provisions of the Plan and any amendment, modification or
revision of the Plan shall be deemed to amend, modify or revise all Options
outstanding under the Plan at the time of the amendment, modification or
revision.
14. Written Agreement. Each Option granted hereunder shall be
embodied in a written option agreement, which shall be subject to the terms and
conditions prescribed above, and shall be signed by the optionee and by the
appropriate officer of the Company for and in the name and on behalf of the
Company. Such an option agreement shall contain such other provisions as the
Committee in its discretion shall deem advisable.
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<PAGE> 7
15. Indemnification of Committee. The Company shall indemnify
each present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his part to indemnity from
the Company for, all expenses (including the amount of judgments and the amount
of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee, whether or not he continues to be such member of the Committee at
the time of incurring such expenses; provided, however, that such indemnity
shall not include any expenses incurred by any such member of the Committee (a)
in respect of matters as to which he shall be finally adjudged in any such
action, suit or proceeding to have been guilty of gross negligence or willful
misconduct in the performance of his duty as such member of the Committee, or
(b) in respect of any matter in which any settlement is effected, to an amount
in excess of the amount approved by the Company on the advice of its legal
counsel; and provided further, that no right of indemnification under the
provisions set forth herein shall be available to or enforceable by any such
member of the Committee unless, within sixty (60) days after institution of any
such action, suit or proceeding, he shall have offered the Company, in writing,
the opportunity to handle and defend same at its own expense. The foregoing
right of indemnification shall inure to the benefit of the heirs, executors or
administrators of each such member of the Committee and shall be in addition to
all other rights to which such member of the Committee may be entitled to as a
matter of law, contract, or otherwise. Nothing in this Section 15 shall be
construed to limit or otherwise affect any right to indemnification, or payment
of expense, or any provisions limiting the liability of any officer or director
of the Company or any member of the Committee, provided by law, the Certificate
of Incorporation of the Company or otherwise.
16. Effective Date of Plan. This Plan shall be deemed to have
been adopted and effective on October 18, 1996; provided, however, that if the
Company has not completed an underwritten public offering of its Common Stock
on or before April 30, 1996, this Plan and all Options granted hereunder shall
automatically terminate.
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<PAGE> 1
Exhibit 10.49
ILEX ONCOLOGY, INC.
1996 NON-EMPLOYEE DIRECTOR PLAN
STOCK OPTION AGREEMENT
Under the terms and conditions of the ILEX Oncology, Inc. 1996 Non-
Employee Director Plan (the "Plan"), a copy of which is attached hereto and
incorporated in this Agreement by reference, ILEX Oncology, Inc. (the
"Company") grants to _________________ (the "Optionee") the option to purchase
30,000 shares of the Company's Common Stock, $.01 par value, at the price of
$_____ per share, subject to adjustment as provided in the Plan (the "Option").
This Option shall be for a term commencing on this date and ending ten
years from the date of grant (such date being indicated below), unless this
Option is terminated earlier by reason of the Optionee's ceasing to be a
director as provided in the Plan.
The Option shall be exercisable at the rate and in the following manner:
(a) Beginning on the last day of the calendar month following the
calendar month of the date of grant, an Option may be exercised
for up to one-forty-eighth of the shares subject to the Option;
(b) On the last day of each succeeding calendar month, the Option may
be exercised for up to an additional one-forty-eighth of the
shares subject to the Option, so that after the expiration of the
last day of the forty-eighth calendar month following the
calendar month of grant, the Option shall be exercisable in full;
and
(c) To the extent not exercised, installments shall be cumulative and
may be exercised in whole or in part until the Option expires on
the tenth anniversary of the date of grant.
This Option may be exercised as set forth above, unless exercise within
six months of this date of grant would violate securities laws, in which case
the Option may not be exercised until such time as it may be exercised legally.
This Option is a non-qualified stock option which is not intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee in accepting this Option accepts and agrees to be bound by
all the terms and conditions of this Agreement and of the Plan.
<PAGE> 2
Granted the _____ day of _________________, 1996.
ILEX ONCOLOGY, INC.
By:
------------------------------------
ACCEPTED this _____ day of ___________, 1996.
- ------------------------------
Optionee
<PAGE> 1
EXHIBIT 10.50
================================================================================
ILEX ONCOLOGY INC.
THIRD AMENDED & RESTATED
REGISTRATION RIGHTS AGREEMENT
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Demand Registrations . . . . . . . . . . . . . . . . . . . . 4
Section 3. Incidental/Piggyback Registration . . . . . . . . . . . . . 5
Section 4. Limitations on Registration Rights . . . . . . . . . . . . . 5
Section 5. Registration Procedures. . . . . . . . . . . . . . . . . . . 7
Section 6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. Indemnification . . . . . . . . . . . . . . . . . . . . . . 11
Section 8. Marketing Restrictions . . . . . . . . . . . . . . . . . . . 15
Section 9. Sale of Preferred to Underwriter . . . . . . . . . . . . . . 19
Section 10. Lockup Agreement . . . . . . . . . . . . . . . . . . . . . . 20
Section 11. Compliance with Rule 144 . . . . . . . . . . . . . . . . . . 20
Section 12. Assignability of Registration Rights . . . . . . . . . . . . 21
Section 13. Designation of Underwriter . . . . . . . . . . . . . . . . . 21
Section 14. Holdback Agreements . . . . . . . . . . . . . . . . . . . . 21
Section 15. Participation in Underwritten Registrations . . . . . . . . 21
Section 16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 22
Severability . . . . . . . . . . . . . . . . . . . . . . . . 22
Successors and Assigns . . . . . . . . . . . . . . . . . . . 23
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Governing Law . . . . . . . . . . . . . . . . . . . . . . . 23
Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 23
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 23
Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Specific Performance . . . . . . . . . . . . . . . . . . . . 24
Grant of Registration Rights . . . . . . . . . . . . . . . . 24
Termination of Prior Agreement . . . . . . . . . . . . . . . 24
</TABLE>
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<PAGE> 3
ILEX ONCOLOGY, INC.
THIRD AMENDED & RESTATED REGISTRATION RIGHTS AGREEMENT
This Third Amended & Restated Registration Rights Agreement dated as of
December 11, 1996 (this "Agreement") is entered into among ILEX ONCOLOGY, INC.,
a Delaware corporation (the "Company"), and the other persons executing a
counterpart of this Agreement listed as Holders on the signature pages of this
Agreement (the "Holders").
PRELIMINARY STATEMENT
The Company has previously granted certain registration rights to the
holders of its Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Common pursuant to the Prior Agreements (as defined in
SECTION 16.12).
The Company desires to finance the expansion of its pharmaceutical
business through the sale of the Series E Preferred described below.
Certain third parties have agreed to purchase the Series E Preferred on
the condition, among others, that the Company provide for certain registration
rights of the common stock underlying the Series E Preferred.
In connection with the sale of such Series E Preferred, the Company and
the holders of the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred and Common have decided to amend and restate
the Prior Agreements by entering into this Agreement.
To clarify the registration rights of holders of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Common and to
induce those certain parties to purchase Series E Preferred and in
consideration of the mutual representations and agreements set forth in this
Agreement, the Company and the other Holders agree as follows:
AGREEMENT
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means any entity controlling, controlled by or under common
control with a designated Person. For the purposes of this definition,
"control" shall have the meaning specified as of the date of this Agreement for
that word in Rule 405 promulgated by the Commission under the Securities Act.
"Board" means the Board of Directors of the Company.
<PAGE> 4
"Commission" means the Securities and Exchange Commission and any
successor thereto.
"Common" means the Company's Common Stock, $.01 par value per share.
"Conversion Stock" means Series A Conversion Stock, Series B Conversion
Stock, Series C Conversion Stock, Series D Conversion Stock and Series E
Conversion Stock.
"CTRC Registrable Stock" means any (a) shares of Series A Conversion
Stock and (b) any shares of Common or other securities issued in respect of the
securities referred to in clause (a) by way of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, sale of assets or
similar event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Stock" means shares of Common issued or issuable upon exercise
of the Vector Warrants.
"Founders Common" means any shares of Common issued to Richard L. Love,
Alexander L. Weis, Charles A. Coltman Jr., or Daniel D. Von Hoff.
"Holders" means (a) holders of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred, Series E Preferred, Founders Common,
Investor Warrant Stock, Investor Warrants, Exercise Stock, Vector Warrants, or
Conversion Stock, each of whom is listed on the signature pages to this
Agreement, and (b) any subsequent legal or beneficial owner of Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E
Preferred, Founders Common, Exercise Stock, Vector Warrants, or Conversion
Stock who has become a party to this Agreement in accordance with SECTION 12 or
SECTION 16.1 of this Agreement.
"Investor Registrable Stock" means (a) any shares of Series B Conversion
Stock, Series C Conversion Stock, Series D Conversion Stock and Series E
Conversation Stock, (b) any shares of Investor Warrant Stock, (c) any shares of
Common acquired, or issued or issuable pursuant to any securities acquired,
pursuant to Section 7.6 of that certain Convertible Preferred Stock Purchase
Agreement, dated as of September 29, 1995 by and among the Company and the
other parties thereto (the "Series B Stock Purchase Agreement"), pursuant to
Section 7.6 of that certain Convertible Preferred Stock Purchase Agreement,
dated as of July 22, 1996 by and among the Company and the other parties
thereto (the "Series C Stock Purchase Agreement"), pursuant to Section 7.6 of
that certain Convertible Preferred Stock Purchase Agreement, dated as of
November 11, 1996 by and between the Company and Johnson & Johnson Development
Corporation (the "Series D Stock Purchase Agreement") or pursuant to Section
7.6 of that certain Convertible Preferred Stock Purchase Agreement dated as of
even date herewith by and between the Company and MPI Enterprises, L.L.C. (the
"Series E Stock Purchase Agreement"), and (d) any shares of Common or other
securities issued in respect of the securities referred to in clauses (a), (b)
or (c) by way of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, sale of assets or similar event.
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<PAGE> 5
"Investor Warrants" means the warrants to purchase 573,395 shares of
Common issued to the investors in the Series C Preferred pursuant to the
Warrant for the Purchase of Shares of Common Stock, dated as of even date
herewith.
"Investor Warrant Stock" means shares of Common issued or issuable upon
exercise of Investor Warrants.
"Immediate Family" shall mean spouses, descendants (including adopted
children) and spouses of descendants.
"Management Registrable Stock" means (a) any shares of Founders Common
and (b) any shares of Common or other securities issued in respect of the
securities referred to in clause (a) by way of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, sale of assets or
similar event.
"Person" means an individual, partnership, corporation, business trust,
limited liability company, joint stock company, trust, unincorporated
association, joint venture, or other entity of whatever nature.
"Registrable Stock" means (a) Investor Registrable Stock, (b)
Shareholder Registrable Stock and (c) Vector Registrable Stock. As to any
particular Registrable Stock, such securities will cease to be Registrable
Stock when they shall have been (x) effectively registered under the Securities
Act and sold by the holder thereof in accordance with such registration, or (y)
sold to the public pursuant to Rule 144 or Rule 701 of the Commission, or any
successor rules.
"Rule 144" means Rule 144 promulgated by the Commission under the
Exchange Act, as such rule may be amended from time to time, or any successor
rule thereto.
"Rule 701" means Rule 701 promulgated by the Commission under the
Exchange Act, as such rule may be amended from time to time, or any successor
rule thereto.
"Securities" means any debt or equity securities of the Company, whether
now or hereafter authorized, and any instrument convertible into, or
exercisable or exchangeable for, Securities or a Security.
"Securities Act" means the Securities Act of 1933, as amended prior to
or after the date of this Agreement, or any federal statute or statutes which
shall be enacted to take the place of such Act, together with all rules and
regulations promulgated thereunder.
"Series A Conversion Stock" means shares of Common issued or issuable
upon conversion of the Series A Preferred.
"Series A Preferred" means 5,239,900 shares of the Company's Series A
Convertible Preferred Stock, $.01 par value per share.
-3-
<PAGE> 6
"Series B Conversion Stock" means shares of Common issued or issuable
upon conversion of the Series B Preferred.
"Series B Preferred" means up to 5,432,500 shares of the Company's
Series B Convertible Preferred Stock, $.01 par value per share.
"Series C Conversion Stock" means shares of Common issued or issuable
upon conversion of the Series C Preferred.
"Series C Preferred" means up to 2,293,578 shares of the Company's
Series C Convertible Preferred Stock, $.01 par value per share.
"Series D Conversion Stock" means shares of Common issued or issuable
upon conversion of the Series D Preferred.
"Series D Preferred" means up to 199,601 shares of the Company's Series
D Convertible Preferred Stock, $.01 par value per share.
"Series E Conversion Stock" means shares of Common issued or issuable
upon conversion of the Series E Preferred.
"Series E Preferred" means up to 833,333 shares of the Company's Series
E Convertible Preferred Stock, $.01 par value per share.
"Shareholder Registrable Stock" means CTRC Registrable Stock and
Management Registrable Stock.
"Vector Registrable Stock" means (a) any shares of Exercise Stock and
(b) any shares of Common or other securities issued in respect of the
securities referred to in clause (a) by way of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, sale of assets or
similar event.
"Vector Warrants" means the warrants to purchase 170,000 shares of
Common issued to Vector Securities International, Inc. pursuant to the Warrant
for the Purchase of Shares of Common Stock, dated as of September 29, 1995.
SECTION 2. DEMAND REGISTRATIONS.
2.1 Commencing on the earlier of (i) six months after the date on
which the Company completes an initial public offering of Common and (ii) two
years after the first issuance of the Series B Preferred:
(a) the Holder or Holders of more than an aggregate of 20% of the
then outstanding shares of Investor Registrable Stock, shall be entitled
to (a) two demand registrations on Form S-1 or any similar long-form
registration (an "Investor Long Form Demand Registration"), and (b) an
unlimited number of demand registrations on Form S-2 or S-3 or any
similar short-form registration (an "Investor Short Form Demand
Registration"); and
-4-
<PAGE> 7
(b) the Holder or Holders of more than an aggregate of 50% of the
then outstanding shares of Shareholder Registrable Stock, shall be
entitled to (a) one demand registration on Form S-1 or any similar long-
form registration (a "Shareholder Long Form Demand Registration"), and
(b) three demand registrations on Form S-2 or S-3 or any similar short-
form registration (a "Shareholder Short Form Demand Registration",
together with the Investor Short Form Demand Registrations, the "Short
Form Demand Registrations"),
by providing a written notice to the Company requesting that the Company
register any eligible Registrable Stock specified in the notice, under the
Securities Act and under other relevant securities laws, for disposition in
accordance with methods stated in the notice. All demand registrations
pursuant to this SECTION 2.1 are collectively referred to herein as the "Demand
Registrations".
2.2 When it receives a registration notice under SECTION 2.1 above,
the Company shall promptly deliver a copy of the registration notice to each
Holder who is not a party to the registration notice, each of whom may then
specify, by written notice to the Company within 20 days of the date of the
Company's notice, the number of shares of Registrable Stock held by it that it
wishes to include in any Demand Registration pursuant to the registration
notice.
2.3 When it receives a registration notice under SECTION 2.1 above,
the Company shall use its best efforts to effect the Demand Registration under
the Securities Act of Registrable Stock specified in the registration notice
under SECTION 2.1 and subsequent notices under SECTION 2.2 above, all to the
extent requisite to permit disposition by such Holders in accordance with the
intended methods of disposition described in the registration notice.
2.4 The Company shall use its best efforts to qualify for
registration on Form S-3 or any comparable or successor form or forms; and to
that end the Company shall register (whether or not required by law to do so)
the Common under the Exchange Act in accordance with the provisions of that Act
following the effective date of the first registration of any securities of the
Company on Form S-1 or any comparable or successor form.
SECTION 3. INCIDENTAL/PIGGYBACK REGISTRATION. After the Company
completes an initial public offering of Common, each time the Company proposes
to register any of its Securities under the Securities Act for its own account
or for the account of other Security holders or both, it will give at least 30
days advance written notice of its intention to do so to each Holder. Each
Holder may then specify, by written notice to the Company within 25 days of the
date of the Company's notice, the number of shares of Registrable Stock held by
it that it wishes to include in the Company's proposed registration (a
"Piggyback Registration"). Subject to the market cutback limitations of
SECTION 8 of this Agreement, the Company will use its best efforts to effect
the Piggyback Registration under the Securities Act of Registrable Stock
specified by Holders under this SECTION 3.
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<PAGE> 8
SECTION 4. LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding any
contrary provision of this Agreement:
(a) the Company shall not be required to effect (i) more than
two Investor Long Form Demand Registrations, (ii) more than one
Shareholder Long Form Demand Registration, (iii) more than three
Shareholder Short Form Demand Registrations, (iv) any Short Form Demand
Registration that seeks to register and offer less than $500,000
aggregate amount of Registrable Stock, (v) per each 12 month period,
more than one Investor Short Form Demand Registration and (vi) per each
12 month period, more than one Shareholder Short Form Demand
Registration; provided, however, that a demand for a Demand Registration
shall not count as a registration under this SECTION 4(A) if the
registration statement filed with respect to such registration covering
all shares of Registrable Stock specified in notices received as
aforesaid (subject to the provisions of SECTION 8.1), for sale in
accordance with the method of disposition specified by the requesting
Holders, is not declared effective by the Commission and kept effective
by the Company in accordance with the planned distribution thereunder,
subject to SECTION 5.2, (unless, except as provided in SECTION 15(B),
such Demand Registration has not become effective due solely to the
fault of the Holder or Holders requesting such Demand Registration and
such Holder or Holders fail to bear all Registration Expenses in
connection therewith, in which case such registration shall count as a
Demand Registration), and the last or any subsequent Investor Long Form
Demand, Shareholder Long Form Demand and Shareholder Short Form Demand
Registration will not count as one of the permitted Demand Registrations
unless the Holders of Registrable Stock are able to register and sell at
least 90% of the shares of the Registrable Stock requested to be
included in such registration; and
(b) the Company will not be obligated to effect any Demand
Registration within 90 days after the effective date of a Demand
Registration or a registration in which the Holders of Registrable Stock
were given piggyback rights pursuant to SECTION 3, provided in either
case all shares of Registrable Stock requested to be included were sold
in such registration. The Company may postpone for up to 90 days the
filing or the effectiveness of a registration statement for a Demand
Registration if the Company, the Holders of at least a majority of the
Registrable Stock and, if such Demand Registration is requested by
Holders of Investor Registrable Stock, the Holders of at least a
majority of the Investor Registrable Stock, agree that such registration
would reasonably be expected to have an adverse effect (i) on any
proposal or plan by the Company or any of its subsidiaries to engage in
any acquisition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or similar
transaction, or (ii) any material corporate development; provided that
in such event, the Holders of Investor Registrable Stock or Shareholder
Registrable Stock initially requesting such Demand Registration will be
entitled to withdraw such request and, if such request is withdrawn,
such registration will not count as one of the permitted Demand
Registrations and the Company will pay all Registration Expenses (as
defined in SECTION 6 hereof) in connection with such registration.
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<PAGE> 9
(c) SECTION 3 of this Agreement shall not apply to a
registration effected solely to offer securities for sale pursuant to,
or in connection with, (i) an employee benefit plan or (ii) a
transaction subject to Rule 145 under the Securities Act or in an
exchange offer registered on Form S-4 or any successor form to Form S-4,
or to any registration on a form which does not permit inclusion of
Registrable Stock pursuant to Commission rule or practice.
SECTION 5. REGISTRATION PROCEDURES.
5.1 Whenever the Company is required by this Agreement to use its
best efforts to effect the registration of any Registrable Stock under the
Securities Act, the Company will, as expeditiously as possible:
(a) in the case of a Demand Registration, engage the
underwriters as provided in SECTION 13;
(b) before filing each registration statement or prospectus or
amendment or supplement thereto with the Commission, furnish counsel for
any Holders registering more than 12,500 shares of Registrable Stock
with copies of all such documents proposed to be filed, which shall be
subject to the reasonable approval of such counsel;
(c) prepare and file with the Commission a registration
statement with respect to such Registrable Stock (which, in the case of
an underwritten public offering, shall be on Form S-1 or other form of
general applicability satisfactory to the managing underwriter selected
as therein provided) with respect to such securities including executing
an undertaking to file post-effective amendments and use its best
efforts to cause such registration statement to become and remain
effective for the period of distribution contemplated thereby (subject
to SECTION 5.2 below);
(d) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period of distribution contemplated thereby
(subject to SECTION 5.2 below) and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
Registrable Stock covered by such registration statement in accordance
with the sellers' intended methods of disposition set forth in such
registration statement for such period;
(e) promptly prepare and file with the Commission, and notify
each seller of such Registrable Stock immediately after the filing of,
such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions
if, during such periods as a prospectus relating to such Securities is
required to be delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements
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<PAGE> 10
therein, in the light of the circumstances in which they were made, not
misleading, and notify each seller and underwriter immediately after its
discovery of such event;
(f) furnish to the underwriters and each seller of such
Registrable Stock such numbers of copies of such registration statement,
each amendment and supplement thereto (in each case, including all
exhibits), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
underwriters or seller may reasonably request in order to facilitate the
disposition of the Registrable Stock in accordance with such
registration statement;
(g) use its best efforts to register or qualify any
Registrable Stock covered by such registration statement under the
securities or blue sky laws of such jurisdictions within the United
States of America as the seller or the underwriters reasonably request,
and to take any other acts which a seller or the underwriters may
reasonably request under such securities or blue sky laws to enable the
consummation of the disposition in such jurisdictions of such
Registrable Stock (provided, however, that the Company shall not be
required under this Agreement (i) to qualify generally to do business as
a foreign corporation in any jurisdiction in which it would not
otherwise be required to qualify, or (ii) to consent to general service
of process in any such jurisdiction unless the Company is already
subject to service in such jurisdiction);
(h) provide a transfer agent and registrar for all Registrable
Stock sold under the registration statement not later than the effective
date of the registration statement;
(i) use its best efforts to cause all Registrable Stock sold
under the registration statement to be listed on each securities
exchange or to be qualified and eligible for trading in any automated
quotation system, if any, on which similar Securities issued by the
Company are then listed or traded or, if no such listing or
qualification has then occurred, to use its best efforts to cause such
Securities to be so listed or qualified on an exchange or in a trading
system that is reasonably acceptable to the Company and the Holders of
such Registrable Stock;
(j) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the underwriters, if any, or the Holders of more than 50% of
the Registrable Stock or in the case of a Demand Registration, the
Holders of more than 50% of the Investor Registrable Stock or
Shareholder Registrable Stock, as the case may be, making such demand,
being sold reasonably request in order to expedite or facilitate the
disposition of such Registrable Stock (including, without limitation,
effecting a stock split or a combination of shares);
(k) advise each seller of Registrable Stock, immediately after
it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by
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the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such
purpose and promptly use reasonable efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be
issued;
(l) make available for inspection by the sellers of
Registrable Stock, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or
other agent retained by any such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested
by any such seller or underwriter in connection with such registration
statement, all subject to such limitations as the Company reasonably
deems appropriate in order to protect the Company's confidential or
proprietary information;
(m) comply with all applicable rules and regulations under the
Securities Act and Exchange Act;
(n) if the offering is underwritten and at the request of any
seller of Registrable Stock, use its best efforts to furnish on the date
that Registrable Stock are delivered to the underwriters for sale
pursuant to such registration: (i) an opinion dated such date of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters to such effects as reasonably may be
requested by counsel for the underwriters and (ii) a letter dated such
date from the independent public accountants retained by the Company,
addressed to the underwriters stating that they are independent public
accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements of the Company
included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial
matters (including information as to the period ending no more than five
business days prior to the date of such letter) with respect to such
registration as such underwriters reasonably may request;
(o) make available for inspection by each seller of
Registrable Stock, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or
other agent retained by such seller or underwriter, reasonable access to
all financial and other records, pertinent corporate documents and
properties of the Company, as such parties may reasonably request, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement;
(p) cooperate with the selling holders of Registrable Stock
and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Stock
to be sold, such certificates to be
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in such denominations and registered in such names as such Holders or
the managing underwriter may request at least two business days prior to
any sale of Registrable Stock; and
(q) permit any Holder of Registrable Stock, which Holder, in
the sole and exclusive good faith judgment of such Holder, might be
deemed to be a controlling person of the Company, to participate in good
faith in the preparation of such registration statement.
5.2 For purposes of this Agreement, the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby or 180 days after the effective
date thereof, provided, however, in the case of any registration of Registrable
Stock on Form S-3 or a comparable or successor form which are intended to be
offered on a continuous or delayed basis, such 180-day period shall be
extended, if necessary, to keep the registration statement effective until all
such Registrable Stock are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment, permit, in lieu of filing a
post-effective amendment which (y) includes any prospectus required by Section
10(a)(3) of the Securities Act or (z) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in (y) and (z) above contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement.
SECTION 6. EXPENSES. The Company will pay all Registration Expenses
(as defined below) in connection with each Demand Registration or Piggyback
Registration of Registrable Stock permitted pursuant to SECTIONS 2 and 3 of
this Agreement; provided, however, that the aggregate maximum Registration
Expenses for legal fees and disbursements, accounting fees and disbursements
and filing fees payable by the Company to third parties in connection with
registering Investor Registrable Securities in all Investor Short Form Demand
Registrations shall be $100,000 (and if any Securities other than Investor
Registrable Securities are included, the amount of such expenses attributable
to the Investor Registrable Securities shall be determined pro rata) and any
such expenses payable to third parties in excess of $100,000 shall be borne pro
rata by the selling stockholders and the Company. For purposes of this SECTION
6, "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with SECTIONS 2 and 3 of this Agreement,
including, without limitation, all registration, filing and National
Association of Securities Dealers, Inc. fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating
and printing expenses, messenger and delivery expenses, the reasonable fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, the
reasonable fees and disbursements of one law firm retained by the Holders of
more than 50% of the
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<PAGE> 13
Investor Registrable Stock being registered, premiums and other costs of
policies of insurance obtained by the Company against liabilities arising out
of the public offering of the Registrable Stock being registered but excluding
all agency fees and commissions, underwriting discounts and commissions and
transfer taxes, if any.
SECTION 7. INDEMNIFICATION.
7.1 In the event of any registration of any of its Registrable Stock
under the Securities Act pursuant to this Agreement, the Company agrees, to the
extent permitted by law, to indemnify and hold harmless each seller of
Registrable Stock, and each officer, partner, director and Affiliate of such
seller, against any losses, claims, damages or liabilities, joint or several,
arising out of or based upon:
(a) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under which such Securities were registered under
the Securities Act, any preliminary prospectus or final prospectus
contained in any registration statement, or any other materials deemed
to be a prospectus pursuant to the Securities Act, or any Securities
being registered, or any amendment or supplement thereto, or any blue
sky application or other document executed by the Company specifically
for that purpose or based upon written information furnished by the
Company filed in any state or other jurisdiction in order to qualify any
or all of the Registrable Stock under the securities laws thereof (any
such application, document or information herein called a "Blue Sky
Application"), or
(b) any omission or any alleged omission to state in any such
document a material fact required to be stated therein or necessary to
make the statements therein not misleading, or
(c) any violation by the Company or its agents (other than by
the indemnitee claiming indemnification hereunder) of the Securities Act
or any rule or regulation promulgated under the Securities Act
applicable to the Company or its agents (other than by the indemnitee
claiming indemnification hereunder) and relating to action or inaction
required of the Company in connection with such registration,
except insofar as any such loss, claim, damage or liability is:
(i) caused by or contained in any information furnished
in writing to the Company by such seller expressly for use in
connection with such registration; or
(ii) caused by such seller's failure to deliver a copy
of the registration statement or prospectus or any amendment or
supplement thereto as required by the Securities Act or the rules
or regulations thereunder to be delivered by such seller, if such
delivery would have cured the defect giving rise to such loss,
claim, damage or liability; or
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<PAGE> 14
(iii) caused by the delivery by such seller of a
prospectus or preliminary prospectus or any amendment or
supplement thereto after receipt of notice from the Company that
it should no longer be used.
In connection with an underwritten offering, the Company will indemnify
such underwriters, their officers and directors and each Person who
controls (within the meaning of the Securities Act) such underwriters to
the same extent as provided above with respect to the sellers of
Registrable Stock. The Company shall reimburse each Person indemnified
pursuant to this SECTION 7.1 for any reasonable legal or other expenses
incurred in connection with investigating or defending any loss, claim,
damage, liability or action indemnified against. The reimbursements
required by this SECTION 7.1 shall be made by periodic payments during
the course of the investigation or defense, as and when bills are
received or expenses incurred. The indemnities provided pursuant to
this SECTION 7.1 shall remain in force and effect regardless of any
investigation made by or on behalf of the indemnified party and shall
survive any transfer of Registrable Stock by a seller.
7.2 In the event of any registration of any Registrable Stock under
the Securities Act pursuant to this Agreement, each Holder agrees to furnish to
the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any registration statement,
prospectus and any amendment or supplement thereto in connection with the
registration.
7.3 To the fullest extent permitted by law, and subject to the
limitation set forth in the last sentence of this SECTION 7.3, each Holder
which is a seller of Registrable Stock in a registration pursuant to this
Agreement agrees severally and not jointly to indemnify and hold harmless the
Company, its directors and officers, and each Affiliate of the Company,
against:
(a) any losses, claims, damages or liabilities, joint or
several, arising out of or based upon:
(i) any alleged untrue statement of any material fact
contained on the effective date thereof, in any registration
statement under which such Securities were registered under the
Securities Act, any preliminary prospectus or final prospectus
contained therein, or any summary prospectus contained therein,
or any amendment or supplement thereto, or
(ii) any alleged omission to state in any such document
a material fact required to be stated therein or necessary to
make the statements therein not misleading,
but only insofar as any such loss, claim, damage or liability is caused
by any information furnished in writing to the Company by the
indemnifying seller expressly for use in connection with such
registration, and excluding any such loss, claim, damage or liability
which is caused by such statements, or caused by
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<PAGE> 15
such omissions, based upon the authority of an expert as defined in the
Securities Act (but only if the indemnifying seller had no grounds to
believe, and did not believe, that the statements made on the authority
of an expert were untrue or that there was an omission to state a
material fact); and
(b) any losses, claims, damages or liabilities, joint or
several, arising out of or based upon any failure by such seller to
deliver a copy of the registration statement or prospectus or any
amendment or supplement thereto if required by the Securities Act or the
rules or regulations thereunder to be delivered by such seller, if such
delivery would have cured the defect giving rise to such loss, claim,
damage or liability. In connection with an underwritten offering, each
seller will indemnify such underwriters, their officers and directors
and each Person who controls (within the meaning of the Securities Act)
such underwriters to the same extent as provided above with respect to
the Company and other sellers. Each seller shall reimburse each Person
indemnified pursuant to this SECTION 7.3 in connection with
investigating or defending any loss, claim, damage, liability or action
indemnified against. The reimbursements required by this SECTION 7.3
shall be made by periodic payments during the course of the
investigation or defense as and when bills are received or expenses
incurred. The indemnities provided pursuant to this SECTION 7.3 shall
remain in force and effect regardless of any investigation made by or on
behalf of the indemnified party and shall survive any transfer of
Registrable Stock by an indemnifying seller and any transfer of other
Securities by any other indemnified seller. Notwithstanding any
contrary provision of this Agreement, however, the liability under this
SECTION 7 of each Holder which is a seller of Registrable Stock shall be
limited in the aggregate, with respect to the claims of all indemnified
Persons taken as a whole, to the amount of proceeds received by the
indemnifying seller from the sale of the Registrable Stock sold by the
indemnifying seller pursuant to such registration statement.
7.4 Each party entitled to indemnification under this SECTION 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense other than reasonable
costs of investigation and of liaison with counsel so selected (unless the
Indemnified Party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the Indemnifying Party or that the interests of the Indemnified
Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, in which case the Indemnified Party shall have the right to
select one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and
fees of such separate counsel and other reasonable expenses related to such
participation to be reimbursed by the Indemnifying Party as incurred), and
provided further that the
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<PAGE> 16
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this SECTION 7 unless
and to the extent the Indemnifying Party is materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense
of such claim and litigation resulting therefrom.
7.5 If the indemnification provided for in this SECTION 7 is held by
a court of competent jurisdiction (by the entry of a final judgment or decree
by such court and the expiration of time to appeal or the denial of the last
right of appeal) to be unavailable to an Indemnified Party with respect to any
loss, liability, claim, damage or expense referred to herein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
statements or omissions which resulted in such loss, liability, claim, damage
or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Notwithstanding
any contrary provision of this Agreement, however, the liability under this
SECTION 7.5 of each Holder which is a seller of Registrable Stock shall be
limited in the aggregate, with respect to the claims of all indemnified Persons
taken as a whole, to the amount of proceeds received by the indemnifying seller
from the sale of the Registrable Stock sold by the indemnifying seller pursuant
to such registration statement.
7.6 Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated
by this Agreement are in conflict with the foregoing provisions, the provisions
in such underwriting agreement shall be controlling. Not in limitation of the
foregoing, it is understood and agreed that the indemnification obligations of
any holder pursuant to any underwriting agreement entered into in connection
herewith shall be limited to the obligations contained in this SECTION 7.
7.7 The foregoing indemnity agreement of the Company and Holders is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the Commission at the time the
registration statement in question becomes
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<PAGE> 17
effective or the amended prospectus filed with the Commission pursuant to
Commission Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall
not inure to the benefit of any underwriter if a copy of the Final Prospectus
was furnished to the underwriter and was not sent or furnished to the person if
required by law so to have been delivered asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities
Act, and if the Final Prospectus would have cured the defect giving rise to
such loss, liability, claim or damage.
7.8 The indemnities and obligations provided in this SECTION 7 shall
survive the transfer of any Registrable Stock by such Holder.
SECTION 8. MARKETING RESTRICTIONS.
8.1 If:
(a) two or more Holders simultaneously seek to make a Demand
Registration pursuant to a registration notice under SECTION 2 of this
Agreement, and
(b) the offering proposed to be made by the Holders for whom
such registration is to be made is to be an underwritten public
offering, and
(c) the managing underwriter or underwriters of such public
offering furnish a written opinion that the total amount of Securities
to be included in such offering would exceed the maximum number of
shares of Common (as specified in such opinion) which can be marketed at
a price reasonably related to the current market value of such Common
and without otherwise materially and adversely affecting such offering
(the "Underwriter Maximum"),
then the rights of all demanding Holders, of the holders of other Securities
having the right to include Common in such registration, to participate in such
offering shall be in the following order of priority:
(i) FIRST, the number of shares of Investor Registrable
Stock requested to be included therein up to the Underwriter
Maximum allocated pro rata among the Holders of such Investor
Registrable Stock on the basis of the number of shares of
Investor Registrable Stock owned by such Holders shall be
entitled to participate, with further successive pro rata
allocations among the Holders of Investor Registrable Stock if
any such Holder of Investor Registrable Stock has requested the
registration of fewer than all of such shares of Investor
Registrable Stock that it is entitled to register;
(ii) SECOND, the number of shares of CTRC Registrable
Stock requested to be included therein, up to the Underwriter
Maximum (after taking into account the number of shares of
Investor Registrable Stock to be sold pursuant to (i) above)
allocated pro rata among the Holders of such CTRC Registrable
Stock on the basis of the number of shares of
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CTRC Registrable Stock owned by such Holders shall be entitled to
participate, with further successive pro rata allocations among
the Holders of CTRC Registrable Stock if any such Holder of CTRC
Registrable Stock has requested the registration of fewer than
all of such shares of CTRC Registrable Stock it is entitled to
register;
(iii) THIRD, the number of shares of Management
Registrable Stock requested to be included therein, up to the
Underwriter Maximum (after taking into account the number of
shares of Investor Registrable Stock and CTRC Registrable Stock
to be sold pursuant to (i) and (ii) above) allocated pro rata
among the Holders of such Management Registrable Stock on the
basis of the number of shares of Management Registrable Stock
owned by such Holders shall be entitled to participate, with
further successive pro rata allocations among the Holders of
Management Registrable Stock if any such Holder has requested the
registration of fewer than all of such shares of Management
Registrable Stock it is entitled to register; and
(iv) FOURTH, other securities requested to be included
in such registration up to the Underwriter Maximum (after taking
into account the Registrable Stock to be sold pursuant to clauses
(i) through (iii) above) shall be entitled to participate.
8.2 If:
(a) any Holder of Registrable Stock requests registration of
Registrable Stock under SECTION 3 of this Agreement, and
(b) the offering proposed to be made is to be an underwritten
public offering, and
(c) the managing underwriters of such public offering furnish
a written opinion that the total amount of Securities to be included in
such offering would exceed the Underwriter Maximum,
then the rights of the Holders, of the holders of other Securities having the
right to include such Securities in such registration and of the Company to
participate in such offering shall be as follows:
(i) if the offering is not a Demand Registration of
Registrable Stock and is the Company's first registered offering
of its equity to the public, then participation shall be in the
following order of priority:
(A) FIRST, the Company shall be entitled to
participate up to the full number of shares of stock which
the Company deems necessary or advisable to fulfill its
strategic capital requirements;
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(B) SECOND, the number of shares of Investor
Registrable Stock requested to be included therein up to
the Underwriter Maximum (after taking into account the
number of shares of Securities to be sold pursuant to (A)
above) allocated pro rata among the Holders of such
Investor Registrable Stock on the basis of the number of
shares of Investor Registrable Stock owned by such Holders
shall be entitled to participate, with further successive
pro rata allocations among the Holders of Investor
Registrable Stock if any such Holder of Investor
Registrable Stock has requested the registration of fewer
than all of such shares of Investor Registrable Stock that
it is entitled to register;
(C) THIRD, the number of shares of CTRC
Registrable Stock requested to be included therein, up to
the Underwriter Maximum (after taking into account the
number of shares of Securities to be sold pursuant to (A)
and (B) above) allocated pro rata among the Holders of
such CTRC Registrable Stock on the basis of the number of
shares of CTRC Registrable Stock owned by such Holders
shall be entitled to participate, with further successive
pro rata allocations among the Holders of CTRC Registrable
Stock if any such Holder of CTRC Registrable Stock has
requested the registration of fewer than all of such
shares of CTRC Registrable Stock that it is entitled to
register; and
(D) FOURTH, the number of shares of Management
Registrable Stock and Vector Registrable Stock requested
to be included therein, up to the Underwriter Maximum
(after taking into account the number of shares to be sold
pursuant to (A), (B) and (C) above) allocated pro rata
among the Holders of such Management Registrable Stock and
Vector Registrable Stock on the basis of the number of
shares of Management Registrable Stock and Vector
Registrable Stock owned by such Holders shall be entitled
to participate, with further successive pro rata
allocations among the Holders of Management Registrable
Stock and Vector Registrable Stock if any such Holder has
requested the registration of fewer than all of such
shares of Management Registrable Stock or Vector
Registrable Stock it is entitled to register; and
(E) FIFTH, all other holders of Securities
having the right to include such Securities in such
registration shall be entitled to participate pro rata in
accordance with the number of shares proposed to be
registered by each of them;
(ii) in all other events, participation shall be in the
following order of priority:
(A) FIRST, (1) if such registration was not
initiated by the Company as a primary registration, then
the Person or Persons
-17-
<PAGE> 20
requesting such registration pursuant to a Demand
Registration of such Person or Persons shall be entitled
to participate in accordance with the relative priorities,
if any, that shall exist among them, subject to the
limitation that a number of shares of Investor Registrable
Stock equal to 35% of the Underwriter Maximum shall also
be entitled to participate therein, with such shares of
Investor Registrable Stock being allocated pro rata among
the Holders of Registrable Stock owned by such Holders,
and (2) if the Company has initiated such registration as
a primary registration, then the Company shall be entitled
to participate up to the full number of shares of stock
which the Company deems necessary or advisable to fulfill
its strategic capital requirements;
(B) SECOND, the number of shares of Investor
Registrable Stock requested to be included therein, up to
the remainder of such Underwriter Maximum (after taking
into account the number of shares to be sold pursuant to
clause (A) above) allocated pro rata among the Holders of
such Investor Registrable Stock on the basis of the number
of shares of Investor Registrable Stock owned by such
Holders, with further successive pro rata allocations
among the Holders of Investor Registrable Stock if any
such Holder of Investor Registrable Stock has requested
the registration of fewer than all of such shares of
Investor Registrable Stock it is entitled to register;
(C) THIRD, the number of shares of CTRC
Registrable Stock requested to be included therein, up to
such Underwriter Maximum (after taking into account the
number of shares to be sold pursuant to clauses (A) and
(B) above) allocated pro rata among the Holders of such
CTRC Registrable Stock on the basis of the number of
shares of CTRC Registrable Stock owned by such Holders,
with further successive pro rata allocations among the
Holders of CTRC Registrable Stock if any such Holder of
CTRC Registrable Stock has requested the registration of
fewer than all of such shares of CTRC Registrable Stock it
is entitled to register
(D) FOURTH, the number of shares of Management
Registrable Stock and Vector Registrable Stock requested
to be included therein, up to such Underwriter Maximum
(after taking into account the number of shares of
securities to be sold pursuant to clauses (A) (B) and (C)
above) allocated pro rata among the Holders of such
Management Registrable Stock and Vector Registrable Stock
on the basis of the number of shares of Management
Registrable Stock and Vector Registrable Stock owned by
such Holders, with further successive pro rata allocations
among the Holders of Management Registrable Stock and
Vector Registrable Stock if any such Holder has requested
the registration
-18-
<PAGE> 21
of fewer than all of such shares of Management Registrable
Stock or Vector Registrable Stock it is entitled to
register; and
(E) FIFTH, other securities requested to be
included in such registration up to the Underwriter
Maximum (after taking into account the securities and
Registrable Stock to be sold pursuant to clauses (A), (B),
(C) and (D) above).
8.3 In connection with any offering involving an underwriting of
Registrable Stock pursuant to SECTION 3 of this Agreement, the Company shall
not be required to include any of the Registrable Stock of a Holder in such
offering unless such Holder agrees to the terms of the underwriting agreed to
between the Company and the underwriter or underwriters selected by the
Company.
SECTION 9. SALE OF PREFERRED TO UNDERWRITER. Notwithstanding
anything in this Agreement to the contrary, in lieu of converting any Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred to Conversion Stock, or in lieu of exercising any Vector Warrants
for Exercise Stock or Investor Warrants for Investor Warrant Stock, prior to or
simultaneously with the filing or the effectiveness of any registration
statement filed pursuant to this Agreement, the Holder of such Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred or Vector Warrants or Investor Warrants may sell such Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred or Vector Warrants and Investor Warrant Stock to the underwriter of
the offering being registered upon the undertaking of such underwriter to
convert such Series A Preferred, Series B Preferred, Series C Preferred, Series
D Preferred or Series E Preferred into Conversion Stock, or to exercise such
Vector Warrants for Exercise Stock or Investor Warrants for Investor Warrant
Stock, before making any distribution pursuant to such registration statement
and agreeing to include such Conversion Stock, Exercise Stock or Investor
Warrant Stock among the Securities being offered pursuant to such registration
statement. The Company agrees to cause such Conversion Stock, Exercise Stock
and Investor Warrant Stock to be issued within such time as will permit the
underwriter to make and complete the distribution contemplated by the
underwriting.
SECTION 10. LOCKUP AGREEMENT. Each Holder severally and not jointly
agrees in connection with the registration of any of the Company's Securities
in its initial public offering that, upon the request of the Company or the
underwriters managing such underwritten offering of the Company's Securities,
he or it will not sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Securities of the Company (other than
the securities included in the registration and other than a transfer by any
Holder to an Affiliate or member of the Immediate Family of such Holder)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed 120 days) from the
effective date of such registration as the Company or the underwriters may
specify, subject to the Company obtaining similar agreements from the Company's
executive officers and directors, any holders of five percent or more of the
Company's then issued
-19-
<PAGE> 22
and outstanding Common, and any other holders of Securities participating in
such registration.
SECTION 11. COMPLIANCE WITH RULE 144. With a view to making available
the benefits of certain rules and regulations of the Commission which may
permit the sale of restricted securities to the public without registration,
the Company agrees to:
(a) make and keep public information available as those terms
are understood and defined in Rule 144, at all times from and after 90
days following the effective date of the first registration under the
Securities Act filed by the Company for an offering of its Securities to
the general public and for so long as the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(c) so long as the Holder owns any Securities and is not
eligible to sell all such Securities under paragraph (k) of Rule 144,
furnish to the Holder upon request, a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any
time from and after 90 days following the effective date of the first
registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed as the Holder
may reasonably request in availing itself of any rule or regulation of
the Commission allowing the Holder to sell any such securities without
registration.
SECTION 12. ASSIGNABILITY OF REGISTRATION RIGHTS. The rights set
forth in this Agreement shall accrue to each subsequent Holder of Registrable
Stock who (a) shall have executed a written consent agreeing to be bound by the
terms and conditions of this Agreement, and (b) owns greater than 12,500 shares
of Registrable Stock (subject to appropriate adjustment for stock splits, stock
combinations and similar events affecting the Registrable Stock).
SECTION 13. DESIGNATION OF UNDERWRITER. In the case of any Demand
Registration effected pursuant to this Agreement, the managing underwriter(s)
and any other investment banking advisers to the Company shall be selected by
Holders of not less than 50% of the Investor Registrable Stock or Shareholder
Registrable Stock to be registered making such demand and shall be reasonably
acceptable to the Company. The Company shall select the managing
underwriter(s) and all other investment banking advisers to the Company for all
other registrations that may be effected from time to time by the Company.
-20-
<PAGE> 23
SECTION 14. HOLDBACK AGREEMENTS. The Company agrees (a) not to effect
any public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
period commencing on the earlier of the notice requesting the Demand
Registration, if applicable or seven days prior to, and continuing during the
90-day period beginning on, the effective date of any underwritten Demand
Registration pursuant to SECTION 2 hereof or any underwritten Piggyback
Registration pursuant to SECTION 3 hereof (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise
agree, and (b) to cause each holder of its Common, or any securities
convertible into or exchangeable or exercisable for Common, purchased from the
Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
SECTION 15. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) No Person may participate in any registration hereunder
which is underwritten unless such Person (i) agrees to sell such
Person's securities on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to
approve such arrangements (including, without limitation, pursuant to
the terms of any overallotment or "green shoe" option requested by the
managing underwriter(s)), (ii) furnishes to the Company such information
regarding such Holder, the Registrable Stock of such Holder to be
registered and the intended method of disposition of such Registrable
Stock, and (iii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
(b) If any Holder or Holders of Registrable Stock that has
requested inclusion in a registration disapproves of the terms of the
underwriting, such Holder or Holders may elect to withdraw therefrom by
written notice to the Company and the managing underwriter; provided
that if such Holder or all Holders of Registrable Stock who requested
such Registration as one of their Demand Registrations withdraw, then
subject to SECTION 4(A) hereof, (i) if such withdrawal occurs prior to
the registration statement being filed with the Commission, the
withdrawing Holder or Holders shall not be responsible for the
Registration Expenses in connection with such registration, and (ii) if
such withdrawal occurs subsequent to the filing of the registration
statement with the Commission, then at the option of the Holders, either
such withdrawing Holders shall be responsible for the Registration
Expenses incurred in connection with such registration pro rata to their
Securities initially included therein, or such withdrawn registration
shall count as a Demand Registration (as determined by the Holders of at
least 66-2/3% of the shares of Registrable Stock included therein by the
Holders with such Demand Registration right); provided, however, that if
at the time of such withdrawal, the requesting Holders have learned of
-21-
<PAGE> 24
a material adverse change in the conditions, business or prospects of
the Company from that known to them at the time of their request, then
the requesting Holders shall not be required to pay any of such expenses
or to count such registration as a Demand Registration.
(c) Each Person that is participating in any registration
hereunder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in SECTION 5.1(E)
above, such Person will forthwith discontinue the disposition of its
Registrable Stock pursuant to the registration statement until such
Person's receipt of the copies of a supplemented or amended prospectus
as contemplated by such SECTION 5.1(E).
SECTION 16. MISCELLANEOUS.
16.1 Modifications; Amendment. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated unless
effected by a writing executed and delivered by the Company and by holders
representing not less than 66-2/3% of Registrable Stock, provided that this
SECTION 16.1 may not be modified or amended without the written consent of all
the holders of Registrable Stock and the Company, and provided further that in
any event, no amendment or change may be made to the terms hereof that imposes
additional obligations or restrictions upon a party without its written
consent.
16.2 Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement
to be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
16.3 Successors and Assigns. Subject to SECTION 12, this Agreement is
binding upon and inures to the benefit of the Company, its successors and
assigns, and the Holders, their successors and assigns, heirs, and legal
representatives.
16.4 Notices. All communications in connection with this Agreement
shall be in writing and shall be deemed properly given if hand delivered or
sent by telecopier or overnight courier with adequate evidence of delivery or
sent by registered or certified mail, return receipt requested, and, if to a
Holder, addressed to the Persons and at such addresses as are set forth below
such Holder's name on Exhibit A hereto, or, if no such Person or address
appears, at such Holder's address as shown on the books of the Company or its
transfer agent, and if to the Company, at its offices at:
ILEX ONCOLOGY, INC.
14785 Omicron Drive, Suite 101
San Antonio, TX 78245
-22-
<PAGE> 25
or such other addresses or Persons as the recipient shall have designated to
the sender by a written notice given in accordance with this Section. Any
notice called for hereunder shall be deemed given when received.
16.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas applicable to agreements
between Texas residents entered into and to be performed entirely within Texas.
16.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same instrument. A written consent executed
pursuant to SECTION 12 of this Agreement shall be deemed to be part of, and
constitute a counterpart of, this Agreement.
16.7 Headings. The headings used herein are solely for the
convenience of the parties and shall not serve to modify or interpret the text
of the Sections at the beginning of which they appear.
16.8 Entire Agreement. This Agreement embodies the entire agreement
and understanding among the Company and the Holders and supersedes all prior
oral and written agreements and understandings relating to the subject matter
hereof.
16.9 Waiver. Any waiver or consent under this Agreement shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent except as
specifically set forth in such waiver or consent. The election of any remedy
by a party hereto shall not constitute a waiver of the right of such party to
pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
16.10 Specific Performance. The Company recognizes that the rights of
the Holders of Registrable Stock under this Agreement are unique and,
accordingly, the Holders of Registrable Stock shall, in addition to such other
remedies as may be available to them at law or in equity, have the right to
enforce their rights hereunder by actions for injunctive relief and specific
performance to the extent permitted by law.
16.11 Grant of Registration Rights. The Company shall not grant to any
third party any registration rights more favorable than, or in any way
conflicting with, any of those contained herein, so long as any of the
registration rights under this Agreement remain in effect, provided, in any
event, (a) any grant of demand or required registration rights shall provide
that the Holders of Registrable Stock have incidental or "piggyback"
registration rights with respect thereto in accordance with the provisions of
SECTION 3 hereof, (b) such rights shall not become effective prior to the
rights of the Holders of the Registrable Stock hereunder, and (c) the
recipients of such rights shall be subject to provisions comparable to those
set forth in SECTION 10 hereof.
-23-
<PAGE> 26
16.12 Termination of Prior Agreement. The parties to that certain
Registration Rights Agreement dated September 29, 1995, that certain Amended &
Restated Registration Rights Agreement dated July 22, 1996 and that certain
Second Amended and Restated Registration Rights Agreement dated November 11,
1996 (the "Prior Agreements") by and among the Company and the persons
designated as Holders therein (all of whom are parties to this Agreement),
hereby amend and restate such Prior Agreements and agree that such Prior
Agreements shall be null and void.
[signatures on next page]
-24-
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Third Amended
and Restated Registration Rights Agreement to be executed on the day first
above written.
MPI Enterprises, L.L.C.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-25-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Third Amended
and Restated Registration Rights Agreement to be executed on the day first
above written.
The Company:
- -----------
ILEX ONCOLOGY, INC.
By:
------------------------------------------
Name: Richard L. Love, President
Holders:
- -------
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner
By:
----------------------------------------
Vice President
ADVENT PERFORMANCE MATERIALS LIMITED
PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner
By:
----------------------------------------
Vice President
ADVENTACT LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner
By:
----------------------------------------
Vice President
-26-
<PAGE> 29
ADVENT INTERNATIONAL INVESTORS II LIMITED
PARTNERSHIP
By: Advent International Corporation,
General Partner
By:
----------------------------------------
Vice President
BIOVEN PARTNERS L.P.
By:
------------------------------------------
Name: Michael Bell
Title: Managing General Partner
BOSTON CAPITAL VENTURES III,
LIMITED PARTNERSHIP
By: BD Partners Limited Partnership
its General Partner
By:
----------------------------------------
General Partner
CROSS ATLANTIC PARTNERS K/S
By its General Partner: CAP/HAMBRO L.P.
By its General Partner: CAP/HAMBRO, INC.
By:
----------------------------------------
Name: John L. Cassis
Title: Managing Director
CROSS ATLANTIC PARTNERS II K/S
By its General Partner: CAP/HAMBRO L.P.
By its General Partner: CAP/HAMBRO, INC.
By:
----------------------------------------
Name: John L. Cassis
Title: Managing Director
-27-
<PAGE> 30
CRYSTAL PARTNERS IV
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
DRUG ROYALTY CORPORATION INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
---------------------------------------------
Steve Dana
---------------------------------------------
Mary Ann Dana
---------------------------------------------
Gerald Dubinski
---------------------------------------------
George Ensley
---------------------------------------------
Lucille Ensley
---------------------------------------------
James Gorman, Jr.
JOHNSON & JOHNSON DEVELOPMENT
CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-28-
<PAGE> 31
---------------------------------------------
John Korbell
---------------------------------------------
Fred Lepick
---------------------------------------------
Billy J. McCombs
---------------------------------------------
Ruskin Norman, M.D.
PERSEUS PHARMACEUTICALS, L.L.C.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
PHARMACIA & UPJOHN COMPANY
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
---------------------------------------------
Stuart D. Pompian
---------------------------------------------
Lon Smith
---------------------------------------------
Susan Smith
---------------------------------------------
Eric Stumberg
-29-
<PAGE> 32
---------------------------------------------
Louis H. Stumberg
---------------------------------------------
Louis H. Stumberg, Jr.
TRINITY UNIVERSITY
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
VECTOR SECURITIES INTERNATIONAL, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
---------------------------------------------
Robert V. West, Jr., Ph.D.
---------------------------------------------
Gary Woods
---------------------------------------------
Roger Zeller
CTRC: CTRC RESEARCH FOUNDATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-30-
<PAGE> 33
Founders:
---------------------------------------------
Richard L. Love
---------------------------------------------
Alexander L. Weis, Ph.D.
---------------------------------------------
Daniel D. Von Hoff
---------------------------------------------
Charles A. Coltman, Jr., M.D.
-31-
<PAGE> 34
EXHIBIT A
ADDRESS OF HOLDERS
Rovent II Limited Partnership
101 Federal Street
Boston, MA 02110
Advent Performance Materials Limited Partnership
101 Federal Street
Boston, MA 02110
ADVENTACT Limited Partnership
101 Federal Street
Boston, MA 02110
Advent International Investors II Limited Partnership
101 Federal Street
Boston, MA 02110
Bioven Partners L.P.
16414 San Pedro Avenue, Suite 345
San Antonio, TX 78232
Boston Capital Ventures III, Limited Partnership
45 School Street
Boston, MA 02108
Cross Atlantic Partners K/S
c/o Hambro America Biosciences
650 Madison Avenue, 21st Floor
New York, NY 10022
Cross Atlantic Partners II K/S
c/o Hambro America Biosciences
650 Madison Avenue, 21st Floor
New York, NY 10022
Crystal Partners IV
Mr. Craig H. Ensley
c/o Crystal Semiconductor Corp.
4210 S. Industrial Drive
Austin, TX 78744
-32-
<PAGE> 35
CTRC Research Foundation
14960 Omicron Drive
San Antonio, TX 78245
Attention: David J. Hirsch, Chief Operating Officer
Drug Royalty Corporation Inc.
Suite 202, 8 King Street East
Toronto, Canada M5C 1B5
Mr. and Mrs. Steve and Mary Ann Dana, as Joint Tenants with a Right of
Survivorship
14035 Oakhill Way
San Antonio, TX 78231
Gerald Dubinski
Chief Executive Officer
Standard Industries
8189 Nelson Road
San Antonio, TX 78227
Mr. and Mrs. George and Lucille Ensley, as Joint Tenants with a Right of
Survivorship
229 Geneseo Street
San Antonio, TX 78209
Mr. James Gorman, Jr.
4040 Broadway, #615
San Antonio, TX 78209
Johnson & Johnson Development Corporation
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Mr. John Korbell
555 Eldon Road
San Antonio, TX 78209
Fred Lepick
816 Eventide Drive
San Antonio, TX 78209
Billy J. McCombs
c/o McCombs Enterprises
9000 Tesoro Drive, Suite 122
San Antonio, TX 78217
-33-
<PAGE> 36
Ruskin Norman, M.D.
Medical Center Tower, #1001
7950 Floyd Curl Drive
San Antonio, TX 78229
Perseus Pharmaceuticals, L.L.C.
The Army and Navy Club Building
1627 I Street N.W., Suite 610
Washington, DC 20006
Pharmacia & Upjohn Company
7000 Portage Road
Kalamazoo, MI 49001
Stuart D. Pompian
304 Main Street
Haverhill, NH 03765
Lon and Susan Smith, as Joint Tenants with a Right of Survivorship
143 Park Hill Drive
San Antonio, TX 78212
Mr. Eric Stumberg
832 Eventide
San Antonio, TX 78209
Mr. Louis H. Stumberg
Tower Life Building
Suite 701
San Antonio, TX 78205
Mr. Louis H. Stumberg, Jr.
310 S. St. Mary's Street, Suite 1290
San Antonio, TX 78205
Trinity University
Attention: Craig McCoy
Rm. 100 Northrup Hall-Fiscal Affairs
715 Stadium Drive
San Antonio, TX 78212
Vector Securities International, Inc.
1751 Lake Cook Road, Suite 350
Deerfield, IL 60015
Robert V. West, Jr., Ph.D.
200 Patterson, No. 118
San Antonio, TX 78209
-34-
<PAGE> 37
Mr. Gary Woods
9000 Tesoro Drive, Suite 122
San Antonio, TX 78217
Mr. Roger Zeller
5005 West Avenue
San Antonio, TX 78213
FOUNDERS
Richard L. Love
24 Eton Green Circle
San Antonio, TX 78257
Alexander L. Weis, Ph.D.
22 Galleria
San Antonio, TX 78257
Charles A. Coltman, Jr.
13206 Hunters View
San Antonio, TX 78230
Daniel D. Von Hoff
226 Branch Oak Way
San Antonio, TX 78230
-35-
<PAGE> 1
Exhibit 10.51
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Agreement dated as of September 29, 1995 by and among ILEX ONCOLOGY,
INC., a Delaware corporation (the "Company"), and the persons identified on
Exhibit A hereto (individually a "Purchaser" and, collectively, the
"Purchasers"), whose mailing addresses and states of principal residence are as
set forth on Exhibit A.
W I T N E S S E T H:
WHEREAS, the Company desires to sell up to 5,432,500 shares of Series B
Convertible Preferred Stock, $.01 par value per share, having the rights,
preferences, privileges and restrictions described herein and in the Exhibits
and Schedules hereto (the "Series B Preferred"); the purchase price for such
shares of Series B Preferred shall be $2.00 per share.
WHEREAS, the Company and The Upjohn Company ("Upjohn") previously
entered into an agreement to which Upjohn was to purchase certain shares of
Series B Preferred.
WHEREAS, Upjohn and the Company desire to rescind and terminate their
prior agreement, and in connection therewith, Upjohn and the other Purchasers
desire to enter into this Agreement pursuant to which each of the Purchasers
will purchase shares of Series B Preferred on the terms set forth herein and in
the amounts and for the aggregate consideration set forth in Exhibit A.
NOW, THEREFORE, the Company and the Purchasers agree severally, and not
jointly, as follows:
1. Purchase and Sale. Subject to the provisions of this
Agreement (including the last sentence of this SECTION 1) and on the basis of
the representations and warranties contained herein, on the Closing Date (as
hereinafter defined), the Company will sell to each Purchaser and each
Purchaser will purchase from the Company that number of shares of the Series B
Preferred set forth on Exhibit A. The purchase price to be paid by each
Purchaser for such shares of Series B Preferred shall be equal to the product
of $2.00 per share times the number of shares of Series B Preferred purchased
at the Closing by the Purchaser (the "Purchase Price").
2. Closing of Purchase and Sale.
2.1. Closing: Closing Date. The purchase and sale of the Series B
Preferred (the "Closing") shall occur at the offices of Gardner, Carton &
Douglas, 321 North Clark Street, Chicago, Illinois 60610, and shall occur at
10:00 a.m. local time on September 29, 1995 (the "Closing Date") or such other
time and date as may be agreed upon by the Company and the Purchasers.
<PAGE> 2
2.2. Transactions at Closing. The Closing of the purchase and sale of
shares of Series B Preferred to be made to Purchasers shall be effected on the
Closing Date. On the Closing Date, (i) the Company and each Purchaser shall
execute and deliver each agreement included as an exhibit hereto to which they
are a party, (ii) the Company shall deliver to each Purchaser a stock
certificate for the Series B Preferred to be issued and sold to each Purchaser,
duly registered in such Purchaser's name, and (iii) the Purchasers shall
deposit by wire transfer of immediately available funds or bank certified or
cashier's check the aggregate Purchase Price called for the in SECTION 1 of
this Agreement into one or more bank accounts of the Company as shall be
designated by the Company prior to this Closing.
2.3. Additional Purchaser. The Company shall have the right for a
period of ten (10) days following the Closing Date to sell up to 10,000 shares
of Series B Preferred (the "Additional Shares") at a purchase price of $2.00
per share (the "Additional Sale") to Stuart Pompian, (the "Additional
Purchaser"), provided that the Additional Sale shall be effected by the
execution by the Additional Purchaser as parties hereto, with all rights and
obligations of a Purchaser hereunder. In the event of such Additional Sale,
for all purposes related to this Agreement, the Additional Purchaser shall be
deemed to have executed this Agreement as of the date hereof and the Additional
Sale shall be deemed to have occurred as of the Closing Date.
3. Representations and Warranties of Company. The Company
represents and warrants to the Purchasers as follows:
3.1. Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full power and authority to own, lease
and operate its properties and assets and to conduct its business as presently
conducted and as proposed to be conducted, and to enter into this Agreement and
the Registration Rights Agreement (as defined in SECTION 5.7) and to carry out
the transactions contemplated by such agreements. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
the State of Texas and in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the business, assets,
operations or financial condition of the Company.
3.2. Capitalization. The authorized capital stock of the Company
consists of (a) 20,000,000 shares of preferred stock $.01 par value per share
("Preferred Stock"), of which (i) 5,239,900 shares have been designated as
Series A Convertible Preferred Stock, $.01 par value per share (the "Series A
Preferred"), all of which are issued and outstanding and (b) 40,000,000 shares
of Common Stock, of which (i) 2,080,100 shares are issued and outstanding, (ii)
5,239,900 shares are reserved for issuance on conversion of the Series A
Preferred, (iii) 1,000,000 shares are reserved for issuance on exercise of
options issued or to be issued to employees, advisors, officers, directors and
consultants of, and other persons performing services for, the Company pursuant
to stock option plans approved by the Board of Directors of the Company and
(iv) 170,000 shares reserved for issuance on exercise of outstanding warrants
issued to Vector Securities International, Inc. (the reserved shares referred
to in (ii) through (iv) are collectively referred to as the "Reserved Shares").
The record owners of the Company's issued and outstanding Common Stock and the
holders of all options and warrants to purchase Common Stock are set forth on
Schedule 3.2 hereto. The issued and outstanding
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shares of the Company's capital stock have been duly authorized and validly
issued and are fully paid and non-assessable. Holders of shares of the
Company's capital stock have no preemptive rights and, except as set forth in
SECTION 7.6 of this Agreement, no holder of shares of the Company's capital
stock has any right of first refusal to purchase securities sold by the
Company. Except for the Series A Preferred and transactions contemplated by
this Agreement (including the exhibits hereto) and except for the shares
reserved for issuance as set forth in this section, there are no outstanding
warrants, options, convertible securities or rights (contingent or otherwise)
to subscribe for or purchase any capital stock or other securities from the
Company. The Company is not required to register any of its equity securities
under Section 12(a) or 12(g) of the Securities Exchange Act of 1934. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Certificate of Incorporation (as defined
below), and of the Series B Preferred will be set forth in the Certificate of
Incorporation prior to the Closing, and, all such designations, powers,
preferences, rights, qualifications, limitations and restrictions are valid,
binding and enforceable and in accordance with all applicable laws. Except as
contemplated by this Agreement or set forth in Schedule 3.2, (i) there are no
restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant state and federal securities laws, (ii) there
are no agreements, understandings, proxies, trusts or other collaborative
arrangements concerning the voting, pledge or purchase and sale of the capital
stock of the Company to which the Company is a party, or to the Company's
knowledge, to which any other Person is a party, (iii) no holder of any
security of the Company is entitled to preemptive, first refusal or similar
statutory or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party, or which are otherwise binding upon
the Company, or the Company's knowledge, to which any other Person is a party.
Except as provided for in the Certificate of Incorporation, the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein or to pay any dividend or
make any other distribution in respect thereof. Other than pursuant to the
terms of the Registration Rights Agreement, no Person has demand or other
rights to cause the Company to file any registration statement under the
Securities Act of 1933 relating to any securities of the Company or any right
to participate in any such registration.
3.3. Validity of Stock. Prior to the Closing, the Certificate of
Designation, Preferences and Rights of Series B Convertible Preferred Stock in
the form attached hereto as Exhibit 3.3(A) will have been duly filed with the
Delaware Secretary of State. On the Closing Date, the Series B Preferred will
be duly authorized and, when issued and sold in accordance with the terms of
this Agreement, will be duly and validly issued, and fully paid and non-
assessable and will be free and clear of all liens, charges, encumbrances or
restrictions imposed by or through the Company except as set forth in this
Agreement, the Registration Rights Agreement or applicable securities laws. On
the Closing Date, the Common Stock issuable upon conversion of the Series B
Preferred will be duly authorized and reserved for issuance by all necessary
action and when issued and sold upon such conversion in accordance with the
terms of this Agreement and the Company's Certificate of Incorporation, as
amended (including the Certificate of Designation, Preferences and Rights of
Series B Convertible Preferred Stock), in the form of Exhibit 3.3(B) (the
"Certificate of Incorporation") will be duly and validly issued, fully paid and
non-assessable.
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3.4. Subsidiaries. The Company has no subsidiaries and does not own
or control, directly or indirectly, any other corporation, partnership,
association, joint venture or entity.
3.5. Financial Statements. The Company has furnished each Purchaser
with the Company's (i) consolidated audited balance sheet (the "Audited Balance
Sheet") as of December 31, 1994 (the "Audited Balance Sheet Date") and
consolidated audited statements of operations for the year ended December 31,
1994 ("Audited Income Statement") and (ii) consolidated unaudited balance sheet
(the "Unaudited Balance Sheet") as of June 30, 1995 (the "Unaudited Balance
Sheet Date") and consolidated unaudited statements of operations for the six
(6) months ended June 30, 1995 ("Unaudited Income Statement") (each of which in
(i) and (ii) above are collectively referred to as the "Financial Statements"
and are attached hereto as Schedule 3.5). The Financial Statements are true
and correct in all material respects, are in accordance with the books and
records of the Company, have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and fairly and
accurately present in all material respects the financial position of the
Company as of such dates and the results of its operations for the periods then
ended, provided that the Unaudited Financial Statements may not contain all
footnotes required by GAAP and the Unaudited Balance Sheet and the Unaudited
Balance Sheet Date, the Company has not incurred or otherwise become subject to
any liabilities, debts or obligations otherwise than in the ordinary course of
business consistent with past practice, except for those listed on Schedule 3.5
attached hereto and those that, would not individually or in the aggregate have
a material adverse effect on the financial condition of the Company.
3.6. Insurance. Schedule 3.6 contains a list of all insurance
policies (specifying (a) the Insurer, (b) the amount of coverage and (c) the
type of insurance) maintained by or on behalf of the Company on the properties,
assets, business or personnel of the Company, all of which are (and pending
Closing will continue to be) in full force and effect.
3.7. Authorization: Approvals. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, to perform its obligations hereunder and
thereunder and to engage in the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Company of this Agreement and
the Registration Rights Agreement, have been duly authorized by all necessary
corporate action, and this Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly executed and delivered by
the Company. This Agreement constitutes, and at the Closing the Registration
Rights Agreement will constitute, the legal, valid and binding obligation of
the Company legally enforceable against the Company in accordance with their
respective terms. The Company has obtained all material consents,
authorizations and approvals of, and has made or will make all material
declarations and filings with, all federal and state governmental authorities
required on the part of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except to the extent any failure
by the Company to comply with the foregoing is due to misrepresentations or
nondisclosure of one or more Purchasers.
3.8. No Conflict with Other Instruments and Laws. Except as set forth
on Schedule 3.8 or any other Schedules hereto, the execution of and performance
by the Company of its
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<PAGE> 5
obligations under this Agreement and the Registration Rights Agreement will not
violate any provision of law or governmental rule or regulation and will not
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default (with notice, lapse of time or both)
under (i) the Company's Certificate of Incorporation, (ii) the Company's by-
laws as currently in effect which are attached hereto as Exhibit 3.8 (the "By-
laws"), (iii) any statute, law, rule, regulation, judgment, decree or order to
which the Company is bound or applicable to the Company or its assets or (iv)
any agreement, contract, lease, indenture or other instrument to which the
Company is a party.
3.9. Absence of Undisclosed Liabilities: Changes. Except as otherwise
described in Schedule 3.9 or any other Schedule hereto, the Company does not
have any liability or obligation (whether accrued, contingent or otherwise),
which individually or in the aggregate exceeds $100,000 (including, without
limiting the generality of the foregoing, any tax liabilities due or to become
due to the extent they relate to the conduct of the business of the Company
through the date hereof) not reflected in the Financial Statements, except (i)
obligations and liabilities incurred after the Unaudited Balance Sheet Date in
the ordinary course of business consistent with past practice; (ii) obligations
under contracts made in the ordinary course of business consistent with past
practice that would not be required to be reflected or disclosed in financial
statements prepared in accordance with GAAP; and (iii) obligations under or
contemplated by this Agreement. The Company has not become directly or
contingently liable on any indebtedness, liability or obligations of any other
Person.
Since the Unaudited Balance Sheet Date, there has been no occurrence or
development that has had or is reasonably likely to have a material adverse
effect on the Company's business, assets, operations or financial condition or
prospects, and there has been no material adverse change in the business,
assets, operations or financial condition or prospects of the Company.
3.10. Labor Agreement and Actions. The Company is not bound by or
subject to any contract with any labor union and, to the knowledge of the
Company, no labor union has requested or has sought to organize or represent
any of the employees of the Company. There is no strike or other labor dispute
involving the Company pending, or to the knowledge of the Company threatened,
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company, nor is the
Company aware of any labor organization activity involving its employees.
3.11. Compliance with Law and Other Instruments. The Company has
complied with and is not in violation of (with due notice or lapse of time or
both) any agreement, instrument, statute or governmental rule or regulation
(including, without limitation, its charter and bylaws) or any governmental
order, judgment, decree, writ, injunction or award of any arbitration, court or
governmental authority applicable to it or its business, operations, assets or
services, applicable to it or its assets that has or could reasonably be
expected to have a material adverse effect on the business, assets, operations
or financial condition of the Company. To the knowledge of the Company, no
employee of the Company is in violation of any term of any employment contract
or any other contract or agreement relating to the employment of such employee
with the Company, as applicable, the violation of which could reasonably be
expected to have a material adverse effect on the business, assets, operations
or financial condition of the
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<PAGE> 6
Company. Except for governmental licenses, permits, approvals and consents,
the failure to obtain any of which alone or in the aggregate could not
reasonably be expected to have a material adverse effect on the business,
assets, operations or financial condition of the Company, Schedule 3.11 hereto
lists all governmental licenses, permits, franchises, approvals and consents
required to be received or obtained by the Company to conducts its business as
presently conducted, all of which the Company currently possesses.
3.12. Proprietary Rights. Schedule 3.12 contains a list of all
patents, trademarks, trade names and service marks (and all applications
therefor), whether or not registered ("Proprietary Rights"), used by the
Company in the conduct of its business. The Company owns or has the right to
use without the payment of royalties or fees or other consideration (except as
disclosed on Schedule 3.12 of any other Schedules hereto), all Proprietary
Rights and Intellectual Property Rights necessary for or used by it in the
conduct of its business as now conducted, and with respect to Mitoguazone,
Crisnatol Mesylate, Dihydro-5-Azacytide, piritrexim, oxypurinol and
difluoromethylornithine as proposed to be conducted. Except as set forth on
Schedule 3.12 or any other Schedules hereto, none of the Proprietary Rights or
Intellectual Property Rights has been declared invalid, been limited by order
of any court or by agreement, or is the subject of any infringement,
interference or similar proceeding or challenge. The Company has not
infringed, and is not infringing, on the Proprietary Rights or Intellectual
Property Rights of others which could have a material adverse effect on the
business, assets, operations or financial condition of the Company. The
conduct of the Company's business as proposed to be operated is not expected to
conflict with or infringe upon the Proprietary Rights and Intellectual Property
Rights (as defined below) of others. Except as set forth on Schedule 3.12 or
any other Schedules hereto, the Company has no obligation to compensate any
Person for the use of any such Proprietary Rights or other Intellectual
Property Rights and the Company has not granted to or assigned to any Person
any license or other right to use any of the Proprietary Rights or other
Intellectual Rights or other Intellectual Property Rights and the Company has
not granted to or assigned to any Person any license or other right to use any
of the Proprietary Rights or other Intellectual Property Rights of the Company.
The consummation of the transactions contemplated by this Agreement will not
terminate or alter the ability of the Company to utilize the Proprietary Rights
or the terms of such use. Listed on Schedule 3.12 are all corporate, trade and
fictitious names under which the Company or its business is operated. The
Company has taken all reasonable measures to protect and preserve the security,
confidentiality and value of its Proprietary Rights or other Intellectual
Property Rights. All key employees and consultants of the Company have
executed Employment Provision Agreements in the form attached hereto as Exhibit
3.12(a) and all members of the Company's Scientific Advisory Board who have not
entered into Consulting Agreements with the Company have executed Non-
Disclosure Confidentiality Agreements in the form attached hereto as Exhibit
3.12(b). To the Company's knowledge, all trade secrets and other confidential
information of the Company are presently protectible and are not part of the
public domain or knowledge, nor, to the Company's knowledge, have they been
used, divulged or appropriated for the benefit of any Person other than the
Company or otherwise to the detriment of the Company. The Company is the
exclusive owner of all rights, titles and interests in its Proprietary Rights
and other Intellectual Property Rights as purported to be exclusively owned by
the Company and insofar as such Proprietary Rights and other Intellectual
Property Rights involve patents, copyrights, licenses, permits, license rights,
contract rights, tradenames or trademarks, such Proprietary Rights and other
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Intellectual Property Rights are valid and in full force and effect. Neither
the Company, nor to the Company's knowledge, any of its officers, employees or
consultants, has received notice of, and to the Company's knowledge there are
no claims pending or threatened that the Proprietary Rights or other
Intellectual Property Rights owned or licensed by the Company or the use or
ownership thereof by the Company infringes, violates or conflicts with any such
right of any third party or, with respect to Proprietary Rights or other
Intellectual Property Rights which involved patents, copyrights, licenses,
permits, license rights, contract rights, tradenames or trademarks, that such
Proprietary Rights or other Intellectual Property Rights are invalid or
unenforceable.
"Intellectual Property Rights" shall mean, in addition to Proprietary Rights,
any and all intellectual property rights relating to trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, claims of infringement against third parties, licenses, permits,
license rights to or of technologies, contract rights with employees,
consultants or third parties, inventions and discoveries, and other such rights
generally classified as intangible, intellectual property assets in accordance
with generally accepted accounting principles.
To the Company's knowledge, no third party has claimed or has reason to
claim that any Person employed by or affiliated with the Company has in the
course of such Person's employment by or affiliation with the Company (a)
violated or may be violating any of the terms or conditions of his or her
employment, non-competition, non-disclosure or inventions agreement with such
third party, (b) disclosed or may be disclosing or utilized or may be utilizing
any trade secret or proprietary information or documentation of such third
party or (c) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. To the
Company's knowledge, no third party has requested information from the Company
which suggests that such a claim might be contemplated. To the Company's
knowledge, no Person employed by or affiliated with the Company has employed or
proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and to the Company's knowledge, no Person
employed by or affiliated with the Company has violated any confidential
relationship which such Person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company, and
the Company has no reason to believe there will be any such employment or
violation. To the Company's knowledge, none of the execution or delivery of
this Agreement or the Registration Rights Agreement, or the carrying on of the
business of the Company as officers, employees or agents by any officer,
director or key employee of the Company, or the conduct or proposed conduct of
the business of the Company, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such Person is obligated.
3.13. Taxes. Except where the failure to do so would not have a
material adverse effect on the Company's business, the Company has accurately
prepared and timely filed all federal income tax returns and all state and
municipal tax returns that are required to be filed by it and has paid or made
provision for the payment of all amounts due pursuant to such returns, which
are not reflected nor reserved for on the Financial Statements and of all other
taxes, assessments
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<PAGE> 8
and other governmental charges imposed upon it or upon any of its assets,
income, other than any such charges that are currently payable without penalty
or interest, including, without limitation, all taxes which the Company is
obligated to withhold from amounts owing to employees, creditors and third
parties. There is no tax lien outstanding against the assets of the Company,
except for liens for taxes not yet due and payable. The federal income tax
returns of the Company have not been audited by the Internal Revenue Service,
and there are no waivers in effect of the applicable statute of limitations for
any period. No deficiency, assessment or proposed adjustment of federal income
taxes or state or local taxes of the Company is pending, and the Company has no
knowledge of any proposed liability for any tax to be imposed.
3.14. Contracts. Except as set forth in Schedule 3.14 or any other
Schedule hereto, the Company is not a party to any contract and has no
obligation or commitment (i) involving aggregate future payments by the Company
of more than $25,000, which is not cancelable on sixty (60) days' notice by the
Company or (ii) that is otherwise material to the business of the Company
(collectively, the "Material Agreements"). Except as set forth on Schedule
3.14 or any other Schedule hereto, the Company has no employment contracts,
deferred compensation agreements or bonus, incentive, profit-sharing, or
pension plans currently in force and effect, or any understanding with respect
to any of the foregoing. Except as set forth on Schedule 3.14 or any other
Schedules hereto, no default or defaults (without regard to notice or lapse of
time or both) exist by the Company (including without limitation the Company's
predecessor in interest) in the due performance by it, or to the knowledge of
the Company by the other party or parties thereto, of any term, covenant or
condition of any contract to which the Company is a party that individually or
in the aggregate would have a materially adverse effect on the business,
assets, operations or financial condition of the Company. All of the Material
Agreements are in full force and effect.
3.15. Litigation. Except as provided in Schedule 3.15 or any other
Schedule hereto, no action, proceeding or governmental inquiry or investigation
(a "Proceeding") before any court, arbitrator or tribunal or administrative or
other governmental agency, is (i) pending, or to the knowledge of the Company,
threatened against the Company or any of its officers, directors or employees
(in their capacity as such) or affecting any of its owned or leased assets, or
(ii) to the knowledge of the Company, pending or threatened against any
consultant or shareholder of the Company (in their capacity as such) or
affecting any of its other assets, nor is the Company aware of any such
threatened or contemplated action, proceeding, inquiry or investigation nor, to
the knowledge of the Company, has there occurred any event or does there exist
any condition on the basis of which it is reasonably likely that any such
Proceeding might properly be instituted. There is no Proceeding by the Company
pending or threatened against others.
3.16. Fees and Commissions. Except for Vector Securities
International, Inc., ("Vector") the Company has not retained any finder,
broker, agent, financial advisor or other intermediary (collectively,
"Intermediary") in connection with the transactions contemplated by this
Agreement. In connection with the transactions contemplated by this Agreement,
the Company will (i) pay Vector a total of $500,000, and (ii) issue to Vector
warrants to acquire 170,000 shares of Common Stock (collectively, the "Vector
Fees").
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3.17. ERISA. Except as disclosed on Schedule 3.17, the Company does
not maintain, sponsor, or contribute (and has not during the last five (5)
years been obligated to maintain, sponsor or contribute or maintained,
sponsored or contributed) to any program or arrangement that is an "employee
pension benefit plan," an "employee welfare benefit plan," "multiple employer
welfare arrangement," or a "multi-employer plan", as those terms are defined in
Sections 3(1), 3(2), 3(4) or 3(37) of the Employee Retirement Income Security
Act of 1974, as amended, deferred compensation agreement or arrangement,
supplemental executive retirement program, vacation plan, cafeteria plan,
educational assistance plan, and any other employee benefit plans, agreements,
or arrangements (collectively, "Employee Programs"). The Company has complied
with all applicable legal requirements, including without limitation ERISA and
the Code, with respect to all Employee Programs.
3.18. Title to Properties: Encumbrances. Except as set forth in
Schedule 3.18 or any other schedule attached hereto, the Company has good and
marketable title to all of the assets owned by it and used in its business,
including, without limitation, all the material properties and assets reflected
in the Financial Statements, subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (a) liens reflected in the
Financial Statements or on Schedule 3.18 or any other Schedules hereto, (b)
liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or impair
the use of, such property by the Company, as applicable, (c) liens for current
taxes, assessments or governmental charges or levies on property not yet due
and delinquent and (d) liens which do not materially affect the operation of
the business of the Company, as applicable (liens of the type described in
clauses (a) through (d) above, inclusive, are hereinafter sometimes referred to
as "Permitted Liens"). Except as set forth in Schedule 3.18, the assets of the
Company are in good working order and condition, ordinary wear and tear
excepted.
3.19. Environmental Compliance. Except as disclosed in Schedule 3.19
and to the best of their knowledge:
(a) The Company has not released, emitted, discharged, dumped or
disposed of any hazardous substances onto or into the assets of the
Company, or any part thereof, or onto or into the air, surface or
groundwater, land or soil in violation of Environmental Laws. For
purposes of this Agreement "Hazardous Substances" has the meaning set
forth in Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and shall also
expressly include (1) petroleum, crude oil and any fraction thereof or
radioactive material; (2) any other chemical, material or substance
defined as or included in the definition of "medical waste," "infectious
waste," "hazardous substance," "hazardous waste," "hazardous material,"
"toxic substance," "special waste," "contaminant" or "pollutant," or
word or term of similar import, under any applicable Environmental Law;
and (3) any other chemical, material or substance exposure to which is
regulated by any governmental authority having jurisdiction over the
Company or is reasonably likely to give rise to any liability of the
Company, in either case under any Environmental Law. The term
"Environmental Laws" means all applicable foreign, federal, state,
county and local statutes, regulations or ordinances (including common
law duties established by courts or any published
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judicial or administrative interpretation thereof) relating to human
health and the environment or the generation, treatment, storage,
recycling, transportation, release or disposal of Hazardous Substances.
(b) No Hazardous Substances resulting from the Company's
operations have been or are currently located at, in, or under or about
either the assets of the Company or any other property currently or
previously owned or operated by the Company in a manner which: (i)
violates in any material respect applicable Environmental Laws or (ii)
requires any material response, remedial, corrective action or cleanup
of any kind under any applicable Environmental Laws.
(c) With respect to the assets or other property owned or leased
by the Company, whether previously or currently owned or operated or
used by the Company for the treatment, storage or disposal of Hazardous
Substances, the Company is not subject to any judgment, injunction,
writ, order or agreement arising from: (i) any applicable Environmental
Laws; (ii) any response, remedial or cleanup activities or (iii) any
release or threatened release of Hazardous Substances. In addition, the
Company is not now aware of any facts on which such litigation,
investigation, administrative or other proceeding of any kind is pending
or threatened by any federal, foreign, state or local governmental
entity or private party arising from: (i) any applicable Environmental
Laws; (ii) any response, remedial or cleanup activities or (iii) any
release or threatened release of Hazardous Substances. In addition, the
Company is not now aware of any facts on which such litigation,
investigation, administrative or other proceeding of any kind might
reasonably be based.
(d) With respect to the assets or other property owned or leased
by the Company, whether previously or currently owned or operated or
used by the Company for the treatment, storage or disposal of Hazardous
Substances, the Company is not subject to any judgment, injunction,
writ, order or agreement arising from: (i) any applicable Environmental
Laws; (ii) any remedial, response or cleanup activities or (iii) any
liabilities, damages, costs, fees or expenses related to the release or
threatened release of Hazardous Substances. In addition, the Company is
not aware of any facts on which such a judgment, injunction, writ, order
or agreement might reasonably be based.
(e) The assets of the Company do not contain any asbestos or PCB
containing materials in material violation of any applicable
Environmental Laws.
(f) The Company has not caused or allowed, and the Company has
not contracted with any party for, the manufacture, processing,
handling, distribution, use, transportation, treatment or storage of any
Hazardous Substances, except in compliance in all material respects with
applicable Environmental Laws. The Company does not own any real
property.
(g) The Company has obtained and is maintaining in full force
and effect all Environmental Permits and is in compliance in all
material respects therewith "Environmental Permit" shall mean any
necessary permit, license, approval or other
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<PAGE> 11
authorization or filing required by the Environmental Laws applicable to
the premises leased by the Company and the business operations currently
conducted thereon and as currently proposed to be conducted.
(h) The Company and the operations of its business are being
conducted in compliance in all material respects with all applicable
Environmental Laws and orders or directives of any governmental
authority having jurisdiction under such Environmental Laws. To the
Company's knowledge, the premises leased by the Company are in
compliance in all material respects with all applicable Environmental
Laws and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws.
3.20. Affiliate Transactions. Schedule 3.20 describes all material
contracts, arrangements or transactions between the Company and to the
Company's knowledge, between any customer, licensor, licensee or supplier of
the Company, and any of the Company's Affiliates.
3.21. Exemption from Registration. In sole reliance, as to factual
matters concerning each Purchaser, upon representations and warranties by each
Purchaser in SECTION 4 hereof and without independent investigation, the offer
and sale of the Series B Preferred, and the Common Stock issuable upon
conversion of the Series B Preferred, in the matter contemplated by the
Agreement are, and upon conversion will be, (i) exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, and (ii)
either exempt from, or registered or qualified in compliance with, the
registration requirements of all applicable state "blue sky" securities laws.
3.22. Prior Exemptions from Registration. All offers and sales of the
Company's capital stock prior to the date hereof (i) were exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and (ii) were made in compliance with all applicable federal and state
securities laws.
3.23. Disclosure. Neither this Agreement, nor any other agreement,
document or certificate furnished to any Purchaser or its counsel by the
Company or on behalf of the Company by any of its officers or counsel in
connection with the transactions contemplated hereby, including, without
limitation, the Financial Statements, when taken as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. The Confidential
Private Placement Memorandum dated April 26, 1995, attached as Exhibit 3.23,
was prepared in good faith and with a good faith belief in the reasonableness
of the assumptions used therein. There is no currently existing fact which
materially and adversely affects, or which in the future may (so far as the
Company can reasonably foresee) materially and adversely affect, the business,
properties, operations or condition, financial or otherwise, of the Company
(except for industry and general economic conditions and climate which are
beyond the control of the Company), which has not been set forth in this
Agreement, including the Schedules and Exhibits hereto. Without limiting the
foregoing, the Company does not have knowledge that there exists, or that there
is pending or
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<PAGE> 12
planned, any patent, invention, device or application of a technology or any
statute, rule, law, regulation, standard or code which will, based solely on
information currently known by the Company, materially adversely affect the
business, prospects, operations, Proprietary Rights, Intellectual Property
Rights, affairs or financial condition of the Company.
3.24. Additional Representations.
(a) Since the Unaudited Balance Sheet Date, (i) the Company has
not entered into any material transaction, made any distribution on its
capital stock, or redeemed or repurchased any of its capital stock; (ii)
paid or cancelled any obligations or liability, other than current
liabilities paid in the ordinary course of the business consistent with
past practice; (iii) suffered any substantial losses or waived any
rights of material value, whether or not in the ordinary course of
business or covered by insurance; or (iv) purchased any properties or
assets, except in the ordinary course of business in immaterial amounts.
(b) No officer or key employee of the Company has advised the
Company (orally or in writing) that he intends to terminate employment
with the Company.
(c) Each of the Material Agreements is in full force and effect.
There is no anticipated or threatened default of the Material Agreements
and none of the parties nor the Company has provided any notice of
default or if its intention to terminate any Material Agreement. The
Company is not bound by any agreement or instrument or subject to any
charge or other corporate restriction which materially and adversely
affects the business, properties, operations, condition or prospects,
financial or otherwise, of the Company.
(d) The Company is not now and has never been a "United States
real property holding corporation", as defined in Section 897(c)(2) of
the Code and Section 1.897-2(b) of the Regulations promulgated by the
Internal Revenue Service.
(e) To the extent reasonably within its control, the Company
shall endeavor to meet the active business requirements of Section
1202(e) of the Code, provided that (i) the Company does not represent
that it is or will be a "qualified small business" within the meaning of
Section 1202(d) of the Code or that the Series B Preferred Stock is or
will be qualified small business stock as defined in Section 1202(c) of
the Code, (ii) the Company shall not be required to cause any of its
stockholders to reduce its holdings of Company capital stock, and (iii)
the Company shall not be required to change its core business as
currently conducted. The value of the assets owned directly by the
Company does not exceed Fifty Million Dollars ($50,000,000) as of the
date hereof.
4. Representations, Warranties and Covenants of Purchasers.
Each Purchaser severally represents and warrants solely as to itself to the
Company as follows:
4.1. Authorization. It has full power and authority to enter into and
to perform this Agreement, the Registration Rights Agreement (as defined in
Section 5.7) and the Stockholders
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<PAGE> 13
Agreement in the form attached as Exhibit 4.1 (the "Stockholders Agreement") in
accordance with their respective terms. This Agreement has been, and at the
Closing the Registration Rights Agreement and the Stockholders Agreement will
have been, duly executed and delivered by it, and constitute valid and legally
binding obligations of the Purchaser, legally enforceable against the Purchaser
in accordance with their respective terms, subject to laws of general
application from time to time in effect affecting creditors' rights and the
exercise of judicial discretion in accordance with general equitable
principles.
4.2. Investment Representations. It is acquiring the Series B
Preferred purchased by it (and any Common Stock into which Series B Preferred
may be converted) for its own account, for investment, and not with a view to,
or for sale in connection with, any distribution of such Series B Preferred (or
related Common Stock) or any part thereof in violation of Federal or state
securities laws. The Purchaser has no present or contemplated agreement,
arrangement or commitment to dispose of Series B Preferred (or any Common Stock
into which the Series B Preferred may be converted) in violation of Federal or
state securities laws.
4.3 Investment Experience: Access to Information. It (a) is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D as
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), has completed and delivered to the Company the investor questionnaire
attached as Exhibit 4.3 (the "Investor Questionnaire") and certifies that the
information concerning it as set forth on Exhibit A and in the Investor
Questionnaire is true and correct in all respects, (b) alone or together with
its advisors is an investor experienced in the evaluation of businesses similar
to the Company's business, and has such knowledge and experience in financial,
business and other relevant matters as to be competent and fully capable of
examining all the merits, risk and other aspects of the investment contemplated
by this Agreement on its own and to make an informed decision with respect
thereto, (c) has the ability to bear the economic risks of this investment
which could include the loss of some or all of its investment and has
sufficient other assets such that the loss of all its investment in the Company
would not have a material adverse effect on its financial condition or
adversely affects its ability to maintain its present lifestyle or operations,
as the case may be, (d) has been provided and carefully reviewed the Company's
Private Placement Memorandum dated April 26, 1995 and has been afforded prior
to the date hereof the opportunity to ask questions of, and to receive answers
from, the Company and its representatives and has received from the Company all
other information concerning the investment contemplated by this Agreement that
it has requested, and (e) acknowledges that no assurances, representations or
guaranties of any nature whatsoever (including those relating to capital
appreciation, dividends or tax aspects) have been made by the Company or anyone
else to it with regard to the performance of the investment contemplated by
this Agreement. Each Purchaser severally agrees that it will indemnify and
hold harmless the Company and its directors, officers, controlling persons and
affiliates (the "indemnities") from any liability or damage (including
reasonable attorney's fees and expenses) to any third party suffered or
incurred by any of the indemnities solely as a result of the inaccuracy of any
of the foregoing representations and warranties made by the Purchaser,
including any liability or damage arising from or under Federal or state
securities laws. No investigation pursuant to this SECTION 4.3 shall affect
any representation or warranty given by the Company in this Agreement.
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<PAGE> 14
4.4. Absence of Registration. Each Purchaser understands that:
The Series B Preferred to be sold and issued hereunder (and the Common
Stock into which the Series B Preferred may be converted) have not been
registered under the Securities Act or any applicable state securities or "Blue
Sky" laws, and may be required to be held indefinitely, unless subsequently
registered under the Securities Act and such applicable Blue Sky laws, or an
exemption from such registration is available.
Except as may be required by the Registration Rights Agreement, the
Company is under no obligation to the Purchaser to file a registration
statement with the Securities and Exchange Commission (the "Commission") or any
state securities commission with respect to the Series B Preferred (or the
Common Stock into which the Series B Preferred may be converted).
4.5. Economic Risk. Each Purchaser understands that it must bear the
economic risk of the investment represented by the purchase of Series B
Preferred (and any Common Stock into which the Series B Preferred may be
converted) for an indefinite period.
4.6. Fees and Commissions. Except as described in Schedule 4.6, each
Purchaser represents and warrants that it has retained no Intermediary in
connection with the transactions contemplated by this Agreement.
Notwithstanding any disclosure on Schedule 4.6, each Purchaser agrees to
indemnify and hold harmless the Company from liability for any compensation to
any Intermediary retained by such Purchaser and the fees and expenses of
defending against such liability or any such alleged liability.
5. Conditions to Closing of the Purchasers. The obligation
of each Purchaser on the Closing Date to pay the Purchase Price required by
SECTION 2 hereof shall be subject to each of the following conditions
precedent, any one or more of which may be waived by such Purchaser:
5.1. Representations and Warranties. The representations and
warranties made by the Company herein shall be true and accurate on and as of
the Closing Date.
5.2. Performance. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing.
5.3. Consents, etc. The Company shall have secured all permits,
consents and authorizations that shall be necessary or lawfully required to
consummate the transactions contemplated by this Agreement (including consents
or approvals required under Federal or state securities laws and from the
holders of the Company's outstanding shares of Common Stock and Series A
Preferred Stock), to issue the Series B Preferred to be purchased by each
Purchaser, and to issue the Common Stock into which the Series B Preferred may
be converted.
5.4. Compliance Certificates. The Company shall have delivered to
each Purchaser or their respective representative at the Closing a certificate
signed by the President and by the Treasurer of the Company to the effect that
the representations and warranties of the Company
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<PAGE> 15
contained in this Agreement continue to be true and accurate on the Closing
Date, and that all conditions specified in SECTIONS 5.2 and 5.3 have been
fulfilled, including a list of any permits, consents or authorizations required
thereby.
5.5. Proceedings and Documents. All corporate and other proceedings,
and all documentation relating thereto, necessary to consummate the
transactions contemplated by this Agreement (including but not limited to the
filing by the Company with the Delaware Secretary of State of the Certificate
of Designation, Preferences and Rights of Series B Convertible Preferred Stock)
shall be reasonably satisfactory in substance and form to the Purchaser and
Purchasers' counsel and the Purchaser and Purchasers' counsel shall have
received all such counterpart originals or certified or other copies of the
documents as the Purchaser or Purchasers' counsel may reasonably request,
including without limitation, a certificate of the Secretary of the Company
attesting to the accuracy of each of the following documents which shall be
attached to such certificate: (a) the Certificate of Incorporation of the
Company, including all amendments thereto, the Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock, and the
Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock, certified as of recent date by the Delaware Secretary of
State, (b) the By-laws of the Company, and (c) the authorizations of the Board
of Directors and stockholders of the Company relating to the Company's
execution, delivery and performance of its respective obligations, if any,
under of this Agreement and the Registration Rights Agreement and all other
agreements and transactions contemplated hereby.
5.6. Opinion of Company's Counsel. The Representative shall have
received an opinion from counsel for the Company, dated the Closing Date and
addressed to the Purchasers in substantially the form attached hereto as
Exhibit 5.6.
5.7. Registration Rights Agreement. The Company shall have executed
and delivered a Registration Rights Agreement in substantially the form
attached hereto as Exhibit 5.7 (the "Registration Rights Agreement").
5.8. Founders' Sales Agreement. Richard L. Love, Alexander L. Weis,
Daniel D. Von Hoff and Charles A. Coltman, Jr. (the "Founders") and the
Purchasers shall have entered into an agreement in substantially the form
attached hereto as Exhibit 5.8 (the "Founders' Sales Agreement").
5.9. Performance. Purchasers shall have committed to purchase
pursuant to this Agreement and shall at the Closing make payment on the Closing
Date of not less than an aggregate of $10,000,000 and not more than $10,865,000
for the purchaser of Series B Preferred pursuant to this Agreement.
5.10. Stockholders Agreement. Each of the other Purchasers shall have
entered into a Stockholders Agreement substantially in the form attached as
Exhibit 4.1 hereto and as of the close of business on the Closing Date, the
membership of the Board of Directors shall be in compliance with the structure
provided for in the Stockholders' Agreement and the Certificate of Designation,
Preferences and Rights of Series B Convertible Preferred Stock.
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<PAGE> 16
5.11. Payment of Fees and Disbursements of Purchasers. The costs, fees
and expenses identified in SECTION 22 shall have been paid in full.
5.12. Preferred Stockholders' Sales Agreement. The Purchasers and CTRC
Research Foundation shall have entered into an agreement in substantially the
form attached hereto as Exhibit 5.12 (the "Preferred Stockholders' Sales
Agreement").
6. Conditions to Closing of Company. The obligation of the
Company on the Closing Date to issue and sell the Series B Preferred to be
purchased under this Agreement shall be subject to each of the following
conditions precedent, any one or more of which may be waived by the Company:
6.1. Representations and Warranties. The representations and
warranties made herein by each Purchaser shall be true and accurate on and as
of the Closing Date and each Purchaser shall be deemed to have restated and
confirmed such representations and warranties as of the Closing Date by
authorizing or permitting the Closing to be effected without delivering in
writing to the Company a notice of change prior to the Closing.
6.2. Performance. Purchasers shall have committed to purchase
pursuant to this Agreement and shall at the Closing make payment of not less
than an aggregate of $5,500,000 for the purchase of Series B Preferred pursuant
to this Agreement. Each Purchaser shall have performed and complied with all
agreements and conditions contained herein required to be performed or complied
with by it prior to or at the Closing.
6.3. Consents, etc. The Company shall have secured all material
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including but not limited to consents or approvals required under Federal or
state securities laws).
6.4. Registration Rights Agreement. The Company and the Purchasers
shall have executed and delivered a Registration Rights Agreement in
substantially the form attached hereto as Exhibit 5.7.
6.5. Stockholders Agreement. The Purchasers shall have entered into a
Stockholders Agreement substantially in the form attached as Exhibit 4.1
hereto.
7. Affirmative Covenants.
The Company covenants and agrees that it will perform and observe the
following covenants and provisions, and will cause each Subsidiary, if and when
such Subsidiary exists, to perform and observe the following covenants and
provisions, as if they applied to it in the same manner as they apply to the
Company.
7.1. Inspection. For so long as a Purchaser (or a Permitted Holder,
as defined in SECTION 14) holds at least One Hundred Thousand (100,000) shares
of Series B Preferred (or Common Stock into which it has been converted), as
adjusted for Recapitalization Events, the
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<PAGE> 17
Company will permit an authorized representative of any such Purchaser (or such
Permitted Holder) reasonable access during the normal business hours of the
Company and upon reasonable notice (which notice in no event shall be provided
less than three (3) business days in advance) to the books, records, personnel
and properties of the Company, for any reasonable purpose whatsoever related to
such Purchaser's (or such Permitted Holder's) investment in the Company. The
Company will furnish to each such Permitted Holder such other information as it
from time to time may reasonably request. For purposes of this SECTION 7.1,
"Recapitalization Events" means stock splits, stock dividends,
recapitalization, reclassifications and similar events.
7.2. Accounting. The Company will maintain a system of accounting
established and administered in accordance with GAAP consistently applied, and
will set aside on its books such proper reserves as shall be required by GAAP.
In the event the services of the independent public accountants, so selected,
or any firm of independent public accountants hereafter employed by the Company
are terminated, the Company will promptly thereafter notify the Permitted
Holders and will request the firm of independent public accountants whose
services are terminated to deliver to the Permitted Holders a letter of such
firm setting forth the reasons for the termination of their services.
7.3. Monthly and Annual Financial Statements. For so long as any
Series B Preferred remains outstanding, the Company will deliver to each
Purchaser for so long as the Purchaser continues as a stockholder of the
Company:
(a) upon the written request of a Purchaser to the Company (but
in any event to any Purchaser owning greater than 100,000 shares of
Series B Preferred), within 30 days after the end of each month and each
fiscal quarter an unaudited balance sheet of the Company as at the end
of each such month or fiscal quarter and unaudited consolidated
statements of income and of cash flow of the Company for each such month
or fiscal quarter compared to budget.
(b) within 90 days after the end of each fiscal year of the
Company, a balance sheet of the Company as at the end of such year and
statements of income and of cash flow of the Company for such year,
audited by such firm of independent public accountants of national
recognition that is appointed by the Company's Board of Directors or an
authorized committee thereof, and a report summarizing the Company's
development activities during the period, and a certificate executed by
the President confirming that during such period the Company has been in
compliance with the terms of this Agreement.
(c) promptly upon receipt thereof, any written report submitted
to the Company by independent public accountants in connection with an
annual or interim audit of the books of the Company and its Subsidiaries
made by such accountants;
(d) prior to the commencement of each fiscal year, a reasonably
detailed business plan for such fiscal year including monthly operating
expenses and profit and loss projections and a capital expenditure
budget for the fiscal year as approved by the Board
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<PAGE> 18
of Directors, and promptly after any revisions to such budget approved
by the Board of Directors, a copy of such revisions.
None of the foregoing provisions of this SECTION 7 nor any other
provision of this Agreement shall be in limitation of any rights which a holder
of Series B Preferred may have with respect to the books and records of the
Company, or to inspect its properties or discuss its affairs, finances and
accounts, under the laws of the jurisdiction of its incorporation.
7.4. Use of Proceeds. The Company shall use the proceeds from the
sale of Series B Preferred for purposes of expanding the development of the
Company's cancer pharmaceutical and research business and to fulfill general
corporate working capital purposes consistent therewith. It is currently
anticipated by the Company that the proceeds will be allocated approximately as
follows: $550,000 for licensing fees for products, $580,000 for capital
expenditures, $600,000 for transaction costs (including $500,000 payable to
Vector as the cash portion of the Vector Fees), $1,500,000 for specified
operating expenses and the remainder for clinical trials and general corporate
working capital purposes.
7.5. Confidentiality and Restrictions on Trading. Any confidential or
proprietary information concerning the Company provided to any Purchaser or a
representative thereof pursuant to this Agreement or otherwise, including
SECTIONS 7.1 and 7.3 hereof, shall be used by such Purchaser or any
representative or affiliate thereof solely in furtherance of its interests as
an investor in the Company, and the Purchaser or representative or affiliate
thereof shall (except as otherwise required by law to which the Purchaser or
representative or affiliate thereof may be subject) maintain the
confidentiality of all non-public information of the Company, provided that,
notwithstanding any other term of this Agreement to the contrary, (i) the
Company shall not be obligated to disclose any information, the disclosure of
which its Board of Directors or President believes in good faith could have a
material adverse effect on the Company or its stockholders, or both and (ii)
the Purchasers shall be entitled to disclose such non-public information (a) as
is reasonably necessary to enforce their rights under this Agreement, (b) on a
confidential basis to their attorneys and other professionals to the extent
reasonably necessary in connection with the Purchasers' investment in the
Company, and (c) to any prospective purchaser of the Series B Preferred, or any
affiliate or partner of a Purchaser, provided that such third party agrees to
be bound by the confidentiality provisions hereof, and such third party is not
a competitor of the Company. No Purchaser or representative, affiliate or
transferee thereof shall purchaser, sell or take any other action relating to
any capital stock or other securities issued by the Company if any such
purchase, sale or other action would be in violation of any federal or state
"insider trading" or other securities laws.
7.6. Right of First Refusal. So long as there are any shares of
Series B Preferred outstanding, the Company hereby grants to the Purchasers as
a group the right of first refusal to purchase such amount of New Securities
(as defined in paragraph (a) below) that the Company may, from time to time,
propose to sell and issue that will enable the Purchasers, as a group, to
maintain their collective percentage equity interest in the Company. This
right of first refusal shall be subject to the following provisions:
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<PAGE> 19
(a) "New Securities" shall mean any Common Stock, preferred
stock or other security which is convertible into or exchangeable for
shares of Common Stock of the Company or any option, warrant or other
right to acquire such security or Common Stock of the Company; provided,
however, that "New Securities" shall not include (i) Common Stock
issuable upon conversion of or with respect to Series B Preferred or
upon conversion of any other convertible security of the Company
(including the Series A Preferred) that is outstanding from time to
time, (ii) securities issued upon the exercise of any warrants or
options issued or granted by the Company that are referred to in or
contemplated by SECTION 3.2 OR SECTION 8.3 of this Agreement, (iii)
securities offered to the public in an underwritten offering pursuant to
a registration statement filed under the Securities Act, (iv) securities
issued by the Company as consideration for an acquisition of a portion
or all of the equity or other interests in another corporation,
partnership, business entity or line of business of another business
entity by the Company by merger, reorganization, stock-for-equity or
stock-for-assets exchange or any other similar transaction and (v) any
option issued pursuant to a plan as permitted by and subject to SECTION
8.3 below.
(b) If the Company proposes to issue New Securities, it shall
give each Purchaser written notice (the "Rights Notice") of its
intention, describing the New Securities, the price, and the general
terms upon which the Company proposes to issue them. Each Purchaser
shall have fifteen (15) days from the date of mailing of the Rights
Notice to agree to purchase (i) all or any part of its Pro-Rata Share
(as defined in subsection (e) below) of such New Securities and (ii) all
or any part of the Pro-Rata Share of such New Securities of all other
Purchasers to the extent that such other Purchasers do not elect to
purchase their respective full Pro-Rata Share, in each case for the
price and upon the general terms specified in the Rights Notice by
giving written notice to the Company setting forth the quantity of New
Securities it elects to purchase. If the Purchasers who elect to
purchase their full Pro-Rata Share also elect to purchase all or a
portion of the Pro-Rata Share of such New Securities of other Purchasers
who do not elect to purchase 100% of their respective Pro-Rata Share
(such other Purchasers referred to as "Non-Participating Purchasers"),
then such Purchasers shall be entitled to purchase, in addition to their
Pro-Rata Share, a percentage of the Pro-Rata Shares of the Non-
Participating Purchasers determined by the fraction the numerator of
which is the number of shares of Common Stock then held, together with
the number of shares of Common stock issuable upon conversion of the
Series B Preferred then held, by such Purchaser as of the date of the
Rights Notice, and the denominator of which is the sum of the number of
shares of Common Stock then held, plus the number of shares of Common
Stock issuable upon the conversion of Series B Preferred then held, by
all Purchasers electing to purchase more than their Pro-Rata Share.
Each Purchaser who agrees to purchase New Securities shall deliver the
purchase price for the New Securities and otherwise comply with the
general terms of sale set forth in the Rights Notice on the thirtieth
(30th) day after the date of mailing of the Rights Notice (or such other
date as agreed to by the Company and such Purchaser) and the Company
shall deliver duly registered share certificates for the New Securities
in exchange therefor.
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<PAGE> 20
(c) If the Purchasers fail to exercise in full the right of
first refusal within the period or periods specified in paragraph (b)
hereof, the Company shall have ninety (90) days after the date of
mailing of the Rights Notice to sell the unsold New Securities and the
balance of the New Securities not subject to the Right of First Refusal
provided for herein at a price and upon general terms no more favorable
to the purchasers thereof than specified in the Rights Notice. If the
Company has not sold the New Securities within said ninety (90) day
period the Company shall not thereafter issue or sell any New Securities
without first offering such securities to the Purchasers in the manner
provided above.
(d) A purchaser's "Pro-Rata Share" shall be the percentage
determined by a fraction the numerator of which is the number of shares
of Common Stock then held, together with the number of shares of Common
Stock issuable upon conversion of the Series B Preferred then held, by
such Purchaser as of the date of the Rights Notice (as defined in
paragraph (b) above) and the denominator of which is the sum of the
total number of shares of Common Stock then outstanding, together with
the number of shares of Common Stock issuable upon conversion of
convertible securities of the Company then outstanding, all as of such
date.
7.7. Restrictions on Transfer. Each Purchaser (and each transferee,
successor or assign of a Purchaser) further agrees that (a) it will not offer,
sell or otherwise dispose of the Series B Preferred (of the Common Stock in to
which the Series B Preferred may be converted), unless such offer, sale or
other disposition is effected in accordance with the terms of this Agreement
and the Registration Rights Agreement and such offer, sale or other disposition
is (i) registered under the Securities Act and applicable state securities
laws, (ii) pursuant to Rule 144 of the Securities Act of 1933, or (iii) in
compliance with an opinion of counsel to such Purchaser delivered to the
Company and reasonably acceptable to the Company and its counsel to the effect
that such offer, sale or other disposition thereof does not violate the
Securities Act or applicable state securities laws, and (b) the certificate(s)
representing the Series B Preferred (and any Common Stock into which the Series
B Preferred maybe converted) shall bear legends in substantially the following
form:
THE TRANSFER AND VOTING OF THESE SHARES IS SUBJECT TO THE TERMS
OF A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF
SEPTEMBER 29, 1995, A PREFERRED STOCKHOLDERS' SALES AGREEMENT
DATED AS OF SEPTEMBER 29, 1995 AND A STOCKHOLDERS' AGREEMENT
DATED AS OF SEPTEMBER 29, 1995, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE OFFICES OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
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<PAGE> 21
TRANSFERRED, UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND SUCH APPLICABLE STATE LAW OR, IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, DOES NOT VIOLATE THE PROVISIONS
THEREOF OR UNLESS SOLD PURSUANT TO RULE 144 OF THE SECURITIES ACT
OF 1933.
Upon request of a Purchaser or other person who in accordance with the
provisions of this SECTION 7.7 becomes a holder of Series B Preferred (or the
Common Stock into which the Series B Preferred has been converted), the Company
shall remove the legend set forth in the second paragraph above from the
certificates evidencing such Series B Preferred or Common Stock or issue to
such holder new certificates evidencing such Series B Preferred or Common Stock
free of such legend, if such request is accompanied by an opinion of counsel,
reasonably satisfactory to the Company and its counsel, to the effect that such
Series B Preferred or Common Stock, as applicable, is not required by the
Securities Act or other applicable law to continue to bear the legend or a
legend similar thereto.
7.8. Transfer Instructions. Each Purchaser agrees that the Company
may provide for appropriate transfer instructions to implement the provisions
of SECTION 7.7 hereof.
7.9. Operation of Business. For so long as any shares of Series B
Preferred remain outstanding, the Company shall comply with each of the
following covenants, and will cause each Subsidiary, if and when such
Subsidiary exists, to comply with each of the following covenants, as if they
applied to it in the same manner as they apply to the Company.
(a) Compliance with Laws, Etc. The Company shall comply with
all laws, rules, regulations, judgments, orders and decrees of any
governmental or regulatory authority, the violation of which could have
a material adverse effect on the business, assets or properties of the
Company and with all material contracts and agreements to which it is a
party or shall become a party and shall perform all material obligations
which it has or shall incur.
(b) Preservation of Corporate Existence and Property. The
Company shall preserve, protect and maintain: (i) its corporate
existence and good standing in its jurisdiction of incorporation, (ii)
its rights, franchises and privileges, and (iii) all of its properties
necessary or useful in the proper conduct of its business in good
working order and condition, with the exception of (x) ordinary wear and
tear, and (y) casualty losses covered by insurance, allowing for
reasonable deductibles. The Company will not enter into a new field of
business without the approval of the directors elected to the Company's
Board of Directors by the Series B Preferred, if any.
(c) Insurance. The Company shall maintain or cause to be
maintained, with financially sound and reputable insurers, insurance
with respect to the properties and business of the Company, against loss
or damage of the kinds customarily insured against
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by corporations of established reputation and similar size engaged in
the same or similar business, in adequate amounts.
(d) Payment of Indebtedness. The Company shall pay or cause to
be paid the principal of, and the interest and premium, if any, on all
indebtedness heretofore or hereafter incurred or assumed by the Company
when and as the same shall become due and payable, unless such
indebtedness shall be renewed or extended, in which case such payments
shall be made in accordance with the terms of such renewal or extension.
(e) Transactions with Affiliates. Without the consent of the
directors elected by the holders of Series B Preferred, the Company will
not enter into any agreements or transactions with any Affiliate of the
Company any member of their families, or any corporation or other entity
in which any one or more of such persons holds, directly or indirectly,
five percent (5%) or more of any class of capital stock, on terms less
favorable to the Company than could be obtained by the Company in an
arm's-length transaction with a person who was not an affiliate of the
Company.
(f) Further Assurance. The Company shall cooperate with the
Purchasers and shall execute and deliver all such further instruments
and documents and do all such further acts and things as the Company may
be reasonably requested to do from time to time by any of the Purchasers
in order to satisfy the conditions and carry out the provisions and
purposes of this Agreement, the Registration Rights Agreement and the
Stockholders Agreement.
(g) Section 305. The Company shall not enter into any
transaction which would result in a dividend on a Purchaser's shares
under Section 305 of the Code (or any successor provision) other than
dividends accruing pursuant to the Certificate of Incorporation, as
amended from time to time.
(h) U.S. Real Property Holding Corporation. The Company will
not be a "United States real property holding corporation", as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service and upon written
request, will provide to any holder of Preferred Stock a statement to
the effect informing such holder whether its interest in the Company
constitutes a U.S. real property interest.
7.10. Reservation of Common Stock. For so long as any shares of Series
B Preferred remain outstanding, the Company shall increase the authorized
amount and maintain in reserve that number of shares of Common Stock necessary
to accommodate the conversation into Common Stock of all issued and outstanding
shares of Series B Preferred.
7.11. Public Announcements. The Company shall not make any public
announcement or disclosure relating to any Purchaser's participation in the
transactions contemplated by this Agreement or the relationship established
hereby with any Purchaser unless such announcement or disclosure is (i) in the
judgment of the Company after consultation with its legal counsel,
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<PAGE> 23
required by applicable law or regulation or (ii) approved by the Purchaser,
which approval shall not be unreasonably withheld.
7.12. Maintenance of Key Person Life Insurance. Within sixty (60) days
after the Closing, to the extent obtainable on reasonable economic terms, the
Company will obtain and thereafter maintain, with a financially sound and
reputable insurance company or association, term life insurance on the life of
Dr. Daniel Von Hoff and the life of Richard Love, in the amount of at least
$1,000,000, which proceeds shall be payable to the order of the Company. The
Company will not cause or permit any assignment of the proceeds of said policy,
and will not borrow against such policy. The Company will add the Purchasers
as notice parties to such policy, and will request that the insurer of such
policy provide each Purchaser with twenty (20) days' notice before such policy
is terminated (for failure to pay premiums or otherwise) or assigned, or before
any change is made in the designation of the beneficiary thereof.
7.13. New Developments. Subject to the other contractual obligations
of such consultants, the Company will cause all technological developments,
patentable or unpatentable inventions, discoveries or improvements by its
officers, employees or consultants to be documented in accordance with
appropriate professional standards, cause all officers, employees and
consultants to execute appropriate patent and copyright assignment agreements
to the Company, as the case may be, and, where possible and appropriate, cause
all officers, employees and consultants to file and execute United States and
foreign patent or copyright applications relating to and protecting such
developments on behalf of the Company. The Company will cause each officer,
key employee and key consultant now or hereafter employed to execute and
deliver an Employee Provisions Agreement in the form and substance of Exhibit
3.12 attached hereto, or as otherwise approved by the Board of Directors of the
Company.
7.14. Indemnification. The Company shall at all times maintain
provisions in its Certificate of Incorporation or By-laws indemnifying all
directors against liability and providing for the advancement of expenses to
the maximum extent permitted under the laws of the jurisdiction of its
incorporation.
7.15. Rule 144A Information. The Company covenants and agrees that, at
all times during which the Company is neither subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it will provide in
written form (as promptly as practicable and in any event within fifteen (15)
business days), upon the written request of any holder of Series B Preferred or
a prospective buyer of such shares or the Conversion Shares, all information
required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the
Commission under the Securities Act ("Rule 144A Information"). The Company
further covenants, upon written request, to cooperate with and assist any
holder of Series B Preferred or any member of the National Association of
Securities Dealers, Inc. system for Private Offerings Resales and Trading
through Automated Linkage ("PORTAL") in applying to designate and thereafter
maintain the eligibility of such shares or the Conversion Shares for trading
through PORTAL. The Company's obligations under this SECTION 7.15 shall at all
times be contingent upon the relevant holder of Series B Preferred obtaining
from a prospective purchaser an agreement to take all reasonable
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<PAGE> 24
precautions to safeguard the Rule 144A Information from disclosure to anyone
other than a Person who will assist such purchaser in evaluating the purchase
of such securities.
7.16. Compliance with Material Agreements. The Company shall provide
notice to the Company's Board of Directors of any material breach by the
Company of any Material Agreement.
7.17. Meetings of Directors: Expenses of Directors. The Company shall
hold meetings of the Company's Board of Directors (any of which may be
conducted as telephonic meetings in accordance with the Delaware General
Corporation Law) not less frequently than six (6) times during each calendar
year. The Company shall promptly reimburse each director of the Company for
all reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any committee thereof.
7.18. Notice to Board of Directors. The Company shall provide notice
within a reasonable period of time to each of its directors of (i) any material
adverse change in the Company's business, assets, properties, management,
operation or financial condition, (ii) all actions, writs and proceedings
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign affecting the Company or its assets of
which the Company has knowledge, which if resolved adversely, could result in a
material adverse effect on the Company's business.
7.19. Nomination of Directors. The Company shall cause the nomination
as directors of any individuals designated by the Venture Capital Stockholders
(as that term is defined in the Stockholders' Agreement) as directors pursuant
to the Stockholders' Agreement and shall not solicit proxies for any other
nominees for election as directors elected by the Holders of the Series B
Preferred.
7.20. Founders' Sales Agreement. Except as otherwise prohibited by
law, the Company agrees that it shall not permit any transfer of shares of
capital stock in violation of the Founders' Sales Agreement.
7.21. Preferred Stockholders' Sales Agreement. Except as otherwise
prohibited by law, the Company agrees that it shall not permit any transfer of
shares of capital stock in violation of the Preferred Stockholders' Sales
Agreement.
7.22. Certain Actions. As soon as reasonably practicable after the
Closing, the Company will use its best efforts to ensure that (i) one of the
Designees (as that term is defined in the Stockholders' Agreement) is appointed
to the Audit Committee of the Company's Board of Directors (the "Board"), (ii)
one of the Designees is appointed to the Relationships Committee of the Board,
(iii) John Cassis and A. Dana Callow, Jr. are appointed to the Compensation
Committee of the Board, (iv) on or before February 29, 1996 the number of
directors on the Board is reduced to ten (10), (v) effective as of June 30,
1996 the number of directors on the Board is reduced to nine (9), and (vi) the
Company cooperates with the Board and the Designees to select by September 15,
1996 an individual with experience in the Company's business to serve as a
director of the Company.
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<PAGE> 25
8. Additional Covenants of the Company.
8.1. Conduct of Business in the Ordinary Course. From the date of
this Agreement until the Closing, except with the prior approval of each
Purchaser, the Company will operate the business of the Company in the ordinary
course.
8.2. Reasonable Efforts. From the date of this Agreement until the
Closing, the Company shall use all reasonable efforts to obtain all necessary
consents and take all actions necessary for the consummation of the
transactions contemplated hereby.
8.3. Stock Option Plans. From the date of this Agreement until the
first date on which shares of Series B Preferred cease to be outstanding, the
Company shall be permitted to increase from time to time the number of shares
issuable to employees, advisors, officers, directors and consultants of, and
other persons performing services for, the Company in connection with their
advisory or other relationship with the Company only pursuant to plans approved
by Company's Board of Directors, provided that without the written consent of
Purchasers representing at least 50% of the Series B Preferred, the Company
shall not permit the total number of shares issuable pursuant to such plans to
exceed 15% of the number of shares of Common Stock and Common Stock Equivalents
that are outstanding at the time of a grant, subject in any event to the
provisions of the Certificate of Incorporation. For purposes to this SECTION
8.3, "Common Stock Equivalent" shall mean (i) Common Stock issuable upon
conversion of the Series A Preferred, the Series B Preferred, and any other
convertible security that may be outstanding from time to time, and (ii) Common
Stock issuable upon exercise of warrants to acquire Common Stock to be issued
to Vector Securities International, Inc. upon the consummation of the
transactions contemplated hereby.
9. Termination of Agreement and Survival of Representations,
Warranties and Covenants.
(a) Termination. This Agreement may be terminated prior to
Closing by the Company with respect to some or all of the Purchasers and
by a Purchaser with respect to itself upon written notice to the other
parties:
(i) At any time by mutual written agreement of all
the parties hereto;
(ii) At any time after September 30, 1995, by any
party if the Closing shall not have occurred on or prior
to such date;
(iii) By the Company if any representation or
warranty of a Purchaser contained in this Agreement or in
any certificate or other document executed and delivered
by a Purchaser to the Company pursuant to this Agreement
is or becomes untrue or breached in any material respect
or if a Purchaser fails to comply in any material respect
with any covenant or agreement contained
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<PAGE> 26
herein, and any such misrepresentation, breach or
noncompliance is not cured, waived, or eliminated before
Closing;
(iv) By a Purchaser if any representation or
warranty of the Company contained in this Agreement or in
any certificate or other document executed and delivered
by the Company pursuant to this Agreement is or becomes
untrue or breached in any material respect or if the
Company fails to comply in any material respect with any
covenant or agreement contained herein, and any such
misrepresentation, breach or noncompliance is not cured,
waived, or eliminated before Closing;
(v) On the Closing Date by a Purchaser if the
conditions set forth in SECTION 5 have not been satisfied;
or
(vi) On the Closing Date by the Company if the
conditions stated in SECTION 6 have not been satisfied.
In the event this Agreement is terminated pursuant to
subparagraph (iii) or (iv) above, the Purchasers and the Company shall
be entitled to pursue, exercise and enforce any and all remedies,
rights, powers and privileges available at law or in equity and under
this Agreement.
(b) Survival of Representations, Warranties and Covenants.
Except as otherwise provided in this Agreement, all covenants made
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and shall continue in full
force and effect thereafter. Any representation or warranty the breach
or inaccuracy of which involves fraud on the part of the Company or a
Purchaser shall survive the Closing and shall continue in full force and
effect thereafter. All other representations and warranties, as
certified to by the Company pursuant to the certificate required to be
delivered under SECTION 5.4 and by the Purchasers pursuant to SECTION
6.1 of this Agreement, made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the
Closing until the expiration of the applicable statute of limitations
and notice of any claim based on a breach of any such representation or
warranty must be given prior to the expiration of such statute of
limitations.
10. Indemnification. The Company shall indemnify and hold
harmless each Purchaser against and from any losses, claims, damages or
liabilities, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (A) the falsity or
incorrectness as of the Closing Date of any representation or warranty of the
Company contained in or made pursuant to SECTION 3 hereof, or (B) the existence
of any condition, event or fact constituting, or which with notice or passage
of time, or both, would constitute a default in the observance of any of the
Company's undertakings or covenants hereunder or under any of the documents
executed in connection herewith. The Company shall also pay all reasonable
attorney's fees and costs and court costs incurred by the Purchasers in
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enforcing the indemnification provided for in this SECTION 10 (provided,
however, that where more than one Purchaser is requesting the indemnification
provided for in this SECTION 10, the Company shall only be obligated to
attorney's fees of one counsel to represent all such Purchasers).
11. Notices. All notices, requests, consents and other
communications provided for herein (except as stated in the last sentence of
this SECTION 11) shall be in writing, and shall be mailed by certified mail,
postage prepaid, delivered by Federal Express or similar overnight courier, or
personally delivered, as follows:
(a) If to the Company:
Ilex Oncology, Inc.
14785 Omicron Drive
San Antonio, Texas 78245
Attention: Richard L. Love
with a copy to:
Gardner, Carton & Douglas
321 North Clark Street
Suite 3200
Chicago, Illinois 60610
Attention: Edgar F. Heizer, III
(b) If to the Purchasers to the persons and addresses set
forth on Exhibit A
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. For purposes of computing the time
periods set forth in SECTION 7, the date of mailing shall be deemed to be the
delivery date. The financial statements and other reports required by SECTION
7 may be mailed by first-class regular mail.
12. Modifications: Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated (i) prior to
the Closing Date unless effected by a writing executed and delivered by the
parties hereto and (ii) after the Closing Date unless effected by a writing
executed and delivered by the Company and by holders representing not less than
66-2/3% of the aggregate number of issued and outstanding shares of Series B
Preferred and shares of Common Stock issued upon the conversion of Series B
Preferred, provided that this SECTION 12 may not be modified or amended without
the written consent of all the holders of Series B Preferred and the Company,
and provided further that in any event, no amendment or change may be made to
the terms hereof that imposes additional obligations or restrictions upon a
party without its written consent.
13. Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, including the Registration Rights Agreement, contain the
entire agreements between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations,
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<PAGE> 28
agreements, representations, warranties, commitments, whether in writing or
oral, prior to the date hereof, including but not limited to the Convertible
Preferred Stock Purchase Agreement dated as of August 1 6, 1995 between Upjohn
and the Company (the "Prior Agreement").
14. Application to Successor Holders. The rights of each
Purchaser set forth in SECTIONS 7.1, 7.3 AND 7.6 shall inure to the benefit of
any person who becomes a holder of Series B Preferred sold pursuant to this
Agreement (or of Common Stock issued upon conversion of such Series B
Preferred) in a transfer made in accordance with the provisions of SECTION 7.7
(a "Permitted Holder") hereof as though such holder were a Purchaser, and the
obligations of each Purchaser set forth in SECTION 7.5 shall be binding on any
person who after the date hereof becomes a holder of shares of Series B
Preferred sold pursuant to this Agreement as though such holder were a
Purchaser.
15. Execution and Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts together shall
constitute one instrument.
16. Governing Law and Severability. This Agreement shall be
governed by the laws of the State of Texas as applied to agreements entered
into and to be performed entirely within the State of Texas. In the event any
provision of this Agreement or the application of such provision to any party
shall be held by a court of competent jurisdiction to be contrary to law, the
remaining provisions of this Agreement shall remain in full force and effect.
17. Headings. The descriptive headings of the Sections hereof
and the Schedules and Exhibits hereto are inserted for convenience only, and do
not constitute a part of this Agreement.
18. Waivers and Consents. Any waiver or consent hereunder
shall be effective only in the specific instance and for the purpose for which
it was given, and shall not constitute a continuing waiver or consent.
Notwithstanding this Agreement, any term or condition hereof, or the
consummation of the transactions contemplated hereby, no Purchaser waives or
relinquishes any right it may have or may acquire against the Company or any of
its Affiliates or agents in connection with this acquisition of Series B
Preferred by such Purchaser, or the ownership thereof. All such rights shall
remain unimpaired by the execution of this Agreement and the consummation of
the transactions contemplated hereby.
19. Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
20. No Waiver Of Rights, Powers and Remedies. Except as
expressly provided in this Agreement, no failure or delay by a party hereto in
exercising any right, power or remedy under this Agreement, and no course of
dealing between the parties hereto, shall
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<PAGE> 29
operate as a waiver of any such right, power or remedy of the party. No single
or partial exercise of any right, power or remedy under this Agreement by a
party hereto, nor any abandonment or discontinuance of steps to enforce any
such right, power or remedy, shall preclude such party from any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. The election of any remedy by a party hereto shall not constitute a
waiver of the right of such party to pursue other available remedies. No
notice to or demand on a party not expressly required under this Agreement
shall entitle the party receiving such notice or demand to any other or further
notice or demand in similar or other circumstances or constitute a waiver of
the rights of the party giving such notice or demand to any other or further
action in any circumstances without such notice or demand.
21. Reliance. The parties hereto agree that, notwithstanding
any access to information by any party or any right of a party to this
Agreement to investigate the affairs of any other party to this Agreement, the
party having such access and right to investigate shall have the right to rely
fully upon the representations and warranties of the other party expressly
contained in this Agreement and on the accuracy of any Schedule, Exhibit or
other document attached hereto or referred to herein or delivered by such other
party or pursuant to this Agreement. Each of the Purchasers acknowledges that,
based on information provided by the Company, it has made its own analysis and
decisions regarding the transactions contemplated hereby and that it is not
relying on any of the other Purchasers in executing this Agreement or
consummating the transactions contemplated hereby.
22. Costs, Expenses and Taxes. As a condition precedent to
the Closing, the Company agrees to pay at the Closing, the reasonable legal
fees, and other expenses of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., special counsel for Cross Atlantic Partners K/S, Advent International
Corporation and Boston Capital Ventures, not to exceed $30,000 (unless any
increase thereto is agreed to in writing by the Company). In addition, the
Company shall pay any and all stamp, or other similar taxes payable or
determined to be payable in connection with the execution and delivery of this
Agreement, the issuance of the Series B Preferred and the other instruments and
documents to be delivered hereunder or thereunder, and agrees to save the
Purchasers harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes. Other than
as set forth above, each of the parties hereto shall bear such party's own
costs and expenses in connection with this Agreement and the transactions
contemplated hereby.
23. Definitions. The following terms shall have the
respective meanings set forth below whenever used in this Agreement:
"Affiliate" has the meaning ascribed to that term in Rule 12b-2 under
the Exchange Act, or any successor rule and in any event with respect to
the Company, shall mean any Director, officer or stockholder thereof.
"Knowledge" or "known" shall mean or refer to the actual knowledge of
the Company, its officers, directors and key employees after reasonable
diligence.
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<PAGE> 30
"Subsidiary" or "Subsidiaries" shall mean any corporation, partnership,
trust or other entity of which the Company and/or any of its other
Subsidiaries directly or indirectly owns at the time a majority of the
outstanding shares of any class of equity security of such corporation,
partnership, trust or other entity.
24. Rescission and Termination of Prior Agreement. In
connection, and as a condition to the consummation of the transactions
contemplated hereby, upon execution of this Agreement by the Company and each
of the Purchasers, the Company and Upjohn hereby terminate and rescind the
Prior Agreement, and agree that the Prior Agreement shall be null and void.
[This space intentionally left blank.]
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EXHIBIT 10.52
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This Convertible Preferred Stock Purchase Agreement (the "Agreement")
dated as of December 11, 1996 is entered into by and between ILEX Oncology,
Inc., a Delaware corporation (the "Company"), and MPI Enterprises, L.L.C. (the
"Purchaser"), whose mailing address and principal office is set forth on
Exhibit A.
W I T N E S S E T H:
WHEREAS, the Company desires to sell 833,333 shares of Series E
Convertible Preferred Stock, $.01 par value per share, having the rights,
preferences, privileges and restrictions described herein and in the Exhibits
and Schedules hereto (the "Series E Preferred"); the purchase price for such
shares of Series E Preferred shall be $6.00 per share.
WHEREAS, the Purchaser desires to enter into this Agreement pursuant to
which the Purchaser will purchase shares of Series E Preferred on the terms set
forth herein and in the amount and for the aggregate consideration set forth in
Exhibit A.
NOW, THEREFORE, the Company and the Purchaser agree as follows:
1. Purchase and Sale. Subject to the provisions of this Agreement
(including the last sentence of this SECTION 1) and on the basis of the
representations and warranties contained herein, on the Closing Date (as
hereinafter defined), the Company will sell to the Purchaser and the Purchaser
will purchase from the Company that number of shares of the Series E Preferred
set forth adjacent to the Purchaser's name on Exhibit A. The purchase price to
be paid by the Purchaser for such shares of Series E Preferred shall be equal
to the product of $6.00 per share times the number of shares of Series E
Preferred purchased at the Closing by the Purchaser (the "Purchase Price").
2. Closing of Purchase and Sale.
2.1 Closing; Closing Date. The purchase and sale of the Series E
Preferred (the "Closing") shall occur at the offices of Fulbright & Jaworski
L.L.P., 300 Convent Street, Suite 2200, San Antonio, Texas 78205, and shall
occur at 9:00 a.m. local time on December 11, 1996 or such other time and date
as may be agreed upon by the Company and the Purchaser (the "Closing Date").
2.2 Transactions at Closing. The Closing of the purchase and sale of
shares of Series E Preferred to be made to the Purchaser shall be effected on
the Closing Date. On the Closing Date (a) the Company and the Purchaser shall
execute and deliver each agreement included as an exhibit hereto to which they
are a party, (b) the Company shall deliver to the Purchaser a stock certificate
for the Series E Preferred to be issued and sold to the Purchaser, duly
registered in the Purchaser's name, and (c) the Purchaser shall deposit by wire
transfer of immediately available funds or bank certified or cashier's check
the aggregate Purchase Price called for in SECTION 1 of this Agreement into one
or more bank accounts of the Company as shall be designated by the Company
prior to the Closing.
<PAGE> 2
3. Representations and Warranties of Company. The Company
represents and warrants to the Purchaser as follows:
3.1 Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full power and authority to own, lease
and operate its properties and assets and to conduct its business as presently
conducted and as proposed to be conducted, and to enter into this Agreement and
the Registration Rights Agreement (as defined in SECTION 5.7) and to carry out
the transactions contemplated by such agreements. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
the State of Texas and in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the business, assets,
operations or financial condition of the Company.
3.2 Capitalization. The authorized capital stock of the Company
consists of (a) 20,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock"), of which (i) 5,239,900 shares have been designated as
Series A Convertible Preferred Stock, $.01 par value per share (the "Series A
Preferred"), all of which are issued and outstanding, (ii) 5,432,500 shares
have been designated as Series B Convertible Preferred Stock, $.01 par value
per share (the "Series B Preferred"), all of which are issued and outstanding,
(iii) 2,293,578 shares have been designated as Series C Convertible Preferred
Stock, $.01 par value per shared (the "Series C Preferred"), all of which are
issued and outstanding, (iv) 199,601 shares have been designated as Series D
Convertible Preferred Stock, $.01 par value per share (the "Series D
Preferred"), all of which are issued and outstanding, (v) 833,333 shares have
been designated the Series E Preferred, to be issued pursuant to the terms of
this Agreement and (b) 40,000,000 shares of Common Stock, $.01 par value per
share ("Common Stock") of which (i) 2,080,100 shares are issued and
outstanding, (ii) 5,239,900 shares are reserved for issuance on conversion of
the Series A Preferred, (iii) 5,432,500 shares are reserved for issuance on
conversion of the Series B Preferred, (iv) 2,293,578 shares are reserved for
issuance on conversion of the Series C Preferred, (v) 199,601 shares are
reserved for issuance on conversion of the Series D Preferred, (vi) 833,333
shares are reserved for issuance on conversion of the Series E Preferred, (vii)
2,300,000 shares are reserved for issuance on exercise of options issued or to
be issued to employees, advisors, officers, directors and consultants of, and
other persons performing services for, the Company pursuant to stock option
plans approved by the Board of Directors of the Company, (viii) 170,000 shares
are reserved for issuance on exercise of outstanding warrants issued to Vector
Securities International, Inc., (ix) 50,000 shares are reserved for issuance on
exercise of warrants to be issued to Chestnut Partners, Inc. and (x) 573,395
shares are reserved for issuance on exercise of warrants issued to the holders
of the Series C Preferred (the "Investor Warrants") (the reserved shares
referred to in (ii) through (x) are collectively referred to as the "Reserved
Shares"). The record owners of the Company's issued and outstanding Common
Stock and the holders of all options and warrants to purchase Common Stock are
set forth on Schedule 3.2 hereto. The issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid and non-assessable. Holders of shares of the Company's capital
stock have no preemptive rights and, except as set forth in SECTION 7.6 of this
Agreement, SECTION 7.6 of the Series B Convertible Preferred Stock Purchase
Agreement dated September 29, 1995 (the "Series B Purchase Agreement"), among
the Company and the persons identified on Exhibit A thereto, SECTION 7.6 of the
Series C Convertible Preferred Stock Purchase Agreement dated July 22, 1996
(the "Series C Purchase Agreement"), among the Company and the persons
identified on Exhibit A thereto, and SECTION 7.6 of the Series D Convertible
Preferred Stock Purchase Agreement dated November 11, 1996 (the "Series D
Purchase Agreement"), among the Company
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<PAGE> 3
and Johnson & Johnson Development Corporation, no holder of shares of the
Company's capital stock has any right of first refusal to purchase securities
sold by the Company. Except for the shares of Common Stock to be issued upon
the conversion of the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred and the transactions contemplated by this
Agreement (including the exhibits hereto) and except for the Reserved Shares,
there are no outstanding warrants, options, convertible securities or rights
(contingent or otherwise) to subscribe for or purchase any capital stock or
other securities from the Company. The Company is not required to register any
of its equity securities under Section 12(a) or 12(g) of the Securities
Exchange Act of 1934. The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each class and
series of authorized capital stock of the Company are as set forth in the
Certificate of Incorporation (as defined in SECTION 3.3), and of the Series E
Preferred will be set forth in the Certificate of Incorporation prior to the
Closing, and, all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
and in accordance with all applicable laws. Except as contemplated by this
Agreement, SECTION 7.6 of the Series B Purchase Agreement, SECTION 7.6 of the
Series C Purchase Agreement, SECTION 7.6 of the Series D Purchase Agreement,
the Third Amended and Restated Preferred Stockholders' Sales Agreement among
the Company, CTRC Research Foundation, and the holders of the Series B
Preferred, the holders of the Series C Preferred, the holders of the Series D
Preferred and the holders of the Series E Preferred executed herewith, (as
amended the "Preferred Stockholders' Sales Agreement"), the Third Amended and
Restated Founders' Sales Agreement among Richard L. Love, Daniel D. Von Hoff,
Alexander L. Weis, Charles A. Coltman, Jr., the holders of the Series B
Preferred, the holders of the Series C Preferred, the holdes of the Series D
Preferred and the holders of the Series E Preferred executed herewith (as
amended, the "Founders' Sales Agreement"), or set forth in Schedule 3.2, (x)
there are no restrictions on the transfer of shares of capital stock of the
Company other than those imposed by relevant state and federal securities laws,
(y) there are no agreements, understandings, proxies, trusts or other
collaborative arrangements concerning the voting, pledge or purchase and sale
of the capital stock of the Company to which the Company is a party or, to the
Company's knowledge, to which any other Person is a party and (z) no holder of
any security of the Company is entitled to preemptive, first refusal or similar
statutory or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party, or which are otherwise binding upon
the Company, or, to the Company's knowledge, to which any other Person is a
party. Except as provided for in the Certificate of Incorporation, the Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its equity securities or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Other than
pursuant to the terms of the Registration Rights Agreement (as defined in
SECTION 5.7), no Person has demand or other rights to cause the Company to file
any registration statement under the Securities Act of 1933, as amended,
relating to any securities of the Company or any right to participate in any
such registration.
3.3 Validity of Stock. Prior to the Closing, the Certificate of
Designation, Preferences and Rights of Series E Convertible Preferred Stock in
the form attached hereto as Exhibit 3.3(A) will have been duly filed with the
Delaware Secretary of State. On the Closing Date, the Series E Preferred will
be duly authorized and, when issued and sold in accordance with the terms of
this Agreement, will be duly and validly issued, and fully paid and non-
assessable and will be free and clear of all liens, charges, encumbrances or
restrictions imposed by or through the Company except as set forth in this
Agreement, the Registration Rights Agreement or applicable securities laws. On
the Closing Date, the Common Stock issuable upon conversion of the Series E
Preferred will be duly authorized and reserved for issuance
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by all necessary action and when issued and sold upon such conversion in
accordance with the terms of this Agreement and the Company's Certificate of
Incorporation, as amended (including the Certificate of Designation,
Preferences and Rights of Series E Convertible Preferred Stock), in the form of
Exhibit 3.3(B) (the "Certificate of Incorporation") will be duly and validly
issued, fully paid and non-assessable.
3.4 Subsidiaries. The Company has no subsidiaries and does not own
or control, directly or indirectly, any other corporation, partnership,
association, joint venture or entity.
3.5 Financial Statements. The Company has furnished the Purchaser
with the Company's (a) consolidated audited balance sheet (the "Audited Balance
Sheet") as of December 31, 1995 (the "Audited Balance Sheet Date") and
consolidated audited statements of operations for the year ended December 31,
1995 ("Audited Income Statement") and (b) consolidated unaudited balance sheet
(the "Unaudited Balance Sheet") as of September 30, 1996 (the "Unaudited
Balance Sheet Date") and consolidated unaudited statements of operations for
the six months ended September 30, 1996 ("Unaudited Income Statement") (each of
which in (a) and (b) above are collectively referred to as the "Financial
Statements" and are attached hereto as Schedule 3.5). The Financial Statements
are true and correct in all material respects, are in accordance with the books
and records of the Company, have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and fairly and
accurately present in all material respects the financial position of the
Company as of such dates and the results of its operations for the periods then
ended, provided that the Unaudited Financial Statements may not contain all
footnotes required by GAAP and the Unaudited Balance Sheet and the Unaudited
Income Statement are subject to normal year-end audit adjustments, none of
which will be material. Since the Unaudited Balance Sheet Date, the Company
has not incurred or otherwise become subject to any liabilities, debts or
obligations other than in the ordinary course of business consistent with past
practice, except for those listed on Schedule 3.5 attached hereto and those
that would not individually or in the aggregate have a material adverse effect
on the financial condition of the Company.
3.6 Insurance. Schedule 3.6 contains a list of all insurance
policies (specifying (a) the insurer, (b) the amount of coverage and (c) the
type of insurance) maintained by or on behalf of the Company on the properties,
assets, business or personnel of the Company, all of which are (and pending
Closing will continue to be) in full force and effect.
3.7 Authorization; Approvals. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, to perform its obligations hereunder and
thereunder and to engage in the transactions contemplated hereby and thereby.
The execution, delivery and performance by the Company of this Agreement and
the Registration Rights Agreement, have been duly authorized by all necessary
corporate action, and this Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly executed and delivered by
the Company. This Agreement constitutes, and at the Closing the Registration
Rights Agreement will constitute, the legal, valid and binding obligation of
the Company legally enforceable against the Company in accordance with their
respective terms. The Company has obtained all material consents,
authorizations and approvals of, and has made or will make all material
declarations and filings with, all federal and state governmental authorities
required on the part of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except to the extent any failure
by the Company to comply with the foregoing is due to misrepresentations or
nondisclosure of the Purchaser.
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<PAGE> 5
3.8 No Conflict with Other Instruments and Laws. Except as set forth
on Schedule 3.8 or any other Schedules hereto, the execution of and performance
by the Company of its obligations under this Agreement and the Registration
Rights Agreement will not violate any provision of law or governmental rule or
regulation and will not conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default (with notice, lapse
of time or both) under (a) the Certificate of Incorporation, (b) the Company's
by-laws as currently in effect which are attached hereto as Exhibit 3.8 (the
"By-laws"), (c) any statute, law, rule, regulation, judgment, decree or order
to which the Company is bound or applicable to the Company or its assets or (d)
any agreement, contract, lease, indenture or other instrument to which the
Company is a party.
3.9 Absence of Undisclosed Liabilities; Changes. Except as otherwise
described in Schedule 3.9 or any other Schedule hereto, the Company does not
have any liability or obligation (whether accrued, contingent or otherwise),
which individually or in the aggregate exceeds $100,000 (including, without
limiting the generality of the foregoing, any tax liabilities due or to become
due to the extent they relate to the conduct of the business of the Company
through the date hereof) not reflected in the Financial Statements, except (a)
obligations and liabilities incurred after the Unaudited Balance Sheet Date in
the ordinary course of business consistent with past practice; (b) obligations
under contracts made in the ordinary course of business consistent with past
practice that would not be required to be reflected or disclosed in financial
statements prepared in accordance with GAAP; and (c) obligations under or
contemplated by this Agreement. The Company has not become directly or
contingently liable on any indebtedness, liability or obligations of any other
Person.
Since the Unaudited Balance Sheet Date there has been no occurrence or
development that has had or is reasonably likely to have a material adverse
effect on the Company's business, assets, operations or financial condition or
prospects, and there has been no material adverse change in the business,
assets, operations or financial condition or prospects of the Company.
3.10 Labor Agreement and Actions. The Company is not bound by or
subject to any contract with any labor union and, to the knowledge of the
Company, no labor union has requested or has sought to organize or represent
any of the employees of the Company. There is no strike or other labor dispute
involving the Company pending, or to the knowledge of the Company threatened,
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company, nor is the
Company aware of any labor organization activity involving its employees.
3.11 Compliance with Law and Other Instruments. The Company has
complied with and is not in violation of (with due notice or lapse of time or
both) any agreement, instrument, statute or governmental rule or regulation
(including, without limitation, its Certificate of Incorporation and By-laws)
or any governmental order, judgment, decree, writ, injunction or award of any
arbitration, court or governmental authority applicable to it or its business,
operations, assets or services, applicable to it or its assets that has or
could reasonably be expected to have a material adverse effect on the business,
assets, operations or financial condition of the Company. To the knowledge of
the Company, no employee of the Company is in violation of any term of any
employment contract or any other contract or agreement relating to the
employment of such employee with the Company, as applicable, the violation of
which could reasonably be expected to have a material adverse effect on the
business, assets, operations or financial condition of the Company. Except for
governmental licenses, permits,
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<PAGE> 6
approvals and consents, the failure to obtain any of which alone or in the
aggregate could not reasonably be expected to have a material adverse effect on
the business, assets, operations or financial condition of the Company,
Schedule 3.11 hereto lists all governmental licenses, permits, franchises,
approvals and consents required to be received or obtained by the Company to
conduct its business as presently conducted, all of which the Company currently
possesses.
3.12 Proprietary Rights. Schedule 3.12 contains a list of all
patents, trademarks, trade names and service marks (and all applications
therefor), whether or not registered ("Proprietary Rights"), used by the
Company in the conduct of its business. The Company owns or has the right to
use without the payment of royalties or fees or other consideration (except as
disclosed on Schedule 3.12 or any other Schedules hereto), all Proprietary
Rights (as defined below) and Intellectual Property Rights necessary for or
used by it in the conduct of its business as now conducted, and with respect to
Mitoguazone, Crisnatol Mesylate, Dihydro-5-Azacytide, piritrexim, oxypurinol
and difluoromethylornithine as proposed to be conducted. Except as set forth
on Schedule 3.12 or any other Schedules hereto, none of the Proprietary Rights
or Intellectual Property Rights has been declared invalid, been limited by
order of any court or by agreement, or is the subject of any infringement,
interference or similar proceeding or challenge. The Company has not
infringed, and is not infringing, on the Proprietary Rights or Intellectual
Property Rights of others which could have a material adverse effect on the
business, assets, operations or financial condition of the Company. The
conduct of the Company's business as proposed to be operated is not expected to
conflict with or infringe upon the Proprietary Rights and Intellectual Property
Rights of others. Except as set forth on Schedule 3.12 or any other Schedules
hereto, the Company has no obligation to compensate any Person for the use of
any such Proprietary Rights or other Intellectual Property Rights and the
Company has not granted to or assigned to any Person any license or other right
to use any of the Proprietary Rights or other Intellectual Property Rights of
the Company. The consummation of the transactions contemplated by this
Agreement will not terminate or alter the ability of the Company to utilize the
Proprietary Rights or the terms of such use. Listed on Schedule 3.12 are all
corporate, trade and fictitious names under which the Company or its business
is operated. The Company has taken all reasonable measures to protect and
preserve the security, confidentiality and value of its Proprietary Rights or
other Intellectual Property Rights. All key employees and consultants of the
Company have executed Employment Provision Agreements in the form attached
hereto as Exhibit 3.12(a) and all members of the Company's Scientific Advisory
Board who have not entered into Consulting Agreements with the Company have
executed Non-Disclosure Confidentiality Agreements in the form attached hereto
as Exhibit 3.12(b). To the Company's knowledge, all trade secrets and other
confidential information of the Company are presently protectable and are not
part of the public domain or knowledge, nor, to the Company's knowledge, have
they been used, divulged or appropriated for the benefit of any Person other
than the Company or otherwise to the detriment of the Company. The Company is
the exclusive owner of all rights, titles and interests in its Proprietary
Rights and other Intellectual Property Rights as purported to be exclusively
owned by the Company and insofar as such Proprietary Rights and other
Intellectual Property Rights involve patents, copyrights, licenses, permits,
license rights, contract rights, tradenames or trademarks, such Proprietary
Rights and other Intellectual Property Rights are valid and in full force and
effect. Neither the Company nor, to the Company's knowledge, any of its
officers, employees or consultants, has received notice of, and to the
Company's knowledge there are no claims pending or threatened that the
Proprietary Rights or other Intellectual Property Rights owned or licensed by
the Company or the use or ownership thereof by the Company infringes, violates
or conflicts with any such right of any third party or, with respect to
Proprietary Rights or other Intellectual Property Rights which
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<PAGE> 7
involved patents, copyrights, licenses, permits, license rights, contract
rights, tradenames or trademarks, that such Proprietary Rights or other
Intellectual Property Rights are invalid or unenforceable.
"Intellectual Property Rights" shall mean, in addition to Proprietary
Rights, any and all intellectual property rights relating to trade secrets,
confidential business information, formula, biological or chemical processes,
compounds, cell lines, fungi, yeast, laboratory notebooks, algorithms,
copyrights, claims of infringement against third parties, licenses, permits,
license rights to or of technologies, contract rights with employees,
consultants or third parties, inventions and discoveries, and other such rights
generally classified as intangible, intellectual property assets in accordance
with GAAP.
To the Company's knowledge, no third party has claimed or has reason to
claim that any Person employed by or affiliated with the Company has in the
course of such Person's employment by or affiliation with the Company (a)
violated or may be violating any of the terms or conditions of his or her
employment, non-competition, non-disclosure or inventions agreement with such
third party, (b) disclosed or may be disclosing or utilized or may be utilizing
any trade secret or proprietary information or documentation of such third
party or (c) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. To the
Company's knowledge, no third party has requested information from the Company
which suggests that such a claim might be contemplated. To the Company's
knowledge, no Person employed by or affiliated with the Company has employed or
proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and to the Company's knowledge, no Person
employed by or affiliated with the Company has violated any confidential
relationship which such Person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company, and
the Company has no reason to believe there will be any such employment or
violation. To the Company's knowledge, none of the execution or delivery of
this Agreement or the Registration Rights Agreement, or the carrying on of the
business of the Company as officers, employees or agents by any officer,
director or key employee of the Company, or the conduct or proposed conduct of
the business of the Company, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such Person is obligated.
3.13 Taxes. Except where the failure to do so would not have a
material adverse effect on the Company's business, the Company has accurately
prepared and timely filed all federal income tax returns and all state and
municipal tax returns that are required to be filed by it and has paid or made
provision for the payment of all amounts due pursuant to such returns, which
are not reflected nor reserved for on the Financial Statements and of all other
taxes, assessments and other governmental charges imposed upon it or upon any
of its assets, income, other than any such charges that are currently payable
without penalty or interest, including, without limitation, all taxes which the
Company is obligated to withhold from amounts owing to employees, creditors and
third parties. There is no tax lien outstanding against the assets of the
Company, except for liens for taxes not yet due and payable. The federal
income tax returns of the Company have not been audited by the Internal Revenue
Service, and there are no waivers in effect of the applicable statute of
limitations for any period. No deficiency, assessment or proposed adjustment
of federal income taxes or state or
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<PAGE> 8
local taxes of the Company is pending, and the Company has no knowledge of any
proposed liability for any tax to be imposed.
3.14 Contracts. Except as set forth in Schedule 3.14 or any other
Schedule hereto, the Company is not a party to any contract and has no
obligation or commitment (a) involving aggregate future payments by the Company
of more than $25,000, which is not cancelable on 60 days' notice by the Company
or (b) that is otherwise material to the business of the Company (collectively,
the "Material Agreements"). Except as set forth on Schedule 3.14 or any other
Schedule hereto, the Company has no employment contracts, deferred compensation
agreements or bonus, incentive, profit-sharing, or pension plans currently in
force and effect, or any understanding with respect to any of the foregoing.
Except as set forth on Schedule 3.14 or any other Schedules hereto, no default
or defaults (without regard to notice or lapse of time or both) exist by the
Company (including without limitation the Company's predecessor in interest) in
the due performance by it, or to the knowledge of the Company by the other
party or parties thereto, of any term, covenant or condition of any contract to
which the Company is a party that individually or in the aggregate would have a
materially adverse effect on the business, assets, operations or financial
condition of the Company. All of the Material Agreements are in full force and
effect.
3.15 Litigation. Except as provided in Schedule 3.15 or any other
Schedule hereto, no action, proceeding or governmental inquiry or investigation
(a "Proceeding") before any court, arbitrator or tribunal or administrative or
other governmental agency is (a) pending, or to the knowledge of the Company,
threatened against the Company or any of its officers, directors or employees
(in their capacity as such) or affecting any of its owned or leased assets, or
(b) to the knowledge of the Company, pending or threatened against any
consultant or shareholder of the Company (in their capacity as such) or
affecting any of its other assets, nor is the Company aware of any such
threatened or contemplated action, proceeding, inquiry or investigation nor, to
the knowledge of the Company, has there occurred any event or does there exist
any condition on the basis of which it is reasonably likely that any such
Proceeding might properly be instituted. There is no Proceeding by the Company
pending or threatened against others.
3.16 Fees and Commissions. Except as described in Schedule 3.16, the
Company has not retained any finder, broker, agent, financial advisor or other
intermediary (collectively, "Intermediary") in connection with the transactions
contemplated by this Agreement. Notwithstanding any disclosure on Schedule
3.16, the Company agrees to indemnify and hold harmless the Purchaser from
liability for any compensation to any Intermediary retained by the Company and
the fees and expenses of defending against such liability or any such alleged
liability.
3.17 ERISA. Except as disclosed on Schedule 3.17, the Company does
not maintain, sponsor, or contribute (and has not during the last five years
been obligated to maintain, sponsor or contribute or maintained, sponsored or
contributed) to any program or arrangement that is an "employee pension benefit
plan," an "employee welfare benefit plan," a "multiple employer welfare
arrangement," or a "multi-employer plan," as those terms are defined in
Sections 3(1), 3(2), 3(4) or 3(37) of the Employee Retirement Income Security
Act of 1974, as amended, bonus or incentive award or compensation plan or
arrangement, severance pay policy or agreement, deferred compensation agreement
or arrangement, supplemental executive retirement program, vacation plan,
cafeteria plan, educational assistance plan, and any other employee benefit
plans, agreements, or arrangements (collectively, "Employee Programs"). The
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Company has complied with all applicable legal requirements, including, without
limitation, ERISA and the Code, with respect to all Employee Programs.
3.18 Title to Properties; Encumbrances. Except as set forth in
Schedule 3.18 or any other schedule attached hereto, the Company has good and
marketable title to all of the assets owned by it and used in its business,
including, without limitation, all the material properties and assets reflected
in the Financial Statements, subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (a) liens reflected in the
Financial Statements or on Schedule 3.18 or any other Schedules hereto, (b)
liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or impair
the use of, such property by the Company, as applicable, (c) liens for current
taxes, assessments or governmental charges or levies on property not yet due
and delinquent and (d) liens which do not materially affect the operation of
the business of the Company, as applicable (liens of the type described in
clauses (a) through (d) above, inclusive, are hereinafter sometimes referred to
as "Permitted Liens"). Except as set forth in Schedule 3.18, the assets of the
Company are in good working order and condition, ordinary wear and tear
excepted.
3.19 Environmental Compliance. Except as disclosed in Schedule 3.19
and to the best of their knowledge:
(a) The Company has not released, emitted, discharged, dumped
or disposed of any hazardous substances onto or into the assets of the
Company, or any part thereof, or onto or into the air, surface or
groundwater, land or soil in violation of Environmental Laws. For
purposes of this Agreement, "Hazardous Substances" has the meaning set
forth in Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and shall also
expressly include (i) petroleum, crude oil and any fraction thereof or
radioactive material; (ii) any other chemical, material or substance
defined as or included in the definition of "medical waste," "infectious
waste," "hazardous substance," "hazardous waste," "hazardous material,"
"toxic substance," "special waste," "contaminant" or "pollutant," or
word or term of similar import, under any applicable Environmental Law;
and (iii) any other chemical, material or substance, exposure to which
is regulated by any governmental authority having jurisdiction over the
Company or is reasonably likely to give rise to any liability of the
Company, in either case under any Environmental Law. The term
"Environmental Laws" means all applicable foreign, federal, state,
county and local statutes, regulations or ordinances (including common
law duties established by courts or any published judicial or
administrative interpretation thereof) relating to human health and the
environment or the generation, treatment, storage, recycling,
transportation, release or disposal of Hazardous Substances.
(b) No Hazardous Substances resulting from the Company's
operations have been or are currently located at, in, under or about
either the assets of the Company or any other property currently or
previously owned or operated by the Company in a manner which: (i)
violates in any material respect applicable Environmental Laws or (ii)
requires any material response, remedial, corrective action or cleanup
of any kind under any applicable Environmental Laws.
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<PAGE> 10
(c) With respect to the assets or other property owned or
leased by the Company, whether previously or currently owned or operated
or used by the Company for the treatment, storage or disposal of
Hazardous Substances, no litigation, investigation, administrative or
other proceeding of any kind is pending or threatened by any federal,
foreign, state or local governmental entity or private party arising
from: (i) any applicable Environmental Laws; (ii) any response, remedial
or cleanup activities or (iii) any release or threatened release of
Hazardous Substances. In addition, the Company is not now aware of any
facts on which such litigation, investigation, administrative or other
proceeding of any kind might reasonably be based.
(d) With respect to the assets or other property owned or
leased by the Company, whether previously or currently owned or operated
or used by the Company for the treatment, storage or disposal of
Hazardous Substances, the Company is not subject to any judgment,
injunction, writ, order or agreement arising from: (i) any applicable
Environmental Laws; (ii) any remedial, response or cleanup activities or
(iii) any liabilities, damages, costs, fees or expenses related to the
release or threatened release of Hazardous Substances. In addition, the
Company is not aware of any facts on which such a judgment, injunction,
writ, order or agreement might reasonably be based.
(e) The assets of the Company do not contain any asbestos or
PCB containing materials in material violation of any applicable
Environmental Laws.
(f) The Company has not caused or allowed, and the Company has
not contracted with any party for, the manufacture, processing,
handling, distribution, use, transportation, treatment or storage of any
Hazardous Substances, except in compliance in all material respects with
applicable Environmental Laws. The Company does not own any real
property.
(g) The Company has obtained and is maintaining in full force
and effect all Environmental Permits and is in compliance in all
material respects therewith "Environmental Permit" shall mean any
necessary permit, license, approval or other authorization or filing
required by the Environmental Laws applicable to the premises leased by
the Company and the business operations currently conducted thereon and
as currently proposed to be conducted.
(h) The Company and the operations of its business are being
conducted in compliance in all material respects with all applicable
Environmental Laws and orders or directives of any governmental
authority having jurisdiction under such Environmental Laws. To the
Company's knowledge, the premises leased by the Company are in
compliance in all material respects with all applicable Environmental
Laws and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws.
3.20 Affiliate Transactions. Schedule 3.20 describes all material
contracts, arrangements or transactions between the Company and to the
Company's knowledge, between any customer, licensor, licensee or supplier of
the Company, and any of the Company's Affiliates.
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3.21 Exemption from Registration. In sole reliance, as to factual
matters concerning the Purchaser, upon representations and warranties by the
Purchaser in SECTION 4 hereof and without independent investigation, the offer
and sale of the Series E Preferred, and the Common Stock issuable upon
conversion of the Series E Preferred, in the manner contemplated by the
Agreement are, and upon conversion will be, (a) exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, and (b)
either exempt from, or registered or qualified in compliance with, the
registration requirements of all applicable state "blue sky" securities laws.
3.22 Prior Exemptions from Registration. All offers and sales of the
Company's capital stock prior to the date hereof (a) were exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and (b) were made in compliance with all applicable federal and state
securities laws.
3.23 Disclosure. Neither this Agreement, nor any other agreement,
document or certificate furnished to any Purchaser or its counsel by the
Company or on behalf of the Company by any of its officers or counsel in
connection with the transactions contemplated hereby, including, without
limitation, the Financial Statements, when taken as a whole, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no
currently existing fact which materially and adversely affects, or which in the
future may (so far as the Company can reasonably foresee) materially and
adversely affect, the business, properties, operations or condition, financial
or otherwise, of the Company (except for industry and general economic
conditions and climate which are beyond the control of the Company), which has
not been set forth in this Agreement, including the Schedules and Exhibits
hereto. Without limiting the foregoing, the Company does not have knowledge
that there exists, or that there is pending or planned, any patent, invention,
device or application of a technology or any statute, rule, law, regulation,
standard or code which will, based solely on information currently known by the
Company, materially adversely affect the business, prospects, operations,
Proprietary Rights, Intellectual Property Rights, affairs or financial
condition of the Company.
3.24 Additional Representations.
(a) Since the Unaudited Balance Sheet Date, (i) the Company
has not entered into any material transaction, made any distribution on
its capital stock, or redeemed or repurchased any of its capital stock;
(ii) paid or cancelled any obligations or liability, other than current
liabilities paid in the ordinary course of the business consistent with
past practice; (iii) suffered any substantial losses or waived any
rights of material value, whether or not in the ordinary course of
business or covered by insurance; or (iv) purchased any properties or
assets, except in the ordinary course of business in immaterial amounts.
(b) No officer or key employee of the Company has advised the
Company (orally or in writing) that he intends to terminate employment
with the Company.
(c) Each of the Material Agreements is in full force and
effect. There is no anticipated or threatened default of the Material
Agreements and none of the parties nor the Company has provided any
notice of default or of its intention to terminate any Material
Agreement. The Company is not bound by any agreement or instrument or
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subject to any charge or other corporate restriction which materially
and adversely affects the business, properties, operations, condition or
prospects, financial or otherwise, of the Company.
(d) The Company is not now and has never been a "United States
real property holding corporation," as defined in Section 897(c)(2) of
the Code and Section 1.897-2(b) of the Regulations promulgated by the
Internal Revenue Service.
(e) To the extent reasonably within its control, the Company
shall endeavor to meet the active business requirements of Section
1202(e) of the Code, provided that (i) the Company does not represent
that it is or will be a "qualified small business" within the meaning of
Section 1202(d) of the Code or that the Series E Preferred Stock is or
will be qualified small business stock as defined in Section 1202(c) of
the Code, (ii) the Company shall not be required to cause any of its
stockholders to reduce its holdings of Company capital stock, and (iii)
the Company shall not be required to change its core business as
currently conducted. The value of the assets owned directly by the
Company does not exceed Fifty Million Dollars ($50,000,000) as of the
date hereof.
4. Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to the Company as follows:
4.1 Authorization. It has full power and authority to enter into and
to perform this Agreement and the Registration Rights Agreement in accordance
with their respective terms. This Agreement has been, and at the Closing the
Registration Rights Agreement will have been, duly executed and delivered by
it, and constitute valid and legally binding obligations of the Purchaser,
legally enforceable against the Purchaser in accordance with their respective
terms, subject to laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles.
4.2 Investment Representations. It is acquiring the Series E
Preferred purchased by it (and any Common Stock into which Series E Preferred
may be converted) for its own account, for investment, and not with a view to,
or for sale in connection with, any distribution of such Series E Preferred (or
related Common Stock) or any part thereof in violation of federal or state
securities laws. The Purchaser has no present or contemplated agreement,
arrangement or commitment to dispose of Series E Preferred (or any Common Stock
into which the Series E Preferred may be converted) in violation of federal or
state securities laws.
4.3 Investment Experience; Access to Information. It (a) is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D as
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), (b) alone or together with its advisors is an investor experienced in
the evaluation of businesses similar to the Company's business, and has such
knowledge and experience in financial, business and other relevant matters as
to be competent and fully capable of examining all the merits, risks and other
aspects of the investment contemplated by this Agreement on its own and to make
an informed decision with respect thereto, (c) has the ability to bear the
economic risks of this investment which could include the loss of some or all
of its investment and has sufficient other assets such that the loss of all its
investment in the Company would not have a material adverse effect on its
financial condition or adversely affect its ability to maintain its present
operations, (d) has been afforded prior to the date hereof the opportunity to
ask questions of, and to receive answers from, the
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<PAGE> 13
Company and its representatives and has received from the Company all other
information concerning the investment contemplated by this Agreement that it
has requested, and (e) acknowledges that no assurances, representations or
guaranties of any nature whatsoever (including those relating to capital
appreciation, dividends or tax aspects) have been made by the Company or anyone
else to it with regard to the performance of the investment contemplated by
this Agreement. The Purchaser agrees that it will indemnify and hold harmless
the Company and its directors, officers, controlling persons and affiliates
(the "indemnities") from any liability or damage (including reasonable
attorney's fees and expenses) to any third party suffered or incurred by any of
the indemnities solely as a result of the inaccuracy of any of the foregoing
representations and warranties made by the Purchaser, including any liability
or damage arising from or under federal or state securities laws. No
investigation pursuant to this SECTION 4.3 shall affect any representation or
warranty given by the Company in this Agreement.
4.4 Absence of Registration. The Purchaser understands that:
The Series E Preferred to be sold and issued hereunder (and the Common
Stock into which the Series E Preferred may be converted) have not been
registered under the Securities Act or any applicable state securities or "Blue
Sky" laws, and may be required to be held indefinitely, unless subsequently
registered under the Securities Act and such applicable Blue Sky laws, or an
exemption from such registration is available.
Except as may be required by the Registration Rights Agreement, the
Company is under no obligation to the Purchaser to file a registration
statement with the Securities and Exchange Commission (the "Commission") or any
state securities commission with respect to the Series E Preferred (or the
Common Stock into which the Series E Preferred may be converted).
4.5 Economic Risk. The Purchaser understands that it must bear the
economic risk of the investment represented by the purchase of Series E
Preferred (and any Common Stock into which the Series E Preferred may be
converted) for an indefinite period.
4.6 Fees and Commissions. Except as described in Schedule 4.6, the
Purchaser represents and warrants that it has retained no Intermediary in
connection with the transactions contemplated by this Agreement.
Notwithstanding any disclosure on Schedule 4.6, the Purchaser agrees to
indemnify and hold harmless the Company from liability for any compensation to
any Intermediary retained by the Purchaser and the fees and expenses of
defending against such liability or any such alleged liability.
5. Conditions to Closing of the Purchaser. The obligation of the
Purchaser on the Closing Date to pay the Purchase Price required by SECTION 2
hereof shall be subject to each of the following conditions precedent, any one
or more of which may be waived by the Purchaser:
5.1 Representations and Warranties. The representations and
warranties made by the Company herein shall be true and accurate on and as of
the Closing Date.
5.2 Performance. The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing.
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<PAGE> 14
5.3 Consents, Amendments, etc. The Company shall have secured all
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including consents or approvals required under federal or state securities
laws and from the holders of the Company's outstanding shares of Common Stock,
Series A Preferred, Series B Preferred, Series C Preferred and Series D
Preferred), to issue the Series E Preferred to be purchased by the Purchaser,
and to issue the Common Stock into which the Series E Preferred may be
converted. The Company shall have filed with the Secretary of State of the
State of Delaware the Certificate of Designation, Preferences and Rights of
Series A Convertible Preferred Stock, the Certificate of Designation,
Preferences and Rights of Series B Convertible Stock, the Certificate of
Designation, Preferences and Rights of Series C Convertible Preferred Stock,
the Certificate of Designation, Preferences and Rights of Series D Convertible
Preferred Stock and the Certificate of Designation, Preferences and Rights of
Series E Convertible Preferred Stock in the form set forth on Exhibit 5.5.
5.4 Compliance Certificates. The Company shall have delivered to the
Purchaser or its representative at the Closing a certificate signed by the
President and by the Secretary of the Company to the effect that the
representations and warranties of the Company contained in this Agreement
continue to be true and accurate on the Closing Date, and that all conditions
specified in Sections 5.2, 5.3, 5.7, 5.8 AND 5.9 have been fulfilled, including
a list of any permits, consents or authorizations required thereby.
5.5 Proceedings and Documents. All corporate and other proceedings,
and all documentation relating thereto, necessary to consummate the
transactions contemplated by this Agreement (including but not limited to the
filing by the Company with the Delaware Secretary of State of the Certificate
of Designation, Preferences and Rights of Series E Convertible Preferred Stock)
shall be reasonably satisfactory in substance and form to the Purchaser and the
Purchaser's counsel, and the Purchaser and the Purchaser's counsel shall have
received all such counterpart originals or certified or other copies of the
documents as the Purchaser or the Purchaser's counsel may reasonably request,
including, without limitation, a certificate of the Secretary of the Company
attesting to the accuracy of each of the following documents which shall be
attached hereto as Exhibit 5.5: (a) the Certificate of Incorporation of the
Company, including all amendments thereto, the Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock, the Certificate
of Designation, Preferences and Rights of Series B Convertible Stock, the
Certificate of Designation, Preferences and Rights of Series C Convertible
Preferred Stock, the Certificate of Designation, Preferences and Rights of
Series D Convertible Preferred Stock and the Certificate of Designation,
Preferences and Rights of Series E Convertible Preferred Stock, each certified
as of a recent date by the Delaware Secretary of State, (b) the By-laws of the
Company, and (c) the authorizations of the Board of Directors and stockholders
of the Company relating to the Company's execution, delivery and performance of
its respective obligations, if any, under this Agreement and the Registration
Rights Agreement and all other agreements and transactions contemplated hereby.
5.6 Opinion of Company's Counsel. The Purchaser or its
representative shall have received an opinion from counsel for the Company,
dated the Closing Date and addressed to the Purchaser in substantially the form
attached hereto as Exhibit 5.6.
5.7 Registration Rights Agreement. The holders of the Series B
Preferred, the holders of the Series C Preferred, the holders of the Series D
Preferred, CTRC Research Foundation and the Company shall have executed and
delivered amendments to the Amended
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<PAGE> 15
& Restated Registration Rights Agreement in compliance with the requirements of
SECTION 16.1 therein, substantially in the form attached hereto as Exhibit 5.7
(the "Registration Rights Agreement"), and the Purchaser shall have executed
and delivered the Registration Rights Agreement.
5.8 Founders' Sales Agreement. Richard L. Love, Alexander L. Weis,
Daniel D. Von Hoff and Charles A. Coltman, Jr. (the "Founders"), the holders of
the Series B Preferred, the holders of the Series C Preferred, the holders of
the Series D Preferred and CTRC Research Foundation shall have executed and
delivered amendments to the Second Amended and Restated Founders' Sales
Agreement in compliance with the requirements of SECTION 15 therein
substantially in the form attached hereto as Exhibit 5.8, and the Purchaser
shall have executed and delivered the Founders' Sales Agreement.
5.9 Preferred Stockholders' Sales Agreement. The holders of the
Series B Preferred, the holders of the Series C Preferred and CTRC Research
Foundation shall have executed and delivered amendments to the Second Amended
and Restated Preferred Stockholders' Sales Agreement in compliance with the
requirements of SECTION 15 therein, substantially in the form attached hereto
as Exhibit 5.9, and the Purchaser shall have executed and delivered the
Preferred Stockholders' Sales Agreement.
5.10 Designation as Director. The Board of Directors of the Company
shall include Dr. Jerry Mitchell as a member of the Board of Directors.
6. Conditions to Closing of Company. The obligation of the Company
on the Closing Date to issue and sell the Series E Preferred to be purchased
under this Agreement shall be subject to each of the following conditions
precedent, any one or more of which may be waived by the Company:
6.1 Representations and Warranties. The representations and
warranties made herein by the Purchaser shall be true and accurate in all
material respects on and as of the Closing Date and the Purchaser shall be
deemed to have restated and confirmed such representations and warranties as of
the Closing Date by authorizing or permitting the Closing to be effected
without delivering in writing to the Company a notice of change prior to the
Closing.
6.2 Consents, etc. The Company shall have secured all material
permits, consents and authorizations that shall be necessary or lawfully
required to consummate the transactions contemplated by this Agreement
(including, but not limited to, consents or approvals required under federal or
state securities laws.)
7. Affirmative Covenants.
The Company covenants and agrees that it will perform and observe the
following covenants and provisions, and will cause each Subsidiary, if and when
such Subsidiary exists, to perform and observe the following covenants and
provisions, as if they applied to it in the same manner as they apply to the
Company.
7.1 Inspection. For so long as the Purchaser (or a Permitted Holder,
as defined in SECTION 14) holds at least 100,000 shares of the Series E
Preferred (or Common Stock into which it has been converted), as adjusted for
Recapitalization Events, the Company will permit
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<PAGE> 16
an authorized representative of the Purchaser (or such Permitted Holder)
reasonable access during the normal business hours of the Company and upon
reasonable notice (which notice in no event shall be provided less than three
business days in advance) to the books, records, personnel and properties of
the Company, for any reasonable purpose whatsoever related to the Purchaser's
(or such Permitted Holder's) investment in the Company. The Company will
furnish to Permitted Holder such other information as it from time to time may
reasonably request. For purposes of this SECTION 7.1, "Recapitalization
Events" means stock splits, stock dividends, recapitalizations,
reclassifications and similar events.
7.2 Accounting. The Company will maintain a system of accounting
established and administered in accordance with GAAP consistently applied, and
will set aside on its books such proper reserves as shall be required by GAAP.
In the event the services of the independent public accountants, so selected,
or any firm of independent public accountants hereafter employed by the Company
are terminated, the Company will promptly thereafter notify the Permitted
Holder and will request the firm of independent public accountants whose
services are terminated to deliver to the Permitted Holder a letter of such
firm setting forth the reasons for the termination of their services.
7.3 Monthly and Annual Financial Statements. For so long as any
Series E Preferred remains outstanding, the Company will deliver to the
Purchaser for so long as the Purchaser continues as a stockholder of the
Company:
(a) upon the written request of the Purchaser to the Company
(but in any event only so long as Purchaser owns greater than 100,000
shares of Series E Preferred), within 30 days after the end of each
month and each fiscal quarter an unaudited balance sheet of the Company
as at the end of each such month or fiscal quarter and unaudited
consolidated statements of income and of cash flow of the Company for
each such month or fiscal quarter compared to budget;
(b) within 90 days after the end of each fiscal year of the
Company, a balance sheet of the Company as at the end of such year and
statements of income and of cash flow of the Company for such year,
audited by such firm of independent public accountants of national
recognition that is appointed by the Company's Board of Directors or an
authorized committee thereof, and a report summarizing the Company's
development activities during the period, and a certificate executed by
the President confirming that during such period the Company has been in
compliance with the terms of this Agreement;
(c) promptly upon receipt thereof, any written report
submitted to the Company by independent public accountants in connection
with an annual or interim audit of the books of the Company and its
Subsidiaries made by such accountants; and
(d) prior to the commencement of each fiscal year, a
reasonably detailed business plan for such fiscal year including monthly
operating expenses and profit and loss projections and a capital
expenditure budget for the fiscal year as approved by the Board of
Directors, and promptly after any revisions to such budget approved by
the Board of Directors, a copy of such revisions.
None of the foregoing provisions of this SECTION 7 nor any other
provision of this Agreement shall be in limitation of any rights which a holder
of Series E Preferred may have
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<PAGE> 17
with respect to the books and records of the Company, or to inspect its
properties or discuss its affairs, finances and accounts, under the laws of the
jurisdiction of its incorporation.
7.4 Use of Proceeds. The Company shall use the proceeds from the
sale of Series E Preferred for purposes of expanding the development of the
Company's cancer pharmaceutical and research business and to fulfill general
corporate working capital purposes consistent therewith.
7.5 Confidentiality and Restrictions on Trading. Any confidential or
proprietary information concerning the Company provided to the Purchaser or a
representative thereof pursuant to this Agreement or otherwise, including
SECTIONS 7.1 and 7.3 hereof, shall be used by the Purchaser or any
representative or affiliate thereof solely in furtherance of its interests as
an investor in the Company, and the Purchaser or representative or affiliate
thereof shall (except as otherwise required by law to which the Purchaser or
representative or affiliate thereof may be subject) maintain the
confidentiality of all non-public information of the Company, provided that,
notwithstanding any other term of this Agreement to the contrary, (a) the
Company shall not be obligated to disclose any information, the disclosure of
which its Board of Directors or President believes in good faith could have a
material adverse effect on the Company or its stockholders, or both and (b) the
Purchaser shall be entitled to disclose such non-public information (i) as is
reasonably necessary to enforce their rights under this Agreement, (ii) on a
confidential basis to their attorneys and other professionals to the extent
reasonably necessary in connection with the Purchaser's investment in the
Company, and (iii) to any prospective purchaser of the Series E Preferred, or
any affiliate or partner of the Purchaser, provided that such third party
agrees to be bound by the confidentiality provisions hereof, and such third
party is not a competitor of the Company. No Purchaser or representative,
affiliate or transferee thereof shall purchase, sell or take any other action
relating to any capital stock or other securities issued by the Company if any
such purchase, sale or other action would be in violation of any federal or
state "insider trading" or other securities laws.
7.6 Right of First Refusal. So long as there are any shares of
Series E Preferred outstanding, the Company hereby grants to the Purchaser the
right of first refusal to purchase such amount of New Securities (as defined in
paragraph (a) below) that the Company may, from time to time, propose to sell
and issue that will enable the Purchaser, to maintain its percentage equity
interest in the Company. This right of first refusal shall be subject to the
following provisions:
(a) "New Securities" shall mean any Common Stock, preferred
stock or other security which is convertible into or exchangeable for
shares of Common Stock of the Company or any option, warrant or other
right to acquire such security or Common Stock of the Company; provided,
however, that "New Securities" shall not include (i) Common Stock
issuable upon conversion of or with respect to the Series E Preferred or
upon conversion of any other convertible security of the Company
(including the Series A Preferred, the Series B Preferred, the Series C
Preferred and the Series D Preferred) that is outstanding from time to
time, (ii) securities issued upon the exercise of any warrants or
options issued or granted by the Company that are referred to in or
contemplated by SECTION 3.2 of this Agreement, (iii) 637,625 shares of
Common Stock to be issued by the Company at fair market value, (iv)
securities offered to the public in an underwritten offering pursuant to
a registration statement filed under the Securities Act, (v) securities
issued by the Company as consideration for an acquisition
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<PAGE> 18
of a portion or all of the equity or other interests in another
corporation, partnership, business entity or line of business of another
business entity by the Company by merger, reorganization, stock-for-
equity or stock-for-assets exchange or any other similar transaction and
(vi) any option issued pursuant to a stock option plan approved by the
Board of Directors of the Company.
(b) If the Company proposes to issue New Securities, it shall
give the Purchaser written notice (the "Rights Notice") of its
intention, describing the New Securities, the price, and the general
terms upon which the Company proposes to issue them. The Purchaser
shall have 15 days from the date of mailing of the Rights Notice to
agree to purchase (i) all or any part of its Pro-Rata Share (as defined
in subsection (d) below) of such New Securities and (ii) all or any part
of the Pro-Rata Share of such New Securities of all other Purchasers to
the extent that such other Purchasers do not elect to purchase their
respective full Pro-Rata Share, in each case for the price and upon the
general terms specified in the Rights Notice by giving written notice to
the Company setting forth the quantity of New Securities it elects to
purchase. If the Purchasers who elect to purchase their full Pro-Rata
Share also elect to purchase all or a portion of the Pro-Rata Share of
such New Securities of other Purchasers who do not elect to purchase
100% of their respective Pro-Rata Share (such other Purchasers referred
to as "Non-Participating Purchasers"), then such Purchasers shall be
entitled to purchase, in addition to their Pro-Rata Share, a percentage
of the Pro-Rata Shares of the Non-Participating Purchasers determined by
the fraction the numerator of which is the number of shares of Common
Stock then held, together with the number of shares of Common Stock
issuable upon conversion of the Series E Preferred then held by such
Purchaser as of the date of the Rights Notice, and the denominator of
which is the sum of the number of shares of Common Stock then held, plus
the number of shares of Common Stock issuable upon the conversion of
Series E Preferred then held, by all Purchasers electing to purchase
more than their Pro-Rata Share. The Purchaser who agrees to purchase
New Securities shall deliver the purchase price for the New Securities
and otherwise comply with the general terms of sale set forth in the
Rights Notice on the thirtieth (30th) day after the date of mailing of
the Rights Notice (or such other date as agreed to by the Company and
such Purchaser) and the Company shall deliver duly registered share
certificates for the New Securities in exchange therefor.
(c) If the Purchaser fails to exercise in full the right of
first refusal within the period or periods specified in paragraph (b)
hereof, the Company shall have 90 days after the date of mailing of the
Rights Notice to sell the unsold New Securities and the balance of the
New Securities not subject to the Right of First Refusal provided for
herein at a price and upon general terms no more favorable to the
purchaser thereof than specified in the Rights Notice. If the Company
has not sold the New Securities within said 90 day period the Company
shall not thereafter issue or sell any New Securities without first
offering such securities to the Purchaser in the manner provided above.
(d) A Purchaser's "Pro-Rata Share" shall be the percentage
determined by a fraction the numerator of which is the number of shares
of Common Stock then held, together with the number of shares of Common
Stock issuable upon conversion of the Series E Preferred then held, by
such Purchaser as of the date of the Rights Notice (as defined in
paragraph (b) above) and the denominator of which is the sum of the
total number of shares of Common Stock then outstanding, together with
the number of
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shares of Common Stock issuable upon conversion of convertible
securities of the Company then outstanding, all as of such date.
7.7 Restrictions on Transfer. The Purchaser (and each transferee,
successor or assign of a Purchaser) further agrees that (a) it will not offer,
sell or otherwise dispose of the Series E Preferred (or the Common Stock in to
which the Series E Preferred may be converted), unless such offer, sale or
other disposition is effected in accordance with the terms of this Agreement
and the Registration Rights Agreement and such offer, sale or other disposition
is (i) registered under the Securities Act and applicable state securities
laws, (ii) pursuant to Rule 144 of the Securities Act of 1933, or (iii) in
compliance with an opinion of counsel to such Purchaser delivered to the
Company and reasonably acceptable to the Company and its counsel to the effect
that such offer, sale or other disposition thereof does not violate the
Securities Act or applicable state securities laws, and (b) the certificate(s)
representing the Series E Preferred (and any Common Stock into which the Series
E Preferred maybe converted) shall bear legends in substantially the following
form:
THE TRANSFER AND VOTING OF THESE SHARES IS SUBJECT TO THE TERMS OF A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF DECEMBER 11, 1996
AND A PREFERRED STOCKHOLDERS' SALES AGREEMENT DATED AS OF DECEMBER 11, 1996,
COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND SUCH APPLICABLE STATE LAW OR, IN THE OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, DOES NOT VIOLATE THE PROVISIONS THEREOF OR UNLESS SOLD PURSUANT TO
RULE 144 OF THE SECURITIES ACT OF 1933.
Upon request of the Purchaser or other person who in accordance with the
provisions of this SECTION 7.7 becomes a holder of Series E Preferred (or the
Common Stock into which the Series E Preferred has been converted), the Company
shall remove the legend set forth in the second paragraph above from the
certificates evidencing such Series E Preferred or Common Stock or issue to
such holder new certificates evidencing such Series E Preferred or Common Stock
free of such legend, if such request is accompanied by an opinion of counsel,
reasonably satisfactory to the Company and its counsel, to the effect that such
Series E Preferred or Common Stock, as applicable, is not required by the
Securities Act or other applicable law to continue to bear the legend or a
legend similar thereto.
7.8 Transfer Instructions. The Purchaser agrees that the Company may
provide for appropriate transfer instructions to implement the provisions of
SECTION 7.7 hereof.
7.9 Operation of Business. For so long as any shares of the Series E
Preferred remain outstanding, the Company shall comply with each of the
following covenants, and will cause each Subsidiary, if and when such
Subsidiary exists, to comply with each of the following covenants, as if they
applied to it in the same manner as they apply to the Company.
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<PAGE> 20
(a) Compliance with Laws, Etc. The Company shall comply with
all laws, rules, regulations, judgments, orders and decrees of any
governmental or regulatory authority, the violation of which could have
a material adverse effect on the business, assets or properties of the
Company and with all material contracts and agreements to which it is a
party or shall become a party and shall perform all material obligations
which it has or shall incur.
(b) Preservation of Corporate Existence and Property. The
Company shall preserve, protect and maintain: (i) its corporate
existence and good standing in its jurisdiction of incorporation, (ii)
its rights, franchises and privileges, and (iii) all of its properties
necessary or useful in the proper conduct of its business in good
working order and condition, with the exception of (y) ordinary wear and
tear and (z) casualty losses covered by insurance, allowing for
reasonable deductibles.
(c) Insurance. The Company shall maintain or cause to be
maintained, with financially sound and reputable insurers, insurance
with respect to the properties and business of the Company, against loss
or damage of the kinds customarily insured against by corporations of
established reputation and similar size engaged in the same or similar
business, in adequate amounts.
(d) Payment of Indebtedness. The Company shall pay or cause
to be paid the principal of, and the interest and premium, if any, on
all indebtedness heretofore or hereafter incurred or assumed by the
Company when and as the same shall become due and payable, unless such
indebtedness shall be renewed or extended, in which case such payments
shall be made in accordance with the terms of such renewal or extension.
(e) Further Assurance. The Company shall cooperate with the
Purchaser and shall execute and deliver all such further instruments and
documents and do all such further acts and things as the Company may be
reasonably requested to do from time to time by the Purchaser in order
to satisfy the conditions and carry out the provisions and purposes of
this Agreement and the Registration Rights Agreement.
(f) Section 305. The Company shall not enter into any
transaction which would result in the dividend on the Purchaser's shares
under Section 305 of the Code (or any successor provision) other than
dividends accruing pursuant to the Certificate of Incorporation, as
amended from time to time.
(g) U.S. Real Property Holding Corporation. The Company will
not be a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service and upon written
request, will provide to any holder of Preferred Stock a statement to
the effect informing such holder whether its interest in the Company
constitutes a U.S. real property interest.
7.10 Reservation of Common Stock. For so long as any shares of the
Series E Preferred remain outstanding, the Company shall increase the
authorized amount and maintain in reserve that number of shares of Common Stock
necessary to accommodate the conversion into Common Stock of all issued and
outstanding shares of the Series E Preferred.
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7.11 Public Announcements. The Company shall not make any public
announcement or disclosure relating to any Purchaser's participation in the
transactions contemplated by this Agreement or the relationship established
hereby with any Purchaser unless such announcement or disclosure is (i) in the
judgment of the Company after consultation with its legal counsel, required by
applicable law or regulation or (ii) approved by the Purchaser, which approval
shall not be unreasonably withheld.
7.12 New Developments. Subject to the other contractual obligations
of such consultants, the Company will cause all technological developments,
patentable or unpatentable inventions, discoveries or improvements by its
officers, employees or consultants to be documented in accordance with
appropriate professional standards, cause all officers, employees and
consultants to execute appropriate patent and copyright assignment agreements
to the Company, as the case may be, and, where possible and appropriate, cause
all officers, employees and consultants to file and execute United States and
foreign patent or copyright applications relating to and protecting such
developments on behalf of the Company. The Company will cause each officer,
key employee and key consultant now or hereafter employed to execute and
deliver an Employment Provision Agreement in the form and substance of Exhibit
3.12(a) attached hereto, or as otherwise approved by the Board of Directors of
the Company.
7.13 Rule 144A Information. The Company covenants and agrees that, at
all times during which the Company is neither subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12(g)3-2(b) under the Exchange Act, it will provide
in written form (as promptly as practicable and in any event within 15 business
days), upon the written request of any holder of the Series E Preferred or a
prospective buyer of such shares or the Conversion Shares, all information
required by Rule 144A(d)(4)(i) of the General Regulations promulgated by the
Commission under the Securities Act ("Rule 144A Information"). The Company
further covenants, upon written request, to cooperate with and assist any
holder of the Series E Preferred or any member of the National Association of
Securities Dealers, Inc. system for Private Offerings Resales and Trading
through Automated Linkage ("PORTAL") in applying to designate and thereafter
maintain the eligibility of such shares or the Conversion Shares for trading
through PORTAL. The Company's obligations under this SECTION 7.14 shall at all
times be contingent upon the relevant holder of the Series E Preferred
obtaining from a prospective purchaser an agreement to take all reasonable
precautions to safeguard the Rule 144A Information from disclosure to anyone
other than a Person who will assist such purchaser in evaluating the purchase
of such securities.
7.14 Founders' Sales Agreement. Except as otherwise prohibited by
law, the Company agrees that it shall not permit any transfer of shares of
capital stock in violation of the Founders' Sales Agreement.
7.15 Preferred Stockholders' Sales Agreement. Except as otherwise
prohibited by law, the Company agrees that it shall not permit any transfer of
shares of capital stock in violation of the Preferred Stockholders' Sales
Agreement.
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<PAGE> 22
7.16 Nomination of Purchaser Director. So long as the Purchaser owns
at least __________ shares of Series E Preferred, the Company will cause one
person designated by the Purchaser to be nominated for election as a director
of the Company at each annual meeting of the stockholders of the Company.
8. Additional Covenants of the Company.
8.1 Conduct of Business in the Ordinary Course. From the date of
this Agreement until the Closing, except with the prior approval of the
Purchaser, the Company will operate the business of the Company in the ordinary
course.
8.2 Reasonable Efforts. From the date of this Agreement until the
Closing, the Company shall use all reasonable efforts to obtain all necessary
consents and take all actions necessary for the consummation of the
transactions contemplated hereby.
9. Termination of Agreement and Survival of Representations,
Warranties and Covenants.
(a) Termination. This Agreement may be terminated prior to
Closing by the Company or the Purchaser upon written notice to the other
party:
(i) At any time by mutual written agreement of all the
parties hereto;
(ii) At any time after December 6, 1996, by any party if
the Closing shall not have occurred on or prior to such date;
(iii) By the Company if any representation or warranty of
the Purchaser contained in this Agreement or in any certificate
or other document executed and delivered by the Purchaser to the
Company pursuant to this Agreement is or becomes untrue or
breached in any material respect or if the Purchaser fails to
comply in any material respect with any covenant or agreement
contained herein, and any such misrepresentation, breach or
noncompliance is not cured, waived, or eliminated before Closing;
(iv) By the Purchaser if any representation or warranty
of the Company contained in this Agreement or in any certificate
or other document executed and delivered by the Company pursuant
to this Agreement is or becomes untrue or breached in any
material respect or if the Company fails to comply in any
material respect with any covenant or agreement contained herein,
and any such misrepresentation, breach or noncompliance is not
cured, waived, or eliminated before Closing;
(v) On the Closing Date by the Purchaser if the
conditions set forth in SECTION 5 have not been satisfied; or
(vi) On the Closing Date by the Company if the
conditions stated in SECTION 6 have not been satisfied.
In the event this Agreement is terminated pursuant to
subparagraph (iii) or (iv) above, the Purchaser and the Company shall be
entitled to pursue, exercise and enforce
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<PAGE> 23
any and all remedies, rights, powers and privileges available at law or
in equity and under this Agreement.
(b) Survival of Representations, Warranties and Covenants.
Except as otherwise provided in this Agreement, all covenants made
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and shall continue in full
force and effect thereafter. Any representation or warranty the breach
or inaccuracy of which involves fraud on the part of the Company or the
Purchaser shall survive the Closing and shall continue in full force and
effect thereafter. All other representations and warranties, as
certified to by the Company pursuant to the certificate required to be
delivered under SECTION 5.4 and by the Purchaser pursuant to SECTION 6.1
of this Agreement, made hereunder or pursuant hereto or in connection
with the transactions contemplated hereby shall survive the Closing
until the expiration of the applicable statute of limitations and notice
of any claim based on a breach of any such representation or warranty
must be given prior to the expiration of such statute of limitations.
10. Indemnification. The Company shall indemnify and hold harmless
the Purchaser against and from any losses, claims, damages or liabilities,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) the falsity or incorrectness as of
the Closing Date of any representation or warranty of the Company contained in
or made pursuant to SECTION 3 hereof, or (b) the existence of any condition,
event or fact constituting, or which with notice or passage of time, or both,
would constitute a default in the observance of any of the Company's
undertakings or covenants hereunder or under any of the documents executed in
connection herewith. The Company shall also pay all reasonable attorney's fees
and costs and court costs incurred by the Purchaser in enforcing the
indemnification provided for in this SECTION 10.
11. Notices. All notices, requests, consents and other
communications provided for herein (except as stated in the last sentence of
this SECTION 11) shall be in writing, and shall be mailed by certified mail,
postage prepaid, delivered by Federal Express or similar overnight courier, or
personally delivered, as follows:
(a) If to the Company:
ILEX Oncology, Inc.
14785 Omicron Drive, Suite 101
San Antonio, Texas 78245
Attention: Richard L. Love
with a copy to:
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Attention: Kenneth J. Halliday
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<PAGE> 24
(b) If to the Purchaser to the person
and address set forth on Exhibit A
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. For purposes of computing the time
periods set forth in SECTION 7, the date of mailing shall be deemed to be the
date of delivery. The financial statements and other reports required by
SECTION 7 may be mailed by first-class regular mail.
12. Modifications; Waiver. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated (a) prior to the
Closing Date unless effected by a writing executed and delivered by the parties
hereto and (b) after the Closing Date unless effected by a writing executed and
delivered by the Company and by holders representing not less than 66-2/3% of
the aggregate number of issued and outstanding shares of Series E Preferred and
shares of Common Stock issued upon the conversion of Series E Preferred,
provided that this SECTION 12 may not be modified or amended without the
written consent of all the holders of Series E Preferred and the Company, and
provided further that in any event, no amendment or change may be made to the
terms hereof that imposes additional obligations or restrictions upon a party
without its written consent.
13. Entire Agreement. This Agreement, including the Schedules and
Exhibits hereto, including the Registration Rights Agreement, the Founders'
Sales Agreement and the Preferred Stockholders' Sales Agreement, contains the
entire agreements between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties, commitments, whether in writing or oral, prior to
the date hereof and shall, except as otherwise expressly provided herein and
therein, not affect the rights of the parties under the Series B Purchase
Agreement, the Series C Purchase Agreement or the Series D Purchase Agreement.
14. Application to Successor Holders. The rights of the Purchaser
set forth in SECTIONS 7.1, 7.3 AND 7.6 shall inure to the benefit of any person
who becomes a holder of Series E Preferred sold pursuant to this Agreement (or
of Common Stock issued upon conversion of such Series E Preferred) in a
transfer made in accordance with the provisions of SECTION 7.6 (a "Permitted
Holder") hereof as though such holder were a Purchaser, and the obligations of
the Purchaser set forth in SECTION 7.5 shall be binding on any person who after
the date hereof becomes a holder of shares of Series E Preferred sold pursuant
to this Agreement as though such holder were a Purchaser.
15. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
16. Governing Law and Severability. This Agreement shall be governed
by the laws of the State of Texas as applied to agreements entered into and to
be performed entirely within the State of Texas. In the event any provision of
this Agreement or the application of such provision to any party shall be held
by a court of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement shall remain in full force and effect.
17. Headings. The descriptive headings of the Sections hereof and
the Schedules and Exhibits hereto are inserted for convenience only and do not
constitute a part of this Agreement.
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<PAGE> 25
18. Waivers And Consents. Any waiver or consent hereunder shall be
effective only in the specific instance and for the purpose for which it was
given and shall not constitute a continuing waiver or consent. Notwithstanding
this Agreement, any term or condition hereof, or the consummation of the
transactions contemplated hereby, the Purchaser does not waive or relinquish
any right it may have or may acquire against the Company or any of its
Affiliates or agents in connection with the acquisition of the Series E
Preferred by such Purchaser, or the ownership thereof. All such rights shall
remain unimpaired by the execution of this Agreement and the consummation of
the transactions contemplated hereby.
19. Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
20. No Waiver Of Rights, Powers and Remedies. Except as expressly
provided in this Agreement, no failure or delay by a party hereto in exercising
any right, power or remedy under this Agreement, and no course of dealing
between the parties hereto, shall operate as a waiver of any such right, power
or remedy of the party. No single or partial exercise of any right, power or
remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The election of any remedy by a
party hereto shall not constitute a waiver of the right of such party to pursue
other available remedies. No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice or
demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
21. Reliance. The parties hereto agree that, notwithstanding any
access to information by any party or any right of a party to this Agreement to
investigate the affairs of any other party to this Agreement, the party having
such access and right to investigate shall have the right to rely fully upon
the representations and warranties of the other party expressly contained in
this Agreement and on the accuracy of any Schedule, Exhibit or other document
attached hereto or referred to herein or delivered by such other party or
pursuant to this Agreement. The Purchaser acknowledges that, based on
information provided by the Company, it has made its own analysis and decision
regarding the transactions contemplated hereby, including the execution of this
Agreement.
22. Costs, Expenses and Taxes. Each of the parties hereto shall
bear such party's own costs and expenses in connection with this Agreement and
the transactions contemplated hereby.
23. Definitions. The following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Affiliate" has the meaning ascribed to that term in Rule 12b-2 under
the Exchange Act or any successor rule, and in any event with respect to the
Company shall mean any Director, officer or stockholder thereof.
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<PAGE> 26
"Knowledge" or "known" shall mean or refer to the actual knowledge of
the Company, its officers, directors and key employees after reasonable
diligence.
"Subsidiary" or "Subsidiaries" shall mean any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
directly or indirectly owns at the time a majority of the outstanding shares of
any class of equity security of such corporation, partnership, trust or other
entity.
[signatures on next page]
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<PAGE> 27
This Convertible Preferred Stock Purchase Agreement is hereby executed
as of the date first above written.
ILEX ONCOLOGY, INC.
By:
------------------------------------------
Richard L. Love, President
PURCHASER:
MPI ENTERPRISES, L.L.C.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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<PAGE> 1
Exhibit 10.55
___________________________________
Cancer Therapy & Research Center Endowment
8122 Datapoint, Suite 600
San Antonio, Texas 78229
Attention: Mr. James W. Gorman, Jr., Chairman
Re: Pledge Agreement
Gentlemen:
I am a non-employee director of Ilex Oncology, Inc. ("Ilex"). The Board
of Directors of Ilex has recently adopted a stock option plan for non-employee
directors (the "Plan") under which I will receive options to purchase
designated shares of the common stock of Ilex (the "Stock") at the option price
and upon the terms stated in the Plan.
This letter will evidence my unconditional and irrevocable pledge to
Cancer Therapy & Research Center Endowment ("Endowment"), as a charitable
contribution, of my net after-tax profit from the sale of any of the Stock
purchased through exercise of options granted under the Plan. Net after-tax
profit means the gross sale price of the Stock less the amount of the option
price paid, transaction costs and all federal and state taxes incurred by me as
a result of exercising the option and selling the Stock.
Endowment agrees to use these contributions for support of Cancer
Therapy & Research Foundation of South Texas and its subsidiary organizations
(the "CTRC Organizations"), although I reserve the right, from time to time, to
designate specific purposes for which contributions made pursuant to this
pledge are used by the CTRC Organizations.
This pledge shall apply to all Stock purchased by me under the Plan. It
shall be effective regardless of whether I am a member of a governing body of
any CTRC Organization at the time I acquire or sell stock pursuant to the Plan.
At my discretion, I may satisfy this pledge as to any Stock purchased by making
an in-kind gift of the stock to Endowment. Further, this pledge may be
satisfied by a transfer of the Stock or the net after tax profit to a
charitable remainder unitrust or other similar estate planning vehicle with
Endowment as the sole remainder beneficiary or sole income beneficiary.
I intend to change my testamentary disposition of my property so that
the terms of this pledge will be carried out by my estate representative at my
death.
Very truly yours,
<PAGE> 1
Exhibit 10.56
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
EXCLUSIVE LICENSE AGREEMENT
(OXYPURINOL)
THIS AGREEMENT is made as of November 27, 1996, by and between MGI
PHARMA, INC. (MGI"), 300E Opus Center, 9900 Bren Road East, Minnetonka,
Minnesota 55343-9667 and ILEX ONCOLOGY, INC. (ILEX"), 14785 Omicron Drive,
Suite 101, San Antonio, Texas 78245-3217
Recitals
A. MGI acquires, develops and markets pharmaceuticals that it
believes address currently unmet medical needs or significantly improve upon
current therapies.
B. Pursuant to that certain license agreement, dated as of March 1,
1995 among Burroughs Wellcome Co. (now known as Glaxo Wellcome, Inc., and
referred to herein as "Glaxo"), the Wellcome Foundation Limited ("WFL") and
ILEX (the "Glaxo Agreement"), ILEX was granted a license to use certain know-
how and clinical data relating to a compound called oxypurinol (the
"Compound"), as the Compound is more fully described in Exhibit A hereto, in
the field of cancer treatment.
C. ILEX has undertaken to amend the Glaxo Agreement to enlarge the
license granted to it under such agreement to include the know-how and data for
use in the treatment of any Indication.
D. MGI desires to develop, make or have made, sell and distribute
products containing the compound for any indication on a worldwide basis, and
ILEx desire to grant to MGI an exclusive, worldwide license and sublicense to
develop, make, have made, import, offer for sale, sell, promote and distribute
such products, all upon the terms and conditions set forth in this Agreement.
E. MGI desires for ILEx to prepare a data package with respect to
the compound and ILEX desires to perform such service, all upon the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto have agreed as follows:
ARTICLE 1 INTRODUCTION PROVISIONS
<PAGE> 2
1.1 Defined Terms. The following terms, when used in capitalized form in
this Agreement, shall have the meanings set forth below.
(a) "Affiliate" when used with reference to either party shall mean
any entity controlling, controlled by or under common control
with the said party. For purposes hereof, "control" shall mean
ownership, directly or indirectly, of more than [**]
([**]%) of the securities having the right to vote for the
election of directors, in the case of a corporation, and more
than [**] ([**]%) of the beneficial interest in the
capital, in the case of a business entity other than a
corporation.
(b) Best Efforts" shall mean those efforts that would be made by a
reasonably prudent business persona acting in good faith, in the
exercise of reasonable commercial judgment and in a manner
consistent with those efforts the applicable party devotes to its
own business and pharmaceutical products resulting from its own
research efforts and having a similar market potential, profit
potential or strategic value.
(c) "Confidential Information" shall mean all proprietary
information, including the Know-how, Proprietary Product
Information of a party, including any information on the markets,
customers, suppliers, patents or patent applications, inventions,
products, procedures, designs, formulas, business plans,
financial projections, organizations, employees or consultants or
any other similar aspects of a party's present or future
business, the secrecy of which confers a competitive advantage
upon that party.
(d) "Data Package" shall mean review and analysis by ILEx of the
clinical data which is a part of the Know-how, documentation of
the conclusions reached and preparation of a package of data for
submission by MGI to the FDA, all as further described on Exhibit
B.
(e) "Drug Master File" shall mean a Type II Drug Master File for any
Product created by ILEX or its agents and on file with the FDA,
any supplementary or successor drug master file that is submitted
by ILEX or its agents to the FDA, or any corresponding drug
master file or similar file in respect of any Product that may be
submitted to the FDA or other applicable governmental agency; in
each case, by ILEX or its agents as of the Effective Date or by
Glaxo or its agents at any time (provided that ILEX has rights
from Glaxo with respect thereto).
(f) "Effective Date shall mean the date first above written.
(g) "Europe" shall mean all countries that are member states, from
time to time, of the European Economic Union.
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<PAGE> 3
(h) "Field" means use for all Indications, or if Glaxo does not agree
to such Field, such Indications as the parties and Glaxo may
mutually agree in writing. Such Field shall be added as an
Exhibit C to this Agreement which shall be initialled by the
parties.
(i) "First Commercial Sale" shall mean the date that MGI or a
sublicensee first transfers title to a Product to a Third Party
for monetary consideration.
(j) "FDA" shall mean the United States Food and Drug Administration
or any successor entity.
(k) "Health Registration Dossier" shall mean all documentation which
is now or shall hereafter be on file with the FDA or other
applicable governmental agency, which comprises the information
and data submitted to such agency in support of an application
made by ILEX, MGI, or a sublicensee of MGI or ILEX, to such
agency for Marketing Authorization for a Product to treat any
Indication.
(l) "Indication" shall mean any medical condition or set of symptoms
for the treatment of which a Product may be determined to be safe
and efficacious.
(m) "Know-how" shall mean all information and data, regardless of
form, which is necessary or useful to the development (including,
without limitation, clinical or preclinical testing or results,
and any other information necessary or supportive of a request
for Marketing Authorization) or manufacture of a Product or to
the development or manufacture of dose forms or means of delivery
of a Product, including, without limitation, the Data Package,
the Proprietary Product Information, and B.W. Co. Know-how and
the WFL Know-how, as those terms are defined in the Glaxo
Agreement, attached hereto as Exhibit D., (i) which (A) may have
been developed by ILEX or Third Parties or (b) is owned,
developed, acquired or otherwise licensable by IlEX to MGI and
(ii) which is in ILEX's possession or control as of the Effective
Date, or with respect to any of the foregoing received by ILEX
from Glaxo, as of the Effective Date or thereafter.
(n) "Marketing Authorization" shall mean any governmental approval by
the FDA or other applicable governmental agency which is legally
required under applicable laws, regulations or administrative
decisions to put a pharmaceutical product on the market in such
country for use in the treatment of any Indication (including
pricing and reimbursement approvals, if applicable).
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<PAGE> 4
(o) "New Sales" shall mean,
(i) with respect to any Product containing the Compound as the
sole active ingredient, the gross sales (i.e., gross
invoice prices) of such Product billed by MGI and its
sublicensees to Third Party customers, less: (A) actual,
credited allowances to such Third Party customers for
spoiled, damaged, outdated and returned Product and for
allowances in lieu of returned Product following price
increases; (b) the amounts of customary trade and cash
discounts are not deducted by MGI or its sublicensees at
the time of invoice in order to arrive at the gross
invoice prices; (c) all transportation and handling
charges, sales taxes, excise taxes, use taxes, value added
taxes, other similar taxes, or import/export duties
actually paid; and (D) all other invoiced allowances and
adjustments actually credited to customers including, but
not limited to, rebates paid to third Party payors,
whether during the specific royalty prod, as defined in
Section 7.1, or not.
(ii) with respect to any product containing one or more active
ingredients in addition to the Compound, the gross sales
of such Product billed by MGI and its sublicensees to
third party customers, less all the allowances,
adjustments, discounts, taxes, duties and other charges
referred to in clauses (a) through (D) above, multiplied
by a fraction, the numerator of which shall be the
manufacturing cost or acquisition cost, as applicable, of
the Compound included in such Product and the denominator
of which shall be the manufacturing cost or acquisition
cost, as applicable, of all active ingredients in such
Product, including the Compound.
(p) "NDA" shall mean a New Drug Application, or a successor
application.
(q) "Product" shall mean the compound or any pharmaceutical product
having the Compound as an active ingredient, either alone or in
combination with other substances, whether or not such products
are known or in existence on the Effective Date.
(r) "Proprietary Product information" shall mean (i) all information
and data now or hereafter contained in any Drug Master File or
Health Registration Dossier to which either Party, or any
sublicensee of either Party, shall have the right under
applicable law, regulations and administrative decisions to
refer, to authorize third parties to refer and to prohibit third
parties from referring, for purposes of any application for
Marketing Authorization for any Product; (ii) all data concerning
any serious or unexpected adverse effects, side effects and
contraindications of any Product which may come to the attention
of either Party or of any sublicensee; (iii) all data and
information in the possession of either Party
-4-
<PAGE> 5
or any permitted sublicensee of a Party relating to (A) the
pharmacological or toxicological properties of a Product, (B)
pre-clinical or clinical testing and experience in relation to a
Product which is not included in any Health Registration Dossier
and (c) to the extent reasonably required for purposes of any
application for Marketing Authorization, the chemical
composition, manufacturing processes and quality control testing
of a Product and (iv) all other information and data now or
hereafter in existence and in the possession of either party
which relates to the development, testing manufacture, marketing
or use of any Product which is not in the public domain.
Notwithstanding the foregoing, as used herein, Proprietary
Product Information of ILEX shall be limited to (1) any of the
foregoing in ILEX's possession or control as of the Effective
Date and (2) any of the foregoing received by ILEx from Glaxo as
of the Effective Date or thereafter.
(s) "Third Party" shall mean any party other than ILEX, MGI, their
respective Affiliates and MGI's sublicensees.
1.2 Other Rules of Interpretation. Unless the context clearly indicates
otherwise, the following rules shall govern the interpretation of the
Agreement.
(a) The definition of all terms defined herein shall apply equally to
the singular, plural, and possessive forms of such terms;
(b) All references herein to "days" shall mean calendar days;
(c) All references herein to "quarters" shall mean calendar quarters;
and
(d) All references herein to "Sections" shall mean the corresponding
Sections of this Agreement and all references to "Articles" shall
mean the corresponding Articles of this Agreement.
ARTICLE 2 WARRANTIES AND REPRESENTATIONS; LIMITATIONS
2.1 ILEX Warranties. ILEX represents and warrants to MGI that:
(a) it has the legal right and power to enter into this Agreement;
(b) it has taken all necessary corporate action to authorize and
perform this Agreement;
(c) it has not entered into any inconsistent prior obligation that
would prevent the sublicense of the Know-how to MGI or
preparation of the Data Package hereunder;
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<PAGE> 6
(d) it owns or has the right to license or sublicense all the rights
granted to MGI herein with respect to the Know-how and such
information and data in any applicable Drug Master Files which
ILEX owns, possesses or controls as of the Effective Date;
(e) it will own or have the right to license or sublicense all the
remaining rights granted to MGI herein with respect to the Know-
how and such information and data in any applicable Drug Master
Files that ILEX is receiving hereunder from Glaxo after the
Effective Date, such that as of the last date of such license or
transfers, ILEX will own or have the right to license or
sublicense all of the rights granted to MGI herein;
(f) to the best of its knowledge, there is no Know-how, technology or
data relating to the Compound that will not be provided to MGI;
and
(g) to the bet of its knowledge, there are not claims that would
challenge or impair the rights of MGI under the sublicense of the
know-how or with respect to the data Package hereunder,
including, without limitation, any claims based upon patents,
copyrights or trade secret laws.
(h) to the best of its knowledge, the manufacture, use or sale of the
Products under the license granted herein under the Know-how in
the Field will not infringe any patents, copyrights, trade
secrets or any other intellectual property right of any third
parties.
2.2 MGI Warranties. MGI respects and warrants to ILEX that:
(a) it has the legal right and power to enter into this Agreement;
and
(b) it has taken all necessary corporate action to authorize ad
perform this Agreement.
2.3 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 2.1
AND 2.2, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT
TO THE KNOW-HOW OR THE PRODUCTS AND EACH PARTY HEREBY EXPRESSLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES
OR MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR PATENT ABILITY.
2.4 LIMITATION OF LIABILITY. EXCEPT AS PROVIDED IN SECTIONS 2.1, 2.2,
ARTICLE 8 OR IN THE EVENT OF A MATERIAL BREACH BY EITHER PARTY OF THE
LIMITATIONS SET FROTH IN ARTICLE 10 BELOW, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER FOR ANY LOSS, EXPENSE OR DAMAGE ARISING OUT OF OR RESULTING
FROM THIS AGREEMENT. IN ANY EVENT, NEITHER PARTY SHALL BE LIABLE FOR
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<PAGE> 7
ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGES. IN
THE EVENT OF ANY CLAIM FOR SUCH LOSS OR DAMAGES, THE SOLE AND EXCLUSIVE
REMEDY FOR ANY LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO A
REFUND OF ANY SUMS PAID AND/OR THE TERMINATION OF ANY RIGHTS GRANTED
UNDER THIS AGREEMENT.
ARTICLE 3 GLAXO AGREEMENT
3.1 License from Glaxo. ILEX acknowledges that MGI's obligation under this
agreement, including its obligations to pay fees or royalties to ILEX, are
dependent upon Glaxo's agreement to license to ILEX (with right of sublicense
to MGI) the rights to the Know-how for the Compound in a Field including all
Indications, or such Indications as the parties and Glaxo may agree, on terms
consistent with the terms of the existing license under the Glaxo Agreement.
ILEX shall use its Best Efforts to obtain an agreement by Glaxo, in a form
acceptable to MGI, to include all Indications in the Field. If Glaxo refuses
in writing to execute such an agreement, or if it fails to execute such
agreement on or before March 15, 1997 or if the parties and Glaxo otherwise do
not agree on the Field, MGI or IlEX shall have the right to terminate this
Agreement as provided in Section 11.5.
3.2 Assignment of Glaxo Agreement to MGI. MGI shall have the right to
require ILEX to request the approval of Glaxo to transfer ILEX's rights and
obligations under the Glaxo Agreement to MGI. Such right shall survive
termination of this Agreement as provided in Section 11.6(c). If this
Agreement is in force at the time of assignment of ILEX's rights and
obligations under the Glaxo Agreement to MGI, such assignment shall serve to
terminate this Agreement. Upon notification by MGI of its desire to assume the
Glaxo Agreement, ILEX shall promptly request Glaxo to give such approval. The
parties'[ rights and obligation under Article 6 shall survive such assignment
of the Glaxo Agreement and the termination of this Agreement as provided in
this Section 3.2.
ARTICLE 4 LICENSE; TECHNOLOGY TRANSFER
4.1 Grant of License. Subject to the terms and conditions of this
Agreement, ILEX hereby grants MGI an exclusive, worldwide, perpetual,
irrevocable license (with the right of sublicense) under the Know-how, to
develop, make, have made, use, offer to sell, sell and distribute Products in
the Field. Such license shall be subject to the reserved right of Glaxo and
WFL under the Glaxo Agreement to use the B.W. Co. Know-how and the WFL Know-how
for research purposes.
4.2 Technology Transfer. Within seven days of the Effective Date, ILEX
shall (a) provide MGI all bulk drug substance of the Compound and Know-how then
in its possession and necessary or useful in development or commercialization
of the Products, including chemistry, manufacturing and controls, preclinical
and clinical data, published literature and the like, for MGI's use and (b)
transfer to MGI any Drug Master Files relating to the Products. ILEX may
retain formulated capsules of the
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Compound in any amount needed to administer the compassionate use program
referred to in Article 9 (the "Compassionate Plea Program").
ARTICLE 5 DATA PACKAGE
5.1 Data Package Services. ILEX shall prepare the Data Package on behalf of
MGI and deliver to MGI on or before March 15, 1997. ILEX shall prepare the
Data Package with that degree of skill expected of properly qualified
professionals performing such obligations and in a prompt manner and in
accordance with ILEX's own internal standards for preparing submissions to FDA.
5.2 FDA Meeting. ILEX shall participate, as and when requested by MGI, in
one meeting and associated conferences between MGI and the FDA concerning the
Data Package and the NDA. MGI will reimburse ILEX's out of pocket travel and
living costs associated with attending such FDA meeting, promptly after receipt
of appropriate supporting documentation.
5.3. Assignment to MGI. ILEX hereby assigned to MGI all right, title and
interest to any tangible materials resulting from preparation of the Data
Package. ILEX further assigns to MGI any and all copyrights, patents,
trademarks, know-how, trade secret rights, and any other intellectual property
arising from preparation of the Data Package. ILEX shall execute all papers,
including patent applications, assignment of inventions, patents and
copyrights, and other instruments that MGI shall deem necessary or convenient
in order to perfect MGI's intellectual property rights.
5.4 Non-Compete. During the term of this Agreement (and if this Agreement
is terminated by MGI pursuant to Section 11.2, then for any additional period
of five (5) years thereafter), ILEX covenants and agrees that it shall not
market, promote, supply or sell Products, directly or indirectly through any
Affiliate or Third Party, unless MGI consents in writing, such consent not to
be unreasonable withheld. For the purposes of this Section 5.4,. MGI's refusal
to consent shall not be deemed to be unreasonable if MGI determines, in its
sole discretion, that the Product in question would be competitive to any
current or future Product of MGI or its sublicensees. Notwithstanding the
foregoing, ILEX shall be entitled to manufacture any Product for any third
party provided that it can do so without using or disclosing any Know-how
licensed hereunder.
5.5 Non-Exclusive Use of Consultant. It is contemplated by the parties that
ILEX will hire a consultant to prepare the Data Package and that MGI may wish
to engage the consultant to perform additional, related services after the Data
Package has been completed. If ILEX hires the consultant as an employee or
continues his consulting arrangement, ILEX shall use its Best Efforts to make
that individual available to assist MGI in preparation of the clinical portion
of its NDA, on such terms as the parties may then agree. At MGI's option, such
services may be provided as part of the research and development work to be
performed pursuant to Section 5.2 of that certain Exclusive License Agreement
(DHAC) dated as of November __, 1996. If ILEX does not hire the
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<PAGE> 9
consultant as an employee or continue his consultancy, ILEX shall not hinder or
interfere with MGI's ability to engage the consultant to perform services
related to the Data Package or the Products after preparation of the Data
Package.
ARTICLE 6 FEES
6.1 License Fee. Subject to the fulfillment of the conditions set forth in
Section 3.1 hereto, MGI shall pay to ILEX [**] Dollars
($ [**] ) as a fee for the grant of the license to the Know-how to MGI,
payable by wire transfer on the later of the Effective Date or receipt by MGI
of a copy of the appropriate amendment to the Glaxo Agreement providing for an
expansion of the license as contemplated in Section 3.1.
6.2 Data Package Fee. Subject to the fulfillment of the conditions set
forth in Section 3.1. hereto, MGI shall pay to ILEX a fee of
[**] Dollars ($ [**] ) for the preparation of the Data
Package, payable by wire transfer thirty (30) days after completion of the Data
Package by ILEX and delivery thereof to MGI. This fee includes all expenses
incurred by ILEX in connection with its preparation of the data Package
(including travel and living costs, except as provided in Section 5.2).
6.3 Milestone Payment. Subject to the fulfillment of the conditions set
forth in Section 3.1 hereto, MGI shall pay to ILEX a milestone payment of
[**] Dollars ($ [**] ) if, an only if, it proceeds with the
submission of an NDA for a Product. If MGI decides to proceed with such NDA
submission, it shall so notify ILEX in writing and such payment will be made by
wire transfer within thirty (3)) days of receipt of such notice.
6.4 Taxes. ILEX shall be responsible for the payment of income taxes
resulting from payment from MGI to ILEX hereunder.
ARTICLE 7 ROYALTIES
7.1 Earned Royalties. Subject to the fulfillment of the conditions set
forth in Section 3.1 hereto and to adjustment as set forth in Section 7.2, MGI
shall pay ILEX a royalty of [**] percent ([**]%) of Net Sales of
Products. The obligation to pay royalties shall cease in each country ten (10)
years after the date of the First Commercial Sale of the first Product in each
such country. Notwithstanding the foregoing, royalties on Net Sales of any
Product sold in Europe shall be payable on a country-by-country basis
commencing with the First Commercial Sale of such Product in such country and
ending on the earlier of: (a) the date on which the Know-how becomes published
or generally known to the public through no fault of Ilex or MGI or their
Affiliates or MGI's sublicensees or (b) eight (8) years after the date of the
First Commercial Sales of the first Product in each such country. Upon
expiration of such royalty obligations, the license granted under Section 4.1
shall be deemed to be fully paid-up, irrevocable and perpetual. The parties
acknowledge and agree that the royalty
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obligation hereunder is designed solely as a pass through of ILEX's royalty
obligation under the Glaxo Agreement.
7.2 Credits Against Royalties. Any costs incurred by MGI or ILEX (including
costs incurred prior to the Effective Date) in the implementation and
maintenance of the compassionate Plea Program may be credited by MGI against
earned royalties payable pursuant to Section 7.1 hereof, provided that (i) the
amount of such credit for program costs shall not exceed [**] percent
([**]%) of the royalties that would otherwise by payable; and (ii) program costs
which are not ultimately credited against earned royalties during the term of
this Agreement shall lapse and shall be of no further value. Within seven days
of the Effective Date, ILEX shall provide MGI with a written accounting of
expenses incurred by ILEX prior to the Effective Date in the implementation and
maintenance of the Compassionate Plea Program, and thereafter shall provide MGI
with quarterly accountings and documentation of expenses incurred in
maintaining the Compassionate Plea Program, all in a form acceptable to MGI for
reimbursement as provided in Section 9.1.
7.3 Accrual of Royalties. No royalty shall be payable on a Product made,
sold or used for tests for development purposes or distributed as samples. No
royalties shall be payable on sales among MGI and MGI's sublicensees, but
royalties shall be payable upon sales by MGI or MGI's sublicensees to third
Parties.
7.4 Third Party Royalties. If MGI or its sublicensees are required to pay
royalties to any Third Party because the manufacture, use or sale of the
Compound contained in a given Product infringes any patent or other
intellectual property rights of such third party in a given country, MGI may
deduct from royalties thereafter due to ILEX with respect to Net Sales of such
Product in such country the royalties or such other fees paid to such Third
Party.
7.5 Glaxo Agreement. MGI shall comply with the terms of the Glaxo Agreement
applicable to sublicensees of ILEX relating to the payment of or accounting for
royalties or documentation of sales of Products (including without limitation
payment of audit expenses if so required under Section 6.2 of the Glaxo
Agreement) and shall, at the request of ILEX, submit to audits and take other
actions necessary for ILEX to fulfill its obligations under the Glaxo
Agreement, provided, however, that MGI shall not be obligated to take any
action that would cause it to pay or incur fees or royalties greater than those
provided for Articles 6 and 7 of this Agreement.
ARTICLE 8 INDEMNIFICATION
8.1 Indemnification by MGI.
(a) MGI hereby indemnifies and holds harmless ILEX and its Affiliates
and their respective officers, directors, employees and agents
(an "ILEX Indemnified Party") from and against all liabilities,
damage,s losses, costs and expenses (including reasonable
attorney's fees) arising out of: (i)
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breach of any warranty, covenant or agreement of MGI contained in
this Agreement; (ii) use of the results of the Data Package,
except to the extent such liabilities, damages, losses, costs and
expenses arise from the preparation by ILEX of the Data Package;
(iii) claims, suits or proceedings (a "Legal Action") brought by
a third party alleging actual negligence, gross negligence or
willful misconduct of MGI or its sublicensees resulting in
personal injury or death related to the use of any Product
developed or marketed by MGI or its sublicensees; (iv) any Legal
Action arising out of MGI's operation and administration of the
Compassionate Plea Program, and (v) any Legal Action alleging
personal injury or death or damage to property arising out of the
use of any Product developed or marketed by MGI or its
sublicensees.
(b) Whenever an ILEX Indemnified Party become aware of a claim, suit
or proceeding as to which it believes it is entitled to
indemnification under this Article 8, such ILEX Indemnified Party
shall give notice in writing to MGI in sufficient time so as not
to materially and adversely prejudice MGI's rights with respect
to such Legal Action, shall permit MGI to assume exclusive
control of the defense or settlement of the matter, and shall
provide, at the expense of MGI, all authority, information and
assistance which MGI may reasonable request for purposes of such
defense. If a single law firm engaged by MGI would be subject to
any material conflict of interest in representing one or more of
such parties MGI shall not be required to waive such conflict and
may, instead, request separate representation by an independent
law firm of the ILEx Indemnified Party at the expense of MGI. An
ILEX Indemnified Party may engage its own counsel, at its own
expense, to monitor the defense of any such matter. MGI will
maintain general and products liability insurance with
contractual liability coverage and limits of at least [**]
dollar ($[**] ).
8.2 Indemnification by ILEX.
(a) ILEX hereby indemnifies and holds harmless MGI, its Affiliates
and any parties to which it sublicenses rights to
manufacture,market, or distribute Products ad their respective
officers, directors, employees and agents (a "MGI Indemnified
Party") from and against all liabilities, damages, losses, costs
and expense (including reasonable attorney's fees) arising out
of: (i) any Legal Action brought alleging negligence, gross
negligence or willful misconduct of ILEX with respect to the
preparation of the Data Package or failure of ILEX to comply with
any applicable laws, regulations and/or administrative decisions
relating to the preparation of the Data Package; (ii) any Legal
Action arising out of ILEX's operation ad administration of the
Compassionate Plea Program, ad (iii) breach of any warranty,
covenant or agreement of ILEX contained in this Agreement.
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(b) Whenever an MGI indemnified Party becomes aware of a claim, suit
or proceedings as to which it believes it is entitled to
indemnification under this Article 8, it shall give notice in
writing to ILEX in sufficient time so as not to materially and
adversely prejudice ILEX's rights with respect to such Legal
Action, shall permit ILEX to assume exclusive control of the
defense or settlement of the matter and shall provide, at the
expense of ILEX all authority, information and assistance which
ILEX may reasonably request for purposes of such defense. If a
single law firm engaged by ILEX would be subject to any material
conflict of interest in representing one or more of such parties,
ILEX shall not be required to waive such representation by an
independent law firm of the MGI Indemnified Party at the expense
of ILEX. An MGI Indemnified Party may engage its own counsel, at
its own expense, to monitor the defense of any such matter.
8.3 Survival. The parties' obligations under this Article 8 shall survive
the termination of this Agreement for any reason.
ARTICLE 9 COMPASSIONATE PLEA PROGRAM
9.1 Continuing Obligation of ILEX. The parties acknowledge that ILEX has
assumed the duties and obligation of a Compassionate Plea Program with respect
to the Compound under the Glaxo Agreement. ILEX shall continue to administer
and shall remain solely responsible for the operation of the Compassionate Plea
Program until such time as: (i) MGI notifies ILEX of its intent to assume
ILEX's duties and obligations of the Compassionate Plea Program, in MGI's sole
discretion, or (ii) upon submission of an NDA for a Product, whichever shall
first occur. In the event of (i) or (ii), MGI shall assume responsibility for
the operation and administration of the Compassionate Plea Program. MGI shall
reimburse ILEX's reasonable expense for administration of the Compassionate
Plea Program, in an amount up to [**] Dollars ($ [**] ) per month
(but not to exceed ILEX's actual expenses), until the earliest of the
occurrence of (i) or (ii) or termination of this Agreement. MGI shall pay such
expense (up to such capped amount) upon presentation of documentation as set
forth in Section 7.2; provided, however, that any such expense incurred after
the Effective Date and prior to the date on which Glaxo signs the amendment to
the Glaxo Agreement contemplated in Section 3.1 shall accrue and MGI shall
reimburse ILEX for such expenses within thirty (3) days of the later date. If
Glaxo fails to sign such an amendment, MGI shall have no obligation hereunder
to reimburse IlEX for such expenses.
9.2 Cooperation. In the event that MGI assumes the duties and obligations
of ILEX under the Compassionate Plea Program, the parties shall work
cooperatively to facilitate the orderly transfer of administration of the
Compassionate Plea Program to MGI, including, but not limited to prompt
delivery to ILEx of all documentation concerning the Compassionate Plea Program
and all formulated Compound in its possession.
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ARTICLE 10 CONFIDENTIALITY
10.1 Non-Use and Non-Disclosure. Each party acknowledges and agrees that all
the other party's Confidential Information is confidential and proprietary to
the disclosing party. Each party shall not use or disclose to any third party
the other party's confidential Information without the other party's prior
written consent for any purpose other than as permitted or required hereunder.
Each party shall take the same reasonable measures necessary to prevent any
unauthorized use or disclosure by its employees, agent, contractors,
sublicensees, or consultants of the other party's Confidential Information as
it applies to the protection of its own Confidential Information.
10.2 Marking To be entitled to protection as Confidential Information, all
ILEX or MGI documents containing that party's Confidential Information shall be
appropriately and clearly marked as "Proprietary," "Secret," "Confidential," or
other words to similar effect. If a disclosure of confidential Information is
made orally, as in a meeting, the disclosing party shall indicate the nature of
that information at the time of its disclosure and shall confirm such
designation in writing within ten (10) days of the date of such disclosure to
the receiving party.
10.3 Exclusions. Information shall not be considered Confidential
Information hereunder if it:
(a) was already in the possession of the receiving party prior to its
receipt from the disclosing party, as shown by the receiving
party's books and records;
(b) is, or becomes, part of the public knowledge or literature
through no fault, act or omission of the receiving party,
provided, however, that Proprietary Product Information shall not
be deemed to have entered the public domain by reason of its
having been filed with the FDA or any other applicable
governmental agency;
(c) is, or becomes, available to the receiving party from a source
other than the disclosing party, which source has rightfully
obtained the same information and has no obligation of
confidentiality to the disclosing party with respect to it;
(d) is made available on an unrestricted basis by the disclosing
party to a Third party unaffiliated with the disclosing party; or
(e) is required to be revealed pursuant to law, provided, however,
the receiving party which is under any such requirement of law
shall give reasonable notice (pursuant to the provisions of
Section 13.5) to the disclosing party of such requirement and
shall cooperate with the disclosing party in reasonable legal
efforts to limit or mitigate any such
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revelation so as to preserve the proprietary nature of any
Confidential Information contained therein.
10.4 Duration; Surviving Obligation. Each party's obligations of non-use and
non-disclosure of the other party's Confidential Information shall apply during
the term of this Agreement and shall also survive for a period of five (5)
years after its termination or expiration for any reason.
ARTICLE 11 TERM AND TERMINATION
11.1 Term Unless earlier terminated in accordance with Section 11.2, 11.3,
11.4 or 11.5, this Agreement shall be in effect, on a country-by-country basis,
for ten (1) years from the date of the First commercial Sale of the first
Product in such country or in the case of countries in Europe, eight (8) years
from the date of the First Commercial Sale of the first Product in such
country.
11.2 Termination for Cause. Either party may terminate this Agreement at any
time by giving notice in writing to the other party, which shall be effective
ninety (90) days after its date, in accordance with the following provisions:
(a) if the other party files a petition of any type as to its
bankruptcy, is declared bankrupt, becomes insolvent, makes an
assignment for the benefit of creditors, or goes into liquidation
or receivership; or
(b) if the other party is in material breach of this Agreement and
has failed to cure such breach within sixty (60) days of the
receipt of written notice of breach from the non-breaching party.
11.3 Termination by Mutual Agreement. The parties may agree in writing to
terminate this Agreement for their mutual convenience at any time and for any
reason, subject to such terms and conditions as they may adopt.
11.4 Termination by MGI. MGI may terminate this Agreement immediately upon
notice to ILEX if:
(a) for any reason upon sixty (60) days notice; or
(b) MGI assumes the Glaxo Agreement pursuant to Section 3.2 hereof;
(c) MGI informs ILEX after the meeting with the FDA that it will not
proceed to submit an NDA with respect to the Product and returns
all Know-how to ILEX; or
(d) immediately upon a decision by MGI to stop all clinical research
on the Products due to safety issues with respect to
administration of a Product to humans.
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11.5 Termination due to Glaxo. If Glaxo refuses in writing to execute an
amendment to the Glaxo Agreement, as required under Section 3.1, or it fails to
do so on or before March 15, 1997, either party may terminate this Agreement
effective immediately upon written notice to the other party. Upon such
termination, MGI shall have no further obligation, and ILEX shall have no
further rights, under Article 6.
11.6. Rights and Obligations on Termination. If this Agreement is terminated
for any reason, the parties shall have the following rights and obligations:
(a) Termination of this Agreement shall not release either party from
the obligation to make payment of all amounts then due and
payable.;
(b) If this Agreement expires as provided in Section 11.1, the
license granted under Section 4.1 shall continue on a fully paid-
up, irrevocable and perpetual basis for the Indications with the
Field. If this agreement is otherwise terminated, the license
granted under Section 3.1 shall terminate and MGI shall return to
ILEX and Know-how relating to the Products that MGI initially
received from ILEX, and if ILEX terminates this Agreement
pursuant to Section 11.2 or MGI terminates this Agreement
pursuant to Section 11.4(a), (c) or (d), ILEX shall have a
worldwide, nonexclusive, royalty-free license under any patent
rights and know-how developed by MGI during the term of this
agreement and relating directly to the Products.
(c) If this Agreement is terminated pursuant to Section 11.2 for
ILEX's breach, ad if MGI so requests, ILEx shall request Glaxo to
approve the assignment of ILEX's rights and obligations under the
Glaxo Agreement to MGI, as provided in Section 3.2
(d) Each party's respective obligation of indemnification under
Article 8 (as provided in Section 8.3), of non-use and non-
disclosure under Article 10 (as provide din Section 0.4) and to
settle all disputes,. controversies or claims under Article 12
(as provided in Section 12.5) shall survive such termination of
this Agreement. In addition, MGI shall comply with Section 11.4
of the Glaxo Agreement upon any termination of this Agreement.
11.7. Rights under U.S. Bankruptcy Laws. The parties acknowledge and agree
that all rights an licenses granted to MGI by ILEX pursuant to this Agreement
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101952) of the Bankruptcy Code, and that MGI, as the licensee
hereunder, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy code.
11.8 No Compensation. the parties agree that, subject to the above
provisions of Section 11.6, and without prejudice to any other remedies at law
or in equity that either
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party may have in respect of any breach of this agreement, neither party shall
be entitled to or claim that it is entitled to any compensation or like payment
as a result of or arising out of any termination in accordance with this
Article 11, whether claimed as loss of good will, foregone profits, lost
investments, or otherwise.
ARTICLE 12 DISPUTE RESOLUTION
12.1 Negotiation. The parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either party's rights or obligation hereunder or thereunder. It is the
objective of the parties to establish procedures to facilitate the resolution
of disputes arising under this Agreement in an expedient manner by mutual
cooperation and without resort to litigation. The parties agree to consult and
negotiate in good faith to try to resolve any dispute, controversy or claim
that arises out of or relates to this Agreement.
12.2 Reservation for Litigation. Notwithstanding Section 12.1, each party
expressly reserve the right to seek judicial relief, including, without
limitation, any injunction or other preliminary relief from a court of
competent jurisdiction, if the other party is or appears to be in violation of
its obligations of non-use and non-disclosure under Article 10 above. Nothing
in this Section 12.2. shall preclude a party from seeking such interim relief
with respect to any disputes or claims arising under this Agreement as may be
available under the commercial arbitration rules a provided in Section 12.3.
12.3 Arbitration. Subject to the reservation of the parties under Section
12.2, all disputes, claim or controversies arising out of or in connection with
this Agreement shall be finally settled under the commercial arbitration rules
of the American Arbitration Association ("AAA"), as modified by Section 12.4
below. Judgment upon the award rendered by the arbitrators may be entered in
any court of competent jurisdiction. The place of arbitration shall be
Chicago, Illinois. The arbitration shall be conducted by three (3) neutral
arbitrators selected by mutual agreement of the parties or, if that is not
possible within thirty (3) days of the initial demand for such arbitration, by
the AAA. At least one (1) arbitrator shall have knowledge of and experience in
technology licensing.
12.4 Special Rules. Notwithstanding any provision to the contrary in the
commercial arbitration rules, the parties hereby stipulate that any arbitration
hereunder shall be subject to the following special rules:
(a) The arbitrators may not award or assess punitive damages against
either party; and
(b) Each party shall bear its own costs and expenses of the
arbitration and one-half (1/2) of the fees and costs of the
arbitrators, subject to the power of the arbitrators, in their
sole discretion, to award all such reasonable costs, expenses and
fees to the prevailing party.
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12.5 Survival. The duty of the parties to arbitrate any dispute, controversy
or claim under the Article 12 shall survive the termination of this Agreement
for any reason.
ARTICLE 13 GENERAL PROVISIONS
13.1 Entire Agreement. This Agreement, together with Exhibits hereto which
are incorporated herein by reference, constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersede all the
parties' previous understandings, agreements and representations, oral or
written.
13.2 Assignment. ILEX shall not assign or otherwise transfer its rights or
obligations under this Agreement except with the prior written consent of MGI;
provided that no such consent for a transfer to an entity shall be required and
all right and obligations arising hereunder shall inure to the benefit of that
entity if it is (a) an Affiliate of ILEX, (b) the successor in interest of ILEx
by reason of sale, merger or operation of law, or (c) has acquired all or
substantially all of the assets and business of ILEX.
13.3 Amendment. This Agreement may not be modified or amended, in whole or
in part, except by a written agreement signed by both parties.
13.4 Severability. If one or more of the provision of this Agreement is
subsequently declared invalid or unenforceable, this Agreement shall be treated
as though that provision were not in this Agreement, and this shall not affect
the validity or enforceability of the remaining provisions of this Agreement
(unless those provision that are invalidated or unenforceable are clearly
material and inseparable from the other provisions). The agreement as modified
shall be applied and construed to reflect substantially the good faith intent
of the parties and to achieve the economic effects originally intended by the
terms hereof.
13.5 Notices. Except as may be otherwise provided in this Agreement, any
notice, demand or request given, made or required to be made shall be in
writing and shall be effective, unless otherwise provided herein, when received
after delivery by (a) registered air mail, postage prepaid; (b) facsimile with
electronic confirmation of receipt; or (c) by express mail or a reputable
courier at the addresses set forth below or to any other address that a party
specifies in writing.
If to MGI: MGI PHARMA, INC.
300E Opus Center
9900 Bren Road East
Minnetonka, NM 55343-9667
Attn: Lori-jean Gille, Vice President,
General Counsel
Facsimile: (612) 935-0468
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With copy to: Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Attn: Karin A. Keitel
Facsimile: (612) 340-8827
If to ILEX: ILEX Oncology, Inc.
Suite 101
14785 Omicron Drive
San Antonio, Texas 78245-3217
Attn: Tim Williamson
Facsimile: (210) 677-6009
With Copy to: Fulbright & Jaworski
300 Convent Street
Suite 2200
San Antonio, Texas 72058
Attn: Kenneth J. Halliday
Facsimile: (210) 270-7205
13.6 Waiver. Either party's failure or delay in exercising any remedy for
default shall not be deemed a waiver of that or any subsequent default of that
provision or of any other provision hereof.
13.7 Counterparts. This Agreement shall be executed in two (2) or more
counterparts, each of which shall be deemed an original.
13.8 Governing Law. This Agreement shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York, excluding (a)
its choice of law rules and (b) the United Nations Convention on the
International Sale of Goods and provided however that the operation of the
arbitration agreement contained in Section 12.3 hereof, and the enforcement of
any award rendered pursuant thereto, shall be governed by United States federal
law to the exclusion of any state law.
13.9 Relationship. The parties are independent contractor sand shall not be
deemed to have formed any partnership, joint venture or other relationship
hereunder. Neither party shall make, or represent to any other person that it
has the power or authority to make, any financial or other commitment on behalf
of the other party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
MGI PHARMA, INC. ILEX ONCOLOGY, INC.
By By Richard L. Love
------------------------------- --------------------------------------
Its Vice President, General Its President and CEO
----------------------------- -------------------------------------
Counsel
-----------------------------
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the date first above written.
MGI PHARMA, INC. ILEX ONCOLOGY, INC.
By By
------------------------------- --------------------------------------
Its Its
----------------------------- -------------------------------------
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EXHIBIT A
THE COMPOUND
Oxypurinol is a structural analog of the natural purine base xanthine and the
principal metabolite of allopurinol, a xanthine oxidase inhibitor that acts on
purine metabolism.
The molecular formula for oxypurinol is C(5)(H)(4)(N)(4)(O)(2)
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EXHIBIT B
OXYPURINOL DATA PACKAGE
A pre-NDA Data Package will be prepared by ILEX to allow its submission to the
FDA on or before 15 March 1997. This data will b submitted by MGI to the FDA
for presentation, with ILEX's assistance. The Data Package will be derived
form approximately 489 patients who have been enrolled in the compassionate use
program for oxypurinol. The data package will contain the following items;
however, additional items may be included as the data package evolves to a pre-
NDA document.
1. INDICATION(S) - An indication(s) for oxypurinol which would allow
for rapid acceptance and approval by the FDA, but will be as broad as is
reasonable. In its most narrow form, an indication for patients suffering from
gout who have experienced an adverse event from the use of Allopurinol will be
sought.
2. DEMOGRAPHICS - Demographic information will be included in the
pre-NDA package. This information will be extracted from the data collection
forms and will include things like age, sex, height and weight. In addition,
information will be summarized regarding the patient's reaction to Allopurinol;
e.g., exfoliative dermatitis, hepatic intolerance or leukopenia. Finally,
information regarding the indication, if other than untoward reaction to
Allopurinol, for gout patients will also be tabulated. Other possible
indications are urate nephrolithiasis, Lesch-Nyan Syndrome or hyperuricemia.
3. PHARMACOKINETICS - On occasion, Burroughs-Wellcome Company did
oxypurinol determinations on blood samples received from physicians concerned
about the bioavailability of the drug. In addition, over 200 articles have
been identified which contain information on pharmacology and/or
pharmacokinetics. These articles and clinical data will be reviewed and
summarized for inclusion in the pre-NDA data package.
4. CLINICAL LABORATORY RESULTS - All available clinical laboratory
data from the Case Report Form review will be included in the pre-NDA data
package. Typically, these include RBC, hemoglobin, hematocrit, white cell
counts and leukocyte differential, also where available, urinalysis, serum uric
acid levels, BUN, and creatinine determinations will be provided for patients
before and during oxypurinol therapy.
5. CLINICAL RESPONSES - Clinical responses are described by many of
the investigators; however, since this was not requested information, it is
not available for all patients. We will, however, review this information and
decide at the conclusion of the review whether it will be included in the
preNDA package.
6. CONCOMITANT MEDICATIONS - This information appears to be readily
available on the Case Report Forms and will be recorded as part of the pre-NDA
package.
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<PAGE> 23
7. TOXICITIES - This information is well documented on the CRFs and
in the annual report sent to the FDA. Overall, the toxicities associated with
the use of oxypurinol can be considered few in number and relatively mild when
compared to Allopurinol.
8. DOSAGE, SCHEDULE, AND LENGTH OF ADMINISTRATION OF OXYPURINOL -
This information will also be summarized in the pre-NDA package. It may be
necessary to refer to other documents to extract this data. This information
will lead to the preparation of a draft of labeling which will also be included
in the pre-NDA package.
As part of processing and analyzing this data, ILEX will perform the
following:
* design and create a database for clinical data
* input and verify entry of data
* perform a data check, followed by investigation and resolution
of data discrepancies
* maintain an audit trail of any edit changes
* generate reports for key data expected to be required for the
clinical section of an NDA submission
* analyze results and discuss clinical conclusions with MGI
* transfer datasets and associated documentation to MGI
In Summary, ILEX will prepare a pre-NDA meeting package and assist MGI
in a face-to-face meeting with the FDA. This meeting will be designed to
solicit the FDA's opinion on the filing of a paper NDA submission on currently
available patient data and on the current status of the IND.
-23-
<PAGE> 24
EXHIBIT C
FIELD
-24-
<PAGE> 25
EXHIBIT D
GLAXO AGREEMENT
-25-
<PAGE> 1
EXHIBIT 10.57
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
EXCLUSIVE LICENSE AGREEMENT
(DHAC)
THIS AGREEMENT is made as of November 27, 1996, by and between MGI
PHARMA, INC. ("MGI"), 300E Opus Center, 9900 Bren Road East, Minnetonka,
Minnesota 55343-9667 and ILEX ONCOLOGY, INC. ("ILEX"), 14785 Omicron Drive,
Suite 101, San Antonio, Texas 78245-3217.
Recitals
A. MGI acquires, develops and markets pharmaceuticals that it
believes address currently unmet medical needs or significantly improve upon
current therapies.
B. ILEX has certain rights and know-how relating to a compound
called 5,6-dihydro-5 azacytidine ("DHAC") and has filed a U.S. patent
application covering the use of such compound for treatment of prostate cancer.
C. MGI and ILEX have previously entered into that certain Non-
Disclosure Confidentiality Agreement dated June 17, 1996 (the "Non-Disclosure
Agreement").
D. MGI desires to develop, make or have made, sell and distribute
products containing DHAC on a worldwide basis, and ILEX desires to grant to MGI
rights to develop, make, have made, import, offer for sale, sell, promote and
distribute such products, all upon the terms and conditions set forth in this
Agreement.
E. ILEX and MGI wish to transfer its only orphan drug designation
for DHAC from ILEX to MGI.
F. ILEX wishes to use its best efforts to cause the National Cancer
Institute of the Department of Health and Human Services, Public Health
Service, National Institutes of Health ("NCI") to transfer and assign to MGI
its existing investigational new drug application for DHAC products as well as
its existing supplies of DHAC bulk drug substance.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the Parties hereto have agreed as follows:
ARTICLE 1 INTRODUCTORY PROVISIONS
1.1 Defined Terms. The following terms, when used in capitalized for
in this Agreement, shall have the meanings set forth below:
(a) "Affiliate" when used with reference to either party shall mean
any entity controlling, controlled by or under common control
with the said party. For
<PAGE> 2
purposes hereof, "control" shall mean ownership, directly or
indirectly, of more than [**] percent ([**]%) of the
securities having the right to vote for the election of
directors, in the case of a corporation, and more than [**]
percent ([**]%) of the beneficial interest in the capital, in the
case of a business entity other than a corporation.
(b) "Best Efforts" shall mean those efforts that would be made by a
reasonably prudent business person acting in good faith, in the
exercise of reasonable commercial judgment and in a manner
consistent with those efforts the applicable party devotes to its
own business and pharmaceutical products resulting from its own
research efforts and having a similar market potential, profit
potential or strategic value.
(c) "Confidential Information" shall mean all proprietary
information, including ILEX Know-How, Proprietary Product
Information of a party, including any information on the markets,
customers, suppliers, patents or patent applications, inventions,
products, procedures, designs, formulas, business plans,
financial projections, organizations, employees or consultants or
any other similar aspects of a party's present or future
business, the secrecy of which confers a competitive advantage
upon that party.
(d) "Drug Master File" shall mean a Type II Drug Master File for any
Product created by ILEX, NCI or their respective agents and on
file with the FDA, any supplementary or successor drug master
file in respect of DHAC that is submitted by ILEX, NCI or their
respective agents to the FDA, or any corresponding drug master
file or similar file in respect of any Product that may be
submitted to the FDA or other applicable governmental agency; in
each case, by ILEX or its agents as of the Effective Date or by
NCI or its agents at any time (provided that ILEX has rights from
NCI with respect thereto).
(e) "Effective Date" shall mean the date first above written.
(f) "FDA" shall mean the United States Food and Drug Administration
or any successor entity.
(g) "Health Registration Dossier" shall mean all documentation which
is now or shall hereafter be on file with the FDA or other
applicable governmental agency, which comprises the information
and data submitted to such agency in support of an application
made by ILEX, MGI, or a sublicensee of MGI or ILEX, to such
agency for Marketing Authorization for a Product to treat any
Indication.
(h) "ILEX Know-how" shall mean all information and data, regardless
of form, which is necessary or useful to the development
(including, without limitation, clinical or preclinical testing
or results, and any other information necessary or supportive of
a request for Marketing Authorization) or manufacture of a
Product or to the development or manufacture of dose forms or
means of delivery of a
<PAGE> 3
Product, including, without limitation, the Proprietary Product
Information, (i) which (A) may have been developed by ILEX, NCI
or other third parties or (B) which is owned, developed, acquired
or otherwise licensable by ILEX to MGI; and (ii) which is in
ILEX's possession or control as of the Effective Date, or with
respect to any of the foregoing received by ILEX from NCI or its
agents, as of the Effective Date or thereafter.
(i) "ILEX Patents" shall mean all patents or patent applications
under the laws of any country or countries, (i) which are
necessary or useful to (A) the development or manufacture of dose
forms or means of delivery of the Products, or (B) to the use of
the Products alone or in conjunction with other products; and
(ii) which are owned or controlled by ILEX which ILEX has a right
to license to MGI or its sublicensees as of the Effective Date,
or with respect to any of the foregoing licensed or assigned to
ILEX by NCI or its agents, as of the Effective Date or
thereafter.
(j) "IND" shall mean an Investigational New Drug Application, or a
successor application.
(k) "Indication" shall mean any medical condition or set of symptoms
for the treatment of which a Product may be determined to be safe
and efficacious.
(l) "Marketing Authorization" shall mean any governmental approval by
the FDA or other applicable governmental agency which is legally
required under applicable laws, regulations or administrative
decisions to put a pharmaceutical product on the market in such
country for use in the treatment of any Indication (including
pricing and reimbursement approvals, if applicable).
(m) "Net Sales" shall mean the total of the gross invoice prices of
Products sold or transferred by MGI, its Affiliates, and its
sublicensees less rebates and allowances given by MGI, its
Affiliates or sublicensees and the sum of the following actual
and customary deductions included on the invoice as part of the
gross invoice price and actually paid: cash, trade, or quantity
discounts; dales, use, tariff or other excise taxes imposed upon
particular sales; import/export duties; and transportation
charges. Sales among MGI, its Affiliates and its sublicensees
for ultimate third party use shall be disregarded for the
purposes of computing Net Sales. Products provided by MGI, its
Affiliates or sublicensees to third parties as samples or for
research purposes or clinical studies shall not be deemed to be
sold or transferred of the purposes of computing Net Sales.
(n) "Orphan Drug Designation" shall mean designation under the U.S.
Orphan Drug Act, as amended, or any successor statute, of a
Product for treatment of mesothelioma.
(o) "Party" shall mean either of the two parties to this Agreement
and, to the extent appropriate when required by the context, to
any sublicensees of a Party.
<PAGE> 4
(p) "Products" shall mean any pharmaceutical products having as an
active ingredient DHAC, either alone or in combination with other
substances, whether or not such products are known or in
existence on the Effective Date.
(q) "Proprietary Product Information" shall mean (i) all information
and data now or hereafter contained in any Drug Master File or
Health Registration Dossier to which either Party, or any
sublicensee of either Party, shall have the right under
applicable law, regulations and administrative decisions to
refer, to authorize third parties to refer and to prohibit third
parties from referring, for purposes of any application for
Marketing Authorization for any Product; (ii) all data concerning
any serious or unexpected adverse effects, side effects and
contraindications of any Product which may come to the attention
of either Party or of any sublicensee; (iii) all data and
information in the possession of either Party or any permitted
sublicensee of a Party relating to (A) the pharmacological or
toxicological properties of a Product, (B) pre-clinical or
clinical testing and experience in relation to a Product which is
not included in any Health Registration Dossier and (C) to the
extent reasonably required for purposes of any application for
Marketing Authorization, the chemical composition, manufacturing
processes and quality control testing of a Product and (iv) all
other information and data now or hereafter in existence and in
the possession of either Party which relates to the development,
testing, manufacture, marketing or use of any Product which is
not in the public domain. Notwithstanding the foregoing, as used
herein, Proprietary Product Information of ILEX shall be limited
to (1) any of the foregoing in ILEX's possession or control as of
the Effective Date and (2) any of the foregoing received by ILEX
from NCI or its agents as of the Effective Date or thereafter.
1.2 Other Rules of Interpretation. Unless the context clearly indicates
otherwise, the following rules shall govern the interpretation of this
Agreement:
(a) The definitions of all terms defined herein shall apply equally
to the singular, plural, and possessive forms of such terms;
(b) All references herein to "days" shall mean calendar days;
(c) All references herein to "quarters" shall mean calendar quarters;
and
(d) All references herein to "Sections" shall mean the corresponding
Sections of this Agreement and all references to "Articles" shall
mean the corresponding Articles of this Agreement.
<PAGE> 5
ARTICLE 2 WARRANTIES, REPRESENTATIONS AND COVENANT; LIMITATIONS
2.1 ILEX Warranties. ILEX represents and warrants to MGI that:
(a) it has the legal right and power to enter into this Agreement;
(b) it has taken all necessary corporate action to authorize and
perform this Agreement;
(c) it has not entered into any inconsistent prior obligations that
would impair the rights being licensed to MGI hereunder;
(d) it owns or has the right to license or sublicense all the rights
granted to MGI herein with respect to the ILEX Patents, ILEX
Know-how and such information and data in any applicable Drug
Master Files which ILEX owns, possesses or controls as of the
Effective Date;
(e) it will own or have the right to license or sublicense all the
remaining rights granted to MGI herein with respect to the ILEX
Patents, ILEX Know-how and such information and data in any
applicable Drug Master Files that ILEX is receiving hereunder
from NCI or its agents after the Effective Date, such that as of
the last date of such transfers, ILEX will own or have the right
to license or sublicense all of the rights granted to MGI herein;
(f) to the best of its knowledge, there are no third party claims
that would challenge or impair the license of the rights granted
to MGI herein, including, without limitation, any claims based
upon patents, copyrights or trade secret laws in the United
States; and
(g) to the best of its knowledge, the manufacture, use or sale of the
Products under the license granted herein under the ILEX Patents
and ILEX Know-how will not infringe any patents, copyrights,
trade secrets or any other intellectual property rights of any
third parties.
2.2 MGI Warranties. MGI represents and warrants to ILEX that:
(a) it has the legal right and power to enter into this Agreement;
and
(b) it has taken all necessary corporate action to authorize and
perform this Agreement.
2.3 ILEX Covenant. During the term of this Agreement (and if this
Agreement is terminated by MGI pursuant to Section 11.2, then for an
additional period of five (5) years thereafter), ILEX covenants and
agrees that it shall not market, promote, supply or sell Products,
directly or indirectly through any affiliate or third party, unless MGI
consents in writing, such consent not to be unreasonably withheld. For
the purposes of
<PAGE> 6
this Section 2.3, MGI's refusal to consent shall not be deemed to be
unreasonable if MGI determines, in its sole discretion, that the Product
in question would be competitive to any current or future Product of MGI
or its sublicensees. Notwithstanding the foregoing, ILEX shall be
entitled to manufacture any Product for any third party provided that it
can do so without using or disclosing any ILEX Patent or ILEX Know-how
licensed hereunder.
2.4 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 2.1
AND 2.2, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE
ILEX PATENTS, ILEX KNOW-HOW OR THE PRODUCTS AND EACH PARTY HEREBY EXPRESSLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR PATENT ABILITY.
2.5 LIMITATION OF LIABILITY. EXCEPT AS PROVIDED IN SECTIONS 2.1, 2.2,
ARTICLE 9 OR IN THE EVENT OF A MATERIAL BREACH BY EITHER PARTY OF THE
LIMITATIONS SET FORTH IN ARTICLE 10 BELOW, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER FOR ANY LOSS, EXPENSE OR DAMAGE ARISING OUT OF OR RESULTING
FROM THIS AGREEMENT. IN ANY EVENT, NEITHER PARTY SHALL BE LIABLE FOR
ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGES. IN
THE EVENT OF ANY CLAIM FOR SUCH LOSS OR DAMAGES, THE SOLE AND EXCLUSIVE
REMEDY FOR ANY LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO A
REFUND OF ANY SUMS PAID AND/OR THE TERMINATION OF ANY RIGHTS GRANTED
UNDER THIS AGREEMENT.
ARTICLE 3 RIGHTS IN INTELLECTUAL PROPERTY
3.1 License Grant to MGI. Subject to the terms and conditions of this
Agreement, ILEX hereby grants to MGI, and MGI hereby accepts from ILEX, an
exclusive, worldwide right and license (with right of sublicense) under the
ILEX Patents and ILEX Know-how and all other intellectual property rights
covering or relating to the Products, which are owned or controlled by ILEX as
of the Effective Date or licensed, assigned or transferred to ILEX by NCI or
its agents at any time, to develop, make, have made, import, use, offer to
sell, sell and distribute the Products.
ARTICLE 4 TRANSFERS TO MGI
4.1 Orphan Drug Designation. ILEX shall transfer and assign to MGI its
Orphan Drug Designation for the Products. The parties acknowledge and agree
that MGI's obligations under this Agreement are dependent upon such transfer
and assignment by ILEX.
4.2 Technology Transfer. ILEX shall (a) provide MGI all DHAC bulk drug
substance then in its possession and ILEX Know-How then in its possession or
control and necessary or useful in development or commercialization of the
Products, including chemistry, manufacturing and controls, preclinical and
clinical data, published literature and the like, for MGI's use and (b)
<PAGE> 7
transfer to MGI any Drug Master Files of ILEX or its agents or otherwise then
in its possession or control and relating to the Products.
4.3 Transfer from NCI. The parties acknowledge that MGI's obligations under
this Agreement are dependent upon NCI's agreement to assign and transfer to MGI
the IND for the Products and any DHAC bulk drug substance in possession or
control of NCI or its agents. MGI shall cooperate reasonably in such transfers
including providing NCI with a copy of its protocol for clinical study of the
Products.
4.4 Schedules for Transfers. ILEX's obligations under Sections 4.1 and 4.2
shall be completed not later than December 15, 1996. ILEX shall use its Best
Efforts to cause the assignment and transfers from NCI, as contemplated under
Section 4.3, to be completed by December 20, 1996 and not later than March 15,
1997. If the assignment and transfers from NCI contemplated in Section 4.3 are
not completed prior to March 15, 1997, either party may terminate this
Agreement as provided in Section 11.5.
4.5 Surviving Provisions. MGI shall comply with Sections 4.7, 5.2 and 9.1
of that certain License Agreement dated August 4, 1993, by and between ILEX and
the National Technical Information Services, as if MGI were a "LICENSEE"
thereunder.
ARTICLE 5 PRODUCT DEVELOPMENT; PATENT PROSECUTION
5.1 Product Development. MGI shall develop the Products, at MGI's expense,
for use in treatment of an initial Indication (which is currently intended to
me myelodisplastic syndrome) (the "Initial Indication") in accordance with a
development plan prepared by MGI and acceptable to ILEX, and thereafter for use
for such Indications and in such countries as MGI deems appropriate.
5.2 ILEX Development Work. ILEX shall be entitled to perform contract
research and development work for MGI, as agreed by the parties from time to
time, at ILEX's then standard contract rates, for an aggregate amount equal to
[**] percent ([**]%) of MGI's total clinical development budget for the
Initial Indication for the Products (excluding any preclinical work for the
Products). If MGI terminates the development of the Products for any reason,
such aggregate amount shall equal [**] percent ([**]%) of what MGI
actually spent for development of the Products (unless the parties have already
agreed to a greater amount pursuant to a written agreement as contemplated
below). Such development work may be related to the Products or to other MGI
products, in MGI's sole discretion and will be subject to the terms of a
separate written agreement, including, without limitation, provisions (i)
restricting ILEX's use of any data resulting f rom the work, (ii) assigning to
MGI all ownership and other rights with respect to any resulting data and
inventions and (iii) indemnifying MGI, its Affiliates and sublicensees and
their respective officers, directors, employees and agents from any claims
arising from negligence, gross negligence or willful misconduct of ILEX with
respect to such development work. MGI and ILEX shall use their Best Efforts to
enter into such a separate written agreement prior to but not later than the
date on which an NDA for a Product is submitted or within sixty (60) days of
the date on which MGI decides, in its sole discretion, to
<PAGE> 8
terminate development of the Products, whichever occurs first, with the
development work to be completed within one year after signing such agreement.
5.3 Patent Prosecution. MGI shall have the right to prosecute and maintain
any ILEX Patents, by attorneys of MGI's choice and at MGI's expense. MGI shall
also reimburse ILEX for up to $[**] of ILEX's out-of-pocket patent expenses
incurred prior to the Effective Date. If MGI decides, for any reason, not to
prosecute or maintain any of the ILEX Patents in the United States, it shall so
notify ILEX in writing. Upon such notification, ILEX shall have the right to
prosecute and maintain such ILEX Patent, at its own expense, and MGI shall no
further rights under Section 3.1 in the United States with respect to such ILEX
Patent.
ARTICLE 6 PRODUCT REGULATORY APPROVALS
6.1 Regulatory Approvals. MGI shall submit appropriate applications for
Marketing Authorization in the United States for use of the Products in the
Initial Indication and shall use its Best Efforts, in consultation with ILEX,
to obtain such Marketing Authorization. Thereafter, MGI may submit
applications for Marketing Authorizations for such Indications and in such
countries as MGI deems appropriate. Such responsibility shall include the
conduct and documentation of such testing and preclinical and clinical trials
as are required in connection with the submission of applications for Marketing
Authorization within such countries.
6.2 Co-Development. MGI shall have the right to engage third parties to
develop the Products jointly with MGI. The Parties acknowledge that any
sublicensee that is developing the Products jointly with MGI shall be entitled
to file separate applications to obtain Marketing Authorizations for the
Products.
ARTICLE 7 PROMOTION AND MARKETING
7.1 General Best Efforts Obligation. MGI shall commit adequate funding and
use its Best Efforts to fund and support the commercial launch and ongoing
promotion, marketing and sale of Products in the Initial Indication.
Thereafter, MGI shall commit such funding and use such efforts as it deems
appropriate to fund and support the commercial launch and on-going promotion,
marketing and sale of Products in other Indications.
7.2 Co-Promotion and Co-Marketing. MGI shall have the right to engage third
parties to assist in its promotion and marketing of the Products. Such third
party arrangements may include co-promotion or co-marketing of the Products.
7.3 Compliance with Law. MGI shall market, promote and sell the Products in
compliance with the conditions and requirements of all applicable Marketing
Authorizations and with all other applicable legal and regulatory requirements.
ARTICLE 8 LICENSE FEE AND ROYALTIES
8.1 Up-front License Fee. MGI shall pay to ILEX [**] Dollars
($ [**] ), as an up-front license fee. This fee shall be payable by wire
transfer five (5)
<PAGE> 9
days after the earlier of (a) the date on which MGI receives written notice
from NCI, in a form reasonably acceptable to MGI, that it shall so transfer and
assign to MGI (or to ILEX as an intermediary) any NCI IND for the Product and
DHAC bulk drug substance in its possession or control, or (b) the date on which
NCI transfers and assigns to MGI (directly or through ILEX) any such IND for
the Products and transfers to MGI any such DHAC bulk d rug substance. If MGI
pays such fee as provided in (a) above, and if NCI thereafter fails, within six
(6) months of such payments, to transfer and assign to MGI (directly or through
ILEX) such IND and to transfer such DHAC bulk drug substance, then (i) ILEX
shall refund such up-front license fee to MGI within five (5) days of such six
(6) month anniversary, and such up-front license fee shall thereafter be
payable to ILEX only upon actual transfer and assignment by NCI of the
foregoing and (ii) the parties shall have the right to terminate this Agreement
as provided under Section 11.5.
8.2 Royalties.
(a) MGI shall pay to ILEX, a royalty of [**] percent ([**]%) of
Net Sales of Products. For any such country in which a third
party introduces a competitive product containing DHAC, MGI's
royalty payments to ILEX will be reduced to [**] percent
([**]%).
(b) Royalties shall continue on a Product-by-Product and country-by-
country basis for (i) the life of the last ILEX Patent covering
the manufacture, use or sale of such Product, or (ii) ten (10)
years from first commercial sale of such Product, whichever is
longer. Upon expiration of such royalty obligations, the license
granted under Section 3.1 shall be deemed to be fully paid up,
irrevocable and perpetual.
8.3 Reports. MGI shall pay to ILEX any amounts owing under Section 8.2, on
a quarterly basis on or before the forty-fifty (45th) day after the end of each
calendar quarter during the term of this Agreement. Each royalty payment shall
be accompanied by a report which shows the Net Sales of Products by MGI and its
sublicensees for such quarter, by Product.
8.4 Books and Records. MGI shall keep adequate and complete books and
records showing all Products sold by MGI and its sublicensees for a period of
no less than five (5) years following completion of the fiscal year in which
the sale of Products occurred. Such books and records shall include all
information necessary to verify the total amount and computation of the Net
Sales hereunder, and shall be open to inspection, audit and copying by ILEX or
its agents during reasonable business hours and upon reasonable notice to the
extent necessary to verify the amount of such Net Sales. Such inspection,
audit and copying may be conducted at the expense of ILEX by an independent
Certified Public Accountant or other agent appointed by ILEX and reasonably
acceptable to MGI, provided, however, MGI shall reimburse ILEX for ILEX's
reasonable expenses incurred in such inspection and audit if such audit reveals
any underpayment of amounts owing hereunder of more than [**] Dollars
($ [**] ) or [**] percent ([**]%), whichever is greater, for any quarter
covered by such inspection and audit.
<PAGE> 10
8.5 Withholding. If any payment to ILEX hereunder is subject to any income
taxes in a particular country:
(a) ILEX shall pay such income taxes and hereby authorizes MGI to
withhold such taxes from the applicable payments due to ILEX
under this Agreement and to pay such withheld amounts to the
relevant tax authorities within such country; and
(b) whenever MGI withholds and pays such income taxes from any
payments due to ILEX under this Agreement, it shall furnish ILEX
with a certificate of the relevant tax authorities and reasonably
acceptable to the U.S. Internal Revenue Service, documenting
payment of such taxes.
8.6 Net Payments. Except as expressly provided in Section 8.5, all payments
by MGI to ILEX under this Agreement represent the net amounts that ILEX is
entitled to receive and shall not be subject to any other withholding or
deduction for any reason whatsoever.
8.7 Currency Controls. If MGI is precluded at any time from making any
payments due to ILEX under the provisions of this Agreement because MGI has
failed to obtain any governmental approvals that may be required under the laws
and regulations in a particular country for such transfers of funds, then MGI
shall:
(a) deposit, or cause its agent to deposit, such sums to an account
designated by ILEX at a bank or other entity in such country;
(b) provide, or cause its agent to provide, to ILEX documentary
evidence of such deposits; and
(c) remit such deposits to ILEX immediately upon the subsequent
receipt of any required governmental approvals for such
transfers.
Subject to any applicable regulatory requirements, MGI further agrees, and
shall cause any agent of MGI to agree, that the form of such depository account
shall permit ILEX to withdraw the deposited amounts at will, but neither MGI
nor any agent of MGI shall withdraw the deposited amounts otherwise than for
the purpose of remitting such amounts to ILEX pursuant to the provisions of
this Section.
ARTICLE 9 INDEMNIFICATION; PATENT INFRINGEMENT
9.1 INDEMNIFICATION BY MGI.
(a) MGI hereby indemnifies and holds harmless ILEX and its affiliates
and their respective officers, directors, employees and agents
(an ILEX Indemnified Party") from and against all liabilities,
damages, losses, costs and expenses (including reasonable
attorney's fees) arising out of" (i) breach of any warranty,
covenant or agreement of MGI contained in this Agreement; (ii)
claims, suits or proceedings (a "Legal Action") brought by a
third party alleging actual
<PAGE> 11
negligence, gross negligence or willful misconduct of MGI or its
sublicensees resulting in personal injury or death related to the
use of any Product developed or marketed by MGI or its
sublicensees.
(b) Whenever an ILEX Indemnified Party becomes aware of a Legal
Action as to which it believes it entitled to indemnification
under this Article 9, such ILEX Indemnified Party shall give
notice in writing to MGI in sufficient time so as not to
materially and adversely prejudice MGI's fights with respect to
such Legal Action, shall permit MGI to assume exclusive control
of the defense or settlement of the matter, and shall provide, at
the expense of MGI, all authority, information and assistance
which MGI may reasonably request for purposes of such defense.
If a single law firm engaged by MGI would be subject to any
material conflict of interest in representing one or more of such
Parties, MGI shall not be required to waive such conflict and
may, instead, request separate representation by an independent
law firm of the ILEX Indemnified Party at the expense of MGI. An
ILEX Indemnified Party may engage its own counsel, at its own
expense, to monitor the defense of any such matter. MGI will
maintain general and products liability insurance with
contractual liability coverage and limits of at least [**]
Dollars ($ [**] ).
9.2 Indemnification by ILEX.
(a) ILEX hereby indemnified and holds harmless MGI, its Affiliates
and any parties to which it sublicenses rights to manufacture,
market, or distribute Products and their respective officers,
directors, employees and agents (a "MGI Indemnified Party") from
and against all liabilities, damages, losses, costs and expenses
(including reasonably attorney's fees) arising out of breach of
any warranty, covenant or agreement of ILEX contained in this
Agreement.
(b) Except as provided in Section 9.3, whenever a MGI Indemnified
Party becomes aware of a Legal Action as to which it believes it
is entitled to indemnification under this Article 9, it shall
give notice in writing to ILEX in sufficient time so as not to
materially and adversely prejudice ILEX's rights with respect to
such Legal Action, shall permit ILEX to assume exclusive control
of the defense or settlement of the matter, and shall provide, at
the expense of ILEX, all authority, information and assistance
which ILEX may reasonably request for purposes of such defense.
If a single law firm engaged by ILEX would be subject to any
material conflict of interest in representing one or more of such
parties, ILEX shall not be required to waive such representation
by an independent law firm of the MGI Indemnified Party at the
expense of ILEX. An MGI Indemnified Party may engage its own
counsel, at its own expense, to monitor the defense of any such
matter.
9.3 Patent Infringement. MGI shall have the right, but shall not be
obligated, to commence Legal Action or any alleged infringement of the ILEX
Patents and to defend any Legal Action alleging that the ILEX Patents violate
any patents, know-how, trade secret or any other
<PAGE> 12
intellectual property rights. MGI shall not enter into any settlement or
consent judgment or other voluntary final disposition of such Legal Action
without the approval of ILEX, such approval to not be unreasonably withheld.
If MGI notifies ILEX at any time of its intention not to commence or continue
prosecution or defense of a Legal Action alleging patent infringement, ILEX
shall have the right to commence or continue prosecution or defense of the
Legal Action. In any Legal Action either Party may prosecute or defend under
this Section 9.3, the other party shall cooperate with and at the request of
the party prosecuting or defending the suit. In addition to its obligation to
indemnify MGI, as set forth in Section 9.2, ILEX shall be solely responsible
for the costs of any Legal Action brought by ILEX under this Section 9.3.
9.4 Survival. The parties' obligations under this Article 9 shall survive
the termination of this Agreement for any reason.
ARTICLE 10 CONFIDENTIALITY
10.1 Non-Use and Non-Disclosure. Each party acknowledges and agrees that all
the other party's Confidential Information is confidential and proprietary to
the disclosing party. Each party shall not use or disclose to any third party
the other party's Confidential Information without the other party's prior
written consent for any purpose other than as permitted or required hereunder.
Each party shall take the same reasonable measures necessary to prevent any
unauthorized use or disclosure by its employees, agents, contractors,
sublicensees, or consultants of the other party's Confidential Information as
it applies to the protection of its own Confidential Information.
10.2 Marking. To be entitled to protection as Confidential Information, all
ILEX or MGI documents containing that party's Confidential Information shall be
appropriately and clearly marked as "Proprietary," "Secret," "Confidential," or
other words to similar effect. If a disclosure of Confidential Information is
made orally, as in a meeting, the disclosing party shall indicate the nature of
that information at the time of its disclosure and shall confirm such
designation in writing within ten (10) days of the date of such disclosure to
the receiving party.
10.3 Exclusions. Information shall not be considered Confidential
Information hereunder if it:
(a) was already in the possession of the receiving party prior to its
receipt from the disclosing party, as shown by the receiving
party's books and records;
(b) is, or becomes, part of the public knowledge or literature
through no fault, act or omission of the receiving party,
provided, however, that Proprietary Product Information shall not
be deemed to have entered the public domain by reason of its
having been filed with the FDA or any other applicable
governmental agency;
(c) is, or becomes, available to the receiving party from a source
other than the disclosing party, which source has rightfully
obtained the same information and has no obligation of
confidentiality to the disclosing party with respect to it;
<PAGE> 13
(d) is made available on an unrestricted basis by the disclosing
party to a third party unaffiliated with the disclosing party; or
(e) is required to be revealed pursuant to law, provided, however,
the receiving party which is under any such requirement of law
shall give reasonable notice (pursuant to the provisions of
Section 13.5) to the disclosing party of such requirement and
shall cooperate with the disclosing party in reasonable legal
efforts to limit or mitigate any such revelation so as to
preserve the proprietary nature of any Confidential Information
contained therein.
10.4 Duration; Surviving Obligation. Each party's obligations of non-use and
non-disclosure of the other party's Confidential Information shall apply during
the term of this Agreement and shall also survive for a period of five (5)
years after its termination or expiration for any reason.
10.5 Prior Agreements. The non-disclosure and non-use provisions of this
Agreement hereby supersede the provisions of the Non-Disclosure Agreement,
provided, however, that this Article 10 shall be deemed retroactive to the
effective date of the Non-Disclosure Agreement.
ARTICLE 11 TERM AND TERMINATION
11.1 Term. Unless earlier terminated in accordance with Section 11.2, 11.3,
11.4 or 11.5, this Agreement shall be in effect, on a Product-by-Product and
country-by-country basis, for the longer of (i) the life of the last ILEX
Patent covering the manufacture, use or sale of such Product in such country or
(ii) ten (10) years from the first commercial sale of such Product.
11.2 Termination for Cause. Either party may terminate this Agreement at any
time by giving notice in writing to the other party, which shall be effective
ninety (90) days after its date, in accordance with the following provisions:
(a) if the other party files a petition of any type as to its
bankruptcy, is declared bankrupt, becomes insolvent, makes an
assignment for the benefit of creditors, or goes into liquidation
or receivership; or
(b) if the other party is in material breach of this Agreement and
has failed to cure such breach within sixty (60) days of the
receipt of written notice of breach from the non-breaching party.
11.3 Termination by Mutual Agreement. The parties may agree in writing to
terminate this Agreement for their mutual convenience at any time and for any
reason, subject to such terms and conditions as they may adopt.
11.4 Termination by MGI. This Agreement may be terminated by MGI:
(a) for any reason upon sixty (60) days notice; or
<PAGE> 14
(b) immediately upon a decision by MGI to stop all clinical research
on the Products due to safety issues with respect to
administration of a Product to humans.
11.5 Termination due to NCI. If NCI (a) refuses in writing to transfer and
assign to MGI its IND for the Products and the DHAC bulk drug substance, as
required under Section 4.3, (b) fails to do so on or before March 15, 1997 or
(c) fails to transfer and assign to MGI such IND and such bulk drug substance
within six months of MGI's payment of the up-front license fee as provided in
Section 8.1, either party may terminate this Agreement effective immediately
upon written notice to the other party.
11.6 Rights and Obligations on Termination or Expiration. If this Agreement
is terminated or expires for any reason, the parties shall have the following
rights and obligations:
(a) Termination of this Agreement shall not release either party from
the obligation to make payment of all amounts then due and
payable;
(b) If this Agreement expires as provided in Section 11.1 or if it is
terminated by MGI pursuant to Section 11.2, the license granted
under Section 3.1 shall continue on a fully paid-up, irrevocable
and perpetual basis. If this Agreement is otherwise terminated,
the license granted under Section 3.1 shall terminate and MGI
shall return to ILEX any ILEX Know-How relating to the Products
that MGI initially received from ILEX, and if ILEX terminates
this Agreement pursuant to Section 11.2 or MGI terminates this
Agreement pursuant to Section 11.4, ILEX shall have a right of
first negotiation to obtain a license to any patent rights and
know-how developed by MGI during the term of this Agreement and
relating directly to the Products, on such terms as the parties
may the agree; and
(c) Each party's respective obligations of indemnification under
Article 9 (as provided in Section 9.3), of non-use and non-
disclosure under Article 10 (as provided in Section 10.4) and to
settle all disputes, controversies or claims under Article 12 (as
provided in Section 12.6) shall survive such termination or
expiration of this Agreement.
11.7 Rights under U.S. Bankruptcy Laws. The parties acknowledge and agree
that all rights and licenses granted to MGI by ILEX pursuant to this Agreement
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101(52) of the Bankruptcy Code, and that MGI, as the licensee
hereunder, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code.
11.8 No Compensation. The parties agree that, subject to the above
provisions of Section 11.6, and without prejudice to any other remedies at law
or in equity that either party may have in respect of any breach of this
Agreement, neither party shall be entitled to or claim that it is entitled to
any compensation or like payment as a result of or arising out of any
termination in accordance with this Article 11, whether claimed as loss of good
will, foregone profits, lost investments, or otherwise.
<PAGE> 15
ARTICLE 12 DISPUTE RESOLUTION
12.1 Negotiation. The parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either party's rights or obligations hereunder or thereunder. It is the
objective of the parties to establish procedures to facilitate the resolution
of disputes arising under this Agreement in an expedient manner by mutual
cooperation and without resort to litigation. The parties agree to consult and
negotiate in good faith to try to resolve any dispute, controversy or claim
that arises out of or relates to this Agreement.
12.2 Reservation for Litigation. Notwithstanding Sections 12.1 and 12.3,
each party expressly reserves the right to seek judicial relief from a court of
competent jurisdiction if the other party is or appears to be in violation of
such other party's obligations of non-use and non-disclosure under Article 10
above, including, without limitation, any injunction or other preliminary
relief. Nothing in this Section 12.2 shall preclude a party from seeking such
interim relief with respect to any disputes or claims arising under this
Agreement as may be available under the commercial arbitration rules as
provided in Section 12.3.
12.3 Arbitration. Subject to the reservation of the parties under Section
12.2, all disputes, claims or controversies arising out of or in connection
with this Agreement shall be finally settled under the commercial arbitration
rules of the American Arbitration Association ("AAA"), as modified by Section
12.4 below. Judgment upon the award rendered by the arbitrators may be entered
in any court of competent jurisdiction. The place of arbitration shall be
Chicago, Illinois. The arbitration shall be conducted by three (3) neutral
arbitrators selected by mutual agreement of the parties, or, if that is not
possible within thirty (30) days of the initial demand for such arbitration, by
the AAA. At least one (1) arbitrator shall have knowledge of and experience in
the ethical pharmaceutical industry, and at least one (1) arbitrator shall have
knowledge of and experience in technology licensing.
12.4 Special Rules. Notwithstanding any provision to the contrary in the
commercial arbitration rules, the parties hereby stipulate that any arbitration
hereunder shall be subject to the following special rules:
(a) Each party shall have the right to request from the arbitrators,
and the arbitrators shall order upon good cause shown, reasonable
and limited pre-hearing discovery, including (i) exchange of
witness lists, (ii) depositions under oath of named witnesses,
(iii) written interrogatories, and (iv) document requests;
(b) Upon conclusion of the pre-hearing discovery, the arbitrators
shall promptly hold a hearing upon the evidence to be presented
by the parties and shall promptly render a written opinion and
award;
(c) The arbitrators may not award or assess punitive damages against
either party; and
<PAGE> 16
(d) Each party shall bear its own costs and expenses of the
arbitration and one-half ( 1/2) of the fees and costs of the
arbitrators, subject to the power of the arbitrators, in their
sole discretion, to award all such reasonable costs, expenses and
fees to the prevailing party.
12.5 Survival. The duty of the parties to arbitrate any dispute, controversy
or claim under this Article 12 shall survive the termination of this Agreement
for any reason.
Article 13 GENERAL PROVISIONS
13.1 Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and thereof and supersede
all the parties' previous correspondence, term sheets, understandings,
agreements and representations, oral or written, including the Non-Disclosure
Agreement.
13.2 Assignment. Neither party shall assign or otherwise transfer its rights
or obligations under this Agreement except with the prior written consent of
the other party; provided that no such consent for a transfer to an entity
shall be required and all rights and obligations arising hereunder shall inure
to the benefit of that entity if it is (a) an Affiliate of either party, (b)
the successor in interest of one party by reason of sale, merger or operation
of law, or (c) has acquired all or substantially all of the assets and business
of a party.
13.3 Amendment. This Agreement may not be modified or amended, in whole or
in part, except by a written agreement signed by both parties.
13.4 Severability. If one or more of the provisions of this Agreement is
subsequently declared invalid or enforceable, this Agreement shall be treated
as though that provision were not i n this Agreement, and this shall not affect
the validity or enforceability of the remaining provisions of this Agreement
(unless those provisions that are invalidated or unenforceable are clearly
material and inseparable from the other provisions). The Agreement as modified
shall be applied and construed to reflect substantially the good faith intent
of the parties and to achieve the economic effects originally intended by the
terms hereof.
13.5 Notices. Except as may be otherwise provided in this Agreement, any
notice, demand or request given, made or required to be made shall be in
writing and shall be effective, unless otherwise provided herein, when received
after delivery by (a) registered air mail, postage prepaid; (b) facsimile with
electronic confirmation of receipt; or (c) by express mail or a reputable
courier at the addresses set forth below or to any other address that a party
specifies in writing:
<PAGE> 17
If to MGI: MGI PHARMA, INC,
300E Opus Center
9900 Bren Road East
Minnetonka, MN 55343-9667
Attn: Lori-jean Gille, Vice
President,
General Counsel
Facsimile: (612) 935-0468
With copy to: Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Attn: Karin A. Keitel
Facsimile: (612) 340-8827
If to ILEX: ILEX Oncology, Inc.
Suite 101
14785 Omicron Drive
San Antonio, Texas 78245-3217
Attn: Tim Williamson
Facsimile: (210) 677-6009
With Copy to: Fulbright & Jaworski
300 Convent Street
Suite 2200
San Antonio, Texas 78205
Attn: Kenneth J. Halliday
Facsimile: (210) 270-7205
13.6 Waiver. Either party's failure or delay in exercising any remedy for
default shall not be deemed a waiver of that or any subsequent default of that
provision or of any other provision hereof.
13.7 Counterparts. This Agreement shall be executed in two (2) or more
counterparts, each of which shall be deemed an original.
13.8 Governing Law. This Agreement shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York, excluding its
choice of law rules and provided, however, that the operation of the
arbitration agreement contained in Section 12.3 hereof, and the enforcement of
any award rendered pursuant thereto, shall be governed by United Stated federal
law to the exclusion of any state law.
13.9 Relationship. The parties are independent contractors and have only a
licensor-licensee relationship hereunder and shall not be deemed to have formed
any partnership, joint venture or other relationship. Neither party shall
make, or represent to any other person that it has the power or authority to
make, any financial or other commitment on behalf of the other party.
<PAGE> 18
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
MGI PHARMA, INC. ILEX ONCOLOLGY, INC.
By: By: /s/ Richard L. Love
-------------------------------- --------------------------------
Its: Its: President and CEO
<PAGE> 1
Exhibit 10.58
STOCK PURCHASE AGREEMENT
(Daniel Von Hoff)
This Stock Purchase Agreement (the "Agreement") is entered into as of
April 11, 1995 by and between ILEX Oncology, Inc., a Delaware corporation
formerly known as Biovensa nc. (the "Company" or the "Seller") and ____________
("Consultant" or the "Buyer").
WHEREAS, the Company and the Consultant have entered into a Consulting
Services Agreement dated as of January 1, 1995 (the "Consulting Agreement");
WHEREAS, pursuant to the terms of the Consulting Agreement, the Company
agreed to sell, and the Consultant agreed to purchase 640,000 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock");
WHEREAS, Buyer desires to purchase, and Seller desires to sell the
Shares.
NOW THEREFORE, in consideration of the recitals, representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
1. PURCHASE AND SALE. Subject to the provisions of this Agreement,
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the
Shares upon the following terms:
(a) Upon the execution of this Agreement, Buyer shall pay to
Seller an aggregate of $64,000, (the "Purchase Price") for the Shares,
at which time Seller shall deliver to Buyer a stock certificate
representing the Shares and registered in the name of Buyer or its
designee.
(b) Buyer shall pay the entire Purchase Price to Seller via a
promissory note substantially in the form attached hereto as Exhibit A
(the "Promissory Note"). The full and timely payment of principal and
interest accruing on the Promissory Note shall be secured by the Shares
in the manner set forth in the Promissory Note and, in accordance
therewith, upon delivery of the Promissory Note Buyer shall deliver to
and deposit with Seller the stock certificates representing the Shares
together with stock powers duly executed in blank by Buyer, such
certificates and stock powers shall be held by Seller until the payment
in full of all amounts outstanding under the Promissory Note.
2. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Buyer that:
<PAGE> 2
(a) The Shares have been duly authorized and validly, and are
free and clear of any claims, pledges, security interest, liens and
encumbrances and other restrictions and limitations of any type, other
than those arising pursuant to the Consulting Agreement of this
Agreement.
(b) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(c) Seller has the requisite corporate power and authority to
execute and deliver this Agreement and to sell and deliver the Shares to
the Buyer pursuant to this Agreement.
(d) The execution, delivery and performance of this Agreement
has been duly authorized and approved by all necessary corporate action.
(e) This Agreement constitutes the valid and binding
obligation of the Seller, enforceable in accordance with its terms,
subject as to enforcement to usual equitable principles and except as
limited by bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
3. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
(a) Buyer has the requisite authority and capacity to enter
into, deliver and perform its obligations pursuant to this Agreement,
the Promissory Note and all of the transactions contemplated hereby and
thereby.
(b) This Agreement, the Promissory Note and the other
documents and instruments to be delivered by Buyer pursuant hereto
constitute the valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, subject as to
enforcement to usual equitable principles and except as limited by
bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
(c) The execution, delivery and performance by Buyer of this
Agreement and the other documents and instruments to be delivered by
Buyer pursuant hereto will not result in any violation of, or be in
conflict with, or constitute a default under any agreement, law,
regulation, rule or ordinance by which Buyer is bound.
(d) Buyer is acquiring the Shares for his own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, and Buyer has no present or contemplated
agreement, arrangement, intention or commitment to dispose of the
Shares.
-2-
<PAGE> 3
(e) Buyer (i) is experienced in the evaluation of businesses
similar to the Company, (ii) is able to fend for himself in the
transactions contemplated by this Agreement, (iii) has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (iv)
has the ability to bear the economic risks of an investment in the
Company, and (v) has been afforded prior to the date hereof the
opportunity to ask questions of, and to receive answers from Mr. Richard
L. Love and other representatives of the Company and to obtain any
additional information, to the extent Mr. Richard L. Love or the Company
has such information or could acquire it without unreasonable effort or
expense, necessary for Buyer to make an informed investment decision
with respect to the purchase of the Shares.
(f) Buyer understands that the Shares have not been registered
under the Securities Act of 1933 or any applicable state securities or
"Blue Sky" laws, and such shares may be required to be held
indefinitely, unless such shares are subsequently registered under the
Securities Act and such applicable Blue Sky laws, or an exemption from
such registration is available.
4. MUTUAL CONDITIONS PRECEDENT. Neither Seller nor Buyer
shall have any obligations pursuant to this Agreement, unless and until Buyer
shall have executed and become a party to the Company's Registration Agreement,
substantially in the form attached hereto as Exhibit B.
5. REPURCHASE RIGHT. Notwithstanding anything to the contrary
contained herein. Buyer and Seller agree that the Shares are subject to
Seller's repurchase right, as more fully set forth in Exhibit B of the
Consulting Agreement, and the provisions of the Consulting Agreement
referencing that repurchase right are incorporated in this Agreement, as if
fully set herein.
6. IRS CONTINGENCY. Notwithstanding anything contained herein to
the contrary, the Seller and Buyer agree that they shall negotiate in good
faith to reach an equitable adjustment to the provisions of this Agreement if
(a) a private ruling is requested, and the National Office of the United States
Internal Revenue Service notifies the Cancer Therapy and Research Foundation of
South Texas ("CTRF") and/or CTRC Research Foundation ("CTRC"), or any affiliate
thereof that they will not rule the establishment and operation of Seller will
not adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (b) a
private ruling is not requested, and CTRF, CTRC and/or any affiliate thereof
are unable to obtain from qualified tax counsel an opinion satisfactory to each
of them to the effect that the establishment and operation of Seller will not
adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (c) the
Internal Revenue Service otherwise asserts that the establishment and operation
of the Seller may adversely affect CTRF's, CTRC's or any such affiliate's
status, or (d) Seller fails to receive at least $3,000,000 by June 30, 1996,
from the sale to persons other than
-3-
<PAGE> 4
CTRF, CTRC and their affiliates of its common or preferred stock. In the event
that Buyer and Seller are unable to agree on the terms of such an adjustment
within thirty (30) days subsequent to the occurrence of such an event, the
Company shall repurchase from Buyer, and Buyer shall sell to the Company, the
Shares in exchange for the return of the Purchase Price, and this Agreement
shall be rescinded.
7. MISCELLANEOUS.
(a) Cooperation. Seller and Buyer agree to take all actions
and execute all documents or instruments as either party may reasonably
request to consummate the transactions contemplated by this Agreement.
(b) Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, each party hereto shall pay its
own expenses incident to the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Notices. All notices hereunder shall be in writing and
shall be deemed given when delivered in person or when telecopied with
hard copy to follow, or three (3) business days after being deposited in
the United States mail, postage prepaid, via registered or certified
mail, or two (2) business days after delivery to a nationally recognized
express courier, expenses prepaid, addressed as follows:
If to Buyer: Daniel Von Hoff
226 Branch Oakway
San Antonio, Texas 78230
If to Seller: ILEX Oncology, Inc.
14960 Omicron
San Antonio, Texas 78245
Attention: Mr. Richard L. Love, President
and/or such other addresses and/or to such other addressees as may be
designated by notice given in accordance with the provisions hereof.
(d) Assignment. This Agreement shall be binding upon and
insure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. No party shall assign this Agreement
or its rights hereunder without the prior written consent of the other
party hereto.
(e) Amendment: Waiver. No change or modification of this
Agreement shall be valid unless the same shall be in writing and signed
by the parties hereto. No waiver of any provisions of this Agreement
shall be valid unless in writing and signed by the waiving party. No
waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute, a waiver of any other
-4-
<PAGE> 5
provision, whether or not similar, nor shall any waiver constitute a
continuing wavier, unless so provided in the waiver.
(f) Severability. If any provision of this Agreement (or
portions thereof) shall, for any reason, be considered invalid or
unenforceable by any court of competent jurisdiction, such provision (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions of this
Agreement (or portions thereof) shall nevertheless be valid, enforceable
and of full force and effect.
(g) Section Headings. The article, section or paragraph
headings or titles herein are inserted for convenience of reference only
and shall not be deemed a part of this Agreement.
(h) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of
which when taken together shall constitute a single instrument.
(i) Governing Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction,
effect and in all other respects by the laws of the State of Texas
applicable to contracts made in that State (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction).
(j) Entire Agreement. Subject to Section 5 hereof, this
Agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and supersedes all previous
written, oral or implied understanding among them with respect to such
matters.
(k) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any other individual or entity other
than Seller and Buyer and their respective successors and permitted
assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BUYER: SELLER
DANIEL VON HOFF ILEX ONCOLOGY, INC.
/s/ Daniel Von Hoff /s/ R. L. Love
--------------------- -------------------------------------
By: Richard L. Love
Title: President
-5-
<PAGE> 1
Exhibit 10.59
STOCK PURCHASE AGREEMENT
(Alexander L. Weis)
This Stock Purchase Agreement (the "Agreement") is entered into as of
April 11, 1995 by and between ILEX Oncology, Inc., a Delaware corporation
formerly known as Biovensa Inc. (the "Company" or the "Seller") and Alexander
L. Weis ("Employee" or the "Buyer").
WHEREAS, the Company and the Employee have entered into an Employment
Agreement dated as of November 2, 1994 (the "Employment").
WHEREAS, pursuant to the terms of the Employment Agreement, the Company
agreed to sell, and the Employee agreed to purchase 480,000 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock").
WHEREAS, Buyer desires to purchase, and Seller desires to sell the
Shares.
NOW THEREFORE, in consideration of the recitals, representations,
warranties, covenants and agreements contained herein, and other food and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
1. PURCHASE AND SALE. Subject to the provisions of this Agreement,
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, The
Shares upon the Following terms:
(a) Upon the execution of this agreement, Buyer shall pay to
Seller an aggregate of $48,000, (the "Purchase Price") for the Shares,
at which time Seller shall deliver to Buyer a stock certificate
representing the Shares and registered in the name of Buyer or its
designee.
(b) Buyer shall pay the Purchase Price to Seller as follows:
(i) $28,000 via check or wire transfer of immediately available funds
and (ii) $20,00 via a promissory note substantially in the form attached
hereto as Exhibit A (the "Promissory Note"). The full and timely
payment of principal and interest accruing on the Promissory Note shall
be secured by the Shares in the manner set forth in the Promissory Note
and, in accordance wherewith, upon delivery of the Promissory Note Buyer
shall deliver to and deposit with Seller the stock certificates
representing the Pledged Shares (as that term is defined in the
Promissory Note) together with stock powers duly executed in blank by
Buyer; such certificates and stock powers shall be held by Seller until
the payment in full of all amounts outstanding under the Promissory
Note.
<PAGE> 2
2. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Buyer that:
(a) The Shares have been duly authorized and validly issued,
and are free and clear of any claims, pledges, security interests, liens
and encumbrances and other restrictions and limitations of any type,
other than those arising pursuant to the Employment Agreement or this
Agreement.
(b) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
(c) Seller has the requisite corporate power and authority to
execute and deliver this Agreement and to sell and deliver the Shares to
the Buyer pursuant to this Agreement.
(d) The execution, delivery and performance of this Agreement
has been duly authorized and approved by all necessary corporate action.
(e) This Agreement constitutes the valid and binding
obligation of the Seller, enforceable in accordance with its terms,
subject as to enforcement to usual equitable principles and except as
limited by bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
3. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
(a) Buyer has the requisite authority and capacity to enter
into, deliver and perform its obligations pursuant to this Agreement,
the Promissory Note and all of the transactions contemplated hereby and
thereby.
(b) This Agreement, the Promissory Note and the other
documents and instruments to be delivered by Buyer pursuant hereto
constitute the valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, subject as to
enforcement to usual equitable principles and except as limited by
bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
(c) The execution, delivery and performance by Buyer of this
Agreement and the other documents and instruments to be delivered by
Buyer pursuant hereto will not result in any violation of, or be in
conflict with, or constitute a default under any agreement, law,
regulation, rule or ordinance by which Buyer is bound.
(d) Buyer is acquiring the Shares for his own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof,
-2-
<PAGE> 3
and Buyer has no present or contemplated agreement, arrangement,
intention or commitment to dispose of the Shares.
(e) Buyer (i) is experienced in the evaluation of business
similar to the Company, (ii) is able to fend for himself in the
transactions contemplated by this Agreement, (iii) has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (iv)
has the ability to bear the economic risks of an investment in the
Company, and (v) has been afforded prior to the date hereof the
opportunity to ask questions of, and to receive answers from, Mr.
Richard L. Love and other representatives of the Company and to obtain
any additional information, to the extent Mr. Richard L. Love or the
Company has such information or could acquire it without unreasonable
effort or expense, necessary for Buyer to make an informed investment
decision with respect to the purchase of the Shares.
(f) Buyer understands that the Shares have not been registered
under the Securities Act of 1933 or any applicable state securities or
"Blue Sky" laws, and such shares may be required to be held
indefinitely, unless such shares are subsequently registered under the
Securities Act and such applicable Blue Sky laws, or an exemption from
such registration is available.
4. MUTUAL CONDITIONS PRECEDENT. Neither Seller nor Buyer shall have
any obligations pursuant to this Agreement, unless and until Buyer shall have
executed and become a party to the Company's Registration Agreement,
substantially in the form attached hereto as Exhibit B.
5. REPURCHASE RIGHT. Notwithstanding anything to the contrary
contained herein, Buyer and Seller agree that the Shares are subject to
Seller's repurchase right, as more fully set forth in Section 4.6 of the
Employment Agreement, and the provisions of the Employment Agreement
referencing that repurchase right are incorporated in this Agreement, as if
fully set herein.
6. IRS CONTINGENCY. Notwithstanding anything contained herein to
the contrary, the Seller and Buyer agree that they shall negotiate in good
faith to reach an equitable adjustment to the provisions of this Agreement if
(a) a private ruling is requested, and the National Office of the United States
Internal Revenue Service notifies the Cancer Therapy and Research Foundation of
South Texas ("CTRF") and/or CTRC Research Foundation ("CTRC"), or any affiliate
thereof that they will not rule the establishment and operation of Seller will
not adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (b) a
private ruling is not requested, and CTRF, CTRC and/or any affiliate thereof
are unable to obtain from qualified tax counsel an opinion satisfactory to each
of them to the effect that the establishment and operation of Seller will not
adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (c) the
Internal Revenue Service otherwise asserts that the establishment and operation
of the Seller
-3-
<PAGE> 4
may adversely affect CTRF's, CTRC's or any such affiliate's status, or (d)
Seller fails to receive at least $3,000,000 by June 30, 1996, from the sale to
persons other than CTRF, CTRC and their affiliates of its common or preferred
stock. In the event that Buyer and Seller are unable to agree on the terms of
such an adjustment within thirty (30) days subsequent to the occurrence of such
an event, the Company shall repurchase from Buyer and Buyer shall sell to the
Company, the Shares in exchange for the return of the Purchase Price, and this
Agreement shall be rescinded.
7. MISCELLANEOUS.
(a) Cooperation. Seller and Buyer agree to take all actions
and execute all documents or instruments as either party may reasonably
request to consummate the transactions contemplated by this Agreement.
(b) Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, each party hereto shall pay its
own expenses incident to the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Notices. All notices hereunder shall be in writing and
shall be deemed given when delivered in person or when telecopied with
hard copy to follow, or three (3) business days after being deposited in
the United States mail, postage prepaid, via registered or certified
mail, or two (2) business days after delivery to a nationally recognized
express courier, expenses prepaid, addressed as follows:
If to Buyer: Alexander L. Weis
------------------------------
------------------------------
If to Seller: ILEX Oncology, Inc.
14960 Omicron
San Antonio, Texas 78245
Attention: Mr. Richard L. Love,
President
and/or such other addresses and/or to such other addressees as may be
designated by notice given in accordance with the provisions hereof.
(d) Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. No party shall assign this Agreement
or its rights hereunder without the prior written consent of the other
party hereto.
(e) Amendment; Waiver. No change or modification of this
Agreement shall be valid unless the same shall be in writing and signed
by the parties
-4-
<PAGE> 5
hereto. No waiver of any provisions of this Agreement shall be valid
unless in writing and signed by the waiving party. No waiver of any of
the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver, unless so provided in the waiver.
(f) Severability. If any provision of this Agreement (or
portions thereof) shall, for any reason, be considered invalid or
unenforceable by any court of competent jurisdiction, such provision (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions of this
Agreement (or portions thereof) shall nevertheless be valid, enforceable
and of full force and effect.
(g) Section Headings. The article, section or paragraph
headings or titles herein are inserted for convenience of reference only
and shall not be deemed a part of this Agreement.
(h) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of
which when taken together shall constitute a single instrument.
(i) Governing Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction,
effect and in all other respects by the laws of the State of Texas
applicable to contracts made in that State (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction).
(j) Entire Agreement. Subject to Section 5 hereof, this
Agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and supersedes all previous
written, oral or implied understanding among them with respect to such
matters.
(k) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any other individual or entity other
than Seller and Buyer and their respective successors and permitted
assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BUYER: SELLER:
ALEXANDER L. WEIS ILEX ONCOLOGY, INC.
/s/ Alexander L. Weis /s/ Richard L. Love
-------------------------------- ----------------------------
By: Richard L. Love
Title: President
-5-
<PAGE> 1
Exhibit 10.60
STOCK PURCHASE AGREEMENT
(Richard L. Love)
This Stock Purchase Agreement (the "Agreement") is entered into as of
April 1, 1995 by and between ILEX Oncology, Inc., a Delaware corporation
formerly known as Biovensa Inc. (the "Company" or the "Seller") and Richard L.
Love ("Employee" or the "Buyer").
WHEREAS, the Company and the Employee have entered into an Employment
Agreement dated as of November 2, 1994 (the "Employment Agreement");
WHEREAS, pursuant to the terms of the Employment Agreement, the Company
agreed to sell, and the Employee agreed to purchase 480,000 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock");
WHEREAS, Buyer desires to purchase, and Seller desires to sell the
Shares.
NOW THEREFORE, in consideration of the recitals, representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
1. PURCHASE AND SALE. Subject to the provisions of this Agreement,
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the
Shares upon the following terms:
(a) Upon the execution of this Agreement, Buyer shall pay to
Seller an aggregate of $48,000, the ("Purchase Price") for the Shares,
at which time Seller shall deliver to Buyer a stock certificate
representing the Shares and registered in the name of Buyer or its
designee.
(b) Buyer shall pay the Purchase Price to Seller as follows:
(i) $28,000 via check or wire transfer of immediately available funds
and (ii) $20,000 via a promissory note substantially in the form
attached hereto as Exhibit A (the "Promissory Note"). The full and
timely payment of principal and interest accruing on the Promissory Note
shall be secured by the Shares in the manner set forth in the Promissory
Note and, in accordance therewith, upon deliver of the Promissory Note
Buyer shall deliver to and deposit with Seller the stock certificates
representing the Pledged Shares (as that term is defined in the
Promissory Note) together with stock powers duly executed in blank by
Buyer; such certificates and stock powers shall be held by Seller until
the payment in full of all amounts outstanding under the Promissory
Note.
<PAGE> 2
2. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Buyer that:
(a) The Shares have been duly authorized and validly issued,
and are free and clear of any claims, pledges, security interests, liens
and encumbrances and other restrictions and limitations of any type,
other than those arising pursuant to the Employment Agreement or this
Agreement.
(b) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
(c) Seller has the requisite corporate power and authority to
execute and deliver this Agreement and to sell and deliver the Shares to
the Buyer pursuant to this Agreement.
(d) The execution, delivery and performance of this Agreement
has been duly authorized and approved by all necessary corporate action.
(e) This Agreement constitutes the valid and binding
obligation of the Seller, enforceable in accordance with its terms,
subject as to enforcement to usual equitable principles and except as
limited by bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
3. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
(a) Buyer has the requisite authority and capacity to enter
into, deliver and perform its obligations pursuant to this Agreement,
the Promissory Note and all of the transactions contemplated hereby and
thereby.
(b) This Agreement, the Promissory Note and the other
documents and instruments to be delivered by Buyer pursuant hereto
constitute the valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, subject as to
enforcement to usual equitable principles and except as limited by
bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
(c) The execution, delivery and performance by Buyer of this
Agreement and the other documents and instruments to be delivered by
Buyer pursuant hereto will not result in any violation of, or be in
conflict with, or constitute a default under any agreement, law,
regulation, rule or ordinance by which Buyer is bound.
-2-
<PAGE> 3
(d) Buyer is acquiring the Shares for his own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, and Buyer has no present or contemplated
agreement, arrangement, intention or commitment to dispose of the
Shares.
(e) Buyer (i) is experienced in the evaluation of businesses
similar to the Company, (ii) is able to fend for himself in the
transactions contemplated by this Agreement, (iii) has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (iv)
has the ability to bear the economic risks of an investment in the
Company, and (v) has been afforded prior to the date hereof the
opportunity to ask questions of, and to receive answers from
representatives of the Company and to obtain any additional information,
to the extent the Company has such information or could acquire it
without unreasonable effort or expense, necessary for Buyer to make an
informed investment decision with respect to the purchase of the Shares.
(f) Buyer understands that the Shares have not been registered
under the Securities Act of 1933 or any applicable state securities or
"Blue Sky" laws, and such shares may be required to be held
indefinitely, unless such shares are subsequently registered under the
Securities Act and such applicable Blue Sky laws, or an exemption from
such registration is available.
4. MUTUAL CONDITIONS PRECEDENT. Neither Seller nor Buyer shall have
any obligations pursuant to this Agreement, unless and until Buyer shall have
executed and become a party to the Company's Registration Agreement,
substantially in the form attached hereto as Exhibit B.
5. REPURCHASE RIGHT. Notwithstanding anything to the contrary
contained herein, Buyer and Seller agree that the Shares are subject to
Seller's repurchase right, as more fully set forth in Section 4.6 of the
Employment Agreement, and the provisions of the Employment Agreement
referencing that repurchase right are incorporated in this Agreement, as if
fully set herein.
6. IRS CONTINGENCY. Notwithstanding anything contained herein to
the contrary, the Seller and Buyer agree that they shall negotiate in good
faith to reach an equitable adjustment to the provisions of this Agreement if
(a) a private ruling is requested, and the National Office of the United States
Internal Revenue Service notifies the Cancer Therapy and Research Foundation of
South Texas ("CTRF") and/or CTRC Research Foundation ("CTRC"), or any affiliate
thereof that they will not rule the establishment and operation of Seller will
not adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (b) a
private ruling is not requested, and CTRF, CTRC and/or any affiliate thereof
are unable to obtain from qualified tax counsel an opinion satisfactory to each
of them to the effect that the establishment and operation of Seller
-3-
<PAGE> 4
will not adversely affect CTRF's CTRC's or any such affiliate's status as an
exempt organization under Section 501(c)(3) of the Internal Revenue Code, (c)
the Internal Revenue Service otherwise asserts that the establishment and
operation of the Seller may adversely affect CTRF's, CTRC's or any such
affiliate's status, or (d) Seller fails to receive at least $3,000,000 by June
30, 1996, from the sale to persons other than CTRF, CTRC and their affiliates
of its common or preferred stock. In the event that Buyer and Seller are
unable to agree on the terms of such an adjustment within thirty (30) days
subsequent to the occurrence of such an event, the Company shall repurchase
from Buyer, and Buyer shall sell to the Company, the Shares in exchange for the
return of the Purchase Price, and this Agreement shall be rescinded.
7. MISCELLANEOUS.
(a) Cooperation. Seller and Buyer agree to take all actions
and execute all documents or instruments as either party may reasonably
request to consummate the transactions contemplated by this Agreement.
(b) Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, each party hereto shall pay its
own expenses incident to the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Notices. All notices hereunder shall be in writing and
shall be deemed given when delivered in person or when telecopied with
hard copy to follow, or three (3) business days after being deposited in
the United States mail, postage prepaid, via registered or certified
mail, or two (2) business days after delivery to a nationally recognized
express courier, expenses prepaid, addressed as follows:
If to Buyer: Richard L. Love
24 Eton Green Circle
San Antonio, Texas 78257
If to Seller: ILEX Oncology, Inc.
14960 Omicron
San Antonio, Texas 78245
Attention: Sue Becken
and/or such other addresses and/or to such other addresses as may be
designated by notice given in accordance with the provisions hereof.
(d) Assignment. This Agreement shall be binding upon and
insure to the benefit of the parties hereto and their respective heirs,
successors and
-4-
<PAGE> 5
permitted assigns. No party shall assign this Agreement or its rights
hereunder without the prior written consent of the other party hereto.
(e) Amendment; Waiver. No change or modification of this
Agreement shall be valid unless the same shall be in writing and signed
by the parties hereto. No waiver of any provisions of this Agreement
shall be valid unless in writing and signed by the waiving party. No
waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, unless so
provided in the waiver.
(f) Severability. If any provision of this Agreement (or
portions thereof) shall, for any reason, be considered invalid or
unenforceable by any court of competent jurisdiction, such provision (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions of this
Agreement (or portions thereof) shall nevertheless be valid, enforceable
and of full force and effect.
(g) Section Headings. The article, section or paragraph
headings or titles herein are inserted for convenience of reference only
and shall not be deemed a part of this Agreement.
(h) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of
which when taken together shall constitute a single instrument.
(i) Governing Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction,
effect and in all other respects by the laws of the State of Texas
applicable to contracts made in that State (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction).
(j) Entire Agreement. Subject to Section 5 hereof, this
Agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and supersedes all previous
written, oral or implied understanding among them with respect to such
matters.
(k) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any other individual or entity other
than Seller and Buyer and their respective successors and permitted
assigns.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BUYER: SELLER:
ILEX ONCOLOGY, INC.
Richard L. Love
/s/ R. L. Love Susan S. Becken
By: /s/ Susan S. Becken
---------------------------
Title: Controller
-6-
<PAGE> 1
Exhibit 10.61
STOCK PURCHASE AGREEMENT
(Charles A. Coltman, Jr.)
This Stock Purchase Agreement (the "Agreement") is entered into as of
April 11, 1995 by and between ILEX Oncology, Inc., a Delaware corporation
formerly known as Biovensa nc. (the "Company" or the "Seller") and Charles A.
Coltman, Jr. ("Consultant" or the "Buyer").
WHEREAS, the Company and the Consultant have entered into a Consulting
Agreement dated as of March 16, 1995 (the "Consulting Agreement");
WHEREAS, pursuant to the terms of the Consulting Agreement, the Company
agreed to sell, and the consultant agreed to purchase 480,000 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock");
WHEREAS, Buyer desires to purchase, and Seller desires to sell the
Shares.
NOW THEREFORE, in consideration of the recitals, representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
1. PURCHASE AND SALE. Subject to the provisions of this Agreement,
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the
Shares upon the following terms:
(a) Upon the execution of this Agreement, Buyer shall pay to
Seller an aggregate of $48,000, (the "Purchase Price") for the Shares,
at which time Seller shall deliver to Buyer a stock certificate
representing the Shares and registered in the name of Buyer or its
designee.
(b) Buyer shall pay the entire Purchase Price to Seller as
folows: (i) $10,000 via check or wire transfer of immediately available
funds and (ii) $38,000 via a promissory note substantially in the form
attached hereto as Exhibit A (the "Promissory Note"). The full and
timely payment of principal and interest accruing on the Promissory Note
shall be secured by the Shares in the manner set forth in the Promissory
Note and, in accordance therewith, upon delivery of the Promissory Note
Buyer shall deliver to and deposit with Seller the stock certificates
representing the Shares together with stock powers duly executed in
blank by Buyer, such certificates and stock powers shall be held by
Seller until the payment in full of all amounts outstanding under the
Promissory Note.
<PAGE> 2
2. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Buyer that:
(a) The Shares have been duly authorized and validly issued,
and are free and clear of any claims, pledges, security interest, liens
and encumbrances and other restrictions and limitations of any type,
other than those arising pursuant to the Consulting Agreement or this
Agreement.
(b) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(c) Seller has the requisite corporate power and authority to
execute and deliver this Agreement and to sell and deliver the Shares to
the Buyer pursuant to this Agreement.
(d) The execution, delivery and performance of this Agreement
has been duly authorized and approved by all necessary corporate action.
(e) This Agreement constitutes the valid and binding
obligation of the Seller, enforceable in accordance with its terms,
subject as to enforcement to usual equitable principles and except as
limited by bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
3. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller that:
(a) Buyer has the requisite authority and capacity to enter
into, deliver and perform its obligations pursuant to this Agreement,
the Promissory Note and all of the transactions contemplated hereby and
thereby.
(b) This Agreement, the Promissory Note and the other
documents and instruments to be delivered by Buyer pursuant hereto
constitute the valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, subject as to
enforcement to usual equitable principles and except as limited by
bankruptcy, moratorium, insolvency or similar laws of general
application affecting the enforcement of creditor's rights.
(c) The execution, delivery and performance by Buyer of this
Agreement and the other documents and instruments to be delivered by
Buyer pursuant hereto will not result in any violation of, or be in
conflict with, or constitute a default under any agreement, law,
regulation, rule or ordinance by which Buyer is bound.
(d) Buyer is acquiring the Shares for his own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof,
-2-
<PAGE> 3
and Buyer has no present or contemplated agreement, arrangement,
intention or commitment to dispose of the Shares.
(e) Buyer (i) is experienced in the evaluation of businesses
similar to the Company, (ii) is able to fend for himself in the
transactions contemplated by this Agreement, (iii) has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company, (iv)
has the ability to bear the economic risks of an investment in the
Company, and (v) has been afforded prior to the date hereof the
opportunity to ask questions of, and to receive answers from Mr. Richard
L. Love and other representatives of the Company and to obtain any
additional information, to the extent Mr. Richard L. Love or the Company
has such information or could acquire it without unreasonable effort or
expense, necessary for Buyer to make an informed investment decision
with respect to the purchase of the Shares.
(f) Buyer understands that the Shares have not been registered
under the Securities Act of 1933 or any applicable state securities or
"Blue Sky" laws, and such shares may be required to be held
indefinitely, unless such shares are subsequently registered under the
Securities Act and such applicable Blue Sky laws, or an exemption from
such registration is available.
4. MUTUAL CONDITIONS PRECEDENT. Neither Seller nor Buyer
shall have any obligations pursuant to this Agreement, unless and until Buyer
shall have executed and become a party to the Company's Registration Agreement,
substantially in the form attached hereto as Exhibit B.
5. REPURCHASE RIGHT. Notwithstanding anything to the contrary
contained herein. Buyer and Seller agree that the Shares are subject to
Seller's repurchase right, as more fully set forth in Exhibit B of the
Consulting Agreement, and the provisions of the Consulting Agreement
referencing that repurchase right are incorporated in this Agreement, as if
fully set herein.
6. IRS CONTINGENCY. Notwithstanding anything contained herein to
the contrary, the Seller and Buyer agree that they shall negotiate in good
faith to reach an equitable adjustment to the provisions of this Agreement if
(a) a private ruling is requested, and the National Office of the United States
Internal Revenue Service notifies the Cancer Therapy and Research Foundation of
South Texas ("CTRF") and/or CTRC Research Foundation ("CTRC"), or any affiliate
thereof that they will not rule the establishment and operation of Seller will
not adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (b) a
private ruling is not requested, and CTRF, CTRC and/or any affiliate thereof
are unable to obtain from qualified tax counsel an opinion satisfactory to each
of them to the effect that the establishment and operation of Seller will not
adversely affect CTRF's, CTRC's or any such affiliate's status as an exempt
organization under Section 501(c)(3) of the Internal Revenue Code, (c) the
Internal
-3-
<PAGE> 4
Revenue Service otherwise asserts that the establishment and operation of the
Seller may adversely affect CTRF's, CTRC's or any such affiliate's status, or
(d) Seller fails to receive at least $3,000,000 by June 30, 1996, from the sale
to persons other than CTRF, CTRC and their affiliates of its common or
preferred stock. In the event that Buyer and Seller are unable to agree on the
terms of such an adjustment within thirty (30) days subsequent to the
occurrence of such an event, the Company shall repurchase from Buyer, and Buyer
shall sell to the Company, the Shares in exchange for the return of the
Purchase Price, and this Agreement shall be rescinded.
7. MISCELLANEOUS.
(a) Cooperation. Seller and Buyer agree to take all actions
and execute all documents or instruments as either party may reasonably
request to consummate the transactions contemplated by this Agreement.
(b) Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, each party hereto shall pay its
own expenses incident to the preparation of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Notices. All notices hereunder shall be in writing and
shall be deemed given when delivered in person or when telecopied with
hard copy to follow, or three (3) business days after being deposited in
the United States mail, postage prepaid, via registered or certified
mail, or two (2) business days after delivery to a nationally recognized
express courier, expenses prepaid, addressed as follows:
If to Buyer: Charles A. Coltman, Jr.
--------------------------------
--------------------------------
If to Seller: ILEX Oncology, Inc.
14960 Omicron
San Antonio, Texas 78245
Attention: Mr. Richard L. Love, President
and/or such other addresses and/or to such other addressees as may be
designated by notice given in accordance with the provisions hereof.
(d) Assignment. This Agreement shall be binding upon and
insure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. No party shall assign this Agreement
or its rights hereunder without the prior written consent of the other
party hereto.
(e) Amendment: Waiver. No change or modification of this
Agreement shall be valid unless the same shall be in writing and signed
by the parties
-4-
<PAGE> 5
hereto. No waiver of any provisions of this Agreement shall be valid
unless in writing and signed by the waiving party. No waiver of any of
the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any
waiver constitute a continuing wavier, unless so provided in the waiver.
(f) Severability. If any provision of this Agreement (or
portions thereof) shall, for any reason, be considered invalid or
unenforceable by any court of competent jurisdiction, such provision (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions of this
Agreement (or portions thereof) shall nevertheless be valid, enforceable
and of full force and effect.
(g) Section Headings. The article, section or paragraph
headings or titles herein are inserted for convenience of reference only
and shall not be deemed a part of this Agreement.
(h) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of
which when taken together shall constitute a single instrument.
(i) Governing Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction,
effect and in all other respects by the laws of the State of Texas
applicable to contracts made in that State (other than any conflict of
laws rule which might result in the application of the laws of any other
jurisdiction).
(j) Entire Agreement. Subject to Section 5 hereof, this
Agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and supersedes all previous
written, oral or implied understanding among them with respect to such
matters.
(k) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any other individual or entity other
than Seller and Buyer and their respective successors and permitted
assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
BUYER: SELLER
CHARLES A. COLTMAN, JR. ILEX ONCOLOGY, INC.
Charles A. Coltman, Jr. R. L. Love
/s/ Charles A. Coltman, Jr. By: Richard L. Love
------------------------------ ------------------------
Title: President
-5-
<PAGE> 1
Exhibit 10.62
PROMISSORY NOTE
$64,000 San Antonio, Texas
April 12, 1995
ON or before March 31, 1999, the scheduled maturity date hereof, or such
earlier date to which the maturity hereof shall have been accelerated pursuant
to the terms hereof. FOR VALUE RECEIVED, Daniel Von Hoff, an individual
resident of the State of Texas (the "DEBTOR"), unconditionally promises to pay
to the order of ILEX ONCOLOGY, INC. ("ILEX"), a Delaware corporation formerly
known as Biovensa Inc., at 14960 Omicron, San Antonio, Texas 78245, or such
other place as ILEX may from time to time designate to DEBTOR in writing, the
principal sum of Sixty Four Thousand Dollars ($64,000) along with interest
accruing thereon at the rate of eight percent (8%) per annum, computed on the
basis of a 360-day year for the actual number of days elapsed. Such principal
and interest shall be paid in lawful money of the United States of America in
consecutive quarterly payments according to the amortization schedule attached
hereto as Annex 1 commencing on the first (1st) of July 1995 and continuing on
the first (1st) of each January, April, July and October thereafter, provided
that any and all remaining outstanding principal and unpaid interest shall be
due and payable in full on March 31, 1999, the scheduled maturity date of the
Promissory Note. The DEBTOR may prepay the principal balance of this
Promissory Note, in whole or in part, at any time without penalty.
This Promissory Note is being made pursuant to a Stock Purchase
Agreement dated as of April 11, 1995 (the "Purchase Agreement") by and between
ILEX and DEBTOR, pursuant to which DEBTOR purchased an aggregate of 640,000
shares (the "Shares") of ILEX'S common stock, $.01 par value per share. As
security for the payment of this Promissory Note, DEBTOR hereby pledges to ILEX
all 640,000 of such Shares (the "Pledged Shares"). Upon the repayment of any
principal hereunder, the number of Pledged Shares shall be reduced by that
number of shares equal to the quotient of (a) the dollar amount of principal
repaid, divided by (b) $.10. In the event that DEBTOR fails to pay to ILEX any
portion of the principal or interest due on this Promissory Note in accordance
with the provisions hereof, DEBTOR shall transfer to ILEX all DEBTOR'S right,
title and interest in that number of Pledged Shares equal to the quotient of
(a) the amount of unpaid principal and interest divided by (b) $.10.
In the event of a Default (as hereinafter defined), all of the
indebtedness evidenced by this Promissory Note may, at the option of ILEX and
without demand or notice of demand of any kind, be declared and thereupon shall
become immediately due and payable. The occurrence of existence of any of the
following shall constitute a Default under this Promissory Note: (a) the
failure of the DEBTOR to pay principal or interest within ten (10) days of the
date due or declared due under this Promissory Note; (b) a proceeding under any
bankruptcy, reorganization, insolvency or similar law
<PAGE> 2
is filed by or against the DEBTOR, or the DEBTOR takes any corporate action to
make an assignment for the benefit of creditors, or to authorize any of the
foregoing; (c) the DEBTOR shall fail to make any payment due on any material
obligation for money borrowed by Debtor and the effect of such failure shall be
to cause or permit the holder of such obligation or trustee to cause such
obligation to become due prior to its date of maturity; or (d) a breach by the
DEBTOR shall occur under any material agreement, document or instrument,
whether heretofore, now or hereafter existing between the DEBTOR and any other
party.
The DEBTOR does not intend or expect to pay, nor does ILEX intend or
expect to charge, accept or collect any interest which, when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate. If acceleration, prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate, then any and all such excess is hereby waived and shall be
applied against the remaining principal balance. Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal amount
outstanding hereunder, cause the rate of interest hereunder to exceed the
highest lawful rate.
The DEBTOR waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Promissory Note.
This Promissory Note shall be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws of Texas.
Whenever possible each provision of this Promissory Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Promissory Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Promissory Note. The provisions of this
Promissory Note shall be binding upon the DEBTOR and its successors and
assigns, and shall inure to the benefit of ILEX and its successors and assigns,
provided that the DEBTOR cannot assign or delegate its obligations hereunder
without the prior written consent of ILEX.
Unless otherwise defined in this Promissory Note, capitalized terms used
in this Promissory Note shall have the respective meanings assigned to them in
the Purchase Agreement.
DEBTOR:
/s/ Daniel Von Hoff
------------------------------
Daniel Von Hoff
-2-
<PAGE> 3
Borrower: Daniel Von Hoff
Amount: $64,000.00
Term: 4 yrs.
Rate: 8%
Amortization: 10 yrs.
<TABLE>
<CAPTION>
Payment
Amount Interest Principal Balance
<S> <C> <C> <C> <C>
$64,000.00
7/1/95 $2,339.57 $1,123.56 $1,216.01 62,783.99
10/1/95 2,339.57 1,255.68 1,083.89 61,700.10
1/1/96 2,339.57 1,234.00 1,105.57 60,594.53
4/1/96 2,339.57 1,211.00 1,127.68 59,466.86
7/1/96 2,339.57 1,189.34 1,150.23 58,316.63
10/1/96 2,339.57 1,166.33 1,173.24 57,143.39
1/1/97 2,339.57 1,142.87 1,196.70 55,946.69
4/1/97 2,339.57 1,118.93 1,220.63 54,726.06
7/1/97 2,339.57 1,094.52 1,245.05 53,481.01
10/1/97 2,339.57 1,069.62 1,269.95 52,211.06
1/1/98 2,339.57 1,044.22 1,295.35 50,915.72
4/1/98 2,339.57 1,018.31 1,321.25 49,594.46
7/1/98 2,339.57 991.89 1,347.68 48,246.78
10/1/98 2,339.57 964.94 1,347.63 46,872.15
1/1/99 2,339.57 937.44 1,402.12 45,470.03
3/31/99 46,379.43 909.40 45,470.03
$81,472.94 $17,472.94 $64,000.00
</TABLE>
-3-
<PAGE> 1
Exhibit 10.63
PROMISSORY NOTE
$20,000 San Antonio, Texas
April 12, 1995
ON or before March 31, 1999, the scheduled maturity date hereof, or such
earlier date to which the maturity hereof shall have been accelerated pursuant
to the terms hereof. FOR VALUE RECEIVED, Richard L. Love, an individual
resident of the State of Texas (the "DEBTOR"), unconditionally promises to pay
to the order of ILEX ONCOLOGY, INC. ("ILEX"), a Delaware corporation formerly
known as Biovensa Inc., at 14960 Omicron, San Antonio, Texas 78245, or such
other place as ILEX may from time to time designate to DEBTOR in writing, the
principal sum of Twenty Thousand Dollars ($20,000) along with interest accruing
thereon at the rate of eight percent (8%) per annum, computed on the basis of a
360-day year for the actual number of days elapsed. Such principal and
interest shall be paid in lawful money of the United States of America in
consecutive quarterly payments according to the amortization schedule attached
hereto as Annex 1 commencing on the first (1st) of July 1995 and continuing on
the first (1st) of each January, April, July and October thereafter, provided
that any and all remaining outstanding principal and unpaid interest shall be
due and payable in full on March 31, 1999, the scheduled maturity date of the
Promissory Note. The DEBTOR may prepay the principal balance of this
Promissory Note, in whole or in part, at any time without penalty.
This Promissory Note is being made pursuant to a Stock Purchase
Agreement dated as of April 11, 1995 (the "Purchase Agreement") by and between
ILEX and DEBTOR, pursuant to which DEBTOR purchased an aggregate of 480,000
shares (the "Shares") of ILEX'S common stock, $.01 par value per share. As
security for the payment of this Promissory Note, DEBTOR hereby pledges to ILEX
200,000 shares of the Shares (the "Pledged Shares"). Upon the repayment of any
principal hereunder, the number of Pledged Shares shall be reduced by that
number of shares equal to the quotient of (a) the dollar amount of principal
repaid, divided by (b) $.10. In the event that DEBTOR fails to pay to ILEX any
portion of the principal or interest due on this Promissory Note in accordance
with the provisions hereof, DEBTOR shall transfer to ILEX all DEBTOR'S right,
title and interest in that number of Pledged Shares equal to the quotient of
(a) the amount of unpaid principal and interest divided by (b) $.10.
In the event of a Default (as hereinafter defined), all of the
indebtedness evidenced by this Promissory Note may, at the option of IELX and
without demand or notice of demand of any kind, be declared and thereupon shall
become immediately due and payable. The occurrence of existence of any of the
following shall constitute a Default under this Promissory Note: (a) the
failure of the DEBTOR to pay principal or interest within ten (10) days of the
date due or declared due under this Promissory Note; (b) a proceeding under any
bankruptcy, reorganization, insolvency or similar law
<PAGE> 2
is filed by or against the DEBTOR, or the DEBTOR takes any corporate action to
make an assignment for the benefit of creditors, or to authorize any of the
foregoing; (c) the DEBTOR shall fail to make any payment due on any material
obligation for money borrowed by Debtor and the effect of such failure shall be
to cause or permit the holder of such obligation or trustee to cause such
obligation to become due prior to its date of maturity; or (d) a breach by the
DEBTOR shall occur under any material agreement, document or instrument,
whether heretofore, now or hereafter existing between the DEBTOR and any other
party.
The DEBTOR does not intend or expect to pay, nor does ILEX intend or
expect to charge, accept or collect any interest which, when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate. If acceleration, prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate, then any and all such excess is hereby waived and shall be
applied against the remaining principal balance. Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal amount
outstanding hereunder, cause the rate of interest hereunder to exceed the
highest lawful rate.
The DEBTOR waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Promissory Note.
This Promissory Note shall be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws of Texas.
Whenever possible each provision of this Promissory Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Promissory Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Promissory Note. The provisions of this
Promissory Note shall be binding upon the DEBTOR and its successors and
assigns, and shall inure to the benefit of ILEX and its successors and assigns,
provided that the DEBTOR cannot assign or delegate its obligations hereunder
without the prior written consent of ILEX.
Unless otherwise defined in this Promissory Note, capitalized terms used
in this Promissory Note shall have the respective meanings assigned to them in
the Purchase Agreement.
DEBTOR:
/s/ Richard L. Love
------------------------------
Richard L. Love
-2-
<PAGE> 3
Borrower: Richard L. Love
Amount: $20,000.00
Term: 4 yrs.
Rate: 8%
Amortization: 10 yrs.
<TABLE>
<CAPTION>
Payment
Amount Interest Principal Balance
<S> <C> <C> <C> <C>
$20,000.00
7/1/95 $731.11 $351.11 $380.00 19,620.00
10/1/95 731.11 392.40 338.72 19,281.28
1/1/96 731.11 385.63 345.49 18,935.79
4/1/96 731.11 378.72 352.40 18,583.39
7/1/96 731.11 371.67 359.45 18,223.95
10/1/96 731.11 364.48 366.64 17,857.31
1/1/97 731.11 357.15 373.97 17,483.34
4/1/97 731.11 349.67 381.45 17,101.89
7/1/97 731.11 342.04 389.08 16,712.82
10/1/97 731.11 334.26 396.86 16,315.96
1/1/98 731.11 326.32 404.80 15,911.16
4/1/98 731.11 318.22 412.89 15,498.27
7/1/98 731.11 309.97 421.15 15.077.12
10/1/98 731.11 301.54 429.57 14,647.55
1/1/99 731.11 292.95 438.16 14,209.38
3/31/99 14,493.57 284.19 14,209.38
$25,460.30 $5,460.30 $20,000.00
</TABLE>
-3-
<PAGE> 1
Exhibit 10.64
PROMISSORY NOTE
$38,000 San Antonio, Texas
April 13, 1995
ON or before March 31, 1999, the scheduled maturity date hereof, or such
earlier date to which the maturity hereof shall have been accelerated pursuant
to the terms hereof. FOR VALUE RECEIVED, Charles A. Coltman, Jr., M.D., an
individual resident of the State of Texas (the "DEBTOR"), unconditionally
promises to pay to the order of ILEX ONCOLOGY, INC. ("ILEX"), a Delaware
corporation formerly known as Biovensa Inc., at 14960 Omicron, San Antonio,
Texas 78245, or such other place as ILEX may from time to time designate to
DEBTOR in writing, the principal sum of Thirty Eight Thousand Dollars ($38,000)
along with interest accruing thereon at the rate of eight percent (8%) per
annum, computed on the basis of a 360-day year for the actual number of days
elapsed. Such principal and interest shall be paid in lawful money of the
United States of America in consecutive quarterly payments according to the
amortization schedule attached hereto as Annex 1 commencing on the first (1st)
of July 1995 and continuing on the first (1st) of each January, April, July and
October thereafter, provided that any and all remaining outstanding principal
and unpaid interest shall be due and payable in full on March 31, 1999, the
scheduled maturity date of the Promissory Note. The DEBTOR may prepay the
principal balance of this Promissory Note, in whole or in part, at any time
without penalty.
This Promissory Note is being made pursuant to a Stock Purchase
Agreement dated as of April 11, 1995 (the "Purchase Agreement") by and between
ILEX and DEBTOR, pursuant to which DEBTOR purchased an aggregate of 480,000
shares (the "Shares") of ILEX'S common stock, $.01 par value per share. As
security for the payment of this Promissory Note, DEBTOR hereby pledges to ILEX
380,000 of such Shares (the "Pledged Shares"). Upon the repayment of any
principal hereunder, the number of Pledged Shares shall be reduced by that
number of shares equal to the quotient of (a) the dollar amount of principal
repaid, divided by (b) $.10. In the event that DEBTOR fails to pay to ILEX any
portion of the principal or interest due on this Promissory Note in accordance
with the provisions hereof, DEBTOR shall transfer to ILEX all DEBTOR'S right,
title and interest in that number of Pledged Shares equal to the quotient of
(a) the amount of unpaid principal and interest divided by (b) $.10.
In the event of a Default (as hereinafter defined), all of the
indebtedness evidenced by this Promissory Note may, at the option of IELX and
without demand or notice of demand of any kind, be declared and thereupon shall
become immediately due and payable. The occurrence of existence of any of the
following shall constitute a Default under this Promissory Note: (a) the
failure of the DEBTOR to pay principal or interest within ten (10) days of the
date due or declared due under this Promissory Note; (b) a proceeding under any
bankruptcy, reorganization, insolvency or similar law
<PAGE> 2
is filed by or against the DEBTOR, or the DEBTOR takes any corporate action to
make an assignment for the benefit of creditors, or to authorize any of the
foregoing; (c) the DEBTOR shall fail to make any payment due on any material
obligation for money borrowed by Debtor and the effect of such failure shall be
to cause or permit the holder of such obligation or trustee to cause such
obligation to become due prior to its date of maturity; or (d) a breach by the
DEBTOR shall occur under any material agreement, document or instrument,
whether heretofore, now or hereafter existing between the DEBTOR and any other
party.
The DEBTOR does not intend or expect to pay, nor does ILEX intend or
expect to charge, accept or collect any interest which, when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate. If acceleration, prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate, then any and all such excess is hereby waived and shall be
applied against the remaining principal balance. Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal amount
outstanding hereunder, cause the rate of interest hereunder to exceed the
highest lawful rate.
The DEBTOR waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Promissory Note.
This Promissory Note shall be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws of Texas.
Whenever possible each provision of this Promissory Note shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Promissory Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Promissory Note. The provisions of this
Promissory Note shall be binding upon the DEBTOR and its successors and
assigns, and shall inure to the benefit of ILEX and its successors and assigns,
provided that the DEBTOR cannot assign or delegate its obligations hereunder
without the prior written consent of ILEX.
Unless otherwise defined in this Promissory Note, capitalized terms used
in this Promissory Note shall have the respective meanings assigned to them in
the Purchase Agreement.
DEBTOR:
/s/ CHARLES A. COLTMAN, JR.
------------------------------
Charles A. Coltman, Jr.
-2-
<PAGE> 3
Borrower: Charles A. Coltman, Jr.
Amount: $38,000.00
Term: 4 yrs.
Rate: 8%
Amortization: 10 yrs.
<TABLE>
<CAPTION>
Payment
Amount Interest Principal Balance
<S> <C> <C> <C> <C>
$38,000.00
7/1/95 $1,389.12 $667.11 $722.01 37,277.99
10/1/95 1,389.12 745.56 643.56 36,634.43
1/1/96 1,389.12 732.69 656.43 35,978.00
4/1/96 1,389.12 719.56 669.56 35,308.45
7/1/96 1,389.12 706.17 682.95 34,625.50
10/1/96 1,389.12 692.51 696.61 33,928.89
1/1/97 1,389.12 678.58 710.54 33,218.35
4/1/97 1,389.12 664.37 724.75 32,493.60
7/1/97 1,389.12 649.87 739.25 31,754.35
10/1/97 1,389.12 635.09 754.03 31,000.32
1/1/98 1,389.12 620.01 769.11 30,231.21
4/1/98 1,389.12 604.62 784.49 29,446.71
7/1/98 1,389.12 588.93 800.18 28,646.53
10/1/98 1,389.12 572.93 816.19 27,830.34
1/1/99 1,389.12 556.61 832.51 26,997.83
3/31/99 27,537.78 539.96 26,997.83
$48,374.56 $10,374.56 $38,000.00
</TABLE>
-3-
<PAGE> 1
Exhibit 10.65
PROMISSORY NOTE
$20,000 San Antonio, Texas
April 11, 1995
ON or before March 31, 1999 the scheduled maturity date hereof, or such
earlier date to which the maturity hereof shall have been accelerated pursuant
to the terms hereof, FOR VALUE RECEIVED, Alexander L. Weis, an individual
resident of the State of Texas (the "DEBTOR"), unconditionally promises to pay
to the order of ILEX ONCOLOGY, INC. ("ILEX"), a Delaware corporation formerly
known as Biovensa Inc., at 14960 Omicron, San Antonio, Texas 78245, or such
other place as ILEX may from time to time designate to DEBTOR in writing, the
principal sum of Twenty Thousand Dollars ($20,000) along with interest accruing
thereon at the rate of eight percent (8%) per annum, computed on the basis of a
360-day year for the actual number of days elapsed. Such principal and
interest shall be paid in lawful money of the United States of America in
consecutive quarterly payments according to the amortization schedule attached
hereto as Annex 1 commencing on the first (1st) of July 1995 and continuing on
the first (1st) of each January, April, July and October thereafter, provided
that any and all remaining outstanding principal and unpaid interest shall be
due and payable in full on March 31, 1999, the scheduled maturity date of this
Promissory Note. The DEBTOR may prepay the principal balance of this
Promissory Note, in whole or in part, at any time without penalty.
This Promissory Note is being made pursuant to a Stock Purchase
Agreement dated as of April 11, 1995 (the "Purchase Agreement") by and between
ILEX and DEBTOR, pursuant to which DEBTOR purchased an aggregate of 480,000
shares (the "Shares") of ILEX'S common stock, $.01 par value per share. As
security for the payment of this Promissory Note, DEBTOR hereby pledges to ILEX
200,000 shares of the Shares (the "Pledged Shares"). Upon the repayment of any
principal hereunder, the number of Pledged Shares shall be reduced by that
number of shares equal to the quotient of (a) the dollar amount of principal
repaid, divided by (b) $.10. In the event that DEBTOR fails to pay to ILEX any
portion of the principal or interest due on this Promissory Note in accordance
with the provisions hereof, DEBTOR shall transfer to ILEX all DEBTOR'S right,
title and interest in that number of Pledged Shares equal to the quotient of
(a) the amount of unpaid principal and interest divided by (b) $.10.
In the event of a Default (as hereinafter defined), all of the
indebtedness evidenced by this Promissory Note may, at the option of ILEX and
without demand or notice of demand of any kind, be declared and thereupon shall
become immediately due and payable. The occurrence or existence of any of the
following shall constitute a Default under this Promissory Note: (a) the
failure of the DEBTOR to pay principal or interest within ten (10) days of the
date due or declared due under this Promissory Note; (b) a proceeding under any
bankruptcy, reorganization, insolvency or similar law
<PAGE> 2
is filed by or against the DEBTOR, or the DEBTOR takes any corporate action to
make an assignment for the benefit of creditors, or to authorize any of the
foregoing; (c) the DEBTOR shall fail to make any payment due on any material
obligation for money borrowed by Debtor and the effect of such failure shall be
to cause or permit the holder of such obligation or trustee to cause such
obligation to become due prior to its date of maturity ; or (d) a breach by the
DEBTOR shall occur under any material agreement, document or instrument,
whether heretofore, nor or hereafter existing between the DEBTOR and any other
party.
The DEBTOR does not intend or expect to pay, nor dos ILEX intend or
expect to charge, accept or collect any interest which, when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate. If acceleration, prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate, then any and all such excess is hereby waived and shall be
applied against the remaining principal balance. Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal amount
outstanding hereunder, cause the rate of interest hereunder to exceed the
highest lawful rate.
The DEBTOR waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Promissory Note.
This Promissory Note shall be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws of Texas.
Whenever possible each provision of this Promissory Note shall be interpreted
in such manner as to the effective and valid under applicable law, but if any
provision of this Promissory Note shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Promissory Note. The provisions of this
Promissory Note shall be binding upon the DEBTOR and its successors and
assigns, and shall inure to the benefit of ILEX and its successors and assigns,
provided that the DEBTOR cannot assign or delegate its obligations hereunder
without the prior written consent of ILEX.
Unless otherwise defined in this Promissory Note, capitalized terms used
in this Promissory Note shall have the respective meanings assigned to them in
the Purchase Agreement.
DEBTOR:
/s/ ALEXANDER L. WEIS
-----------------------
Alexander L. Weis
-2-
<PAGE> 3
Borrower: Alexander L. Weis
Amount: $20,000.00
Term: 4 yrs.
Rate: 8%
Amortization: 10 yrs.
<TABLE>
<CAPTION>
Payment
Amount Interest Principal Balance
<S> <C> <C> <C> <C>
$20,000.00
7/1/95 $731.11 $351.11 $380.00 19,620.00
10/1/95 731.11 392.40 338.72 19,281.28
1/1/96 731.11 385.63 345.49 18,935.79
4/1/96 731.11 378.72 352.40 18,583.39
7/1/96 731.11 371.67 359.45 18,223.95
10/1/96 731.11 364.48 366.64 17,857.31
1/1/97 731.11 357.15 373.97 17,483.34
4/1/97 731.11 349.67 381.45 17,101.89
7/1/97 731.11 342.04 389.08 16,712.82
10/1/97 731.11 334.26 396.86 16,315.96
1/1/98 731.11 326.32 404.80 15,911.16
4/1/98 731.11 318.22 412.89 15,498.27
7/1/98 731.11 309.97 421.15 15,077.12
10/1/98 731.11 301.54 429.57 14,647.55
1/1/99 731.11 292.95 438.16 14,209.38
3/31/95 14,493.57 284.19 14,209.38
--------- ------ ---------
$25,460.30 $5,460.30 $20,000.00
========== ========= ==========
</TABLE>
-3-
<PAGE> 1
EXHIBIT 10.66
OWNERSHIP RESTRICTION AGREEMENT
This Ownership Restriction Agreement (the "Agreement") dated as of
December 11, 1996, is entered into among (a) MPILEX Management, L.L.C., a
Delaware limited liability company (the "General Partner"), (b) MPILEX
Partners, L.P., a Delaware limited partnership (the "Partnership"), and (c) the
holders of Units of the General Partner and the Partnership listed on Schedule
A hereto (each a "Holder" and collectively the "Holders").
RECITALS
A. The Holders own Units of the General Partner and the
Partnership as reflected on Schedule A hereto.
B. The parties desire to enter into this Agreement in order to
preserve the continuity of management and ownership of the General Partner and
the Partnership as hereinafter provided.
AGREEMENTS
In consideration of the premises and mutual covenants contained
herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the terms defined below shall
have the following meanings for all purposes of this Agreement (applicable to
both the singular and plural forms thereof):
"Affiliate" means, when used with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the specified Person. For purposes of
this definition "control", when used with respect to any specified Person,
means the power to direct the management and policies of the Person, directly
or indirectly, whether through the ownership of voting securities, by contract,
by family relationship or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Code" means the Internal Revenue Code of 1986, as amended.
"GP Units" means the Units of the General Partner as defined and set
forth in the Regulations.
"Holders" means the owners of record of GP Units and/or P Units.
"ILEX" means Ilex Oncology, Inc., a Delaware corporation.
"MPI" means MPI Enterprises, L.L.C., a Michigan limited liability
company.
<PAGE> 2
"Owned Units" means, with respect to a Holder, the GP Units and P
Units owned of record by such Holder.
"P Units" means the Units of the partners of the Partnership as
defined and set forth in the Partnership Agreement.
"Partnership Agreement" means the Agreement of Limited Partnership of
the Partnership dated as of December 11, 1996, as amended, modified or restated
from time to time.
"Person" includes all natural persons, corporations, business trusts,
associations, companies, partnerships, joint ventures and other entities and
governments and agencies and political subdivisions.
"Regulations" means the Regulations of the General Partner dated as of
December 11, 1996, 1996, as they may be amended, modified or restated from time
to time.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE 2
GENERAL RESTRICTION ON TRANSFER
2.1 General Limitation. Unless otherwise approved in writing by
all of the Holders, no Holder may sell, transfer, assign or devise, or subject
to security interest, lien or charge, all or any part of its Owned Units;
provided that a Holder may sell, transfer or assign all, but not less than all,
of its Owned Units in compliance with the following conditions:
(a) Any such sale, transfer or assignment is to one
Person only;
(b) Any such sale, transfer or assignment includes all of
such Holder's Owned Units;
(c) The provisions of Articles 3 or 4 hereof are
satisfied; provided further, however, that the provisions of Articles
3 or 4 need not be satisfied if (i) all of the provisions of this
Section 2.1 hereof are satisfied and (ii) the sale, transfer or
assignment is made to an Affiliate of such Holder;
(d) In the event of a proposed sale, transfer or
assignment pursuant to Article 3 hereof, the transferee or assignee is
approved by the Tranferee Holder, which approval may not be
unreasonably withheld (for purposes hereof, the withholding of
approval by the Transferee Holder shall not be deemed unreasonable if
such approval is withheld as a result of good faith concern on the
part of the Transferee Holder that the transferee or assignee is
engaged in a business that is in competition with the Transferee
Holder);
-2-
<PAGE> 3
(e) No sale, transfer or assignment will be permitted
unless the Holder furnishes the General Partner, for itself and as the
general partner of the Partnership, with an opinion of counsel
satisfactory to the General Partner or other assurances reasonably
satisfactory to the General Partner to the effect that the proposed
sale, transfer or assignment will not subject the Partnership or the
General Partner, as appropriate, to any additional regulatory
requirements; will not constitute a violation of applicable law or
this Agreement; will not result in the Partnership being classified as
an association taxable as a corporation; will not constitute a
termination under Section 708 of the Code; and is exempt from the
registration provisions of the Securities Act and applicable state
securities laws;
(f) The transferee or assignee of the GP Units and P
Units of a Holder executes and acknowledges such instruments as may be
reasonably necessary to reflect the admission of such transferee or
assignee as a substituted member of the General Partner and a
substituted limited partner of the Partnership, including, without
limitation, a written acceptance by such transferee or assignee of the
provisions of this Agreement, the Partnership Agreement and the
Regulations; and
(g) The transferring Holder reimburses the General
Partner for all reasonable expenses (including attorney fees) incurred
by the General Partner and the Partnership in connection with such
transaction.
2.2 Acts in Violation. Any transfer by any Holder or any other
Person in violation of Section 2.1 shall be null and void ab initio.
ARTICLE 3
RIGHT OF FIRST REFUSAL
3.1 Right of First Refusal.
(a) Subject to compliance with the restrictions contained
in Article 2 hereof, if any Holder (a "Transferring Holder") wishes to
sell, assign or transfer all of its Owned Units, such Transferring
Holder shall first give a written notice (a "Transfer Notice") to
other Holder (the "Transferee Holder") specifying the amount and type
of Owned Units such Transferring Holder wishes to sell, assign or
transfer, which amount (the "Transfer Interests") shall not be less
than all of the Units owned by the Transferring Holder, the name and
address of the proposed transferee, and containing an irrevocable
offer (the "Transfer Offer") to sell the Transfer Interests to the
Transferee Holder at the price and on the terms set forth in the
Transfer Notice, which price and terms (i) shall be the same as the
price and terms on which the Transferring Holder proposes to sell,
assign or transfer such Owned Units and (ii) shall provide that all
consideration payable to the Transferring Holder shall be in the form
of cash and/or a promissory note (whether secured or unsecured) issued
by the purchaser to the Transferring Holder.
-3-
<PAGE> 4
(b) The Transfer Offer shall remain open to acceptance by
the Transferee Holder for a period of 30 days from the date of the
Transferee Holder's receipt of the Transfer Notice. During such
30-day period, the Transferring Holder shall promptly provide to the
Transferee Holder such other information relevant to the proposed
sale, assignment or transfer as the Transferee Holder may reasonably
request. If the Transferee Holder desires to accept the Transfer
Offer, it must give the Transferring Holder written notice of
acceptance before the expiration of such 30-day period.
(c) The closing of any purchase by the Transferee Holder
pursuant to this Article 3 shall take place at the principal offices
of the General Partner on the 30th day (or, if not a business day, the
next business day) after the notice of acceptance of the Transfer
Offer is given by the Transferee Holder. At such closing, the
Transferee Holder shall pay and deliver to the Transferring Holder all
consideration required under the terms of the Transfer Offer, against
delivery of duly executed assignments and other instruments reasonably
necessary to effect the sale, assignment or transfer of the Transfer
Interests to be purchased. The Transfer Interests shall be conveyed
and delivered to the Transferee Holder or its designee free and clear
of all liens, security interests, encumbrances, options, calls or
other restrictions, other than those imposed by this Agreement, the
Partnership Agreement and the Regulations.
(d) If, at the end of the 30th day after the Transfer
Notice is received by the Transferee Holder, the Transferee Holder has
not given its notice of acceptance of the Transfer Offer, then the
Transferring Holder shall have 120 days in which to sell, assign or
transfer all of the Transfer Interests to the Person specified in the
Transfer Notice (but not any other Person) at a price not lower, and
on other terms no more favorable to the transferee, than contained in
the Transfer Notice. If, at the end of such 120-day period, the
Transferring Holder has not completed the sale, assignment or transfer
of all of the Transfer Interests in accordance with the foregoing, the
Transferring Holder shall no longer be permitted to sell, transfer or
assign the Transfer Interests pursuant to this Article 3 without again
complying with this Article 3 in its entirety.
ARTICLE 4
PUSH-PULL PROVISIONS
4.1 Push-Pull Provisions.
(a) Subject to compliance with the restrictions contained
in Article 2 hereof, and in addition to the rights of the Holders
under Article 3 hereof, any Holder (an "Invoking Holder") may deliver
to the other Holder (the "Offeree Holder") written notice (an "Offer
Notice") that it is invoking the provisions of this Article 4. The
Offer Notice shall set forth the cash price per GP Unit and the cash
price per P Unit that the Invoking Holder would be willing to purchase
GP Units and P Units as if such Invoking Holder was a third party
offering to purchase such GP Units from the General Partner and such P
Units from the
-4-
<PAGE> 5
Partnership. The Offer Notice shall constitute an offer by the
Invoking Holder to (i) purchase all of the Owned Units of the Offeree
Holder for cash at the prices per GP Unit and per P Unit set forth in
the Offer Notice and (ii) sell all of its Owned Units for cash to the
Offeree Holder at the prices per GP Unit and per P Units set forth in
the Offer Notice.
(b) Upon receipt of the Offer Notice, the Offeree Holder
may elect to either (i) purchase for cash all of the Invoking Holder's
Owned Units at the prices per GP Unit and per P Unit set forth in the
Offer Notice, or (ii) sell for cash all of its Owned Units to the
Invoking Holder at the prices per GP Unit and per P Unit set forth in
the Offer Notice. The Offeree Holder shall give notice of its
election hereunder to the Invoking Holder within 60 days after the
Offeree Holder's receipt of the Offer Notice; provided, however, that
if the Offeree Holder does not give the Invoking Holder notice of its
election within such 60-day period, the Offeree Holder shall be
conclusively deemed to have elected to sell for cash all of its Owned
Units to the Invoking Holder at the prices per GP Unit and per P Unit
set forth in the Offer Notice. The Invoking Holder may rescind its
offer notice prior to acceptance or deemed acceptance of the offer
evidenced thereby by giving written notice of such rescission to the
Offeree Holder prior to such acceptance or deemed acceptance.
(c) The closing of any purchase by the Invoking Holder or
the Offeree Holder pursuant to this Article 4 shall take place at the
principal offices of the General Partner on the 60th day (or, if not a
business day, the next business day) after the sooner of (i) the date
on which the Offeree Holder gives notice of such Offeree Holder's
election under this Article 4 or (ii) the date on which the Offeree
Holder is conclusively deemed to have elected to sell its Owned Units
pursuant to this Article 4. At such closing, the purchasing Holder
shall deliver, by wire transfer of immediately available funds, the
appropriate amount to the selling Holder against delivery of duly
endorsed certificates and duly executed assignments and other
instruments necessary to effect the sale, assignment or transfer of
the Owned Units to be purchased. The Owned Units of the selling
Holder shall be conveyed and delivered to the purchasing Holder or its
designee free and clear of all liens, security interests,
encumbrances, options, calls or other restrictions other than those
imposed by this Agreement, the Partnership Agreement and the
Regulations.
(d) After the giving of an Offer Notice as described
herein, no Holder may sell, assign or transfer its Owned Units under
Article 3 hereof until the closing of the sale of the selling Holder's
Owned Units pursuant to Article 4.
ARTICLE 5
BANKRUPTCY OF A HOLDER
In the event that any Holder shall initiate a petition in bankruptcy
or for reorganization, suffer to be filed against it a petition in bankruptcy
or reorganization and fail to cause such petition to be dismissed within 60
days, or admit insolvency or
-5-
<PAGE> 6
be adjudicated insolvent (such Holder being herein referred to as a "Bankrupt
Holder"), then in any such event the other Holder shall have the exclusive
right and option to purchase all of the Owned Units of such Bankrupt Holder at
a purchase price equal to the Appraised Value (hereinafter defined) of the
Owned Units of such Bankrupt Holder. The payment for such Owned Units shall be
in cash and the closing of such transaction shall occur at the principal
offices of the Partnership, or at another place mutually agreeable to the
parties, within 15 days after the receipt of the notice described in the
following sentence, and the Bankrupt Holder shall be obligated and bound to
sell its Owned Units to the other Holder upon said terms. Notice of the
exercise of the option granted pursuant to this Article 4 shall be given to the
Bankrupt Holder within 180 days of the date on which the Holder other than the
Bankrupt Holder obtains knowledge of the initiation or filing of such petition
in bankruptcy or for reorganization or of the insolvency of the Bankrupt
Holder. As used herein, "Appraised Value" shall mean the fair market value of
such Owned Units as determined by a qualified independent appraiser, selected
in good faith by the non-Bankrupt Holder and approved by the Bankrupt Holder
(which approval may not be unreasonably withheld or delayed). Such "Appraised
Value" shall not include any minority interest discount or majority interest
premium. All fees and expenses of such appraiser shall be paid by the
Partnership.
ARTICLE 6
MISCELLANEOUS
6.1 Additional Restrictions. In addition to the foregoing
provisions of this Agreement, the Holders agree as follows:
(a) No Holder may pledge or otherwise grant any security
interest in any of its Owned Units without the prior written consent
of all of the Holders; and
(b) MPI (or its permitted assign) will not permit the
Persons that control MPI (or its permitted assign) as of the date
hereof (or in the case of an assignee, as of the date such assignee
becomes a Holder hereunder) (such Persons being referred to as the
"Controlling Persons") to sell, assign or otherwise transfer ownership
interests in MPI (or its permitted assign) such that a Person who is
not an Affiliate of the Controlling Persons thereafter controls MPI
(or its permitted assign), unless such transferee is approved by the
ILEX, which approval may not be unreasonably withheld (for purposes
hereof, the withholding of approval shall not be deemed unreasonable
if such approval is withheld as a result of a good faith concern that
the transferee is engaged in a business that is in competition with
ILEX). As used above, "control" shall have the meaning set forth in
the definition of "Affiliate" in Article 1 hereof. The Controlling
Persons of MPI as of the date of this Agreement are J.R. Mitchell,
M.D., Ph.D. and William Parfet. The foregoing provisions of this
Section 6.1(b) shall only apply so long as the Owned Units held by MPI
(or its permitted assign) constitute substantially all of the assets
of MPI (or its permitted assign, as the case may be).
-6-
<PAGE> 7
6.2 Term of this Agreement. This Agreement shall continue until
the sooner to occur of (a) the dissolution and termination of the Partnership
or (b) the agreement by all of the Holders to terminate this Agreement.
6.3 Enforcement. No Owned Units shall be transferred on the books
of the Partnership or the General Partner and no transfer thereof shall be
effective unless and until the terms and provisions of this Agreement are
complied with, and in case of violation of this Agreement by the attempted
transfer of the Owned Units without compliance with the terms and provisions
thereof, such transfer shall be invalid and of no effect and the General
Partner and/or the Holders who are not attempting to transfer the Owned Units
shall have the right to compel the Holder who is attempting to transfer the
Owned Units, and/or the purported transferee, to transfer and deliver the same
in accordance with Article 2 and Articles 3 or 4 of this Agreement, whichever
is applicable.
6.4 Specific Performance. The parties hereto recognize that the
Owned Units cannot be readily purchased or sold on the open market and that it
is to the benefit of the Partnership, General Partner and the Holders that this
Agreement be carried out; and for those and other reasons, the parties hereto
would be irreparably damaged if this Agreement is not specifically enforced in
the event of a breach hereof. If any controversy concerning the rights or
obligations to purchase or sell any Owned Units arises, or if this Agreement is
breached, the parties hereto hereby agree that remedies at law might be
inadequate and that, therefore, such rights and obligations, and this
Agreement, shall be enforceable by specific performance. The remedy of
specific performance shall not be an exclusive remedy, but shall be cumulative
of all other rights and remedies of the parties hereto at law, in equity or
under this Agreement.
6.5 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally, mailed by certified mail (return receipt requested) or sent by
reputable overnight delivery service, cable, telegram, facsimile transmission
or telex to the parties at the following addresses or at such other addresses
as shall be specified by the parties by like notice:
(a) If to the General Partner or Partnership:
MPILEX Management, L.L.C.
14785 Omicron Dr., Suite 101
San Antonio, TX 78245
Attn: Board of Managers
Fax No.: (210) 677-6009
-7-
<PAGE> 8
(b) If to ILEX:
ILEX Oncology, Inc.
14785 Omicron Dr., Suite 101
San Antonio, TX 78245
Attn: Richard L. Love
Fax No.: (210) 677-6009
(c) If to MPI:
MPI Enterprises, L.L.C.
54943 N. Main Street
Mattawan, MI 49071
Attn: J.R. Mitchell
Fax No.: (616) 668-4151
(d) A copy of each notice to the General Partner or the
Partnership shall be sent, in the manner described in
this section, to each Holder.
Notice so given shall, in the case of notice so given by mail, be deemed to be
given and received on the third calendar day after posting, in the case of
notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission with answer back
or other confirmations, or, as the case may be, personal delivery.
6.6 Binding Effect. This Agreement, including, without
limitation, the restrictions, rights and conditions contained herein relating
to the transfer of Owned Units shall be binding upon the parties hereto and
their respective successors and assigns permitted under this Agreement. In
particular, any assignee of a Holder permitted under the terms of this
Agreement shall have all rights hereunder of the assigning Holder in full
substitution of such assigning Holder.
6.7 Governing Law. This Agreement shall be governed by and
interpreted in accordance with laws of the State of Delaware.
6.8 Arbitration. Any claim, dispute or controversy of any nature
whatsoever, including but not limited to tort claims or contract disputes,
among the parties to this Agreement or their respective successors and assigns,
arising out of or relating to the terms and conditions of this Agreement,
including the implementation, applicability and interpretation thereof, shall
be resolved in accordance with the dispute resolution procedures set forth on
Annex A attached to this Agreement.
-8-
<PAGE> 9
6.9 Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
6.10 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
(written and oral) relating to the subject matter hereof.
6.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
6.12 Amendments. This Agreement may be amended, modified or
supplemented only by a written instrument executed by all of the Holders.
[signatures on next page]
-9-
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Ownership
Restriction Agreement as of the day and in the year first above written.
GENERAL PARTNER:
MPILEX MANAGEMENT, L.L.C.
By: /s/ RICHARD L. LOVE
---------------------------------------
Richard L. Love, President
PARTNERSHIP:
MPILEX PARTNERS, L.P.
By: MPILEX MANAGEMENT, L.L.C.
General Partner
By: /s/ RICHARD L. LOVE
------------------------------
Richard L. Love, President
HOLDERS:
MPI ENTERPRISES, L.L.C.
By: /s/ J. R. MITCHELL
---------------------------------------
J.R. Mitchell, M.D., Ph.D.,
Co-Chairman and CEO
ILEX ONCOLOGY, INC.
By: /s/ RICHARD L. LOVE
---------------------------------------
Richard L. Love,
President
-10-
<PAGE> 11
SCHEDULE A
GP AND P UNITS
A. Units in General Partner GP Units
------------------------ --------
ILEX Oncology, Inc. 50 Class A
14785 Omicron Dr., Suite 101
San Antonio, TX 78245
MPI Enterprises, L.L.C. 50 Class B
54943 N. Main Street
Mattawan, MI 49071
B. Units in Partnership P Units
-------------------- -------
MPILEX Management, L.L.C. 1
14785 Omicron Dr., Suite 101
San Antonio, TX 78245
ILEX Oncology, Inc. 49.5
14785 Omicron Dr., Suite 101
San Antonio, TX 78245
MPI Enterprises, L.L.C. 49.5
54943 N. Main Street
Mattawan, MI 49071
-1-
<PAGE> 12
ANNEX A
ALTERNATIVE DISPUTE RESOLUTION
All disputes between the parties relating to this Agreement, the
Partnership Agreement or the Regulations shall be settled among the parties by
the following procedures. For purposes hereof, the parties shall mean Ilex
(and its permitted successors and assigns), on one side, and MPI (and its
permitted successors and assigns), on the other:
1. NEGOTIATION
1.1 Within thirty (30) days of the incurred acts,
occurrences and/or omissions giving rise to the dispute, the aggrieved party
shall give detailed written notice to the other party of the aggrieved party's
specific complaint including the amount of actual damages and expenses,
including attorneys' fees, claimed or incurred by the aggrieved party. The
aggrieved party shall include copies of all documents which support its claims.
1.2 Within thirty (30) days after receipt of the notice,
the party receiving the notice shall tender to the other party a written
response, including an offer of settlement, if appropriate. Any offer of
settlement not accepted with thirty (30) days of receipt by the aggrieved party
shall be deemed to have been rejected.
1.3 The tender of an offer of settlement is not an
admission of engaging in an unlawful act or practice or of liability.
1.4 In the event the parties are unable to settle their
disputes after following the procedures set forth above, with fifteen (15) days
thereafter, the parties shall submit their disputes to mediation.
2. MEDIATION
2.1 Consent to Mediator. Both parties shall share
equally in the naming of the mediator. The mediator shall act as an advocate
for resolution and shall use his or her best efforts to assist the parties in
reaching a mutually acceptable settlement.
2.2 Conditions Precedent to Serving as Mediator. The
mediator shall not serve as a mediator in any dispute in which he or she has
any financial or personal interest in the result of the mediation. Prior to
accepting an appointment, the mediator shall disclose any circumstance likely
to create a presumption of bias or prevent a prompt meeting with the parties.
In the event that the parties disagree as to whether the mediator shall serve,
the mediator shall not serve.
-1-
<PAGE> 13
2.3 Authority of Mediator. The mediator does not have
the authority to decide any issue for the parties, but will attempt to
facilitate the voluntary resolution of the dispute by the parties. The
mediator is authorized to conduct joint and separate meetings with the parties
and to offer suggestions to assist the parties in achieving settlement. If
necessary, the mediator may also obtain expert advice concerning technical
aspects of the dispute, provided that the parties agree and assume the expenses
of obtaining such advice. Arrangements for obtaining such advice shall be made
by the mediator or the parties, as the mediator shall determine. Likewise, the
mediator may request the limited production of documents from both parties in
defense of their respective claims. The mediator shall not disclose the
parties in defense of their respective claims. The mediator shall not disclose
the actual documents without the consent of the offering party. However, in
his or her discussions with the respective parties, the mediator will be
permitted to share summary oral information from any such documents.
2.4 Length of Mediation. Mediation proceedings shall not
extend beyond two (2) days, without the consent of the parties.
2.5 Commitment to Participate in Good Faith. The parties
further agree that at any time following the mediation process but prior to the
initiation of binding arbitration, the president or highest ranking senior
level executive of the respective companies shall meet or confer telephonically
in one last effort to resolve the dispute. During each phase of the
alternative dispute evaluation process, the parties agree to act in good faith
to settle the dispute, if possible.
3. ARBITRATION.
3.1 All claims, disputes, controversies and other matters
in question arising out of or relating to the Agreement or to the alleged
breach thereof shall be settled by Negotiation between the parties as described
in Section 1 of this Annex A or by Mediation between the parties as described
in Section 2 of this Annex A. If such negotiation and mediation are
unsuccessful, the parties agree to submit to binding arbitration. The parties
agree the arbitration shall be administered by the American Arbitration
Association ("AAA") and conducted in accordance with its Commercial Arbitration
Rules, except as otherwise provided in accordance with procedures set forth in
Sections 3.2 through 3.3 (xiii) of this Annex A or as the parties may otherwise
agree.
3.2 Notice. Notice of demand for binding arbitration
shall be given in writing to the other party pursuant to the Agreement.
3.3 Binding Arbitration. Upon filing of a notice of
demand for binding arbitration by either party, arbitration shall be commenced
and conducted as follows:
(i) Arbitrator. All claims, disputes,
controversies, and other matters (collectively "matters") in question shall be
referred to and decided and settled by an arbitrator that has been found
acceptable by both Ilex and MPI. Selection of the arbitrator shall be made
within ten (10) business days after the date of filing of a
-2-
<PAGE> 14
demand for arbitration. In the event the parties cannot agree on the selection
of the arbitrator within ten (10) business days of delivery of the written
notice invoking arbitration, the arbitrator shall be selected pursuant to the
AAA Commercial Arbitration Rules.
(ii) Cost of Arbitration. The cost of arbitration
proceedings, including without limitation the arbitrator's compensation and
expenses, hearing room charges, court reporter transcript charges etc., shall
be borne by the parties equally or otherwise as the arbitrator may determine.
The arbitrator may award the prevailing party its reasonable attorneys' fees
and costs incurred in connection with the arbitration. The arbitrator is
specifically instructed to award attorneys' fees for instances of abuse in the
discovery process.
(iii) Location of Proceedings. The arbitration
proceedings shall be held in San Antonio, Texas, unless the parties agree
otherwise.
(iv) Pre-hearing Discovery. The parties shall
have the right to conduct and enforce pre- hearing discovery in accordance with
the then current Federal Rules of Civil Procedure, subject to these
limitations:
(a) Each party may serve no more than one set of
interrogatories limited to fifty items;
(b) Each party may depose the other party's expert
witnesses who will be called to testify at the hearing, plus
two fact witnesses without regard to whether they will be
called to testify (each party will be entitled to a total of
nor more than 24 hours of depositions of the other party's
witnesses), provided however, that the arbitrator may provide
for additional depositions upon showing of good cause; and
(c) Document discovery and other discovery shall be
under the control of and enforceable by the arbitrator.
(v) Discovery disputes. All discovery disputes
shall be decided by the arbitrator. The arbitrator is empowered;
(a) to issue subpoenas to compel pre-hearing
document or deposition discovery;
(b) to enforce the discovery rights and obligations
of the parties; and
(c) to otherwise control the scheduling and conduct
of the proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrator
shall have the power and authority to, and to the fullest extent practicable
shall, abbreviate
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arbitration discovery in a manner which is fair to all parties in order to
expedite the conclusion of each alternative dispute resolution proceeding.
(vi) Pre-hearing Conference. Within fifteen (15)
days after selection of the arbitrator or as soon thereafter as is mutually
convenient to the arbitrator, the arbitrator shall hold a pre-hearing
conference to establish schedules for completion of discovery, for exchange of
exhibit and witness lists, for arbitration briefs, for the hearing, and to
decide procedural matters and all other questions that may be presented.
(vii) Hearing Procedures. The hearing shall be
conducted to preserve its privacy and to allow reasonable procedural due
process. Rules of evidence need not be strictly followed, and the hearing
shall be streamlined as follows:
(a) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
(b) Expert reports, witness biographies,
depositions, and affidavits may be utilized, subject to the
opponent's right of a live cross-examination of the witness in
person;
(c) Charts, graphs, and summaries shall be utilized
to present voluminous data, provided (i) that the underlying
data was made available to the opposing party thirty (30) days
prior to the hearing, and (ii) that the preparer of each
chart, graph, or summary is available for explanation and live
cross-examination in person;
(d) The hearing should be held on consecutive
business days without interruption to the maximum extent
practicable; and
(e) The arbitrator shall establish all other
procedural rules for the conduct of the arbitration in
accordance with the rules of arbitration of the Center for
Public Resources.
(viii) Governing Law. This arbitration provision
shall be governed by, and all rights and obligations specifically enforceable
under and pursuant to, the Federal Arbitration Act (9 U.S.C. Section 1, et
seq.). All disputes under this Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware. No conflict-of-laws rule or
law that might refer such construction or interpretation to the laws of another
jurisdiction shall be considered.
(ix) Consolidation. No arbitration shall include,
by consolidation, joinder, or in any other manner, any additional person not a
party to the Agreement, except by written consent of both parties containing a
specific reference to this Agreement.
(x) Award. The arbitrator is empowered to render
an award of general compensatory damages and equitable relief (including,
without limitations, injunctive relief), but is not empowered to award
exemplary, special or punitive damages. The award rendered by the arbitrator
(1) shall be final; (2) shall not constitute a basis for collateral estoppel as
to any issue; and (3) shall not be subject to vacation or modification.
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(xi) Waiver of Any Right to Punitive or Exemplary
Damages. All persons subject to the Agreement expressly agree to WAIVE ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES of any kind, whether this right
or claim could accrue NOW OR IN THE FUTURE under applicable law. However, in
the event a court determines that the express waiver set forth in Section 3(xi)
of this Annex A is unenforceable, then the arbitrator, and not a court, shall
determine if punitive or exemplary damages should be awarded and, if awarded,
the amount thereof.
(xii) Confidentiality. The parties hereto will
maintain the substance of any proceedings hereunder in confidence and the
arbitrator, prior to any proceedings hereunder, will sign an agreement whereby
the arbitrator agrees to keep the substance of any proceedings hereunder in
confidence.
(xiii) Severability. In the event any court or
other tribunal concludes any portion of this Annex A to be void or otherwise
unenforceable for any reason, the remainder of this Annex A shall survive and
is deemed severable, such that the parties' express purpose to arbitrate any
unresolved controversy shall be recognized and given effect.
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Exhibit 10.67
AGREEMENT OF LIMITED PARTNERSHIP
OF
MPILEX PARTNERS, L.P.
This Agreement of Limited Partnership of MPILEX Partners, L.P. dated
December 11, 1996, is entered into by and among MPILEX Management, L.L.C., a
Delaware limited liability company, as the General Partner, and the persons who
have executed and delivered this Agreement and whose names appear on Schedule A
hereto (as said Schedule A hereto may be amended from time to time as
hereinafter provided), as the Limited Partners.
In consideration of the mutual covenants, conditions and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to said Act.
"Affiliate" means, when used with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the specified Person, provided that the
Partnership shall not be deemed to be an Affiliate of any Partner. For
purposes of this definition "control", when used with respect to any specified
Person, means the power to direct the management and policies of the Person,
directly or indirectly, whether through the ownership of voting securities, by
contract, by family relationship or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Agreement" means this Agreement of Limited Partnership of the
Partnership, L.P., as the same may be amended, modified or restated from time
to time.
"Capital Contributions" means the amount of cash or the fair market
value, as determined in the sole judgment of the General Partner, of other
property contributed to the Partnership.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" shall mean the commitment by a Partner to make Capital
Contributions as determined under Article 4 hereof and set forth in Schedule A
hereto.
"Covered Person" means any Partner, an Affiliate of a Partner or any
officer, manager, director, shareholder, partner or member of the Partnership
or of a Partner or their respective Affiliates.
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"Distributable Cash" shall mean, at the time of determination, all
Partnership cash derived from the conduct of the Partnership's business, other
than (i) Capital Contributions, together with interest earned thereon pending
utilization thereof, (ii) financing proceeds and (iii) reserves for working
capital and other amounts that the General Partner reasonably determines to be
necessary for the proper operation of the Partnership's business and its
winding up and liquidation.
"General Partner" means MPILEX Management, L.L.C., a Delaware limited
liability company, or any other Person who, at the time of reference, serves as
the general partner of the Partnership, and who owns the number of Units set
forth on Schedule A hereto.
"Gross Asset Value" means, as of any date of determination, the fair
market value of all property of the Partnership as of the date on which the
determination thereof is to be made. The fair market value of the property of
the Partnership shall be determined by the General Partner. At the General
Partner's election, or if no determination is made by the General Partner
within 15 days after a request therefor is made, the fair market value of the
property of the Partnership shall be determined by an independent appraiser
selected by the General Partner. An appointed appraiser may employ persons and
incur expenses as are necessary to make the determination. In all
determinations of fair market value, no value shall be placed on the goodwill
or name of the Partnership. Determinations of fair market value made in
accordance with the foregoing shall be final and not subject to challenge by
any Partner.
"ILEX" means ILEX Oncology, Inc., a Delaware corporation.
"License Agreement" shall mean the License Agreement dated December 11,
1996 between the Partnership and ILEX, granting the Partnership certain
exclusive rights with respect to piritrexim.
"Limited Partners" means each Person who is a limited partner (which
shall include each Limited Partner executing this Agreement on the date hereof,
each additional Limited Partner and each substituted Limited Partner) at the
time of reference thereto, and who owns the number of Units set forth on
Schedule A hereto.
"MPI" means MPI Enterprises, L.L.C., a Michigan limited liability
company.
"Ownership Restriction Agreement" means the Ownership Restriction
Agreement dated December 11, 1996, among the Partnership, the General Partner,
the members of the General Partner and the Limited Partners.
"Partners" means, collectively, the General Partner and the Limited
Partners, and "Partner" means any one of them.
"Partnership" means MPILEX Partners, L.P., the limited partnership
entered into and formed hereunder pursuant to the Act.
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"Person" shall mean an individual, corporation, association, limited
liability company, limited liability partnership, partnership, estate, trust,
unincorporated organization or a government or any agency or political
subdivision thereof.
"Securities Act" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor to said Act.
"Unit Percentage" means, as to any Partner, the fraction, expressed as a
percentage, having as its numerator the number of Units owned by such Partner
and having as its dominator the total number of Units of all Partners.
"Units" means the issued and outstanding ownership interests of the
Partnership held by the Partners as set forth on Schedule A hereto (as amended
in accordance with this Agreement by the General Partner) and the rights and
obligations associated with ownership interests of the Partners in the
Partnership at the relevant time, including the consent, approval and
management rights of the Partners and any and all other benefits to which the
Partners may be entitled as provided in this Agreement, together with the
obligations of the Partners to comply with all the terms and provisions of this
Agreement. "Unit" means any one of the Units.
ARTICLE 2
FORMATION OF PARTNERSHIP
2.1 Formation. The Partners hereby enter into and form the
Partnership as a limited partnership pursuant to the provisions of the Act.
2.2 Name. The name of the Partnership shall be "MPILEX Partners,
L.P."
2.3 Certificate. The General Partner shall cause a certificate of
limited partnership meeting the requirements of the Act, and any amendments
thereto which are required under the Act, to be filed, when and as required.
2.4 Principal Place of Business. The principal place of business of
the Partnership shall be 14785 Omicron Dr., Suite 101, San Antonio, Texas 78245
or such other place as the General Partner may determine.
2.5 Registered Office; Registered Agent. In Delaware, the
Partnership shall maintain a registered office at 1209 Orange Street,
Wilmington, Delaware 19801, and the name of the Partnership's registered agent
at that address shall be CT Corporation System. In Texas, the Partnership
shall maintain a registered office at 14785 Omicron Dr., Suite 101, San
Antonio, Texas 78245, and the name of the Partnership's registered agent at
that address shall be James R. Koch.
2.6 Term. The term of the Partnership shall commence on the date
hereof and shall continue for a period of 20 years, unless the Partnership is
continued or sooner dissolved pursuant to the provisions of this Agreement.
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<PAGE> 4
ARTICLE 3
PURPOSE; OPPORTUNITIES
3.1 Purpose. The purpose and nature of the business to be conducted
by the Partnership shall be limited to (a) the commercialization of piritrexim
and its derivatives under the License Agreement and (b) enter into, make and
perform all such agreements and undertakings, and to engage in all such
activities and transactions, as the General Partner may deem necessary or
advisable for or incidental to the carrying out of the foregoing.
3.2 Outside Activities. This Agreement shall not preclude or limit,
in any respect, the right of the General Partner, any other Partner or any of
their Affiliates to engage or invest in any business activity of any nature or
description, including those which may be the same as or similar to the
Partnership's business. Any such activity may be engaged in independently or
with others without any obligation whatsoever to offer same to any other
Partner. Neither the Partnership, any Partner nor any of their Affiliates
shall have any right, by virtue of this Agreement or the partnership
relationship created hereby, in or to such other investments or activities, or
to the income or proceeds derived therefrom.
ARTICLE 4
CAPITAL CONTRIBUTIONS; PARTNERS
4.1 Initial Capital Commitments. By execution of this Agreement,
each Partner commits to make the Capital Contribution set forth on Schedule A
hereto dated as of December 11, 1996 ("Initial Commitments"), which Initial
Commitments are in the aggregate amount of $4,000,000.
4.2 Additional Capital Commitments. When the Initial Commitments
have been funded by the Partners and the Partnership needs additional funds,
there shall be successive additional rounds of commitments for Capital
Contributions offered by the Partnership to the Partners ("Offered Commitments"
and together with Initial Commitments, collectively the "Commitments"). Each
such round shall be in increments of $2,000,000 in aggregate Offered
Commitments and shall be offered as soon as practical upon a Capital Need. As
used herein, a "Capital Need" shall be deemed to exist when (a) all then
outstanding Commitments of the Partners have been fully funded and (b) the
Partnership then needs additional funds for its operations or to maintain
reasonable reserves for such operations. Upon the occurrence of a Capital
Need, an offering of a round of Offered Commitments may be commenced by any
Partner upon such Partner giving written thereof to the other Partners and,
once commenced, such offering shall continue for a period of 30 days thereafter
(the "Offer Period"). With regard to each round of Offered Commitments, the
General Partner must accept Offered Commitments in an amount equal to 1% of all
Offered Commitments accepted by the Limited Partners and each Limited Partner
shall have the right (but no obligation) to accept Offered Commitments in an
amount equal to but not less than 49.5% of the Offered Commitments (which
percentage may not correspond to then existing Unit Percentages, as adjusted).
Each Limited Partner that desires to accept Offered Commitments must give
written notice of its acceptance to each other
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<PAGE> 5
Partner during the Offer Period. Unless a Limited Partner accepts Offered
Commitments during the Offer Period in accordance with foregoing, such Limited
Partner shall be deemed to have rejected the Offered Commitments. If a Limited
Partner rejects (or is deemed to have rejected) the Offered Commitments, the
other Limited Partner may elect to accept all (but not less than all) of such
rejected Offered Commitments by giving written notice thereof to the Other
Partners on or before the expiration of 15 days after the end of the Offer
Period.
4.3 Funding of Commitments. All Commitments made by the Partners
pursuant to the provisions of this Article 4 shall be funded upon request by
the General Partner (or its managers or officers) as necessary to fund the
Partnership's operations and to maintain reasonable reserves for such
operations. Each request for funding shall be given by the General Partner (or
its managers or officers) to all other Partners at least five business days
prior to the funding date. Each request for funding shall include the
statement as to the intended use of the proceeds of such funding.
4.4 Binding Commitments; Default. All Commitments made by the
Partners pursuant to the provisions of this Article 4 shall be irrevocable,
binding commitments which shall be enforceable by the Partnership against the
Partners making such Commitments, respectively. If a Partner does not fund a
Commitment made by it in accordance with the foregoing provisions, the other
Partners may (without any obligation) fund the unfunded portion of such
Commitment. Any such funding shall be in addition to, and not in lieu of, all
rights and remedies that the Partnership and the other Partners may be entitled
to against the defaulting Partner pursuant to this Agreement, at law or in
equity.
4.5 Adjustments to Units. As of any date (an "Adjustment Date") on
which, in accordance with the foregoing, Capital Contributions are made by the
Partners other than in accordance with their Unit Percentages, the Units of all
Partners shall automatically (and without any further action by the Partners)
be adjusted so that the number of Units held by each Partner shall be equal to
100 multiplied by a fraction, the numerator of which shall be the aggregate
amount of Capital Contributions made by such Partner as of the Adjustment Date,
and the denominator of which shall be the aggregate amount of Capital
Contributions made by all Partners as of the Adjustment Date; it being
understood that the total number of Units held by all Partners shall always
equal 100. As of the date of each Adjustment Date, the Unit Percentage of each
Partner shall also be adjusted based upon the adjusted number of Units held by
each Partner. Promptly after each Adjustment Date, the General Partner shall
amend Schedule A hereto to reflect the automatic adjustment of the number of
Units and Unit Percentages as of each Adjustment Date (such adjustment shall
nevertheless be effective as of the Adjustment Date regardless when Schedule A
hereto is amended).
4.6 Schedule of Partners; Commitments; Contributions; Unit Ownership.
The name, address, Commitments, Capital Contributions and Unit ownership of
each Partner are set forth on Schedule A attached hereto. Schedule A hereto
shall be amended by the General Partner to reflect the admission of additional
or substituted Limited Partners and to reflect adjustments to Units, Unit
Percentages, Commitments and Capital Contributions in accordance with the
provisions of this Agreement. The
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<PAGE> 6
General Partner shall amend Schedule A hereto pursuant to the power of attorney
granted under Article 13 hereof to reflect any such adjustments. The Units
owned by Partners hereunder shall not be represented by certificates.
4.7 No Third Party Beneficiaries In no event shall a third party,
including without limitation a creditor of the Partnership, be entitled to in
any way rely upon or enforce the obligation of Partners to make future Capital
Contributions.
4.8 Loans and Withdrawal of Capital Contributions. No Partner shall
be permitted to borrow, or to make an early withdrawal of, any portion of the
capital contributed by such Partner.
4.9 Limited Liability of Limited Partners. No Limited Partner shall
be bound by or personally liable for the expenses, liabilities or obligations
of the Partnership.
ARTICLE 5
CAPITAL ACCOUNTS
5.1 Capital Accounts. A capital account ("Capital Account") shall be
established for each Partner. A Partner's Capital Account shall be credited
with the fair market value (as determined in the sole judgment of the General
Partner) of property contributed and the amounts of cash contributed to the
Partnership by such Partner and shall be credited or charged, as the case may
be, with such Partner's share of Partnership items of book income, gain, loss
and deduction for each fiscal year of the Partnership determined pursuant to
Article 7 below. Each Partner's Capital Account shall be charged with the fair
market value (as determined in the sole judgment of the General Partner) of any
property distributed and the amount of cash distributed to such Partner. The
respective Capital Accounts of the Partners shall not bear interest.
5.2 Adjustments to Capital Accounts Upon Revaluation of Property.
Upon the occurrence of (a) the admission of an additional or substituted
Limited Partner, (b) an extraordinary (as determined by the General Partner)
distribution of property by the Partnership, or (c) the liquidation of the
Partnership (each an "Adjustment Event"), then, upon any such event, the Gross
Asset Value immediately before the Adjustment Event shall be determined. The
property of the Partnership shall thereafter be treated as if it were sold by
the Partnership and any gain or loss resulting therefrom shall be allocated
among the Partners in accordance with Article 7 hereof as of the date
immediately before the Adjustment Event resulting in the valuation of
Partnership assets. Such allocation of gain or loss shall thereafter be
reflected in the Capital Accounts of the Partners for all purposes of this
Agreement. Solely for purposes of determining adjustments to Capital Accounts,
any net profit or net loss shall be determined using the Gross Asset Value
rather than the adjusted tax basis of the property of the Partnership.
5.3 Compliance with Treasury Regulations. Notwithstanding any
provision in this Agreement to the contrary, the Capital Accounts of the
Partners shall be maintained in accordance with Treasury Regulations, as
amended from time to time, and shall be adjusted as provided therein.
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ARTICLE 6
DISTRIBUTIONS
Except as otherwise provided herein, Distributable Cash of the
Partnership shall be distributed on a quarterly basis among the Partners pro
rata in accordance with their Unit Percentages. The amount and timing of such
distributions shall be determined by the General Partner. The General Partner
shall have the absolute discretion to have any distribution treated as a return
of capital. That portion of any distribution which is treated as a return of
capital shall be made to the Partners ratably in proportion to their respective
Capital Accounts immediately prior to the distribution. The General Partner and
the Partnership shall incur no liability for making distributions in accordance
with the provisions of this Agreement, whether or not the General Partner or
the Partnership have knowledge or notice of any transfer of ownership of any
Units.
ARTICLE 7
ALLOCATIONS
7.1 Book Allocations. Except as otherwise provided herein or unless
another allocation is required by the Code, Treasury Regulations, published
revenue rulings or judicial decisions, all items of Partnership book income,
gain, loss, deduction and credit shall be allocated among the Partners pro rata
in accordance with their Unit Percentages in effect for the period during which
such items accrue. For purposes of computing each item of book income, gain,
deduction or loss, the determination, recognition and classification of such
item shall be the same as its determination, recognition and classification for
federal income tax purposes.
7.2 Tax Allocations.
(a) Code Section 704(c). Notwithstanding anything
herein to the contrary, if any Partner has contributed or is
treated as contributing any property to the Partnership that has
a Gross Asset Value that is in excess of or less than its
adjusted basis for federal income tax purposes at the time of
such contribution, then all gain, loss, and deduction with
respect to the contributed property shall, solely for federal
income tax purposes, be allocated among the Partners so as to
take account of the variation between the adjusted basis of such
property and its initial net asset value as required under Code
Section 704(c).
(b) Partnership Asset Adjustments. In the event the
Gross Asset Value of any Partnership Asset is adjusted under
Section 5.2 hereof, subsequent allocations of Partnership income,
gain, loss, and deduction with respect to such asset, as
calculated for tax purposes, shall take account of any variation
between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in accordance with the
principals of Code Section 704(c) as is required pursuant to
Treasury Regulations Section 1.704-1(b)(4)(i).
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<PAGE> 8
(c) Consistent Allocation. Except as provided in
Section 7.2(a) and (b), Partnership income, gain, loss,
deduction, and credit, as calculated for tax purposes, shall be
allocated among the Partners, to the extent possible, in
accordance with the allocations of the items of Partnership book
income, gain, loss, deduction, and credit allocated pursuant to
Section 7.1.
(c) Adjustments by the Partners. Any elections or
other decisions related to Partnership tax allocations pursuant
to this Section 7.2 shall be made by the General Partner of the
Partnership in a manner that reasonably reflects the purpose and
intention of this Agreement. Partnership tax allocations
pursuant to this Section 7.2 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be
taken into account in computing, any Partner's Capital Account or
distributive share of the Partners items of Partnership book
income, gain, loss, deduction, and credit or Partnership
distributions to any of the Partners under this Agreement.
7.3 Transfer of Units. Unless otherwise unanimously agreed by the
Partners, income, gain, loss, deduction or credit attributable to any Unit (or
portion thereof) which has been transferred shall be allocated between the
transferor and the transferee equally among the days of the Partnership's
fiscal year without regard to Partnership operations during such days.
ARTICLE 8
MANAGEMENT AND OPERATION OF BUSINESS
8.1 Management by General Partner. Subject to Section 8.4 below and
subject to the provisions of the Act, the General Partner shall have exclusive
authority to manage and control the day-to-day operations and affairs of the
Partnership and to make all decisions regarding the business and property of
the Partnership. The General Partner is hereby granted by the other Partners
the right, power and authority to do on behalf of the Partnership all things
which, in the General Partner's sole judgment, are necessary, proper or
desirable to carry out and exercise such authority.
8.2 Authority to Act. In order to expedite the handling of
Partnership business, it is understood and agreed that any document executed by
the General Partner or any officer of the General Partner while acting on
behalf and in the name of the Partnership shall be deemed to be the action of
the Partnership as to any third parties. Further, any Person dealing with the
Partnership or the General Partner or any officer of the General Partner may
rely upon a certificate signed by the General Partner or any officer of the
General Partner as to:
(a) identity of the Partners;
(b) existence or nonexistence of any fact or facts that
constitute conditions precedent to acts by the Partnership or are in any
other manner related to the affairs of the Partnership;
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(c) Persons who are authorized to execute and deliver any
instrument or document of the Partnership;
(d) any act or failure to act by the Partnership; or
(e) any other matter whatsoever involving the Partnership or
any Partner.
In no event shall any Person dealing with the General Partner or any officer of
the General Partner with respect to any business or property of the Partnership
be obligated to ascertain that the terms of this Agreement have been complied
with, or be obligated to inquire into the necessity or expedience of any act or
action of the General Partner or any officer of the General Partner, and every
contract, agreement, conveyance instrument, mortgage, security agreement,
promissory note or other instrument or document executed by the General Partner
or an officer of the General Partner with respect to any business or property
of the Partnership shall be conclusive evidence in favor of any and every
Person relying thereon and claiming thereunder that (i) at the time of the
execution and/or delivery thereof, this Agreement was in full force and effect;
(ii) such instrument or document was duly executed in accordance with the terms
and provisions of this Agreement and is binding upon the Partnership; and (iii)
the General Partner or officer of the General Partner, as applicable, was duly
authorized and empowered to execute and deliver any and every such instrument
or document for and on behalf of the Partnership.
8.3 Certain Limitations upon the Power of the General Partner.
Notwithstanding anything to the contrary contained herein, without the prior
written approval of all of the Limited Partners, the General Partner shall not:
(a) Do any act in contravention of this Agreement or the
certificate of limited partnership of the Partnership;
(b) Do any act which would make it impossible to carry on the
ordinary business of the Partnership;
(c) Possess Partnership property or assign its rights in
specific Partnership property for other than a Partnership purpose;
(d) Admit a person as the General Partner;
(e) Except for the admission of a transferee or assignee of a
Limited Partner's Units transferred or assigned in compliance with the
Ownership Restriction Agreement, admit an additional Partner to the
Partnership; or
(f) Knowingly commit any act that would subject any Limited
Partner to liability as a general partner in any jurisdiction.
8.4 Investment/Bank Accounts. The Partnership will maintain such
investment, bank and other accounts as the General Partner may deem necessary
for
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<PAGE> 10
the investment and deposit of the Partnership funds and for the proper
segregation thereof into such separate accounts as may be deemed appropriate.
All withdrawals from any such accounts shall be made by the General Partner or
the duly authorized officers of the Partnership. Partnership funds shall not
be commingled with those of any other Person. The Partnership accounts shall
be in the name of the Partnership and all payments required of the Partnership
will be made from accounts of the Partnership.
8.5 Reimbursement. The General Partner shall be reimbursed by the
Partnership for all costs and expenses, including legal, accounting and other
fees related to the formation of the Partnership and the preparation of this
Agreement. During the term of the Partnership, the General Partner shall be
reimbursed for all direct costs and expenses incurred by it in the management
and administration of the Partnership and attributable to the business of the
Partnership.
8.6 Compensation. The General Partner shall not be entitled to any
compensation for the management and administration of the Partnership.
ARTICLE 9
BOOKS OF ACCOUNT; RECORDS; TAX INFORMATION
9.1 Fiscal Year. The fiscal year of the Partnership shall end on
December 31 in each year.
9.2 Books and Records. Proper and complete records and books of
account shall be kept by the General Partner in which shall be entered fully
and accurately all transactions and other matters relative to the Partnership's
business as are usually entered into records and books of account maintained by
Persons engaged in businesses of like character. The Partnership books and
records shall be prepared in accordance with generally accepted accounting
principles applied on a consistent basis. The books and records shall at all
times be made available at the principal office of the Partnership and shall be
open to the reasonable inspection and copying by the Partners or their duly
authorized representatives with advance notice during reasonable business
hours.
9.3 Taxation as a Partnership. The Partnership shall be treated as a
partnership for federal and all state tax purposes. The General Partner shall
cause the Partnership to prepare and file annually on or before the due date or
extended due date thereof all required federal, state and local tax returns and
filings.
9.4 Tax Elections. All elections required or permitted to be made by
the Partnership under the Code, including but not limited to, the election
pursuant to Section 754 thereof, shall be made by the General Partner, if at
all, in its sole discretion. Each Partner will upon request supply the
information necessary to properly give effect to such elections.
9.5 Tax Returns. The General Partner shall, on a timely basis, send
each Person who is a holder of an interest in the Partnership at any time
during a calendar
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year all partnership tax information kept on a federal income tax basis as
shall be necessary for the preparation by such holder of its federal income tax
return. Further, on request by any holder of an interest in the Partnership,
the General Partner will furnish such holder copies of all federal, state and
local income tax returns or information returns, if any, which the Partnership
is required to file.
ARTICLE 10
RESTRICTIONS ON TRANSFER
10.1 Private Offering. Each Limited Partner is fully aware that the
Partnership is selling Units to such Limited Partner in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act, and
upon the truth and accuracy of the representations of such Limited Partner
contained in this Agreement.
10.2 Securities Act Requirements. Each Limited Partner represents
that (a) its Units are being acquired for investment, with no present intention
of distributing or selling any portion thereof or with a view to any
distribution thereof within the meaning of the Securities Act, and (b) its
financial condition is such that it is able to bear all risks of holding its
Units for an indefinite period of time and that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of acquisition of the Units and of making an informed
investment decision with respect thereto; and (c) it will not offer or make a
transfer of its Units unless it shall have delivered to the Partnership (i) an
opinion of counsel satisfactory to the General Partner to the effect that no
registration (or perfection of an exemption) under the Securities Act is
required with respect to such transfer or (ii) such other evidence satisfactory
to the General Partner that the transfer will not violate the Securities Act
and other applicable state securities laws.
10.3 Transfers by the Limited Partners. A Limited Partner may not
sell, transfer, assign or devise, or subject to security interest, lien or
charge, all or any part of its Units, except as permitted in the Ownership
Restriction Agreement, and any act in violation of this Section 10.3 shall be
null and void ab initio. Any transfer of or assignment of the Units of a
Limited Partner shall not dissolve the Partnership. A transferee or assignee
of a Limited Partner's Units transferred or assigned in compliance with the
Ownership Restriction Agreement shall be admitted as a substituted Limited
Partner of the Partnership (with regard to the interest so transferred and
assigned) without any further approval by the Partners.
10.4 Transfers by the General Partner. The General Partner may not
sell, assign or transfer, or subject to security interest, lien or charge, all
or any portion of its Units. The General Partner agrees not to voluntarily
withdraw or resign as the general partner of the Partnership.
ARTICLE 11
DISSOLUTION
The Partnership shall dissolve and its affairs shall be wound up in
accordance with Article 12 on the first to occur of the following:
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<PAGE> 12
(a) the expiration of the term of the Partnership;
(b) the bankruptcy, dissolution or termination and winding up
of the affairs of the General Partner; or
(c) the written consent to terminate by all of the Partners.
ARTICLE 12
WINDING UP AND TERMINATION OF THE PARTNERSHIP
12.1 Winding Up. If the Partnership is dissolved for any reason, it
shall be wound up and its assets sold or distributed in an orderly manner,
unless, in the case of the bankruptcy or termination and winding up of the
affairs of the General Partner, all of the Partners agree, in accordance with
the Act, to reconstitute and continue the Partnership and appoint one or more
new general partners within 90 days after such event. In the absence of any
such applicable agreement, no Partner shall have the right to reconstitute or
continue the Partnership.
12.2 Liquidator. The General Partner, or if there is no General
Partner, then a liquidation trustee appointed by Partners owning at least 75%
of the Units of all Partners (the "Liquidation Trustee"), shall have the
exclusive authority to manage and control the Partnership during the period
during which it is being wound up. The Person(s) vested with the authority to
manage and control the Partnership during the winding up period are hereinafter
referred to as the "Liquidator".
12.3 Liquidation; Distributions. Upon the winding up and termination
of the business and affairs of the Partnership, its assets (other than cash)
shall be sold and its liabilities and obligations to creditors and all expenses
incurred in its liquidation shall be paid (either by payment or the making of
reasonable provision for payment). Thereafter, the net proceeds from such
sales (after deducting all selling costs and expenses in connection therewith)
shall be distributed among the Partners in accordance with their respective
positive balances in their Capital Accounts. Any distributions under this
Section 12.3 may be made, at the election of the Liquidator, in money arising
from the sale of the property of the Partnership or by a distribution of the
Partnership's assets in kind (the distributed asset being treated as sold for
its fair market value and any deemed gain or loss being treated as allocated
among the Partners in accordance with Article 7 hereof) or such distribution
may be, at the election of the Liquidator, partially in money and partially in
kind. All determinations of fair market value under this Section 12.3 shall be
made in the sole judgment of the Liquidator. Any sales or distributions in
kind of the Partnership's assets shall be effected in compliance with the
Securities Act and applicable state securities laws, as well as applicable
contractual restrictions or requirements relating to the transfer of the assets
of the Partnership.
12.4 Source of Distributions. Each holder of an interest in the
Partnership shall look solely to the assets of the Partnership for all
distributions with respect to the Partnership and its Capital Contribution
thereto (including the return thereof) and
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<PAGE> 13
share of profits or losses thereof, and shall have no recourse therefor (upon
dissolution or otherwise) against the Partnership, any Partner or the
Liquidator.
12.5 Deficit Capital Accounts. No Partner shall be required to
restore any deficit balance existing in its Capital Account upon the
liquidation and termination of the Partnership.
12.6 Termination of Partnership. Upon the completion of the
liquidation of the Partnership and the distribution of all Partnership assets,
the Partnership shall terminate and the Liquidator shall (and is hereby given
the power and authority to) execute, acknowledge, swear to and record all
documents required to effectuate the dissolution and termination of the
Partnership.
ARTICLE 13
POWER OF ATTORNEY
Each Limited Partner hereby makes, constitutes and appoints the General
Partner with full power of substitution and resubstitution, such Limited
Partner's true and lawful attorney for it and in its name, place and stead and
for its use and benefit, to sign, execute, certify, acknowledge, deliver, swear
to, file and record in all necessary or appropriate places such agreements,
instruments or documents as may be necessary or advisable (a) to reflect the
exercise by the General Partner of any of the powers granted to it under this
Agreement; (b) to reflect the admission to the Partnership of any additional
Limited Partner or substituted Limited Partner in the manner prescribed in this
Agreement; (c) to amend Schedule A in the manner prescribed in this Agreement;
and (d) which may be required of the Partnership or of the Partners by the laws
of the State of Delaware or any other jurisdiction in which the Partnership may
conduct business or own property. Each Limited Partner authorizes such
attorney-in-fact to take any further action which such attorney-in-fact shall
consider necessary or advisable in connection with any of the foregoing, hereby
giving such attorney-in-fact full power and authority to do and perform each
and every act or thing whatsoever requisite or advisable to be done in and
about the foregoing as fully as such Limited Partner might or could do if
personally present, and hereby ratifying and confirming all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. The
power of attorney granted pursuant to this Article 13: (a) is a special power
of attorney coupled with an interest and is irrevocable; (b) may be executed
by such attorney-in-fact by listing all of the Limited Partners executing any
agreement, certificate, instrument or document with the single signature of any
such attorney-in-fact acting as attorney-in-fact for all of them; (c) shall
survive the bankruptcy, death, adjudication of incompetence or insanity, or
dissolution of a Limited Partner; and (d) shall survive the delivery of an
assignment by a Limited Partner of its Units.
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<PAGE> 14
ARTICLE 14
LIABILITY AND EXCULPATION
14.1 Liability. Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Partnership, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of
the Partnership, and no Partner shall be obligated for any such debt,
obligation or liability of the Partnership solely by reason of being a Partner
of the Partnership.
14.2 Exculpation. No Covered Person shall be liable to the
Partnership or any Partner under any theory of law, including tort, contract or
otherwise (INCLUDING A COVERED PERSON'S OWN NEGLIGENCE) for any loss, damage or
claim incurred by reason of any act or omission (including decisions to vote
for or against any matter) performed or omitted by such Covered Person in good
faith on behalf of the Partnership and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person by this
Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person's gross negligence or
willful misconduct. A Covered Person shall be fully protected in relying in
good faith upon the records of the Partnership and upon such information,
opinions, reports or statements presented to the Partnership by any Person as
to matters the Covered Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Partnership, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses or any other facts pertinent to the existence and
amount of assets from which distributions to Partners might properly be paid.
14.3 Duties and Liabilities of Covered Persons. To the extent that,
at law or in equity, a Covered Person has duties (including fiduciary duties)
and liabilities relating thereto to the Partnership or to any other Covered
Person arising under this Agreement, a Covered Person acting under this
Agreement shall not be liable to the Partnership or to any other Covered Person
for actions (including decisions to vote for or against any matter) taken by it
in good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of
a Covered Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of such Covered
Person. Unless otherwise expressly provided herein, whenever a conflict of
interest exists or arises between a Covered Person and the Partnership or a
Partner, the Covered Person shall disclose such conflict to the Partners and
shall resolve such conflict of interest, taking such action or providing such
terms, considering in each case the relative interest of each party (including
its own interest) to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Covered Person, the
resolution, action or term so made, taken or provided by the Covered Person
shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of the Covered Person at law
or in equity or otherwise.
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<PAGE> 15
ARTICLE 15
INDEMNIFICATION
15.1 Indemnification. To the fullest extent permitted by applicable
law, a Covered Person shall be entitled to indemnification from the Partnership
for any loss, damage or claim incurred by such Covered Person (a) by reason of
any act or omission performed or omitted by such Covered Person in good faith
on behalf of the Partnership and in a manner reasonably believed to be within
the scope of authority conferred on such Covered Person by this Agreement or
(b) by reason of being a Partner, an Affiliate of a Partner or an officer,
manager, director, shareholder, partner, representative, advisor or agent of
the Partnership or a Partner or its Affiliate, except that no Covered Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Covered Person by reason of gross negligence or willful
misconduct with respect to such acts or omissions; provided, however, that any
indemnity under this Article 15 shall be provided out of and to the extent of
Partnership assets only, and no Covered Person shall have any personal
liability on account thereof. THE FOREGOING INDEMNITY IS INTENDED TO INDEMNIFY
EACH COVERED PERSON FOR HIS OWN ACTS OF NEGLIGENCE AND SHALL APPLY IRRESPECTIVE
OF ANY CLAIM OF CONCURRENT OR CONTRIBUTORY NEGLIGENCE ON THE PART OF SUCH
COVERED PERSON.
15.2 Expenses. To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by a Covered Person in defending any
claim, demand, action, suit or proceeding for which indemnity is sought under
this Agreement shall, from time to time, be advanced by the Partnership prior
to the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Partnership of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person
is not entitled to be indemnified as authorized under this Article 15.
15.3 Insurance. The Partnership may purchase and maintain insurance,
to the extent and in such amounts as the General Partner shall deem reasonable,
on behalf of Covered Persons and such other Persons as the General Partner
shall determine, against any liability that may be asserted against or expenses
that may be incurred by any such Person in connection with the activities of
the Partnership or such indemnities, regardless of whether the Partnership
would have the power to indemnify such Person against such liability under the
provisions of this Agreement. The Partnership may enter into indemnity
contracts with Covered Persons and adopt written procedures pursuant to which
arrangements are made for the advancement of expenses and the funding of
obligations under this Article 15 and containing such other procedures
regarding indemnification as are appropriate.
ARTICLE 16
NOTICES
All notices, requests and communications under this Agreement shall be
in writing and shall be given to a party at the party's address set forth in
Schedule A hereto or, in the case of the Partnership, as follows: MPILEX
Partners, L.P., 14785
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<PAGE> 16
Omicron Dr., Suite 101, San Antonio, Texas 78245, Attention: Board of Managers
of MPILEX Management, L.L.C. Each such notice, request or other communication
shall be effective (a) if given by registered or certified mail, return receipt
requested, two days after such communication is deposited in the mails with
postage prepaid and addressed as specified pursuant to this Article 16, or (b)
if given by any other means, when delivered at the address specified pursuant
to this Article 16. Any party may change its or its address for notifications
hereunder by giving the other parties notice thereof in accordance with this
Article 16. Notwithstanding the foregoing, a copy of each notice given to the
General Partner or the Partnership shall also be given to each Limited Partner.
ARTICLE 17
DISPUTE RESOLUTION
Except as otherwise provided herein, any claim, dispute or controversy
of any nature whatsoever, including but not limited to tort claims and contract
disputes between the parties to this Agreement arising out of or related to the
terms and conditions of this Agreement, including the implementation,
applicability or interpretation thereof, shall be resolved in accordance with
the dispute resolution procedures set forth in the Ownership Restriction
Agreement.
ARTICLE 18
MISCELLANEOUS
18.1 Further Assurances. Each Partner agrees to execute, with
acknowledgement or affidavit if required, any and all documents and writings
which may be necessary or expedient in connection with the formation of the
Partnership and the achievement of its purposes, specifically including all
such agreements, certificates, tax statements, tax returns and other documents
as may be required of the Partnership or its Partners by the laws of the United
States of America, the State of Texas or Delaware or any political subdivision
or agency thereof.
18.2 Partnership Property. The Partners agree that the property and
other assets of the Partnership are and shall be owned by the Partnership as an
entity. Each Partner, accordingly, owns Unit(s) and not an undivided interest
in such assets and properties. No Partner shall have any right to partition
the assets and properties of the Partnership; and to the extent, if any, that
any Partner would have such a right, each such Partner hereby irrevocably
waives any and all rights to maintain any action for partition of the assets
and properties of the Partnership, either as a partition in kind or a partition
by sale.
18.3 Invalid Provisions. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
18.4 Entire Agreement. This Agreement and the additional documents
and agreements referred to herein constitute the entire agreement among the
parties, and
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<PAGE> 17
it supersedes all prior or contemporaneous agreements or understandings among
the parties.
18.5 Successors and Assigns. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and permitted assigns.
18.6 Amendments. Except as provided in Article 4 and Article 13
relating to certain amendment powers of the General Partner, amendments or
modifications may be made to this Agreement only by setting forth such
amendments or modifications in a written instrument signed by all the Partners.
18.7 Interpretation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
18.8 Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware.
18.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. It shall not be necessary for all
Partners to execute the same counterpart hereof.
[remainder of this page intentionally left blank]
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership as of the day and in the year first above written.
GENERAL PARTNER:
---------------
MPILEX MANAGEMENT, L.L.C.
By: /s/ Richard L. Love
------------------------------------------
Richard L. Love, President
LIMITED PARTNERS:
----------------
MPI ENTERPRISES, L.L.C.
By: /s/ J. R. Mitchell
------------------------------------------
J.R. Mitchell, M.D., Ph.D.,
Co-Chairman and CEO
ILEX ONCOLOGY, INC.
By: /s/ Richard L. Love
------------------------------------------
Richard L. Love,
President
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<PAGE> 19
SCHEDULE A
(As of December 11, 1996)
<TABLE>
<CAPTION>
CAPITAL UNFUNDED UNIT UNIT
NAME AND ADDRESS CONTRIBUTIONS COMMITMENT OWNERSHIP PERCENTAGE
---------------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
General Partner:
MPILEX Management, L.L.C. $20,000 $20,000 1.0 1.0%
14785 Omicron Dr., Suite 101
San Antonio, TX 78245
Fax No. (210) 677-6009
Attention: Board of Managers
Limited Partners:
MPI Enterprises, L.L.C.
54943 N. Main Street
Mattawan, MI 49071
Fax No. (616) 668-4151 $990,000 990,000 49.5 49.5%
Attention: J.R. Mitchell
ILEX Oncology, Inc. $990,000 990,000 49.5 49.5%
14785 Omicron Dr., Suite 101 --------- ----------
San Antonio, TX 78245
Fax No. (210) 677-6009
Attention: Richard L. Love
------------------- -------------------- ------------- --------------
TOTAL: $2,000,000 $2,000,000 100.0 100.0%
===== ========== ========== ===== ======
</TABLE>
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<PAGE> 1
EXHIBIT 10.68
REGULATIONS
OF
MPILEX MANAGEMENT, L.L.C.
These Regulations (the "Regulations") are hereby duly adopted as the
regulations of MPILEX Management, L.L.C., a Delaware limited liability company
(the "Company"), by the persons who have executed and delivered this Agreement
and whose names appear on Schedule A hereto (as said Schedule A hereto may be
amended from time to time as hereinafter provided), as the Members.
ARTICLE 1
DEFINITIONS
Definitions. In addition to terms defined elsewhere in this
Agreement, the following terms shall have the following meanings:
"Act" shall mean the Delaware Limited Liability Company Act, as the
same may be amended from time to time.
"Affiliate" means, when used with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the specified Person, provided that the
Company shall not be deemed to be an Affiliate of any Member. For purposes of
this definition "control", when used with respect to any specified Person,
means the power to direct the management and policies of the Person, directly
or indirectly, whether through the ownership of voting securities, by contract,
by family relationship or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Capital Contributions" means the amount of cash or the fair market
value, as determined in the sole judgment of the Managers, of other property
contributed to the Company.
"Class A Members" shall mean those members owning Units designated as
Class A Member Units on Schedule A hereto.
"Class B Members" shall mean those members owning Units designated as
Class B Member Units on Schedule A hereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means MPILEX Management, L.L.C., the limited liability
company entered into and formed hereunder pursuant to the Act.
"Company Value" means, as of any date of determination, the fair
market value of all property of the Company as of the date on which the
determination thereof is to be made. The fair market value of the property of
the Company shall be determined by the Managers. At the Managers' election, or
if no such determination is so made by the Managers within 15 days after a
request therefor is made, the fair market value of
<PAGE> 2
the property of the Company shall be determined by an independent appraiser
selected by the Managers. An appointed appraiser may employ such persons and
incur such expenses as are necessary to make such determination. In all such
determinations of fair market value, no value shall be placed on the goodwill
or name of the Company. Determinations of fair market value made in accordance
with the foregoing shall be final and not subject to challenge by any Member.
"Covered Person" means any Member, an Affiliate of a Member or any
officer, director, shareholder, partner or member of the Company or of a
Member or their respective Affiliates.
"Distributable Cash" shall mean, at the time of determination, all
Company cash derived from the conduct of the Company's business, other than (i)
Capital Contributions, together with interest earned thereon pending
utilization thereof, (ii) financing proceeds and (iii) reserves for working
capital and other amounts that the Managers reasonably determine to be
necessary for the proper operation of the Company's business and its winding up
and liquidation.
"Managers" shall mean the initial Managers as set forth in the
Certificate of Formation of the Company and any person elected as a Manager by
the Members and serving as such in accordance with these Regulations.
"Member" shall mean any person who is a Member at the time of
reference (which shall include each Member executing these Regulations on the
date hereof, each additional Member and each substituted Member ) at the time
of reference thereto, and who owns the number of Units set forth on Schedule A
hereto.
"Ownership Restriction Agreement" means the Ownership Restriction
Agreement dated December 11, 1996, among the Partnership, the Limited Partners
of the Partnership, the Company and the Members of even date herewith.
"Partnership" means MPILEX Partners, L.P., a Delaware limited
partnership, entered into among the Company, as general partner and certain
limited partners.
"Partnership Agreement" means that Agreement of Limited Partnership
Agreement of the Partnership entered into among the Company and the Members of
even date herewith.
"Person" shall mean an individual, corporation, association, limited
liability company, limited liability partnership, partnership, estate, trust,
unincorporated organization or a government or any agency or political
subdivision thereof.
"Required Interest" means such Members who, in the aggregate, own more
than seventy-five percent (75%) of the Units of all Members.
"Securities Act" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor to said Act.
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<PAGE> 3
"Unit Percentage" shall mean, as to any Member, the percentage
obtained by dividing the number of Units owned by such Member by the total
number of Units owned by all Members.
"Units" means the issued and outstanding ownership interests of the
Company held by the Members as set forth on Schedule A hereto (as amended in
accordance with these Regulations) and the rights and obligations associated
with such ownership interests of the Members in the Company at the relevant
time, including the consent, approval and management rights of the Members and
any and all other benefits to which the Members may be entitled as provided in
these Regulations, together with the obligations of the Members to comply with
all the terms and provisions of these Regulations. The Units are designated as
either Class A Units or Class B Units. Class A Units and Class B Units have
exactly the same rights except with respect to the election of Managers as set
forth in Article 10 hereof. "Unit" means any one of the Units.
ARTICLE 2
FORMATION OF COMPANY
2.1 Formation. The Members hereby enter into and form the Company
as a limited liability company pursuant to the provisions of the Act.
2.2 Name. The name of the Company shall be "MPILEX Management,
L.L.C.."
2.3 Principal Place of Business. The principal place of business
of the Company shall be 14785 Omicron Dr., Suite 101, San Antonio, Texas 78245,
or such other place as the Managers may determine.
2.4 Registered Office; Registered Agent. In Delaware, the Company
shall maintain a registered office at 1209 Orange Street, Wilmington, Delaware
19801, and the name of the Company's registered agent at such address shall be
CT Corporation System. In Texas, the Company shall maintain a registered
office at 14785 Omicron Dr., Suite 101, San Antonio, Texas 78245, and the name
of the Company's registered agent at such address shall be James R. Koch.
2.5 Term. The term of the Company shall commence on the date
hereof and shall continue for a period of 20 years, unless the Company is
continued or sooner dissolved pursuant to the provisions of this Agreement.
ARTICLE 3
PURPOSE; OPPORTUNITIES
3.1 Purpose. The purpose and nature of the business to be
conducted by the Company shall be to (a) take such action as is appropriate in
connection with the Company's duties as general partner of the Partnership and
(b) enter into, make and perform all such agreements and undertakings, and to
engage in all such activities and
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<PAGE> 4
transactions, as the Managers may deem necessary or advisable for or incidental
to the carrying out of the foregoing.
3.2 No Partnership. The Members intend that the Company shall not
be a partnership (including a limited partnership) or joint venture, and that
no Member be a partner or joint venturer of any other Member, for any purposes
other than applicable tax laws, and these Regulations may not be construed to
suggest otherwise.
3.3 Outside Activities. This Agreement shall not preclude or
limit, in any respect, the right of the Members or the Managers or any of their
Affiliates to engage or invest in any business activity of any nature or
description, including those which may be the same as or similar to the
Company's business. Any such activity may be engaged in independently or with
others without any obligation whatsoever to offer same to the Company or any
Member. Neither the Company, any Member nor any of their Affiliates shall have
any right, by virtue of this Agreement or the relationship created hereby, in
or to such other investments or activities, or to the income or proceeds
derived therefrom.
ARTICLE 4
CAPITAL CONTRIBUTIONS; MEMBERS
4.1 Capital Contributions. Each Member shall make Capital
Contribution as and when necessary to fund capital contributions to be made by
the Company to the Partnership to maintain the Company's 1% "Unit Percentage"
(as defined in the Partnership Agreement) in the Partnership. The initial
Capital Contributions of the Members made on the date of this Agreement are as
set forth on Schedule A hereto. Except as provided in this paragraph, no
Member shall have any obligation to make any additional Capital Contributions
to the Partnership.
4.2 Binding Commitment; Default. The obligation of each Member to
make Capital Contributions required under Section 4.1 shall represent an
irrevocable, binding commitment which shall be enforceable by the Partnership
against each Member. If a Member does not fund a Capital Contribution required
to be made by it in accordance with the foregoing provisions, the other Member
may (without any obligation) fund such Capital Contribution. Any such funding
shall be in addition to, and not in lieu of, all rights and remedies that the
Partnership and the other Member may be entitled to against the defaulting
Member pursuant to this Agreement, at law or in equity.
4.3 Adjustments to Units. As of any date (an "Adjustment Date")
on which, in accordance with the foregoing, Capital Contributions are made by
the Members other than in accordance with their Unit Percentages, the Units of
all Members shall automatically (and without any further action by the Members)
be adjusted so that the number of Units held by each Member shall be equal to
100 multiplied by a fraction, the numerator of which shall be the aggregate
amount of Capital Contributions made by such Member as of the Adjustment Date,
and the denominator of which shall be the aggregate amount of Capital
Contributions made by all Members as of the Adjustment Date; it being
understood that the total number of Units held by all Members shall always
equal 100. As of the date of each Adjustment Date, the Unit Percentage of each
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<PAGE> 5
Member shall also be adjusted based upon the adjusted number of Units held by
each Member. Promptly after each Adjustment Date, the Managers shall amend
Schedule A hereto to reflect the automatic adjustment of the number of Units
and Unit Percentages as of each Adjustment Date (such adjustment shall
nevertheless be effective as of the Adjustment Date regardless when Schedule A
hereto is amended).
4.4 Schedule of Members; Contributions; Unit Ownership. The name,
address, Capital Contributions and Unit ownership of each Member are set forth
on Schedule A attached hereto. Schedule A hereto shall be amended by the
Managers to reflect the admission of additional or substituted Members or any
adjustment of Units as a result of additional Capital Contributions (including
disproportionate Capital Contributions), returns of Capital Contributions or
otherwise. The Units owned by Members hereunder shall not be represented by
certificates.
4.5 No Third Party Beneficiaries In no event shall a third party,
including without limitation a creditor of the Company, be entitled to in any
way rely upon or enforce the obligation of Members to make future Capital
Contributions.
4.6 Loans and Withdrawal of Capital Contributions. No Member
shall be permitted to borrow, or to make an early withdrawal of, any portion of
the capital contributed by such Member.
4.7 Limited Liability of Members. No Member shall be liable for
the debts, liabilities, contracts or other obligations of the Company except to
the extent of any unpaid Capital Contributions a Member has agreed to make to
the Company and a Member's share of the assets (including undistributed
revenues) of the Company; and in all events, a Member shall be liable and
obligated to make payments of his Capital Contributions only as and when such
payments are due in accordance with the terms of these Regulations, and no
Member shall be required to make any loans to the Company.
ARTICLE 5
CAPITAL ACCOUNTS
5.1 Capital Accounts. A capital account ("Capital Account") shall
be established for each Member. A Member's Capital Account shall be credited
with the fair market value (as determined in the sole judgment of the Managers)
of property contributed and the amounts of cash contributed to the Company by
such Member and shall be credited or charged, as the case may be, with such
Member's share of Company items of book income, gain, loss and deduction for
each fiscal year of the Company determined pursuant to Article 7 below. Each
Member's Capital Account shall be charged with the fair market value (as
determined in the sole judgment of the Managers) of any property distributed
and the amount of cash distributed to such Member. The respective Capital
Accounts of the Members shall not bear interest.
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<PAGE> 6
5.2 Adjustments to Capital Accounts Upon Revaluation of Property.
Upon the occurrence of (a) the admission of an additional or substituted
Member, (b) an extraordinary (as determined by the Managers) distribution of
property by the Company, or (c) the liquidation of the Company (each an
"Adjustment Event"), then, upon any such event, at the election of the
Managers, the Company Value immediately before the Adjustment Event shall be
determined. The property of the Company shall thereafter be treated as if it
were sold by the Company and any gain or loss resulting therefrom shall be
allocated among the Members in accordance with Article 7 hereof as of the date
immediately before the Adjustment Event resulting in the valuation of the
Company assets. Such allocation of gain or loss shall thereafter be reflected
in the Capital Accounts of the Members for all purposes of these Regulations.
Solely for purposes of determining adjustments to Capital Accounts, any net
profit or net loss shall be determined using the Company Value rather than the
adjusted tax basis of the property of the Company.
5.3 Compliance with Treasury Regulations. Notwithstanding any
provision in these Regulations to the contrary, the Capital Accounts of the
Members shall be maintained in accordance with Treasury Regulations, as amended
from time to time, and shall be adjusted as provided therein.
ARTICLE 6
DISTRIBUTIONS
Except as otherwise provided herein, Distributable Cash of the Company
shall be distributed from time to time among the Members pro rata in accordance
with their Unit Percentages. The amount and timing of such distributions shall
be determined in the sole judgment of the Managers. The Managers shall have
the absolute discretion to have any distribution treated as a return of
capital. That portion of any distribution which is treated as a return of
capital shall be made to the Members ratably in proportion to their respective
Capital Accounts immediately prior to the distribution. The Managers and the
Company shall incur no liability for making distributions in accordance with
the provisions of these Regulations, whether or not the Managers or the Company
have knowledge or notice of any transfer of ownership of any Units.
ARTICLE 7
ALLOCATIONS
Except as otherwise provided herein or unless another allocation is
required by the Code, Treasury Regulations, published revenue rulings or
judicial decisions, all items of Company book income, gain, loss, deduction and
credit shall be allocated among the Members pro rata in accordance with their
Unit Percentages in effect for the period during which such items accrue. For
purposes of computing each item of book income, gain, deduction or loss, the
determination, recognition and classification of such item shall be the same as
its determination, recognition and classification for federal income tax
purposes. Unless otherwise unanimously agreed by the Members, income, gain,
loss, deduction or credit attributable to any Unit (or portion thereof) which
has been transferred shall be allocated between the transferor and the
transferee
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equally among the days of the Company's fiscal year without regard to Company
operations during such days.
In the event the Company Value of any Company asset is adjusted under
Section 5.2 hereof, subsequent allocations of Company income, gain, loss and
deduction with respect to such asset, is calculated for tax purposes, shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Company Value in accordance with the
principals of Code Section 704(c) as is required pursuant to Treasury
Regulations Section 1.704-1(b)(4)(i).
ARTICLE 8
MANAGEMENT OF THE COMPANY
8.1 Management by Managers. Except for situations in which the
approval of the Members is required by these Regulations or by non-waivable
provisions of applicable law, the powers of the Company shall be exercised by
or under the authority of, and the business and affairs of the Company shall be
managed under the direction of, the Managers.
8.2 Limited Authority of Managers. No Manager shall, without the
approval or ratification of the specific act by all of the Members, (i)
terminate, liquidate and wind up the Company, except upon the occurrence of an
event which, under applicable law, dissolves or terminates the Company in light
of the provisions of these Regulations; (ii) create and issue any additional
Units; (iii) make any election to cause the Company to be classified other than
as a partnership for federal income tax purposes or (iv) take any action that
would terminate the Company. FURTHER, UNLESS SPECIFICALLY AUTHORIZED BY A
RESOLUTION DULY ADOPTED BY THE MANAGERS, NO MANAGER AND NO OFFICER OF THE
COMPANY SHALL INDIVIDUALLY HAVE THE AUTHORITY OR POWER TO TAKE ANY ACTION OR
MAKE ANY DETERMINATION DESCRIBED IN ANNEX B HERETO.
8.3 Limited Authority of Members. Other than as specifically
provided for in these Regulations, no Member shall, individually as a Member,
(a) be permitted to take part in the business or control of the business or
affairs of the Company, (b) have any voice in the management or operation of
any Company property, (c) have the authority or power to act as agent for or on
behalf of the Company or any other Member, or (d) to incur any expenditures or
create or incur any indebtedness or obligations on behalf of or with respect to
the Company.
ARTICLE 9
MEMBERS
9.1 Meetings. Meetings of Members shall be held at any place
stated in any proper notice of meeting, whether within or without the State of
Texas. Meetings shall be held only when called by the Managers or by any
Member of the Company for any matters on which Members may vote or approve.
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9.2 Notice of Meetings. Written or printed notice stating the
place, day and hour of each meeting of the Members and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than 60 days before the date of the
meeting, either personally or by mail, telegram or telefax or similar
communication, by or at the direction of the person(s) calling the meeting, to
each Member entitled to vote at the meeting.
9.3 Quorum of and Action by Members. A Required Interest of the
Members present in person or represented by proxy, shall be requisite to and
shall constitute a quorum at each meeting of Members for the transaction of
business, except as otherwise provided by statute, the Certificate of Formation
or these Regulations. With respect to any matter, the affirmative vote or
consent of a Required Interest of the Members shall be required to constitute
the act of the Members; provided that the election of Managers shall be
governed by the provisions of Article 10 hereof. Unless otherwise provided in
the Certificate of Formation or these Regulations, the Members represented in
person or by proxy at a meeting of Members at which a quorum is not present may
adjourn the meeting until such time and to such place as may be determined by a
vote of the holders of a majority of the Units in person or by proxy at that
meeting. At any such adjourned meeting at which a quorum shall later be
present or represented, any business may be transacted that might have been
transacted at the meeting as originally convened.
9.4 Voting by Members. Each unit held by the Members shall be
entitled to one vote on each matter submitted to a vote at a meeting of
Members. No proxy shall be valid after 11 months from the date of its
execution unless otherwise provided in the proxy. Each proxy shall be
revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest. Each proxy shall be
delivered to the Managers prior to or at the time of the meeting.
9.5 Action Without a Meeting. Any action required by the Act to
be taken at any annual or special meeting of Members, or any action which may
be taken at any annual or special meeting of Members, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of a
Required Interest of the Members.
9.6 Telephone Meetings. Subject to the provisions of applicable
law and these Regulations regarding notice of meetings, Members may, unless
otherwise restricted by the Certificate of Formation or these Regulations,
participate in and hold a meeting by using conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 9.6 shall constitute presence in person at such meeting, except when a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting was not lawfully
called or convened.
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ARTICLE 10
MANAGERS
10.1 Number and Qualifications of Managers. Except as set forth in
Section 10.3 below, the Company shall have a Board of Managers comprised of
four (4) persons. None of the Managers need be Members of the Company or
residents of the States of Texas or Delaware.
10.2 Election and Term of Service. Managers shall be elected at
each annual meeting of the Members and at any special meeting of the Members
called for the purpose of electing Managers. At any such meeting, the Class A
Members shall be entitled to elect two (2) Managers and the Class B Members
shall be entitled to elect two (2) Managers. In each case, the Managers will
be selected from the existing officers of the Members. Each Manager so elected
shall serve as a Manager for the term for which he is elected and until his
successor shall have been elected by the Member class that had the right to
initially elect such Manager or until his earlier death, resignation or removal
in accordance with these Regulations.
10.3 Change in Control. Upon the occurrence of a Triggering Event
(as defined below) with respect to a Member in its capacity as a limited
partner of the Partnership (the "Affected Member"), at the election of the
other Member (the "Non-Affected Member"), (a) the Board of Managers shall be
automatically increased by one person, (b) the number of Managers which the
class of Units held by the Non-Affected Member shall be entitled to elect shall
be increased from two to three persons, and (c) a person designated by the
Non-Affected Member shall be elected to the Board of Managers, solely by the
action of the Non-Affected Member, to fill the vacancy created by the increase
in the size of the Board of Managers. For purposes hereof, a "Triggering
Event" shall mean, with respect to a Member in its capacity as a limited
partner of the Partnership, the occurrence of either of the following events:
(i) such Member does not accept at least 49.5% of the Offered Commitments (as
defined in the Partnership Agreement) in any two of rounds of Offered
Commitments under the terms of the Partnership Agreement or (ii) such Member
does not fund a Commitment (as defined in the Partnership Agreement) in
accordance with the terms and provisions of the Partnership Agreement and such
failure to fund continues uncured 20 days after written notice thereof is given
to such Member by any other Member (or any partner of the Partnership).
10.4 Removal; Filling of Vacancies. Any Manager may be removed,
with or without cause, by the affirmative vote of the Member class that had the
right to initially elect such Manager. Any vacancy occurring in the Managers
resulting from the death, resignation or removal or otherwise shall be filled
by the Member class that had the right to initially elect such Manager. A
Manager elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office.
10.5 Meetings. Meetings of the Managers may be held either within
or without the State of Texas upon the request of any Manager or the President
of the Company on not less than 24 hours notice to each Manager, either
personally or by mail (overnight service), telephone, telefax or similar
communication. Only business within
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the purpose or purposes described in the notice of special meeting of Managers
may be conducted at the meeting.
10.6 Quorum of and Action by Managers. At all meetings of the
Managers, the presence of a majority of the Managers shall be necessary to
constitute a quorum for the transaction of business, except as otherwise
provided by statute. The act of a majority of the Managers present at a
meeting at which a quorum is present shall be the act of the Managers unless
the act of a greater number is required by statute, the Certificate of
Formation or these Regulations. If a quorum shall not be present at any
meeting of the Managers, the Managers present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present. At any such adjourned meeting any business may be
transacted that might have been transacted at the meeting as originally
convened.
10.7 Action Without a Meeting. Unless otherwise restricted by the
Certificate of Formation or these Regulations, any action required or permitted
to be taken at any meeting of the Managers may be taken without a meeting, if
all Managers consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Managers.
10.8 Telephone Meetings. Subject to the provisions of applicable
law and these Regulations regarding notice of meetings, the Managers may,
unless otherwise restricted by the Certificate of Formation or these
Regulations, participate in and hold a meeting of Managers by using conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 10.8 shall constitute presence in person at
such meeting, except when a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting was not lawfully called or convened.
10.9 Reimbursement of Managers. All reasonable out-of-pocket
expenses incurred by the Managers in managing and conducting the business and
affairs of the Company, shall be paid or reimbursed by the Company in
accordance with the policy of the Company adopted by the Managers.
ARTICLE 11
OFFICERS
11.1 Officers. The Managers may designate one or more individuals
(who may or may not be Managers) to serve as officers of the Company. The
Company shall have such officers as the Managers may from time to time
determine, which officers may (but need not) include a President, one or more
Vice Presidents (and in case of each such Vice President with such descriptive
title, if any, as the Managers shall deem appropriate), a Secretary and a
Treasurer. Any two or more offices may be held by the same person.
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11.2 Limited Authority. UNLESS SPECIFICALLY AUTHORIZED BY A
RESOLUTION DULY ADOPTED BY THE MANAGERS, NO OFFICER OF THE COMPANY SHALL HAVE
THE AUTHORITY NOR PERMIT ANY EMPLOYEE OF THE COMPANY TO TAKE ANY ACTION OR MAKE
ANY DETERMINATION DESCRIBED IN ANNEX B HERETO.
11.3 Compensation. The officers of the Company shall not be
entitled to any compensation from the Company.
11.4 Term of Office: Removal, Filling of Vacancies. Each officer
of the Company shall hold office until his successor is chosen and qualified in
his stead or until his earlier death, resignation, retirement, disqualification
or removal from office. Any officer designated by the Managers may be removed
at any time by the Managers whenever in their judgment the best interests of
the Company will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Designation of an
officer shall not of itself create contract rights. If the office of any
officer becomes vacant for any reason, the vacancy may be filled by the
Managers.
11.5 President. The President, if one is designated by the
Managers, shall be the chief executive officer of the Company and, subject to
the provisions of these Regulations, shall have general supervision of the
affairs of the Company and shall have general and active control of all its
business. The President shall have power and general authority to execute
bonds, deeds and contracts in the name of the Company, to cause the employment
or appointment of such employees and agents of the Company as the proper
conduct of operations may require and to fix their compensation, subject to the
provisions of these Regulations; to remove or suspend any employee or agent who
shall have been employed or appointed under his authority or under authority of
an officer subordinate to him; and in general to exercise all the powers
usually pertaining to the office of president of a corporation, except as
otherwise provided by statute, the Certificate of Formation or these
Regulations.
11.6 Vice Presidents. Each Vice President that is designated by
the Managers shall generally assist the President and shall have such powers
and perform such duties and services as shall from time to time be prescribed
or delegated to him by the President or the Managers.
11.7 Secretary. The Secretary, if one is designated by the
Managers, shall see that notice is given of all meetings of Members and special
meetings of the Managers and shall keep and attest true records of all
proceedings at all meetings thereof. He shall have authority to attest any and
all instruments or writings to which the same may be affixed. He shall keep
and account for all books, documents, papers and records of the Company except
those for which some other officer or agent is properly accountable. The
Secretary shall generally perform all duties usually pertaining to the office
of secretary of a corporation.
11.8 Treasurer. The Treasurer, if one is designated by the
Managers, shall be the chief accounting and financial officer of the Company
and shall have active control
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of and shall be responsible for all matters pertaining to the accounts and
finances of the Company. He shall receive, audit and consolidate all operating
and financial statements of the Company and its various departments; shall have
supervision of the books of account of the Company, their arrangement and
classification; and shall supervise the accounting and auditing practices of
the Company. The Treasurer shall have the care and custody of all monies,
funds and securities of the Company, shall deposit or cause to be deposited all
such funds in and with such depositories as the Managers shall from time to
time direct or as shall be selected in accordance with procedures established
by the Managers; and shall advise upon all terms of credit granted by the
Company. He shall have the power to endorse for deposit or collection or
otherwise all checks, drafts, notes, bills of exchange and other commercial
paper payable to the Company and to give proper receipts or discharges for all
payments to the Company. The Treasurer shall generally perform all duties
usually pertaining to the office of treasurer of a corporation.
11.9 Additional Powers and Duties. In addition to the foregoing
especially enumerated duties, services and powers, the several officers of the
Company shall perform such other duties and services and exercise such further
powers as may be provided by statute, the Certificate of Formation or these
Regulations, or as the Managers may from time to time determine or as may be
assigned to them by any competent superior officer.
ARTICLE 12
BOOKS OF ACCOUNT; RECORDS; TAX INFORMATION
12.1 Fiscal Year. The fiscal year of the Company shall end on
December 31 in each year.
12.2 Books and Records. Proper and complete records and books of
account shall be kept by the Managers in which shall be entered fully and
accurately all transactions and other matters relative to the Company's
business as are usually entered into records and books of account maintained by
Persons engaged in businesses of like character. The Company's books and
records shall be prepared in accordance with generally accepted accounting
principles applied on a consistent basis. The books and records shall at all
times be made available at the principal office of the Company and shall be
open to the reasonable inspection and copying by the Members or their duly
authorized representatives with advance notice during reasonable business
hours.
12.3 Taxation as a Company. The Company shall be treated as a
partnership for federal and all state tax purposes. The Managers shall cause
the Company to prepare and file annually on or before the due date or extended
due date thereof all required federal, state and local tax returns and filings.
12.4 Tax Elections. All elections required or permitted to be made
by the Company under the Code, including but not limited to, the election
pursuant to Section 754 thereof, shall be made by the Managers, if at all, in
its sole discretion. Each Member will upon request supply the information
necessary to properly give effect to such elections.
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12.5 Tax Returns. The Managers shall, on a timely basis, send each
Person who is a holder of an interest in the Company at any time during a
calendar year all partnership tax information kept on a federal income tax
basis as shall be necessary for the preparation by such holder of its federal
income tax return. Further, on request by any holder of an interest in the
Company, the Managers will furnish such holder copies of all federal, state and
local income tax returns or information returns, if any, which the Company is
required to file.
ARTICLE 13
RESTRICTIONS ON TRANSFER
13.1 Private Offering. Each Member is fully aware that the Company
is selling Units to such Member in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act, and upon the truth
and accuracy of the representations of such Member contained in this Agreement.
13.2 Securities Act Requirements. Each Member represents that (a)
its Units are being acquired for investment, with no present intention of
distributing or selling any portion thereof or with a view to any distribution
thereof within the meaning of the Securities Act, and (b) its financial
condition is such that it is able to bear all risks of holding its Units for an
indefinite period of time and that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of acquisition of the Units and of making an informed investment decision
with respect thereto; and (c) it will not offer or make a transfer of its Units
unless it shall have delivered to the Company (i) an opinion of counsel
satisfactory to the Managers to the effect that no registration (or perfection
of an exemption) under the Securities Act is required with respect to such
transfer or (ii) such other evidence satisfactory to the Managers that the
transfer will not violate the Securities Act and other applicable state
securities laws.
13.3 Transfers by the Members. A Member may not sell, transfer,
assign or devise, or subject to security interest, lien or charge, all or any
part of its Units, except as permitted in the Ownership Restriction Agreement,
and any act in violation of this Section 13.3 shall be null and void ab initio.
Any transfer of or assignment of the Units of a Member shall not dissolve the
Company. A transferee or assignee of a Member's Units transferred or assigned
in compliance with the Ownership Restriction Agreement shall be admitted as a
substituted Member of the Company (with regard to the interest so transferred
and designated) without any further approval by the Members.
ARTICLE 14
DISSOLUTION
The Company shall dissolve and its affairs shall be wound up in
accordance with Article 15 on the first to occur of the following:
(a) the expiration of the term of the Company;
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(b) the filing of a certificate of cancellation of the
Partnership under the Act.
(c) the written consent to terminate by all of the
Members.
ARTICLE 15
WINDING UP AND TERMINATION OF THE COMPANY
15.1 Winding Up. If the Company is dissolved for any reason, it
shall be wound up and its assets sold or distributed in an orderly manner,
unless, in the case of the bankruptcy or dissolution of a Member, all of the
remaining Members agree, in accordance with the Act, to continue the Company
within 90 days after such event. In the absence of any such applicable
agreement, no Member shall have the right to continue the Company.
15.2 Liquidator. A quorum of the Managers, or if there is no
quorum of the Managers, then a liquidation trustee appointed by a Required
Interest of the Members (the "Liquidation Trustee"), shall have the exclusive
authority to manage and control the Company during the period during which it
is being wound up. The Person(s) vested with the authority to manage and
control the Company during the winding up period are hereinafter referred to as
the "Liquidator".
15.3 Liquidation; Distributions. Upon the winding up and
termination of the business and affairs of the Company, its assets (other than
cash) shall be sold and its liabilities and obligations to creditors and all
expenses incurred in its liquidation shall be paid (either by payment or the
making of reasonable provision for payment). Thereafter, the net proceeds from
such sales (after deducting all selling costs and expenses in connection
therewith) shall be distributed among the Members in accordance with their
respective positive balances in their Capital Accounts. Any distributions
under this Section 15.3 may be made, at the election of the Liquidator, in
money arising from the sale of the property of the Company or by a distribution
of the Company's assets in kind (the distributed asset being treated as sold
for its fair market value and any deemed gain or loss being treated as
allocated among the Members in accordance with Article 7 hereof) or such
distribution may be, at the election of the Liquidator, partially in money and
partially in kind. All determinations of fair market value under this Section
15.3 shall be made in the sole judgment of the Liquidator. Any sales or
distributions in kind of the Company's assets shall be effected in compliance
with the Securities Act and applicable state securities laws, as well as
applicable contractual restrictions or requirements relating to the transfer of
the assets of the Company.
15.4 Source of Distributions. Each holder of an interest in the
Company shall look solely to the assets of the Company for all distributions
with respect to the Company and its Capital Contribution thereto (including the
return thereof) and share of profits or losses thereof, and shall have no
recourse therefor (upon dissolution or otherwise) against the Company, any
Member or the Liquidator.
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15.5 Deficit Capital Accounts. No Member shall be required to
restore any deficit balance existing in its Capital Account upon the
liquidation and termination of the Company.
15.6 Termination of Company. Upon the completion of the
liquidation of the Company and the distribution of all Company assets, the
Company shall terminate and the Liquidator shall (and is hereby given the power
and authority to) execute, acknowledge, swear to and record all documents
required to effectuate the dissolution and termination of the Company.
ARTICLE 16
LIABILITY AND EXCULPATION
16.1 Liability. Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort
or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Member shall be obligated for any such debt, obligation or
liability of the Company solely by reason of being a Member of the Company.
16.2 Exculpation. No Covered Person shall be liable to the Company
or any Member under any theory of law, including tort, contract or otherwise
(INCLUDING A COVERED PERSON'S OWN NEGLIGENCE) for any loss, damage or claim
incurred by reason of any act or omission (including decisions to vote for or
against any matter) performed or omitted by such Covered Person in good faith
on behalf of the Company and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by these Regulations,
except that a Covered Person shall be liable for any such loss, damage or claim
incurred by reason of such Covered Person's gross negligence or willful
misconduct. A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or
expert competence and who has been selected with reasonable care by or on
behalf of the Company, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
16.3 Duties and Liabilities of Covered Persons. To the extent
that, at law or in equity, a Covered Person has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to any other Covered
Person arising under these Regulations, a Covered Person acting under these
Regulations shall not be liable to the Company or to any other Covered Person
for actions (including decisions to vote for or against any matter) taken by it
in good faith reliance on the provisions of these Regulations. The provisions
of these Regulations, to the extent that they restrict the duties and
liabilities of a Covered Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and liabilities of
such Covered Person. Unless otherwise expressly provided herein, whenever a
conflict of interest
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<PAGE> 16
exists or arises between a Covered Person and the Company or a Member, the
Covered Person shall disclose such conflict to the Members and shall resolve
such conflict of interest, taking such action or providing such terms,
considering in each case the relative interest of each party (including its own
interest) to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests, any customary or accepted
industry practices, and any applicable generally accepted accounting practices
or principles. In the absence of bad faith by the Covered Person, the
resolution, action or term so made, taken or provided by the Covered Person
shall not constitute a breach of these Regulations or any other agreement
contemplated herein or of any duty or obligation of the Covered Person at law
or in equity or otherwise.
ARTICLE 17
INDEMNIFICATION
17.1 Indemnification. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person (a) by
reason of any act or omission performed or omitted by such Covered Person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person by these
Regulations or (b) by reason of being a Member, an Affiliate of a Member or an
officer, director, shareholder, partner, representative, advisor or agent of
the Company or a Member or its Affiliate, except that no Covered Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Covered Person by reason of gross negligence or willful misconduct with
respect to such acts or omissions; provided, however, that any indemnity under
this Article 17 shall be provided out of and to the extent of Company assets
only, and no Covered Person shall have any personal liability on account
thereof. THE FOREGOING INDEMNITY IS INTENDED TO INDEMNIFY EACH COVERED PERSON
FOR HIS OWN ACTS OF NEGLIGENCE AND SHALL APPLY IRRESPECTIVE OF ANY CLAIM OF
CONCURRENT OR CONTRIBUTORY NEGLIGENCE ON THE PART OF SUCH COVERED PERSON.
17.2 Expenses. To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by a Covered Person in defending any
claim, demand, action, suit or proceeding for which indemnity is sought under
these Regulations shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized under this Article 17.
17.3 Insurance. The Company may purchase and maintain insurance,
to the extent and in such amounts as the Members shall deem reasonable, on
behalf of Covered Persons and such other Persons as the Members shall
determine, against any liability that may be asserted against or expenses that
may be incurred by any such Person in connection with the activities of the
Company or such indemnities, regardless of whether the Company would have the
power to indemnify such Person against such
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liability under the provisions of these Regulations. The Company may enter
into indemnity contracts with Covered Persons and adopt written procedures
pursuant to which arrangements are made for the advancement of expenses and the
funding of obligations under this Article 17 hereof and containing such other
procedures regarding indemnification as are appropriate.
ARTICLE 18
NOTICES
All notices, requests and communications under this Agreement shall be
in writing and shall be given to a party at the party's address set forth in
Schedule A hereto or, in the case of the Company, as follows: MPILEX
Management, L.L.C., 14785 Omicron Dr., Suite 101, San Antonio, Texas 78245,
Attention: Board of Managers. Each such notice, request or other communication
shall be effective (a) if given by registered or certified mail, return receipt
requested, two days after such communication is deposited in the mails with
postage prepaid and addressed as specified pursuant to this Article 18, or (b)
if given by any other means, when delivered at the address specified pursuant
to this Article 18. Any party may change its or its address for notifications
hereunder by giving the other parties notice thereof in accordance with this
Article. Notwithstanding the foregoing, a copy of each notice given to the
Managers or the Company receive shall also be given to each Member.
ARTICLE 19
DISPUTE RESOLUTION
Except as otherwise provided herein, any claim, dispute or controversy
of any nature whatsoever, including but not limited to tort claims and contract
disputes between the parties to this Agreement arising out of or related to the
terms and conditions of this Agreement, including the implementation,
applicability or interpretation thereof, shall be resolved in accordance with
the dispute resolution procedures set forth in Annex A attached to the
Ownership Restriction Agreement.
ARTICLE 20
MISCELLANEOUS
20.1 Further Assurances. Each Member agrees to execute, with
acknowledgement or affidavit if required, any and all documents and writings
which may be necessary or expedient in connection with the formation of the
Company and the achievement of its purposes, specifically including all such
agreements, certificates, tax statements, tax returns and other documents as
may be required of the Company or its Members by the laws of the United States
of America, the State of Texas or Delaware or any political subdivision or
agency thereof.
20.2 Company Property. The Members agree that the property and
other assets of the Company are and shall be owned by the Company as an entity.
Each Member, accordingly, owns Unit(s) and not an undivided interest in such
assets and properties. No Member shall have any right to partition the assets
and properties of
-17-
<PAGE> 18
the Company; and to the extent, if any, that any Member would have such a
right, each such Member hereby irrevocably waives any and all rights to
maintain any action for partition of the assets and properties of the Company,
either as a partition in kind or a partition by sale.
20.3 Invalid Provisions. If any provision of this Agreement, or
the application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
20.4 Entire Agreement. This Agreement and the additional documents
and agreements referred to herein constitute the entire agreement among the
parties, and it supersedes all prior or contemporaneous agreements or
understandings among the parties.
20.5 Successors and Assigns. Except as herein otherwise
specifically provided, this Agreement shall be binding upon and inure to the
benefit of the parties and their legal representatives, heirs, administrators,
executors, successors and permitted assigns.
20.6 Amendments. Except as provided in Article 4 relating to
certain amendment powers of the Managers, amendments or modifications may be
made to this Agreement only by setting forth such amendments or modifications
in a written instrument signed by all of the Members.
20.7 Interpretation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
20.8 Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Texas.
20.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. It shall not be necessary for all
Members to execute the same counterpart hereof.
[remainder of page intentionally left blank]
-18-
<PAGE> 19
The undersigned, being all of the Members of the Company, have caused
these Regulations to be duly adopted by the Company as of December _____, 1996.
MEMBERS:
MPI ENTERPRISES, L.L.C.
By: /s/ J. R. Mitchell
-------------------------------
J.R. Mitchell, M.D., Ph.D.,
Co-Chairman and CEO
ILEX ONCOLOGY, INC.
By: /s/ Richard L. Love
-------------------------------
Richard L. Love,
President
-19-
<PAGE> 20
SCHEDULE A
(As of December 11, 1996)
<TABLE>
<CAPTION>
CAPITAL UNIT UNIT
NAME AND ADDRESS CONTRIBUTIONS OWNERSHIP PERCENTAGE
---------------- ------------- --------- ----------
<S> <C> <C> <C>
CLASS A MEMBER:
--------------
ILEX Oncology, Inc. 50 50%
14785 Omicron Dr., Suite 101 $10,000 Class A Units
San Antonio, TX 78245
Fax No. (210) 677-6009
Attention: Richard L. Love
CLASS B MEMBER:
--------------
MPI Enterprises, L.L.C.
54943 N. Main Street
Mattawan, MI 49071 50
Fax No. (616) 668-4151 $10,000 Class B Units 50%
Attention: J.R. Mitchell
------- ------ --------
TOTAL: $20,000 100.0 100.0%
===== ======= ===== ======
</TABLE>
<PAGE> 21
ANNEX B
1. Fundamental Powers. Take any actions or exercise any powers
specifically delegated to or vested in (i) the Managers under the Regulations
or (ii) vested in the Company under the Partnership Agreement or Ownership
Restriction Agreement, including, without limitation, actions or exercises of
power with respect to distributions, valuations, requests for capital
contributions, issuance of units or other interests, admission of substitute
members of the Company or limited partners of the Partnership, amendments to
the schedule of unit ownership and tax elections of either the Company or the
Partnership.
2. Exclusive Management Activities. Permit the Company to engage
in any business activity other than the management of the Partnership.
3. Indebtedness. Create, incur, issue, assume, guarantee or
otherwise become or remain directly or indirectly liable for any indebtedness
of the Company or the Partnership in excess of $20,000 in the aggregate (for
all indebtedness).
4. Capital Expenditures. Make any capital expenditures by the
Company or the Partnership exceeding $20,000 for any single expenditure or
$20,000 in the aggregate for any 12-month period.
5. Liens. Create, assume or permit any lien or encumbrances upon
any of the properties or assets of the Company or the Partnership, whether now
owned or hereafter acquired, except liens or encumbrances existing as of the
date hereof.
6. Loans; Guarantees. Make any loan or advance by the Company or
the Partnership to any Person, including, without limitation, any employee,
officer, Manager or agent of the Company, the Partnership or any of their
Affiliates in excess of $5,000 in the aggregate (for all Persons), excluding
advances for travel and entertainment expenses and similar expenditures in the
ordinary course of business, or allow the Company or the Partnership to
guarantee, directly or indirectly, any indebtedness in excess of $5,000 in the
aggregate (for all indebtedness), except for trade accounts of the Company or
the Partnership arising in the ordinary course of business.
7. Investments. Own, purchase or acquire any stock, obligations
or securities of, or any interest in, or make any capital contribution to, any
other Person, except the Company and/or the Partnership may (a) own, purchase
or acquire certificate of deposit in or repurchase agreements from United
States commercial banks having capital resources in excess of $10,000,000 and
obligations of the United States Government or any agency thereof and
obligations guaranteed by the United States Government, (b) invest in
commercial paper rated at least Prime 1 by Moody's Industrial Manual, and (c)
deposit funds in money market accounts in financial institutions having capital
resources in excess of $10,000,000.
8. Mergers; Acquisitions. Permit the Company or the Partnership
to become a party to any merger, consolidation or reorganization with any other
Person. Permit the Company or the Partnership purchase, license or otherwise
acquire, or enter into
<PAGE> 22
any letter of intent or agreement to purchase, license or otherwise acquire,
any material assets of any other Person.
9. Dispositions. Sell, license or otherwise dispose of, or enter
into any agreement to sell, license or otherwise dispose of, any material
assets of the Company or the Partnership.
10. Compensation. Fix, grant, pay or provide annual aggregate
cash or noncash compensation (including any form of personal benefit or
property and including any compensation which has been earned but payment of
which has been deferred, but excluding compensation pursuant to group life,
health, hospitalization, medical or dental reimbursement plan) to any officer
or management personnel of the Company or the Partnership or any Affiliate
thereof.
11. Material Agreements. Enter into any agreements, including
leases or other rental agreements, under which the amount of the aggregate
payments for all such agreements exceeds $10,000 in aggregate for any 12-month
period.
12. Related Party Transactions. Enter into any material
transaction with the officers, Managers, employees of the Company, the
Partnership or their Affiliates, except as otherwise approved by the Managers.
13. Lines of Business. Establish, enter into or otherwise engage
in any business activity outside of the ownership, development and operation of
the property owned or licensed by the Partnership.
<PAGE> 1
EXHIBIT 10.69
[Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been redacted and are denoted by [**]. The
confidential portions have been separately filed with the commission.]
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is effective as of the 11th day of December,
1996, by and among MPILEX Partners, L.P., a Delaware limited partnership
("NEWCO"), having an address at 14785 Omicron Drive, San Antonio, Texas
78245-3217, U.S.A. and ILEX Oncology Inc. ("ILEX"), formerly known as Biovensa
Inc., having an address at 14785 Omicron Drive, San Antonio, Texas 78245-3217,
U.S.A.
WHEREAS, ILEX entered an agreement (the "B.W. Agreement") with
Burroughs Wellcome Co. (now known as Glaxo Wellcome Inc.) ("B.W. Co.") and the
Wellcome Foundation Limited ("WFL"), pursuant to which ILEX was granted a
license, with the right to sublicense, to certain worldwide rights to make,
use, and sell piritrexim isethionate, also known as 2, 4--diamino--6 (2,
5--dimethoxybenzyl)--5--methylpyrido--(2, 3--D) pyrimidine, in all forms and
formulations; and
WHEREAS, NEWCO is interested in obtaining an exclusive sublicense of
ILEX's worldwide rights to such Patent Rights and Know-How to use and sell the
Compound and Products containing the Compound; and
WHEREAS, ILEX is willing to grant such license to NEWCO;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants set forth herein, the parties hereto mutually agree as
follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or the plural, shall have the following meanings:
1.1 "Affiliate" means any corporation or entity which controls, is
controlled by, or is under common control with ILEX or NEWCO. A corporation or
entity shall be regarded as in control of another corporation if it owns or
directly or indirectly controls at least [**] of the voting
stock of the other corporation, or (i) in the absence of the ownership of at
least [**] of the voting stock of a corporation or (ii) in the
case of a non-corporate entity, if it possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation or non-corporate entity, as applicable.
1.2 "Agreement" means this License Agreement.
1.3 "Approval Date" means the calendar date upon which necessary
government authorities in a country issue final approval legally required
before a Product may be commercialized in such country.
<PAGE> 2
1.4 "Base Currency" means (i) Dollars, with respect to sales of
Products in the U.S. and royalties payable to ILEX thereon; and (ii) Sterling,
with respect to sales of Products in the Non-U.S. Territory and royalties
payable to ILEX thereon.
1.5 "B.W. Agreement" means the License Agreement entered into by
Burroughs Wellcome Co., the Wellcome Foundation Limited, and ILEX effective as
of the Operative Date. A copy of the B.W. Agreement is attached hereto as
Exhibit "I" and made a part hereof.
1.6 "Compound" means the chemical known as piritrexim isethionate,
having the chemical structure set forth on Appendix II attached hereto and made
a part hereof.
1.7 "Cost of Manufacturing" means the actual cost incurred by ILEX
in the manufacture of formulated Compound, including all packaging,
transportation and handling charges, excise, use, and sales taxes, or any
import/export duties actually paid.
1.8 "Dollars" or "$" means United States dollars.
1.9 "Effective Date" means the date appearing at the beginning of
this Agreement.
1.10 "Europe" means all countries which are Member States, from
time to time, of the European Economic Area.
1.11 "FDA" means the United States Food and Drug Administration or
any successor entity.
1.12 "Field" means the treatment or prophylaxis of cancer in humans
and conditions other than cancer which are associated with cancer or the
treatment or prophylaxis of cancer in humans.
1.13 "First Commercial Sale" means the date on which NEWCO or a
sublicensee first transfers title to a Product to a Third Party for monetary
consideration.
1.14 "ILEX's License Rights" means the license rights B.W. Co. and
WFL granted ILEX in the B.W. Agreement.
1.15 "IND" means an Investigational New Drug application or any
equivalent successor application.
1.16 "Know-How" means all inventions, technical data, techniques,
knowledge, and other information, whether or not patented or patentable, that
are (i) reasonably necessary to manufacture a Product or to use the Compound in
the Field, including all regulatory filings, clinical trial data, synthesis
and analytic procedures and reference standards, and (ii) owned by ILEX or
licensed to ILEX under the B.W. Agreement.
-2-
<PAGE> 3
1.17 "Major European Country" shall mean any of Great Britain,
France, Germany, Italy, Spain, or the Netherlands.
1.18 "NDA" means a New Drug Application or any equivalent successor
application.
1.19 "Net Sales," with respect to any Product containing the
Compound as the sole active ingredient, means the gross sales (i.e., gross
invoice prices) of such Product billed by NEWCO and its sublicensees to Third
Party customers, less: (i) actual credited allowances to such Third Party
customers for spoiled, damaged, outdated and returned Product and for
allowances in lieu of returned Product following price increases; (ii) the
amounts of customary trade and cash discounts, to the extent such trade and
cash discounts are not deducted by NEWCO or its sublicensees at the time of
invoice in order to arrive at the gross invoice prices; (iii) all
transportation and handling charges, sales taxes, excise taxes, use taxes,
value added taxes, other similar taxes, or import/export duties actually paid;
and (iv) all other invoiced allowances and adjustments actually credited to
customers including, but not limited to, rebates paid to Third Party payors,
whether during the specific royalty period, as defined in Section 5.1, or not.
1.20 "Net Sales," with respect to any Product containing one or
more active ingredients in addition to the Compound, means the gross sales of
such Product billed by NEWCO and its sublicensees to Third Party customers,
less all the allowances, adjustments, discounts, taxes, duties and other
charges referred to in clauses (i) through (iv) of Section 1.18, multiplied by
a fraction, the numerator of which shall be the manufacturing cost or
acquisition cost, as applicable, of the Compound included in such Product and
the denominator of which shall be the manufacturing cost or acquisition cost,
as applicable, of all active ingredients in such Product, including the
Compound. These costs shall be computed using the standard cost accounting
procedures of ILEX in accordance with generally accepted accounting principles
(i.e., GAAP).
1.21 "Operative Date" means the 31st day of March, 1995, the date
which the B.W. Agreement became effective.
1.22 "Patent Rights" means, collectively, the B.W. Co. Patent
Rights and the WFL Patent Rights licensed to ILEX under the B.W. Agreement as
more fully described in Exhibit "I" attached hereto and made a part hereof.
1.23 "Product" means the Compound or any product containing the
Compound as an active ingredient, which is (i) covered by a Valid Claim or (ii)
made or developed using the Know-How.
1.24 "Registration" means in relation to any Product such approvals
by government authorities in a country (including price approvals) as may be
legally required before such Product may be commercialized in such country.
1.25 "Sterling" or "L" means English Pounds Sterling.
-3-
<PAGE> 4
1.26 "Submittal Date" means the calendar date upon which NEWCO
forwards, whether by mail, facsimile, electronically, carrier, or otherwise, a
Registration dossier or NDA to appropriate government authorities.
1.27 "Technology" means the Patent Rights together with all
Know-How related or pertaining to the Field.
1.28 "Territory" means the U.S. and Non-U.S. Territory.
1.29 "Non-U.S. Territory" means the entire world excluding the
U.S.
1.30 "Third Party" means any party other than MPI Enterprises,
L.L.C. ("MPI"), ILEX, NEWCO, ILEX's and NEWCO's respective Affiliates, and
NEWCO's sublicensees.
1.31 "U.S." means the United States of America, its territories and
possessions.
1.32 "Valid Claim" means a claim of an issued and unexpired patent
included within the Patent Rights which has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise.
ARTICLE 2. REPRESENTATIONS & WARRANTIES
Each party hereto represents and warrants to the other that it is free
to enter into this Agreement and to carry out its obligations hereunder,
including, in the case of ILEX, the right to grant the license granted by it
pursuant to Article 3 hereof. Except as set forth in this Article 2, ILEX
makes no representations or warranties with respect to the Patent Rights or the
Know-How.
ARTICLE 3. GRANT
3.1 License Grant. Subject to the provisions of Section 3.2 and 3.3
in respect of the exclusive sublicense granted in this Section 3.1, and B.W.
Co.'s and WFL's reservation of rights set forth in Section 3.3 of the B.W.
Agreement, and any other limitation upon ILEX's License Rights set forth in the
B.W. Agreement, ILEX hereby grants to NEWCO, under the Patent Rights and
Know-How, an exclusive sublicense in the Territory in the Field with a right to
sublicense, to make, have made, use and sell Products.
3.2 Reservation of Rights. ILEX hereby reserves the perpetual,
royalty-free right to practice the Patent Rights and to use the Know-How for
research purposes.
3.3 Manufacturing and Marketing Rights. ILEX hereby reserves the
rights set forth in Sections 8.3 and Article 9.
-4-
<PAGE> 5
ARTICLE 4. LICENSE FEE AND MILESTONE PAYMENTS
4.1 License Fee. As partial consideration for the licenses
granted hereunder, NEWCO will pay ILEX a total sum of [**]
upon Effective Date.
4.2 Milestone Payments. As partial consideration for the licenses
granted hereunder, and subject to fulfillment of preconditions to payment
referred to in this Section 4.2, NEWCO will pay ILEX the following sums:
(i) [**] within ten (10)
days of the Submittal Date of the first NDA in the
United States;
(ii) [**] within ten
(10) days of the Submittal Date of the first
Registration dossier in a Major European Country;
(iii) [**] within ten
(10) days of the Submittal Date of the first
Registration in Japan;
(iv)
[**] within ten (10) days of the Approval
Date of the first Approval of the NDA in the United
States;
(v)
[**] within ten (10) days of the Approval
Date of the first Registration dossier by a Major
European Country;
(vi) [**] within ten (10)
days of the Approval Date of the first Registration
dossier in Japan.
4.3 Payment. Payment of each installment of the License Fee and
Milestone Payment shall be made in Dollars directly to ILEX.
ARTICLE 5. ROYALTIES
5.1 Earned Royalties. Subject to adjustment as set forth in
Section 5, NEWCO shall pay ILEX a royalty on Net Sales of Products in (i) the
U.S. and in (ii) the Non-U.S. Territory at the royalty rate of [**]
on Net Sales of Products in the respective Territories in a calendar
year, except as provided below.
-5-
<PAGE> 6
Royalties shall be paid in respect of Net Sales of Products in a given
country of the Territory for a period of ten (10) years from the date of First
Commercial Sale of the first Product in such country. Thereafter, royalties
shall be paid in respect of a given Product only so long as the manufacture,
sale or use of such Product in such country would, but for the license granted
herein, infringe a Valid Claim. With respect to countries where all Valid
Claims expire before the 10-year period, the royalty rate on Net Sales of
Products shall be reduced to [**] for the remainder of the
10-year period. Notwithstanding the foregoing, however, with respect to Europe
only, royalties on Net Sales of a given Product which are payable only by
virtue of clause (ii) of Section 1.22 shall be payable on a country-by-country
basis commencing with the first commercial sale of such Product in such country
and ending on the earlier of (x) the date on which the Know-How used to make
and develop such Product becomes published or generally known to the public
through no fault on the part of NEWCO or its Affiliates or sublicensees or (y)
the eighth (8th) anniversary of the commercial sale of the first Product in
such country.
5.2 Payment to B.W. Co. and WFL. ILEX hereby undertakes and
agrees to transfer the applicable royalty payments to B.W. Co. and WFL, in
accordance with the B.W. Agreement. ILEX shall indemnify and hold NEWCO, its
Affiliates, directors, officers, employees and agents harmless from and against
any liabilities for ILEX's breach of this Section 5.2 and NEWCO shall have the
right to set off future royalties due ILEX pursuant to Section 5.1 by the
amount of such liability.
5.3 Third Party Sales.
(i) With respect to any country in which Patent Rights do not
exist, if (a) a product containing the Compound as an active ingredient for use
in the Field is introduced by a Third Party (a "Competitive Product") and (b)
sales by such Third Party exceed the applicable percentage set forth below of
unit sales of NEWCO and its sublicensees of Products in such country in any
calendar quarter, then the royalty rates specified in Sections 5.1 applicable
to sales by NEWCO and its sublicensees of Products in such country during such
calendar quarter shall be adjusted as set forth below:
<TABLE>
<CAPTION>
% Third Party Unit Sales ("X") %
------------------------------ --
Reduction in Section 5.1 Royalty Rates
- --------------------------------------
<S> <C>
X less than or equal to [**] [**]
[**] less than X less than [**] [**]
X greater than or equal to [**] [**]
</TABLE>
By way of example only, if in a given calendar quarter a Third Party's unit
sales of a Competitive Product in a country were [**] of
the unit sales by NEWCO and its sublicensees of Products in such country for
the same calendar quarter, the royalty rates applicable to such sales by NEWCO
and its sublicensees during such calendar quarter would be [**]
.
-6-
<PAGE> 7
(ii) For purposes of this Section 5.3, Third Party unit sales shall
be measured by the sales reported by IMS America Ltd. of Plymouth Meeting,
Pennsylvania and its affiliates ("IMS") or another independent marketing firm
selected and paid by NEWCO and reasonably acceptable to ILEX. NEWCO shall
furnish to ILEX copies of reports of IMS or such other auditing firm for the
relevant calendar quarter(s), together with NEWCO's royalty reports and NEWCO's
royalty payments for the relevant quarters.
5.4 Accrual of Royalties. No royalty shall be payable on a
Product made, sold, or used for tests or development purposes or distributed as
samples. No royalties shall be payable on sales among NEWCO and NEWCO's
sublicensees, but royalties shall be payable on the initial subsequent sale by
NEWCO or its sublicensees to a Third Party. No multiple royalty shall be
payable because the manufacture, use or sale of a Product is covered by more
than one Valid Claim or is subject to both Know-How and a Valid Claim.
5.5 Third Party Royalties. If (i) NEWCO or its sublicensees and
(ii) ILEX agree that NEWCO or its sublicensees are required to pay royalties to
any Third Party because the manufacture, use or sale of a Compound contained in
a given Product infringes any patent or other intellectual property rights of
such Third Party in a given country, NEWCO or its sublicensees may deduct equal
amounts from royalties thereafter due to ILEX pursuant to paragraph 5.1 with
respect to Net Sales of such Product in such country up to [**]
of the royalties or such other fees paid to such Third Party, subject to the
limitation in the immediately following sentence. In no event shall the
royalties due to ILEX, pursuant to Paragraph 5.1, on such Net Sales of such
Product in such country on account of any reduction pursuant to this Section
5.5 be thereby reduced by more than [**] of the royalties
which otherwise would have been due hereunder on such Net Sales of such Product
in such country.
ARTICLE 6. ROYALTY REPORTS AND ACCOUNTING
6.1 Royalty Reports; Records. During the term of this Agreement,
NEWCO shall furnish to ILEX, in respect of Net Sales of Products in the U.S.
and in respect of Net Sales of Products in the Non-U.S. Territory, a written
report or reports covering each calendar quarter (a "Royalty Period") showing
(i) the Net Sales of all Products in the U.S. or the Non-U.S. Territory, as
applicable, during the Royalty Period; (ii) the royalties, payable in the Base
Currency, which shall have accrued hereunder in respect of such sales; (iii)
withholding taxes, if any, required by law to be deducted in respect of such
sales; and (iv) the exchange rates used in determining the amount of the
royalties payable in the Base Currency. With respect to sales of Products
invoiced in the Base Currency, the Net Sales and royalty payable shall be
expressed in such Base Currency. With respect to sales of Products invoiced in
a currency other than the Base Currency, the Net Sales and royalty payable
shall be expressed in the domestic currency of the party making the sale
together with the Base Currency equivalent of the royalty payable, calculated
using the simple average of the exchange rates published in the London
Financial Times under the heading "World Value of the Pound" on the last day of
each month during the Royalty Period in which the London Financial Times' Guide
-7-
<PAGE> 8
is published (currently Tuesdays). If any sublicensee makes any sales invoiced
in a currency other than its domestic currency, the Net Sales shall be
converted to its domestic currency in accordance with the sublicensee's normal
accounting principles. NEWCO shall furnish to ILEX appropriate evidence of
payment of any tax or other amount required by applicable laws or regulations
to be deducted from any royalty payment. Reports shall be due on the
forty-fifth (45th) day following the close of each respective calendar quarter.
NEWCO shall keep accurate records in sufficient detail to enable the royalties
payable hereunder to be determined. NEWCO shall be responsible for all
royalties and late payments that are due to ILEX but have not been paid by
NEWCO's sublicensees to NEWCO
6.2 Right to Audit. Upon the written request of B.W. Co. or WFL
or ILEX (the "Auditing Party"), at its expense and not more than once in each
calendar year (i.e., once for B.W. Co. and once for WFL and once for ILEX),
NEWCO shall permit an independent public accountant, selected by the Auditing
Party, and acceptable to NEWCO (the "Auditor"), which acceptance shall not be
unreasonably refused, to have access during normal business hours to those
records of NEWCO as may be reasonably necessary to verify the accuracy of the
royalty reports furnished by NEWCO pursuant to Section 6.1 of this Agreement in
respect of any calendar year ending not more than forty-eight (48) months prior
to the date of such request. NEWCO shall include in each sublicense granted by
it pursuant to this Agreement a provision requiring the sublicensee to keep and
maintain records of sales made pursuant to such sublicense and to grant access
to such records by the Auditor. If the Auditor's report shows any underpayment
of royalties, within twenty five (25) days after NEWCO's receipt of such
report, NEWCO shall remit to ILEX (i) the amount of such underpayment and (ii)
if such underpayment exceeds [**] of the total royalties owed to
the Auditing Party for the calendar year then being audited, the reasonable and
necessary fees and expenses of the Auditor, subject to reasonable
substantiation thereof. Any overpayment of royalties shall be fully creditable
against future royalties payable to the Auditing Party in subsequent Royalty
Periods.
6.3 Confidentiality of Records. The Auditing Party agrees that
all information subject to review under this Article 6 or under any sublicense
agreement is confidential and that it and its accountant shall retain all such
information in confidence in accordance with the provisions of Article 13
hereof. At NEWCO's request, the Auditor shall execute a confidentiality
agreement with respect to the information subject to review under this Article
6.
ARTICLE 7. ROYALTY AND OTHER PAYMENTS
7.1 Royalty Payment Due Dates. Royalties shown to have accrued in
each royalty report provided for under Article 6 of this Agreement shall be due
and payable on the date such royalty report is due. Payment of royalties in
whole or in part may be made in advance of such due date.
-8-
<PAGE> 9
7.2 Currency Restrictions. Except as hereinafter provided in this
Section 7.2, all royalties due shall be paid in the Base Currency. If at any
time legal restrictions prevent the prompt remittance of part or all royalties
with respect to any country of the Territory where the Products are sold, NEWCO
shall have the right and option to make such payments by depositing the amount
thereof in local currency to ILEX's account in a bank or depository in such
country.
7.3 Interest. Royalties, Milestone, and other payments required
to be paid by NEWCO pursuant to this Agreement shall, if overdue, bear interest
at a per annum rate of [**] or the maximum rate allowed by
law, whichever is less, until paid. The payment of such interest shall not
preclude ILEX from exercising any other rights it may have because any payment
is overdue.
ARTICLE 8. DEVELOPMENT AND MARKETING PROGRAM
8.1 Development Plan. NEWCO shall prepare a development program
and budget (the "Development Plan") to conduct clinical studies and such other
work as is necessary to file for and obtain marketing approval of the Compound,
for one or more indications, in the United States, Europe, and Japan. NEWCO
shall exercise its best efforts to formulate the Development Plan in the
shortest time possible.
8.2 Oversight of Development Plan. ILEX and NEWCO agree that
NEWCO shall oversee the Development Plan. On an annual basis, NEWCO shall
review, modify, and adjust the Development Plan as appropriate. NEWCO shall
undertake and comply with ILEX's obligations set forth in Sections 8.1, 8.2,
and 8.3 of the B.W. Agreement.
8.3 Commercialization Plan. ILEX will have a right of first
refusal to market the Products in the countries for which approval to market
has been obtained, provided that ILEX reasonably demonstrate that it has
reasonably competitive capabilities and pricing to accomplish such marketing.
8.4 Progress Reports. Until commercial introduction of the first
Product, NEWCO will provide a semiannual report to ILEX summarizing NEWCO's
activities related to the development of the Products and securing of the
requisite Registrations during the semiannual period covered by such report.
ARTICLE 9. MANUFACTURE AND SUPPLY
ILEX shall have the exclusive right, except to the extent that the
partners in NEWCO agree to have a back-up manufacturer, to supply formulated
Product to NEWCO and its sublicensees provided that ILEX can reasonably
demonstrate that it has reasonably competitive capabilities and can supply such
Product at reasonably competitive prices. The parties will use their
reasonable efforts to keep the cost of Product below [**] of Net
Sales.
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<PAGE> 10
ARTICLE 10. PATENT RIGHTS
10.1 Patent Prosecution and Maintenance. The parties acknowledge
and agree that pursuant to the B.W. Agreement, B.W. Co. and WFL have primary
responsibility for preparation, filing, prosecution, and maintenance of Patent
Rights. Should at any time during the term of this Agreement, ILEX be given
the opportunity to prosecute any patent application or to maintain any Patent
Rights in any country in the Territory pursuant to Article 9.1 of the B.W.
Agreement, ILEX shall (i) use reasonable efforts to prosecute patent
applications within the Patent Rights, to obtain patents thereon and to
maintain any such patents during the term hereof using patent counsel of their
choice, or (ii) offer NEWCO the right to prosecute such patent application
and/or to maintain such patent at NEWCO's expense.
10.2 Patent Prosecution Costs. NEWCO shall reimburse ILEX for the
reasonable out-of-pocket expenses incurred in the performance of ILEX's, B.W.
Co.'s, or WFL's obligations pursuant to Section 10.1 and out-of-pocket expenses
ILEX incurred pursuant to section 9.3 of the B.W. Agreement. ILEX shall
invoice NEWCO for such expenses on or before April 30 and October 31 of each
year with respect to those out-of-pocket expenses ILEX has incurred for the six
(6) month period ending on the last day of the immediately preceding August or
February. Such invoice shall itemize, in reasonable detail, the expenses which
have been incurred on a country-by-country basis. Payment of each invoice
shall be due net twenty (20) days after its date.
ARTICLE 11. THIRD PARTY INFRINGEMENT
In the event that NEWCO becomes aware that a product containing the
Compound for use in the Field is being made, used or sold in the Territory and
it believes that such product infringes a Valid Claim, it shall promptly advise
ILEX of all the relevant facts and circumstances known by it in connection with
the infringement. In the event that (i) ILEX and B.W. Co. and WFL shall fail,
within ninety (90) days after ILEX receives notice from NEWCO, either (a) to
terminate such infringement or (b) to institute an action to prevent
continuation thereof and, thereafter, to prosecute such action diligently, or
(ii) ILEX earlier notifies NEWCO that ILEX and B.W. Co. and WFL do not plan to
terminate the infringement or institute such action, then NEWCO shall have the
right to do so at its own expense. ILEX shall cooperate with NEWCO in such
effort including being joined as a party to such action, if necessary. Any
damages or costs recovered in connection with any action filed by NEWCO
hereunder, after first reimbursing NEWCO for its out-of- pocket costs and
expenses of litigation, shall be deemed to be Net Sales of Products in the
calendar year actually received by NEWCO and royalties shall be payable by
NEWCO to ILEX thereon in accordance with the terms of this Agreement. Any
damages or costs recovered in connection with any action filed by ILEX
hereunder, after reimbursing ILEX for its out-of-pocket costs and expenses of
litigation and royalties due to either B.W. Co. or WFL, respectively, in
accordance with the B.W. Agreement shall be divided among ILEX and NEWCO on an
equal basis. Any damages or costs recovered in connection with any action
filed by B.W. Co. or WFL, respectively, in connection with any action filed by
it under Article 10 of the B.W. Agreement, after first reimbursing B.W. Co. or
WFL for its out-of-pocket
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<PAGE> 11
costs and expenses of litigation, shall be divided by ILEX and NEWCO in equal
amounts of [**] .
ARTICLE 12. INDEMNIFICATION; INSURANCE
12.1 Indemnification by NEWCO. NEWCO agrees to indemnify and hold
ILEX, its Affiliates, directors, officers, employees and agents harmless from
and against any liabilities or damages or expenses in connection therewith
(including reasonable attorneys' fees and costs and other expenses of
litigation) resulting from (i) claims arising out of NEWCO's or its
sublicensees' testing, use, manufacture or sale of the Products; (ii) the
successful enforcement (i.e., a judgment issued by a court of competent
jurisdiction against NEWCO, unappealable or unappealed by NEWCO within the time
allowed therefor) by ILEX of its indemnification rights set forth in clause (i)
of this Section 12.1; or (iii) the successful enforcement (i.e., a judgment
issued by a court of competent jurisdiction against NEWCO, unappealable or
unappealed by NEWCO within the time allowed therefor) by either B.W. Co. or WFL
of a claim against ILEX that arises under the B.W. Agreement.
12.2 Indemnification Procedures. If ILEX (the "indemnitee")
intends to claim indemnification under this Article 12, ILEX shall promptly
notify NEWCO (the "indemnitor") in writing of any action, claim or liability in
respect of which the indemnitee or any of its Affiliates, directors, officers,
employees or agents intend to claim such indemnification. The indemnitee shall
permit, and shall cause its Affiliates, directors, officers, employees and
agents to permit, the indemnitor, at its discretion, to settle any such action,
claim or liability and agrees to the complete control of such defense or
settlement by the indemnitor; provided, however, that such settlement does not
adversely affect the indemnitee's rights hereunder or impose any obligations on
the indemnitee in addition to those set forth herein in order for it to
exercise such rights. No such action, claim or liability shall be settled
without the prior written consent of the indemnitor and the indemnitor shall
not be responsible for any legal fees or other costs incurred other than as
provided herein. The indemnitee and its Affiliates, directors, officers,
employees and agents shall cooperate fully with the indemnitor and its legal
representatives in the investigation and defense of any action, claim or
liability covered by this indemnification. The indemnitee shall have the
right, but not the obligation, to be represented by counsel of its own
selection and expense.
12.3 Insurance.
(i) NEWCO shall take out and maintain, at its own expense, during
the term of this Agreement, and for a minimum of two (2) years following the
expiration, termination or cancellation of this Agreement, product liability
coverage from an insurance company or companies reasonably satisfactory to
ILEX. During the clinical development of Products, such coverage shall be at
least [**] per occurrence. Promptly upon commercial introduction of the
initial Product, the parties shall negotiate in good faith an increase in such
coverage. The insurance policy relating to such coverage shall name ILEX, B.W.
Co., and WFL as additional insureds by way of endorsement or otherwise as their
respective interests may appear.
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<PAGE> 12
(ii) Within thirty (30) days after the Effective Date, NEWCO shall
cause to be delivered to ILEX an insurance certificate evidencing the insurance
coverage required by Subsection 12.3(i). Such insurance certificate shall name
ILEX, B.W. Co., and WFL as additional insureds as their respective interests
may appear.
ARTICLE 13. CONFIDENTIALITY
13.1 Treatment of Confidential Information. Except as otherwise
provided in this Article 13, during the term of this Agreement and for a period
of five (5) years thereafter:
(i) NEWCO will retain in confidence and use only for purposes of
this Agreement any information and data supplied by or on behalf of ILEX to
NEWCO under this Agreement; and
(ii) ILEX will retain in confidence and use only for purposes of
this Agreement any information and data supplied by or on behalf of NEWCO to
ILEX under this Agreement.
For purposes of this Agreement, all such information and data which a
Party is obligated to retain in confidence shall be called "Information."
13.2 Right to Disclose. To the extent it is reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under this
Agreement or any rights which survive termination or expiration hereof, a party
may disclose Information to its Affiliates, sublicensees (actual and
prospective), investors (actual and prospective), consultants, outside
contractors and clinical investigators on condition that such entities or
persons agree (i) to keep the Information confidential for at least the same
time periods and to the same extent as each party is required to keep the
Information confidential and (ii) to use the Information only for such purposes
as such party is entitled to use the Information. Each party or its Affiliates
or, if applicable, its sublicensees may disclose such Information to government
or other regulatory authorities to the extent that such disclosure (a) is
reasonably necessary to obtain patents or authorizations, to conduct clinical
trials and to market commercially the Product, provided such party is otherwise
entitled to engage in such activities under this Agreement or (b) is otherwise
required by applicable laws or regulations. To the extent reasonably necessary
or appropriate to fulfill its obligations or exercise its rights under the B.W.
Agreement or any rights that survive termination or expiration thereof, ILEX
may disclose information to B.W. Co. or WFL, under terms set forth in Sections
12.1-12.5 of the B.W. Agreement.
13.3 Release From Restrictions. The obligation not to disclose
Information shall not apply to any part of such Information that (i) is or
becomes patented, published or otherwise part of the public domain other than
by acts of the party obligated not to disclose such Information (for purposes
of this Article 13, the "receiving party") or its Affiliates or sublicensees in
contravention of this Agreement; (ii) is disclosed to the receiving party or
its Affiliates or sublicensees by a Third Party, provided such Information was
not obtained by such Third Party directly or indirectly
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<PAGE> 13
from the other party under this Agreement; (iii) prior to disclosure under this
Agreement, was already in the possession of the receiving party or its
Affiliates or sublicensees, provided such Information was not obtained,
directly or indirectly, from the other party under this Agreement or under an
obligation of confidence; (iv) results from research and development by the
receiving party or its Affiliates or sublicensees independent of disclosures
from the other party under this Agreement; (v) has been approved for
publication by the parties hereto; or (vi) is Product-related information which
is reasonably required to be disclosed in connection with the marketing of the
Product.
13.4 Confidentiality of Agreement. Except as otherwise required by
law or applicable regulation or the terms of this Agreement or otherwise
mutually agreed upon by the hereto, each party shall treat as confidential the
terms, conditions and existence of this Agreement. Notwithstanding the
foregoing, a party may disclose such terms, conditions and existence to an
Affiliate or, in the case of NEWCO, a sublicensee, which agrees to be bound by
the terms of this Section 13.4 to the same extent as such party.
13.5 Right to Publication. NEWCO agrees that ILEX shall have the
right to publish or to present publicly (collectively, a "Publication") the
results of any research, work or other development performed pursuant to this
Agreement by or on behalf of ILEX (collectively, the "Results"). ILEX agrees
to submit any proposed Publication to NEWCO for its review at least thirty (30)
days prior to submission or presentation of such Publication. If NEWCO
requests a delay in submission or presentation based on patent considerations,
NEWCO agrees to delay such submission or presentation for a period not to
exceed ninety (90) days from the date of such request. ILEX further agrees to
give due consideration to any comments made by NEWCO with respect to such
Publication but, except as set forth in the immediately following sentence,
ILEX shall determine the content of the Publication.
ARTICLE 14. TERM; TERMINATION
14.1 Term; Termination. Unless terminated sooner pursuant to
Section 14.3 this Agreement shall become effective as of the Effective Date and
shall continue in full force and effect until the expiration of the later of
ILEX's obligation to pay royalties under the B.W. Agreement or NEWCO's
obligation to pay royalties hereunder; at which time, notwithstanding anything
to the contrary contained herein, all rights licensed to NEWCO herein shall be
deemed to be converted to a fully paid, non-exclusive, irrevocable, royalty
free license of the Technology in the Territory to use, sell and have sold
Products incorporating, utilizing or otherwise commercially exploiting the
Technology in the Field. Upon expiration or termination of this Agreement with
respect to one or more countries of the Territory, the rights and obligations
of the parties with respect to such country or countries shall cease, except as
follows:
(i) the rights and obligations of the parties under Article 12
shall survive termination or expiration;
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<PAGE> 14
(ii) upon expiration or termination for any reason, the obligations
of confidentiality and use of Information under Article 13 shall survive for
the period provided therein;
(iii) upon termination, NEWCO's obligations under Sections 14.3,
14.4 and 14.5 shall survive; and
(iv) expiration or termination of this Agreement shall not relieve
the parties of any other obligation accruing prior to such termination.
14.2 Paragraph 13.2 of the B.W. Agreement. ILEX agrees not to
exercise its rights under Section 13.2 of the B.W. Agreement unless (i) NEWCO
is in breach of this Agreement or (ii) ILEX and NEWCO agree to do so.
14.3 Termination For Cause.
(i) ILEX may terminate this Agreement in the U.S. and/or in the
Non-U.S. Territory upon the occurrence of any of the following:
(a) upon or after the bankruptcy, insolvency,
dissolution or winding up of NEWCO (other than dissolution or
winding up for the purposes of reconstruction or
amalgamation);
(b) upon or after the breach of any material
provision of this Agreement by NEWCO if such breach is not
cured within twenty (20) days after ILEX gives NEWCO written
notice thereof, it being understood that if such breach
relates solely to NEWCO's obligations in the U.S., then this
Agreement may be terminated only as to the U.S.; and, if such
breach relates solely to NEWCO's obligations in the Non-U.S.
Territory, then this Agreement may be terminated only as to
the Non-U.S. Territory;
(c) upon the abandonment by NEWCO of the
development of the Products. As used in this clause (c), the
term "abandonment," in respect of development of the
Products, shall mean that NEWCO or its sublicensees have
failed for a period of five (5) or more consecutive months to
conduct any development, testing, regulatory or manufacturing
activity reasonably necessary in order to prepare and file
such Registration for such Product in the U.S., unless such
failure was due to (x) reasons beyond its or their control
(such as circumstances of the type described in Article 21
hereof) or (y) the failure by ILEX to perform its obligations
hereunder. NEWCO shall give ILEX prompt written notice of
the abandonment of the development of the Products; or
(d) upon the termination of the B.W. Agreement,
in whole or in part, by either B.W. Co. or WFL, it being
understood that if the B.W. Agreement termination relates
solely to ILEX's License Rights in the U.S., then this
Agreement may be terminated only as to the U.S.; and, if such
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<PAGE> 15
termination relates solely to ILEX's License Rights in the
Non-U.S. Territory, then this Agreement may be terminated only
as to the Non-U.S. Territory;
(ii) NEWCO may terminate this Agreement upon the occurrence of any
of the following:
(a) the bankruptcy, insolvency, dissolution or
winding up of ILEX (other than dissolution or winding up for
the purposes of reconstruction or amalgamation);
(b) the breach of any material provision of this
Agreement by ILEX if such breach is not cured within sixty
(60) days after NEWCO gives ILEX written notice thereof;
(c) the NEWCO Board of Managers determines that the
Compound is not approvable for any indications in the Field.
14.4 NEWCO's Obligations Upon Termination. Upon termination (but
not expiration) of this Agreement for any reason, (i) NEWCO shall promptly pay
to ILEX any amounts due under the terms of this Agreement including License
Fees and Royalty Fees which have accrued as of the date of termination (ii)
NEWCO agrees to cooperate fully with ILEX or its respective nominee, to
transfer or to hand over to ILEX or its respective nominee, health
registrations and sales registrations regarding the Products in the country or
countries in which termination has occurred and (iii) in the event of
termination with respect to all countries of the Territory, NEWCO shall return
to ILEX all copies of the Information supplied by either hereunder, except that
NEWCO's legal department may retain one copy of the Information for purposes of
determining the scope of its obligations hereunder, and all rights that ILEX
granted NEWCO hereunder shall revert back to ILEX and NEWCO shall grant ILEX a
nonexclusive royalty free license in any improvements to the Know-How or Patent
Rights, including but not limited to any trade secret, patentable improvement
or patent rights.
14.5 Disposition of Product. Upon termination of this Agreement
with respect to all countries of the Territory, NEWCO shall provide ILEX with a
written inventory of all the Products (in the form of raw materials, work-in-
process and finished goods) in its and its sublicensees' possession and shall
have the right to dispose of such Products within six (6) months thereafter,
subject to fulfillment of its royalty obligations relating thereto.
Notwithstanding the foregoing, upon termination of this Agreement in all
countries of the Territory, NEWCO shall promptly return or destroy, at ILEX's
election, any materials supplied by ILEX pursuant to Article 15.
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<PAGE> 16
14.6 Sublicensees Upon Termination. If any party terminates the
Agreement and sublicensees are not then in default under the terms of their
sublicensee agreements hereunder, ILEX shall have the right (but not the
obligation) to assume and continue such sublicense agreements with payments
thereunder being made by the sublicensees directly to ILEX, as the case may be,
without any further obligations on the part of NEWCO with respect thereto.
ARTICLE 15. TRANSFER TO NEWCO
Within the twenty (20) day period following the Effective Date, ILEX
shall make available to NEWCO all of the Technology, and ILEX shall assign to
NEWCO IND 30,692 for the Compound. NEWCO shall acknowledge acceptance of such
assignment to the FDA promptly after it is made by ILEX. Within the twenty
(20) day period following effective date, ILEX shall transfer legal title to
formulated Compound delivered by B.W. Co. pursuant to Article 14.2 of the B.W.
Agreement. ILEX shall supply the formulated Compound "AS IS" and subject to
the limitations of Sections 14.2 and 14.3 of the B.W. Agreement.
ARTICLE 16. ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by NEWCO
without the written consent of ILEX; provided, however, that NEWCO may, without
such consent, assign this Agreement in connection with the transfer or sale of
all or substantially all of its business related to the Products or in the
event of its merger or consolidation with another company. Any purported
assignment in violation of the preceding sentence shall be void. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. No
assignment shall relieve NEWCO of responsibility for the performance of any
accrued obligation which NEWCO then has hereunder.
ARTICLE 17. PATENT MARKING
NEWCO agrees to mark all Products made, used or sold under the terms
of this Agreement, or their containers, in accordance with applicable patent
marking laws.
ARTICLE 18. REGISTRATION OF LICENSES
NEWCO agrees to register or give required notice concerning this
Agreement, through itself or through a sublicensee, in each country of the
Territory where there exists a Valid Claim and an obligation under law to so
register or give notice, to pay all costs and legal fees connected therewith
and shall otherwise comply with all national laws applicable to this Agreement.
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<PAGE> 17
ARTICLE 19. PATENT TERM EXTENSION
NEWCO hereby agrees to cooperate fully with ILEX and its Affiliates in
obtaining an extension of the term of any patent included within the Patent
Rights under the applicable laws of any country including, but not limited to,
the Drug Price Competition and Patent Term Restoration Act of 1984. NEWCO
agrees to execute such documents and to take such additional actions as ILEX or
any of its Affiliates may reasonably request in connection therewith. NEWCO
further agrees promptly (and in any event within seven (7) days) to provide
ILEX with a copy of each product registration certificate, via facsimile, which
NEWCO receives in respect of a Product in any country for purposes of ILEX
seeking such an extension.
ARTICLE 20. B.W. AGREEMENT
Each of the parties agrees to abide by and comply with the terms of
the B.W. Agreement. Any terms of this Agreement that are inconsistent with the
B.W. Agreement or that would be interpreted as a breach by ILEX of the B.W.
Agreement shall be interpreted to comply with the B.W. Agreement.
ARTICLE 21. FORCE MAJEURE
A party shall not be held liable or responsible to another party nor
be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement, other than an
obligation to make a payment, when such failure or delay is caused by or
results from fires, floods, embargoes, government regulations, prohibitions or
interventions, wars, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
ARTICLE 22. SEVERABILITY
Each party hereby expressly agrees and contracts that it is not the
intention of any party to violate any public policy, statutory or common laws,
rules, regulations, treaty or decision of any government agency or executive
body thereof of any country or community or association of countries; that if
any word, sentence, paragraph, clause or combination thereof in this Agreement
is found by a court or executive body with judicial powers having jurisdiction
over this Agreement or any of the parties hereto in a final unappealed order,
to be in violation of any such provisions in any country or community or
association of countries, such words, sentences, paragraphs, clauses or
combination shall be inoperative in such country or community or association of
countries and the remainder of this Agreement shall remain binding upon the
parties hereto.
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ARTICLE 23. NOTICES
Any notice required or permitted to be given hereunder shall be in
writing and shall be deemed to have been properly given if delivered in person,
or if mailed by registered or certified mail (return receipt requested),
postage prepaid, or by facsimile (and promptly confirmed by such registered or
certified mail), to the addresses given below or such other addresses as may be
designated in writing by the parties from time to time during the term of this
Agreement. Any notice sent by registered or certified mail as aforesaid shall
be deemed to have been given when mailed.
In the case of ILEX:
ILEX Oncology Inc.
14785 Omicron Drive
San Antonio, Texas 78245-3217
Attention: President
Facsimile No.: (210) 677-6009
and with a copy to:
Fulbright & Jaworski L.L.P.
Attention: Thomas D. Paul
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Telephone: (713) 651-5151
Facsimile No.: (713) 651-5246
In the case of NEWCO:
MPILEX Partners, L.P
14785 Omicron Dr., Suite 101
San Antonio, Texas 78245
and with a copy to:
MPI Development, Inc.
54943 N. Main St.
Mattawan, Michigan 49071
Attention: J. R. Mitchell, M.D., Ph.D.
Telephone: (616) 668-3336
Facsimile No.: (616) 668-4151
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<PAGE> 19
with a copy to:
Howard & Howard Attorneys, P.C.
Attention: Joseph B. Hemker
The Kalamazoo Building, Suite 402
107 West Michigan Avenue
Kalamazoo, Michigan 49007-3956
Telephone: (616) 382-1483
Facsimile No.: (616) 382-1568
ARTICLE 24. GOVERNING LAW AND ARBITRATION
24.1 Governing Law. This Agreement is to be read and construed in
accordance with and be governed by laws of the State of Texas, exclusive of its
choice of law rules. Each party hereby irrevocably submits to jurisdiction in
the courts of the State of Texas for any dispute that arises under this
Agreement. The parties hereby exclude the application of The Convention for
the International Sale of Goods.
24.2 Alternative Dispute Resolution. All claims, disputes,
controversies and other matters in question arising out of or relating to this
Agreement shall be settled in accordance with the provisions of Appendix III
attached hereto, and judgment may be entered upon the arbitration award in any
court having jurisdiction thereof.
ARTICLE 25. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. The parties hereto may alter any of the
provisions of this Agreement, but only by a written instrument duly executed by
both parties hereto. B.W. Co. and ILEX agree that the Letter Agreement is
hereby terminated.
ARTICLE 26.
COMPLIANCE WITH UNITED STATES OF AMERICA AND FOREIGN LAWS AND STANDARDS
26.1 Marketing Regulations. Each party shall be responsible for
complying with all FDA rules regulations and requirements and with all FDA
equivalent laws, rules, requirements and regulations in the countries outside
the United States covering the marketing and sale of Product.
26.2 Manufacturing Regulations. Each party shall be responsible
for complying with all FDA rules regulations and requirements and with all FDA
equivalent laws, rules, requirements and regulations in the countries outside
the United States covering the manufacture of Product.
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<PAGE> 20
26.3 Export Laws. Each party shall be responsible for compliance
with all laws, rules and regulations covering the exportation or importation of
Product.
26.4 Foreign Corrupt Practices Act.
(i) Agreement. Each party agrees that neither it nor any
of its employees or agents will, directly or indirectly, in connection
with the solicitation of sales or sales of Products to customers:
(a) make any payment to any officer or employee
of any government, or to any political party or official
thereof, where such payment either (1) is unlawful under laws
applicable thereto, or (2) would be unlawful under the Foreign
Corrupt Practices Act of 1977, as amended (the "Act"), of the
United States of America;
(b) make any payment to any person, if such
payment constitutes an illegal bribe, illegal kickback or
other illegal payment under laws applicable thereto; or
(c) commit, directly or indirectly, any other act
or omission in violation of any applicable law, regulation,
rule or custom having the effect of law.
(ii) No Authorization. Neither party nor any of a party's
employees is authorized under this Agreement to engage in any of the
activities described in Section 26.4(i), and each party agrees that no
such activity will be in furtherance of its relationship with the
other party or of the business of the other party. Each party affirms
that neither it nor any of its employees or agents is an official or
an employee of any government.
(iii) Indemnification. In the event a party or its
employees engage in any of the activities described in Section
26.4(i), and if such activities result in any judicial, quasi-judicial
or administrative proceedings involving the other party, or its
employees or agents, the party engaging in such activities will
indemnify the other party and such employees or agents of the other
party, for all expenses, including, but not limited to, attorneys'
fees and expenses of investigation, incurred in the course of such
proceedings.
(iv) Reporting. Each party agrees to report to the other
party any solicitation to engage in any activity described in Section
26.4(i) as soon as possible after it becomes aware of such
solicitation, but in no event more than ten calendar days thereafter.
Each party agrees further to provide all information concerning such
solicitation which the other party may reasonably request.
26.5 Local Law. Each party shall be responsible for compliance
with all local, state, federal and foreign governmental laws, rules,
regulations and requirements for the marketing, sale or other transfer of
Product.
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ARTICLE 27. WAIVER
The failure of a party to enforce at any time for any period any of
the provisions hereof shall not be construed as a waiver of such provisions or
of the rights of such party thereafter to enforce each such provision.
ARTICLE 28. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same document.
ARTICLE 29. CAPTIONS
The captions to the several Articles and Sections hereof are not a
part of this Agreement, but are merely guides or labels to assist in locating
and reading the several Articles and Sections hereof.
[Signatures on next page.]
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IN WITNESS WHEREOF, the parties have executed this License Agreement
as of the Effective Date.
ILEX ONCOLOGY, INC.
By: /s/ Richard L. Love
-----------------------------------------
Richard L. Love, President
MPILEX PARTNERS, L.P.
By: MPILEX Management, L.L.C.
By: /s/ J. R. Mitchell
--------------------------------
J. R. Mitchell, M.D., Ph.D.,
Vice President
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<PAGE> 23
APPENDIX I
B.W. Agreement to be set forth herein.
AI-1
<PAGE> 24
APPENDIX II
Piritrexim isethionate or
2,4-Diamino-6(2,5-dimethoxybenzyl)-5-methylpyrido-(2,3- d)pyrimidine:
has a molecular weight of: 451.50
and the formula: C17H19N5O2oC2H6O4S
AII-1
<PAGE> 25
APPENDIX III
ALTERNATIVE DISPUTE RESOLUTION
All disputes between the Parties relating to this Agreement shall be
settled by the following procedures:
1. NEGOTIATION
1.1 Within thirty (30) days of the incurred acts,
occurrences and/or omissions giving rise to the dispute, the aggrieved party
shall give detailed written notice to the other party of the aggrieved party's
specific complaint including the amount of actual damages and expenses,
including attorneys' fees, claimed or incurred by the aggrieved party. The
aggrieved party shall include copies of all documents which support its claims.
1.2 Within thirty (30) days after receipt of the notice,
the party receiving the notice shall tender to the other party a written
response, including an offer of settlement, if appropriate. Any offer of
settlement not accepted with thirty (30) days of receipt by the aggrieved party
shall be deemed to have been rejected.
1.3 The tender of an offer of settlement is not an
admission of engaging in an unlawful act or practice or of liability.
1.4 In the event the parties are unable to settle their
disputes after following the procedures set forth above, with fifteen (15) days
thereafter, the parties shall submit their disputes to mediation.
2. MEDIATION
2.1 Consent to Mediator. Both parties shall share
equally in the naming of the mediator. The mediator shall act as an advocate
for resolution and shall use his or her best efforts to assist the parties in
reaching a mutually acceptable settlement.
2.2 Conditions Precedent to Serving as Mediator. The
mediator shall not serve as a mediator in any dispute in which he or she has
any financial or personal interest in the result of the mediation. Prior to
accepting an appointment, the mediator shall disclose any circumstance likely
to create a presumption of bias or prevent a prompt meeting with the parties.
In the event that the parties disagree as to whether the mediator shall serve,
the mediator shall not serve.
2.3 Authority of Mediator. The mediator does not have
the authority to decide any issue for the parties, but will attempt to
facilitate the voluntary resolution of the dispute by the parties. The
mediator is authorized to conduct joint and separate meetings with the parties
and to offer suggestions to assist the parties in achieving settlement. If
necessary, the mediator may also obtain expert advice concerning technical
aspects of the
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dispute, provided that the parties agree and assume the expenses of obtaining
such advice. Arrangements for obtaining such advice shall be made by the
mediator or the parties, as the mediator shall determine. Likewise, the
mediator may request the limited production of documents from both parties in
defense of their respective claims. The mediator shall not disclose the
parties in defense of their respective claims. The mediator shall not disclose
the actual documents without the consent of the offering party. However, in
his or her discussions with the respective parties, the mediator will be
permitted to share summary oral information from any such documents.
2.4 Length of Mediation. Mediation proceedings shall not
extend beyond two (2) days, without the consent of the parties.
2.5 Commitment to Participate in Good Faith. The parties
further agree that at any time following the mediation process but prior to the
initiation of binding arbitration, the president or highest ranking senior
level executive of the respective companies shall meet or confer telephonically
in one last effort to resolve the dispute. During each phase of the
alternative dispute evaluation process, the parties agree to act in good faith
to settle the dispute, if possible.
3. ARBITRATION.
3.1 All claims, disputes, controversies and other matters
in question arising out of or relating to the Agreement or to the alleged
breach thereof shall be settled by Negotiation between the parties as described
in Section 1 of this Appendix III or by Mediation between the parties as
described in Section 2 of this Appendix III. If such negotiation and mediation
are unsuccessful, the parties agree to submit to binding arbitration. The
parties agree the arbitration shall be administered by the American Arbitration
Association ("AAA") and conducted in accordance with its Commercial Arbitration
Rules, except as otherwise provided in accordance with procedures set forth in
Sections 3.2 through 3.3 (xiii) of this Appendix III or as the parties may
otherwise agree.
3.2 Notice. Notice of demand for binding arbitration
shall be given in writing to the other party pursuant to the Agreement.
3.3 Binding Arbitration. Upon filing of a notice of
demand for binding arbitration by either party, arbitration shall be commenced
and conducted as follows:
(i) Arbitrator. All claims, disputes,
controversies, and other matters (collectively "matters") in question shall be
referred to and decided and settled by an arbitrator that has been found
acceptable by both Licensor and Licensee. Selection of the arbitrator shall be
made within ten (10) business days after the date of filing of a demand for
arbitration. In the event the parties cannot agree on the selection of the
arbitrator within ten (10) business days of delivery of the written notice
invoking arbitration, the arbitrator shall be selected pursuant to the AAA
Commercial Arbitration Rules.
(ii) Cost of Arbitration. The cost of arbitration
proceedings, including without limitation the arbitrator's compensation and
expenses, hearing room
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charges, court reporter transcript charges etc., shall be borne by the parties
equally or otherwise as the arbitrator may determine. The arbitrator may award
the prevailing party its reasonable attorneys' fees and costs incurred in
connection with the arbitration. The arbitrator is specifically instructed to
award attorneys' fees for instances of abuse in the discovery process.
(iii) Location of Proceedings. The arbitration
proceedings shall be held in San Antonio, Texas, unless the parties agree
otherwise.
(iv) Pre-hearing Discovery. The parties shall
have the right to conduct and enforce pre- hearing discovery in accordance with
the then current Federal Rules of Civil Procedure, subject to these
limitations:
(a) Each party may serve no more than one set of
interrogatories limited to fifty items;
(b) Each party may depose the other party's expert
witnesses who will be called to testify at the hearing, plus
two fact witnesses without regard to whether they will be
called to testify (each party will be entitled to a total of
nor more than 24 hours of depositions of the other party's
witnesses), provided however, that the arbitrator may provide
for additional depositions upon showing of good cause; and
(c) Document discovery and other discovery shall be
under the control of and enforceable by the arbitrator.
(v) Discovery disputes. All discovery disputes
shall be decided by the arbitrator. The arbitrator is empowered;
(a) to issue subpoenas to compel pre-hearing
document or deposition discovery;
(b) to enforce the discovery rights and obligations
of the parties; and
(c) to otherwise control the scheduling and conduct
of the proceedings.
Notwithstanding any contrary foregoing provisions, the arbitrator
shall have the power and authority to, and to the fullest extent practicable
shall, abbreviate arbitration discovery in a manner which is fair to all
parties in order to expedite the conclusion of each alternative dispute
resolution proceeding.
(vi) Pre-hearing Conference. Within fifteen (15)
days after selection of the arbitrator or as soon thereafter as is mutually
convenient to the arbitrator, the arbitrator shall hold a pre-hearing
conference to establish schedules for completion of discovery, for exchange of
exhibit and witness lists, for arbitration briefs, for the hearing, and to
decide procedural matters and all other questions that may be presented.
(vii) Hearing Procedures. The hearing shall be
conducted to preserve its privacy and to allow reasonable procedural due
process. Rules of evidence need not be strictly followed, and the hearing
shall be streamlined as follows:
(a) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
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(b) Expert reports, witness biographies,
depositions, and affidavits may be utilized, subject to the
opponent's right of a live cross-examination of the witness in
person;
(c) Charts, graphs, and summaries shall be utilized
to present voluminous data, provided (i) that the underlying
data was made available to the opposing party thirty (30) days
prior to the hearing, and (ii) that the preparer of each
chart, graph, or summary is available for explanation and live
cross-examination in person;
(d) The hearing should be held on consecutive
business days without interruption to the maximum extent
practicable; and
(e) The arbitrator shall establish all other
procedural rules for the conduct of the arbitration in
accordance with the rules of arbitration of the Center for
Public Resources.
(viii) Governing Law. This arbitration provision
shall be governed by, and all rights and obligations specifically enforceable
under and pursuant to, the Federal Arbitration Act (9 U.S.C. Section 1, et
seq.). All disputes under this Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware. No conflict-of-laws rule or
law that might refer such construction or interpretation to the laws of another
jurisdiction shall be considered.
(ix) Consolidation. No arbitration shall include,
by consolidation, joinder, or in any other manner, any additional person not a
party to the Agreement, except by written consent of both parties containing a
specific reference to this Agreement.
(x) Award. The arbitrator is empowered to render
an award of general compensatory damages and equitable relief (including,
without limitations, injunctive relief), but is not empowered to award
exemplary, special or punitive damages. The award rendered by the arbitrator
(1) shall be final; (2) shall not constitute a basis for collateral estoppel as
to any issue; and (3) shall not be subject to vacation or modification.
(xi) Waiver of Any Right to Punitive or Exemplary
Damages. All persons subject to the Agreement expressly agree to WAIVE ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES of any kind, whether this right
or claim could accrue NOW OR IN THE FUTURE under applicable law. However, in
the event a court determines that the express waiver set forth in Section 3(xi)
of this Appendix III is unenforceable, then the arbitrator, and not a court,
shall determine if punitive or exemplary damages should be awarded and, if
awarded, the amount thereof.
(xii) Confidentiality. The parties hereto will
maintain the substance of any proceedings hereunder in confidence and the
arbitrator, prior to any proceedings hereunder, will sign an agreement whereby
the arbitrator agrees to keep the substance of any proceedings hereunder in
confidence.
(xiii) Severability. In the event any court or
other tribunal concludes any portion of this Appendix III to be void or
otherwise unenforceable for any reason, the
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remainder of this Appendix III shall survive and is deemed severable, such that
the parties' express purpose to arbitrate any unresolved Controversy shall be
recognized and given effect.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of the
headnote to our report (and to all references to our firm) included in or made a
part of this Registration Statement.
ARTHUR ANDERSEN LLP
San Antonio, Texas
December 11, 1996
