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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
July 8, 1998
Date of Report (Date of earliest event reported)
UROGEN CORP.
(Exact name of registrant as specified in its charter)
Delaware 0-27264 33-0687976
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
10835 Altman Row, Suite A
San Diego, California 92121
(Address of principal executive offices)
(619) 450-5949
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On July 8, 1998, UroGen Corp., a Delaware corporation, ("UroGen")
purchased, leased and licensed certain tangible property, intellectual
property, and other assets of Baxter Healthcare, Inc. ("Baxter"), a Delaware
corporation (the "Acquisition"), for a total purchase price, payable in UroGen
stock, of approximately $6,712,316.63, based upon the closing price of
UroGen's stock on July 8, 1998. In addition, upon the occurrence of certain
events UroGen will acquire certain other assets from Baxter for additional
stock. The aggregate amount of UroGen stock to be issued is expected to
represent 19% of the total voting power in UroGen on a preconverted basis and
50% of the total outstanding stock on a fully converted basis.
Under the terms of the agreement, UroGen obtained exclusive rights to
Baxter's adenoviral-based gene transfer technologies in exchange for 5,444
shares of non-voting Series A Convertible Preferred Stock and 133,900 shares of
Common Stock. Each share of the Series A Preferred is convertible into 1,000
shares of UroGen Common Stock. UroGen will also acquire, for an additional
1,768,319 shares of Common Stock and 325 shares of Series A Convertible
Preferred Stock, certain fixed assets used in Baxter's gene therapy program.
Baxter will provide funding to UroGen for continued research and
development of the acquired technology in the form of loans under an unsecured
line of credit under which UroGen will issue additional Convertible Preferred
Stock on an annual basis. Baxter also will have exclusive worldwide rights to
sell, market and distribute products that are developed, using this technology,
for blood clotting disorders. A team of scientists involved in the project will
join UroGen and relocate to San Diego. A Baxter representative will join the
UroGen board of directors.
In a related transaction UroGen sold $1,030,000 of unsecured convertible
notes to various private investors. Such notes are convertible into Common
Stock at a price of $1.00 per share. The Company also issued warrants to
purchase 515,000 shares of Common Stock to those investors, exercisable at 74c
per share.
A copy of the Asset Purchase Agreement, the Amendment to Asset
Purchase Agreement, and related agreements are filed as exhibits to this report
and are incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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The following financial statements and exhibits are filed as part of
this report, where indicated.
(a) Financial statements of business acquired, prepared pursuant to Rule
3.05 of Regulation S-X:
Not applicable.
(b) Pro forma financial information required pursuant to Article 11 of
Regulation S-X:
Not applicable.
(c) Exhibits in accordance with Item 601 of Regulation S-K:
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Exhibits.
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2.1 Asset Purchase Agreement, dated as of February 28, 1998, between
UroGen Corp., a Delaware corporation ("UroGen") and Baxter
Healthcare Corporation, a Delaware corporation ("Baxter").
2.2 Amendment to Asset Purchase Agreement, dated as of May 27, 1998,
between UroGen and Baxter.
2.3 Distribution Agreement, dated July 8, 1998, by and among UroGen
Corp. and Baxter.
2.4 Investor Rights Agreement, dated July 8, 1998, between UroGen
and Baxter.
2.5 Credit Agreement, dated July 8, 1998, between UroGen and Baxter.
2.6 Developmental Collaboration Agreement, dated July 8, 1998,
between UroGen and Baxter.
2.7 Technology License Agreement, dated July 8, 1998, between UroGen
and Baxter.
4.1 Certificate of Designation of Preferences and Rights of Series A
Preferred Stock of UroGen.
4.2 Certificate of Designation of Preferences and Rights of Series B
Preferred Stock of UroGen.
4.3 Certificate of Designation of Preferences and Rights of Series C
Preferred Stock of UroGen.
The Registrant agrees to supplementally furnish the Securities and
Exchange Commission with a copy of any other exhibits or schedules
upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UROGEN CORP.
Dated: July 23, 1998 By: /s/ Paul Quadros
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Paul Quadros
Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER
2.1 Asset Purchase Agreement, dated as of February 28, 1998, between
UroGen Corp., a Delaware corporation ("UroGen") and Baxter
Healthcare Corporation, a Delaware corporation ("Baxter").
2.2 Amendment to Asset Purchase Agreement, dated as of May 27, 1998,
between UroGen and Baxter.
2.3 Distribution Agreement, dated July 8, 1998, by and among UroGen
Corp. and Baxter.
2.4 Investor Rights Agreement, dated July 8, 1998, between UroGen
and Baxter.
2.5 Credit Agreement, dated July 8, 1998, between UroGen and Baxter.
2.6 Developmental Collaboration Agreement, dated July 8, 1998, between
UroGen and Baxter.
2.7 Technology License Agreement, dated July 8, 1998, between UroGen
and Baxter.
4.1 Certificate of Designation of Preferences and Rights of Series A
Preferred Stock of UroGen.
4.2 Certificate of Designation of Preferences and Rights of Series B
Preferred Stock of UroGen.
4.3 Certificate of Designation of Preferences and Rights of Series C
Preferred Stock of UroGen.
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
BAXTER HEALTHCARE CORPORATION
and
UROGEN CORP.
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT ("Agreement"), made this 28th day of February,
1998, by and between BAXTER HEALTHCARE CORPORATION, a Delaware corporation with
offices at 1627 Lake Cook Road, Deerfield, Illinois 60015 (the "Seller"), and
UROGEN CORP., a Delaware corporation with offices at 10835 Altman Row, Suite A,
San Diego, California, 92121 ("Buyer").
RECITALS
WHEREAS, the Seller currently operates a business segment known as the
Molecular Biology Unit of its Biotech Business Group (the "Unit");
WHEREAS, the business in which the Unit is engaged includes the research
and development of the Mini-Ad Vector Technology (as hereinafter defined);
WHEREAS, the Buyer desires to purchase from Seller, and the Seller desires
to sell to Buyer, the Mini-Ad Vector Technology, together with certain other
property related to the research, development, manufacture, use and sale of
products utilizing the Mini-Ad Vector Technology, on and subject to the terms
and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained, the parties agree as follows:
TERMS
1. Definitions and Interpretation.
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1.1 Definitions. Capitalized terms used herein shall have the following
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meanings:
"Actions" shall mean claims, actions, suits, audits, proceedings or
investigations, whether at law, in equity or admiralty, and whether or not
before any Tribunal or any Authority.
"Affiliate" shall mean, with respect to any party, any entity (i) which
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, the party or (ii) fifty percent
(50%) or more of the voting capital stock (or in the case of an entity which is
not a corporation, fifty percent (50%) or more of the equity interest) of which
is beneficially owned or held by a party or any of such party's Subsidiaries.
"Assets" shall refer to the following assets and properties owned by the
Seller and used, held or arising in connection with the business of the Unit
relating to the Mini-Ad Vector Technology:
a. all Intellectual Property Rights which exclusively relate to the Mini-
Ad Vector Technology, including but not limited to those described on
Schedules 3.7(A), (B), (C) and (D) attached hereto;
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b. all goodwill relating exclusively to the Mini-Ad Vector Technology;
c. (i) any inventions which may have been made and in which Seller owns
rights pursuant to the Clinical Studies Agreement between McMaster
University and Seller dated April 4, 1996; and (ii) any inventions
relating to adenoviral vector which may have been made or which are
made in the future, and in which Seller owns rights pursuant to the
July 1, 1996 agreement between Seller and the Chinese Academy of
Military Medical Services.
d. all furniture, supplies, tools, machinery, equipment and materials
listed on Schedule 1.1(A), attached hereto;
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e. all quantities of finished goods inventory of Mini-Ad Vector Products
("Included Inventory") existing on the Closing Date;
f. all right, title and interest of the Seller in or with respect to the
contracts and agreements listed on Schedule 1.1(B) attached hereto
(the "Included Agreements");
g. all books and records including, without limitation, laboratory
notebooks, operating manuals, procedures manuals, drawings and
specifications relating exclusively to the Mini-Ad Vector Technology;
h. to the extent such transfer or assignment is permitted by applicable
law, rule or regulation, all of (i) the foreign marketing and clinical
authorizations, clearances and approvals set forth on Schedule 3.4(A),
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and (ii) the FDA Submissions set forth on Schedule 3.4(B), and with
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respect to each of (i) and (ii) which solely relate to Mini-Ad Vector
Technology and/or Mini-Ad Vector Products;
i. all of Seller's right, title and interest in any existing or future
claims or causes of action against suppliers or vendors of Included
Inventory or any other Assets;
j. all of Seller's rights, title and interest to any prepayments or
deposits in connection with the Assets; and
k. the biologics listed on Schedule 1.1(C) attached hereto (the
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"Biologics").
The Assets described in items a, b and c above are hereinafter referred to from
time to time as the "Intellectual Property Assets". The Assets described in
items d through k above, inclusive, are hereinafter referred to from time to
time as the "Other Assets". Notwithstanding any other terms or provisions of
this Agreement to the contrary, the defined term "Assets" shall not include any
of the following:
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i. any cash or cash equivalents;
ii. the agreements listed on Schedule 1.1(D) attached hereto
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(collectively, the "Excluded Agreements");
iii. any real property;
iv. any of the Intellectual Property listed on Schedule 1.1(E) attached
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hereto, any Intellectual Property Rights that are the subject of the
Seller License Agreement, and any Shrinkwrap Software;
v. any books or records not relating exclusively to the Mini-Ad Vector
Technology or the Assets (provided, however, that upon the Buyer's
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request the Seller shall provide to Buyer copies of Seller's books and
records which relate, but not exclusively, to the Mini-Ad Vector
Technology or the Assets, redacted to exclude information which does
not relate to the Mini-Ad Vector Technology or the Assets); or
vi. any accounts receivable.
"Assigned Contracts" shall have the meaning assigned thereto in the
definition of "Assumed Liabilities".
"Assumed Liabilities" shall mean liabilities and obligations of the Seller,
other than accounts payable and Excepted Obligations, under any Included
Agreements of the Seller which (a) are validly and effectively assigned to the
Buyer under this Agreement and (b) conform to the representations and warranties
with respect thereto contained in this Agreement (the "Assigned Contracts"),
subject to the following: (i) in the case of rental payments under leases of
personal property, only to the extent that such rental payments relate to
periods after the Closing Date and (ii) in the case of all other obligations
under the Assigned Contracts, only to the extent that the obligation (including
payment) is by its terms first to be performed after the Closing Date.
"Authority" shall mean any Federal, state, municipal, foreign or other
government or governmental department, commission, board, bureau, agency or
instrumentality.
"Business Day" shall mean any day other than (a) a Saturday or Sunday or
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(b) a day on which commercial banks in California are authorized or required by
law to close.
"Buyer" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Buyer Common Stock" shall mean the common stock of the Buyer, $.001 par
value per share.
"Buyer's Counsel's Opinion" shall mean the opinion of Buyer's legal
counsel, Wilson, Sonsini, Goodrich & Rosati, with respect to this Agreement,
the other Transaction Documents, and
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the transactions contemplated hereby and thereby, the form and content of which
shall be negotiated after the execution and delivery hereof and prior to the
Closing.
"Buyer Liabilities" shall have the meaning assigned thereto in Section
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2.4(C).
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"Buyer Preferred Stock" shall mean Series B and Series C Convertible
Preferred Stock of Buyer, par value $.001, having rights, preferences and
designations (including a per share liquidation value of $1,000 as set forth on
Exhibit A to this Agreement.
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"Closing Date" shall have the meaning assigned thereto in Section 2.5.
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"Closing" shall have the meaning assigned thereto in Section 2.5.
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"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contaminants" shall mean any material, pollutant, substance or waste which
is defined in, regulated by, or subject to any Environmental Law, including
asbestos and asbestos containing materials.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of an entity
(other than a natural person), whether through the ownership of voting capital
stock, by contract or otherwise.
"Copyrights" shall mean United States and foreign copyrights, whether
registered or unregistered.
"Credit Agreement" shall mean an annual equity line of credit agreement
between the Buyer and the Seller and dated as of the Closing Date, the
provisions of which shall be negotiated by the parties after the execution and
delivery hereof and prior to the Closing.
"Customized Software" shall mean all Software owned by or licensed to the
Seller and used by the Seller exclusively in connection with the Mini-Ad Vector
Technology, other than Shrinkwrap Software.
"Development Agreement" shall mean a development agreement between the
Buyer and the Seller and dated as of the Closing Date, the provisions of which
shall be negotiated by the parties after the execution and delivery hereof and
prior to the Closing, which shall contain (at a minimum) the terms and
conditions set forth in Exhibit B attached to this Agreement.
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"Distribution Agreement" shall mean a distribution agreement between the
Buyer and the Seller and dated as of the Closing Date, the provisions of which
shall be negotiated by the parties after the execution and delivery hereof and
prior to the Closing, which shall contain (at a minimum) the terms and
conditions set forth in Exhibit C attached to this Agreement.
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"Encumbrance" shall mean any lien, charge, security interest, encumbrance
or claim, whether legal or equitable.
"Environmental Laws" shall mean any and all laws, statutes, codes, rules,
regulations, ordinances, orders, writs, decrees and injunctions of any Authority
relating to the protection or pollution of the environment, or community health
and safety, including the Comprehensive Environmental Response Compensation and
Liability Act, as amended, the Federal Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act and the Hazardous and Solid Waste
Amendments, the Clean Air Act, the Clean Water Act, the Toxic Substances Control
Act, the Safe Drinking Water Act and any similar or analogous statutes,
regulations and decisional law of any Authority.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Benefit Plans" shall mean any (i) "employee pension benefit plan"
(as such term is defined in Section 3(2) of ERISA), (ii) "multiemployer plan"
(as such term is defined in Section 3(37) of ERISA), or (iii) "welfare benefit
plan" (as such term is defined in Section 3(1) of ERISA).
"Excepted Obligations" shall mean:
(a) any debt, liability or obligation arising from any breach of any
covenant, representation or warranty in any Assigned Contract arising prior to
the Closing;
(b) any debt, liability or obligation arising from any action,
circumstance or omission, occurring or existing on or prior to the Closing Date,
which (with or without notice, the passage of time or both) is, or would become,
a breach of any Assigned Contract on the part of the Seller; and
(c) any debt, liability or obligation arising under any Assigned
Contract as to which the Seller shall already have received any payment or other
consideration, to the extent of fair value of such payment or other
consideration.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"FDA" shall mean the U.S. Food and Drug Administration.
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"Fully Loaded Cost" shall mean for either party, such party's cost of
manufacturing, performing or acquiring any items or services, in accordance with
GAAP and, with respect to each party, in accordance with such party's normal
accounting policies, all consistently applied.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, applied on a consistent basis.
"Included Agreements" shall have the meaning assigned thereto in the
definition of "Assets".
"Indemnified Party" shall have the meaning assigned thereto in Section
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8.2(F).
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"Indemnifying Party" shall have the meaning assigned thereto in Section
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8.2(F).
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"Information" shall mean confidential ideas, trade secrets, technology,
know-how, inventions (whether or not patentable) and improvements thereto,
concepts, methods, processes, formulae, reports, data, customer lists, mailing
lists, business plans, or other proprietary information.
"Intellectual Property" shall mean Copyrights, Patents, Trademarks,
Information and Software.
"Intellectual Property Right" shall mean any right possessed by any person
or entity which arises as a result of his or its ownership, license or use of,
or of any application for, or application for registration of, any Intellectual
Property.
"Investment Agreement" shall mean an investment agreement between the Buyer
and the Seller and dated as of the Closing Date, the provisions of which shall
be negotiated by the parties after the execution and delivery hereof and prior
to the Closing, which shall contain (at a minimum) the terms and conditions set
forth in Exhibit D attached to this Agreement.
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"Licenses" shall mean licenses, authorizations, authorities, approvals,
permits and certificates.
"Losses" shall mean liabilities, claims, losses, costs, damages, and
expenses (including reasonable attorneys' fees and expenses), whether incurred
in connection with a claim, controversy or dispute between the parties hereto or
between a party hereto and one or more third parties.
"Material Adverse Effect", with respect to the Seller or the Buyer, means a
material adverse effect, or the occurrence or existence of facts or
circumstances that would reasonably be expected to result in a material adverse
effect, on the business, assets, liabilities, results of operations, properties,
financial or operating condition of (i) the Unit, in the case of the Seller, and
(ii) Buyer
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and its subsidiaries taken as a whole, in the case of Buyer, or on the ability
of any such Person (and to the extent applicable, its subsidiaries) to
consummate the transactions contemplated hereunder.
"Mini-Ad Vector Technology" shall mean technology developed by Seller and
relating to adenoviral vectors for gene therapy.
"Mini-Ad Vector Products" shall mean all products which utilize the Mini-Ad
Vector Technology.
"Non-Assumed Liabilities" shall have the meaning assigned thereto in
Section 2.4(A).
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"Non-ERISA Plans" shall mean, in respect of any Person, each and every (i)
employee collective bargaining agreement, employment agreement (other than
employment agreements terminable by such Person without premium or penalty on
notice of 30 days or less under which the only monetary obligation of such
person is to make current wage or salary payments and provide current fringe
benefits), consulting, advisory or service agreement (as to the latter three,
where such person is the recipient of the services); deferred compensation
agreement, confidentiality agreement or covenant not to compete (other than
confidentiality agreements and covenants not to compete contained in agreements
which are required to be disclosed by such Person hereunder), (ii) contract or
agreement with any officer, director or employee (other than employment
agreements disclosed in response to clause (i) or excluded from the scope of
clause (i)), agent, or attorney-in-fact of such Person; or (iii) stock option,
stock purchase, bonus or other incentive plan or agreement.
"Orders" shall mean any order, writ, injunction or decree of any Tribunal
or Authority.
"Patents" shall mean United States and foreign patents, continuations,
continuations-in-part, divisions, reissues, reexaminations, extensions and
disclosures.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, (c) liens on deposits or pledges to secure
obligations under workmen's compensation, social security or similar laws and
(d) other liens, encumbrance(s) or imperfections on property which are not
material in amount or do not materially detract from the value of or materially
impair the existing use of the property affected by such lien, encumbrance(s) or
imperfection.
"Person" shall mean any individual, corporation, partnership, limited
partnership, limited liability partnership, joint venture, limited liability
company, association, joint-stock company, trust, unincorporated organization,
Authority or other entity.
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"PTO" shall mean the United States Patent and Trademark Office.
"Purchase Consideration" shall have the meaning assigned thereto in Section
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2.2.
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"Registration Rights Agreement" shall mean a registration rights agreement
between the Buyer and the Seller and dated as of the Closing Date, the
provisions of which shall be negotiated by the parties after the execution and
delivery hereof and prior to the Closing, which shall contain (at a minimum) the
terms and conditions set forth in Exhibit E attached to this Agreement.
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"Representatives" shall mean, with respect to any Person, such Person's
officers, directors, employees, independent contractors, agents and
representatives.
"Round Lake Facility" shall mean the facility, located at WG 2 3S Route 120
& Wilson Road, Round Lake, Illinois, in which the Unit currently conducts
certain of its operations.
"Royalty Agreement" shall mean a royalty agreement between the Buyer and
the Seller and dated as of the Closing Date, the provisions of which shall be
negotiated by the parties after the execution and delivery hereof and prior to
the Closing.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Reports" shall mean all forms, reports and documents required to be
filed with the SEC pursuant to the Securities Act or the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Security Agreement" shall mean an agreement between Buyer, as grantor, and
Seller, as grantee, to be negotiated after the execution and delivery hereof and
prior to the Closing, pursuant to which the Buyer shall grant to Seller a first
priority security interest in the Intellectual Property Assets for a period
beginning on the Closing Date and ending twenty four (24) months following the
Closing Date.
"Seller" shall have the meaning assigned thereto in the Preamble to this
Agreement.
"Seller License Agreement" shall mean a license agreement between the Buyer
and the Seller, to be negotiated after the execution and delivery hereof, and
prior to the Closing, relating to the non-exclusive licensing by Seller to Buyer
of certain Intellectual Property Rights of Seller (other than the Assets)
existing as of the Closing Date which shall be required by Buyer as currently
utilized by the Unit to research and develop the Mini-Ad Vector Technology and
to make, use and sell the Mini-Ad Vector Products, subject to existing licenses
and agreements by which Seller may be bound.
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"Services Agreement" shall mean an agreement between the Buyer and the
Seller, to be negotiated after the execution and delivery hereof and prior to
the Closing, relating to manufacturing, regulatory and other support services
(other than those covered by the other Transaction Documents) which shall
provide, among other terms to be mutually agreed by the parties, for the Seller
to provide to the Buyer, at its Fully Loaded Cost, certain of such services of
the type which are now rendered by the Seller in respect of the Unit, for a
specified period following the Closing.
"Seyfarth Opinion" shall mean the opinion of Seyfarth, Shaw, Fairweather &
Geraldson, counsel to the Seller, with respect to this Agreement, the other
Transaction Documents, and the transactions contemplated hereby and thereby, the
form and content of which shall be negotiated after the execution and delivery
hereof and prior to the Closing.
"Shrinkwrap Software" shall mean all Software that is available in consumer
retail stores and subject to form shrinkwrap license agreements.
"Software" shall mean computer software programs and software systems,
including, without limitation, all database applications, compilations, tool
sets, compilers, higher level or "proprietary" languages, related documentation
and materials, whether in source code, object code or human readable form.
"Stockholders' Agreement" shall mean a stockholders' agreement by and among
the Seller, the Buyer and certain of the Buyer's stockholders, dated as of the
Closing Date, the provisions of which shall be negotiated by the parties after
the execution and delivery hereof and prior to the Closing, which shall contain
(at a minimum) the terms and conditions set forth in Exhibit F attached to this
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Agreement.
"Subsidiary" shall mean, as to any party, any corporation of which more
than 50% of the outstanding capital stock having ordinary voting power to elect
a majority of the board of directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by the party, by
one or more of its subsidiaries, or by the party and one or more of its
subsidiaries.
"Taxes" shall mean all taxes, including all Federal, state, local, foreign
and other income, franchise, sales, use, property, payroll, stamp, withholding,
environmental, alternative or add-on minimum and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever, and all estimated taxes, deficiency assessments, additions to tax,
penalties and interest, and any contractual or other obligation to indemnity or
reimburse any person with respect to any such assessment.
"Tax Return" shall mean, in respect of any Person, any report, statement,
return, declaration of estimated Tax or other information required to be
supplied by or on behalf of such Person to a Tax Authority in connection with
Taxes, or with respect to grants of Tax exemption, including any
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consolidated, combined, unitary, joint or other return filed by any person that
properly includes the income, deductions or other Tax information concerning
such Person.
"Third Party Claim" shall mean, in respect of any party hereto, any claim,
or the commencement, or possible commencement, of any Action with respect to
which indemnification is or is reasonably likely to be claimed by such party
pursuant to Section 8.
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"Trademarks" shall mean United States, state and foreign trademarks,
service marks, logos, trade dress and trade names, whether registered or
unregistered.
"Transaction Documents" shall mean the following:
(i) the Distribution Agreement,
(ii) the Registration Rights Agreement,
(iii) the Stockholders' Agreement,
(iv) the Credit Agreement,
(v) the Development Agreement,
(vi) the Seller License Agreement,
(vii) the Services Agreement,
(viii) the Royalty Agreement,
(ix) the Investment Agreement,
(x) the Security Agreement,
(xi) and each of the other agreements, documents and instruments
being, or to be, executed in connection with the transactions
contemplated hereunder.
"Transactional Taxes" shall mean all sales, use, transfer, conveyance, bulk
transfer, business and occupation, value added or other such Taxes, duties,
excises or governmental charges imposed by any taxing jurisdiction.
"Tribunal" shall mean any domestic or foreign court, arbitration board or
other tribunal.
"Unit" shall have the meaning assigned thereto in the Preamble to this
Agreement.
1.2 Interpretation.
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(A) In respect of any of the Seller or the Buyer, the terms "to the
knowledge of" such Person and "awareness of" such party, and variations thereof,
shall be deemed to refer to the actual knowledge and/or awareness (without any
requirement of inquiry) of the Relevant Persons of such Party. In respect of the
Seller, the term "Relevant Persons" shall be deemed to refer to (i) Victor W.
Schmitt, Cynthia L. Collins, Wei-Wei Zhang, MD, Ph.D., Sarah E. Bates, and
William Kritchevsky and (ii) any other person who, prior to the Closing Date,
shall succeed to the position or office now held by any of the foregoing persons
in (i). In respect of the Buyer, the term "Relevant Persons" shall be deemed to
refer to (i) Ivor Royston, Paul Quadros, Robert Sobol, and (ii) any other
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person who, prior to the Closing Date, shall succeed to the position or office
now held by any of the foregoing persons in (i).
(B) Whenever in this Agreement the phrase "in the ordinary course of
business" is used, it shall be construed as meaning "in the ordinary course of
business and substantially consistent with prior practice."
(C) Whenever in this Agreement the term "including" is used, it shall
be construed as meaning "including but not limited to."
(D) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP in effect at the Closing.
(E) Whenever in this Agreement the term "agreement" is used, it shall
be deemed to refer to commitments, leases, licenses, contracts and agreements.
(F) Whenever in this Agreement the term "party to" is used in regard
to an agreement, it shall be construed as meaning "party to or bound by".
(G) Whenever in this Agreement the singular is used, it shall include
the plural if the context so requires, and whenever the masculine gender is used
in this Agreement, it shall be construed as if the masculine, feminine or neuter
gender, respectively, has been used where the context so dictates, with the rest
of the sentence being construed as if the grammatical and terminological changes
thereby rendered necessary have been made.
2. Purchase and Sale of the Assets; Closing.
----------------------------------------
2.1 Purchase and Sale. In reliance on the representations and warranties
-----------------
contained herein and subject to all of the terms and conditions hereof, the
Seller hereby agrees to sell, assign, transfer and deliver (or cause to be sold,
assigned, transferred and delivered) to the Buyer, and the Buyer agrees to
purchase from the Seller, on the Closing Date, all of the Seller's right, title
and interest in and to the Assets. With respect to the immediately preceding
sentence only, the phrase "Seller's right, title and interest in and to the
Assets" shall, with respect to the Intellectual Property Assets, include the
right, title and interest of Seller's parent corporation, Baxter International
Inc., in and to the Intellectual Property Assets. Subject to the Distribution
Agreement, Seller shall hold the tangible Assets at the Round Lake Facility for
a period not to exceed six months from the date of Closing on behalf of Buyer
until Buyer directs Seller in writing to deliver such tangible Assets to Buyer
in California ("Buyer's Notice of Delivery"). Buyer's Notice of Delivery shall
specify the method of delivery and destination, and the Assets will be delivered
by Seller FOB the Round Lake Facility per Buyer's Notice of Delivery. Until the
tangible Assets are delivered to Buyer as provided for in this Section 2.1, the
Seller shall be responsible for storing and maintaining the tangible assets in
good working order, with any extraordinary costs of maintenance subject to the
pre-approval of Buyer, and the Buyer shall reimburse the Seller for the Seller's
Fully Loaded Costs for such storage and
11
<PAGE>
maintenance. Buyer and Seller shall bear equally the costs for de-installing,
packing and shipping the tangible Assets to Buyer.
2.2 Purchase Consideration. In consideration of the sale, assignment and
----------------------
transfer of the Assets pursuant to Section 2.1 hereof, Buyer agrees to issue to
-----------
the Seller Seven Million Five Hundred Forty-Three Thousand Four Hundred Thirty
(7,543,430) shares of Buyer Common Stock, or such greater number of shares of
Buyer Common Stock such that immediately following the Closing Seller will hold
fifty percent (50%) of the outstanding shares of Buyer Common Stock ("Common
Stock Consideration"), which percentage may be adjusted downward for any equity
investment in Buyer prior to the Closing; provided, however, that Seller shall
-------- -------
have previously approved, in its sole discretion, any such equity investment.
2.3 Payment. At the Closing provided for in Section 2.5 hereof, the Buyer
------- -----------
shall deliver to the Seller certificates representing the Common Stock
Consideration and such certificates shall bear the legends set forth in the
Registration Rights Agreement and/or the Stockholders Agreement.
2.4 Liabilities.
-----------
(A) Liabilities Not Assumed. Except as specifically provided in
-----------------------
Section 2.4(B), the Buyer neither assumes nor shall be obligated to pay, perform
- --------------
or discharge, and the Seller hereby agrees to pay, perform, discharge or
otherwise satisfy in due course and to hold the Buyer harmless from, any and all
debts, liabilities and obligations of the Seller, whether known or unknown,
fixed, contingent or otherwise, including, without limitation, all Taxes and
liabilities under Environmental Laws relating to or arising from any Seller
operations and/or the Assets up to and including the Closing Date (all such non-
assumed liabilities being hereinafter collectively referred to as the "Non-
Assumed Liabilities").
(B) Assumed Liabilities. In addition to the consideration payable
-------------------
pursuant to Section 2.2 hereof, and subject to the terms and conditions set
-----------
forth in this Agreement, effective as of the Closing Date, the Buyer hereby
assumes only the Assumed Liabilities.
(C) Buyer Liabilities. The Seller shall have no liability for any
-----------------
obligations of the Buyer that are incurred or arise after the Closing Date
("Buyer Liabilities") except to the extent (i) otherwise provided in this
Agreement or any Transaction Document or (ii) that any such liability arises
from a wrongful act or omission on the part of the Seller, any Affiliate of
Seller or any Representative of any of the foregoing.
2.5 Closing. The closing of the purchase and sale of the Assets hereunder
-------
(the "Closing") shall be held at the offices of the Buyer, as promptly as
reasonably practicable following the date on which the last of the conditions
set forth in Section 6 has been satisfied or waived in accordance with the terms
---------
of this Agreement, or on such other date, and at such other time and place, as
the Seller and the Buyer shall mutually agree in writing (the day of occurrence
of the Closing being referred to hereinafter as the "Closing Date").
12
<PAGE>
3. Representations and Warranties of the Seller. The Seller represents and
---------------------------------------------
warrants to the Buyer as of the date hereof, and as of the Closing Date, as
follows:
3.1 Good Standing. The Seller is a corporation organized, validly existing
-------------
and in good standing under the laws of the State of Delaware, and with respect
to the Mini-Ad Vector Technology and the Assets, has all necessary corporate
power and authority to own, lease and operate its properties and to carry on its
business as the same is now being conducted. True, accurate and complete copies
of the Certificate of Incorporation and By-Laws of the Seller have been provided
to the Buyer.
3.2 Authority. Subject to the approval of Seller's Board of Directors, the
---------
Seller possesses full right, corporate power and legal authority to execute and
deliver this Agreement and the Transaction Documents to which the Seller is a
party and to perform each of the agreements and make each of the representations
and warranties on its part to be performed and made hereunder and thereunder.
Subject to the approval of Seller's Board of Directors, the execution and
delivery of this Agreement and the Transaction Documents to which the Seller is
a party and the consummation by it of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of the Seller. This Agreement has been duly and validly executed by
the Seller and constitutes, and the Transaction Documents (upon and subject to
their execution and delivery by all parties thereto) shall constitute, the
legal, valid and binding obligations of the Seller enforceable against it in
accordance with their terms subject to the qualification that the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws, now or hereafter in effect,
affecting creditors' rights and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding for the enforcement thereof may be brought.
Except as set forth on Schedule 3.2, the execution and delivery of this
------------
Agreement and the Transaction Documents to which the Seller is a party and the
performance by it of all of the transactions contemplated herein and therein do
not and shall not (with or without the giving of notice or the passage of time
or both) (A) violate or conflict with the Certificate of Incorporation or By-
laws of the Seller, or (B) (1) violate or conflict with any law, rule, ruling,
determination, ordinance or regulation of any Authority or any condition or
provision of, (2) result in the creation or imposition of any Encumbrance upon
any of the Assets of the Seller pursuant to, (3) accelerate or create, or permit
the acceleration or creation of, any liability or obligation of the Seller
under, or (4) cause a termination under or give rise to a right of termination
under, the terms of, any contract, mortgage, lien, lease, agreement, indenture,
trust, instrument, order, judgment or decree to which the Seller is a party or
which is binding upon the Seller (it being agreed that this subsection (B) shall
be deemed to refer only to the Assets, liabilities, obligations, contracts,
mortgages, liens, leases, agreements, indentures, trusts, instruments, orders,
judgments and decrees which relate to or affect the Mini-Ad Vector Technology,
the Assets and/or the Assumed Liabilities and which are being transferred to,
assumed by or sublicensed to the Buyer, as the case may be); provided, however,
that the existence of any such violations, conflicts, encumbrances,
accelerations, creations, terminations or rights of termination shall not be
deemed to be a breach of this Section 3.2 unless, individually
-----------
13
<PAGE>
or in the aggregate, they would have a Material Adverse Effect on the Unit or
(subsequent to the Closing) on the Buyer.
3.3 Consents and Approvals. Except as set forth on Schedule 3.2 and
---------------------- ------------
Schedule 3.3 , no other action or consent, whether corporate or otherwise,
- ------------
including action or consent by any Authority or any other third party, is
necessary in connection with the execution, delivery, validity or enforceability
of this Agreement or the Transaction Documents with respect to the Seller or the
consummation by it of the transactions contemplated hereby and thereby.
3.4 Regulatory Matters.
------------------
(A) Schedule 3.4A sets forth a true and correct list of all foreign
-------------
marketing and clinical authorizations, clearances, approvals and related
submissions, if any, which (i) relate to the Mini-Ad Vector Technology and/or
Mini-Ad Vector Products and (ii) are either (a) submitted and pending, or (b)
cleared and/or approved.
(B) Schedule 3.4B sets forth a true and correct list of all PMA's,
-------------
510(k)'s, IDE's, IND's, MAF's, DMF's, ELA's, PLA's and other FDA related
submissions, if any, which (i) relate to the Mini-Ad Vector Technology and/or
Mini-Ad Vector Products and (ii) are either (a) submitted and pending, or (b)
cleared and/or approved.
3.5 Taxes. Except as set forth in Schedule 3.5:
----- ------------
(A) As a business segment of the Seller, the Unit does not file Tax
Returns;
(B) The Seller has, in respect of the Unit and the Assets, withheld
proper and accurate amounts (including from persons now or previously employed
by the Unit for income Taxes and Social Security and other payroll Taxes) for
all periods in compliance with all relevant Tax laws and other withholding
provisions of all applicable laws; and either paid such amounts to the relevant
Tax Authorities or set them aside in accounts for such purpose; provided,
--------
however, that no failure to so withhold, pay or set aside such Taxes shall
- -------
constitute a breach of this Section 3.5(B) unless such failure would have a
--------------
Material Adverse Effect after the Closing on the Buyer;
(C) the Seller has, since its incorporation, been a "C"
corporation, as defined in Section 1361(a) of the Code; and
---------------
(D) to the Seller's knowledge, no transaction contemplated by this
Agreement is subject to withholding under Section 1445 of the Code.
------------
14
<PAGE>
3.6 Title; Tangible Personal Property
---------------------------------
(A) Except as set forth in Schedule 3.6(A), each material item of
tangible personal property included in the Assets, as well as each material item
of personal property covered by a lease included in the Included Agreements, is
located at the Round Lake Facility.
(B) Except as set forth in Schedule 3.6(B) hereto, the Seller (or
---------------
with respect to the Intellectual Property Assets, its parent corporation, Baxter
International Inc.) is the sole and exclusive owner of and has good and valid
title to all of the Assets (except for the Biologics, for which the Seller makes
no representation or warranty and which are being sold to Buyer "as is"), free
and clear of all Encumbrances, except for Permitted Encumbrances.
3.7 Intellectual Property.
---------------------
(A) Schedule 3.7(A) contains a list and description of all Patents
---------------
and Trademarks currently owned by or licensed to the Seller (or its parent
corporation, Baxter International Inc.) and which exclusively relate to the
Mini-Ad Vector Technology (separately identifying those which are owned and
those which are licensed and, if not owned by the Seller, identifying the owner
thereof, if any).
(B) Schedule 3.7(B) contains a list and description of all material
---------------
Copyrights (registered or unregistered) owned by or licensed to the Seller and
which exclusively relate to the Mini-Ad Vector Technology (in the case of
licensed Copyrights, identifying the owner thereof and the related work).
(C) Schedule 3.7(C) contains a list of (i) all applications for
---------------
registration of any Intellectual Property (other than Patents) owned by or
licensed to the Seller and which exclusively relate to the Mini-Ad Vector
Technology as well as a list of all existing registrations of any such
Intellectual Property (in either case, identifying the Intellectual Property,
the application or registration number and the jurisdiction thereof) and (ii)
pending applications for any Patents which exclusively relate to the Mini-Ad
Vector Technology where the Seller (or its parent corporation, Baxter
International Inc.) is listed as the owner or is the licensee of any of the
underlying technology (identifying the subject matter of the application, the
relevant application number, the jurisdiction thereof and the owner thereof).
True and correct copies of all such applications and registrations have been
provided to the Buyer.
(D) Schedule 3.7(D) contains a list and description (showing in each
---------------
case the parties thereto and, in the event the same has not been reduced to
writing, the material terms thereof) of all material agreements and licenses to
which the Seller is a party or by which it is bound which entitle the Seller or
a third party to use, or restrict the Seller's or a third-party's use of, (i)
any Copyrights, Patents, Trademarks or Information owned by, licensed to, or
used by, the Seller (or its
15
<PAGE>
parent corporation, Baxter International Inc.) exclusively in connection with
the Mini-Ad Vector Technology or (ii) any Customized Software.
(E) Except as disclosed in Schedule 3.7(E): (i) those Intellectual
---------------
Property Assets consisting of Patent, Copyright or Trademark registrations, are
valid and in full force and effect, and (ii) neither the Seller nor its parent
corporation, Baxter International Inc., has received written notice of any
outstanding challenges, by any third party, either to any such Patent, Copyright
or Trademark registrations or to any of the applications described in Section
-------
3.7(C).
- ------
(F) Except as disclosed in Schedule 3.7(F), the Seller is not aware
---------------
that there now exists any use, by a third party, of any Intellectual Property
which violates any Intellectual Property Right of the Seller (or its parent
corporation, Baxter International Inc.) in the Intellectual Property Assets.
(G) Except as set forth in Schedule 3.7(G), and except for the
---------------
Biologics, (i) to the Seller's knowledge, no infringement of any material
Intellectual Property Right of any other person or entity has occurred or
results in any way from the use, manufacture and sale of the Mini-Ad Vector
Technology or Mini-Ad Vector Products, and (ii) no claim of any infringement by
the Seller of any material Intellectual Property Right of any other person or
entity has been made, asserted or threatened in writing against and to the
Seller (or its parent corporation, Baxter International Inc.) relating to any of
the Intellectual Property Assets. The Seller makes no representation or
warranty with respect to the infringement of third party Intellectual Property
Rights by the Biologics, all of which are being sold to the Buyer "as is."
(H) Schedule 3.7(H), contains a list and description of all Patents
---------------
which are to be licensed by Seller (or its parent corporation, Baxter
International Inc.) to Buyer under the Seller License Agreement.
3.8 Contracts and Commitments.
-------------------------
(A) Except as set forth on Schedule 3.8(A), there is no existing
---------------
material breach of any of the Included Agreements by Seller; to the knowledge of
Seller, and subject to the foregoing, no event has occurred which, with the
lapse of time or the giving of notice or both, is reasonably likely to
constitute a material breach of any such agreement by Seller or give rise to a
right on the part of any of the other parties thereto to terminate such
agreement or to deprive Seller of any material right, or accelerate any of its
material obligations, thereunder.
(B) Except as set forth on Schedule 3.8(B), to the knowledge of
---------------
Seller, there is no existing material breach of any of the Included Agreements
by any party (other than Seller) thereto and no event has occurred which, with
the lapse of time or the giving of notice or both, is reasonably likely to
constitute a material breach thereof by such other party or give rise to a right
on the part of Seller to terminate such agreement or to deprive the other party
of any right, or accelerate any obligation of such party, thereunder.
16
<PAGE>
(C) Except as set forth on Schedule 3.8(C), there are no current
---------------
circumstances which create a reasonable probability that Seller will not, or
will be unable to, fulfill any of its material obligations, under any of the
Included Agreements.
(D) Seller has not, during the current term of any insurance policy
which provides coverage with respect to persons, properties or operations of the
Unit, received any notice canceling or threatening to cancel or refusing to
renew, based (to the knowledge of Seller) on reasons relating directly to the
business of the Unit, within the last twelve months.
3.9 Labor Relations. Schedule 3.9 sets forth a list of all of Seller's
--------------- ------------
employees in the Unit whose work relates to the Mini-Ad Vector Technology, none
of whom is subject to union or collective bargaining agreements by which the
Seller is bound or subject. The Seller has not at any time during the last five
years had, nor is there now to the knowledge of the Seller threatened, a strike,
picket, work stoppage, work slowdown, union organizing activity or other labor
trouble that has had or would be reasonably likely to have a Material Adverse
Effect on the Unit.
3.10 Legal Proceedings.
-----------------
(A) Except as set forth on Schedule 3.10(A) attached hereto, there
----------------
are no Actions pending, or to the knowledge of the Seller, threatened against or
affecting the Seller, which relate to the Assets or the Unit; and the Seller is
not in default with respect to any Order which has been issued against the
Seller in connection with the Assets or the Unit. Except as set forth on
Schedule 3.10(A), to Seller's knowledge there are no Orders issued against the
- ----------------
Seller which relate to the Assets or the Unit.
(B) Except as set forth on Schedule 3.10(B), there are no Actions in
----------------
which the Seller, in connection with the Assets, is either a plaintiff or, if
not a formal proceeding, an aggrieved party or claimant.
3.11 Compliance with Law. Except as set forth in Schedule 3.11, in
------------------- -------------
connection with the operations of the Unit relating to the Assets, (i) the
Seller has complied in all respects with, and (ii) all of the Assets are in
compliance in all respects with, all material laws, orders, rules, and
regulations of each Authority having jurisdiction over the Unit or its
operations or properties, where the failure to so comply would have a Material
Adverse Effect on the Unit.
3.12 Absence of Certain Changes. Except as specifically disclosed in the
--------------------------
SEC Reports filed by Seller on or prior to the date of this Agreement or as set
forth on Schedule 3.12, and except for this Agreement and the Transaction
-------------
Documents, since December 31, 1997, Seller has not entered into any material
transaction, or, in any material respect, conducted business or operations of
the Unit relating to the Mini-Ad Vector Technology or the Assets other than in
the ordinary course of business consistent with past practice.
17
<PAGE>
3.13 Compensation. Schedule 3.13 sets forth a true and correct list of the
------------ -------------
(a) names, (b) positions and (c) compensation arrangements (including annualized
salary, bonus and commission arrangements), monetary or otherwise, of all
current employees of the Unit whose work relates to the Mini-Ad Vector
Technology. Except as set forth on Schedule 3.13, to the Seller's knowledge, no
-------------
such employee has provided notice to the Seller with regard to either
cancellation or other termination of his or her relationship with the Seller.
3.14 Books and Records. The books and records of the Seller included in
-----------------
the Assets accurately reflect all material Assets, and all material liabilities
and transactions of the Unit relating to the Mini-Ad Vector Technology.
3.15 Brokers. No broker, finder or other such Person or entity is entitled
-------
to receive a finder's or broker's fee or commission with respect to the
transactions contemplated hereby based on arrangements made by or on behalf of
the Seller.
3.16 Benefits Received. The Seller has not:
-----------------
(A) received any payment or other consideration for any products or
services that the Buyer will be obligated hereunder to deliver; or
(B) received any payment or other benefit for or with respect to any
other obligation that the Buyer will be obligated hereunder to perform.
3.17 Inventory. Attached hereto as Schedule 3.17 is a true and correct
--------- -------------
list describing, for any Included Inventory held by the Seller as of December
31, 1997, the aggregate book value of such Included Inventory as of such date.
3.18 Experience. The Seller is experienced in evaluating companies such as
----------
the Buyer, is able to fend for itself in transactions such as the one
contemplated by this Agreement, has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its prospective investment in the Buyer, and has the ability to bear the
economic risks of the investment.
3.19 Investment. The Seller is acquiring the Buyer Common Stock and will
----------
acquire any Buyer Preferred Stock for investment for the Seller's own account
and not with the view to, or for resale in connection with, any distribution
thereof. The Seller understands that the Buyer Common Stock (and any Buyer
Preferred Stock) to be acquired by Seller has not been and will not be
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein. The
Seller further represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to any third person with respect to any of the Buyer Common Stock
(or any Buyer Preferred Stock) to be acquired by Seller. The Seller understands
and acknowledges that the offering and issuance of the
18
<PAGE>
Buyer Common Stock pursuant to this Agreement, and any issuance of Buyer
Preferred Stock, will not be registered under the Securities Act on the ground
that the sale provided for in this Agreement and the issuance of securities
hereunder is exempt from the registration requirements of the Securities Act
based on, among other things, the bona fide nature of the investment intent as
expressed herein.
3.20 Rule 144. The Seller acknowledges that the Buyer Common Stock (and
--------
any Buyer Preferred Stock) to be acquired by Seller must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. The Seller is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of certain
securities purchased in a private placement subject to the satisfaction of
certain conditions. In connection therewith, the Seller acknowledges that the
Buyer will make a notation on its stock books regarding the restrictions on
transfers set forth in this Section 3.20 and will transfer securities on its
------------
books only to the extent not inconsistent therewith and with the Stockholders'
Agreement. The Seller acknowledges that all shares representing Buyer Common
Stock (and any Buyer Preferred Stock) to be acquired by Seller will bear
appropriate restrictive legends reflecting the transfer restrictions reflected
in this Section 3.20 as well as in the Stockholders' Agreement.
------------
3.21 No Public Market. The Seller understands that no public market now
----------------
exists for the securities of the Buyer; that it is not expected that a public
market will ever exist for the Buyer Preferred Stock; and that it is uncertain
whether a public market will ever exist for the Buyer Common Stock.
3.22 Access to Data. For purposes of satisfying the applicable
--------------
requirements for exemption from registration relating to the issuance of the
Buyer Common Stock, the Seller acknowledges that it has received and reviewed
information about the Buyer and has had an opportunity to discuss Buyer's
business, management and financial affairs with its management and to review
their facilities.
3.23 Full Disclosure. Without limiting any of the foregoing, no
---------------
representation or warranty by the Seller herein and no other written statement
or certificate furnished by or on behalf of the Seller to the Buyer or its
Representatives pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to the Seller
that has not been disclosed in this Agreement which would reasonably be expected
to materially and adversely affect the ability of the Seller to perform its
obligations under this Agreement.
4. Representations and Warranties of the Buyer. The Buyer represents and
-------------------------------------------
warrants to the Seller as of the date hereof, and as of the Closing Date, as
follows:
4.1 Good Standing. The Buyer is a corporation organized, validly existing
-------------
and in good standing under the laws of the State of Delaware, with all necessary
corporate power and authority
19
<PAGE>
to own, lease and operate its properties and to carry on its business as the
same is now being conducted. True, accurate and complete copies of the
Certificate of Incorporation and By-Laws of the Buyer have been provided to the
Seller.
4.2 Authority. The Buyer possesses full right, corporate power and legal
---------
authority to execute and deliver this Agreement and the Transaction Documents to
which the Buyer is a party and to perform each of the agreements and make each
of the representations and warranties on its part to be performed and made
hereunder and thereunder. The execution and delivery of this Agreement and the
Transaction Documents to which the Buyer is a party and the consummation by it
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Buyer. This
Agreement has been duly and validly executed by the Buyer and constitutes, and
the Transaction Documents (upon and subject to their execution and delivery by
all parties thereto) shall constitute, the legal, valid and binding obligations
of the Buyer enforceable against it in accordance with their terms subject to
the qualification that the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws,
now or hereafter in effect, affecting creditors' rights and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding for the enforcement
thereof may be brought. Except as set forth on Schedule 4.2, the execution and
------------
delivery of this Agreement and the Transaction Documents to which the Buyer is a
party and the performance by it of all of the transactions contemplated herein
and therein do not and shall not (with or without the giving of notice or the
passage of time or both) (A) violate or conflict with the Certificate of
Incorporation or By-laws of the Buyer, or (B) (1) violate or conflict with any
law, rule, ruling, determination, ordinance or regulation of any Authority or
any condition or provision of, (2) result in the creation or imposition of any
Encumbrance upon any of the property or assets of the Buyer pursuant to, (3)
accelerate or create, or permit the acceleration or creation of, any liability
or obligation of the Buyer under, or (4) cause a termination under or give rise
to a right of termination under, the terms of any contract, mortgage, lien,
lease, agreement, indenture, trust, instrument, order, judgment or decree to
which the Buyer is a party or which is binding upon the Buyer; provided,
--------
however, that the existence of any such violations, conflicts, encumbrances,
- -------
accelerations, creations, terminations or rights of termination shall not be
deemed to be a breach of this Section 4.2 unless, individually or in the
-----------
aggregate, they would have a Material Adverse Effect on the Buyer.
4.3 Consents and Approvals. Except at set forth on Schedule 4.3, no other
---------------------- ------------
action or consent, whether corporate or otherwise, including action or consent
by any Authority, is necessary in connection with the execution, delivery,
validity or enforceability of this Agreement or the Transaction Documents with
respect to the Buyer or the consummation by it of the transactions contemplated
hereby and thereby.
4.4 Capitalization. Except as set forth on Schedule 4.4, the authorized
-------------- ------------
capital stock of the Buyer consists, or will consist prior to the Closing, of
(a) Forty Million (40,000,000) shares of Buyer Common Stock, of which Seven
Million Five Hundred Forty-Three Thousand Four Hundred Thirty (7,543,430) shares
are issued and outstanding on the date of this Agreement and (b) Five
20
<PAGE>
Million (5,000,000) shares of preferred stock, of which no shares are issued and
outstanding on the date of this Agreement. Except as set forth on Schedule 4.4
------------
or as specified in the Exhibits hereto, there are no other issued or outstanding
securities or equivalents thereof of the Buyer. Except as set forth on Schedule
--------
4.4 or as specified in the Exhibits hereto, there are no outstanding obligations
- ---
of the Buyer to repurchase, redeem or otherwise acquire any securities of the
Buyer, other than the Buyer's obligation to convert the Buyer Convertible
Preferred Stock into shares of Buyer Common Stock.
4.5 Valid Issuance of Buyer Common Stock, and Buyer's Preferred Stock.
-----------------------------------------------------------------
The shares of Buyer Common Stock representing the Common Stock Consideration,
when authorized, issued and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
authorized and issued, fully paid, and nonassessable, and will be free of
restrictions on transfer, other than restrictions on transfer under this
Agreement, the Stockholders' Agreement and the other Transaction Documents and
under applicable state and Federal securities laws. Immediately following
issuance at Closing, the Common Stock Consideration shall represent 50% of the
Buyer Common Stock then issued and outstanding. The Buyer Preferred Stock has
been duly authorized and validly reserved for issuance and, upon issuance and
receipt of payment therefor, in accordance with the terms of the Transaction
Documents, will be duly and validly authorized and issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Stockholders' Agreement and
the other Transaction Documents and under applicable state and Federal
securities laws.
4.6 Taxes.
-----
(A) Except as set forth on Schedule 4.6, all Tax Returns required to
------------
be filed by Buyer have been properly completed and filed on a timely basis and
in correct form on or prior to the date hereof. As of the time of filing, the
foregoing Tax Returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status or other matters of Buyer or
any other information required to be shown thereon, and no extension of time
within which to file any such Tax Return has been requested or granted.
(B) With respect to all amounts in respect of Taxes imposed upon
Buyer, or for which Buyer could be liable, whether to taxing Authorities or to
other persons or entities, with respect to all taxable periods or portions of
periods ending on or before the Closing Date, all applicable tax laws and
agreements have been fully complied with, and all such amounts required to be
paid by Buyer, to taxing Authorities or others, on or before the date hereof
have been paid.
4.7 Brokers. No broker, finder or other such Person or entity is entitled
-------
to receive a finder's or broker's fee or commission with respect to, the
transactions contemplated hereby based on arrangements made by or on behalf of
the Buyer.
4.8 SEC Documents; Financial Statements. Buyer has furnished or made
-----------------------------------
available to the Seller true and complete copies of all reports or registration
statements filed by it with the SEC under
21
<PAGE>
the Exchange Act for all periods since January 1, 1996, all in the form so filed
(all of the foregoing being collectively referred to as the "SEC Documents"). As
of their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a document subsequently filed with the SEC. The financial
statements of Buyer, including the notes thereto, included in the SEC Documents
(the "Buyer Financial Statements") comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP consistently applied (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and present fairly the financial position of Buyer at the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal audit adjustments). There has been
no change in Buyer accounting policies except as described in the notes to the
Buyer Financial Statements.
4.9 Absence of Certain Changes. Since the Interim Financial Statement
--------------------------
Date, except as set forth on Schedule 4.9, and except for this Agreement and the
------------
Transaction Documents, Buyer has not entered into any material transaction, or,
in any material respect, conducted its business or operations other than in the
ordinary course of business consistent with past practice. Since the Interim
Financial Statement Date, Buyer has not suffered or had any adverse change in
its business, results of operations, assets or financial condition, other than
those changes that are in the ordinary course of business, none of which
(individually or in the aggregate) would have, or constitute, a Material Adverse
Effect on Buyer.
4.10 Legal Proceedings.
-----------------
(A) Except as set forth on Schedule 4.10 attached hereto, there are
-------------
no Actions pending, or to the knowledge of Buyer, threatened, against or
affecting Buyer or any Subsidiary of Buyer; and neither Buyer nor any Subsidiary
of Buyer is in default with respect to any Order which has been issued against
it. Except as set forth on Schedule 4.10, there are no Orders issued against
-------------
Buyer or any Subsidiary of Buyer.
(B) Except as set forth on Schedule 4.10, there are no Actions in
-------------
which Buyer or a Subsidiary of Buyer is either a plaintiff or, if not a formal
proceeding, an aggrieved party or claimant.
4.1 Compliance with Law. Except as set forth on Schedule 4.11, Buyer and
------------------- -------------
each Subsidiary of Buyer has complied in all material respects with, and each
such entity and all of its properties are in compliance in all material respects
with, all material laws, orders, rules, and regulations of each Authority having
jurisdiction over such entity or its operations or properties.
22
<PAGE>
4.12 Contracts and Commitments.
-------------------------
(A) Except as set forth on Schedule 4.12(A), there is no existing
----------------
material breach of any contract or agreement to which Buyer or any Subsidiary of
Buyer is a party by Buyer or the relevant Subsidiary of Buyer; to the knowledge
of Buyer, and subject to the foregoing, no event has occurred which, with the
lapse of time or the giving of notice or both, is reasonably likely to
constitute a material breach of any such agreement by Buyer or the relevant
Subsidiary of Buyer or give rise to a right on the part of any of the other
parties thereto to terminate such agreement or to deprive Buyer or the relevant
Subsidiary of Buyer of any material right, or accelerate any of its material
obligations, thereunder.
(B) Except as set forth on Schedule 4.12(B), to the knowledge of
----------------
Buyer, there is no existing material breach of any contract or agreement to
which Buyer or any Subsidiary of Buyer is a party by any party (other than Buyer
and the relevant Subsidiary of Buyer) thereto and no event has occurred which,
with the lapse of time or the giving of notice or both, is reasonably likely to
constitute a material breach thereof by such other party or give rise to a right
on the part of Buyer or the relevant Subsidiary of Buyer to terminate such
agreement or to deprive the other party of any right, or accelerate any
obligation of such party, thereunder.
(C) Except as set forth on Schedule 4.12(C), to the knowledge of
----------------
Buyer, there are no current circumstances which create a reasonable probability
that Buyer or any Subsidiary of Buyer will not, or will be unable to, fulfill
any of its material obligations, under any material agreement to which it is a
party.
(D) Buyer (or the relevant Subsidiary of Buyer, in the case of
insurance held by a Subsidiary of Buyer) has not, during the current term of any
insurance policy which provides coverage with respect to persons, properties or
operations of Buyer or any Subsidiary of Buyer, received any notice canceling or
threatening to cancel or refusing to renew, based (to the knowledge of Buyer) on
reasons relating directly to the business of Buyer or any Subsidiary of Buyer,
any such policy, and no policy insuring any such persons, properties or
operations has, based (to the knowledge of Buyer) on reasons relating directly
to the business if Buyer or any Subsidiary of Buyer, been canceled by the
insurer within the last twelve months.
4.13 Intellectual Property.
---------------------
(A) Schedule 4.13(A) contains a list and description of all Patents
----------------
and Trademarks currently owned by or licensed to Buyer or any Subsidiary of
Buyer (separately identifying those which are owned and those which are licensed
and, if not owned by such entity, identifying the owner thereof, if any).
(B) Schedule 4.13(B) contains a list and description of all material
----------------
Copyrights (registered or unregistered) licensed to Buyer or any Subsidiary of
Buyer (identifying the owner thereof and the related work).
23
<PAGE>
(C) Schedule 4.13(C) contains a list of (i) all applications for
----------------
registration of any Intellectual Property owned by or licensed to Buyer or any
Subsidiary of Buyer as well as a list of all existing registrations of any such
Intellectual Property (in either case, identifying the Intellectual Property,
the application or registration number and the jurisdiction thereof) and (ii)
pending applications for any Patents where Buyer or any Subsidiary of Buyer is
listed as the owner or is the licensee of any of the underlying technology
(identifying the subject matter of the application, the relevant application
number, the jurisdiction thereof and the owner thereof). True and correct
copies of all such applications and registrations have been provided to the
Seller.
(D) Schedule 4.13(D) contains a list of all material documents
----------------
relating to product clearances relating to Patent infringement performed by or
on behalf of Buyer or any Subsidiary of Buyer. Buyer has delivered to the
Seller true and correct copies of all such documents, if any.
(E) Schedule 4.13(E) contains a list (showing in each case the parties
----------------
thereto and, in the event the same has not been reduced to writing, the material
terms thereof) of all material agreements and licenses to which Buyer or any
Subsidiary of Buyer is a party or by which it is bound which entitle Buyer or
any Subsidiary of Buyer or a third party to use, or restrict Buyer's or any
Subsidiary of Buyer's or a third-party's use of, any Copyrights, Patents,
Trademarks or Information owned by, licensed to, or used by, Buyer or any
Subsidiary of Buyer. Buyer has delivered to the Seller true and correct copies
of all such documents, if any.
(F) Except as disclosed in Schedule 4.13(F): (i) to the knowledge of
----------------
Buyer, all Patents, and all Copyright and Trademark registrations, owned by
Buyer or any Subsidiary of Buyer are valid and in full force and effect, and
(ii) Buyer has not received written notice of any outstanding challenges, by any
third party, either to any such Patents or registrations or to any of the
applications described in Section 4.13(C).
---------------
(G) Except as disclosed in Schedule 4.13(G), Buyer is not aware that
----------------
there now exists any use, by a third party, of any Intellectual Property which
violates any material Intellectual Property Right of Buyer or any Subsidiary of
Buyer.
(H) Except as set forth in Schedule 4.13(H), (i) to Buyer's knowledge,
----------------
no infringement of any material Intellectual Property Right of any other person
or entity has occurred or results in any way from the current operations of
Buyer or any Subsidiary of Buyer, and (ii) no claim of any infringement by Buyer
or any Subsidiary of Buyer of any material Intellectual Property Right of any
other person or entity has been made, asserted or threatened in writing against
and to Buyer or any Subsidiary of Buyer.
4.14 Environmental Matters.
---------------------
(A) Schedule 4.14(A) lists all written notices received by Buyer or
----------------
any Subsidiary of Buyer of violations of Environmental Laws or environmental
claims from environmental Authorities since January 1, 1993. Buyer has
delivered to the Seller true and correct copies of all
24
<PAGE>
such notices, claims and reports, as well as all reports of Buyer or any
Subsidiary of Buyer filed with such Authorities since such date.
(B) Except as set forth in Schedule 4.14(B), to the knowledge of
----------------
Buyer, (i) there has been no release or discharge by Buyer (or any other Person)
of any Contaminant in or on any facility of Buyer or any Subsidiary of Buyer (or
the land upon which it is situated) and (ii) there otherwise exist no
Contaminants on or in any such real property of Buyer or any Subsidiary of
Buyer, in any material quantity, which, in either case, would (a) constitute or
have constituted a material violation of any Environmental Law, or (b) give rise
to an obligation on the part of Buyer or any Subsidiary of Buyer, its assigns or
successors in interest to effect an environmental cleanup or remediation.
4.15 Labor Relations. Buyer and its Subsidiaries collectively employ ___
---------------
employees, none of whom is subject to union or collective bargaining agreements
by which such entity is bound or subject. None of such entities has, at any
time during the last five years, had, nor is there now to the knowledge of Buyer
threatened, a strike, picket, work stoppage, work slowdown, union organizing
activity or other labor trouble that has had or would be reasonably likely to
have a Material Adverse Effect on Buyer.
4.16 Employee Benefit Plans.
----------------------
(A) Except as set forth in Schedule 4.16(A), neither Buyer nor any
----------------
Subsidiary of Buyer is a party to or bound by any oral or written Non-ERISA
Plans.
(B) Except as set forth in Schedule 4.16(B), Buyer and each Subsidiary
----------------
of Buyer does not maintain, has never maintained, is not required to contribute
to, and has never been required to contribute to or pay any amount with respect
to, and has no liability with respect to any ERISA Benefit Plans. Except as set
forth in Schedule 4.16(B), and, to the best of Buyer's knowledge, each of the
----------------
plans described in Schedule 4.16(B) that is an ERISA Benefit Plan ("Buyer Group
----------------
ERISA Benefit Plan") complies in form and is operated in all material respects
in accordance with the requirements of ERISA and, where applicable, the Code.
Buyer and, to the knowledge of Buyer, each Subsidiary of Buyer, as applicable,
has complied with the health care continuation requirements of Section 601, et.
seq., of ERISA with respect to its employees and their spouses, former spouses
and dependents.
(C) Except as set forth on Schedule 4.16(C), Buyer has delivered to
----------------
the Seller, with respect to each Buyer Group ERISA Benefit Plan, correct and
complete copies of (i) all plan documents and amendments, trust agreements and
insurance contracts and policies, (ii) the current and, to the extent available,
the prior summary plan description, (iii) the most recent financial statements,
if any, and (iv) where applicable, a determination letter of the Internal
Revenue Service evidencing the plan's qualification under the Code.
25
<PAGE>
(D) Neither Buyer nor any Subsidiary of Buyer has any obligations
under any Buyer Group ERISA Benefit Plan or otherwise to provide health benefits
to former employees of Buyer or any Subsidiary of Buyer, except as specifically
required by law. Neither Buyer nor any Subsidiary of Buyer has any liability,
potential or otherwise, under Section 4069 or Section 4212(c) of ERISA. Neither
Buyer nor any Subsidiary of Buyer has ever made a contribution to a voluntary
employees' beneficiary association described in Section 501(c)(9) of the Code.
(E) Neither Buyer nor, to the knowledge of Buyer, any Subsidiary of
Buyer or any other "disqualified person" (within the meaning of Section 4975 of
the Code) or "party in interest" (within the meaning of Section 3(14) of ERISA)
has engaged in any "prohibited transaction" (within the meaning of Section 4975
of the Code or Section 406 of ERISA) with respect to any Buyer Group ERISA
Benefit Plan which could subject any such Plan (or its related trust) or Buyer
or any Subsidiary of Buyer or any officer, director or employee of Buyer or any
Subsidiary of Buyer to the penalty or tax under Section 402(i) or Section 402(1)
of ERISA or Section 4975 of the Code.
(F) There is no pending or, to the knowledge of Buyer, threatened
claim which alleges any violation of ERISA or any other law (i) by or on behalf
of any Buyer Group ERISA Benefit Plan or (ii) by any employee of Buyer or any
Subsidiary of Buyer or any plan participant or beneficiary against any such
plan.
(G) There does not now exist (and has not in the past existed) an
"employee pension benefit plan," as defined in Section 3(2) of ERISA, maintained
by Buyer or any Subsidiary of Buyer or to which Buyer or any Subsidiary of Buyer
contributes or is required to contribute (or contributed or was required to
contribute in the past), including any multiemployer employee pension benefit
plan, other than an individual account plan within the meaning of Section 3(34)
or ERISA.
(H) Except as set forth on Schedule 4.16(H), there has been no
----------------
complete or partial termination of any Buyer Group ERISA Benefit Plan and no
action taken by Buyer or its Affiliates at any time during the three years
preceding the Closing date which has or will result in termination of any
employee benefit plan in effect during such period; nor has there been any
"reportable event," as such term is defined in Section 4043(c) of ERISA and the
regulations promulgated thereunder, with respect to any Buyer Group ERISA
Benefit Plan; and except by reason of discontinuance of any Buyer Group ERISA
Benefit Plan as a result of or following the transactions contemplated by this
Agreement, no Buyer Group ERISA Benefit Plan or other employee plan, arrangement
or agreement of Buyer or any Subsidiary of Buyer provides for additional or
accelerated payments or other consideration to be made on account of the
transactions contemplated by this Agreement.
4.17 Books and Records. Except as set forth in Schedule 4.17, all of the
----------------- -------------
books and records of Buyer and each Subsidiary of Buyer (including all minute
books and stock records) are accurate and complete in all material respects, are
kept in the ordinary course of business and are maintained at the principal
offices of Buyer or the relevant Subsidiary of Buyer.
4.18 Subsidiaries of Buyer. The Buyer has no Subsidiaries.
---------------------
26
<PAGE>
4.19 Experience. Buyer is experienced in evaluating companies, technology
----------
and businesses such as the Mini-Ad Vector Technology and the business of the
Unit relating to the Mini-Ad Vector Technology and is able to fend for itself in
transactions such as the one contemplated by this Agreement, has such knowledge,
sophistication, and experience in financial and business matters that it is
capable of evaluating the merits and risks of (i) the acquisition and assumption
of the Assets and the Assumed Liabilities pursuant to the terms and conditions
of this Agreement and (ii) its prospective investment as contemplated by the
Transaction Documents, and has the ability to bear the economic risks of the
investment.
4.20 Full Disclosure. Without limiting any of the foregoing, no
---------------
representation or warranty by Buyer herein and no other written statement or
certificate furnished by or on behalf of Buyer to the Seller or its
Representatives pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to Buyer
that has not been disclosed in this Agreement which (i) has had, or would
reasonably be expected to have, a Material Adverse Effect on Buyer or (ii) which
would reasonably be expected to materially and adversely affect the ability of
Buyer to perform its obligations under this Agreement.
5. Certain Covenants and Agreements.
--------------------------------
5.1 Pre-Closing Covenants.
---------------------
(A) Covenants of the Seller. From the date hereof (except as set
-----------------------
forth in Section 5.1(A) (vii) below) until the Closing Date, the Seller
--------------------
covenants that it shall do the following (it being agreed by Buyer that it shall
not unreasonably withhold its consent, which shall not be valid unless in
writing, to any proposed departures, by the Seller, from the provisions of
Sections 5.1(A)(ix)-(xv) below):
- ------------------------
(i) preserve and maintain its corporate existence and good
standing in the jurisdiction of its incorporation and in the State of Illinois;
(ii) maintain, keep and preserve, in all material respects,
all of the Assets;
(ii) keep reasonably adequate books and records with respect
to the Assets;
(iv) maintain the insurance policies in effect as of the date
of this Agreement which relate to the Assets;
(v) comply (with respect to the persons, assets and operations of
the Unit), in all material respects, with all applicable laws, rules,
regulations and orders;
27
<PAGE>
(vi) at any reasonable time and from time to time, (a) permit the
Buyer, or any agent or representative of either, to examine and make copies and
abstracts from any and all of the Seller's records and books relating to the
Assets and visit and inspect any and all of the Assets and (b) make available
its officers and employees to discuss with the Buyer and its representatives the
Assets and the Mini-Ad Vector Technology;
(vi) in the event and to the extent, that events or circumstances
occur or arise, or the Seller becomes aware of events or circumstances, which
render any of the representations and warranties set forth in Section 3 hereof
---------
inaccurate, and without limiting in any way the Buyer's rights under Section
-------
6.1, promptly notify the Buyer thereof by delivering to Buyer new, updated or
amended (and black-lined) Schedules relating to such events or circumstances;
(vi) exercise commercially reasonable efforts to: (a) preserve
intact, in all material respects, the Assets, and (b) keep available the
services of the Designated Employees (as that term is defined in Section
-------
5.1(B)(iv) below);
- ----------
(ix) not mortgage, pledge or subject any of the Assets to any
Encumbrance, other than Permitted Encumbrances;
(x) not sell, transfer or otherwise dispose of any of the
Assets, except in connection with (i) the sale of inventory in the ordinary
course of business or (ii) the sale or other disposal in the ordinary course of
business of any of the Other Assets no longer needed for the operation of the
Unit without reasonable prior written notice to Buyer;
(xi) not waive, release or compromise any material claims or
rights of the Seller relating to the Assets;
(xii) not, except in the ordinary course of business, increase
the compensation (including severance and termination pay) payable to any
employees of the Unit; or enter into any agreement with any employee of the Unit
providing for a salary in excess of $50,000 per year;
(xiii) not amend or terminate any Included Agreement, other than
in the ordinary course of business and provided that such amendment or
termination would not have a Material Adverse Effect on the Unit;
(xiv) except as set forth on Schedules 3.7(A)-(H), inclusive,
not abandon or forfeit any Intellectual Property, or any application for
protection or registration of any Intellectual Property, included in the Assets;
and
(xv) provide such assistance as may be reasonably requested by
the Buyer in connection with the employment by the Buyer of the Designated
Employees (as that term is
28
<PAGE>
defined in Section 5.1(B)(iv) below) and provide the applicable severance
benefits for those employees of the Unit who are not Designated Employees.
(B) Covenants of Buyer. From the date hereof (except as set forth in
------------------
Section 5.1(B)(vi) below) until the Closing Date, Buyer covenants that it shall,
and shall (except with respect to item (vi) below) cause each Subsidiary of
Buyer to:
(i) continue to operate, in all material respects, in the
ordinary course of business;
(ii) provide to the Seller copies of all management letters,
audit letters and reports, including all drafts or preliminary versions of such
letters and reports, in each case, prepared by its outside auditors in
connection with any audit of its internal controls and procedures;
(iii) not issue, deliver or sell, or authorize or propose to
issue, deliver or sell (whether through the granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), any shares of its
capital stock of any class or series, or any other securities in excess of two
percent (2%) of such class or series of stock, other than options, warrants,
commitments, subscriptions or rights to purchase under plans or arrangements
existing as of the Closing Date in aggregate amounts as set forth in Schedule
--------
4.4, and provided that any such issuance, delivery or sale of stock shall not
- ---
reduce the Seller's Common Stock Consideration to less the percentage of the
outstanding Buyer Common Stock determined pursuant to the provisions of Section
-------
2.2.
- ---
(iv) designate to the Seller those employees of the Unit whose
services (as newly-hired employees) the Buyer is interested in employing
subsequent to the Closing (such people as may be so designated by the Buyer from
time to time prior to Closing, and whom Seller agrees may be employed by the
Buyer subsequent to the Closing, being referred to as the "Designated
Employees"), and offer to each such Designated Employee employment at a salary
comparable to such Designated Employee's current salary with the Seller, and
fund the cost of such Designated Employee's relocation expenses in connection
with such employment by the Buyer;
(v) at any reasonable time and from time to time, (a) permit
the Seller, or any representative or agent of the Seller, to examine and make
copies and abstracts from any and all of its records and books and visit and
inspect any and all of its assets and properties and (b) make available its
officers, employees and independent accountants to discuss with the Seller and
its representatives its affairs, finances and accounts; and
(vi) in the event and to the extent, that events or
circumstances occur or arise, or Buyer becomes aware of events or circumstances,
which render any of the representations and warranties set forth in Section 4
hereof inaccurate, and without limiting in any way the Seller's rights under
Section
-------
6.2, promptly notify the Seller thereof by delivering to the Seller new, updated
- ---
or amended (and black-lined) Schedules relating to such events or circumstances.
29
<PAGE>
(C) Filings. The Buyer and the Seller shall each (and shall each
-------
cause their Affiliated entities, as appropriate, to) (i) promptly take all such
action as may be necessary under any laws applicable to or necessary for, and
will file and, if appropriate, use their reasonable best efforts to have
declared effective or approved, all documents and notifications with all
Authorities which they deem necessary or appropriate for, the consummation of
the transactions contemplated hereby and, (ii) promptly give any other party
hereto information requested by such other party pertaining to it and its
Subsidiaries and Affiliates which is reasonably necessary to enable such other
party to take such actions and file in a timely manner all reports and documents
required to be so filed by or under applicable laws.
(D) Plan for Designated Employees. The Buyer and the Seller shall
-----------------------------
develop a mutually agreeable plan for the issuance of options to purchase Buyer
Common Stock to Designated Employees who are employed by the Buyer subsequent to
the Closing.
(E) Due Diligence. Each party shall give the other party's officers,
-------------
employees, attorneys, consultants and accountants reasonable access during
normal business hours to all of the properties, books, contracts, documents,
records and personnel of such party as relate to this Agreement, the Transaction
Documents, and the transactions contemplated hereby and thereby, and shall
furnish such information relevant thereto as the other party may reasonably
request, and each party shall cooperate with the representatives of the other
party. Each party hereto shall have completed its due diligence to its
satisfaction by no later than one month after the date hereof.
(F) Buyer shall reimburse Seller for all reasonable non-hemophilia
related expenses which the Unit has incurred since January 1, 1998; provided,
--------
however, that the amount of such reimbursement shall not exceed $35,000 of such
- -------
expenses per month during such period; and provided, further, that Buyer shall
-------- -------
not be required to reimburse Seller for such expenses in the event that (i)
Seller's Board of Directors does not approve this Agreement and the transactions
contemplated hereby or (ii) this Agreement is terminated pursuant to Section
-------
13(B) hereof. In the event this Agreement is terminated for any other reason,
- -----
Buyer's obligation to reimburse Seller for all reasonable non-hemophilia related
expenses of the Unit shall continue.
5.2 Post-Closing Covenants.
----------------------
(A) Assignability. To the extent that any lease, contract, license,
-------------
agreement, sales or purchase order, commitment, property interest or other asset
included in the Assets, or any claim, right or benefit arising thereunder or
resulting therefrom (each an "Interest") is not capable of being sold, assigned,
transferred or conveyed without the approval, consent, novation or waiver of the
issuer thereof or the other party or parties thereto, or any other third person
(including an Authority), or would be breached in the event of a sale,
assignment, transfer, or conveyance without such approval, consent or waiver,
this Agreement shall not, in the event any such issuer or third party shall
object to such assignment, constitute a sale, assignment, transfer or conveyance
thereof, or an attempted sale, assignment, transfer or conveyance thereof absent
such approval, consent or waiver.
30
<PAGE>
At the request of the Buyer, the Seller shall use its commercially reasonable
best efforts, both prior and subsequent to the Closing Date, to obtain all
necessary approvals, consents or waivers necessary to convey to the Buyer each
such Interest as soon as reasonably practicable; provided, however, that the
-------- -------
Seller shall not be required to pay any additional consideration in order to
obtain such approvals, consents or waivers. To the extent any of the approvals,
consents or waivers referred to in this Section 5.2(A) have not been obtained as
--------------
of the Closing, the Seller shall, during the remaining term of such Interest
(and without limiting the Buyer's right to have the Seller persist, post-
Closing, in attempting to obtain any such approval, consent or waiver), exercise
commercially reasonable best efforts to cooperate with the Buyer in any
reasonable and lawful arrangements designed to provide the benefits of such
Interest to the Buyer.
(B) Facilitation of Possession. Subsequent to the Closing, the
--------------------------
Seller, at the request of the Buyer, shall write letters to, and otherwise
communicate with third parties, and do such other reasonable acts and things as
may be necessary or appropriate, to facilitate the gaining of possession by the
Buyer of the Assets.
(C) Intellectual Property. The Seller shall cooperate, and shall
---------------------
cause its Representatives to cooperate, with the Buyer in (i) obtaining,
maintaining, enforcing, defending and confirming the Buyer's ownership of the
Intellectual Property included in the Assets and (ii) enforcing and defending
the Intellectual Property Rights arising from the Intellectual Property Assets.
The Buyer shall reimburse the Seller's reasonable out of pocket costs,
including, without limitation, reasonable attorneys fees, incurred in connection
therewith.
(D) Preferred Stock. Buyer shall not issue or sell any shares of
---------------
Buyer Preferred Stock to any person other than the Seller or an Affiliate of the
Seller, so long as the Seller or any Affiliate of the Seller remains the
beneficial owner of any shares of Buyer Preferred Stock.
(E) Employee Benefit Plans. Buyer shall have adopted employee benefit
----------------------
plans reasonably equivalent to those currently in place for employees of the
Unit by the Closing Date; provided, however that Buyer may elect to continue the
-------- -------
urrent health/medical coverage for the Designated Employees under COBRA until
such time as the Designated Employees are relocated to San Diego.
(F) Books and Records. Seller shall, upon Buyer's request, provide
-----------------
copies of any books and records not exclusively relating to the Mini-Ad Vector
Technology or the Assets, redacted to exclude information which does not relate
to the Mini-Ad Vector Technology or the Assets, which the Buyer has determined
it requires in addition to the books and records it received at Closing. Buyer
shall reimburse Seller for the cost of all such copies made pursuant to this
Section 5.2(F).
- --------------
(G) Taxes. To the extent relevant to the Assets and the Unit, Seller
-----
shall (i) provide Buyer with such assistance as may reasonably be required in
connection with the preparation of any Tax Return of Buyer and the conduct of
any audit or other examination by any taxing authority or in connection with
judicial or administrative proceedings for Buyer relating to any
31
<PAGE>
liability for Taxes of Buyer and (ii) retain and provide Buyer with all records
or other information in Seller's possession that may be relevant to the
preparation of any Tax Returns, or the conduct of any audit or examination, or
other tax proceeding in each case, relating directly to the Buyer.
(H) Financial Statements. To the extent relevant to the Assets and
--------------------
the Unit, Seller shall (i) provide Buyer with such assistance as may reasonably
be required in connection with the preparation of any financial statements of
Buyer for periods prior to the Closing and (ii) retain and provide Buyer with
all records or other information in Seller's possession that may be relevant to
the preparation of any financial statements of Buyer for periods prior to the
Closing.
6. Conditions to Obligations of the Buyer and the Seller
-----------------------------------------------------
6.1 The Buyer's Conditions.
----------------------
The obligations of the Buyer to consummate the transactions
contemplated hereunder are conditioned upon the following, any or all of which
may be waived by the Buyer in its sole and absolute discretion:
(A) All representations and warranties of the Seller contained in
this Agreement that are qualified as to materiality shall be true and correct on
and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date, and
all representations and warranties of the Seller contained in this Agreement
which are not so qualified shall, in all material respects, be true and correct
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
(B) The Seller shall, in all material respects, have performed and
complied with all of the covenants and agreements required by or pursuant to
this Agreement, or any Exhibit or instrument delivered pursuant to this
-------
Agreement, to be performed or complied with by it on or prior to the Closing
Date.
(C) The Seller shall have obtained and delivered to the Buyer
consents, in form reasonably satisfactory to the Buyer, executed by every party
(other than the Seller) to every material Included Agreement to which the Seller
becomes a party after the date hereof whose consent to the assignment and
delegation of such agreement to the Buyer is required in order to avoid a
violation of such agreement.
(D) The Seller and the Buyer shall, simultaneously with the Closing,
have executed and delivered the Transaction Documents.
(E) The Seyfarth Opinion shall, simultaneously with the Closing, have
been delivered to the Buyer.
32
<PAGE>
6.2 The Seller's Conditions.
-----------------------
The obligations of the Seller to consummate the transactions
contemplated hereunder are conditioned upon the following, any or all of which
may be waived by the Seller in its sole and absolute discretion:
(A) All warranties and representations of the Buyer contained in this
Agreement that are qualified as to materiality shall be true and correct on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date, and
all representations and warranties of the Buyer which are not so qualified
shall, in all material respects, be true and correct on and as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
(B) The Buyer shall, in all material respects, have performed and
complied with all of the covenants and agreements required by or pursuant to
this Agreement, or any Exhibit, or instrument delivered pursuant to this
-------
Agreement, to be performed or complied with by it on or prior to the Closing
Date.
(C) The Seller and the Buyer shall, simultaneously with the Closing,
have executed and delivered the Transaction Documents.
(D) The Buyer's Counsel's Opinion shall, simultaneously with the
Closing, have been delivered to the Seller.
(E) Buyer shall have completed a financing of $[ * ] or more from a
third party on terms that are mutually agreeable to the parties hereto.
(F) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby shall have been approved and authorized by the
Board of Directors of the Seller.
6.3 Mutual Conditions.
-----------------
The respective obligations of each party hereto to consummate the
transactions contemplated hereunder are conditioned upon the following:
(A) No order of any court or Authority shall be in effect which
restrains or prohibits the transactions contemplated hereby, and no suit, action
or proceeding by any Authority or other person shall be pending or threatened
which seeks to restrain the consummation, or challenges the validity or
legality, of the transactions contemplated by this Agreement.
(B) All other consents, approvals or orders of any Authority, the
granting of which is required for the lawful consummation of the transactions
contemplated hereby, shall have been
33
<PAGE>
obtained; and all other waiting and notification periods specified under
applicable law the termination or expiration of which is necessary for such
consummation shall have been terminated or shall have expired.
(C) The Buyer and the Seller shall have developed a mutually
agreeable plan for the issuance of options to purchase Buyer Common Stock to
Designated Employees who are employed by the Buyer subsequent to the Closing.
7. Deliveries of the Parties.
-------------------------
7.1 The Seller's Deliveries to the Buyer. At the Closing, the Seller
-------------------------------------
shall deliver, or cause to be delivered, to the Buyer the following:
(i) a Bill of Sale from the Seller and from each other entity,
if any, which shall then own any Included Inventory or other assets constituting
Assets, each to be in a form reasonably satisfactory to the Buyer;
(ii) a good standing certificate, dated as of a date not more
than five days prior to the Closing Date, as to the corporate existence and good
standing of the Seller, certified by the Secretary of State of Delaware;
(iii) such individual or general contract assignments as Buyer
shall reasonably request;
(iv) all governmental or other third party approvals, consents,
grants, and licenses, if any, required to be procured by the Seller in
connection with the transactions contemplated hereby;
(v) a certificate of the Secretary of the Seller certifying
and including the resolutions of the Board of Directors of Seller authorizing
the execution, delivery and performance of this Agreement and the Transaction
Documents, and the transactions contemplated hereby and thereby, and attesting
to the incumbency and signatures of all officers executing any documents in
connection with the transactions contemplated by this Agreement and the
Transaction Documents;
(vi) an executed copy of each of the Transaction Documents to
which the Seller is a party;
(vii) such other executed assignments, bills of sale,
endorsements, notices, consents, novations, assurances and such other
instruments of conveyance and transfer as counsel for the Buyer shall reasonably
request and as shall be effective to vest in the Buyer the Seller's rights,
title and interest in the Assets;
34
<PAGE>
(viii) an executed and notarized assignment of United States
patents/patent applications for each United States patent or patent application
included in the Assets, the form of which assignment shall be reasonably
satisfactory to the Buyer; and
(ix) the Seyfarth Opinion.
7.2 Deliveries of Buyer to the Seller. At the Closing, Buyer shall
----------------------------------
deliver to the Seller the following:
(i) the Common Stock Consideration due at Closing to the
Seller pursuant to Section 2.2 hereof;
-----------
(ii) a good standing certificate, dated as of a date not more
than five days prior to the Closing Date, as to the corporate existence and good
standing of the Buyer, certified by the Secretary of State of the State of
Delaware.
(iii) all governmental or other approvals, consents, grants and
licenses, if any, required to be procured by the Buyer in connection with the
transactions contemplated hereby;
(iv) an executed copy of each of the Transaction Documents to
which the Buyer is a party;
(v) a certificate of the Secretary of the Buyer certifying and
including the resolutions of the Board of Directors authorizing the execution,
delivery and performance of this Agreement and the Transaction Documents, and
the transactions contemplated hereby and thereby, and attesting to the
incumbency and signatures of all officers executing any documents in connection
with the transactions contemplated by this Agreement and the Transaction
Documents; and
(vi) the Buyer's Counsel's Opinion.
8. Survival of Representations: Indemnities.
----------------------------------------
8.1 Survival.
--------
All representations and warranties contained in, or in any certificate
delivered pursuant to or in connection with, this Agreement (the Agreement,
together with such other certificates, being collectively referred to as
"Documents") shall survive the Closing of the transactions contemplated under
this Agreement until one (1) year from the Closing Date. All covenants and
agreements contained in any Document shall survive in accordance with their
terms.
35
<PAGE>
8.2 Indemnity.
---------
(A) The Seller agrees to indemnify and hold the Buyer harmless from and
against (i) any and all Losses which the Buyer shall sustain by reason of or in
connection with the breach or inaccuracy of, or failure to comply with, any of
the representations, warranties, covenants or undertakings, contained in any
Document, made by the Seller, (ii) the Non-Assumed Liabilities, (iii) any
broker's or finder's fee or commission due to any brokers with respect to the
transactions contemplated hereby, and (iv) any and all Losses which the Buyer
shall sustain in connection with (a) claims by third parties arising in
connection with the Non-Assumed Liabilities, or (b) claims by third parties that
they are due a broker's or finder's fee or similar compensation with respect to
the transactions contemplated hereby, which claims arise out of actions of the
Seller or any Representative of the Seller. Notwithstanding the foregoing, the
Buyer shall not be entitled to any indemnification under this Section 8.2 (A)
---------------
with respect to any Losses incurred by the Buyer as a result of the breach of
any representation or warranty contained in Section 3 hereof, unless and until
---------
the amount of all Losses arising from breaches of representations and warranties
contained in Section 3 shall, in the aggregate, exceed $100,000, provided,
--------- --------
however, that at the time the aggregate amount of all such Losses exceeds
- -------
$100,000, Buyer shall be entitled to indemnification for the full amount of all
such Losses; provided, further, that the immediately preceding limitation shall
-------- -------
not apply in the case of any fraudulent breach.
(B) Buyer agrees to indemnify and hold the Seller harmless from and
against (i) any and all Losses which the Seller shall sustain by reason of or in
connection with the breach or inaccuracy of any of the representations,
warranties, covenants or undertakings contained in any Document, made by the
Buyer, (ii) the Assumed Liabilities, (iii) any broker's or finder's fee or
commission due to any brokers with respect to the transactions contemplated
hereby, and (iv) any and all Losses which the Seller shall sustain in connection
with claims by third parties that they are due a finder's or broker's fee or
similar compensation with respect to the transactions contemplated hereby, which
claims arise out of actions of the Buyer or any of its Representatives;
provided, however, that the Seller shall not be entitled to any indemnification
- -------- -------
under this Section 8.2(B) with respect to any Losses incurred by the Seller as a
--------------
result of the breach of any representation or warranty contained in Section 4
hereof, unless and until the amount of all Losses arising from breaches of
representations and warranties contained in Section 4 shall, in the aggregate,
---------
exceed $100,000, provided, however, that at the time the aggregate amount of all
-------- -------
such Losses exceeds $100,000, Seller shall be entitled to indemnification for
the full amount of all such Losses; provided, further, however, that the
-------- -------
immediately preceding limitation shall not apply in the case of any fraudulent
breach.
(C) The Buyer agrees to indemnify and hold the Seller harmless from and
against (i) the Buyer's Liabilities and (ii) any and all Losses which the Seller
shall sustain in connection with claims by third parties arising in connection
with the Buyer's Liabilities (subject to the exceptions set forth in Section
-------
2.4(c) hereof).
- ------
36
<PAGE>
(D) (i) Notwithstanding anything to the contrary contained herein, but
subject in any event to the rest of this Section 8.2(D), the maximum indemnity
--------------
which the Seller could become obligated to provide to the Buyer, in the
aggregate, under Section 8.2(A) for breaches of representations, warranties,
--------------
covenants and/or undertakings is $2,500,000 (in cash or securities, as more
specifically provided below); provided, however, that notwithstanding the
foregoing, any indemnity or payment to which the Buyer may be or become entitled
under Sections 2.4(A), 8.2(A)(ii), (iii) and (iv), 9, 12 and 16.6 shall be paid
--------------------------- ----- -- - -- ----
by the Seller, notwithstanding such $2,500,000 cap.
(ii) In the event that the Seller becomes liable to indemnify Buyer
for Losses under Section 8.2(A) for breaches of representations, warranties,
--------------
covenants and/or undertakings, any indemnified Losses shall be payable,
. firstly, by surrender (i.e., cancellation) of indebtedness otherwise
owed to the Seller under the Credit Agreement, such
surrender/cancellation to be made on a dollar-for-dollar basis in
accordance with the amount of Losses to be indemnified;
. secondly, by surrender (i.e., transfer of ownership) to Buyer of
shares of Buyer Preferred Stock (each share of Buyer Preferred Stock
shall be valued at the price Seller paid for such Buyer Preferred
Stock), such surrender to be made on a dollar-for-dollar basis in
accordance with the amount of Losses to be indemnified; and
. thirdly, at Seller's election, by payment of cash or by surrender
(i.e., transfer of ownership) to Buyer of shares of Buyer Common
Stock, such Buyer Common Stock to be valued at the most recent value
established by the Board of Directors of the Buyer for the Buyer
Common Stock for the purposes of the options to be issued to
Designated Employees and such surrender to be made on a dollar-for-
dollar basis in accordance with the amount of Losses to be
indemnified.
(E) Notwithstanding anything to the contrary contained herein, the maximum
aggregate indemnity which the Buyer could, in the aggregate, become obligated to
provide to the Seller under Section 8.2(B) for breaches of representations,
--------------
warranties, covenants and/or undertakings is $2,500,000; provided, however, that
notwithstanding the foregoing, any indemnity or payment to which the Seller may
be or become entitled under Sections 2.4(B), 2.4(C), 5.2(C)(i), 8.2(B)(ii),
---------------------------------- ----------
(iii) and (iv), 8.2(C), 9, 12 and 16.6 shall be paid by the Buyer,
- ----- -- ------ - -- ----
notwithstanding such $2,500,000 cap.
(F) Within a reasonable period of time after receipt by any party hereto
of notification of the assertion by a third party, of any Third Party Claim
(such recipient being referred to hereinafter as an "Indemnified Party"), such
Indemnified Party shall give written notice of such Third Party Claim to each
party which has, or would reasonably be expected to have, an obligation to
indemnify such Indemnified Party under this Section 8 (an "Indemnifying Party");
---------
provided, however, that the failure to so notify the Indemnifying Party shall
- -------- -------
not relieve him or it of any indemnity obligations hereunder unless, and to the
extent, the Indemnifying Party's rights have been adversely affected by
37
<PAGE>
any such failure or delay. The Indemnifying Party shall (upon its delivery to
the Indemnified Party of a written acknowledgment and agreement that, if such
Third Party Claim shall be adversely determined, the Indemnifying Party shall be
fully responsible hereunder to indemnify the Indemnified Party with respect to
such Third Party Claim) have the option, upon notice to the Indemnified Party,
to assume control of the defense of the Third Party Claim and the Indemnified
Party may participate at its own expense in (but not control) the Third Party
Claim (with counsel selected by it in its discretion) if it notifies the
Indemnified Party in writing of its intention so to participate; provided,
--------
however, that the Indemnifying Party shall not consent to the entry of any
- -------
judgment or enter into any settlement, except with the written consent of the
Indemnified Party, which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnified Party and its Affiliates
and Representatives of a release from all liability in respect of such Action or
which imposes any injunctive relief upon the Indemnified Party or any of its
Affiliates or Representatives. In the event of such assumption, the Indemnified
Party shall cooperate fully in the defense of the Third Party Claim as and to
the extent reasonably requested by the Indemnifying Party (such cooperation
shall include the retention and, upon the request of the Indemnifying Party, the
provision to such party of records and information which are reasonably relevant
to such claim or demand and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder). In the absence of any such assumption of the defense, the
Indemnifying Party shall be obligated to cooperate in accordance with the
preceding sentence.
(G) The provisions of this Section 8 are the exclusive remedy of any party
---------
to this Agreement against any other party to this Agreement for any claim for
breach of any covenant, agreement, representation, warranty or other provision
of this Agreement (other than a claim for specific performance or injunctive
relief or a claim based upon fraud) with the intent that all such claims shall
be subject to the limitations and other provisions contained in this Section 8.
---------
(H) In no event shall any party hereto be entitled to or recover
exemplary, punitive, special, consequential or liquidated damages or lost
profits in any action under this Agreement or relating to the subject matter
hereof.
9. Transactional and Other Taxes.
-----------------------------
(A) Transactional Taxes. The Buyer shall bear and pay any and all
-------------------
applicable Transactional Taxes with respect to the sale, transfer, or assignment
of the Assets or otherwise on account of this Agreement or the transactions
contemplated herein.
(B) Personal Property Taxes. All personal property taxes relating to
-----------------------
any and all personal property conveyed pursuant to this Agreement shall be pro-
rated between the Buyer and the Seller in accordance with the relationship of
the Closing Date to the entire relevant tax year. Any payment owed in respect
of such pro-ration shall be made at Closing.
38
<PAGE>
10. Further Assurances and Cooperation. Following the date hereof, and
----------------------------------
subject to the terms and conditions hereof, each of the Seller and the Buyer
agrees to execute and deliver such documents and take such other action as shall
be reasonably requested by the other party to carry out and effectuate the
transactions contemplated by this Agreement. On and subsequent to the Closing
Date, each party covenants and warrants that it shall, whenever and as often as
it shall be reasonably requested to do so by another party to this Agreement,
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered, any and all such further documents and instruments as may be
reasonably necessary, expedient or proper in order to complete any and all of
the conveyances, transfers, sales and assignments herein provided for.
11. Notices. All notices, requests, demands, and other communications
-------
permitted or required under this Agreement shall be in writing and shall be
either personally delivered (including couriers such as Federal Express) or sent
by pre-paid certified mail, return receipt requested, or facsimile transmission,
with a confirmation copy personally delivered or sent by pre-paid certified
mail, addressed or transmitted to the address or number stated below of the
party to which notice is given, or to such other address or number as such party
may have fixed by notice given in accordance with the terms hereof:
To the Buyer:
UroGen Corp.
10835 Altman Row, Suite A
San Diego, California 92121
Attention: Robert E. Sobol
Facsimile: (619) 642-9173
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Herbert P. Fockler, Esq.
Facsimile: (650) 493-6811
39
<PAGE>
To the Seller:
Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Attention: President - Venture Management
Associate General Counsel
Facsimile: (847) 940-6271
With a copy to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Chicago, Illinois 60603-5803
Attention: Christopher A. Lause, Esq.
Facsimile: (312) 269-8869
Any notice, sent as provided above, shall be deemed given if personally
delivered or, if sent by certified mail, upon delivery at the address provided
for above (or, in the event delivery is refused, the first date on which
delivery was tendered) or, if sent by facsimile transmission, upon receipt by
the sender of confirmation of delivery.
12. Expenses. Subject to the terms of Section 8 hereof, each party hereto
-------- ---------
shall bear its own expenses (including all attorneys', accountants', investment
bankers', brokers', representatives' and consultants' fees) incurred in
connection with the negotiation, preparation, consummation and performance of
this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby.
13. Termination. This Agreement may be terminated at any time on or prior to
-----------
the Closing Date:
(A) by mutual consent of the Seller and the Buyer;
(B) by the Buyer, if (i) there has been a material misrepresentation
or breach on the part of the Seller with respect to any representation or
warranty of the Seller set forth herein, or (ii) there has been any material
failure on the part of the Seller to comply with any of its obligations or to
perform any of its covenants hereunder, which failure, if capable of remedy, has
not been remedied within 15 days of receipt by the Seller of notice thereof, or
(iii) any of the conditions set forth in Section 6.1 or 6.3 shall not have been
------------------
fulfilled within 90 days of the date hereof (other than by virtue of a breach of
this Agreement by the Buyer) and the fulfillment thereof shall not have been
waived by the Buyer; or
(C) by the Seller, if (i) there has been a material misrepresentation
or breach on the part of the Buyer in any of its representations or warranties
set forth herein, or (ii) there has been
40
<PAGE>
any material failure on the part of the Buyer to comply with any of its
obligations or to perform any of its covenants hereunder, which failure, if
capable of remedy, has not been remedied within 15 days of receipt by the Buyer
of notice thereof, or (iii) any of the conditions set forth in Section 6.2 or
--------------
6.3 shall not have been fulfilled within 90 days of the date hereof (other than
- ---
by virtue of a breach of the Agreement by the Seller) and the fulfillment
thereof shall not have been waived by the Seller.
A termination pursuant to Section 13(B) or (C) shall be effective
--------------------
immediately upon delivery of a notice of termination by the party or parties
having the right to terminate to the other party or parties. In the event of a
termination of this Agreement, as provided above, this Agreement shall forthwith
terminate and there shall be no liability on the part of Buyer or the Seller,
except for amounts payable, if any, under Section 5.1(F) or for liability
--------------
arising from a breach of this Agreement.
14. Disclaimer. The Seller shall not be deemed to have made to the Buyer any
----------
representation or warranty other than as expressly made by the Seller in Section
3 hereof. Without limiting the generality of the foregoing, and notwithstanding
any otherwise express representations and warranties made by the Seller in
Section 3 hereof, THE SELLER MAKES NO REPRESENTATION OR WARRANTY TO THE BUYER
WITH RESPECT TO, AND WITH RESPECT TO PARAGRAPH (C) BELOW ONLY, THE BUYER MAKES
NO REPRESENTATION OR WARRANTY TO THE SELLER WITH RESPECT TO:
(A) ANY FINANCIAL INFORMATION WITH RESPECT TO THE UNIT OR ANY
PROJECTIONS, ESTIMATES OR BUDGETS HERETOFORE DELIVERED TO OR MADE AVAILABLE TO
THE BUYER OF FUTURE REVENUES, EXPENSES OR EXPENDITURES OR FUTURE RESULTS OF
OPERATIONS; OR
(B) ANY ASSETS CONSISTING OF FURNITURE, SUPPLIES, TOOLS, MACHINERY,
EQUIPMENT, MATERIALS OR THE BIOLOGICS, EXCEPT AS EXPRESSLY SET FORTH IN SECTION
3 HEREOF, AND EXPRESSLY DISCLAIMS ANY WARRANTIES, EXPRESSED OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE (ALL SUCH ASSETS BEING SOLD
TO THE BUYER ON AN "AS IS" BASIS); OR
(C) EXCEPT AS COVERED BY A REPRESENTATION AND WARRANTY CONTAINED IN
SECTION 3 OR 4 HEREOF, ANY OTHER INFORMATION OR DOCUMENTS (FINANCIAL OR
OTHERWISE) MADE AVAILABLE TO THE PARTIES HERETO OR THEIR COUNSEL, ACCOUNTANTS OR
ADVISERS WITH RESPECT TO THE OTHER PARTY HERETO.
15. Allocation of Consideration. The parties shall exercise their good faith
---------------------------
efforts to agree upon how the consideration paid or given for the Assets
(including but not limited to the Purchase Consideration) shall be allocated.
In the event that any such agreement is executed and delivered by the parties,
such consideration shall be deemed, for all purposes (including those relating
to Taxes of any kind whatsoever), to be allocated to the Assets in accordance
therewith and, without limiting the foregoing, any IRS Forms 8594 shall be
prepared consistent therewith.
41
<PAGE>
16. Miscellaneous.
-------------
16.1 Entire Agreement: No Modification. This Agreement, including the
---------------------------------
Exhibits, Schedules, Transaction Documents and instruments delivered pursuant
- -------- ---------
hereto, sets forth the entire agreement and understanding between the parties
hereto as to the specific subject matter hereof and thereof, and merges and
supersedes all prior discussions, agreements and understandings of every kind
and nature between them with respect to the specific subject matter hereof and
thereof, and no party hereto shall be bound by any condition, definition,
warranty or representation other than as expressly provided for in this
Agreement. This Agreement shall not be changed or amended except by a writing
signed by the Buyer and the Seller.
16.2 Waiver of Breach. The waiver by a party of a breach or violation by
----------------
any other party of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach or violation by any party of the
same or any other provision of this Agreement. No such waiver shall be
effective unless in writing signed by the party claimed to have made the waiver.
16.3 Benefit of Parties; Assignment. This Agreement shall be binding upon
------------------------------
and shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and permitted assigns. No party
shall have the right to assign or delegate any of its rights or obligations
arising hereunder, except with the prior written consent of each other party
hereto; provided, however, that any party may assign any or all of its rights,
-------- -------
and delegate any or all of its obligations, hereunder to any person or entity
who shall, by merger, consolidation, transfer of assets or otherwise, have
acquired all or substantially all of the assets (not counting cash and cash
equivalents) of such party; provided, further, that no such delegation shall
-------- -------
relieve the delegating party of the obligation to satisfy and discharge the
obligation(s) so delegated. Notwithstanding the foregoing, the Seller shall
have the right to assign this Agreement, and any rights and obligations arising
hereunder, to an Affiliate of the Seller without the prior written consent of
any other party hereto; provided, that no such assignment shall relieve the
Seller of any of its obligations hereunder. Any purported assignment or
delegation in violation of this Section 16.3 shall be null and void ab initio.
------------ -- ------
16.4 Headings. The headings of the sections and paragraphs of this
--------
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
16. Governing Law; Jurisdiction. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of California without giving
effect to principles of conflict of laws. Subject to Section 16.6 below, each
party to this Agreement expressly and irrevocably (A) agrees that any legal
action or proceeding under, arising out of or in any manner relating to, this
Agreement, or any other Document delivered in connection herewith, if brought by
the Buyer shall be brought in any court of the State of Illinois located in Cook
County or in the United States District Court for the Northern District of
Illinois, or, if brought by the Seller shall be brought in any court of the
State of California located in San Diego County or in the United States District
Court for the Southern District of California, (B) consents and submits to the
personal jurisdiction of any of such
42
<PAGE>
courts in any such action or proceeding, (C) consents to the service of any
complaint, summons, notice or other process relating to any such action or
proceeding by delivery thereof to him, her or it by hand or by any other manner
provided for in Section 11, (D) waives any claim or defense in any such action
----------
or proceeding based on any alleged lack of personal jurisdiction, improper venue
or forum non conveniens or any similar basis, and (E) waives all rights, if any,
----- --- ----------
to trial by jury with respect to any such action or proceeding. Subject to
Section 16.6 below, nothing in this Section shall affect or impair in any manner
or to any extent the right of any party to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction or to serve
process in any manner permitted by law.
16.6 Dispute Resolution.
------------------
(A) Provisional Remedies: The procedures specified in this Section
16.6 shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
---------
however, that a party, without prejudice to these procedures, may seek a
- -------
preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in good
faith in the procedures specified in this Section 16.6.
(B) Negotiations Between Executives: The parties will attempt in good
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
16.6).
(C) Arbitration: In the event that any dispute arising out of or
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith negotiation pursuant to the procedures of Section
16.6(B) within thirty (30) days following either party delivering notice of such
dispute to the other party hereto, such dispute shall, upon written notice by
either party to the other, be finally settled by arbitration administered by
JAMS/Endispute in accordance with the provisions of its Comprehensive
Arbitration Rules and Procedures and the United States Federal Arbitration Act,
as modified below:
(i) The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators all of whom shall be
selected from a list of neutral arbitrators supplied by the
JAMS/Endispute. From such list, each of Seller and Buyer shall
select one (1) arbitrator, and the arbitrators so selected shall
select a third. The panel shall designate one (1) among them to
serve as chair.
(ii) The arbitration proceedings shall be conducted: (a) if
notice demanding arbitration is delivered by the Buyer to the
Seller, in Cook County, Illinois, or (b) if notice demanding
43
<PAGE>
arbitration is delivered by the Seller to the Buyer, in San Diego
County, California.
(iii) Any party may seek interim or provisional remedies under
the Federal Rules of Civil Procedure and the United States
Federal Arbitration Act as necessary to protect the rights or
property of the party pending the decision of the arbitrators.
(iv) The parties shall allow and participate in limited
discovery for the production of documents and taking of
depositions, which shall be conducted in accordance with the
Comprehensive Arbitration Rules and Procedures of JAMS/Endispute.
All discovery shall be completed within sixty (60) days following
the filing of the answer or other responsive pleading. Unresolved
discovery disputes shall be brought to the attention of the chair
of the arbitration panel and may be disposed of by the chair.
(v) Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of
arbitrators, provided that the chair of the panel of arbitrators
may establish such longer times for presentations as the chair
deems appropriate.
(vi) The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing
of the matter, shall be in writing and shall specify the factual
and legal basis for the award. Judgment thereon may be entered in
any court having jurisdiction thereof.
(vii) The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance
or other appropriate relief to cure a breach; provided, however,
--------- -------
that the arbitrators will have no authority to award special,
punitive or exemplary damages, or other money damages that are
not measured by the prevailing party's actual damages.
(D) Performance During Dispute: Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating
44
<PAGE>
to this Agreement, unless to do so would be commercially impossible or
impractical under the circumstances.
(E) Costs of Arbitration: The party which is found to have been more
at fault in a dispute arbitrated under this Section 16.6 shall be responsible
------------
for paying the costs and expenses, including reasonable attorney's fees, which
the other party has incurred in such arbitration.
16.7 Multiple Counterparts; Execution by Fax. This Agreement may be
---------------------------------------
signed in any number of counterparts which taken together shall constitute one
and the same instrument. This Agreement may be executed and delivered by
exchange of facsimile copies showing the signatures of the parties hereto, and
those signatures need not be affixed to the same copy. The facsimile copies
showing the signatures of the parties will constitute originally signed copies
of the same agreement requiring no further execution.
16.8 Exhibits, Schedules. All Exhibits and Schedules referred to in this
------------------- -------- ---------
Agreement are attached hereto and are incorporated herein by reference as if
fully set forth herein.
16.9 Construction. The language in all parts of this Agreement shall in
------------
all cases be construed as a whole according to its fair meaning, strictly
neither for nor against any party hereto, and without implying a presumption
that the terms thereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be construed more
strictly against the person who himself or through his agent prepared the same,
it being agreed that representatives of both parties have participated in the
preparation hereof.
16.10 Publicity. No party to this Agreement shall issue or cause the
---------
publication of any press release or other public announcement with respect to
this Agreement or the transactions contemplated hereby without first providing a
draft of such press release or announcement to the other parties and obtaining
the consent of the other parties hereto, which consent shall not be unreasonably
withheld; provided, however, that nothing herein shall prevent any party from
-------- -------
making any disclosure required by law, including, without limitation, the
requirements of the SEC, the Securities Act and the rules promulgated
thereunder, or any applicable stock exchange or the Nasdaq Stock Market.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the date first above written.
SELLER:
BAXTER HEALTHCARE CORPORATION
45
<PAGE>
By: /s/ Victor W. Schmitt
----------------------------------------
Title: President, Venture Management
-------------------------------------
BUYER:
UROGEN CORP.
By: Paul D. Quadros
----------------------------------------
Title: President and CEO
--------------------------------------------
46
<PAGE>
EXHIBIT 2.2
AMENDMENT TO ASSET PURCHASE AGREEMENT
-------------------------------------
This AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment"), made as of this
27th day of May, 1998, by and between BAXTER HEALTHCARE CORPORATION, a Delaware
corporation with offices at 1627 Lake Cook Road, Deerfield, Illinois 60015 (the
"Seller"), and UROGEN CORP., a Delaware corporation with offices at 10835 Altman
Row, Suite A, San Diego, California, 92121 ("Buyer").
RECITALS
WHEREAS, the Buyer and the Seller have entered into that Certain Asset
Purchase Agreement, dated as of February 28, 1998 (the "Agreement"); and
WHEREAS, the Buyer and the Seller desire to amend the Agreement to (i)
reflect certain changes to the structure of the transaction contemplated by the
Agreement, (ii) extend the date for the fulfillment of certain conditions
precedent set forth in the Agreement, and (iii) incorporate certain terms and
conditions relating to the employment by the Buyer of the Designated Employees,
all upon and subject to the terms and conditions of this Amendment; and
WHEREAS, any capitalized terms not otherwise defined in this Amendment
shall bear the meaning ascribed to such terms in the Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained, the parties agree as follows:
TERMS
As of the date hereof, the Agreement is hereby amended as follows:
1. DEFINITIONS. Section 1.1 of the Agreement shall be amended as follows:
A. The following defined term shall be inserted into Section 1.1 of the
Agreement immediately following the definition of "Authority":
"Bridge Financing" shall mean shall mean that the Buyer shall have
completed a sale or sales of the Buyer's securities of any type whatsoever
(whether representing debt or equity), or shall have obtained debt
financing, in either case for which the Buyer shall have received, in the
aggregate, net proceeds equal to or exceeding $[ * ] following the date of
the Agreement and prior to the Closing, excluding (a) the proceeds from any
---------
sale or sales of the Buyer's securities of any type whatsoever (whether
representing debt or equity) to Baxter or any of Baxter's Affiliates (as
that capitalized term is defined in the Investors' Agreement), (b) the
proceeds from any sale or sales of the Buyer's securities of any type
whatsoever (whether representing debt or equity) to employees, officers,
directors, contractors, advisors or consultants
<PAGE>
of the Buyer pursuant to incentive agreements or plans approved by the
Board of Directors of the Buyer, (c) the proceeds from the issuance of any
securities upon conversion of, or with respect to, any then outstanding
securities of the Buyer or in connection with any stock split, stock
dividend or recapitalization, (d) the proceeds from securities issued
pursuant to the acquisition of another corporation or entity by
consolidation, merger, purchase of assets or other reorganization, (e) the
value received from equipment lessors or real property lessors in leasing
or other similar debt financing transactions, and (f) proceeds from
securities issued to banks, equipment lessors, real property lessors, or
the proceeds of other similar debt financing transactions.
B. The definition of "Buyer Preferred Stock" shall be deleted and the
following inserted therefor:
"Buyer Preferred Stock" shall mean Series A, Series B and Series C
Preferred Stock of Buyer, par value $.01, having rights, preferences and
designations as set forth on Exhibit A to this Agreement.
---------
In addition, Exhibit A of the Agreement will be deleted and a new Exhibit A
--------- ---------
containing forms of the Certificate(s) of Designation for the Series A, Series B
and Series C Preferred Stock of Buyer will be substituted therefor in the form
attached hereto as Exhibit A.
---------
C. The definition of "Credit Agreement" shall be deleted and the
following inserted therefor:
"Credit Agreement" shall mean a Credit Agreement between the Buyer and the
Seller and dated as of the Closing Date in the form attached hereto as
Exhibit B.
---------
In addition, Exhibit B of the Agreement will be deleted and a new Exhibit B
--------- ---------
containing a form of Credit Agreement will be substituted therefor in the form
attached hereto as Exhibit B.
---------
D. The definition of "Development Agreement" shall be deleted and the
following inserted therefor:
"Development Agreement" shall mean a Developmental Collaboration Agreement
between the Buyer and the Seller and dated as of the Closing Date in the
form attached hereto as Exhibit C.
---------
In addition, Exhibit C of the Agreement will be deleted and a new Exhibit C
--------- ---------
containing a form of Developmental Collaboration Agreement will be substituted
therefor in the form attached hereto as Exhibit C.
---------
2
<PAGE>
E. The definition of "Distribution Agreement" shall be deleted and the
following inserted therefor:
"Distribution Agreement" shall mean a Distribution Agreement between the
Buyer and the Seller and dated as of the Closing Date in the form attached
hereto as Exhibit D.
---------
In addition, Exhibit D of the Agreement will be deleted and a new Exhibit D
--------- ---------
containing a form of Distribution Agreement will be substituted therefor in the
form attached hereto as Exhibit D.
---------
F. A definition of "Employee Lease" will be added as follows:
"Employee Lease" shall mean an Employee Lease between the Buyer and the
Seller and dated as of the Closing Date in the form attached hereto as
Exhibit E.
---------
In addition, Exhibit E of the Agreement will be deleted and a new Exhibit E
--------- ---------
containing a form of Employee Lease will be substituted therefor in the form
attached hereto as Exhibit E.
---------
G. The following defined terms shall be inserted into Section 1.1 of the
Agreement immediately prior to the definition of "Investment Agreement":
"Investment Milestone" shall mean that the Buyer shall have completed a
sale or sales of the Buyer's securities of any type whatsoever (whether
representing debt or equity) for which the Buyer shall have received, in
the aggregate, net proceeds equal to or exceeding $2,500,000 following the
Closing, excluding (a) the proceeds from any sale or sales of the Buyer's
---------
securities of any type whatsoever (whether representing debt or equity) to
Baxter or any of Baxter's Affiliates (as that capitalized term is defined
in the Investors' Agreement), (b) the proceeds from any sale or sales of
the Buyer's securities of any type whatsoever (whether representing debt or
equity) to employees, officers, directors, contractors, advisors or
consultants of the Buyer pursuant to incentive agreements or plans approved
by the Board of Directors of the Buyer, (c) the proceeds from the issuance
of any securities upon conversion of, or with respect to, any then
outstanding securities of the Buyer or in connection with any stock split,
stock dividend or recapitalization, (d) the proceeds from securities issued
pursuant to the acquisition of another corporation or entity by
consolidation, merger, purchase of assets or other reorganization, (e) the
proceeds from securities issued to banks, equipment lessors, real property
lessors or the proceeds of other similar debt financing transactions, and
(f) the proceeds of the Bridge Financing.
"Investment Milestone Date" shall mean the date when the Buyer shall
achieve the Investment Milestone.
3
<PAGE>
H. The definition of "Investment Agreement" shall be deleted and the
following inserted therefor:
"Investors' Agreement" shall mean an Investor Rights Agreement between the
Buyer, Seller and certain individuals, dated as of the Closing Date, in the
form attached hereto as Exhibit F.
---------
In addition, Exhibit F of the Agreement will be deleted and a new Exhibit F
--------- ---------
containing a form of Investors' Agreement will be attached to the Agreement by
the parties in the form attached hereto as Exhibit F.
---------
I. The definition of "Registration Rights Agreement" shall be deleted.
J. The definition of "Royalty Agreement" shall be deleted and the
following inserted therefor:
"Royalty Agreement" shall mean a Royalty Agreement between the Buyer and
the Seller and dated as of the Closing Date in the form attached hereto as
Exhibit G.
---------
In addition, a new Exhibit G containing a form of Royalty Agreement will be
---------
attached to the Agreement by the parties in the form attached hereto as Exhibit
-------
G.
- -
K. The definition of "Security Agreement" shall be deleted.
L. The definition of "Seller License Agreement" shall be deleted and the
following inserted therefor:
"Seller License Agreement" shall mean a Technology License Agreement
between the Buyer and the Seller and dated as of the Closing Date in the
form attached hereto as Exhibit H.
---------
In addition, a new Exhibit H containing a form of Technology License Agreement
---------
will be attached to the Agreement by the parties in the form attached hereto as
Exhibit H.
- ---------
M. The definition of "Services Agreement" shall be deleted and the
following inserted therefor:
"Services Agreement" shall mean a Services Agreement between the Buyer and
the Seller and dated as of the Closing Date in the form attached hereto as
Exhibit I.
---------
In addition, a new Exhibit I containing a form of Services Agreement will be
---------
attached to the Agreement by the parties in the form attached hereto as Exhibit
-------
I.
- -
4
<PAGE>
N. The definition of "Stockholders' Agreement" shall be deleted.
O. The definition of "Transaction Documents" will be deleted and the
following inserted therefor:
"Transaction Documents" shall mean the following:
(i) the Credit Agreement;
(ii) the Development Agreement;
(iii) the Distribution Agreement;
(iv) the Employee Lease;
(v) the Investors' Agreement;
(vi) the Royalty Agreement;
(vii) the Seller License Agreement;
(viii) the Services Agreement; and
(ix) each of the other agreements, documents and instruments being,
or to be, executed in connection with the transactions
contemplated hereunder.
2. CONFORMING CHANGES. Each time any of the following old defined terms
(as defined in the original Agreement) is otherwise utilized in the Agreement or
any of the other Transaction Documents, such terms shall be deleted and the
following new defined terms (as defined in this Amendment) shall be substituted
therefor:
<TABLE>
<CAPTION>
Old Defined Term New Defined Term Agreement Cross Reference
- ---------------- ---------------- -------------------------
<S> <C> <C>
"Stockholders' Agreement" "Investors' Agreement" (S)(S)3.20, 4.5
"Common Stock Consideration" "Stock Consideration" (S)(S)4.5, 5.1(B)(iii), 7.2(i)
</TABLE>
In addition, the phrase "financing of $[ * ] or more from a third party" in
Section 6.2(E) of the Agreement shall be deleted and the defined term "Bridge
Financing" shall be substituted therefor.
3. PURCHASE AND SALE. Section 2.1 of the Agreement shall be deleted and
the following inserted therefor:
2.1 Purchase and Sale. (a) Except for the tangible Assets (which
-----------------
shall initially be leased to the Buyer pursuant to the terms and conditions
of the Services Agreement), and in reliance on the representations and
warranties contained herein and subject to all of the terms and conditions
hereof, the Seller hereby agrees to sell, assign, transfer and deliver (or
cause to be sold, assigned, transferred and delivered) to the Buyer, and
the Buyer agrees to purchase from the Seller, on the Closing Date, all of
the Seller's right, title and interest in and to the Other Assets.
5
<PAGE>
(b) With respect to the tangible Assets, Seller shall retain title to
and hold the tangible Assets at the Round Lake Facility from the date of
Closing through the date of termination of the lease of tangible Assets
under the Services Agreement (the "Tangible Asset Transfer Date"), which
Tangible Asset Transfer Date shall not be later than December 31, 1998. At
least sixty (60) days prior to the Tangible Asset Transfer Date, Buyer
shall direct Seller in writing to deliver such tangible Assets to Buyer at
Buyer's specified location in California ("Buyer's Notice of Delivery").
Between the date of this Agreement and the Buyer's Notice of Delivery, the
parties shall discuss alternatives to the structure set forth in this
Section 2.1(b) for Seller's delivery of Seller's rights, title and interest
--------------
in and to the tangible Assets on the Tangible Asset Transfer Date to Buyer
on terms which are mutually agreeable and beneficial to the parties.
Subject to the satisfaction of the relevant terms and conditions of the
Services Agreement on or before the Tangible Asset Transfer Date, Buyer's
Notice of Delivery shall become effective on the Tangible Asset Transfer
Date and shall specify the method of delivery. Subject to the satisfaction
of the relevant terms and conditions of the Services Agreement on or before
the Tangible Asset Transfer Date, on the Tangible Asset Transfer Date,
Seller shall sell, assign, transfer and deliver (or cause to be sold,
assigned, transferred and delivered) to the Buyer, and the Buyer shall
purchase from the Seller, all of the Seller's right, title and interest in
and to the tangible Assets. The tangible Assets will be delivered by Seller
FOB the Round Lake Facility, per Buyer's Notice of Delivery, on the
Tangible Asset Transfer Date. Until the tangible Assets are delivered to
Buyer as provided for in this Section 2.1(b), pursuant to the terms and
--------------
conditions of the Services Agreement, the Seller shall be responsible for
storing and maintaining the tangible Assets and the Buyer shall reimburse
the Seller for such storage and maintenance. Buyer and Seller shall bear
equally the Fully Loaded Costs for de-installing, packing and shipping the
tangible Assets to Buyer.
(c) With respect to the Intellectual Property Assets, Seller (and/or
Seller's parent corporation, Baxter International Inc.) shall retain title
to the Intellectual Property Assets and license the Intellectual Property
Assets from the date of Closing through the Investment Milestone Date
pursuant to the terms and conditions of the Seller License Agreement.
Subject to the satisfaction of the relevant terms and conditions of the
Seller License Agreement on or before the Investment Milestone Date, on the
Investment Milestone Date Seller will assign, transfer and deliver (or
cause to be assigned, transferred and delivered) to the Buyer all of the
Seller's right, title and interest in and to the Intellectual Property
Assets. With respect to this Section 2.1(c) only, the phrase "Seller's
--------------
right, title and interest in and to the Intellectual Property Assets"
shall, with respect to the Intellectual Property Assets, include the right,
title and interest of Seller's parent corporation, Baxter International
Inc., in and to the Intellectual Property Assets.
6
<PAGE>
4. PURCHASE CONSIDERATION. Section 2.2 of the Agreement shall be deleted
and the following inserted therefor:
2.2 Purchase Consideration. In consideration of the licensing,
----------------------
leasing, sale, assignment and transfer of the Assets pursuant to Section
-------
2.1 hereof, Buyer agrees to issue to the Seller the following securities of
---
the Buyer as follows:
(a) On the Tangible Asset Transfer Date, Buyer shall issue to the
Seller (i) 1,768,319 shares of Buyer Common Stock (equitably adjusted for
any stock dividend, stock split, combination of shares, reclassification or
other similar event affecting such shares between the Closing Date and the
Tangible Asset Transfer Date), and (ii) 325 shares of Buyer's Series A
Preferred Stock (equitably adjusted for any stock dividend, stock split,
combination of shares, reclassification or other similar event affecting
such shares between the Closing Date and the Tangible Asset Transfer Date);
(b) At Closing, Buyer shall issue to the Seller 5,444 shares of
Buyer's Series A Preferred Stock, or such greater number of shares of
Buyer's Series A Preferred Stock (including fractional shares) such that
immediately following the Closing the Buyer Common Stock issuable to Seller
pursuant to Section 2.2(a) above plus the Buyer Common Stock issuable to
-------------- ----
Seller pursuant to Section 2.2(c) below plus the number of shares of Buyer
-------------- ----
Common Stock issuable to Seller upon conversion of the Buyer's Series A
Preferred Stock issued to Seller pursuant to Section 2.2(a) above and this
--------------
Section 2.2(b) shall represent (assuming for the purposes of this
--------------
calculation that all of the Buyer Common Stock issuable to Seller pursuant
to Section 2.2(a) above and Section 2.2(c) below was issued to Seller at
-------------- --------------
Closing and that all of the Buyer's Series A Preferred Stock issued to
Seller pursuant to Section 2.2(a) above and this Section 2.2(b) had been
-------------- --------------
converted into Buyer Common Stock at Closing) fifty percent (50%) of the
outstanding shares of Buyer Common Stock on a fully diluted basis (without
adjustment for options granted by the Buyer's Board of Directors to Hired
Designated Employees and employees of Buyer on June 17, 1998, and subject
to such percentage being adjusted downward as a result of the Bridge
Financing (subject to Section 2.2(e) below): provided, however, that
-------------- -------- -------
Seller shall have previously approved, in its sole discretion, the Bridge
Financing; and
(c) Within five (5) days of the closing of a transaction under which
any Dilutive Bridge Financing Securities (as defined below in Section
-------
2.2(e)) are issued, and under which an adjustment occurs in the number of
------
shares of Common Stock deemed issued or issuable that is greater than 1000
shares of Buyer Common Stock, Buyer shall deliver to Seller a certificate
representing the number of shares of Buyer Common Stock due Seller under
the formula set forth below in Section 2.2(e)(bb) (the "Adjustment").
7
<PAGE>
(d) The Buyer Common Stock and the Buyer's Series A Preferred Stock
issued or issuable to Seller pursuant to Sections 2.2(a) through (c) above
--------------- ---
are hereinafter referred to as the "Stock Consideration" or "Purchase
Consideration".
(e) Notwithstanding any provision of this Agreement to the contrary,
the parties agree that in the event of the issuance of any securities
(including any Buyer Common Stock, preferred stock, warrants, options,
debentures, notes, or any other securities or debt convertible into Buyer
Common Stock) by the Buyer in connection with the Bridge Financing, which
(i) in the case of Buyer Common Stock shall be purchased for less than one
dollar ($1.00) per share of Buyer Common Stock, (ii) in the case of
warrants or options shall have an exercise price of less than one dollar
($1.00) per share of Buyer Common Stock, or (iii) in the case of securities
or debt convertible into Buyer Common Stock, shall convert into Buyer
Common Stock at a conversion price of less than one dollar ($1.00) per
share of Buyer Common Stock (collectively the "Dilutive Bridge Financing
Securities"): (aa) The number of shares of Buyer Common Stock and Buyer's
Series A Preferred Stock issuable to Buyer pursuant to Section 2.2 (b)
above shall be adjusted to reflect only the portion of such Dilutive Bridge
Financing Securities set forth in the formula in clause (bb) below; and
(bb) the number of shares of Buyer Common Stock issued or issuable pursuant
to such Dilutive Bridge Financing Securities shall be deemed to have been
issued immediately prior to Closing for the purposes of calculating that
"fifty percent (50%) of the outstanding shares of Buyer Common Stock"
pursuant to Section 2.2(b) above, shall be determined according to the
following formula:
Number of shares of Buyer Common Stock deemed issued or issuable
pursuant to such Dilutive Bridge Financing Securities= 1-A x B
(rounded down to the nearest whole number)
Where:
A = the price per share of Buyer Common Stock or the exercise price
or conversion price (as applicable) of each individual Dilutive
Bridge Financing Security, as expressed as a fraction of a dollar
(i.e., $0.70 = .7); and
----
B = the number of Dilutive Bridge Financing Securities issued at that
price.
5. PAYMENT. Section 2.3 of the Agreement shall be deleted and the
following inserted therefor:
8
<PAGE>
2.3 Payment. (a) At the Closing provided for in Section 2.5
------- -----------
hereof, the Buyer shall deliver to the Seller certificates representing the
Stock Consideration set forth in Sections 2.2(b) above and such
--------------
certificates shall bear the legends set forth in the Investors' Agreement.
(b) On the Tangible Asset Transfer Date, the Buyer shall deliver to
the Seller certificates representing the Stock Consideration set forth in
Section 2.2(a) above and such certificates shall bear the legends set forth
--------------
in the Investors' Agreement.
(c) Within five (5) days of the closing of a transaction under which
any Dilutive Bridge Financing Securities are issued, and under which an
adjustment occurs in the number of shares of Common Stock deemed issued or
issuable that is greater than 1000 shares of Common Stock pursuant to
Section 2.2(c) above, the Buyer shall deliver to the Seller certificates
--------------
representing the Stock Consideration set forth in Section 2.2(c) above and
--------------
such certificates shall bear the legends set forth in the Investors'
Agreement.
6. LIABILITIES. Section 2.4 of the Agreement shall be amended to add a
new subsection (D) immediately following subsection 2.4(C) as follows:
(D) Post-Closing Liabilities. Notwithstanding Sections 2.4(A) through
------------------------
2.4(C) inclusive to the contrary, with respect to (1) tangible Assets to be
------
transferred to the Buyer on the Tangible Asset Transfer Date pursuant to
Section 2.1(b) above, (2) Intellectual Property Assets to be transferred to
--------------
the Buyer on the Investment Milestone Date pursuant to Section 2.1(c)
--------------
above, and (3) employees of Seller who shall be leased by Seller to the
Buyer pursuant to the Employee Lease, Buyer shall not assume nor be liable
for any liabilities with respect to such Assets or employees pursuant to
Sections 2.4(A) through 2.4(C) on or after the Closing Date, whether or not
--------------- ------
such liabilities constitute "Assumed Liabilities", except as follows:
(a) With respect to the tangible Assets to be transferred to the
Buyer on the Tangible Asset Transfer Date pursuant to Section 2.1(b) above,
--------------
Buyer shall (i) assume and be liable for any liabilities with respect to
such Assets to the extent set forth in and as set forth in the Services
Agreement between the Closing and the Tangible Asset Transfer Date and (ii)
upon the transfer of such Assets to Buyer pursuant to Section 2.1(b)
--------------
above, on and after the Tangible Asset Transfer Date assume and be liable
for any liabilities with respect to such Assets to the extent provided for
under this Agreement as if such Assets were transferred to the Buyer under
this Agreement on the Closing Date (subject to any reallocation of such
liabilities pursuant to the Services Agreement for the period between the
Closing and the Tangible Asset Transfer Date);
9
<PAGE>
(b) With respect to the Intellectual Property Assets to be
transferred to the Buyer on the Investment Milestone Date pursuant to
Section 2.1(c) above, Buyer shall (i) assume and be liable for any
--------------
liabilities with respect to such Assets to the extent set forth in and as
set forth in the Seller License Agreement between the Closing and the
Investment Milestone Date and (ii) upon the transfer of such Intellectual
Property Assets to Buyer pursuant to Section 2.1(c) above, on and after the
--------------
Investment Milestone Date shall assume and be liable for any liabilities
with respect to such Assets to the extent provided for under this Agreement
as if such Assets were transferred to the Buyer under this Agreement on the
Closing Date (subject to any reallocation of such liabilities pursuant to
the Seller License Agreement for the period between the Closing and the
Investment Milestone Date); and
(c) With respect to employees of Seller who shall be leased by the
Seller to the Buyer pursuant to the Employee Lease, Buyer shall (i) assume
and be liable for any liabilities with respect to such employees to the
extent set forth in and as set forth in the Employee Lease between the
Closing and the date of the termination of the Employee Lease (the
"Employee Lease Termination Date"), which Employee Lease shall terminate
not later than December 31, 1998, and (ii) on and after the Employee Lease
Termination Date shall assume and be liable for any liabilities with
respect to any "Hired Designated Employees" (as that term is defined below
in Section 16.11B) to the extent set forth in and as set forth in Section
-------------- -------
16.11B below.
------
7. CLOSING. Section 2.5 of the Agreement shall be amended to delete the
phrase "The closing of the purchase and sale of the Assets hereunder" and the
following phrase shall be inserted and substituted therefor:
The (a) closing of the purchase and sale of the Other Assets (except for
the tangible Assets to be transferred to the Buyer on the Tangible Asset
Transfer Date pursuant to Section 2.1(b) above) and (b) and the execution
--------------
and delivery of the Transaction Documents
8. REPRESENTATIONS AND WARRANTIES OF SELLER. The representations and
warranties of the Seller contained in Article 3 of the Agreement shall be
amended as follows:
(A) In the fifth to last line of Section 3.2, the phrase "or sublicensed
to" shall be deleted and the following inserted therefor: ", leased
to, or licensed or sublicensed to".
(B) The phrase "Schedule 3.7(H) contains a list and description of all
---------------
Patents" in Section 3.7(H) shall be deleted and the following inserted
therefor: "Schedules 3.7(A), 3.7(B), 3.7(C) and 3.7(D), and items b
---------------- ------ ------ ------
and c of the Definition of "Assets"
10
<PAGE>
in Section 1.1 above, list all material Intellectual Property Assets
-----------
(other than any Intellectual Property Rights relating to the
Biologics)".
9. VALID ISSUANCE OF BUYER COMMON STOCK AND BUYER'S PREFERRED STOCK.
Section 4.5 of the Agreement will be amended to delete the second sentence
thereof and to insert and substitute the following therefor:
Immediately following issuance at Closing, and subject to Section 2.2(e)
--------------
above, the Buyer Common Stock issuable to Seller pursuant to Section 2.2(a)
--------------
above plus the Buyer Common Stock issuable to Seller pursuant to Section
---- -------
2.2(c) above plus the number of shares of Buyer Common Stock issuable to
------ ----
Seller upon conversion of the Buyer's Series A Preferred Stock issued to
Seller pursuant to Sections 2.2(a) and (b) above shall represent (assuming
-----------------------
for the purposes of this calculation that all of the Buyer Common Stock
issuable to Seller pursuant to Section 2.2(a) above and Section 2.2(c)
-------------- --------------
above was issued to Seller at Closing and that all of the Buyer's Series A
Preferred Stock issued to Seller pursuant to Section 2.2(a) and Section
-------------- -------
2.2(b) above had been converted into Buyer Common Stock at Closing) fifty
------
percent (50%) of the outstanding shares of Buyer Common Stock on a fully
diluted basis (without adjustment for options granted by the Buyer's Board
of Directors to Hired Designated Employees and employees of Buyer on June
17, 1998, and subject to such percentage being adjusted downward as a
result of the Bridge Financing).
10. LABOR RELATIONS. Section 4.15 of the Agreement shall be amended to
delete the phrase "__ employees" contained in the first line thereof and to
insert and substitute therefor "one (1) employee".
11. COVENANTS OF BUYER. Section 5.1(B)(iii) shall be amended to delete the
phrase "the Seller's Common Stock Consideration to less the percentage of the
outstanding Buyer Common Stock determined pursuant to the provisions of Section
-------
2.2" and to insert and substitute the following therefor:
- ---
the Buyer Common Stock issuable to Seller pursuant to Section 2.2(a) above
--------------
plus the Buyer Common Stock issuable to Seller pursuant to Section 2.2(c)
---- --------------
above plus the number of shares of Buyer Common Stock issuable to Seller
----
upon conversion of the Buyer's Series A Preferred Stock issuable to Seller
pursuant to Sections 2.2(a) and (b) (assuming for the purposes of this
-----------------------
calculation that all of the Buyer Common Stock issuable to Seller pursuant
to Section 2.2(a) above and Section 2.2(c) above was issued to Seller at
-------------- --------------
Closing and that all of the Buyer's Series A Preferred Stock issuable to
Seller pursuant to Section 2.2(a) and Section 2.2(b) above had been
-------------- --------------
converted into Buyer Common Stock at Closing) to less than fifty percent
(50%) of the outstanding shares of Buyer Common Stock on a fully diluted
basis, without adjustment for options granted by the Buyer's Board of
Directors to
11
<PAGE>
Hired Designated Employees and employees of Buyer on June 17, 1998, and
subject to such percentage being adjusted downward as a result of the
Bridge Financing (subject to Section 2.2(e) above).
--------------
12. PROVISIONS RELATING TO BUYER'S EMPLOYMENT OF DESIGNATED EMPLOYEES.
(A) In Section 5.1(B)(iv), Section 5.1(D) and Section 6.3(C), the phrase
"subsequent to the Closing" shall be deleted and the phrase
"subsequent to the Employee Lease Termination Date" will be inserted
and substituted therefor. In addition, in Section 5.2(E), the phrase
"by the Closing Date" shall be deleted and the phrase "by the Employee
Lease Termination Date" will be inserted and substituted therefor.
(B) A new Section 16.11 will be added to the Agreement immediately
following Section 16.10 of the Agreement as follows:
"16.11 Additional Terms Relating to Designated Employees. Notwithstanding
-------------------------------------------------
any term, condition or provision of the Agreement to the contrary
(including, but not limited to, Section 5.1(B)(iv), Section 5.1(D) and
------------------ --------------
Section 5.2(E) of the Agreement), the Buyer and Seller hereby agree as
--------------
follows:
A. Offers of Employment. Within thirty (30) days following the Closing,
--------------------
Buyer shall offer employment to all Designated Employees effective as of
the Employee Lease Termination Date and subject to the consummation of the
transactions contemplated hereby at the Closing. The terms of employment
offered to Designated Employees shall be based on Buyer's existing
employment practices and policies, provided that it shall be a term of such
offer that each such Designated Employee shall be entitled to receive (1)
total compensation and benefits (including bonuses) which are no less
generous than those provided by Buyer to similarly-situated employees, (2)
severance benefits in accordance with Seller's severance pay plan in effect
immediately prior to the Closing as set forth on Schedule 16.11(A)(1)
--------------------
attached hereto (the "Severance Pay Policies") in the event that his or her
employment is terminated by Buyer within twelve (12) months following the
Employee Lease Termination Date, (3) employee stock options to purchase
Buyer Common Stock (which employee stock options shall not vest with
respect to each Designated Employee until the date the Designated Employee
becomes an employee of UroGen on or after the Employee Lease Termination
Date), and (4) all relocation costs and expenses of, or incurred by, such
Designated Employee as a result of his or her employment by Buyer (in
accordance with the Buyer's relocation plans or policies, if any). The
Seller represents and warrants to the Buyer that the Severance Pay Policies
attached hereto as Schedule 16.11(A) are true and correct copies of the
-----------------
Severance Pay Policies as of the Closing.
12
<PAGE>
B. Buyer's Assumption of Employee Liability and Indemnity. Buyer shall
------------------------------------------------------
assume and be solely responsible for the past service liability of Seller
under the Severance Pay Policies and as otherwise imposed by law for a
period of twelve (12) months following the Employee Lease Termination Date
in respect of all Designated Employees who accept employment with the Buyer
before, on, or within the twelve (12) month period following the Employee
Lease Termination Date (the "Hired Designated Employees"). The Seller
represents and warrants to the Buyer that the list of severance benefits
payable to, or to be provided to, each of the Designated Employees (as if
such Designated Employees' employment with Baxter terminated) under such
Severance Pay Policies attached hereto as Schedule 16.11(B) is a true and
-----------------
correct list of such severance benefits as of the Closing. Notwithstanding
any provision contained in Sections 16.11A or B to the contrary, Buyer's
--------------- -
liability for such severance benefits with respect to Hired Designated
Employees under Sections 16.11A and B shall not exceed those severance
benefits available under the Severance Pay Policies (including additional
service earned with the Buyer) with respect to such Designated Employees.
Notwithstanding anything in this Section 16.11B to the contrary, (1) Buyer
--------------
shall assume responsibility for all accrued liabilities of Seller relating
to accrued vacation pay of Hired Designated Employees through the Employee
Lease Termination Date, including the responsibility to make immediate cash
payments for such accrued amounts at any time on or after the Employee
Lease Termination Date to the extent required under applicable law, and (2)
Seller shall retain responsibility for all accrued bonuses of Hired
Designated Employees through the Employee Lease Termination Date, including
the responsibility to make immediate cash payments for such accrued amounts
at any time on or after the Employee Lease Termination Date to the extent
required under applicable law.
C. Benefit Plans and Pension Plans. Except to the extent otherwise
-------------------------------
provided herein, Buyer shall not assume any obligations arising under any
"employee benefit plan" (as such term is defined in Section 3(3) of ERISA)
which Seller maintains relating to any Designated Employee (collectively
the "Plans"). The active participation of the Hired Designated Employees in
the Plans shall terminate as of the Employee Lease Termination Date (or, if
hired by the Buyer after the Employee Lease Termination Date, the date of
such Hired Designated Employee's date of hire with the Buyer), in each case
except to the extent that any rights under the Plans shall have vested, or
may vest upon fulfillment of certain conditions, in accordance with the
terms contained therein; provided, however, that each Hired Designated
Employee shall be 100% vested in his or her account balances under the
Baxter International Inc. and Subsidiaries Incentive Investment Plan (the
"Seller's Savings Plan") and in his or her accrued benefits under the
Baxter International Inc. and Subsidiaries Pension Plan as of the Employee
Lease Termination Date provided that the Hired Designated Employee is
employed by the Buyer as of the Employee Lease Termination Date (i.e., full
vesting shall not apply
13
<PAGE>
to Hired Designated Employees who are not employed by the Buyer as of the
Employee Lease Termination Date).
D. Buyer's Plans. Buyer shall provide for the participation, commencing
-------------
on the Employee Lease Termination Date for such of the Hired Designated
Employees who participated in the Plans prior to the Employee Lease
Termination Date, in Buyer's employee benefits plans, provided that for
purposes of eligibility to participate and vesting under Buyer's employee
benefit plans (but not for purposes of benefit accruals), Buyer shall take
any and all action necessary (including amendment of Buyer's employee
benefit plans) to recognize each Hired Designated Employee's service with
Seller under Buyer's employee benefits plans. No Hired Designated
Employee's participation in any of Buyer's employee benefit plans shall be
limited or restricted due to a preexisting condition or limitation in such
plan.
E. Relocation Costs. In accordance with the Buyer's relocation plans or
----------------
policies, if any, Buyer shall be responsible for, and shall pay all
relocation costs and expenses of, or incurred by, each Hired Designated
Employee as a result of his or her employment by Buyer."
13. POST-CLOSING COVENANTS AND CONDITIONS.
(A) Section 5.1(F) shall be deleted and a new Section 5.2(I) shall be
inserted into the Agreement immediately following Section 5.2(H) as
follows:
(I) Non-Hemophilia Related Expenses. Upon delivery
-------------------------------
of Seller's invoice therefor to Buyer, the amount of
all of Seller's reasonable non-hemophilia related
expenses incurred by the Unit from January 1, 1998,
through Cl Closing shall be credited to Seller against
Buyer's first request for Baxter Funding (pursuant to
and as that term is defined in the Development
Agreement) as of the date of Buyer's first request for
Baxter Funding, and shall be deemed to be an advance by
Baxter under the Credit Facility Loan (as that
capitalized term is defined in the Credit Agreement))
as of the date of Buyer's first request for Baxter
Funding; provided, however, that the amount invoiced by
-------- -------
and credited to Seller under this Section 5.2(I) shall
--------------
not exceed $35,000 of such expenses per month during
such period.
(B) Section 5.2 (A) shall be amended to delete the phrases "sold,
assigned, transferred or conveyed", "sale, assignment, transfer, or
conveyance", "assignment, constitute a sale, assignment, transfer, or
conveyance" and "attempted sale, assignment, transfer, or conveyance"
and to insert and substitute therefor, respectively: "sold, assigned,
transferred, licensed, leased or conveyed", "sale, assignment,
transfer,
14
<PAGE>
license, lease or conveyance", "assignment, constitute a sale,
assignment, transfer, license, lease or conveyance" and "attempted
sale, assignment, transfer, license, lease or conveyance".
(C) Section 5.2(B) shall be amended to delete the phrase "Subsequent to
the Closing" and insert therefor the phrase "Subject to Section 2.1
-----------
above, the Services Agreement and the Seller License Agreement,
subsequent to the Closing, the Tangible Asset Transfer Date and the
Investment Milestone Date, as applicable".
(D) Section 5.2(C) shall be amended to add the phrase "Subject to Section
-------
2.1 above and the Seller License Agreement," to the beginning of the
---
first sentence thereof.
(E) Section 6.2(E) shall be deleted and the following shall be inserted
and substituted therefor:
(E) Buyer shall have received, as proceeds of the Bridge Financing,
at least $[ * ] in cash or currently available funds.
14. DELIVERIES OF SELLER. Section 7.1 shall be amended as follows:
(A) A subheading "(A)" shall be inserted prior to the phrase "At the
Closing" in the first line thereof.
(B) In item (i) thereof, the phrase "any Included Inventory or other
assets constituting Assets" shall be deleted and the phrase "any Other
Assets (except for the tangible Assets to be transferred to the Buyer
on the Tangible Asset Transfer Date pursuant to Section 2.1(b) above)"
--------------
shall be inserted and substituted therefor. In item (vii) thereof, the
word "Assets" shall be deleted and the phrase "the Other Assets
(except for the tangible Assets to be transferred to the Buyer on the
Tangible Asset Transfer Date pursuant to Section 2.1(b) above)" shall
--------------
be inserted and substituted therefor. Finally, item (viii) will be
deleted, the word "and" will be added to the end of item (vi)
following the semi-colon, and item (ix) will be renumbered as item
(viii).
(C) New subsections (B) and (C) shall be added at the end of Section 7.1
as follows:
"(B) Subject to the Services Agreement, on the Tangible Asset Transfer
Date, the Seller shall deliver, or cause to be delivered, to the Buyer the
following:
(i) a Bill of Sale from the Seller and from each other entity, if any,
which shall then own any tangible Assets to be transferred to the Buyer
pursuant to Section 2.1(b) above, with respect to such tangible Assets,
--------------
each to be in a form reasonably satisfactory to the Buyer; and
15
<PAGE>
(ii) such other executed assignments, bills of sale, endorsements,
notices, consents, novations, assurances and such other instruments of
conveyance and transfer as counsel for the Buyer shall reasonably request
and as shall be effective to vest in the Buyer the Seller's rights, title
and interest in the tangible Assets to be transferred to the Buyer pursuant
to Section 2.1(b) above.
-------------
(C) Subject to the Seller License Agreement, on the Investment Milestone
Date the Seller shall deliver, or cause to be delivered, to the Buyer the
following:
(i) such executed assignments, bills of sale, endorsements, notices,
consents, novations, assurances and such other instruments of conveyance
and transfer as counsel for the Buyer shall reasonably request and as shall
be effective to vest in the Buyer the Seller's rights, title and interest
in the Intellectual Property Assets; and
(ii) an executed and notarized assignment of United States patents/patent
applications for each United States patent or patent application included
in the Intellectual Property Assets, the form of which assignment shall be
reasonably satisfactory to the Buyer."
15. DELIVERIES OF SELLER. Section 7.2 shall be amended as follows:
(A) A subheading "(A)" shall be inserted prior to the phrase "At the
Closing" in the first line thereof.
(B) Section 7.2(v) shall be deleted and the following shall be inserted
and substituted therefor:
(v) (aa) a certificate of the Secretary of the Buyer
certifying and including the resolutions of the Board
of Directors authorizing the execution, delivery and
performance of this Agreement and the Transaction
Documents, and the transactions contemplated hereby and
thereby, and attesting to the incumbency and signatures
of all officers executing any documents in connection
with the transactions contemplated by this Agreement
and the Transaction Documents; and (bb) a certificate
of the chief executive officer and/or the chief
financial officer of the Buyer certifying that the
transactions contemplated by the Bridge Financing have
been consummated, attaching an accurate and detailed
description thereof (as well as a statement of the
proceeds received in the Bridge Financing), and
certifying that the Buyer has received, as proceeds of
the Bridge Financing, at least $[ * ] in cash or
currently available funds; and
16
<PAGE>
(C) New subsection (B) shall be added at the end of Section 7.2 as
follows:
"(B) Subject to the Services Agreement, on the Tangible Asset Transfer
Date the Buyer shall deliver, or cause to be delivered, to the Seller the
shares of Common Stock due at the Tangible Asset Transfer Date to the
Seller pursuant to Section 2.2(c) hereof."
--------------
16. INDEMNIFICATION. The second bullet point of Section 8.2(D)(ii) shall
be amended to delete references to "Buyer Preferred Stock" and to insert
therefor "Buyer's Series B Preferred Stock and/or Series C Preferred Stock".
The third bullet point of Section 8.2(D)(ii) shall be amended to delete
references to "Buyer Common Stock" and to insert therefor "Buyer Common Stock
and/or Buyer's Series A Preferred Stock". In addition, the following
parenthetical shall be added to the end of the second sentence of the third
bullet point of Section 8.2(D)(ii): "(for the purposes of the foregoing
calculation, the Buyer's Series A Preferred Stock will be valued as if it had
been converted into Buyer Common Stock at the time of transfer)".
17. PERSONAL PROPERTY TAXES. In Section 9(B), the terms "the Closing
Date" and "Closing" shall be deleted and the following phrase inserted and
substituted therefor: "the date of transfer of the applicable Assets to Buyer
(for example, the Investment Milestone Date in the case of the Intellectual
Property Assets)".
18. EXTENSION OF DATE FOR SATISFACTION OF CONDITIONS PRECEDENT. Section
13(B) and Section 13(C) of the Agreement is hereby amended by deleting from each
Section the phrase "within 90 days of the date hereof" each time it appears and
substituting and inserting therefor "by June 30, 1998".
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the date first above written.
SELLER:
BAXTER HEALTHCARE CORPORATION
By: /s/ Victor W. Schmitt
------------------------------------
Title: President, Venture Management
--------------------------------
BUYER:
UROGEN CORP.
By: /s/ Paul D. Quadros
-----------------------------------
Title: President and CEO
---------------------------------
<PAGE>
EXHIBIT 2.3
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT ("Agreement"), dated as of July 8, 1998 is
entered into by and between Baxter Healthcare Corporation, a Delaware
corporation having a place of business at 1627 Lake Cook Road, Deerfield,
Illinois 60015 ("Baxter") and UroGen Corp., a Delaware corporation having its
principal place of business at 10835 Altman Row, Suite A, San Diego, California
92121 ("UroGen").
RECITALS
A. Baxter and UroGen have entered into that certain Asset Purchase
Agreement dated as of February 28, 1998, as amended by that certain Amendment to
Asset Purchase Agreement dated as of May 27, 1998, between Baxter and UroGen (as
so amended, the "Asset Purchase Agreement") pursuant to which Baxter has agreed
to sell the Mini-Ad Vector Technology (as that capitalized term is defined in
the Asset Purchase Agreement) to UroGen as well as other property related to the
research, development, manufacture, use and sale of Mini-Ad Vector Products (as
that capitalized term is defined in the Asset Purchase Agreement).
B. Baxter has agreed to collaborate with UroGen to develop products
utilizing the Mini-Ad Vector Technology for the treatment of blood clotting
disorders in humans relating to hemophilia A (such products are hereafter
referred to individually and collectively as "Collaboration Product(s)")
pursuant to the terms of that certain Developmental Collaboration Agreement
between Baxter and UroGen of even date herewith (the "Development Agreement").
C. UroGen desires that Baxter market, sell and distribute all
Collaboration Products, as described herein and subject to the terms hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and UroGen hereby agree as follows:
1. DEFINITIONS.
1.1 Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth therein.
<PAGE>
1.2 Terms Defined in Asset Purchase Agreement: Unless otherwise
defined herein, all capitalized terms shall have the meanings ascribed to such
terms as set forth in the Asset Purchase Agreement.
1.3 Other Terms: As used herein, the following capitalized terms
shall have the following meanings:
A. "Affiliate" of a party shall mean any entity (i) which
directly or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with, the party or (ii) fifty percent
(50%) or more of the voting capital stock (or in the case of an entity which is
not a corporation, fifty percent (50%) or more of the equity interest) of which
is beneficially owned or held by a party or any of such party's Subsidiaries.
The term "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of an entity (other
than a natural person), whether through the ownership of voting capital stock,
by contract or otherwise.
B. "Baxter Region" means, individually and collectively, the
geographical regions of (1) Western and Eastern Europe; (2) North America
(United States and Canada); (3) Japan; and (4) the rest of the world; provided,
--------
however, that Baxter's marketing plans may from time to time further divide
- -------
"Baxter Regions" into individual nations or other smaller geographical regions
for the purposes of such marketing plans.
C. "FDA" means the United States Food and Drug Administration.
D. "Field of Distribution" means the market for products
utilizing the Mini-Ad Vector Technology for the treatment of blood clotting
disorders in humans relating to hemophilia A.
E. "First Equity Milestone" shall mean that point in time when
UroGen treats the first patient under an Initial New Drug Application in a Phase
I clinical trial, as such capitalized terms are defined by the FDA from time to
time.
F. "Fully Loaded Cost" means, for either party, such party's
cost of manufacturing, performing or acquiring any items or services, in
accordance with generally accepted accounting principles, consistently applied
("GAAP"), and, with respect to each party, in accordance with such party's
normal accounting policies, all consistently applied, including any royalties
payable by such party in connection with manufacturing, performing or acquiring
any items or services. Fully Loaded Cost shall not include general corporate
allocations or other allocations which are not directly related to the
manufacture, performance or acquisition of the item or service, however
designated. In the event any item is acquired or any service is provided for a
party from or by an Affiliate of such party, the cost of acquiring such items or
services shall be deemed to mean such Affiliate's actual cost of manufacturing,
performing or acquiring such items or services in accordance with the principles
set forth in this definition of "Fully Loaded Cost." Current costs of
developing any items or services shall be included in Fully Loaded Cost,
-2-
<PAGE>
but in no event shall any historic development costs which arise or accrue prior
to the date of this Agreement be included in Fully Loaded Cost.
G. "Mini-Ad Vector Technology" means (a) technology developed
by Seller and relating to adenoviral vectors for gene therapy which has been (i)
licensed to UroGen pursuant to the Seller License Agreement and/or (ii)
transferred to UroGen pursuant to the Asset Purchase Agreement and (b) any
Intellectual Property Rights developed, licensed or acquired by UroGen (and/or
Affiliates of UroGen) relating to adenoviral vectors for gene therapy.
H. "Product(s)" means any product or products utilizing the
Mini-Ad Vector Technology for use in the Field of Distribution, including
ancillary products relating thereto and/or used for the delivery or
administration of products utilizing the Mini-Ad Vector Technology in the Field
of Distribution to patients or customers.
I. "Purchase Price Percentage" means UroGen's Adjusted Interest
(as such term is defined in the Development Agreement), but in no event shall
UroGen's Purchase Price Percentage be less than [ * ]% or more than [ * ]%.
J. "Regulatory Approval" means (i) in the United States,
approval from the FDA and any other United States governmental authority (or
agency or other political subdivision thereof) necessary for the right to
market, sell or distribute the Products, in the United States to the public at
large, or (ii) outside the United States, an analogous order by a non-United
States governmental authority (or agency or other political subdivision thereof)
necessary for the right to market, sell or distribute, and the right to be paid
or reimbursed for, the Products, in that country (other than the United States),
to the public at large.
K. "Standard Average Price" shall mean an amount equal to the
average price paid by Baxter for a Product during the first three calendar
quarters of the preceding calendar year. For the first year of sales for any
Product, the Standard Average Price for such Product shall be determined by the
mutual agreement of the parties hereto.
2. TERM OF AGREEMENT.
2.1 Duration: The term of this Agreement (the "Term"), unless
earlier terminated as provided below, shall be the longer of (i) ten (10) years
from the date of Regulatory Approval of the first Collaboration Product in the
United States or (ii) the expiration of the last to expire of any existing
patents anywhere in the world or patents issued anywhere in the world as a
result of existing patent applications on the Mini-Ad Vector Technology listed
on Schedule 3.7(C) of the Asset Purchase Agreement which have issued on or
before ten (10) years from the date of Regulatory Approval of the first
Collaboration Product in the United States. The Term may be extended upon the
mutual written agreement of the parties.
-3-
<PAGE>
2.2 Early Termination: A non-breaching party may terminate this
Agreement if any of the following events (each is herein referred to as a
"Material Breach") occur:
A. A party fails to pay any amount owing under this Agreement,
on the date(s) specified for such payment and such failure shall continue for
sixty (60) days after written notice of such failure by the other party to this
Agreement;
B. A party shall default in the performance of or compliance
with any covenant contained in this Agreement (other than a failure to make a
payment described in Section 2.2(A) above or a default the liability for which
is excused under Sections 4.3, 4.4 or 13 hereof) which default shall continue
uncured beyond the applicable grace period therefor or, if no grace period is
specified therefor, such default shall continue uncured for sixty (60) days
after written notice of such default by the other party to this Agreement;
C. A receiver, conservator, custodian, liquidator or trustee of
a party, or of all or any of the property of a party, is appointed by court
order and such order remains in effect for more than ninety (90) days; or an
order for relief is entered under the federal bankruptcy laws with respect to a
party; or any of the material property of a party is sequestered by court order
and such order remains in effect for more than ninety (90) days; or a petition
is filed against a party under the bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not dismissed within
ninety (90) days after such filing;
D. A party files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing of
any petition against it under any such law; or
E. A party makes an assignment for the benefit of its creditors
or consents to the appointment of a receiver, conservator, custodian, liquidator
or trustee of the party, or of all or any part of its property; or
F. Baxter provides notice to UroGen of Baxter's election to
cease participation in all Development Work (as such term is defined in the
Development Agreement) in accordance with Section 8.1 of the Development
Agreement and UroGen elects by written notice to Baxter to terminate Baxter's
ownership rights, marketing rights and licenses to Collaboration Product(s)
being developed under the Development Work in accordance with the terms of
Section 8.1(b) of the Development Agreement.
3. APPOINTMENT. Subject to the terms and conditions contained in this
Agreement, UroGen appoints Baxter as its exclusive worldwide marketing, sales
and distribution entity for the Products. Baxter accepts such appointment.
Notwithstanding any provision of this Agreement to the contrary, for a period
equal to the longer of (i) the Term of this Agreement or
-4-
<PAGE>
(ii) the term of the Development Agreement, UroGen shall not, in any form or
manner, directly or indirectly, on its own behalf or in combination with others,
anywhere in the world:
(i) develop, manufacture, market, sell, distribute, acquire or license; or
(ii) provide services to (including, but not limited to, consulting
services), or become interested in (as a stockholder, joint venturer,
partner, licensor, member, principal, agent, independent contractor,
trustee, lender of money or in any other relation or capacity whatsoever,
except as a holder of securities of a corporation whose securities are
publicly traded, and then only to the extent of owning not more than two
percent (2%) of any class or series of the issued and outstanding
securities of such corporation), any individual, corporation, limited
partnership, trust or unincorporated association, or a government or any
agency or political subdivision thereof, which develops, manufactures,
markets, sells, distributes, acquires or licenses;
any products utilizing the Mini-Ad Vector Technology for the treatment of blood
clotting disorders in humans, except for the Collaboration Products.
4. MANUFACTURE AND SUPPLY.
4.1 Obligation to Supply: UroGen shall exercise its commercially
reasonable efforts to manufacture and supply the Products or make reasonably
satisfactory arrangements for the manufacture and supply of the Products for
Baxter. UroGen shall make the commercially reasonable investment required to
enable it to manufacture and supply or make satisfactory arrangements for the
same, as required to perform its obligations under this Agreement. UroGen, or
its contract manufacturer, shall comply with all of the applicable regulations
of the country of manufacture and the country of sale as related to the
production of the Products (for example, Quality System Regulation ("QSR") of
the FDA).
4.2 Changes to Contract Suppliers, Manufacturers or Specifications:
UroGen may change contract suppliers, contract manufacturers or the
specifications of Products, provided that any such change has been presented for
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review and approval by Baxter at least ninety (90) days before it becomes
effective, and has been approved by Baxter, which approval shall not be
unreasonably withheld and notice of such approval (or disapproval, as the case
may be) shall be given to UroGen within thirty (30) days of Baxter's receipt of
a request from UroGen for such change. UroGen will be responsible for obtaining
any required Regulatory Approval with respect to such changes and will be
responsible for all costs associated with such change, including without
limitation, the cost of field upgrades.
4.3 Forecasting:
(a) After receiving Regulatory Approval, thirty (30) days prior to
the beginning of each calendar quarter during the term of this Agreement, Baxter
shall provide UroGen with a rolling twelve (12) month forecast of the orders it
expects to place for the
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Products during the next twelve (12) months. The forecast for the first quarter
of each such forecast shall constitute a firm purchase order by Baxter for the
number of units of Products forecast for such quarter (the "Baxter Purchase
Order"). The forecast for any given calendar quarter may not vary from the
forecast for the immediately preceding calendar quarter by more than twenty
percent (20%), nor may any Baxter Purchase Order for any given calendar quarter
vary by more than twenty percent (20%) from the prior forecast for such calendar
quarter. Twelve (12) months after receiving Regulatory Approval, the parties
hereto shall review and may mutually agree to adjust the twenty percent (20%)
level of variance permitted for (i) any given calendar quarter from the
immediately preceding calendar quarter under this Section 4.3(a), and (ii) any
Baxter Purchase Order from the prior forecast for such calendar quarter under
this Section 4.3(a). Before Regulatory Approval is received, Baxter shall
provide UroGen with a forecast based on the reasonably assumed date of
Regulatory Approval, but such forecast shall not be effective until Regulatory
Approval is actually received, and shall be effective only for thirty (30) days
after receipt of Regulatory Approval, whereupon Baxter shall provide UroGen with
a new forecast. The parties shall cooperate in good faith in creating and
providing other, longer range, forecasts which shall be used in budget planning
for the parties.
(b) In the event that Baxter fails to purchase the amounts specified
in the Baxter Purchase Orders for two (2) consecutive calendar quarters, the
parties shall agree to a remedial marketing plan which will reestablish the
appropriate amounts of Baxter's purchases under the Baxter Purchase Orders. In
the event that Baxter fails to purchase the amounts specified in the Baxter
Purchase Orders for three (3) consecutive calendar quarters, (i) Baxter's
purchase obligation shall be fixed at the minimum quarterly purchase amount
applicable to the then current Baxter Purchase Order and such purchase
obligation will remain in place for the period during which Baxter fails to meet
its quarterly purchase obligations with respect to Baxter Purchase Orders
(including such third consecutive calendar quarter) and (ii) the parties shall
also agree to a remedial marketing plan which will reestablish the appropriate
amounts of Baxter's purchases. The above mentioned penalties for failure to
purchase the forecast amounts shall not take effect until twelve (12) months
after Regulatory Approval, although Baxter shall make commercially reasonable
efforts to meet the forecast level of purchases during such twelve (12) month
period.
(c) At such time as Baxter resumes meeting its quarterly purchase
obligations under the Baxter Purchase Orders, Baxter shall no longer be subject
to the requirements of clauses (i) and (ii) of Section 4.3(b) above, and for the
purposes of determining compliance with this Section 4.3, calculation of
consecutive calendar quarters in which Baxter fails to purchase the amounts
specified in the Baxter Purchase Orders shall begin again at zero. If Baxter
complies with all of its obligations under Section 4.3(b), the remedial actions
by Baxter detailed in clauses (i) and (ii) of Section 4.3(b) above shall be the
sole and exclusive remedy available to UroGen for Baxter's failure to purchase
the amounts specified in the Baxter Purchase Orders. Further, if Baxter complies
with all of its obligations under Section 4.3(b), Baxter's failure to purchase
the amounts specified in the Baxter Purchase Orders shall not be deemed a
default by Baxter in its performance under this Agreement which would permit
termination of this Agreement pursuant to Section 2.2(A).
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4.4 Fill Rate Commitment:
(a) Upon Regulatory Approval and for a period of twelve (12) months
thereafter, UroGen shall make commercially reasonable efforts to maintain an
overall first delivery "fill rate" on Baxter Purchase Orders for Products of [*]
%. Thereafter, UroGen shall maintain an overall first delivery fill rate on
Baxter Purchase Orders of at least [ * ]%, or such other amount to which the
parties may mutually agree in writing, based on their experience during the
first twelve (12) months following Regulatory Approval. For the purpose of this
Agreement, "fill rate" shall be defined as lines of product shipped on the date
specified in the Baxter Purchase Order, divided by lines of product ordered,
times 100. Fill rate will be monitored by UroGen and Baxter. The fill rate
commitment established pursuant to this Section may be adjusted by mutual
written agreement of the parties hereto during the Term as may be appropriate to
reflect actual manufacturing experience.
(b) In the event that UroGen fails to meet its fill rate for two (2)
consecutive calendar quarters, the parties shall mutually agree to a remedial
plan to handle back orders of the Products and to assist UroGen in
reestablishing the targeted fill rate. In the event that UroGen fails to meet
its fill rate for three (3) consecutive calendar quarters, (i) UroGen's Purchase
Price Percentage shall drop to its minimum level of [ * ]% for any period in
which it fails to meet its fill rate (including such third consecutive calendar
quarter) and (ii) the parties shall also agree to a remedial plan to handle back
orders and assist UroGen in reestablishing the targeted fill rate. The above
mentioned penalties for failure to meet the applicable fill rates shall not take
effect until twelve (12) months after Regulatory Approval, although UroGen shall
make commercially reasonable efforts to meet the applicable fill rates during
such twelve (12) month period.
(c) At such time as UroGen resumes meeting its overall fill rate on
Baxter's orders for Products, UroGen shall no longer be subject to the
requirements of clauses (i) and (ii) of Section 4.4(b) above, and for the
purposes of determining compliance with this Section 4.4, calculation of
consecutive calendar quarters in which UroGen fails to meet its overall fill
rate on Baxter's orders for Products shall begin again at zero. If UroGen
complies with all of its obligations under Section 4.4(b), the remedial actions
by UroGen detailed in clauses (i) and (ii) of Section 4.4(b) above shall be the
sole and exclusive remedy available to Baxter for UroGen's failure to meet its
overall fill rate on Baxter's orders for Products. Further, if UroGen complies
with all of its obligations under Section 4.4(b), UroGen's failure to meet its
overall fill rate on Baxter's orders for Products shall not be deemed a default
by UroGen in its performance under this Agreement which would permit termination
of this Agreement pursuant to Section 2.2(A).
4.5 Discontinuance of Product Line: If UroGen wishes to discontinue a
product line which includes any Products, the parties will negotiate appropriate
closure conditions, in accordance with Section 4.6 below.
4.6 Assignment of Rights: In the event UroGen elects to abandon
and/or discontinues substantially all efforts to develop or market (or to have
developed or marketed) the Products or any of them (the "Discontinued
Products"), UroGen shall grant Baxter an exclusive,
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worldwide, royalty-free license under the Mini-Ad Vector Technology to make,
have made, use and sell, in such Product Field or sub-field, those Discontinued
Products. The term of such license shall be equal to the term of the
Distribution Agreement. In addition, in the event UroGen elects to abandon
and/or discontinues substantially all efforts to develop or market (or have
developed or marketed) any products utilizing the Mini-Ad Vector Technology
outside of the Field of Distribution ("Discontinued Products Outside of the
Field"), UroGen shall grant Baxter an exclusive, worldwide license under the
Mini-Ad Vector Technology to make, use and sell the Discontinued Products
Outside of the Field. Baxter shall pay UroGen a royalty under such license of no
less than [ * ] percent ([ * ]%) of sales of such Discontinued Products Outside
of the Field, the actual amount of which to be negotiated by the parties hereto.
After granting Baxter either or both of such licenses, (a) sales of Discontinued
Products or Discontinued Products Outside of the Field shall not be included in
net receipts for the purpose of determining the UroGen Price under Section 5.1
hereof or for the purpose of determining the Standard Average Price and (b)
UroGen shall cooperate with and assist Baxter in Baxter's regulatory efforts,
including providing Baxter access to any and all information and documentation
necessary in order for Baxter to assume regulatory responsibility, and any costs
UroGen may incur in such cooperation or assistance shall be borne by Baxter at
UroGen's Fully Loaded Cost. Any royalty obligations to third parties with
respect to Discontinued Products or Discontinued Products Outside the Field
which are assigned or otherwise transferred to Baxter shall be paid by Baxter
after such assignment or transfer. The terms and conditions of such licenses
shall be negotiated by UroGen and Baxter, bargaining in good faith, and
documented in a written agreement, signed by authorized representatives of both
parties.
5. PURCHASE OF PRODUCT.
5.1 Product Sales: Baxter is solely responsible for establishing the
price of the Products for sale to customers. Baxter will pay UroGen the "UroGen
Price", as such term is hereafter defined, for the Products and payment for such
Products shall be made in accordance with Section 5.4. The UroGen Price will be
an amount equal to the product of the Purchase Price Percentage times net
-----
receipts from sales of Products by Baxter for that quarter (i.e., gross receipts
----
net of any stamp, sales, transfer, use or similar taxes, freight, shipping or
customs duties costs). However, regardless of the applicable Purchase Price
Percentage under the Development Agreement, the UroGen Price shall never be less
than the sum of (a) UroGen's Fully Loaded Cost (excluding royalty payments made
as set forth in clause (c) below) for the Products Baxter has sold during such
calendar quarter plus (b) [ * ] percent ([ * ]%) of such Fully Loaded Cost, plus
---- ----
(c) any third party royalty payments UroGen may be required to pay, in
accordance with Section 5.8 hereof (the "UroGen Price Floor").
5.2 Managed Care/Capitated Sales: If Baxter sells Products to
customers in the managed care market on a "capitated" basis (i.e., customers are
charged on a per patient per year basis rather than on a per unit of product
basis), the parties shall negotiate in good faith a commercially reasonable,
appropriate and equitable allocation of the capitated fee between Baxter and
UroGen in lieu of applying the Purchase Price Percentage to the capitated fee.
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5.3 "Minimal" or "No Charge" Sales Transactions with Customers:
Baxter may, from time to time, agree to make specified Products available to
customers with a minimal charge or at no charge, as part of an advertising and
promotion program. Baxter shall be responsible for developing and approving any
such program, provided, however, that Baxter shall pay UroGen's Fully Loaded
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Cost for Products made available to customers in accordance with this Section
5.3.
5.4 Payment and Shipping Terms: UroGen shall bill Baxter as of the
end of each month the Standard Average Price for Products shipped to customers
during the month. Baxter shall pay such invoices within sixty (60) days of
Baxter's receipt thereof. At the end of each calendar quarter, Baxter shall
reconcile the difference between the Standard Average Price paid for Products
shipped during that quarter and the actual price of such Products as determined
in accordance with Section 5.1 hereof. Baxter shall deliver to UroGen within
thirty (30) days of the end of each quarter a written report (a "Reconciliation
Report") detailing its reconciliation of the difference between the Standard
Average Price and the actual price of Products shipped during such quarter. If
Baxter has paid UroGen more than the actual price payable by Baxter for the
Products shipped during a calendar quarter pursuant to Sections 5.1 through 5.3,
inclusive (the "Owed Amount"), UroGen shall refund to Baxter within thirty (30)
days of the date of the Reconciliation Report the difference between the Owed
Amount and the Standard Average Price for such Products. If Baxter has paid
UroGen less than the Owed Amount for the Products shipped during a calendar
quarter, Baxter shall pay to UroGen within thirty (30) days of the date of the
Reconciliation Report the difference between the Owed Amount and the Standard
Average Price for such Products. Any dispute with respect to such a
reconciliation shall be resolved in accordance with the terms of Section 24
hereof. Products are to be shipped FCA (INCOTERMS) to Baxter's destination
designated in the purchase order. Baxter's designated destination may include a
Baxter facility or a customer's facility. Unless otherwise agreed in writing,
Baxter shall designate the shipper, pay all freight charges and will obtain and
pay for any necessary import licenses, authorizations or documentation for
shipments of Products outside the United States. UroGen shall pay all costs
associated with delivering the Products to the designated shipper and will
obtain and pay for any necessary export licenses, authorizations or
documentation for shipments of Products outside the United States. The parties
will cooperate with one another as necessary to meet appropriate export/import
regulations.
5.5 Acceptance of Shipment/Return of Goods: Baxter may inspect or
audit the Products for integrity and adherence to the product specifications.
If any of the Products of a continuous production run or shipment (a "Lot") fail
to meet UroGen's warranties or to conform to product specifications, Baxter
shall notify UroGen in writing within 120 days, and thereafter Baxter may reject
such Lot and, at Baxter's option and at UroGen's expense, Baxter shall receive a
credit, refund or replacement for such Products. If UroGen so requests, Baxter
will return any such Products to UroGen at UroGen's expense.
5.6 Controlling Document: UroGen shall acknowledge receipt of each
Baxter purchase order in writing within ten (10) business days after receipt
thereof and confirm delivery dates to destinations specified by Baxter. Subject
to Sections 4.3 and 4.4, all sales of Products
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shall be subject to the terms and conditions of this Agreement and, to the
extent they specify quantities, destinations and delivery dates, to Baxter
purchase orders. This Agreement shall not be subject to the terms, conditions or
provisions of any business form of Baxter or UroGen and any purchase order of
Baxter or any confirmation of UroGen is subject to this Agreement.
5.7 Baxter shall provide quarterly (or, to the extent Baxter
customarily generates such sales reports on a monthly basis, monthly) sales
reports as customarily generated by Baxter with standard detailing of the sales
volume. These reports shall be delivered to UroGen within thirty (30) days after
the end of each quarter (or, to the extent Baxter customarily generates such
sales reports on a monthly basis, each month).
5.8 Royalty Payments: Baxter shall pay any third party patent
royalty payments associated with any license obtained by Baxter for the benefit
of UroGen and required for the sale of Products incorporating the Factor VIII
gene. UroGen shall be responsible for paying any and all other third party
royalty payments necessary in order to manufacture and distribute the Products.
The cost of such third party royalty payments shall not be factored into the
calculation of UroGen's Fully Loaded Cost, but the cost of such third party
royalty payments shall be part of the UroGen Price Floor in accordance with
Section 5.1 hereof.
6. COMPLIANCE WITH REGULATORY REQUIREMENTS.
6.1 Regulatory Requirements:
(a) Except as provided below, and except for those regulatory
responsibilities allocated to Baxter pursuant to the other Transaction Documents
between UroGen and Baxter, UroGen shall be responsible for obtaining regulatory
approval for the sale of Products, meeting regulatory requirements, including,
without limitation, regulatory approval of promotional materials, and for
obtaining reimbursement pertaining to the manufacturing, marketing, sales,
distribution and utilization of the Products. UroGen's regulatory obligations
are applicable to each country, state, region or locality in which Baxter either
markets, sells and distributes or plans to market, sell and distribute the
Products. To assist UroGen in meeting this obligation, Baxter shall be diligent
in advising UroGen of its plans to enter, remain active, or depart from specific
countries, states, regions or localities relative to the marketing, sales and
distribution of the Products. Further, Baxter will be obligated to meet all
applicable regulations relative to its role as exclusive seller and distributor
of the Products. UroGen's regulatory responsibilities shall include conducting
any necessary clinical trials to gather safety and effectiveness data to support
marketing applications to FDA or other governmental or quasi-governmental
authorities, while Baxter shall be responsible for conducting marketing studies.
Initiation of marketing studies will be coordinated between Baxter Regions and
UroGen for continuity. Baxter may provide certain regulatory support to UroGen,
but only as specifically provided in the Services Agreement.
(b) In the event UroGen believes, in UroGen's reasonable judgement,
that the cost of obtaining regulatory approval in any jurisdiction would not be
economically prudent, UroGen may refuse to obtain regulatory approval in such
jurisdiction and shall provide written
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notice of such an election to Baxter. Upon receipt of notice from UroGen that it
has elected not to pursue regulatory approval in a jurisdiction, Baxter may
elect to assume regulatory responsibility for that jurisdiction (to the extent
such an assumption is permissible in that jurisdiction) within sixty (60) days
of receipt of such notice from UroGen. Upon assumption of regulatory
responsibility for a jurisdiction, Baxter will become solely responsible for
regulatory compliance for that jurisdiction, except for any obligations UroGen
must retain in its role as manufacturer of the Products. Upon Baxter's
assumption of regulatory responsibility for a jurisdiction, UroGen will continue
to supply Baxter with Products for sale in such jurisdiction, but the price
Baxter shall pay UroGen for such Products shall be the UroGen Price Floor.
UroGen shall cooperate with and assist Baxter in Baxter's regulatory efforts,
including providing Baxter access to any and all information and documentation
necessary in order for Baxter to assume regulatory responsibility, and any costs
UroGen may incur in such cooperation or assistance shall be borne by Baxter at
UroGen's Fully Loaded Cost. After assuming regulatory responsibility for a
jurisdiction, Baxter may elect at any time to withdraw from regulatory
responsibility for such jurisdiction. In the event Baxter elects to assume
regulatory responsibility for a jurisdiction and such an assumption by Baxter is
not permitted in that jurisdiction, UroGen shall obtain regulatory approval in
that jurisdiction upon Baxter's request, at Baxter's expense and at UroGen's
Fully Loaded Cost. The price Baxter will pay to UroGen for Products sold in that
jurisdiction will be the UroGen Price Floor and Baxter may elect at any time to
have UroGen withdraw from regulatory responsibility for that jurisdiction.
6.2 Regulatory Actions: UroGen shall be responsible for all
regulatory actions and incur all costs of such actions, Baxter will cooperate
with and assist UroGen, at UroGen's expense, with any regulatory action, and
Baxter will maintain and provide UroGen with a current customer list as needed
solely for regulatory actions. If a regulatory action is determined to be due
to Baxter's negligence in distributing Products, Baxter shall incur all costs of
such action, to the extent such costs are due to Baxter's negligence. In the
event of a Regulatory Action with respect to Products which requires Baxter to
return Products it has purchased from UroGen, Baxter may elect to invoice UroGen
for the full amount paid by Baxter for such Products which UroGen shall pay
within thirty (30) days of receipt. UroGen shall bear the cost of all return
shipments of and field notifications which are reasonably required with respect
to such Products, as well as any associated import/export licenses, fees,
customs duties or taxes on such returned Products. As used in this paragraph,
"regulatory actions" mean: mandatory notifications, repairs, replacements and
refunds; safety alerts; "cease distribution and notification" and mandatory
recall actions; voluntary recalls, market withdrawals or stock recoveries; and
device removals and corrections, as defined or understood under law or FDA
policy, or related or analogous actions.
6.3 Product Complaints: Baxter shall complete product complaint
forms provided by UroGen to Baxter and forward any product complaint information
to UroGen's post-quality assurance group. UroGen and Baxter will work together
to manage product complaints in an effective and responsive manner. Should
Baxter or its customers receive significant amounts of defective Products,
UroGen will issue to Baxter, or to a customer if directed to do so by Baxter, a
refund for such Products, including the cost of return shipment for such
Products as
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well as any associated import/export licenses, fees, customs duties and taxes,
or, at Baxter's option, replacement Products, and the cost of shipping such
replacement Products as well as any associated import/export licenses, fees,
customs duties and taxes shall be at UroGen's expense.
7. MARKETING OF PRODUCT.
7.1 Obligation to Market:
(a) Upon receipt of Regulatory Approval for a Product, Baxter agrees
to follow its marketing plan on an annual basis, as such plan may be revised or
changed by Baxter from time to time. Baxter will use commercially reasonable
diligence in its marketing and sales efforts. Baxter's sales and marketing
efforts, which will comply with the regulatory requirements of the applicable
regulatory jurisdiction, may include the development of promotional materials,
certain customer letters, sales calls, presentations and other documentation in
support of marketing and sales personnel representation of the Products. Baxter
shall coordinate the production of promotional materials with UroGen so that the
parties' marketing efforts are complementary and so that UroGen may comply with
such regulatory requirements as may apply to such materials and will provide
UroGen with marketing comments on promotional materials prepared by UroGen.
Baxter's efforts may also include, at its sole discretion, the funding of
marketing studies relating to the Products. Baxter will coordinate the
initiation and completion of such marketing studies with UroGen.
(b) If, after the first anniversary of Regulatory Approval, UroGen
reasonably believes that Baxter is not using commercially reasonable diligence
in its marketing and sales efforts in a given Baxter Region (as such Baxter
Regions may be set forth in Baxter's marketing plans) during a given calendar
quarter, UroGen may provide Baxter with written notice of such dissatisfaction
within sixty (60) days of the end of such calendar quarter. Upon Baxter's
receipt of such notice, the parties shall mutually agree to a remedial marketing
and sales plan for such Baxter Region, the structure and implementation of which
shall be coordinated with any concurrent marketing or production plans then in
effect or being implemented under Sections 4.3 and 4.4 hereof which apply to
such Baxter Region. If UroGen still reasonably believes that Baxter is not
using commercially reasonable diligence in its marketing and sales efforts in
that Baxter Region for the next consecutive calendar quarter, UroGen may provide
Baxter with written notice of such continuing dissatisfaction within sixty (60)
days of the end of such calendar quarter. Upon Baxter's receipt of such notice,
the issue of whether Baxter is utilizing commercially reasonable diligence in
its marketing and sales efforts in that Baxter Region shall be submitted to
arbitration in accordance with the terms of Section 24 hereof. In the event it
is finally determined in arbitration that Baxter failed to use commercially
reasonable diligence in its marketing and sales efforts for that Baxter Region,
UroGen's sole remedy shall be the right to co-market the Product or Products
which UroGen complained Baxter did not adequately market in that Baxter Region
and UroGen will be entitled to receive its maximum Purchase Price Percentage on
sales of such co-marketed Products in that Baxter Region.
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7.2 Technical Materials & Medical Inquiries: UroGen will be
responsible for developing, publishing and revising, as appropriate, all
technical and educational materials (for example, technical articles, abstracts,
publications) relating to the Products; provided, however, that the cost of
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developing and complying with regulatory requirements for such materials shall
be borne by UroGen and shall not be included in UroGen's Fully Loaded Cost.
Baxter will pay UroGen's Fully Loaded Cost for printing any such promotional or
educational materials. These technical and educational materials will otherwise
be provided to Baxter and Baxter's customers free of charge. UroGen shall
retain a medical affairs staff to handle the medical inquiries from Baxter.
Baxter may, from time to time, request UroGen to prepare certain additional
technical or educational materials and UroGen shall meet such requests as are
reasonable.
7.3 UroGen's Right to Market, Sell and Distribute: Subject to
Section 3 above, UroGen shall be solely responsible for its own marketing,
selling and distribution efforts for products utilizing the Mini-Ad Vector
Technology outside the Field of Distribution. UroGen shall apprise Baxter on a
periodic basis of its activities in this regard so that the parties' marketing
and selling efforts are complementary.
7.4 Customer Feedback: As either party develops, surveys or
otherwise receives feedback from customers, operators and others relative to the
Products, it will share the results and data obtained with the other party
hereto. The parties may choose to jointly seek customer feedback or use similar
data to agree upon changes or improvements to the Products, to the use and
administration of the Products, the training of users, or the technical
presentation of the Products.
7.5 Use of Trademarks and Labeling: UroGen hereby grants to Baxter
and Baxter hereby accepts a license to use the trademarks, trade names, service
marks and corporate logos of UroGen on a non-exclusive, royalty-free, worldwide
basis solely in connection with the marketing, sales and distribution of the
Products. No other use of the trademarks, trade names or corporate logos is
permitted. Nothing herein shall give Baxter any right, title or interest in or
to UroGen's trademarks or trade names. Baxter shall not at any time assert any
claim to any goodwill, reputation or ownership of UroGen's trademarks, trade
names or corporate logo. All uses of UroGen's trademarks or trade names shall
inure to the benefit of UroGen. The parties agree that the Products as well as
promotional materials will be labeled and primarily referred to as products of
UroGen and will bear UroGen's name. UroGen shall provide all labeling, product
inserts and packaging for the Products, provided that Baxter has reviewed and
approved in writing each use or display on such labels, inserts or packaging of
any trademark, trade name, service mark or logo used or owned by Baxter.
Baxter's name and logo may be used in any labeling, product inserts and
packaging for the Products by UroGen, if and when required by regulatory
guidelines, to indicate Baxter's exclusive appointment as the marketer, seller
and distributor of the Product.
8. FOREIGN CURRENCY CONVERSION. Where calculations of Baxter's Fully
Loaded Cost or UroGen's Fully Loaded Cost relate to currency other than United
States dollars, all such calculations shall be made pursuant to GAAP.
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9. WITHHOLDING TAXES. Where required to do so by applicable law, Baxter
shall withhold taxes required to be paid to a taxing authority on account of any
payments to UroGen hereunder, and Baxter shall furnish UroGen with satisfactory
evidence of such withholding and payment in order to permit UroGen to obtain a
tax credit or other such relief as may be available under applicable laws.
Baxter shall cooperate with UroGen in obtaining exemption from withholding taxes
wherever available under applicable law.
10. INTEREST ON OVERDUE PAYMENTS. Interest shall accrue and be payable on
all overdue payments owing by a party under this Agreement from the date due at
the rate of [ * ] percent ([ * ]%) per month (or the highest rate allowed by
law, if lower), compounded annually, until fully paid (including full payment of
such interest).
11. WARRANTIES.
11.1 Warranty: UroGen shall warrant or shall obtain such warranty
from its suppliers and contract manufacturers that all Products sold to Baxter
hereunder are, as of the date of shipment or delivery, not adulterated or
misbranded within the meaning of the United States Food, Drug and Cosmetic Act,
or amendments thereto, and any similar federal, state or local laws or
regulations, and are not articles which may not, under the provisions of the
Act, be introduced into interstate commerce. This warranty shall be continuing
and shall be binding on UroGen, its suppliers and contract manufacturers and
UroGen's permitted successors and assigns and shall inure to the benefit of
Baxter and its permitted successors and assigns. Baxter shall represent to its
customers that any product which it distributes on behalf of a manufacturer
other than Baxter is warranted by the manufacturer and not Baxter.
11.2 Baxter Indemnity: Subject to Section 14 below, Baxter agrees to
indemnify UroGen and hold it harmless from any liability, loss, expense, cost,
claim or judgment arising out of any claim for property damage, personal injury
or death which is caused by Baxter's failure to meet its obligations as provided
herein. At Baxter's expense, UroGen shall cooperate fully with Baxter in
defending or otherwise resolving any such claim. Baxter shall have full control
of any litigation brought against UroGen with respect to any claim that is
indemnifiable by Baxter hereunder; but UroGen may at its expense, also be
represented by its own counsel in any such litigation. Baxter shall not enter
into any settlement that materially affects UroGen's rights or interests under
this Agreement, the Development Agreement or otherwise without UroGen's prior
written consent, which consent shall not be unreasonably withheld.
11.3 UroGen Indemnity: Subject to Section 14 below and subject to
Baxter's obligation to indemnify UroGen under Section 11.2 hereof, UroGen hereby
indemnifies and agrees to defend and hold Baxter harmless from and against all
claims, liabilities, losses, expenses (including attorneys' fees), including any
property damage, personal injury or death, arising out of or in connection with
the design, manufacture, sale or use of the Products, unless such claims,
liabilities, losses or expenses arise from the negligence or wilful misconduct
of Baxter. In the event UroGen controls any litigation brought against Baxter
with respect to a
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claim which is indemnifiable by UroGen hereunder, UroGen shall not enter into
any settlement that materially affects Baxter's rights or interests under this
Agreement, the Development Agreement or otherwise without Baxter's prior written
consent, which consent shall not be unreasonably withheld.
11.4 Insurance: UroGen shall obtain and keep in force during the Term
of this Agreement, general comprehensive liability insurance covering each
occurrence of bodily injury and property damage combined single limit with
special endorsements (i) immediately after achieving the First Equity Milestone,
in an amount not less than $[ * ] and (ii) immediately after obtaining
Regulatory Approval, in an amount not less than the greater of (x) $[ * ]or (y)
[ * ]% of the annual net sales of Products under the terms of this Agreement,
providing coverage for:
(i) Products and completed operations liability;
(ii) blanket contractual liability; and
(iii) blanket broad form supplier liability.
The insurance policy shall be endorsed to name Baxter as an additional insured
and to provide for written notification to Baxter by the insurer not less than
thirty (30) days prior to cancellation, expiration or modification of the
insurance policy. A certificate of insurance evidencing compliance with this
Section and referencing this Agreement shall be furnished to Baxter immediately
prior to achieving the First Equity Milestone and again immediately prior to
obtaining Regulatory Approval for any Product.
12. INDEMNIFICATION FOR INFRINGEMENT. Subject to Section 14 below, UroGen
shall defend, indemnify and hold Baxter harmless with respect to all claims,
liabilities, losses or expenses (including attorneys' fees) of Baxter arising
out of or in connection with the infringement of patents, trademarks (except
trademarks used on the Products at the request of Baxter) or copyrights arising
out of the use or sale of the Products supplied to Baxter under this Agreement.
Baxter shall communicate to UroGen all charges of alleged infringement, within a
reasonable time after their receipt. Baxter will cooperate with UroGen in
defending or otherwise resolving each charge of infringement. UroGen agrees to
bear all costs and expenses of litigation, including attorneys fees in
connection with such alleged infringement, and UroGen will reimburse Baxter for
each disbursement made by Baxter in satisfaction of a final judgement issued in
such litigation, but Baxter may, at its own expense, be also represented by its
own counsel in any such litigation. In the event that sale of any Product is
enjoined, UroGen shall repurchase Baxter's inventory of such Product at Baxter's
Fully Loaded Cost therefor. However, the foregoing indemnification obligation
shall not apply to (i) claims for infringement of any rights relating to the
Factor VIII gene rights which have been supplied to UroGen by Baxter or (ii)
claims for infringement in any jurisdiction in which Baxter has assumed
responsibility for regulatory compliance in accordance with Section 6.1 hereof.
In the event Baxter elects to defend such infringement claim, UroGen will
cooperate with Baxter, at Baxter's expense, in such defense. Neither party shall
settle any suit for infringement the settlement of which would materially affect
the other's rights or interests under this Agreement, the Development
-15-
<PAGE>
Agreement or otherwise without the other party's prior written consent, which
consent shall not be unreasonably withheld.
13. FORCE MAJEURE. Neither party to this Agreement shall be liable for
delay or failure in the performance of any of its obligations hereunder if such
delay or failure is due to causes beyond its reasonable control, including acts
of God, fires, earthquakes, strikes and labor disputes, acts of war, civil
unrest or intervention of any governmental authority, but any such delay or
failure shall be remedied by such party as soon as is reasonably possible.
14. LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH
OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY,
CONSEQUENTIAL OR LIQUIDATED DAMAGES OR LOST PROFITS UNDER THIS AGREEMENT OR
RELATING TO THE SUBJECT MATTER HEREOF, EXCEPT WHERE DAMAGES ARE AWARDED TO A
THIRD PARTY AGAINST AN INDEMNIFIED PARTY.
15. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement or any
associated transaction is required by the law of any nation to be either
approved or registered with any governmental authority, or any agency or
political subdivision thereof, UroGen shall assume all legal obligations to do
so, except to the extent UroGen has elected not to pursue regulatory approval in
such jurisdiction in accordance with Section 6.1 (in which case Baxter shall be
permitted to do so, pursuant to Section 6.1).
16. NOTICES. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
purchase orders) shall be delivered either by hand, by a nationally recognized
overnight delivery service (with delivery charges prepaid), by first class,
registered or certified United States mail (postage prepaid), or by facsimile
transmission (provided that in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter,
such notices shall be delivered to: Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Attention: President - Venture Management
Associate General Counsel
Facsimile: 847-940-6271
If to UroGen,
such notices shall be delivered to: UroGen Corp.
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<PAGE>
10835 Altman Row, Suite A
San Diego, California 92121
Attention: President
Facsimile: 619-642-9173
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 16. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered by: hand or by a nationally recognized overnight
delivery service (with delivery charges prepaid) at the time of delivery; by
first class, registered or certified United States mail (postage prepaid), three
(3) business days after delivery thereof to the United States Postal Service; or
by facsimile transmission, at the time of transmission.
17. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California,
without application of conflicts of law principles, and, subject to Section 24
below, each party hereby submits to the jurisdiction and venue of any state or
federal court in the State of California. To the extent permissible by law,
each of the parties hereby waives, releases and agrees not to assert, and agrees
to cause its Affiliates to waive, release and not assert, any rights such party
or its Affiliates may have under any foreign law or regulation that would be
inconsistent with the terms of this Agreement as governed by California law.
18. PROVISIONS CONTRARY TO LAW/SEVERABILITY. In performing this
Agreement, the parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with the applicable law or to be
unenforceable or, if such modification is not possible, such provision shall be
deemed to have been deleted here from, without affecting, impairing or
invalidating the remaining provisions of this Agreement.
19. ENTIRE AGREEMENT. This Agreement, together with any schedules
attached hereto, constitutes the entire agreement between the parties as to the
subject matter hereof, and all prior negotiations, representations, agreements
and understandings are merged into, extinguished by and completely expressed by
this Agreement.
20. WAIVERS AND MODIFICATIONS. The failure of any party to insist on the
performance of any obligation hereunder shall not be deemed to be a waiver of
such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing signed by the party to be bound by such waiver, modification, release or
amendment.
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<PAGE>
21. ASSIGNMENT. UroGen may not assign its rights or obligations under
this Agreement without the prior written consent of Baxter, unless such
assignment occurs in connection with a Change of Control (as such term is
defined in the Development Agreement) of UroGen and the assignee assumes all of
the duties and obligations of UroGen hereunder. Baxter may assign its rights
and obligations hereunder to any Affiliate of Baxter without prior notice to or
consent of UroGen. No party hereto may assign any of its rights or obligations
under this Agreement, unless and to the extent expressly permitted by this
Section 21. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding on the parties' permitted successors and assigns.
22. INDEPENDENT PARTIES. By virtue of this Agreement, neither party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venturer, or legal representative and neither
party has express or implied authority to bind the other in any manner
whatsoever.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together, and shall constitute one and the same instrument.
24. DISPUTE RESOLUTION.
24.1 Provisional Remedies: The procedures specified in this Section
24 shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
--------
however, that a party, without prejudice to these procedures, may seek a
- -------
preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in good
faith in the procedures specified in this Section 24.
24.2 Negotiations Between Executives: The parties will attempt in
good faith to resolve any claim or controversy arising out of or relating to the
execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
24) promptly by negotiations between one designated executive from each of
UroGen and Baxter who will attempt in good faith to resolve any dispute or
undecided matter referred to them.
24.3 Arbitration: In the event that any dispute arising out of or
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith negotiation pursuant to the procedures of Section
24.2, such dispute shall upon written notice by either party to the other, be
finally settled by arbitration administered by JAMS/Endispute in accordance with
the provisions of its Comprehensive Arbitration Rules and Procedures and the
United States Federal Arbitration Act, as modified below:
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<PAGE>
A. The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators, all of whom shall be selected from a list
of neutral arbitrators supplied by JAMS/Endispute. From such list, each of
Baxter and UroGen shall select one (1) arbitrator, and the arbitrators so
selected shall select a third. The panel shall designate one (1) among them to
serve as chair.
B. The arbitration proceedings shall be conducted: (a) if
notice demanding arbitration is delivered by UroGen to Baxter, in Cook County,
Illinois, or (b) if notice demanding arbitration is delivered by Baxter to
UroGen, in San Diego County, California.
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration Act
as necessary to protect the rights or property of the party pending the decision
of the arbitrators.
D. The parties shall allow and participate in limited discovery
for the production of documents and taking of depositions, which shall be
conducted in accordance with the Comprehensive Arbitration Rules and Procedures
of JAMS/Endispute. All discovery shall be completed within sixty (60) days
following the filing of the answer or other responsive pleading. Unresolved
discovery disputes shall be brought to the attention of the chair of the
arbitration panel and may be disposed of by the chair.
E. Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators provided that
--------
the chair of the panel of arbitrators may establish such longer times for
presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the hearing of the matter,
shall be in writing and shall specify the factual and legal basis for the award.
Judgment thereon may be entered in any court having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however, that the arbitrators
-------- -------
will have no authority to award special, punitive or exemplary damages, or other
money damages that are not measured by the prevailing party's actual damages.
24.4 Performance During Dispute: Each party is required to continue
to perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
24.5 Costs of Arbitration: The party which is found to have been more
at fault in a dispute arbitrated under this Section 24 shall be responsible for
paying the costs and
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<PAGE>
expenses, including reasonable attorney's fees, which the other party has
incurred in such arbitration.
25. RULES OF CONSTRUCTION. In this Agreement, unless a clear
contrary intention appears:
A. The singular number includes the plural number and vice
versa;
B. Reference to any party includes such party's permitted
successors and assigns;
C. Reference to any gender includes the other gender;
D. Reference to any Section, Exhibit or Schedule means such
section of this Agreement, exhibit to this Agreement or
schedule to this Agreement, as the case may be, and
references in any section or definition to any clause means
such clause of such section or definition;
E. "Herein," "hereunder," "hereof," "hereto," and words of
similar import shall be deemed references to this Agreement
as a whole and not to any particular section or other
provision of this Agreement;
F. "Including" (and with the correlative meaning "include")
means including without limiting the generality of any
description preceding such term;
G. Relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding"
and "through" means "through and including";
H. Reference to any law (including statutes and ordinances)
means such law as amended, modified, codified or reenacted,
in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder;
I. Accounting terms used herein shall have the meanings
historically attributed to them by GAAP;
J. In the event of any conflict between any of the provisions
of the body of this Agreement and any exhibit or schedule
hereto, the provisions of the body of this Agreement shall
control;
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<PAGE>
K. The headings contained in this Agreement have been inserted
for convenience of reference only, and are not to be used in
construing this Agreement; and
L. Any rule of construction or interpretation which might
otherwise require this Agreement to be construed or
interpreted against either party shall not apply to any
construction or interpretation hereof.
26. AUDIT. Either party may audit the books and records of the other for
the purpose of determining compliance with the terms of this Agreement. The
auditing party may use independent outside auditors (who may participate fully
in such audit). In the event that an audit is proposed with respect to
information which the party to be audited wishes not to disclose to the auditing
party ("Restricted Information"), then on the written demand of the party to be
audited the individuals conducting the audit with respect to the Restricted
Information will be limited to the auditing party's independent auditors. In
such event, the party to be audited shall pay the costs of the independent
auditors conducting such audit, but only with respect to that portion of the
audit relating to the Restricted Information. Such independent auditors shall
enter into an agreement with the parties hereto, on terms that are agreeable to
both parties hereto, under which such independent auditors shall agree to
maintain the confidentiality of the information obtained during the course of
such audit and establishing what information such auditors will be permitted to
disclose in reporting the results of any audit of Restricted Information. Any
such audit shall be conducted during regular business hours in a manner that
does not interfere unreasonably with the operations of the party to be audited.
The audits conducted by any party under the provisions of this Agreement shall
not, in the aggregate, be conducted more than once in any twelve (12) month
period per facility unless the next preceding audit disclosed a failure to
conform to the terms of any such Agreement or unless the facility received a
Form FDA-483 in the twelve (12) months following any audit. Subject to the
foregoing limitations, any such audit shall be conducted when requested by
notice given not less than thirty (30) days prior to the commencement of the
audit.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first set forth above.
BAXTER HEALTHCARE CORPORATION UROGEN CORP.
By:/s/ Victor W. Schmitt /s/ Paul D. Quadros
--------------------- ---------------------------
Name: Victor W. Schmitt Name: Paul D. Quadros
Title: President, Venture Management Title: President and CEO
<PAGE>
EXHIBIT 2.4
UROGEN CORP.
_______________________
INVESTOR RIGHTS AGREEMENTS
JULY 8, 1998
_______________________
<PAGE>
UROGEN CORP.
INVESTOR RIGHTS AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 8th day of July, 1998, by
---------
and among Urogen Corp., a Delaware corporation (the "Company"), Baxter
-------
Healthcare Corporation, a Delaware corporation (the "Investor"), and with
--------
respect to Sections 2, 3, 5 and 7, Ivor Royston, Paul Quadros and Robert Sobol
(collectively, the "Founders").
--------
RECITALS
--------
WHEREAS, the Company and the Investor have entered into that certain Asset
Purchase Agreement dated as of February 28, 1998, as amended by Amendment to
Asset Purchase Agreement dated as of May 27, 1998 (collectively, the "Asset
-----
Purchase Agreement");
- ------------------
WHEREAS, pursuant to the Asset Purchase Agreement, the Company agreed to
grant the Investor certain rights regarding registration of the Company's
securities under the Securities Act (as defined below), co-sale rights,
investment rights and certain other rights;
WHEREAS, pursuant to the Asset Purchase Agreement the Investor has agreed
to comply with certain standstill and other conditions set forth herein; and
WHEREAS, the Founders have entered into this Agreement as an inducement to
the Investor entering into the Acquisition Agreements.
NOW, THEREFORE, in consideration of the above and of the mutual promises set
forth herein, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
-----------
1.1 CERTAIN DEFINITIONS. Hereafter, in this Agreement the following terms
-------------------
shall have the following respective meanings (capitalized terms not otherwise
defined shall have the meanings ascribed to them in the Asset Purchase
Agreement):
"Acquisition Agreements" shall mean the Asset Purchase Agreement, this
----------------------
Agreement, the Distribution Agreement, the Development Agreement, the Services
Agreement, the Royalty Agreement, the Seller License Agreement, the Credit
Agreement and the Employee Lease.
"Affiliate" of, or Person "affiliated" with, a specified Person shall
---------
mean a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
<PAGE>
"Co-Sale Pro Rata Share" shall mean, with respect to the Investor, the
----------------------
ratio that (i) the sum of (x) the total number of shares of then outstanding
Common Stock held by the Investor and (y) the number of shares of Common Stock
issuable upon the conversion of then outstanding Preferred Stock held by the
Investor bears to (ii) the sum of (x) the total number of shares of then
outstanding Common Stock held by the Investor or issuable upon the conversion of
then outstanding Preferred Stock held by the Investor and (y) the total number
of shares of Founders' Shares held by all Founders and Permitted Transferees.
"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock, $.001 par value per share,
------------
of the Company.
"Common Stock Equivalents" shall mean (without duplication of any
------------------------
other Common Stock, Preferred Stock or Common Stock Equivalents) rights,
warrants, convertible securities or indebtedness, or other rights, exercisable
for or convertible or exchangeable into, directly or indirectly, Common Stock
and securities convertible or exchangeable into Common Stock, whether at the
time of issuance or upon the passage of time or the occurrence of some future
event.
"Company Securities" shall mean the Preferred Stock, Common Stock,
------------------
Common Stock Equivalents and any other capital stock of the Company issued and
outstanding from time to time.
"Conversion Stock" shall mean (i) any Common Stock issued or issuable
----------------
with respect to any Original Common Stock or Preferred Stock held by a Holder
and/or (ii) any Common Stock issued or issuable with respect to any other Common
Stock Equivalents issued or issuable with respect to any Original Common Stock
or Preferred Stock held by a Holder.
"First Public Offering" shall mean the first consummation of the
---------------------
Company's sale of its Common Stock pursuant to a registration statement under
the Securities Act after the date hereof.
"Founders' Shares" shall mean shares of outstanding Common Stock and
----------------
Common Stock Equivalents held of record by the Founders on the date hereof or
issued with respect to such shares upon any Recapitalization and held by the
Founders and/or Permitted Transferees at the applicable time; provided, however
that Founders' Shares shall not include securities issued in connection with the
Bridge Financing or securities issued with respect to such securities upon any
Recapitalization.
"Holder" shall mean the Investor so long as the Investor holds
------
Registrable Securities and any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in accordance with Section
2.14 hereof.
"Initiating Holders" shall mean any Holder so long as such Holder
------------------
holds at least 1,000,000 shares of Common Stock or Conversion Stock convertible
into or exercisable for at least 1,000,000 shares of Common Stock.
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<PAGE>
"Offered Shares" shall mean Founders' Shares proposed to be sold,
--------------
assigned or transferred by a Seller in a particular transaction.
"Permitted Transfer" shall mean: (a) a Transfer of Company Securities
------------------
between any Stockholder and any Affiliate of such Stockholder; provided,
--------
however, that with respect to any Transfer of shares of Voting Stock, the
- -------
Stockholder, or any successor to substantially all of the Stockholder's
business, retains, as trustee or by some other means, the sole authority to vote
such shares of Voting Stock; and (b) a bona fide pledge of Company Securities by
a Stockholder to a bank or financial institution. Except with respect to a bona
fide pledge to a bank or financial institution, no Permitted Transfer shall be
effective unless and until the transferee of the Company Securities so
transferred executes and delivers to the Company an executed counterpart of this
Agreement agreeing to be bound by the terms of this Agreement in the same manner
as the transferor.
"Permitted Transferee" shall mean any Person who shall have acquired
--------------------
and who shall hold Company Securities pursuant to a Permitted Transfer.
"Person" shall mean an individual, corporation, limited liability
------
company, partnership, limited partnership, limited liability partnership, trust
or unincorporated association, or a government or any agency or political
subdivision thereof.
"Preferred Stock" shall mean the preferred stock, $.01 par value per
---------------
share, of the Company.
"Recapitalization" shall mean with respect to any Company Securities,
----------------
any stock split, stock dividend, recapitalization, or similar event.
"Registrable Securities" shall mean (i) the Conversion Stock and (ii)
----------------------
Common Stock issued to the Investor pursuant to the Asset Purchase Agreement and
held of record by a Holder (the "Original Common Stock"); provided, however,
--------------------- -------- -------
that shares of Common Stock or other securities shall be treated as Registrable
Securities only if and so long as they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction, whether in a registered offering, Rule 144 transaction or
otherwise, or (B) sold, in the written opinion of counsel to the Company, in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act, such that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
---------------------
stated below, incurred by the Company in complying with Sections 2.4, 2.5 and
2.6 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and
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<PAGE>
disbursements of counsel for the Company, and blue sky fees and expenses, but
shall not include any Selling Expenses.
"Reorganization" shall mean the Company's sale of all or substantially
--------------
all of its assets or the acquisition of the Company by another entity by means
of merger or consolidation resulting in the exchange of the outstanding shares
of the Company for securities or consideration issued, or caused to be issued,
by the acquiring entity in which the holders of capital stock of the Company
hold less than 50% of the voting securities of the acquiring corporation.
"Restricted Securities" shall mean the securities of the Company
---------------------
required to bear the legend set forth in Section 2.2 hereof.
"Rights" shall mean the registration rights and the co-sale rights of
------
the Investor described in Sections 2 and 3, respectively.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Seller" shall mean a Founder or Permitted Transferee who proposes to
------
sell, transfer or assign Founders' Shares.
"Selling Expenses" shall mean all underwriting discounts, selling
----------------
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all reasonable fees and, with respect to each Holder,
disbursements of counsel for such Holder.
"Series A Preferred Stock" shall mean the Series A preferred stock,
------------------------
$.01 par value per share, of the Company.
"Series B Preferred Stock" shall mean the Series B preferred stock,
------------------------
$.01 par value per share, of the Company.
"Series C Preferred Stock" shall mean the Series C preferred stock,
------------------------
$.01 par value per share, of the Company.
"Shares" shall mean all issued and outstanding shares of Original
------
Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock.
"Stockholder" shall mean any holder of record of Company Securities
-----------
(other than the Company) who may execute this Agreement or hereafter may execute
a separate agreement to be bound by the terms hereof.
"Total Voting Power" shall mean, at any time, the aggregate number of
------------------
votes which may be cast by holders of outstanding Voting Stock.
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<PAGE>
"Transfer" shall mean to transfer, sell, assign, pledge, hypothecate,
--------
create a security interest in or lien on, place in trust (voting or otherwise),
assign or in any other way encumber or dispose of, directly or indirectly and
whether or not by operation of law or for value, any Company Securities.
"Voting Stock" shall mean (i) shares of the Company's Common Stock,
------------
(ii) each series of Preferred Stock, (iii) all other securities issued by the
Company which are exercisable or convertible into Common Stock or exercisable or
convertible into securities that are exercisable or convertible into Common
Stock and (iv) all other securities directly or indirectly entitled to vote
generally for the election of directors of the Company, whether currently
outstanding or hereafter issued.
SECTION 2
GENERAL RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
------------------------------------------------------
COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS
---------------------------------------------------
2.1 GENERAL RESTRICTIONS ON TRANSFERABILITY. The Shares, Founders' Shares
---------------------------------------
and the Conversion Stock shall not be sold, assigned, transferred or pledged
except upon the conditions specified in this Section 2 and in Sections 5.1 and
5.7, which conditions are intended to ensure compliance with the provisions of
the Securities Act. Each Holder and Founder will cause any proposed purchaser,
assignee, transferee, or pledgee of the Shares, Founders' Shares or Conversion
Stock held by such Holder or Founder to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Section 2.
2.2 RESTRICTIVE LEGEND. Each certificate representing the Shares,
------------------
Founders' Shares and any securities issued in respect of the Shares or Founders'
Shares, including upon conversion of the Preferred Stock held by a Holder and
upon any Recapitalization, Reorganization or similar event or a reincorporation
shall (unless otherwise permitted by the provisions of Section 2.3 below) be
stamped or otherwise imprinted with a legend in substantially the following form
(in addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.
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<PAGE>
Each Holder and Founder consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Preferred Stock or the
Common Stock in order to implement the restrictions on transfer established in
this Section 2.
2.3 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 2.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (i) an unqualified written
opinion of legal counsel, who shall be and whose legal opinion shall be
reasonably satisfactory to the Company, addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto (except that it is agreed that the
Company will not require opinions of counsel or "no action" letters for
transfers to Permitted Transferees), whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of this Agreement and the terms of the notice
delivered by such holder to the Company. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 2.2 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such holder and the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act.
2.4 REQUESTED REGISTRATION.
----------------------
(a) Request for Registration. In case the Company shall receive from
------------------------
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to not less than such number of shares
such that the anticipated aggregate offering price, net of underwriting
discounts and commissions, would equal or exceed $5,000,000, the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within forty-eight (48) hours after
the Company's giving of such written notice; provided,
--------
-6-
<PAGE>
however, that the Company shall not be required to effect more than one
- -------
registration pursuant to this Section 2.4 in any twelve (12) month period;
provided, further, that the Company shall not be obligated to take any action to
- -------- -------
effect any such registration, qualification or compliance pursuant to this
Section 2.4:
(A) With respect to any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) Prior to the date six months after the closing of
the First Public Offering;
(C) During the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on the
date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(D) After the Company has effected two such
registrations pursuant to this Section 2.4(a), and such registrations have been
declared or ordered effective; or
(E) If the Company shall furnish to such Holders a
certificate signed by the Chief Executive Officer of the Company stating that in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for a registration statement to
be filed in the near future, in which case the Company's obligation to use its
best efforts to register, qualify or comply under this Section 2.4 shall be
deferred for a period not to exceed ninety (90) days from the date of mailing
such notice to the Initiating Holders (such notice shall also state that it is
the Company's bona fide intention to effect the filing of a registration
statement with the Commission within ninety (90) days of the date of such
notice); provided that the Company may not exercise this right more than once in
any twelve-month period.
Subject to the foregoing clauses (A) through (E), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
------------
Section 2.4 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 2.4(a)(i). In such event, the right of any Holder to registration
pursuant to Section 2.4 shall be conditioned upon such Holder's participation in
the underwriting arrangements required by this Section 2.4, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein. The Company shall (together with
all Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter selected for such
-7-
<PAGE>
underwriting by a majority in interest of the Initiating Holders, but subject to
the Company's reasonable approval. Notwithstanding any other provision of this
Section 2.4, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement; provided,
--------
however, that the number of shares of Registrable Securities to be included in
- -------
such underwriting and registration shall not be reduced unless all other
securities of the Company are first entirely excluded from the underwriting and
registration; provided further, however, that if the number of shares of
-------- ------- -------
Registrable Securities to be included in such underwriting or registration is
reduced to less than 75% of the aggregate number of shares of Registrable
Securities originally requested for registration pursuant to Section 2.4(a),
then such registration or underwriting shall not be counted as one of the two
permitted requests for registration under Section 2.4(a)(D). No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder to the
nearest one hundred (100) shares. If any Holder of Registrable Securities
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the managing underwriter and the
Initiating Holders. The Registrable Securities and/or other securities so
withdrawn shall also be withdrawn from registration and such Registrable
Securities shall not be transferred in a public distribution prior to one
hundred eighty (180) days after the effective date of such registration, or such
other shorter period of time as the underwriters may require.
2.5 COMPANY REGISTRATION.
--------------------
(a) Notice of Registration. If at any time or from time to time
----------------------
after the First Public Offering the Company shall determine to register any of
its securities, either for its own account or the account of a security holder
or holders, other than (i) a registration relating solely to employee benefit
plans or (ii) a registration relating solely to a Rule 145 transaction, the
Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within forty-eight (48) hours after the Company's giving of
such notice, by any Holder.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.5(a)(i). In such event, the right of any Holder to
registration pursuant to Section 2.5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together
-8-
<PAGE>
with the Company and the other holders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 2.5, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration. The Company shall so advise all
Holders and other holders distributing their securities through such
underwriting, and the number of shares of Registrable Securities that may be
included in the registration and underwriting (after inclusion of all shares to
be included by the Company) shall be allocated among all Holders requesting
inclusion of Registrable Securities in such registration in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement; provided,
--------
however, that the right of the underwriters to exclude Registrable Securities
- -------
from the registration and underwriting as described above shall be restricted
such that (i) the number of Registrable Securities included in any such
registration may not be reduced below fifteen percent (15%) of the shares
proposed to be registered by such Holders; and (ii) all shares that are not
Registrable Securities and all shares that are held by persons who are employees
or directors of the Company (or any subsidiary of the Company) shall first be
excluded from such registration and underwriting before any Registrable
Securities are so excluded. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of shares allocated
to any Holder or holder to the nearest one hundred (100) shares. If any Holder
or holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to one hundred eighty (180) days after the effective date of
the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 2.5 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
2.6 REGISTRATION ON FORM S-3.
------------------------
(a) If any Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate offering price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
-------- -------
shall not be required to effect more than one registration pursuant to this
Section 2.6 in any twelve (12) month period or in excess of two registrations
under this Section 2.6. The substantive provisions of Section 2.4(b) shall be
applicable to each registration initiated under this Section 2.6.
-9-
<PAGE>
(b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 2.6: (i) with respect to any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act; (ii) if
the Company, within ten (10) days of the receipt of the request of the
Initiating Holders, gives notice of its bona fide intention to effect the filing
of a registration statement with the Commission within ninety (90) days of
receipt of such request (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities); (iii) during the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on the date six
(6) months immediately following, the effective date of any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iv) if the Company shall furnish to such Holder a certificate signed by the
Chief Executive Officer of the Company stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company or
its shareholders for registration statements to be filed in the near future, in
any such case the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed ninety (90)
days from the receipt of the request to file such registration by such Holder.
2.7 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
---------------------------------------------
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such new registration rights,
including standoff obligations, are subordinate to the rights of the Holders
hereunder and would not reduce the amount of Registrable Securities of the
Holders which may be included in a registration.
2.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
------------------------
connection with all registrations pursuant to Sections 2.4, 2.5 and 2.6 shall be
borne by the Company. Unless otherwise stated, all Selling Expenses relating to
securities registered on behalf of the Holders and all other Registration
Expenses shall be borne by the Holders of such securities pro rata on the basis
of the number of shares so registered; provided, however that fees and
disbursements of counsel for a Holder shall be paid by the Holder incurring
same.
2.9 REGISTRATION PROCEDURES. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 2,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the Registration
Statement has been completed;
-10-
<PAGE>
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(c) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(d) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriters of such offering;
(e) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
2.10 INDEMNIFICATION.
---------------
(a) The Company will indemnify each Holder, each of its officers,
directors, partners, members, accountants, legal counsel and agents, and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Section 2, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act (each a "Company Indemnified Party"), against all expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any final registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by the Company of the Securities Act or any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Company Indemnified Party for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
-11-
<PAGE>
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Company Indemnified Party and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors,
officers, accountants, legal counsel and agents, each underwriter, if any, of
the Company's securities covered by such a registration statement, each person
who controls the Company or such underwriter within the meaning of Section 15 of
the Securities Act, and each other such Holder, each of its officers, directors,
partners, members, accountants, legal counsel and agents, and each person
controlling such Holder within the meaning of Section 15 of the Securities Act
(each a "Holder Indemnified Party"), against all claims, losses, damages and
------------------------
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement of a material fact contained in any final registration
statement, prospectus, offering circular or other document, or any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such Holder
Indemnified Party for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement or omission is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however that the total amount payable in indemnity by a Holder under
- -------- -------
this Section 2.10(b) shall not exceed the net proceeds received by such Holder
in the registered offering from which the obligation to indemnify under this
Section 2.10(b) arises.
(c) Each party entitled to indemnification under this Section 2.10
(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 litigation, 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, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action,
in which case the Indemnifying Party shall be relieved of its obligation under
this Section 2.10 to the extent of such prejudice, and provided further that the
Indemnifying Party shall not assume the defense for matters as to which there is
a conflict of interest or separate and different defenses. 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.
(d) If the indemnification provided for in this Section 2.10 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any claim, loss, damage, liability or action referred to herein,
then the Indemnifying Party, in lieu of indemnifying such
-12-
<PAGE>
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such claim, loss, damage, liability or
action in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with the statements or omissions that resulted in such claim, loss,
damage, liability or action 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 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.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with an underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
2.11 TERMINATION OF REGISTRATION RIGHTS. The rights granted pursuant to
----------------------------------
this Section 2, to the extent not earlier terminated pursuant to Section 7.1,
shall terminate as to any Holder on the earlier of (a) such time as such Holder
is able to sell publicly without registration all Registrable Securities then
held by such Holder, if any, within a ninety (90) day period pursuant to Rule
144 under the Securities Act or a similar exemption or (b) five (5) years after
the date hereof (the "Five Year Termination Date"); provided, however, that
--------------------------
unless the Company provides written notice to such Holder at the Holder's
address of record with the Company at least twelve (12) months prior to the Five
Year Termination Date, the Five Year Termination Date shall automatically extend
for additional one year periods (the ending date of each, an "Extended
--------
Termination Date") unless written notice is provided to such Holder at such
- ----------------
address at least twelve (12) months prior to the applicable Extended Termination
Date.
2.12 INFORMATION BY HOLDER. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Section
2.
2.13 RULE 144 REPORTING. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission that may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
------------
-13-
<PAGE>
(b) 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 Investor owns any Restricted Securities, to
furnish to the Investor forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
and of the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Investor may reasonably request in
availing itself of any rule or regulation of the Commission allowing the
Investor to sell any such securities without registration.
2.14 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
-------------------------------
register securities granted to the Investor under Sections 2.4, 2.5 and 2.6 may
be assigned in connection with any transfer or assignment of Registrable
Securities by the Investor provided that: (i) such transfer may otherwise be
effected in accordance with applicable securities laws, (ii) such transferee
agrees to be bound hereby and (iii) either (A) such assignee or transferee
acquires at least 1,000,000 shares of Common Stock or Conversion Stock
convertible into at least 1,000,000 shares of Common Stock (appropriately
adjusted for Recapitalizations) or (B) such transferee is a Permitted Transferee
of the Investor.
2.15 STANDOFF AGREEMENT. Each Holder agrees in connection with the
------------------
Company's registered public offering of the Company's securities that, upon
request of the Company or the underwriters managing any underwritten offering of
the Company's securities, not to publicly sell, make any short sale of, hedge,
loan, grant any option for the purchase of, or otherwise dispose of any
securities of the Company in a public transaction (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of any such registration;
provided, that the officers and directors of the Company who own stock of the
Company have also agreed to such restrictions (including without limitation, the
Founders and their Permitted Transferees).
SECTION 3
RIGHT OF CO-SALE
----------------
3.1 Investor's Right of Co-Sale. Prior to a registered public offering,
---------------------------
no Seller may sell, assign or transfer any of its Offered Shares until the
Investor shall have been given the opportunity, exercisable within twenty (20)
days from the date of receipt of the notice to it of such sale (including the
price, terms and conditions of such sale), to participate in such transfer,
provided that the Investor is capable of selling such securities under federal
and state securities laws, to the extent of its respective Co-Sale Pro Rata
Share of the Offered Shares. If the Investor fails to notify such Seller within
twenty (20) days after receipt of the notice given by such Seller pursuant to
this Section 3.1 of its agreement to sell all or part of its Co-Sale Pro Rata
Share of the Offered Shares, the Investor shall be deemed to have waived its
rights under this Section 3.1 with respect to such proposed transfer; provided,
--------
however that
- -------
-14-
<PAGE>
the foregoing restrictions on the sale, assignment or transfer by a Seller
set forth in this Section 3.1 shall not apply to any transfer to a Permitted
Transferee.
3.2 Termination of Co-Sale Rights. The rights set forth in this Section
-----------------------------
3, to the extent not earlier terminated pursuant to Section 7.1, shall terminate
and be of no further force or effect on the earlier of (a) the Company's First
Public Offering, (b) the listing of the Company's Common Stock on The Nasdaq
Stock Market, (c) the Investment Milestone Date (as defined in the Asset
Purchase Agreement) and (d) July 8, 2003.
SECTION 4
RIGHT TO PURCHASE NEW SECURITIES; OBLIGATION TO PURCHASE SERIES C PREFERRED
---------------------------------------------------------------------------
STOCK
-----
4.1 General. The Investor shall have the right to purchase up to twenty
-------
percent (20%) of any "New Securities" (as defined in Section 4.2) that the
Company may from time to time issue after the date of this Agreement.
4.2 New Securities. "New Securities" shall mean any Common Stock or
-------------- --------------
Preferred Stock, whether now authorized or not, and rights, options or warrants
to purchase such Common Stock or Preferred Stock, debt securities (other than
pursuant to capital leases, real property leases or indebtedness to banks or
other financial institutions), and securities of any type whatsoever that are,
or may become, convertible or exchangeable into such Common Stock or Preferred
Stock; provided, however, that the term "New Securities" does not include:
-------- ------- ----------------
(i) shares of the Company's Common Stock (and/or options or
warrants therefor) issued to employees, officers, directors, contractors,
advisors or consultants of the Company pursuant to incentive agreements or plans
approved by the Board of Directors of the Company;
(ii) as of such applicable date, any securities issuable upon
conversion of or with respect to any then outstanding shares of Common Stock or
Preferred Stock or other securities issuable upon conversion of or with respect
to such securities;
(iii) shares of the Company's Common Stock or Preferred Stock issued
in connection with any stock split, stock dividend or recapitalization in which
the Investor's percentage beneficial ownership of the Company's capital stock is
not reduced;
(iv) securities offered by the Company after the First Public
Offering;
(v) securities issued pursuant to the acquisition of another
corporation or entity by the Company by consolidation, merger, purchase of all
or substantially all of the assets, or other reorganization in which the Company
acquires, in a single transaction or series of related transactions, all or
substantially all of the assets of such other corporation or entity or fifty
percent (50%) or more of
-15-
<PAGE>
the voting power of such other corporation or entity or fifty percent (50%) or
more of the equity ownership of such other entity;
(vi) securities issued to banks, equipment lessors, real property
lessors and in other similar debt financing transactions approved by the
Company's Board of Directors and securities issued upon conversion of or with
respect to such securities; or
(vii) any Company Securities issued as part of the Bridge Financing
(as defined in the Asset Purchase Agreement).
4.3 PROCEDURES. In the event that the Company proposes to undertake an
----------
issuance of New Securities, it shall give to the Investor written notice of its
intention to issue New Securities (the "Notice"), describing the type of New
------
Securities and the price and the general terms upon which the Company proposes
to issue such New Securities. The Investor shall have ten (10) days from the
date of the sending of any such Notice to agree in writing to purchase any of
such New Securities for the price and upon the general terms specified in the
Notice by giving written notice to the Company and stating therein the quantity
of New Securities to be purchased (not to exceed twenty percent (20%) of the New
Securities to be issued).
4.4 FAILURE TO EXERCISE. In the event that the Company has not issued and
-------------------
sold the New Securities within 120 days after sending the Notice to the
Investor, then the Company shall not thereafter issue or sell any New Securities
without again first offering such New Securities to the Investor pursuant to
this Section 4.
4.5 OBLIGATION TO PURCHASE SERIES C PREFERRED STOCK. Notwithstanding
-----------------------------------------------
anything in this Section 4 to the contrary, the Investor shall make the
following purchases of Series C Preferred Stock (with the rights, preferences
and limitations set forth in the Series C Certificate of Designation set forth
as part of Exhibit A to the Asset Purchase Agreement) at a purchase price of
---------
$1,000 per share upon the Company's achievement of the following milestones;
provided, however, that the Investor shall not be obligated to make such
- -------- -------
purchases of Series C Preferred Stock if the Development Agreement has been
terminated by the Investor pursuant to Section 8.1 thereof:
(a) Two Million Dollars ($2,000,000) of Series C Preferred Stock on
the IND Milestone date (as defined in the Development Agreement);
(b) Five Million Dollars ($5,000,000) of Series C Preferred Stock
upon commencement of Phase III clinical trials of the Mini-Ad Vector Technology
(as defined in the Development Agreement) with respect to Collaboration
Product(s) (as defined in the Development Agreement);
(c) Ten Million Dollars ($10,000,000) of Series C Preferred Stock
upon FDA (as defined in the Development Agreement) approval of the first product
license application of a Collaboration Product(s) (as defined in the Development
Agreement).
-16-
<PAGE>
4.6 TERMINATION OF RIGHTS. The rights set forth in this Section 4 (other
---------------------
than pursuant to Section 4.5), to the extent not earlier terminated pursuant to
Section 7.1, shall terminate and be of no further force or effect at such time
as the Investor does not own at least 250,000 shares of Common Stock and/or
Preferred Stock (on an as converted to Common Stock basis) issued upon
conversion of the shares of Preferred Stock and/or warrants or convertible
securities exercisable for or convertible into at least 250,000 shares of Common
Stock and/or Preferred Stock (on an as converted to Common Stock basis), in each
instance appropriately adjusted for Recapitalizations.
SECTION 5
ADDITIONAL COVENANTS OF THE INVESTOR
------------------------------------
Until the termination of this Agreement in accordance with Section 7.1 or
the particular covenant, as the case may be, the Investor covenants and agrees
as follows:
5.1 STANDSTILL RESTRICTIONS.
-----------------------
(a) Without the prior written consent of the Company, the Investor
shall not, and shall not permit any of its subsidiaries to, directly or
indirectly, authorize or make a tender or exchange offer for, or purchase or
otherwise acquire, or agree to acquire or obtain, directly or indirectly,
beneficial ownership of any Voting Stock, if the effect of such acquisition
would be to increase the number of shares of Voting Stock then beneficially
owned by the Investor and its subsidiaries to an amount representing more than
forty percent (40%) of the Total Voting Power; provided that (i) the issuance or
--------
ownership of New Securities pursuant to Section 4.1, (ii) issuance of Common
Stock or Preferred Stock pursuant to the Asset Purchase Agreement, (iii)
issuance or ownership of the Shares or shares of Common Stock or Preferred Stock
issuable or issued upon conversion of the Shares which constitute Preferred
Stock in accordance with the terms of the Certificate of Designation, and (iv)
the ownership or exercise of any Rights in accordance with the terms hereof,
shall in no event be prohibited by the foregoing limitation; provided, further
-------- -------
that until the Investor's percentage of the Total Voting decreases below forty
percent (40%) of the Total Voting Power, except as set forth in (i) through (iv)
above, the Investor shall not, and shall not permit any of its subsidiaries to,
directly or indirectly, authorize or make a tender or exchange offer for, or
purchase or otherwise acquire, or agree to acquire or obtain, directly or
indirectly, beneficial ownership of any Voting Stock.
(b) Notwithstanding the above, the Investor shall not be obligated to
dispose of any shares of Voting Stock if the aggregate percentage ownership of
the Investor is increased as a result of a Recapitalization of the Company or a
repurchase of securities by the Company or any other action taken by the Company
or its subsidiaries. If the Company repurchases any of its Voting Stock and such
repurchases result in the Investor owning more than the percentage of the Voting
Stock of the Company allowed under Section 5.1(a) at the effective time of such
repurchases, the Investor shall not be obligated to divest itself of the Voting
Stock to fall within the foregoing percentage limitation, but shall not acquire
any additional Voting Stock unless such acquisition would otherwise be Permitted
under this Section 5.
-17-
<PAGE>
5.2 PURCHASE OF COMMON STOCK IN OPEN MARKET.
---------------------------------------
Subject to the limitations of Section 5.1, the Investor shall have the
right to purchase Voting Stock in the open market in an amount such that its
beneficial ownership does not exceed the percentage ownership permitted under
Section 5.1
5.3 VOTING.
------
(a) Until July 8, 2001, provided that the Company is not in material
breach of the Acquisition Agreements, the Investor and the Founders will take
such action as is reasonable so that all shares of Voting Stock owned by the
Investor and its Affiliates and the Founders and their Affiliates are voted (in
person or by proxy) for (and the Company will nominate and recommend to the
Company's Stockholders a vote for) the nominees to the Company's Board of
Directors such that (i) one Director is a nominee requested by the Investor;
(ii) two Directors are nominees requested by the Company's Stockholders (other
than the Investor and the Founders); and (iii) three directors are nominees
requested by the Company's management. On all other matters to be voted on by
holders of Voting Stock, the Investor and the Founders may vote (in person or by
proxy) their shares of Voting Stock at their sole discretion. So long as the
Investor holds at least five percent of the Total Voting Power, the Investor
shall be present, in person or by proxy, at all duly held meetings of
stockholders of the Company so that all shares of Voting Stock held by the
Investor may be counted for the purposes of determining the presence of a quorum
at such meetings.
(b) Notwithstanding the foregoing, nothing in this Section 5.3 shall
require the Investor to breach its fiduciary obligations by voting for an unfit
nominee or a nominee not reasonably acceptable to the Investor.
5.4 VOTING TRUSTS. Except as consented to by the Company in writing, the
-------------
Investor shall not deposit any shares of Voting Stock owned by it in a voting
trust or, except as otherwise provided in this Agreement, subject any such
shares to any similar arrangement or agreement with respect to the voting of
such shares.
5.5 SOLICITATION OF PROXIES. Without the Company's prior written consent,
-----------------------
the Investor shall neither solicit proxies with respect to any Voting Stock, nor
shall it become a "participant" in any "election contest" as such terms are used
in Rule 14a-11 of Regulation 14A under the Exchange Act relating to the election
of directors of the Company.
5.6 ACTS IN CONCERT WITH OTHERS. Except as otherwise provided herein or
---------------------------
permitted in writing by the Company, the Investor shall not join any group or
otherwise act in concert with any third person for the purpose of acquiring,
holding or disposing of Voting Stock.
5.7 RESTRICTIONS ON TRANSFER OF SHARES AND OTHER VOTING STOCK.
---------------------------------------------------------
(a) Until termination of this Section 5 (as provided in Section 5.9),
each Holder and Founder shall not, directly or indirectly, sell or transfer any
Voting Stock, except:
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<PAGE>
(i) to the Company or any person or group approved by the
Company; or
(ii) to any Permitted Transferee of the Holder or Founder; or
(iii) pursuant to a Recapitalization, Reorganization or similar
event of the Company or pursuant to a reincorporation or plan of liquidation of
the Company approved by the Company's Board of Directors; or
(iv) provided that the rights of such Holder or Founder under
this Agreement (other than rights specified in Section 2 hereof) shall not
transfer to the transferee of such securities, pursuant to a bona fide public
offering registered under the Securities Act (which shall be structured to
distribute such shares or other securities, if any, through an underwriter) or
otherwise in such a manner as, to the extent practicable, will not, to such
Holder's or Founder's knowledge, result in a sale or sales of beneficial
ownership of ten percent (10%) or more of the Total Voting Power being
transferred to a single person or group or pursuant to a rights offering or a
dividend or other distribution to stockholders of such Holder on a pro rata
basis; or
(v) provided that the rights of such Holder under this
Agreement (other than rights specified in Section 2 hereof) shall not transfer
to the transferee of such securities, pursuant to Rule 144 under the Securities
Act if any such sale will not, to the knowledge of such Holder or Founder,
result in the transferees (whether a single person or group) beneficially owning
more than ten percent (10%) of the Total Voting Power to a single person or
group;
(vi) in response to (A) an offer to purchase or exchange for
cash or other consideration any Voting Stock (1) which is made by or on behalf
of the Company, or (2) which is made by another person or group and is not
opposed by the Board of Directors of the Company within the time such Board is
required, pursuant to regulations under the Exchange Act, to advise the
stockholders of the Company of such Board's position an such offer, or (B)
subject to Sections 5.3 and 6.3, any other offer made by another person or group
to purchase or exchange for cash or other consideration any Voting Stock which,
if successful, would to such Holder's or Founder's knowledge, result in such
person or group beneficially owning or having the right to acquire ten percent
(10%) or less of the Total Voting power; or
(vii) pursuant to a plan of liquidation of such Holder; or
(viii) to employees of such Holder upon the exercise of options
issued to such employees (which options shall be exercisable for shares of
Common Stock only); or
(ix) provided that the rights of such Holder or Founder under
this Agreement (other than rights specified in Section 2 hereof) shall not
transfer to the transferee of such securities, pursuant to a bona fide public
offering (structured as set forth in Section 5.7 (a)(iv) above) by such Holder
of securities convertible into, or exchangeable for, Voting Stock; or
-19-
<PAGE>
(x) subject to Section 6.1, in any transfer not otherwise
described herein so long as such transfer does not, directly or indirectly,
result, to the best knowledge of such Holder or Founder, after reasonable
inquiry, in any single person or group beneficially owning after such transfer
greater than ten percent (10%) of the Total Voting Power.
(b) Upon a proposed sale or transfer of any Shares, such Holder shall
so notify the Company, as promptly as is practicable.
(c) Notwithstanding the foregoing, no Holder or Founder will be
prohibited from any of the transactions set forth in this Section 5.7 if:
(i) prior to such transaction the Total Voting Power held by
such Holder or Founder was less than twenty-five percent (25%); or
(ii) any other holder of at least ten percent (10%) of the
Total Voting Power is not so bound.
5.8 SUPERMAJORITY VOTE. The Company agrees not to take any significant
------------------
corporate actions without obtaining the approval of a majority of the Company's
Board of Directors and the Investor-nominated director including:
(a) a Recapitalization;
(b) a Reorganization;
(c) the liquidation, dissolution or winding up of the Company's
business; or
(d) any similar transaction.
5.9 TERMINATION OF STANDSTILL PROVISIONS. The provisions of this Section
------------------------------------
5 shall terminate on July 8, 2003.
SECTION 6
RIGHTS OF THE COMPANY UPON CERTAIN SALES
----------------------------------------
6.1 NOTIFICATION OF INTENT TO SELL. Until July 8, 2003, if the Investor
------------------------------
shall decide to sell or transfer any Voting Stock pursuant to Section 5.7(a)(x),
the Investor shall notify the Company (in writing or otherwise) of such
intention, and shall consider in good faith any timely offer made by the Company
to purchase such Voting Stock. This Section 6.1 shall not obligate (i) the
Company to acquire or to offer to acquire any Voting Stock to be sold by the
Investor pursuant to Section 5.7(a) (x) or require the Investor to sell any such
Voting Stock to the Company.
-20-
<PAGE>
6.2 RIGHT OF FIRST OFFER. Until July 8, 2003, prior to making any sale or
--------------------
transfer of shares of Voting Stock permitted by Section 5.7 (other than Sections
5.7(a)(ii), (iv), (vi) or (ix)), the Investor shall give the Company the
opportunity to purchase such shares in the following manner:
(a) The Investor shall give notice (the "Transfer Notice") to the
---------------
Company in writing of such intention specifying the number of shares of Voting
Stock proposed to be sold or transferred; provided, however, that if the
proposed sale or transfer is pursuant to an unsolicited offer ("Unsolicited
-----------
Offer"), then the Investor need not specify the number of shares of Voting Stock
- -----
proposed to be sold or transferred.
(b) Within 20 calendar days after the receipt of the Transfer Notice,
the Company may offer to purchase from the Investor at a price and on terms
specified in a written notice to the Investor (the "Election Notice") any
---------------
portion of such Voting Stock set forth in the Transfer Notice.
(c) If the Transfer Notice relates to an Unsolicited Offer, the
Investor may reject the Company's proposal set forth in the Election Notice if
in the Investor's reasonable business judgement it believes that the Company's
proposal is inferior to the Unsolicited Offer.
(d) If the Transfer Notice does not relate to an Unsolicited Offer,
and if the Company and the Investor do not enter into an agreement for the sale
of the Voting Stock within the 30-day period following delivery by the Company
of the Election Notice and after good faith negotiation by each party, the
Investor shall be free, during the period of one hundred twenty (120) calendar
days thereafter to sell the shares of Voting Stock specified in the Transfer
Notice at a price not less and on terms not less favorable than that set forth
in the Election Notice.
(e) To the extent the Company and the Investor reach an agreement
pursuant to this Section 6.2 the Company and the Investor shall be legally
obligated to consummate the purchase contemplated thereby and shall use their
best efforts to secure any approvals required in connection therewith.
(f) If the Investor accepts the Company's proposal set forth in the
Election Notice in lieu of an Unsolicited Offer, then promptly after the
Investor's acceptance of the Company's proposal, the Investor must disclose the
written Unsolicited Offer to the Company.
(g) If the Company does not send an Election Notice within the time
specified for such notice, the Investor shall be free, during the period of one
hundred twenty (120) calendar days following the expiration of such time for
sending the Election Notice, to sell the shares of Voting Stock specified in the
Transfer Notice or again be subject to the provisions of this Section 6.2 with
respect to such Voting Stock.
6.3 TENDER OFFER SALE. Until July 8, 2003, prior to making any sale or
-----------------
exchange of shares of Voting Stock pursuant to Section 5.7(a)(vi)(B) in response
to a tender or exchange offer referred to therein (the "Eligible Tender Offer"),
---------------------
the Investor shall give the Company the opportunity to purchase such shares of
Voting Stock in the following manner:
-21-
<PAGE>
(a) The Investor shall give notice (the "Tender Notice") to the
-------------
Company in writing of its intention to tender shares of Voting Stock in the
Eligible Tender Offer no later than 48 hours prior to the then-scheduled
expiration of the Eligible Tender Offer, which Tender Notice shall specify the
number of shares proposed to be tendered (the "Tendered Shares"). If the
---------------
Investor thereafter chooses not to tender any or all of such Tendered Shares
into the Eligible Tender Offer (which the Investor may do at any time prior to
receipt of an Exercise Notice (as defined below) from the Company), the Investor
shall promptly advise the Company thereof by amending the Tender Notice and
thereafter such shares shall no longer be deemed to be Tendered Shares.
(b) If the Tender Notice is given, the Company shall have the right
to purchase part or all of the Tendered Shares specified in the Tender Notice,
exercisable, no later than 24 hours prior to the expiration of the Eligible
Tender Offer (as specified in the Tender Notice or any extension of the Eligible
Tender Offer), by giving written notice (an "Exercise Notice") to the Investor
---------------
and depositing in escrow (or similar arrangement) a sum (in cash) sufficient to
purchase all Tendered Shares at the price then being offered in the Eligible
Tender Offer, without regard to any provision thereof with respect to proration
or conditions to the offeror's obligation to purchase. The delivery by the
Company of an Exercise Notice and deposit of funds as provided above will,
except as provided below, constitute an irrevocable agreement by the Company to
purchase, and the Investor to sell, the Tendered Shares in accordance with the
terms of this Section 6.3, whether or not the Eligible Tender Offer or any other
tender or exchange offer (a "Competing Tender Offer") for Voting Stock that was
----------------------
outstanding during the Eligible Tender offer is consummated; provided that if
--------
prior to delivery of the Tender Notice, the Investor has commenced a tender or
exchange offer for Voting Stock, the Investor will not be obligated to sell the
Tendered Shares to the Company unless such offer has expired or been withdrawn
without the purchase of any Voting Stock by the Investor thereunder. If the
Company exercises its right to purchase Tendered Shares by giving such notice
and depositing such cash, the closing of the purchase of such Tendered Shares
shall take place not later than five business days after the expiration or
withdrawal of the Eligible Tender Offer or any Competing Tender Offer. If the
cash deposited by the Company in the escrow account is insufficient to pay all
amounts required to be paid to the Investor pursuant to Section 6.3(c), the
Company shall pay any additional amounts necessary to cover such insufficiency
to the Investor in cash at the closing.
If the Eligible Tender Offer is extended, any Tender Notice or related
Exercise Notice shall be deemed invalid subject to the obligation of the
Investor to give notice pursuant to Section 6.3(a) at least 48 hours prior to
the new scheduled expiration date if it intends to tender voting stock into the
Eligible Tender Offer and the right of the Company to purchase any Tendered
Shares by giving notice pursuant to Section 6.3(b) not later than 24 hours prior
to the new scheduled expiration date.
(c) The purchase price to be paid by the Company pursuant to this
Section 6.3 shall be the highest price offered or paid in the Eligible Tender
Offer or in any Competing Tender Offer. For purposes hereof, the price offered
or paid in a tender or exchange offer for shares of Voting Stock Shall be deemed
to be the price offered or paid pursuant thereto, without regard to any
provisions thereof with respect to proration or conditions to the offeror's
obligation to purchase.
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<PAGE>
If the purchase price specified in the tender offer includes any
property other than cash, the value of any property included in the purchase
price shall be jointly determined by a nationally recognized investment banking
firm selected by each party or, in the event such firms are unable to agree, a
third nationally recognized investment banking firm to be selected by such two
firms. For this purpose:
(i) The parties shall use their best efforts to cause any
determination of the value of any securities included in the purchase price to
be made within the three business days after the date of delivery of the Tender
Notice. If the firms selected by the Investor and the Company are unable to
agree upon the value of any such securities within such three-day period, the
firms shall promptly select a third firm whose determination shall be made
promptly and shall be conclusive.
(ii) The parties shall use their best effort to cause any
determination of the value of property other than securities to be made within
four business days after the date of delivery of the Tender Notice. If the firms
selected by the Investor and the Company are unable to agree upon a value within
such four-day period, the firms shall promptly select a third firm whose
determination shall be made promptly and shall be conclusive.
The Company shall bear the costs of any investment banking firms and escrow
agents retained in accordance with this Section 6.3.
(d) If the Company does not exercise its right of first refusal as
contemplated in this Section 6.3, the Investor shall be free to accept the
Eligible Tender Offer.
6.4 ASSIGNMENT OF RIGHTS. In the event that the Company elects to
--------------------
exercise any of its rights under this Section 6, the Company may specify, prior
to closing such purchase, another Person (reasonably acceptable to Baxter) as
its designee to purchase the shares of Voting Stock to which such notice of
intention to exercise such rights relates. If the Company designates another
person as the purchaser pursuant to this Section 6, the Company shall be legally
obligated to complete such purchase if its designee fails to do so. Any such
designee of the Company must agree in writing to comply with and be bound by the
terms of this Agreement.
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<PAGE>
SECTION 7
MISCELLANEOUS
-------------
7.1 TERMINATION.
-----------
(a) This Agreement may be terminated at any time prior to the Closing
by mutual consent of the respective Boards of Directors of the Company and the
Investor;
(b) After the Closing, this Agreement shall terminate an the earliest
to occur of:
(i) the tenth anniversary of the date hereof ; or
(ii) such time or times as the Investor beneficially owns less
than 5% of the aggregate Common Stock and Common Stock Equivalents.
7.2 GOVERNING LAW. This Agreement shall be governed and construed in all
-------------
respects in accordance with the laws of the State of California as applied to
agreements made and performed in California by residents of the State of
California.
7.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full and
---------------------------
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein and therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of a majority of the Registrable Securities may,
- -------- -------
with the Company's prior written consent, waive, modify or amend on behalf of
all holders, any provisions hereof, except that any such waiver, modification or
amendment which affects a Holder in a manner or to an extent more adverse than
any other Holder shall require the prior written consent of such Holder.
7.4 NOTICES. All notices, requests, demands, and other communications
-------
permitted or required (i) under this Agreement shall be in writing and shall be
either personally delivered (including couriers such as Federal Express) or sent
by pre-paid certified mail, return receipt requested, or facsimile transmission,
with a confirmation copy personally delivered or sent by pre-paid certified
mail, addressed or transmitted to the address or number stated below of the
party to which notice is given, or to such other address or number as such party
may have fixed by notice given in accordance with the terms hereof (ii) pursuant
to the Certificates of Designation set forth as Exhibit A to the Asset Purchase
---------
Agreement, shall be sent in the manner set forth in such certificates to the
following address of the applicable party:
-24-
<PAGE>
To the Company:
Urogen Corp.
10835 Altman Row, Suite A
San Diego, California 92121
Attention: Robert E. Sobol
Facsimile: (619) 642-9173
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Herbert P. Fockler, Esq.
Facsimile: (650) 493-6811
To the Investor:
Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Attention: President - Venture Management
Associate General Counsel
Facsimile: (847) 940-6271
With a copy to:
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe Street
Chicago, Illinois 60603-5803
Attention: Christopher A. Lause, Esq.
Facsimile: (312) 269-8869
To any other Holder:
At such Holder's address of record with the Company.
To the Founders:
At such Founder's address of record with the Company.
Any notice, sent as provided above, shall be deemed given if personally
delivered or, if sent by certified mail, upon delivery at the address provided
for above (or, in the event delivery is refused, the first date
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<PAGE>
on which delivery was tendered) or, if sent by facsimile transmission, upon
receipt by the sender of confirmation of delivery.
7.5 DISPUTE RESOLUTION.
------------------
(a) Provisional Remedies: The procedures specified in this Section
7.5 shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
--------
however, that a party, without prejudice to these procedures, may seek a
- -------
preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the parties will continue to participate in good
faith in the procedures specified in this Section 7.5.
(b) Negotiations Between Executives: If the dispute is between the
Company or the Founders and the Investor, the parties will first attempt in good
faith to resolve promptly any claim or controversy arising out of or relating to
the execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
7.5) through negotiation by executive officers of the Company and the Investor.
(c) Arbitration: In the event that any dispute arising out of or
relating to this Agreement or its breach, termination or validity has not been
resolved after good faith negotiation pursuant to the procedures of Section
7.5(b) or if Section 7.5(b) is inapplicable, after good faith negotiation by the
applicable parties, within thirty (30) days following any party delivering
notice of such dispute to any adverse party hereto, such dispute shall, upon
written notice by either party to the other, be finally settled by arbitration
administered by JAMS/Endispute in accordance with the provisions of its
Comprehensive Arbitration Rules and Procedures and the United States Federal
Arbitration Act, as modified below:
(i) The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators all of whom shall be
selected from a list of neutral arbitrators supplied by
the JAMS/Endispute. From such list, each of such adverse
parties shall select one (1) arbitrator, and the
arbitrators so selected shall select a third. The panel
shall designate one (1) among them to serve as chair.
(ii) The arbitration proceedings shall be conducted in San
Diego County, California unless notice demanding
arbitration is delivered by the Company or the Founders to
the Investor, in which case the arbitration proceedings
shall be conducted in Cook County, Illinois.
(iii) Any party may seek interim or provisional remedies under
the Federal Rules of Civil Procedure and the United States
Federal Arbitration Act as necessary to protect the rights
or property of the party pending the decision of the
arbitrators.
-26-
<PAGE>
(iv) The parties shall allow and participate in limited
discovery for the production of documents and taking of
depositions, which shall be conducted in accordance with
the Comprehensive Arbitration Rules and Procedures of
JAMS/Endispute. All discovery shall be completed within
sixty (60) days following the filing of the answer or
other responsive pleading. Unresolved discovery disputes
shall be brought to the attention of the chair of the
arbitration panel and may be disposed of by the chair.
(v) Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of
arbitrators, provided that the chair of the panel of
arbitrators may establish such longer times for
presentations as the chair deems appropriate
(vi) The arbitration award shall be rendered by the arbitrators
within fifteen (15) business days after conclusion of the
hearing of the matter, shall be in writing and shall
specify the factual and legal basis for the award.
Judgment thereon may be entered in any court having
jurisdiction thereof.
(vii) The arbitrations are empowered to order money damages in
compensation for a party's actual damages, specific
performance or other appropriate relief to cure a breach;
provided, however, that the arbitrators will have no
-------- -------
authority to award special, punitive or exemplary damages,
or other money damages that are not measured by the
prevailing party's actual damages.
(d) Performance During Dispute: Each party is required to continue
to perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement, unless to do so would be
commercially impossible or impractical under the circumstances.
(e) Costs of Arbitration: The party which is found to have been more
at fault in a dispute arbitrated under this Section 7.5 shall be responsible for
paying the costs and expenses, including reasonable attorney's fees, which the
other party has incurred in such arbitration.
7.6 REPRESENTATIONS OF THE COMPANY AND THE FOUNDERS. Each of the Company
-----------------------------------------------
and the Founders severally, but not jointly, represent and warrant to the
Investor that to its knowledge, the terms of the Certificates of Designation of
the Preferred Stock set forth as Exhibit A to the Asset Purchase Agreement do
---------
not materially conflict with the Articles of Incorporation, the By-Laws, or any
other instrument or agreement to which any of the Company or the Founders are
parties or with respect to which any of them are bound.
7.7 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
-27-
<PAGE>
in full force and effect without said provision; provided that no such
severability shall be effective if it materially changes the economic benefit of
this Agreement to any party.
7.8 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not considered in construing or
interpreting this Agreement.
7.9 COUNTERPARTS; EXECUTION BY FACSIMILE. This Agreement may be executed
------------------------------------
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one instrument. This Agreement may be executed and delivered by
exchange of facsimile copies showing the signatures of the parties hereto, and
those signatures need not be affixed to the same copy. The facsimile copies
showing the signatures of the parties will constitute originally signed copies
of the same agreement requiring no further execution.
-28-
<PAGE>
IN WITNESS WHEREOF, the Company, the Investor and the Founders (but only as
to Sections 2, 3, 5 and 7) have executed this Investor Rights Agreement as of
the date first above written.
UROGEN CORP.
By: /s/ Paul D. Quadros
------------------------------------
Name: Paul D. Quadros
Its: President and Chief Executive Officer
INVESTOR:
BAXTER HEALTHCARE CORPORATION
By: /s/ Victor W. Schmitt
------------------------------------
Name: Victor W. Schmitt
Its: President, Venture Management
FOUNDERS:
/s/ Ivor Royston
----------------------------------------
Ivor Royston
/s/ Paul Quadros
----------------------------------------
Paul Quadros
/s/ Robert E. Sobol
----------------------------------------
Robert E. Sobol
[INVESTOR RIGHTS AGREEMENT]
<PAGE>
EXHIBIT 2.5
CREDIT AGREEMENT
By And Between
BAXTER HEALTHCARE CORPORATION
as lender
And
UROGEN CORP.
as Borrower
July 8, 1998
<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT (this "Agreement") is entered into this 8th day of
July, 1998, by and between UROGEN CORP., a Delaware corporation with offices at
10835 Altman Row, Suite A, San Diego, California 92121 ("Borrower"), and BAXTER
HEALTHCARE CORP., a Delaware corporation with offices at 1627 Lake Cook Road,
Deerfield, Illinois 60015 ("Baxter").
PRELIMINARY STATEMENT
---------------------
WHEREAS, Baxter and Borrower have entered into that certain Asset Purchase
Agreement dated as of February 28, 1998, as amended by that certain Amendment to
Asset Purchase Agreement, dated as of May 27, 1998, between Baxter and Borrower
(as so amended, the "Asset Purchase Agreement") pursuant to which Baxter has
agreed to sell the Mini-Ad Vector Technology (as that capitalized term is
defined in the Asset Purchase Agreement) to Borrower, as well as other property
related to the research, development, manufacture, use and sale of the Mini-Ad
Vector Products (as that capitalized term is defined in the Asset Purchase
Agreement);
WHEREAS, Baxter has agreed to collaborate with Borrower to develop
Collaboration Products, as that capitalized term is defined in, and pursuant to,
the terms of that certain Developmental Collaboration Agreement between Baxter
and Borrower of even date herewith (the "Development Agreement");
WHEREAS, the Borrower desires that Baxter make available to Borrower a
credit facility in order to finance a portion of the funding for development of
Collaboration Products in accordance with the terms of the Development
Agreement; and
WHEREAS, Baxter is willing to make available such credit facility for such
purposes and on the terms and conditions stated below.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
Baxter and the Borrower agree as follows:
1. LOAN.
----
1.1 TERMS DEFINED IN DEVELOPMENT AGREEMENT. Unless otherwise defined
--------------------------------------
herein, all capitalized terms shall have the meanings ascribed to such terms
(including by reference to another agreement) as set forth in the Development
Agreement.
1.2 CREDIT FACILITY LOAN.
--------------------
(a) Credit Facility. Subject to the terms and conditions of this
---------------
Agreement, Baxter agrees to loan to Borrower from time to time during the
Commitment Period (as defined below) such amounts to be funded by Baxter as
Baxter Funding during the Baxter Funding Period under, and subject to the terms
and conditions of, Section 3.5(a) of the Development Agreement (the "Credit
<PAGE>
Facility Loan"), which funds may be repaid without penalty during the Commitment
Period but may not be reborrowed. Notwithstanding any provision of the
immediately preceding sentence to the contrary, any amounts to be advanced by
Baxter as part of the Baxter Funding during the Baxter Funding Period shall be
subject to Baxter's right at any time and from time to time to decline to pay
any portion of its funding obligations under Section 3.5 of the Development
Agreement in accordance with the terms and conditions set forth therein. The
proceeds of the Credit Facility Loan shall be used solely to fund the Approved
Expenses of Borrower incurred with respect to the Development Work during the
Baxter Funding Period in accordance with Section 3.5(a) of the Development
Agreement. The full amount of any outstanding Borrower's Liabilities (as defined
in Section 2 below) under the Credit Facility Loan shall be payable on December
31 of each year during the term of this Agreement. Upon termination of this
Agreement, Borrower shall pay Baxter the remaining outstanding amount of the
Borrower's Liabilities under the Credit Facility Loan as of the date of
termination. In the event that no Event of Default shall occur and be
continuing on any of the dates for payment described above (such dates, the
"Payment Dates"), the amounts due and payable on such Payment Dates shall be
paid by Borrower by issuing to Baxter on the Payment Date the number of shares
of Borrower's Series B Preferred Stock (the "Stock") determined by dividing (i)
the outstanding amount of the Borrower's Liabilities under the Credit Facility
Loan at such Payment Date divided by (ii) $[*] per share (subject to equitable
----------
adjustment whenever there shall occur a stock dividend, stock split, combination
of shares, reclassification or other similar event affecting such shares),
rounding down to the nearest whole share (with the remaining amount, otherwise
payable in fractional shares, payable to Baxter in cash). However, if an Event
of Default shall occur and be continuing on a Payment Date, Baxter may elect in
its sole discretion to require payment of the outstanding amount of the
Borrower's Liabilities under the Credit Facility Loan, in accordance with
Section 7 hereof, in either cash or in Stock. The amount of Stock so payable
shall be calculated by using the formula as described above.
The full amount of the Borrower's Liabilities under the Credit Facility
Loan then outstanding shall mature and shall be due and payable on the
"Termination Date" (as defined below).
Baxter shall be under no obligation to make further loans after the
Commitment Period unless Baxter extends the Commitment Period, in its sole
discretion.
(b) "PRIME RATE" as used herein means the variable rate of interest
-----------
quoted as the prime rate by the Wall Street Journal from time to time. Whenever
-------------------
in this Agreement the Prime Rate is a component of an interest rate hereunder,
such interest rate shall fluctuate from time to time concurrently with, and in
an amount equal to, each increase or decrease in the Prime Rate component
thereof.
(c) "COMMITMENT PERIOD" means the period from and including the date
-------------------
hereof to and including the Termination Date.
(d) "BUSINESS DAY" shall mean any day other than (a) a Saturday or
-------------- ----- ----
Sunday or (b) a day on which commercial banks in the State of Illinois are
authorized or required by law to close.
2
<PAGE>
(e) "TERMINATION DATE" means the earlier to occur of (i) termination
------------------
of the Development Agreement, (ii) the License Termination Date, (iii) the first
day of the UroGen Funding Period, as such term is defined in the Development
Agreement, or (iv) as earlier specified in a written notice given by Baxter to
Borrower of an acceleration of the Credit Facility Loan after an Event of
Default.
(f) "LOAN" means the Credit Facility Loan.
------
2. BORROWER'S LIABILITIES. Borrower's liability to Baxter hereunder
----------------------
("Borrower's Liabilities") shall be equal to the aggregate of:
(i) the then unpaid principal of all loans and/or advances made by
Baxter to or for the account of the Borrower, including, but not limited
to, the Loan; and
(ii) any other costs and expenses required to be paid by Borrower as
provided in this Agreement (and, at Baxter's sole option, any amounts
accrued but unpaid by Borrower after a default which has not been cured
under and pursuant to the Seller License Agreement, the Services Agreement,
the Employee Lease, the Royalty Agreement, the Development Agreement, the
Distribution Agreement and the Investors' Agreement (as those capitalized
terms are defined in the Asset Purchase Agreement) may be treated as
advances for the account of Borrower hereunder); and
(iii) any interest which accrues but remains unpaid by Borrower with
respect to items (i) and (ii) above.
In determining Borrower's Liabilities, the books and records of Baxter
shall be controlling, absent manifest error. All statements of account rendered
by Baxter to Borrower concerning Borrower's Liabilities, including all
statements of principal, interest, expenses and costs owing to Baxter by
Borrower shall, absent manifest error, constitute an account stated between
Baxter and the Borrower.
Any portion of Borrower's Liabilities not paid after an Event of Default
shall occur shall bear interest from the due date until paid at a floating rate,
computed using a 360-day year and actual days elapsed, equal to [ * ] percent
([*]%) per annum in excess of the Prime Rate (the "Default Rate"). The foregoing
rate of interest to be charged hereunder shall fluctuate from time to time
concurrently with and in an amount equal to each increase or decrease in the
Prime Rate.
3. LOAN ADVANCES; APPLICATION OF PAYMENTS. Each request for an advance
--------------------------------------
under the Credit Facility Loan under this Agreement shall be made by Borrower by
delivering to Baxter a written notice requesting funding under and pursuant to
the terms and conditions set forth in Section 3.5(a) of the Development
Agreement (a "Borrowing Notice"). Baxter, upon determination in its good faith
judgment that the conditions set forth in Section 4 hereof have been duly
satisfied, and subject to (i) Baxter's right at any time and from time to time
to decline to pay any portion of its funding obligations under Section 3.5(a) of
the Development
3
<PAGE>
Agreement, and (ii) the terms and conditions of this Agreement and the
limitations set forth in Section 1, will fund the Baxter Funding requested by
Borrower in the Borrowing Notice by advancing such amount under the Credit
Facility Loan to the Borrower in immediately available funds pursuant to the
Borrower's wire transfer instructions pursuant to Section 3.5 of the Development
Agreement in accordance with the terms and conditions set forth therein, or, if
Baxter determines that such conditions have not been met, or that the amount
requested shall not be advanced by Baxter to Borrower, Baxter will so notify
Borrower.
4. CONDITIONS TO DISBURSEMENTS.
---------------------------
The obligation of Baxter to make any advances under the Credit Facility
Loan is subject to the satisfaction of each of the following conditions:
(a) Borrower shall have executed and delivered to Baxter this
Agreement;
(b) All other such documents, instruments, certificates or actions
as Baxter may reasonably request in connection with the transactions
contemplated hereby shall have been delivered or taken by the Borrower;
(c) Before and after giving effect to such advance under the Credit
Facility Loan, no Event of Default hereunder, nor any event which, with the
lapse of time or the giving of notice, or both, would constitute such an Event
of Default hereunder, shall have occurred and be continuing;
(d) Before and after giving effect to any such advance under the
Credit Facility Loan, the representations and warranties of Borrower herein
shall be correct as though made on the date of such advance under the Credit
Facility Loan; and
(e) Borrower shall have delivered a Borrowing Notice as provided
above.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES. The Borrower hereby
-----------------------------------------
represents and warrants to Baxter, and with each request hereunder for an
advance under the Credit Facility Loan, Borrower shall be deemed to have newly
represented and warranted to Baxter, that:
(a) The financial statements of Borrower furnished to Baxter in
accordance with Section 4.8 of the Asset Purchase Agreement (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP consistently
applied (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and present fairly
the financial position of Borrower at the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal audit adjustments). There has been no change in
Borrower's accounting policies except as described in the notes to the Financial
Statements.
4
<PAGE>
(b) No litigation (including derivative actions), arbitration
proceedings or governmental proceedings are pending or, to the knowledge of the
Borrower, threatened against the Borrower the results of which might, if
determined adversely to the Borrower, materially and adversely affect the
Borrower's financial condition or operations, other than such litigation or
proceedings provided for or previously disclosed to Baxter in writing.
6. COVENANTS.
---------
The Borrower hereby covenants and agrees with Baxter that, except as
permitted hereby or with the prior written consent and approval of Baxter, until
all the Borrower's Liabilities have been paid in full:
(a) It will maintain at all times its existence in good standing in
the jurisdiction of its incorporation and its qualification to transact business
in each jurisdiction where it is required to be so qualified;
(b) It will comply with the provisions of the Seller License Agreement
in all material respects;
(c) It will file all federal, state and local tax returns which are
required to be filed by it, or timely request an extension of time within which
to file any such tax returns, and pay, or make provision for the payment of, all
taxes, additions to tax, penalties or interest which have become due pursuant to
such tax returns or pursuant to any assessment received by the Borrower;
(d) It will comply with all applicable laws, statutes, regulations
and ordinances of the United States of America, of any state or municipality, or
of any other jurisdiction or agency thereof, the violation of which would in any
respect materially and adversely affect the Borrower;
(e) It will maintain at all times all material authorizations,
consents, approvals, licenses, permits, exemptions of, or filings or
registration with, all commissions, boards, bureaus, agencies and
instrumentalities necessary to carry on its business in the ordinary course; and
(f) It will promptly give notice to Baxter of the occurrence of a
material default or Event of Default under this Agreement, or under the Asset
Purchase Agreement, the Seller License Agreement, the Services Agreement, the
Employee Lease, the Royalty Agreement, the Development Agreement, the
Distribution Agreement or the Investors' Agreement.
7. EVENTS OF DEFAULT.
-----------------
Each of the following events (an "Event of Default") shall constitute a
default hereunder:
(a) If any amount of principal on any of the Borrower's Liabilities
is not paid on or before thirty (30) days after the date when such amount is
due; or
5
<PAGE>
(b) If Borrower breaches in any material respect any of the covenants
contained in this Agreement, other than for nonpayment of Borrower's Liabilities
provided for in Subsection (a) above, and such breach shall continue for a
period of thirty (30) days after notice thereof has been given by Baxter to the
Borrower, unless within such thirty (30) day period the Borrower has instituted
corrective action satisfactory to Baxter, is diligently pursuing such action to
correct the breach, and such breach is in fact remedied within sixty (60) days
of the earlier of the date such default shall first have become known to the
Borrower or the date written notice of such default shall have been given to the
Borrower by Baxter; or
(c) If any representation or warranty of Borrower contained in this
Agreement or in any other such instrument or document given to Baxter should at
any time be untrue or incorrect in any material respect as of the time such
representation or warranty is made or deemed made, unless, within a thirty (30)
day period after notice thereof has been given by Baxter to the Borrower,
Borrower shall have corrected the breach so that such representation and
warranty shall thereafter be true and correct and provided that Baxter shall not
-------- ----
have materially relied upon such representation and warranty to its detriment;
or
(d) If Borrower (i) shall generally not pay, or shall be unable to
pay, its debts as such debts become due; or (ii) shall make an assignment for
the benefit of creditors, or petition or apply to any court or other
governmental agency or apply to any court or other governmental agency or
authority for the appointment of a custodian, receiver for it or for all or any
material part of its properties; or (iii) shall commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) shall have had any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation petition or application filed
or any such proceeding commenced against it in which an order for relief is
entered or an adjudication or appointment is made, and which remains undismissed
for a period of sixty (60) days; or (v) shall indicate, by act or omission, its
consent to, approval of, or acquiescence in any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation petition,
application or proceeding, or any order for relief or the appointment of a
custodian, receiver of trustee for all or any material part of its properties;
or (vi) shall suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of sixty (60) days; or
(e) If a notice of lien, levy or assessment is filed of record with
respect to all or any material part of Borrower's assets by any governmental
agency or department, or if any taxes or debts owing at any time hereafter to
any governmental agency or department becomes a lien or encumbrance upon all or
any material part of the Borrower's assets and either the same is not released
within sixty (60) days after the same becomes a lien or encumbrance, or within
said sixty (60) day period the Borrower has not, in good faith and with
reasonable diligence, commenced the contest of the validity or amount of any
lien or encumbrance; or
(f) A material default shall occur under the Seller License Agreement,
the Services Agreement, the Employee Lease, the Royalty Agreement, the
Development Agreement, the Distribution Agreement, or the Investors' Agreement
which is not cured as provided therein; or
6
<PAGE>
(g) If notice is given to the Borrower by Baxter that in the
reasonable opinion of Baxter any litigation, arbitration proceeding or
governmental proceeding which has been instituted with respect to the Borrower
or its assets will, to a material extent, adversely affect the financial
condition or the continued operations of the Borrower, individually or as a
whole, and such litigation, arbitration proceeding or governmental proceeding is
not dismissed within sixty (60) days after such notice is given by Baxter.
Upon the occurrence of any Event of Default:
(1) At the option of Baxter, the entire unpaid amount of all of
Borrower's Liabilities shall become immediately due and payable
without notice of such election by Baxter, and without demand or
presentment and shall be payable in the manner set forth in Section
1.2 hereof, notwithstanding anything contained herein to the contrary,
and the principal amount of the Credit Facility Loan so accelerated
and declared due as aforesaid shall thereafter bear simple interest at
the Default Rate; and
(2) Baxter may, at its option, exercise from time to time any
rights and remedies available to it under the Uniform Commercial Code
of California or of any other applicable state. No remedy herein
conferred upon or reserved to Baxter is intended to be exclusive of
any other remedy or remedies, and each and every such remedy shall be
cumulative, and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity.
8. CHARGES.
-------
The Borrower shall repay to Baxter all lawful out-of-pocket costs and
disbursements, including reasonable counsel fees incurred by Baxter in
connection with the collection or enforcement of Borrower's Liabilities,
together with interest thereon from the date of demand for payment thereof until
paid at a floating rate of interest, computed using a 360-day year and actual
days elapsed, equal to the applicable Default Rate. Any such charges or
disbursements may be deducted by Baxter from any amounts received under this
Agreement.
9. WAIVER.
------
Borrower hereby waives presentment, demand for payment (except as expressly
provided herein) and notice of dishonor with respect to Borrower's Liabilities
and the Borrower hereby consents to any and every renewal or extension of time
that may be granted with respect to such instruments.
10. CONTINUATION OF AGREEMENT.
-------------------------
In the event Borrower shall at any time cease to be indebted to Baxter for
advances made pursuant to this Agreement while this Agreement has not been
terminated by either party hereto, any advance relating to the Loan made
thereafter by Baxter to the Borrower shall be governed by the
7
<PAGE>
terms, conditions, covenants, representations and warranties contained in this
Agreement (except as the same may have been expressly altered or modified in a
writing signed by the parties hereto subsequent to the date hereof) without the
necessity of any further act, understanding or writing by the parties hereto.
11. DISPUTE RESOLUTION.
------------------
11.1 Provisional Remedies: The procedures specified in this Section 11
shall be the sole and exclusive procedures for the resolution of any disputes
hereunder ("Disputes"); provided, however, that a Party, without prejudice to
-------- -------
these procedures, may seek a preliminary injunction or other provisional relief
with respect to a Dispute if, in its sole judgment, such action is deemed
necessary to avoid irreparable damage or to preserve the status quo. During
such action, the Parties will continue to participate in good faith in the
procedures specified in this Section 11.
11.2 Negotiations Between Executives: Within ten (10) days of delivery of a
written notice by one Party to the other Party of a Dispute, the Parties will
cause, respectively, an executive officer of Borrower designated by Borrower and
an executive of Baxter designated by Baxter, to meet and by good faith
negotiations attempt to resolve such Dispute.. In the event that the Parties
fail to resolve a Dispute pursuant to this Section 11.2 within thirty (30) days
after one Party delivering written notice of the Dispute to the other Party, the
Dispute shall be submitted to and shall be resolved by arbitration pursuant to
Section 11.3 below.
11.3 Arbitration: In the event that a Dispute is not resolved between the
Parties pursuant to the procedures of, and time periods specified in, Section
11.2 above, such Dispute shall be finally settled by arbitration administered by
JAMS/Endispute in accordance with the provisions of its Comprehensive
Arbitration Rules and Procedures and the United States Federal Arbitration Act,
as modified below:
(a) The arbitration shall be heard by a panel of three (3) independent and
impartial arbitrators, all of whom shall be selected from a list of neutral
arbitrators supplied by JAMS/Endispute. From such list, each of Baxter and
Borrower shall select one (1) arbitrator, and the arbitrators so selected
shall select a third. The panel shall designate one (1) among them to
serve as chair.
(b) The arbitration proceedings shall be conducted: (a) if notice
demanding arbitration is delivered by Borrower to Baxter, in Cook County,
Illinois, or (b) if notice demanding arbitration is delivered by Baxter to
Borrower, in San Diego County, California.
(c) Any Party may seek interim or provisional remedies under the Federal
Rules of Civil Procedure and the United States Federal Arbitration Act as
necessary to protect the rights or property of the Party pending the
decision of the arbitrators.
(d) The Parties shall allow and participate in limited discovery for the
production of documents and taking of depositions, which shall be conducted
in accordance with the
8
<PAGE>
Comprehensive Arbitration Rules and Procedures of JAMS/Endispute. All
discovery shall be completed within sixty (60) days following the filing of
the answer or other responsive pleading. Unresolved discovery disputes
shall be brought to the attention of the chair of the arbitration panel and
may be disposed of by the chair.
(e) Each Party shall have up to fifty (50) hours to present evidence and
argument in a hearing before the panel of arbitrators provided that the
--------
chair of the panel of arbitrators may establish such longer times for
presentations as the chair deems appropriate.
(f) The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the matter,
shall be in writing and shall specify the factual and legal basis for the
award. Judgment thereon may be entered in any court having jurisdiction
thereof.
(g) The arbitrators are empowered to order money damages in compensation
for a Party's actual damages, specific performance or other appropriate
relief to cure a breach; provided, however, that the arbitrators will have
-------- -------
no authority to award special, punitive or exemplary damages, or other
money damages that are not measured by the prevailing Party's actual
damages.
11.4 Performance During Dispute: During the Commitment Period, each Party
is required to continue to perform its obligations under this Agreement pending
final resolution of any dispute arising out of or relating to this Agreement,
unless to do so would be commercially impossible or impractical under the
circumstances.
11.5 Costs of Arbitration: Subject to Section 8 above, the Party which is
found to have been more at fault in a dispute arbitrated under this Section 11
shall be responsible for paying the costs and expenses, including reasonable
attorney's fees, which the other Party has incurred in such arbitration.
12. GENERAL.
-------
12.1 Baxter shall not, by act, delay, omission or otherwise be deemed to
have waived any of its rights and/or remedies hereunder unless such waiver shall
be in writing signed by Baxter, and only to the extent therein expressly set
forth; a waiver by Baxter of any right and/or remedy under the terms of this
Agreement on any one occasion shall not be construed as a bar to or waiver of
any such right and/or remedy which Baxter would otherwise have had on any future
occasion. No executory agreement shall be effective to change or modify or to
discharge in whole or in part this Agreement unless such executory agreement is
in writing and signed by Baxter.
12.2 The Borrower covenants and agrees to execute and deliver to Baxter,
upon demand, such additional assurances, writings and instruments as may be
reasonably required by Baxter for the purpose of effectuating the intent of this
Agreement.
9
<PAGE>
12.3 All notices or other communications hereunder shall be in writing and
shall be given either by hand delivery, by facsimile transmission, or by
certified or registered mail addressed in accordance herewith and shall be
deemed given when so delivered in hand or by facsimile transmission, or
otherwise on the third (3rd) business day after the date when deposited in the
United States Mail. Any notice or other communication which is mailed shall be
addressed to the addressee at the following address:
To Baxter: President - Venture Management
Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Facsimile: 847-940-6271
With copies to: Christopher A. Lause
Seyfarth, Shaw, Fairweather &
Geraldson
55 East Monroe Street, Suite 4200
Chicago, Illinois 60603
Facsimile: (312) 269-8869
To Borrower: Robert E. Sobol
UroGen Corp.
10835 Altman Row, Suite A
San Diego, California 92121
Facsimile: 619-642-9173
With copies to: Herbert P. Fockler
Wilson, Sonsini, Goodrich
& Rosati
650 Page Mill Road
Palo Alto, California 94303
Facsimile: 650-496-4092
Any party may change such address by notice given in accordance herewith.
12.4 This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
12.5 If any clause or provision of this Agreement shall be held invalid
or unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such particular clause or provision, or
part thereof, in such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or provision
of this Agreement in any jurisdiction.
10
<PAGE>
12.6 This Agreement and any other documents relating hereto may not be
modified, altered or amended, except by an agreement in writing signed by
Borrower and Baxter. Borrower may not sell, assign or transfer this Agreement
or any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and/or duties hereunder or thereunder. Borrower
hereby consents to Baxter's participation, sale, assignment, transfer or other
disposition to an Affiliate of Baxter, at any time or times hereafter, of this
Agreement or of any portion hereof or thereof, including, without limitation,
Baxter's rights, title, interests, remedies, powers, and/or duties hereunder or
thereunder.
12.7 In addition to all of Borrower's Liabilities under this Agreement,
Borrower agrees to hold Baxter harmless from, and to indemnify Baxter, and each
of its officers, directors, employees, attorneys and agents, against, all
losses, damages, fees, liabilities, obligations, penalties, actions, suits,
claims, costs and expenses (including, without limitation, attorneys' fees,
costs and expenses), imposed on or incurred by Baxter, whether prior to or from
and after the date hereof, whether direct, indirect or consequential, as a
result of or arising from or relating to any suit, investigation, action or
proceeding by any person, whether threatened or initiated, asserting a claim for
any legal or equitable remedy against any person under any statute or regulation
(other than suits or other actions by the Borrower against Baxter), including
without limitation, any federal or state securities, labor or environmental
laws, or under any common law or equitable cause or otherwise, arising from or
in connection with any of the following: (i) the negotiation, preparation,
execution, performance or enforcement of this Agreement or of any document
executed in connection with the transactions contemplated by this Agreement;
(ii) Baxter's furnishing of funds to Borrower under this Agreement; or (iii) any
matter relating to the financing transactions contemplated by this Agreement or
by any document executed in connection with the transactions contemplated by
this Agreement. Such indemnification shall be part of the Borrower's
Liabilities.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
BAXTER: BAXTER HEALTHCARE CORPORATION
By: /s/ Victor W. Schmitt
----------------------------------------
Its: President, Venture Management
BORROWER: UROGEN CORP
By: /s/ Paul D. Quadros
----------------------------------------
Its: President and Chief Executive Officer
<PAGE>
EXHIBIT 2.6
DEVELOPMENTAL COLLABORATION AGREEMENT
This DEVELOPMENTAL COLLABORATION AGREEMENT ("Agreement"), dated as of July
8, 1998 is entered into by and between Baxter Healthcare Corporation, a Delaware
corporation having a place of business at 1627 Lake Cook Road, Deerfield,
Illinois 60015 ("Baxter") and UroGen Corp., a Delaware corporation having its
principal place of business at 10835 Altman Row, Suite A, San Diego, California
92121 ("UroGen").
RECITALS
A. Baxter and UroGen have entered into that certain Asset Purchase
Agreement dated as of February 28, 1998, as amended by that certain Amendment to
Asset Purchase Agreement dated as of May 27, 1998, between Baxter and UroGen (as
so amended, the "Asset Purchase Agreement") pursuant to which Baxter has agreed
to sell the Mini-Ad Vector Technology (as that capitalized term is defined in
the Asset Purchase Agreement) to UroGen as well as other property related to the
research, development, manufacture, use and sale of Mini-Ad Vector Products (as
that capitalized term is defined in the Asset Purchase Agreement).
B. UroGen has appointed Baxter as its exclusive worldwide distributor of,
and Baxter has agreed to distribute, products utilizing the Mini-Ad Vector
Technology for the treatment of blood clotting disorders in humans relating to
hemophilia A pursuant to the terms of that certain Distribution Agreement
between Baxter and UroGen of even date herewith (the "Distribution Agreement")
C. Baxter and UroGen wish to collaborate to develop products utilizing
the Mini-Ad Vector Technology for the treatment of blood clotting disorders in
humans relating to hemophilia A (such products are hereafter referred to,
individually and collectively, as "Collaboration Product(s)"), subject to the
terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Baxter and UroGen hereby agree as follows:
1. DEFINITIONS.
1.1 Terms Defined in Preamble and Recitals: As used herein, all
capitalized terms defined in the Preamble and Recitals of this Agreement shall
bear the meanings ascribed to such terms as set forth therein.
1.2 Terms Defined in Asset Purchase Agreement: Unless otherwise defined
herein, all capitalized terms shall have the meanings ascribed to such terms as
set forth in the Asset Purchase Agreement.
<PAGE>
1.3 Other Terms: As used herein, the following capitalized terms shall
have the following meanings:
"Adjusted Interest(s)" means each of the UroGen Interest and the Baxter
Interest, respectively, as adjusted pursuant to Section 3.5(c) of this
Agreement.
"Affiliate" of a Party shall mean any entity (i) which directly or
indirectly through one or more intermediaries Controls, is Controlled by, or is
under common Control with, the Party or (ii) fifty percent (50%) or more of the
voting capital stock (or in the case of an entity which is not a corporation,
fifty percent (50%) or more of the equity interest) of which is beneficially
owned or held by a Party or any of such Party's Subsidiaries. The term
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity (other than a
natural person), whether through the ownership of voting capital stock, by
contract or otherwise.
"Baxter Funding" means all funds advanced by Baxter to UroGen under the
Credit Agreement during the Baxter Funding Period pursuant to Section 3.5(a) of
this Agreement.
"Baxter Funding Period" means the period beginning on the date of this
Agreement through and including the date of the IND Milestone.
"Baxter Interest" means [ * ]%.
"Deadlock" means a deadlock of the Management Board on any matter coming
before the Management Board for a vote.
"Development Work" is defined in Section 3.1(a) of this Agreement.
"Dispute" means any claim or controversy arising out of or relating to the
execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in Section 27)
and/or the Parties' legal obligations to each other.
"Event of Insolvency" shall mean, with respect to any Party, that:
(1) A receiver, conservator, custodian, liquidator or trustee of the Party
or of all or any of the property of the Party, is appointed by court
order and such order remains in effect for more than ninety (90) days;
or an order for relief is entered under the federal bankruptcy laws
with respect to the Party; or any of the material property of the
Party is sequestered by court order and such order remains in effect
for more than ninety (90) days; or a petition is filed against the
Party under the bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not dismissed
within ninety (90) days after such filing;
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(2) The Party files a petition in voluntary bankruptcy or seeking relief
under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, or consents to
the filing of any petition against it under any such law; or
(3) The Party makes an assignment for the benefit of its creditors or
consents /to the appointment of a receiver, conservator, custodian,
liquidator or trustee of the Party (or of all or any part of its
property).
"FDA" means the United States Food and Drug Administration.
"Fully Loaded Cost" means, for either Party, such Party's cost of
manufacturing, performing or acquiring any items or services, in accordance with
generally accepted accounting principles, consistently applied ("GAAP"), and,
with respect to each Party, in accordance with such Party's normal accounting
policies, all consistently applied, including any royalties payable by such
Party in connection with manufacturing, performing or acquiring any items or
services. Fully Loaded Cost shall not include general corporate allocations or
other allocations which are not directly related to the manufacture, performance
or acquisition of the item or service, however designated. In the event any
item is acquired or any service is provided for a Party from or by an Affiliate
of such Party, the cost of acquiring such items or services shall be deemed to
mean such Affiliate's actual cost of manufacturing, performing or acquiring such
items or services in accordance with the principles set forth in this definition
of "Fully Loaded Cost." Current costs of developing any items or services shall
be included in Fully Loaded Cost, but in no event shall any historic development
costs which arise or accrue prior to the date of this Agreement be included in
Fully Loaded Cost.
"Funding" means the UroGen Funding and/or the Baxter Funding.
"IND Budget" means the budget approved by the Management Board, as adjusted
by the Management Board from time to time, for developing Collaboration
Product(s) during the Baxter Funding Period.
"IND Milestone" means the date on which the treatment of the first patient
under an Initial New Drug Application for a Collaboration Product commences in a
Phase I Clinical Trial.
"Interest" means the Baxter Interest and/or the UroGen Interest, as the
context requires.
"Management Board" means the Management Board created pursuant to Section
3.2 hereof.
"Mini-Ad Vector Technology" means (a) technology developed by Baxter and
relating to adenoviral vectors for gene therapy which has been (i) licensed to
UroGen pursuant to the Seller License Agreement and/or (ii) transferred to
UroGen pursuant to the Asset Purchase Agreement and (b) any Intellectual
---
Property Rights developed, licensed or acquired by UroGen (and/or Affiliates of
UroGen) relating to adenoviral vectors for gene therapy.
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<PAGE>
"Milestones" means, collectively, the IND Milestone and the Qualifying
Regulatory Approval Milestone.
"Party" or "Parties" means, individually or collectively (as the context
requires) UroGen and/or Baxter.
"Qualifying Regulatory Approval" means Regulatory Approval in (i) the
United States; or (ii) Japan; or (iii) in at least two of the following five
European nations: France, Germany, Italy, Spain and the United Kingdom.
"Qualifying Regulatory Approval Milestone" means the Qualifying Regulatory
Approval of a Collaboration Product.
"Regulatory Approval" means (i) in the United States, approval from the FDA
and any other United States governmental authority (or agency or other political
subdivision thereof) necessary for the right to market, sell or distribute the
Collaboration Product(s), in the United States to the public at large, (ii)
outside the United States, an analogous order by a non-United States
governmental authority (or agency or other political subdivision thereof)
necessary for the right to market, sell or distribute, and the right to be paid
or reimbursed for, the Collaboration Product(s), in that country (other than the
United States), to the public at large.
"UroGen Funding" means all monetary contributions or payments by UroGen
towards or on behalf of the Development Work required to be paid by UroGen under
this Agreement during the UroGen Funding Period, other than any such funds
expended by UroGen where the source of such funds is Baxter Funding.
"UroGen Funding Period" means the period beginning on the first day
following the date of the IND Milestone through and including the date of the
Qualifying Regulatory Approval Milestone.
"UroGen Interest" means [ * ]%.
2. TERM OF AGREEMENT. The term of this Agreement (the "Term") shall
expire on the earlier to occur of (a) a Qualifying Regulatory Approval or (b)
either Baxter or UroGen giving the other Party hereto written notice of
termination of the Term of the Agreement at least thirty (30) days prior to the
effective date of termination (or, if an Event of Insolvency occurs after the
delivery of the notice of termination, or has occurred and is continuing as of
the date of the notice of termination, with respect to a non-terminating Party,
the effective date of termination of the Term shall occur immediately as of the
date of delivery of the terminating Party's notice of termination to the non-
terminating Party).
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3. DEVELOPMENT WORK.
3.1 Responsibility for Development Work:
(a) During the Term, UroGen:
i. shall be responsible for the overall Development Work (as that
term is defined below); and
ii. shall use at least commercially reasonable efforts to develop the
Collaboration Product(s) and to achieve the Milestones, including
but not limited to conducting any clinical trials and performing
any regulatory work which it is required to perform (the
"Development Work"), pursuant to the terms and conditions of this
Agreement and subject to the direction of the Management Board.
(b) Notwithstanding any provision of this Agreement to the contrary, for a
period equal to the longer of the term of this Agreement or the term of the
Distribution Agreement, UroGen shall not, in any form or manner, directly or
indirectly, on its own behalf or in combination with others, anywhere in the
world:
(i) develop, manufacture, market, sell, distribute, acquire or license; or
(ii) provide services to (including, but not limited to consulting
services), or become interested in (as a stockholder, joint venturer,
partner, licensor, member, principal, agent, independent contractor,
trustee, lender of money or in any other relation or capacity whatsoever,
except as a holder of securities of a corporation whose securities are
publicly traded, and then only to the extent of owning not more than two
percent (2%) of any class or series of the issued and outstanding
securities of such corporation), any individual, corporation, limited
liability company, partnership, limited partnership, limited liability
partnership, trust or unincorporated association, or a government or any
agency or political subdivision thereof, which develops, manufactures,
markets, sells, distributes, acquires or licenses;
any products utilizing the Mini-Ad Vector Technology for the treatment of blood
clotting disorders in humans except for the Collaboration Products.
(c) It is understood and accepted that UroGen and Baxter have interests in
other business ventures which may be in conflict with the activities of the
Development Work and that nothing in this Agreement, subject to Section 3.1(b)
above and the Distribution Agreement, shall limit the current or future business
activities of UroGen or Baxter with respect to such activities, whether or not
such activities are competitive with those of the Development Work or the other
Party hereto.
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<PAGE>
3.2 Management Board:
(a) Purpose and Constitution.
(i) The purpose of the Management Board will be to facilitate the
overall relationship of the Parties under this Agreement and to manage the
direction and implementation of the Development Work. The product
components, biological elements, product confirmations, product design and
product requirements for Collaboration Product(s) recommended by the
Management Board shall not be deemed finalized until they are approved by
UroGen. The Management Board shall meet from time to time as appropriate,
but no less frequently than quarterly during each calendar year,
alternating between the offices of the Parties, unless the Parties shall
agree otherwise. The Management Board shall review and approve technical
milestones, budgets, funding, reimbursement and resource allocations.
(ii) Subject to Sections 27 and 8.2 below, the Management Board will
consist of representatives from each of UroGen and Baxter, and each Party
shall select not less than one (1) and up to three (3) representatives to
serve as its designated members of the Management Board. Regardless of the
number of representatives serving as designated members of the Management
Board for each Party, each of Baxter and UroGen shall have one (1) vote on
any issue presented to the Management Board for a vote.
(iii)Subject to Sections 27 and 8.2 below, in the event that any
member of the Management Board designated pursuant to Section 3.2(a)(ii) is
unable to serve, or once having commenced to serve, is removed or withdraws
from the Management Board (a "Withdrawing Member of the Management Board"),
such Withdrawing Member of the Management Board's replacement (the
"Substitute Member of the Management Board") on the Management Board will
be designated by the Party which selected the Withdrawing Member of the
Management Board; provided that, subject to Sections 27 and 8.2 below, a
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member of the Management Board designated pursuant to Section 3.2(a)(ii)
may only be removed by the Party entitled to designate such member of the
Management Board pursuant to Section 3.2(a)(ii).
(iv) In the event a Party chooses not to designate any member(s) of
the Management Board, such membership(s) shall not otherwise be filled and
the size of the Management Board shall be correspondingly reduced until
such time as such Party elects to designate such member(s) in accordance
with this Agreement.
(v) The Parties agree that no action shall be taken at any meeting of
the Management Board unless (aa) each member of the Management Board shall
receive at least three (3) business days' notice of such meeting or shall
waive such notice in writing and the unanimous consent of Baxter and UroGen
is given approving such action at such meeting of the Management Board or
(bb) a unanimous written consent of the Management Board
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<PAGE>
authorizing such action is obtained prior to the taking of such action at
such meeting of the Management Board.
(b) Development Work Committees. To assist the Management Board in its
work, the Management Board may, from time-to-time, at its sole discretion,
create project committees, including Management Board and non-Management Board
members (each, a "Development Work Committee"). Each Development Work
Committee shall only have that authority specifically granted to it by the
Management Board, and may not be granted any authority which exceeds that of the
Management Board. A Development Work Committee may be created to oversee the
Development Work or a specific aspect or the Development Work.
(c) Voting. Except as provided in Section 3.2(d) below, all decisions of
the Management Board shall be made by unanimous consent or unanimous written
consent of Baxter and UroGen. In the event that a Party ceases to participate in
the Development Work pursuant to Section 8.2, that Party's rights with respect
to the management of the Development Work, representation on the Management
Board, and right of approval of decisions of the Management Board shall cease.
(d) Certain Material Transactions. The sale, pledge, hypothecation,
license, transfer or other disposition of UroGen Intellectual Property (as that
term is defined in Section 4 below) to any entity other than UroGen or Baxter,
which would adversely affect the performance of UroGen's obligations or any of
Baxter's rights under the Distribution Agreement or this Agreement, will require
approval by Baxter before the Management Board and/or UroGen may authorize such
transactions.
(e) Confidential Information. At the request of UroGen, Baxter shall cause
any of its officers, directors, employees, agents and representatives (other
than the Hired Designated Employees, as that capitalized term is defined in the
Asset Purchase Agreement) (the "Baxter Representatives") to whom UroGen
Confidential Information (as that capitalized term is hereinafter defined) will
be disclosed through their participation on the Management Board and/or the
Development Work Committees, to execute an agreement (which is reasonably
acceptable to Baxter and UroGen) containing substantially the same terms and
conditions as are set forth in Sections 1 through 7, inclusive, of that certain
Confidentiality and Non-Solicitation Agreement, dated as of September 17, 1997
(the "Confidentiality Agreement"), by and between Baxter and UroGen (attached
hereto as Exhibit B) with respect to such UroGen Confidential Information. For
---------
the purposes of this Agreement, the term "UroGen Confidential Information" shall
mean Confidential Information (as that capitalized term is defined in the
Confidentiality Agreement) of UroGen which is disclosed by UroGen to any of the
Baxter Representatives, in connection with their participation on the Management
Board and/or the Development Work Committees, in a tangible form which is marked
as "Confidential" at the time it is so delivered. Except as is set forth in this
Section 3.2(e), or as may otherwise be required by applicable law, Baxter and
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the Baxter Representatives shall have no other obligations relating to any
confidential information of UroGen and the Parties agree that the continuing
obligations of each Party with respect to Confidential Information under the
Confidentiality Agreement shall be limited to any such Confidential Information
disclosed by a
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<PAGE>
Disclosing Party to a Receiving Party (as those capitalized terms are defined in
the Confidentiality Agreement) prior to the date of this Agreement.
3.3 Budget, Funding and Milestones: The technical milestones/benchmarks,
budget and timetable for the Development Work will be submitted by UroGen to the
Management Board for review and approval from time-to-time during the
Development Work with the intent that the Parties move expeditiously and
effectively toward development of the Collaboration Product(s) and the
achievement of the Milestones. Notwithstanding anything contained in this
Agreement to the contrary, however, from the date of this Agreement until
achievement of the Qualifying Regulatory Approval Milestone, Baxter and UroGen
will use at least commercially reasonable efforts to mutually agree in good
faith on the milestones/benchmarks, budget and timetable for the Development
Work.
3.4 Delivery of Information: During the term of the Development Work,
UroGen shall promptly deliver to Baxter all material data and information (and
with respect to patentable Intellectual Property Rights, after establishing
invention records and filing patent applications) developed pursuant to the
Development Work relating to the Collaboration Product(s).
3.5 Funding:
(a) Baxter Funding. Subject to the terms and conditions set forth in this
Agreement, Baxter will fund the Approved Expenses of UroGen with respect to the
Development Work to be incurred during the Baxter Funding Period at UroGen's
Fully Loaded Cost by making advances of such funds with respect to each three
(3) month period during the Baxter Funding Period pursuant to the Credit
Agreement, which funding shall constitute "Baxter Funding", as follows:
(i) UroGen shall, with respect to each three (3) month period during the
Baxter Funding Period, deliver its request for funding for such three (3)
month period to Baxter at least thirty (30) days in advance of the
beginning of the applicable three (3) month period; and
(ii) Subject to the terms and conditions set forth in this Agreement,
Baxter will thereupon make advances under the Credit Agreement pursuant to
UroGen's request for funding prior to the start of the applicable three (3)
month period.
For the purposes of this Agreement, the term "Approved Expenses" shall mean
those expenditures made or to be made by UroGen with respect to research,
development and other activities which specifically relate to the Development
Work and which are contemplated by, and fall within, the Development Work
budgets approved by the Management Board for such three (3) month period less
----
any unexpended funds funded by either Baxter or UroGen as part of the Baxter
Funding or the UroGen funding, respectively, for prior periods.
(b) UroGen Funding. Subject to the terms and conditions set forth in this
Agreement, UroGen will fund the Approved Expenses of UroGen with respect to the
Development Work
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<PAGE>
incurred during the UroGen Funding Period at UroGen's Fully Loaded Cost, which
funding shall constitute "UroGen Funding".
(c) Adjusted Interest. (i) From the date hereof through the end of the
Baxter Funding Period, in the event that Baxter declines to pay any portion of
its funding obligations under Section 3.5(a), for the purposes of determining
Baxter's Adjusted Interest under this Agreement, the Baxter Interest will be
adjusted (and UroGen's Adjusted Interest will be correspondingly adjusted) on an
annual basis in arrears in proportion to its share of the total Funding pursuant
to the following formula (provided, however, that in no event shall (aa) the
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UroGen Adjusted Interest be less than [ * ]% nor more than [ * ]%, nor shall
(bb) the Baxter Adjusted Interest be less than [ * ]% nor more than [ * ]%):
Baxter's Adjusted Interest = ((A / B) x C) x 100
UroGen's Adjusted Interest = 100% - Baxter's Adjusted Interest
where:
A = the dollar amount actually funded to UroGen by Baxter pursuant to
Section 3.5(a) above through such calendar year;
B = the aggregate Approved Expenses for Developmental Work during the
Baxter Funding Period through such calendar year; and
C = the Baxter Interest, expressed as a decimal.
In the event that UroGen does not request funding from Baxter for any
calendar year during the Baxter Funding Period up to the level of the
Approved Expenses for that calendar year, neither Baxter's Interest nor
UroGen's Interest will be adjusted according to the preceding formula with
respect to the difference between the level of the Approved Expenses for
that calendar year and the amount of funding requested by UroGen for that
calendar year. On the last day of the Baxter Funding Period Baxter's
Adjusted Interest and UroGen's Adjusted Interest, each as adjusted by this
Section 3.5(c)(i), shall be fixed until and unless Baxter's Adjusted
Interest or UroGen's Adjusted Interest is adjusted pursuant to Section
3.5(c)(ii) below.
(ii) From the first day of the UroGen Funding Period through the end of
the UroGen Funding Period, in the event that UroGen declines to pay any
portion of its funding obligations under Section 3.5(b), for the purposes
of determining UroGen's Adjusted Interest under this Agreement, UroGen's
Adjusted Interest (as adjusted pursuant to Section 3.5(c)(i) above) will
be adjusted (and Baxter's Adjusted Interest will be correspondingly
adjusted) on an annual basis in arrears in proportion to its share of the
total Funding pursuant to the following formula (provided, however, that in
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no event shall (aa) the UroGen Adjusted Interest be less than [ * ]% nor
more than [ * ]%, nor shall (bb) the Baxter Adjusted Interest be less than
[ * ]% nor more than [ * ]%):
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UroGen's Adjusted Interest = ((A / B) x C) x 100
Baxter's Adjusted Interest = 100% - UroGen's Adjusted Interest
where:
A = the dollar amount actually funded by UroGen pursuant to Section
3.5(b) above from the beginning of the UroGen Funding Period
through such calendar year;
B = the aggregate Approved Expenses for Developmental Work during the
UroGen Funding Period through such calendar year; and
C = the UroGen Adjusted Interest fixed as of the last day of the
Baxter Funding Period pursuant to Section 3.5(c)(i) above,
expressed as a decimal.
On the earlier to occur of (i) the last day of the UroGen Funding
Period or (ii) the date of termination of this Agreement, and thereafter,
the Adjusted Interest of each Party for the purposes of calculating the
Purchase Price Percentage under the Distribution Agreement shall be fixed
at such Party's Adjusted Interest as of the earlier to occur of (i) the
last day of the UroGen Funding Period or (ii) the date of termination of
this Agreement.
(iii) In the event that during the annual budget approval process for the
Development Work by the Management Committee and/or UroGen, either Baxter
or UroGen proposes to fund the Development Work in excess of the
Development Work budgets approved by the Management Committee during the
Baxter Funding Period ("Baxter Funding Period Excess Funding"), Baxter will
have the first option (for a period of fifteen (15) days from the date the
Baxter Funding Period Excess Funding is proposed) to elect to provide the
Baxter Funding Period Excess Funding as part of the Baxter Funding pursuant
to Section 3.5(a) above and, if Baxter elects not to exercise its option,
UroGen will then have the option (for a period of fifteen (15) days from
the date of expiration of Baxter's option) to elect to provide the Baxter
Funding Period Excess Funding (which amount, if paid by UroGen, shall be
treated as Approved Expenses for the purposes of the calculations in
Section 3.5(a) above for the Baxter Funding Period). In the event that
during the annual budget approval process for the Development Work by the
Management Committee and/or UroGen, either Baxter or UroGen proposes to
fund the Development Work in excess of the Development Work budgets
approved by the Management Committee during the UroGen Funding Period
("UroGen Funding Period Excess Funding"), UroGen will have the first option
(for a period of fifteen (15) days from the date the UroGen Funding Period
Excess Funding is proposed) to elect to provide the UroGen Funding Period
Excess Funding as part of the UroGen Funding pursuant to Section 3.5(b)
above and, if UroGen elects not to exercise its option to provide the
UroGen Funding Period Excess Funding, Baxter will then have the option (for
a period of fifteen (15) days from the date of expiration of UroGen's
option) to elect to provide the UroGen Funding Period Excess Funding (which
amount, if paid by Baxter, shall be treated as Approved Expenses for the
purposes of the calculations in Section 3.5(b) above for the UroGen Funding
Period).
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(iv) Upon a Change of Control of UroGen, Baxter's obligation to provide any
Baxter Funding under this Agreement or the Credit Agreement will terminate,
Baxter's Adjusted Interest for the Baxter Funding Period under Sections
3.5(a) and 3.5(c)(i) will become fixed at its then current level as of the
date of the Change of Control (subject to increase pursuant to Section
3.5(c)(ii)), the Baxter Funding Period will terminate, and the UroGen
Funding Period will commence. For the purposes of this Agreement, the term
"Change of Control" shall mean that a stockholder of UroGen (including any
Affiliates of such stockholder), other than Baxter, shall Control fifty
percent (50%) or more of the Total Voting Power (as that capitalized term
is defined in the Investors' Agreement) at any time.
(v) For purposes of illustration, an example of the operation of the
formulae in Sections 3.5(c)(i) through 3.5(c)(iv) above is set forth in
Exhibit A attached hereto.
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(d) Costs of Management Board. Each Party shall bear its own expense with
respect to participation on the Management Board and any Development Work
Committees, including travel expenses for meetings, which costs will not be
included in the Funding of either Party.
(e) Limitation on Baxter Funding. Notwithstanding any provision of this
Agreement to the contrary, Baxter shall not be obligated to fund more than one
Collaboration Product at a time during the Baxter Funding Period and any refusal
by Baxter to fund more than one Collaboration Product at a time during the
Baxter Funding Period shall not constitute a breach of this Agreement, a
termination of this Agreement by Baxter under Section 2, an election by Baxter
to cease participation under Section 8.1, nor a failure by Baxter to advance any
Baxter Funding.
(f) Cessation of Funding. In the event that either Party fails to make any
advances or payments with respect to their respective Funding obligations
hereunder, such failure to Fund shall be deemed an election to cease
participation pursuant to Section 8.1 hereof.
3.6 Testing And Regulatory Expenses: All expenses incurred by UroGen in
connection with any research, development, testing or Regulatory Approval whose
primary function is other than developing the Collaboration Product(s) or
achieving the Milestones, shall be borne solely by UroGen and shall not be
considered reimbursable expenses or Funding covered by this Agreement.
4. OWNERSHIP OF COLLABORATION PRODUCT(S), PATENTS AND KNOW-HOW. As
between Baxter and UroGen, subject to the Seller License Agreement UroGen shall
own any and all (a) unpatented inventions, data, processes, compositions,
techniques and other technical data and (b) material subject to protection as
trade secrets or as patentable or copyrightable ideas, which UroGen or its
employees, agents or representatives may conceive, invent or discover, either
solely or jointly with another or others (including Baxter), during the Term of
this Agreement in conjunction with the Development Work (collectively, together
with the Intellectual Property Assets, the "UroGen Intellectual Property") and
all Collaboration Product(s). Subject to the Seller License Agreement, Baxter
shall not make any use of, or have any rights or interests in, any UroGen
Intellectual Property
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or Collaboration Product(s) without the prior written approval of UroGen except
as otherwise set forth in this Agreement, the Asset Purchase Agreement or the
other Transaction Documents.
5. PROSECUTION OF PATENT RIGHTS.
5.1 UroGen Patents: Subject to the Seller License Agreement and during
the term of the Seller License Agreement and this Agreement, UroGen shall have
the obligation to timely prepare, file, prosecute and maintain, at UroGen's
direction and expense, all patents, and any applications, extensions,
continuations, divisions, reissues and reexaminations thereof (collectively,
"Patent(s)"), on UroGen Intellectual Property. Whenever possible, UroGen shall
file internationally under the Patent Cooperation Treaty and/or the European
Patent Convention in order to minimize expenses. At a minimum, UroGen shall
prepare, file, prosecute and maintain all Patents on UroGen Intellectual
Property in the United States, Canada, the member nations of the European Union,
Japan, and in any other Baxter Region (as that capitalized term is defined in
the Distribution Agreement) where UroGen has elected to obtain regulatory
approval pursuant to Section 6.1(b) of the Distribution Agreement. The
reasonable expenses of preparing, filing, prosecuting and maintaining Patents
with respect to the UroGen Intellectual Property in the United States, Canada,
the member nations of the European Union, Japan, in any other Baxter Region (as
that capitalized term is defined in the Distribution Agreement) where UroGen has
elected to obtain regulatory approval pursuant to Section 6.1(b) of the
Distribution Agreement, and all other countries that are agreed to by Baxter and
UroGen in writing, shall be Approved Expenses. If UroGen elects not to prepare,
file, prosecute and/or maintain any Patent on UroGen Intellectual Property in
any Baxter Region (as that capitalized term is defined in the Distribution
Agreement) where UroGen has elected not to obtain regulatory approval pursuant
to Section 6.1(b) of the Distribution Agreement and where Baxter has elected to
assume regulatory responsibility (or to pay UroGen to obtain such regulatory
approval) pursuant to Section 6.1(b) of the Distribution Agreement, upon
Baxter's election to prepare, file, prosecute and/or maintain such Patent on
UroGen Intellectual Property in that Baxter Region on behalf of UroGen: UroGen
shall cooperate with and assist Baxter in preparing, filing, prosecuting and/or
maintaining such Patent on UroGen Intellectual Property in that Baxter Region,
including providing Baxter any and all information and documentation necessary
in order for Baxter to prepare, file, prosecute and/or maintain such Patent on
UroGen Intellectual Property in that Baxter Region on behalf of UroGen (any
costs UroGen may incur in connection therewith shall be funded by Baxter as
Baxter Funding Period Excess Funding or UroGen Funding Period Excess Funding, as
applicable, pursuant to Section 3.5(c)(iii)). After assuming responsibility for
preparing, filing, prosecuting and/or maintaining such Patent on UroGen
Intellectual Property in that Baxter Region, Baxter may elect at any time to
withdraw from such responsibility for such jurisdiction. Except as set forth in
this Section 5.1, or unless such filings in other countries are agreed to by the
Parties in writing, such other country filings shall not be made.
5.2 Prior Art; Review And Comment: Each Party shall cooperate with the
other to ensure that all prior art that is pertinent to the examination of any
Patent on UroGen Intellectual Property is brought to the attention of the other
Party. The Parties to this Agreement shall have the right to review and comment
on substantive documents prepared in connection with the preparation, filing,
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prosecution and maintenance of any Patent on UroGen Intellectual Property prior
to the filing of such papers; however, such review and comment shall be
performed expeditiously so as not to negatively affect patent rights and shall
be at each party's own cost and expense.
5.3 Third Party Licenses and Product Clearances: UroGen shall be
responsible for obtaining (at its cost and expense), and shall use at least
commercially reasonable efforts to obtain: (a) licenses or sublicenses of any
Intellectual Property Rights of third parties (other than Intellectual Property
Rights relating to Factor VIII genes) which may be necessary or advisable to the
prosecution of the Development Work and/or to fully exploit the Collaboration
Products; and (b) product clearances with respect to Collaboration Products.
6. TRADEMARKS.
6.1 Baxter Trademarks: UroGen shall not make any use of, or have any
rights or interests in, any Baxter trademark except as otherwise permitted in
the Transaction Documents without the prior written approval of Baxter.
6.2 UroGen Trademarks: Subject to the Seller License Agreement, Baxter
shall not make any use of, or have any rights or interests in, any UroGen
trademark except as otherwise permitted in the Transaction Documents without the
prior written approval of UroGen.
7. USE OF CONSULTANTS. The Parties contemplate that from time to time
during the term of this Agreement third party technical consultants may be
employed by either Party in connection with the development of the Collaboration
Product(s). Baxter's prior written consent to the utilization of specific
consultants shall be required in the event that UroGen desires to retain a third
party technical consultant for consultation relating to the treatment of blood
clotting disorders in humans. The Parties agree that information designated as
confidential by either Party may be disclosed by UroGen to such consultants
provided that Baxter is given reasonable notice of the circumstances and nature
of the intended disclosure and that the disclosure is limited to information
necessary to enable the technical consultant to provide technical consulting
services. The consultant will be required to sign an agreement with UroGen
committing the consultant to protect such confidential information.
8. CESSATION OF DEVELOPMENT WORK.
8.1 Cessation: Prior to the occurrence of the Qualifying Regulatory
Approval Milestone, either Party may unilaterally cease all participation in all
Development Work under this Agreement by thirty (30) days prior written notice
of its election to cease participation to the other Party. In the event that a
Party gives a notice of termination of the Agreement pursuant to Section 2(b)
above, fails to make any advances or payments with respect to its Funding
obligations (i.e., funds $0 with respect to its aggregate Funding obligations),
or gives a notice of cessation of participation pursuant to this Section 8.1,
the other Party (the "Remaining Party") shall have the right to proceed with the
independent development of the Collaboration Product(s) at its own expense. In
the event Baxter
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gives notice of termination to UroGen pursuant to this Section 8.1, effective as
of the date of termination Baxter's obligations to provide Baxter Funding shall
immediately terminate. In addition, in the event that the Seller License
Agreement terminates without a concurrent transfer of the Intellectual Property
Assets to UroGen pursuant to the terms and conditions of the Seller License
Agreement and the Asset Purchase Agreement (the "License Termination Date"),
Baxter's obligations to UroGen under this Agreement will automatically terminate
without notice to UroGen or any third party effective on the License Termination
Date, UroGen will be deemed to have elected to have unilaterally ceased all
participation in all Development Work under this Agreement as of the License
Termination Date, and Baxter will be deemed to be the "Remaining Party" as of
the License Termination Date (but shall have no obligation with respect to the
independent development of the Collaboration Product(s)). Upon any such
cessation of participation in the Development Work:
(a) If the Remaining Party is Baxter, then at Baxter's election by written
notice to UroGen: (i) UroGen shall grant an exclusive royalty-free license to
all rights, title and interest of UroGen with respect to the UroGen Intellectual
Property and to the Collaboration Product(s), including the exclusive right to
develop, make, use, market, sell and distribute such Collaboration Product(s),
throughout the world in perpetuity; (ii) UroGen shall, at UroGen's cost, use at
least commercially reasonable efforts to effect a transfer of UroGen's then
existing technology (including know-how) to Baxter as may be, and to the extent,
necessary for Baxter to make, use and sell the Collaboration Products within the
Field of Distribution (as that capitalized term is defined in the Distribution
Agreement); and (iii) UroGen shall cooperate with and assist Baxter in Baxter's
regulatory efforts, including providing Baxter access to any and all information
and documentation necessary in order for Baxter to assume regulatory
responsibility, as may be necessary as a result of the license described in
clause (i) above and the transfer of technology described in clause (ii) above
(any costs UroGen may incur in such cooperation or assistance shall be borne by
Baxter at UroGen's Fully Loaded Cost); or
(b) If the Remaining Party is UroGen, then at UroGen's election by written
notice to Baxter: (i) all ownership rights, marketing rights and licenses of
Baxter to the Collaboration Product(s) developed or being developed under the
Development Work (including under the Distribution Agreement), shall terminate
and fully vest in UroGen and UroGen shall have the sole right to use, market,
sell and distribute such Collaboration Product(s) throughout the world; and (ii)
Baxter shall, at Baxter's cost, use at least commercially reasonable efforts to
license or sublicense to UroGen, on a royalty-free (except for royalties payable
to third parties, which shall be paid by UroGen), world-wide, and non-exclusive
basis, any of Baxter's then existing Intellectual Property Rights to the use of
adenoviral vectors for the treatment of blood clotting disorders in humans
relating to hemophilia A as have been provided to UroGen prior to termination of
Baxter's participation in the Development Work in perpetuity (or in the event of
a sublicense of third party Intellectual Property Rights, for the remaining term
of Baxter's license from such third party).
8.2 Composition of Management Board on Cessation: In the event that a
Party ceases participation in the Development Work under this Agreement pursuant
to Section 8.1 above, such Party's designated members of the Management Board
shall be deemed to have resigned from the
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Management Board effective with the effective date of such notice and such Party
shall have no further right to designate any members of the Management Board or
to participate in the management of the Development Work.
9. COMPLIANCE WITH REGULATORY REQUIREMENTS.
9.1 Regulatory Requirements: Except as otherwise provided in this
Agreement, and except for those regulatory responsibilities allocated to Baxter
pursuant to the Distribution Agreement, UroGen shall be responsible for meeting
all regulatory requirements and for obtaining reimbursement pertaining to the
manufacturing, marketing, sales, distribution and utilization of the
Collaboration Product(s), including such requirements as are necessary for
Regulatory Approval, in the United States, Canada, the member nations of the
European Union, and Japan. Subject to the terms and conditions of the
Distribution Agreement, UroGen's regulatory responsibilities will also be
applicable to each country, state, region or locality in which Baxter either
markets, sells and distributes or plans to market, sell and distribute the
Collaboration Product(s). UroGen's regulatory responsibilities shall include
conducting any necessary clinical trials to gather safety and effectiveness data
to support marketing applications to FDA or other governmental or quasi-
governmental authorities in the United States, Canada, the member nations of the
European Union, and Japan, and any other country, state, region or locality
where UroGen may be responsible for compliance with such regulatory requirements
pursuant to the terms and conditions of the Distribution Agreement. During the
term of this Agreement, Baxter's obligations with respect to compliance with
regulatory requirements shall be as set forth in Section 6.1 of the Distribution
Agreement.
9.2 Regulatory Actions: During the term of this Agreement, UroGen shall be
responsible for all regulatory actions, and Baxter will cooperate and assist
UroGen with any regulatory action, pursuant to the terms and conditions set
forth in Section 6.2 of the Distribution Agreement.
10. BOOKS AND RECORDS.
10.1 Records: UroGen shall keep full, detailed and accurate books of
account of the Development Work in accordance with GAAP, including identifying
costs and expenses (including, but not limited to, Approved Expenses) incurred
and paid in connection with the Development Work. Books of account maintained by
UroGen shall be kept at its principal place of business.
(a) As soon as available after the end of each calendar month, and in any
event within 30 days thereafter, unaudited statements of Funding, cash flow,
costs, expenses, Approved Expenses, and operations of the Development Work for
such month and for the calendar year to the end of such month, along with an
estimate of costs and expenses to be incurred during the following six months,
all in reasonable detail and prepared according to GAAP, subject to changes
resulting from normal year-end audit adjustments, certified by the chief
financial officer of UroGen, and a comparison between the actual financial
figures for such monthly accounting period, the comparable figures for the prior
calendar year (if any), and the comparable figures included, as applicable, in
the then
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current budget for the Development Work approved by the Management Board for
such monthly accounting period, with an explanation of any material differences
between them;
(b) As soon as available after the end of each calendar year, and in any
event within 120 days thereafter, audited statements of Funding, cash flow,
costs, expenses, Approved Expenses, and operations of the Development Work for
such calendar year, setting forth in each case in comparative form the figures
for the previous calendar year (if any), all in reasonable detail, accompanied
by an unqualified opinion on such financial statements of a firm of independent
public accountants of nationally recognized standing selected by the Management
Board that such financial statements fairly present the financial position of
the Development Work being reported upon at the end of such calendar year and
the results of the Development Work's operations and cash flows for such
calendar year in conformity with GAAP; and
(c) With reasonable promptness, such other data, reports and information
as from time to time Baxter and/or the Management Board may reasonably request.
10.2 Retention: Books and records required to be maintained by UroGen
hereunder shall be retained for at least three (3) years after the expiration of
the Term.
10.3 Audit: Either Party may audit the books and records of the other
for the purpose of determining compliance with the terms of this Agreement. The
auditing Party may use independent outside auditors (who may participate fully
in such audit). In the event that an audit is proposed with respect to
information which the Party to be audited wishes not to disclose to the auditing
Party ("Restricted Information"), then on the written demand of the Party to be
audited the individuals conducting the audit with respect to the Restricted
Information will be limited to the auditing Party's independent auditors. In
such event, the Party to be audited shall pay the costs of the independent
auditors conducting such audit, but only with respect to that portion of the
audit relating to the Restricted Information. Such independent auditors shall
enter into an agreement with the Parties hereto, on terms that are agreeable to
both Parties hereto, under which such independent auditors shall agree to
maintain the confidentiality of the information obtained during the course of
such audit and establishing what information such auditors will be permitted to
disclose in reporting the results of any audit of Restricted Information. Any
such audit shall be conducted during regular business hours in a manner that
does not interfere unreasonably with the operations of the Party to be audited.
The audits conducted by any Party under the provisions of this Agreement shall
not, in the aggregate, be conducted more than once in any twelve (12) month
period unless the next preceding audit disclosed a failure to conform to the
terms of this Agreement or unless the facility received a Form FDA-483 in the
twelve (12) months following any audit. Subject to the foregoing limitations,
any such audit shall be conducted when requested by notice given not less than
thirty (30) days prior to the commencement of the audit.
11. REPRESENTATIONS AND INDEMNITIES. For the purposes of this Agreement,
the following respective representations of the Parties set forth in Sections
11.1 and 11.3 below shall be
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deemed to be made as of the date of this Agreement and shall be deemed to be
remade as of the date of each and every Funding hereunder:
11.1 UroGen Representations: UroGen represents and warrants that:
(a) UroGen is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation. UroGen has the
corporate power and authority to execute, deliver and perform this Agreement;
(b) The execution, delivery and performance by UroGen of this Agreement
has been duly authorized by all requisite corporate action and will not violate
any provision of law applicable to, any order of any court or other agency of
government applicable to, or the articles/certificate of incorporation or the
by-laws of, UroGen. This Agreement has been duly executed and delivered by
UroGen and constitutes its legal, valid and binding obligation, enforceable
against UroGen in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws and equitable principles relating to creditors rights generally and
by general principles of equity, regardless of whether considered at law or in
equity;
(c) Neither the execution and delivery of this Agreement, nor the
performance of the obligations of UroGen hereunder shall result in a violation,
breach or event of default (or any event or condition which with notice or the
passage of time or both would constitute an event of default) of or with respect
to any agreement, mortgage, indenture or order of any court of competent
jurisdiction binding upon UroGen or upon the property of UroGen;
(d) It is party to no contract materially adverse to the obligations
undertaken and rights granted in this Agreement;
(e) The execution of this Agreement and delivery of this Agreement to
Baxter and the performance of its terms does not conflict with the terms of any
agreement to which UroGen is bound;
(f) UroGen has no current agreements with other parties for the
development of the Collaboration Product(s); and
(g) Except as disclosed in Schedule 3.7(F) or Schedule 3.7(G) of the Asset
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Purchase Agreement, and except for the Biologics, (i) UroGen is not aware that
there now exists any use, by a third party, of any Intellectual Property which
violates any Intellectual Property Right of UroGen in the UroGen Intellectual
Property; (ii) to UroGen's knowledge, no infringement of any material
Intellectual Property Right of any other person or entity has occurred or
results in any way from the use, manufacture and sale of the UroGen Intellectual
Property or Collaboration Products; and (iii)
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no claim of any infringement by UroGen of any material Intellectual Property
Right of any other person or entity has been made, asserted or threatened in
writing against UroGen relating to any of the UroGen Intellectual Property.
UroGen makes no representation or warranty with respect to the infringement of
third party Intellectual Property Rights by the Biologics.
11.2 UroGen Indemnification -- Representations And Warranties: UroGen
shall indemnify Baxter for, and hold it harmless from, any liability, loss,
expense or cost (including attorney's fees) incurred by, or any claim or
judgement against, Baxter as a result of any breach by UroGen of any of the
foregoing representations and warranties. In addition, UroGen shall, during the
term of this Agreement, indemnify Baxter pursuant to the terms and conditions of
Section 12 of the Distribution Agreement.
11.3 Baxter Representations: Baxter represents and warrants to UroGen
that as of the date of this Agreement:
(a) Baxter is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation. Baxter has the
corporate power and authority to execute, deliver and perform this Agreement;
(b) The execution, delivery and performance by Baxter of this Agreement
has been duly authorized by all requisite corporate action and will not violate
any provision of law applicable to, any order of any court or other agency of
government applicable to, or the articles/certificate of incorporation or the
by-laws of, Baxter. This Agreement has been duly executed and delivered by
Baxter and constitutes its legal, valid and binding obligation, enforceable
against Baxter in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws and equitable principles relating to creditors rights generally and
by general principles of equity, regardless of whether considered at law or in
equity;
(c) Neither the execution and delivery of this Agreement, nor the
performance of the obligations of Baxter hereunder shall result in a violation,
breach or event of default (or any event or condition which with notice or the
passage of time or both would constitute an event of default) of or with respect
to any agreement, mortgage, indenture, or order of any court of competent
jurisdiction binding upon Baxter or upon the property of Baxter;
(d) It is party to no contract materially adverse to the obligations
undertaken in this Agreement;
(e) The execution of this Agreement and delivery of this Agreement to
UroGen and the performance of its terms does not conflict with the terms of any
agreement to which Baxter is bound; and
(f) Baxter has no current agreements with other parties for the
development of the Collaboration Product(s).
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11.4 Baxter Indemnification -- Representations And Warranties: Baxter
shall indemnify UroGen for, and hold it harmless from, any liability, loss,
expense or cost (including attorney's fees) incurred by, or any claim or
judgement against, UroGen as a result of a breach by Baxter of the foregoing
representations and warranties.
12. INFRINGEMENT.
12.1 Defense Of Third Party Infringement Suits: In the event that a third
party shall sue either Party alleging that the manufacture, use or sale of
Collaboration Product(s), or any part thereof, infringes a patent of such third
party, then UroGen shall control the defense and bear the costs and expenses of
such suit (in such event, UroGen shall be the "Controlling Party"); provided,
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however, that in the event that UroGen, for whatever reason, fails to defend any
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such third party suit, Baxter shall have the right to assume control of the
defense and bear the costs and expenses of such suit (in such event, Baxter
shall be the "Controlling Party"). Either Party shall have the right, in the
event that it is not the Controlling Party, to participate at its own expense in
the defense of any such action with counsel of its own selection. The
Controlling Party will consult with the Management Board with respect to all
material decisions and actions taken by the Controlling Party in connection with
any such suit (to the extent possible, prior to making or taking any such
decisions or actions) and the other Party shall provide reasonable cooperation
in the defense of such suit and furnish all evidence in its control (at the
Controlling Party's expense based on the other Party's Fully Loaded Cost
therefor). The Controlling Party shall not enter into any settlement that
materially affects the other Party's rights or interests under this Agreement,
the Distribution Agreement or otherwise without the other Party's prior written
consent, which consent shall not be unreasonably withheld.
12.2 Third Party Royalty Expenses: If the Management Board shall approve
the payment to a third-party of royalty payments with respect to any license
relating to the development of the Collaboration Product(s) or any portion
thereof, then such royalty payments shall be paid by UroGen and included in the
determination of UroGen's Fully Loaded Costs with respect to the development of
the Collaboration Product(s) or any portion thereof.
12.3 Suits For Infringement By Others: In the event Baxter or UroGen
becomes aware of any actual or threatened infringement by a third party of the
UroGen Intellectual Property, that Party shall promptly notify the Management
Board and the Management Board shall determine the most appropriate action to
take. Baxter will cooperate with UroGen in pursuing or otherwise resolving each
charge of infringement. UroGen will bear all costs and expenses of pursuing any
claims of infringement, including attorneys fees in connection with any such
suit. In the event that UroGen, for whatever reason, fails to pursue any actual
or threatened infringement by a third party of the UroGen Intellectual Property,
Baxter shall have the right (but not the obligation) to pursue such claims of
infringement at UroGen's expense based on Baxter's Fully Loaded Cost therefor.
Either Party shall have the right, in the event that it is not the Party
controlling such infringement action, to participate at its own expense in any
such suit with counsel of its own selection. Any award of damages or other
recovery attributable to the infringement of the UroGen Intellectual Property
shall be retained by UroGen. The Party controlling such suit for infringement
shall not enter into any
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settlement that materially affects the other Party's rights or interests under
this Agreement, the Distribution Agreement or otherwise without the other
Party's prior written consent, which consent shall not be unreasonably withheld.
13. FOREIGN CURRENCY CONVERSION. Where calculations of a Party's Fully
Loaded Cost relate to currency other than United States dollars, all such
calculations shall be made pursuant to Baxter's then current accounting policies
and practices, as consistently applied.
14. WITHHOLDING TAXES. Where required to do so by applicable law, Baxter
shall withhold taxes required to be paid to a taxing authority on account of any
payments to UroGen hereunder, and Baxter shall furnish UroGen with satisfactory
evidence of such withholding and payment in order to permit UroGen to obtain a
tax credit or other such relief as may be available under applicable laws.
Baxter shall cooperate with UroGen in obtaining exemption from withholding taxes
wherever available under applicable law.
15. FORCE MAJEURE. Neither Party to this Agreement shall be liable for
delay or failure in the performance of any of its obligations hereunder if such
delay or failure is due to causes beyond its reasonable control, including acts
of God, fires, earthquakes, strikes and labor disputes, acts of war, civil
unrest or intervention of any governmental authority, but any such delay or
failure shall be remedied by such Party as soon as is reasonably possible.
16. LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH
OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY,
CONSEQUENTIAL OR LIQUIDATED DAMAGES OR LOST PROFITS UNDER THIS AGREEMENT OR
RELATING TO THE SUBJECT MATTER HEREOF, EXCEPT WHERE DAMAGES ARE AWARDED TO A
THIRD PARTY AGAINST AN INDEMNIFIED PARTY.
17. FOREIGN GOVERNMENT APPROVAL OR REGISTRATION. If this Agreement or
any associated transaction is required by the law of any nation to be either
approved or registered with any governmental authority, or any agency or
political subdivision thereof, UroGen shall assume all legal obligations to do
so, except where (i) the failure to obtain approval or registration shall not
------------
adversely affect the material rights and/or obligations of UroGen and/or Baxter
with respect to this Agreement or any associated transaction, and (ii) the
---
failure to obtain approval or registration shall not result in any liability or
culpability of Baxter under, or with respect to the violation of, any applicable
law.
18. NOTICES. All notices required under this Agreement shall be in
writing, and all such notices and other written communications (including
purchase orders) shall be delivered either by hand, by a nationally recognized
overnight delivery service (with delivery charges prepaid), by first class,
registered or certified United States mail (postage prepaid), or by facsimile
transmission (provided that in the case of facsimile transmission, a
confirmation copy of the notice shall be
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delivered by hand, by a nationally recognized overnight delivery service (with
delivery charges prepaid), or by first class, registered or certified United
States mail (postage prepaid) within two (2) days of facsimile transmission),
addressed to each Party as follows:
If to Baxter,
such notices shall be delivered to: Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Attention: President - Venture Management
Associate General Counsel
Facsimile: 847-940-6271
If to UroGen,
such notices shall be delivered to: UroGen Corp.
10835 Altman Row, Suite A
San Diego, California 92121
Attention: President
Facsimile: 619-642-9173
or such other address as any such Party may designate in writing and delivered
to the other Party hereto pursuant to this Section 18. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered by: hand or by a nationally recognized overnight
delivery service (with delivery charges prepaid) at the time of delivery; by
first class, registered or certified United States mail (postage prepaid), three
(3) business days after delivery thereof to the United States Postal Service; or
by facsimile transmission, at the time of transmission.
19. CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California,
without application of conflicts of law principles, and, subject to Section 27
below, each Party hereby submits to the jurisdiction and venue of any state or
federal court in the State of California. To the extent permissible by law,
each of the Parties hereby waives, releases and agrees not to assert, and agrees
to cause its Affiliates to waive, release and not assert, any rights such Party
or its Affiliates may have under any foreign law or regulation that would be
inconsistent with the terms of this Agreement as governed by California law.
20. PROVISIONS CONTRARY TO LAW/SEVERABILITY. In performing this
Agreement, the Parties hereto shall comply with all applicable laws. Nothing in
this Agreement shall be construed so as to require the violation of any law, and
wherever there is any conflict between any provision of this Agreement and any
applicable law, the applicable law shall prevail. In the event any provision of
this Agreement conflicts with any applicable law or is otherwise determined by
an arbitrator or court having valid jurisdiction thereof to be unenforceable,
the affected provision of this Agreement shall be deemed to have been modified
to the extent necessary so as not to conflict with
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the applicable law or to be unenforceable or, if such modification is not
possible, such provision shall be deemed to have been deleted here from, without
affecting, impairing or invalidating the remaining provisions of this Agreement.
21. ENTIRE AGREEMENT. This Agreement, together with any schedules
attached hereto, constitutes the entire agreement between the Parties as to the
subject matter hereof, and all prior negotiations, representations, agreements
and understandings are merged into, extinguished by and completely expressed by
this Agreement.
22. WAIVERS AND MODIFICATIONS. The failure of any Party to insist on
the performance of any obligation hereunder shall not be deemed to be a waiver
of such obligation. Waiver of any breach of any provision hereof shall not be
deemed to be a waiver of any other breach of such provision or any other
provision. No waiver, modification, release or amendment of any obligation
under or provision of this Agreement shall be valid or effective unless in
writing signed by the Party to be bound by such waiver, modification, release or
amendment.
23. ASSIGNMENT. UroGen may not assign its rights or obligations under
this Agreement without the prior written consent of Baxter, unless such
assignment occurs in connection with a Change of Control of UroGen and the
assignee assumes all of the duties and obligations of UroGen under this
Agreement and the Distribution Agreement. Baxter may assign its rights and
obligations hereunder to any Affiliate of Baxter without prior notice to or
consent of UroGen. No Party hereto may assign any of its rights or obligations
under this Agreement, unless and to the extent expressly permitted by this
Section 23. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding on the Parties' permitted successors and assigns.
24. INDEPENDENT PARTIES. By virtue of this Agreement, neither Party
constitutes the other as its agent (except as may otherwise be expressly
provided herein), partner, joint venturer, or legal representative and neither
Party has express or implied authority to bind the other in any manner
whatsoever.
25. DISBURSEMENTS. Unless otherwise agreed between the Parties, all
disbursements from one Party to another under this Agreement shall be paid on or
before the due date by wire transfer to the bank account specified in writing by
the Party receiving the disbursement.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all Parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together, and shall constitute one and the same instrument.
27. DISPUTE RESOLUTION.
27.1 Provisional Remedies: The procedures specified in this Section 27
shall be the sole and exclusive procedures for the resolution of Deadlocks and
Disputes; provided, however, that a
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Party, without prejudice to these procedures, may seek a preliminary injunction
or other provisional relief with respect to a Dispute if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action, the Parties will continue to participate in good
faith in the procedures specified in this Section 27.
27.2 Negotiations Between Executives: Within ten (10) days of the
occurrence of a Deadlock or delivery of a written notice by one Party to the
other Party of a Dispute, the Parties will cause, respectively, an executive
officer of UroGen designated by UroGen and an executive of Baxter designated by
Baxter, to meet and by good faith negotiations attempt to resolve such Deadlock
or Dispute. In the event that the Parties fail to resolve a Deadlock pursuant to
this Section 27.2 within thirty (30) days of the occurrence of the Deadlock, the
final decision with respect to the Deadlock shall be made solely by UroGen
reasonably taking into account the interests of both Parties. In the event that
the Parties fail to resolve a Dispute pursuant to this Section 27.2 within
thirty (30) days after one Party delivering written notice of the Dispute to the
other Party, the Dispute shall be submitted to and shall be resolved by
arbitration pursuant to Section 27.3 below.
27.3 Arbitration: In the event that a Dispute is not resolved between the
Parties pursuant to the procedures of, and time periods specified in, Section
27.2 above, such Dispute shall be finally settled by arbitration administered by
JAMS/Endispute in accordance with the provisions of its Comprehensive
Arbitration Rules and Procedures and the United States Federal Arbitration Act,
as modified below:
(a) The arbitration shall be heard by a panel of three (3) independent
and impartial arbitrators, all of whom shall be selected from a list of
neutral arbitrators supplied by JAMS/Endispute. From such list, each of
Baxter and UroGen shall select one (1) arbitrator, and the arbitrators so
selected shall select a third. The panel shall designate one (1) among them
to serve as chair.
(b) The arbitration proceedings shall be conducted: (a) if notice
demanding arbitration is delivered by UroGen to Baxter, in Cook County,
Illinois, or (b) if notice demanding arbitration is delivered by Baxter to
UroGen, in San Diego County, California.
(c) Any Party may seek interim or provisional remedies under the Federal
Rules of Civil Procedure and the United States Federal Arbitration Act as
necessary to protect the rights or property of the Party pending the
decision of the arbitrators.
(d) The Parties shall allow and participate in limited discovery for the
production of documents and taking of depositions, which shall be conducted
in accordance with the Comprehensive Arbitration Rules and Procedures of
JAMS/Endispute. All discovery shall be completed within sixty (60) days
following the filing of the answer or other responsive pleading.
Unresolved discovery disputes shall be brought to the attention of the
chair of the arbitration panel and may be disposed of by the chair.
-23-
<PAGE>
(e) Each Party shall have up to fifty (50) hours to present evidence and
argument in a hearing before the panel of arbitrators provided that the
--------
chair of the panel of arbitrators may establish such longer times for
presentations as the chair deems appropriate.
(f) The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the matter,
shall be in writing and shall specify the factual and legal basis for the
award. Judgment thereon may be entered in any court having jurisdiction
thereof.
(g) The arbitrators are empowered to order money damages in compensation
for a Party's actual damages, specific performance or other appropriate
relief to cure a breach; provided, however, that the arbitrators will have
-------- -------
no authority to award special, punitive or exemplary damages, or other
money damages that are not measured by the prevailing Party's actual
damages.
27.4 Performance During Dispute: Subject to Sections 2 and 8.1 above, each
Party is required to continue to perform its obligations under this Agreement
pending final resolution of any dispute arising out of or relating to this
Agreement, unless to do so would be commercially impossible or impractical under
the circumstances.
27.5 Costs of Arbitration: The Party which is found to have been more at
fault in a dispute arbitrated under this Section 27 shall be responsible for
paying the costs and expenses, including reasonable attorney's fees, which the
other Party has incurred in such arbitration.
28. RULES OF CONSTRUCTION. In this Agreement, unless a clear contrary
intention appears:
(a) The singular number includes the plural number and vice versa;
(b) Reference to any Party includes such Party's permitted successors and
assigns;
(c) Reference to any gender includes the other gender;
(d) Reference to any Section, Exhibit or Schedule means such section of
this Agreement, exhibit to this Agreement or schedule to this Agreement, as
the case may be, and references in any section or definition to any clause
means such clause of such section or definition;
(e) "Herein," "hereunder," "hereof," "hereto," and words of similar
import shall be deemed references to this Agreement as a whole and not to
any particular section or other provision of this Agreement;
(f) "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
-24-
<PAGE>
(g) Relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding" and "through" means
"through and including";
(h) Reference to any law (including statutes and ordinances) means such
law as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations promulgated
thereunder;
(i) Accounting terms used herein shall have the meanings historically
attributed to them by GAAP;
(j) In the event of any conflict between any of the provisions of the
body of this Agreement and any exhibit or schedule hereto, the provisions
of the body of this Agreement shall control;
(k) The headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in construing this
Agreement; and
(l) Any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against either Party
shall not apply to any construction or interpretation hereof.
-25-
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first set forth above.
BAXTER HEALTHCARE CORPORATION UROGEN CORP.
By: /s/ Victor W. Schmitt By: /s/ Paul D. Quadros
-------------------------------- --------------------------------
Name: Victor W. Schmitt Name: Paul D. Quadros
Title: President, Venture Management Title: President and Chief Executive
Officer
<PAGE>
EXHIBIT A
---------
EXAMPLE OF THE OPERATION OF THE FORMULAE IN SECTIONS 3.5(C)(I) THROUGH
3.5(C)(IV)
ILLUSTRATION 1: For the purposes of this illustration, assume that:
. The Baxter Funding Period begins at 12:01 am on January 1, 1999;
. In Year 1 of the Baxter Funding Period (year end 1999), UroGen
requests funding equal to budgeted Approved Expenses for Year 1 and
Baxter pays full amount of request ($[ * ]);
. In Year 2 of the Baxter Funding Period (year end 2000), UroGen
requests $[ * ], $[ * ] less than the budgeted Approved Expenses for
Year 2 ($[ * ]) and Baxter pays full amount of request;
. In Year 3 of the Baxter Funding Period (year end 2001), UroGen
requests $[ * ] in funding, $[ * ] in excess of budgeted Approved
Expenses for Year 3 ($[ * ]), and Baxter pays $[ * ] (electing to pay
the excess under Section 3.5(c)(iii));
. In Year 4 of the Baxter Funding Period (year end 2002), UroGen
requests $[ * ] in funding, $[ * ] in excess of budgeted Approved
Expenses for Year 4 ($[ * ]), and Baxter only pays $[ * ] (electing
not to pay the excess) and UroGen pays $[ * ] (electing to pay the
excess under Section 3.5(c)(iii));
. In Year 5 of the Baxter Funding Period (year end 2003), UroGen
requests funding equal to budgeted Approved Expenses for Year 5
($[ * ]) and Baxter pays only $[ * ] ($[ * ] less than amount
requested);
. The Baxter Funding Period terminates at midnight on December 31,
2003;
. The UroGen Funding Period begins at 12:01 am on January 1, 2004;
. In Year 1 of the UroGen Funding Period (year end 2004), UroGen funds
full amount of budgeted Approved Expenses for Year 1 ($[ * ]);
. In Year 2 of the UroGen Funding Period (year end 2005), UroGen funds
$[ * ], $[ * ] less than the budgeted Approved Expenses for Year 2
($[ * ]);
. In Year 3 of the UroGen Funding Period (year end 2006), Baxter
proposes $[ * ] in funding, $[ * ] in excess of budgeted Approved
Expenses for Year 3 ($[ * ]), UroGen declines to pay the excess and
Baxter elects to pay, and pays, the $[ * ] excess under Section
3.5(c)(iii));
. The UroGen Funding Period terminates at midnight on December 31,
2006.
Accordingly, the Adjusted Interests of Baxter and UroGen as of the end of each
year of the Baxter Funding Period and as of the end of each year of the UroGen
Funding Period will be as follows:
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
ILLUSTRATION 1
- --------------------------------------------------------------------------------------------------------
TIME PERIOD CALCULATION OF BAXTER ADJUSTED CALCULATION OF UROGEN ADJUSTED
BAXTER ADJUSTED INTEREST UROGEN ADJUSTED INTEREST
INTEREST INTEREST
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
END OF YEAR 1 OF (([ * ] / [ * ]) x [ * ]% 100% - [ * ]% [ * ]%
BAXTER FUNDING [ * ]) x 100
PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 2 OF (([ * ] / [ * ]/1/)x [ * ]% 100% - [ * ]% [ * ]%
BAXTER FUNDING [ * ]) x [ * ]
PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 3 OF (([ * ] / [ * ]) x [ * ]% 100% - [ * ]% [ * ]%
BAXTER FUNDING [ * ]) x 100
PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 4 OF (([ * ] / [ * ]/2/)x [ * ]% 100% - [ * ]% [ * ]%
BAXTER FUNDING [ * ]) x [ * ]
PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 5 OF (([ * ] / [ * ]) x [ * ]% 100% - [ * ]% [ * ]%
BAXTER FUNDING [ * ]) x 100
PERIOD
- --------------------------------------------------------------------------------------------------------
FINAL FIXED [ * ]% [ * ]%
ADJUSTED INTERESTS
AT END OF BAXTER
FUNDING PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 1 OF [ * ]% - [ * ]% [ * ]% (([ * ] / [ * ]) x [ * ]%
UROGEN FUNDING [ * ]) x 100
PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 2 OF [ * ]% - [ * ]% [ * ]% (([ * ] / [ * ]) x [ * ]%
UROGEN FUNDING [ * ]) x 100
PERIOD
- --------------------------------------------------------------------------------------------------------
END OF YEAR 3 OF [ * ]% - [ * ]% [ * ]% (([ * ] / [ * ]/3/)x [ * ]%
UROGEN FUNDING [ * ]) x 100
PERIOD
- --------------------------------------------------------------------------------------------------------
</TABLE>
__________________
/1/ See first sentence of final paragraph of Section 3.5(c)(i).
/2/ Pursuant to Section 3.5(c)(iii), for the purposes of the calculation
under Section 3.5(c)(i) UroGen's payment of the $[ *] in excess of
Approved Expenses is treated as part of the accumulated Approved
Expenses.
/3/ Pursuant to Section 3.5(c)(iii), for the purposes of the calculation
under Section 3.5(c)(ii) Baxter's payment of the $[ * ] in excess of
Approved Expenses is treated as part of the accumulated Approved
Expenses.
-ii-
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------
ILLUSTRATION 1
- --------------------------------------------------------------------------------------------------------
TIME PERIOD CALCULATION OF BAXTER ADJUSTED CALCULATION OF UROGEN ADJUSTED
BAXTER ADJUSTED INTEREST UROGEN ADJUSTED INTEREST
INTEREST INTEREST
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINAL FIXED [ * ]% [ * ]%
ADJUSTED INTERESTS
AT END OF UROGEN
FUNDING PERIOD
- --------------------------------------------------------------------------------------------------------
</TABLE>
ILLUSTRATION 2: For the purposes of this illustration, assume that the facts
are the same as in Illustration 1 above except that the Agreement terminates on
the License Termination Date pursuant to Section 8.1 of the Agreement at the end
of Year 3 of the Baxter Funding Period - thereafter Baxter's Adjusted Interest
and UroGen's Adjusted Interest will remain fixed at [ * ]% and [ * ]%
respectively pursuant to the last paragraph of Section 3.5(c)(ii).
ILLUSTRATION 3: For the purposes of this illustration, assume that the facts
are the same as in Illustration 1 above except that in Year 3 of the Baxter
Funding Period a Change of Control occurs with respect to UroGen - thereupon
Baxter's Adjusted Interest and UroGen's Adjusted Interest will become fixed at
[ * ]% and [ * ]% respectively pursuant to Section 3.5(c)(iv), the Baxter
Funding Period will terminate, the UroGen Funding Period will commence, and each
of Baxter's Adjusted Interest and UroGen's Adjusted Interest will thereafter be
adjusted pursuant to Section 3.5(c)(ii).
-iii-
<PAGE>
EXHIBIT B
---------
CONFIDENTIALITY AGREEMENT
Please see attached.
-iv-
<PAGE>
EXHIBIT 2.7
TECHNOLOGY LICENSE AGREEMENT
THIS TECHNOLOGY LICENSE AGREEMENT (the "Agreement"), effective as of July
8, 1998 (the "Effective Date"), is entered into by and between Baxter Healthcare
Corporation, a Delaware corporation having a place of business at 1627 Lake Cook
Road, Deerfield, Illinois 60015 ("Baxter"), Baxter International Inc., a
Delaware corporation having a place of business at One Baxter Parkway,
Deerfield, Illinois 60015 ("BII"), and UroGen Corp., a Delaware corporation
having a place of business at 10835 Altman Row, Suite A, San Diego, California
92121 ("UroGen").
RECITALS
A. Baxter and UroGen have entered into a certain Asset Purchase Agreement
dated as of February 28, 1998 as amended by that certain Amendment to Asset
Purchase Agreement dated as of May 27, 1998, between Baxter and UroGen (as so
amended the "Asset Purchase Agreement") pursuant to which Baxter has agreed to
license the Mini-Ad Vector Technology until the Investment Milestone Date (both
as defined below) to UroGen; and
B. Pursuant to the terms of the Asset Purchase Agreement, UroGen desires
to obtain an exclusive license under the Intellectual Property Rights until the
Investment Milestone Date (as defined below), and Baxter and BII desire to grant
such a license to UroGen, on the terms and conditions herein.
NOW, THEREFORE, Baxter and UroGen agree as follows:
1. DEFINITIONS
1.1 Terms Defined in Asset Purchase Agreement. Unless otherwise defined
-----------------------------------------
herein, all capitalized terms shall have the meanings ascribed to such terms as
set forth in the Asset Purchase Agreement.
1.2 "Affiliate" of a party shall mean any entity (i) which directly or
---------
indirectly through one or more intermediaries Controls, is Controlled by, or is
under common Control with, the party or (ii) fifty percent (50%) or more of the
voting capital stock (or in the case of an entity which is not a corporation,
fifty percent (50%) or more of the equity interest) of which is beneficially
owned or held by a party or any of such party's Subsidiaries. The term
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity (other than a
natural person), whether through the ownership of voting capital stock, by
contract or otherwise.
1.3 "Investment Milestone Date"shall mean the date on which UroGen shall
-------------------------
achieve the Investment Milestone.
<PAGE>
1.4 "Licensed Product" shall mean any product which (a) but for the
----------------
license granted herein would infringe a Valid Claim in the country such product
is made or sold; or (b) incorporates or uses any component of the Intellectual
Property Assets.
1.5 "Territory" shall mean all countries of the world.
---------
1.6 "Valid Claim" shall mean (i) a claim of an issued and unexpired patent
-----------
included within the Intellectual Property Assets which has not been held
unenforceable or invalid by a court or other governmental agency of competent
jurisdiction, and which has not been disclaimed or admitted to be invalid or
unenforceable through reissue or otherwise, or (ii) a claim of a pending patent
application within the Intellectual Property Assets, provided that not more than
five (5) years have elapsed from the date the claim takes priority for filing
purposes.
2. GRANT
2.1 Grant. Baxter and BII hereby grant to UroGen an exclusive, worldwide
-----
license under the Intellectual Property Assets, with the right to grant and
authorize sublicenses, to make, have made, import, have imported, use, sell,
offer for sale and otherwise distribute and exploit the Licensed Products in the
Territory. Any sublicense granted by UroGen under the terms of this Agreement
shall provide for automatic termination of such sublicense upon the expiration
or early termination of this Agreement.
3. CONSIDERATION
3.1 Consideration. In primary consideration of the license granted
-------------
herein, UroGen shall provide to Baxter certain UroGen stock as set forth in the
Asset Purchase Agreement. In further consideration of the license granted
herein, UroGen shall pay to Baxter royalties on sales of Licensed Products sold
by UroGen as set forth in the Royalty Agreement.
4. PAYMENTS
4.1 Payments. UroGen agrees to pay all royalties due to Baxter pursuant
--------
to the terms of the Royalty Agreement. UroGen agrees to pay all stock
consideration due to Baxter pursuant to the terms of the Asset Purchase
Agreement.
4.2 Taxes. Where required to do so by applicable law, UroGen shall
-----
withhold taxes required to be paid to a taxing authority on account of any
payments to Baxter hereunder, and UroGen shall furnish Baxter with satisfactory
evidence of such withholding and payment in order to permit Baxter to obtain a
tax credit or other such relief as may be available under applicable laws.
UroGen shall cooperate with Baxter in obtaining exemption from withholding taxes
wherever available under applicable law.
-2-
<PAGE>
5. PROSECUTION AND ENFORCEMENT
5.1 Responsibilities. Baxter and UroGen affirm that the respective rights
----------------
and responsibilities associated with the preparation, filing, prosecution and
maintenance of any patents for the Intellectual Property Assets and the
Collaboration Products shall be governed by the terms of the Distribution
Agreement and the Development Agreement, respectively.
6. DISPUTE RESOLUTION
6.1 Provisional Remedies: The procedures specified in this Section 6
--------------------
shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
--------
however, that a party, without prejudice to these procedures, may seek a
- -------
preliminary injunction or other provisional relief if, in its sole judgment,
such action is deemed necessary to avoid irreparable damage or to preserve the
status quo. During such action. the parties will continue to participate in
good faith in the procedures specified in this Section 6.
6.2 Negotiations Between Executives: The parties will attempt in good
-------------------------------
faith to resolve any claim or controversy arising out of or relating to the
execution, interpretation or performance of this Agreement (including the
validity, scope and enforceability of the provisions contained in this Section
6) promptly by negotiations between one designated executive from each of
UroGen, Baxter and/or BII who will attempt in good faith to resolve any dispute
or undecided matter referred to them.
6.3 Arbitration: In the event that any dispute arising out of or relating
-----------
to this Agreement or its breach, termination or validity has not been resolved
after good faith negotiation pursuant to the procedures of Section 6.2, such
dispute shall upon written notice by any party to the others, be finally settled
by arbitration administered by JAMS/Endispute in accordance with the provisions
of its Comprehensive Arbitration Rules and Procedures and the United States
Federal Arbitration Act, as modified below:
A. The arbitration shall be heard by a panel of three (3)
independent and impartial arbitrators, all of whom shall be selected from a list
of neutral arbitrators supplied by JAMS/Endispute. From such list, each of
Baxter and/or BII and UroGen shall select one (1) arbitrator, and the
arbitrators so selected shall select a third. The panel shall designate one (1)
among them to serve as chair.
B. The arbitration proceedings shall be conducted: (a) if notice
demanding arbitration is delivered by UroGen to Baxter or BII, in Cook County,
Illinois, or (b) if notice demanding arbitration is delivered by Baxter or BII
to UroGen, in San Diego County, California.
-3-
<PAGE>
C. Any party may seek interim or provisional remedies under the
Federal Rules of Civil Procedure and the United States Federal Arbitration Act
as necessary to protect the rights or property of the party pending the decision
of the arbitrators.
D. The parties shall allow and participate in limited discovery for
the production of documents and taking of depositions, which shall be conducted
in accordance with the Comprehensive Arbitration Rules and Procedures of
JAMS/Endispute. All discovery shall be completed within sixty (60) days
following the filing of the answer or other responsive pleading. Unresolved
discovery disputes shall be brought to the attention of the chair of the
arbitration panel and may be disposed of by the chair.
E. Each party shall have up to fifty (50) hours to present
evidence and argument in a hearing before the panel of arbitrators provided that
--------
the chair of the panel of arbitrators may establish such longer times for
presentations as the chair deems appropriate.
F. The arbitration award shall be rendered by the arbitrators within
fifteen (15) business days after conclusion of the hearing of the matter, shall
be in writing and shall specify the factual and legal basis for the award.
Judgment thereon may be entered in any court having jurisdiction thereof.
G. The arbitrators are empowered to order money damages in
compensation for a party's actual damages, specific performance or other
appropriate relief to cure a breach; provided, however , that the arbitrators
-------- -------
will have no authority to award special, punitive or exemplary damages, or other
money damages that are not measured by the prevailing party's actual damages.
6.4 Performance During Dispute: Subject to Section 7 of this Agreement,
--------------------------
each party is required to continue to perform its obligations under this
Agreement pending final resolution of any dispute arising out of or relating to
this Agreement, unless to do so would be commercially impossible or impractical
under the circumstances.
6.5 Costs of Arbitration: The party which is found to have been more at
--------------------
fault in a dispute arbitrated under this Section 6 shall be responsible for
paying the costs and expenses, including reasonable attorney's fees, which the
other party and/or parties have incurred in such arbitration.
7. TERM AND TERMINATION
7.1 Term. The term of this Agreement shall commence on the Effective
----
Date, and unless earlier terminated as provided in this Article 7, and shall
continue in full force and effect until the earlier of (a) five years from the
Effective Date in which case expiration shall be on the fifth anniversary of the
Effective Date, or (b) UroGen meets the Investment Milestone in which case
termination shall be effective on the Investment Milestone Date.
-4-
<PAGE>
7.2 Termination for Cause. If any party materially breaches this
---------------------
Agreement, the other party may elect to give the breaching party written notice
describing the alleged breach. If the breaching party has not cured such breach
within sixty (60) days after receipt of such notice, the notifying party will be
entitled, in addition to any other rights it may have under this Agreement, to
terminate this Agreement effective immediately; provided, however, if either
party receives notification from the other of a material breach and if the party
alleged to be in default notifies the other party in writing within thirty (30)
days of receipt of such default notice that it disputes the asserted default,
the matter will be submitted to arbitration as provided in Article 9 of this
Agreement. In such event, the nonbreaching party shall not have the right to
terminate this Agreement until it has been determined in such arbitration
proceeding that the other party materially breached this Agreement, and the
breaching party fails to cure such breach within ninety (90) days after the
conclusion of such arbitration proceeding. The breaching party shall not have
the opportunity to bring such matter to arbitration a second time.
7.3 Termination for Material Breach. If UroGen materially breaches the
-------------------------------
Distribution Agreement, the Development Agreement or the Royalty Agreement and
as a result of such breach, any or all of such Agreements are terminated, this
Agreement shall terminate concurrently with the terminated Agreement(s).
7.4 Termination for Insolvency. This Agreement shall terminate
--------------------------
immediately if any of the following events occur:
(a) A receiver, conservator, custodian, liquidator or trustee of a
party, or of all or any of the property of a party, is appointed by court order
and such order remains in effect for more than ninety (90) days; or an order for
relief is entered under the federal bankruptcy laws with respect to a party; or
any of the material property of a party is sequestered by court order and such
order remains in effect for more than ninety (90) days; or a petition is filed
against a party under the bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, and is not dismissed within ninety (90) days
after such filing; or
(b) A party files a petition in voluntary bankruptcy or seeking relief
under any provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, or consents to the filing of any petition
against it under any such law; or
(c) A party makes an assignment for the benefit of its creditors or
consents to the appointment of a receiver, conservator, custodian, liquidator or
trustee of the party, or of all or any part of its property.
7.5 Effect of Termination on attainment of the Investment Milestone Date.
--------------------------------------------------------------------
(a) Transfer Documentation. Consistent with Section 8.9, upon
----------------------
termination of this Agreement for reaching the Investment Milestone pursuant to
Section 7.1, Baxter shall or shall
-5-
<PAGE>
cause its parent corporation BII to, on the Investment Milestone Date or as soon
as practical thereafter, execute all assignments and any other documentation as
may be reasonably required to effect the transfer and assignment of the
Intellectual Property Assets, to UroGen.
(b) Accrued Rights and Obligations. Termination of this Agreement for
------------------------------
any reason shall not release any 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 any rights and remedies it may have hereunder or at law or in
equity which accrued or are based upon any event occurring prior to such
termination.
(c) Sublicensees. In the event of any termination of this Agreement
------------
any sublicensees granted by UroGen shall automatically terminate.
7.6 Effect of Other Termination.
---------------------------
(a) Transfer Documentation. Upon expiration of this Agreement on the
----------------------
fifth anniversary of the Effective Date pursuant to Section 7.1 or upon early
termination of this Agreement pursuant to Sections 7.2, 7.3 or 7.4 and prior to
UroGen's attainment of the Investment Milestone, UroGen shall, on the expiration
date or termination date or as soon as practical thereafter, execute all
assignments and any other documentation as may be reasonably required to effect
the transfer and assignment of the Intellectual Property Assets licensed
hereunder, as well as any associated Included Agreements and any other
documentation associated with the Intellectual Property Assets reasonably
necessary in order for Baxter and/or BII to regain ownership in the Intellectual
Property Assets and Included Agreements.
(b) Accrued Rights and Obligations. Termination of this Agreement for
------------------------------
any reason shall not release any 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 any rights and remedies it may have hereunder or at law or in
equity which accrued or are based upon any event occurring prior to such
termination.
7.7 Survival. Articles 6, 7, 8, and 9 of this Agreement shall survive
--------
termination of this Agreement for any reason.
8. MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California, without reference to
principles of conflicts of laws.
8.2 Independent Contractors. The relationship of the parties hereto is
-----------------------
that of independent contractors. The parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result of
this Agreement or the transactions contemplated thereby.
-6-
<PAGE>
8.3 Assignment UroGen may not assign its rights or obligations under this
----------
Agreement without the prior written consent of Baxter. Baxter may assign its
rights and obligations hereunder to any Affiliate of Baxter without prior notice
to or consent of UroGen. No party hereto may assign any of its rights or
obligations under this Agreement, unless and to the extent expressly permitted
by this Section 8.3. Subject to the foregoing, this Agreement shall inure to
the benefit of and be binding on the parties' permitted successors and assigns.
8.4 Right to Develop Independently. Nothing in this Agreement will impair
------------------------------
either Baxter's or UroGen's right to, subject to Section 3.1(b) of the
Development Agreement and Section 3 of the Distribution Agreement,
independently acquire, license, develop for itself, or have others develop for
it, intellectual property and technology performing similar functions as the
Intellectual Property Assets or to market and distribute Licensed Products or
other products based on such other intellectual property and technology.
8.5 Notices. All notices required under this Agreement shall be in
-------
writing, and all such notices and other written communications (including
purchase orders) shall be delivered either by hand, by a nationally recognized
overnight delivery service (with delivery charges prepaid), by first class,
registered or certified United States mail (postage prepaid), or by facsimile
transmission (provided that in the case of facsimile transmission, a
confirmation copy of the notice shall be delivered by hand, by a nationally
recognized overnight delivery service (with delivery charges prepaid), or by
first class, registered or certified United States mail (postage prepaid) within
two (2) days of facsimile transmission), addressed to each party as follows:
If to Baxter,
such notices shall be delivered to: Baxter Healthcare Corporation
1627 Lake Cook Road
Deerfield, Illinois 60015
Attention: President - Venture Management
Associate General Counsel
Facsimile: 847-940-6271
If to UroGen,
such notices shall be delivered to: UroGen
10835 Altman Row, Suite A
San Diego, California 92121
Attention: President
Facsimile: 619-642-9173
or such other address as any such party may designate in writing and delivered
to the other party hereto pursuant to this Section 8.5. All such notices or
other written communications shall be deemed to have been received by the
addressee if delivered by: hand or by a nationally recognized overnight delivery
service (with delivery charges prepaid) at the time of delivery; by first class,
registered or certified United States mail (postage prepaid), three (3) business
days after delivery thereof to the United States Postal Service; or by facsimile
transmission, at the time of transmission.
-7-
<PAGE>
8.6 Force Majeure. No party to this Agreement shall be liable for delay
-------------
or failure in the performance of any of its obligations hereunder if such delay
or failure is due to causes beyond its reasonable control, including acts of
God, fires, earthquakes, strikes and labour disputes, acts of war, civil unrest
or intervention of any governmental authority, but any such delay or failure
shall be remedied by such Party as soon as is reasonably possible.
8.7 Compliance with Laws. Subject to the allocation of applicable costs
--------------------
and expenses set forth in the Development Agreement and the Distribution
Agreement, each party shall furnish to the other party any information requested
or required by that party during the term of this Agreement or any extensions
hereof to enable that party to comply with the requirements of any U.S. or
foreign federal, state and/or government agency.
8.8 LIMITATION OF LIABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF
-----------------------
CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE), OR OTHERWISE, SHALL ANY PARTY
BE LIABLE TO ANY OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL
OR LIQUIDATED DAMAGES OR LOST PROFITS UNDER THIS AGREEMENT OR RELATING TO THE
SUBJECT MATTER HEREOF, EXCEPT WHERE SUCH DAMAGES ARE AWARDED TO A THIRD PARTY
FOR WHICH A PARTY HEREUNDER IS ENTITLED TO INDEMNIFICATION.
8.9 Further Assurances. At any time or from time to time on and after the
------------------
date of this Agreement, Baxter shall at the request of UroGen (i) deliver to
UroGen such records, data or other documents consistent with the provisions of
this Agreement, (ii) execute, and deliver or cause to be delivered, all such
consents, documents or further instruments of transfer or license, and (iii)
take or cause to be taken those actions, which may be reasonably necessary in
order for UroGen to obtain the full benefits of this Agreement and the
transactions contemplated hereby.
8.1 Severability. In the event that any provisions of this Agreement,
------------
with the exception of Article 7, are determined to be invalid or unenforceable
by a court of competent jurisdiction, the remainder of the Agreement shall
remain in full force and effect without said provision. The parties shall in
good faith negotiate a substitute clause for any provision declared invalid or
unenforceable, which shall most nearly approximate the intent of the parties in
entering this Agreement.
8.1 Modification; Waiver. This Agreement may not be altered, amended or
--------------------
modified in any way except by a writing signed by both parties. The failure of
a party to enforce any provision of the Agreement shall not be construed to be a
waiver of the right of such party to thereafter enforce that provision or any
other provision or right.
8.1 Entire Agreement. This Agreement including, its Exhibit, sets forth
----------------
the entire agreement and understanding of the parties with respect to the
subject matter hereof, and supersedes all prior discussions, agreements and
writings in relating thereto.
8.1 Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original and which together shall constitute one
instrument.
-8-
<PAGE>
9. RULES OF CONSTRUCTION
9.1 Rules of Construction. In this Agreement, unless a clear contrary
---------------------
intention appears:
A. The singular number includes the plural number and vice versa;
B. Reference to any party includes such party's permitted successors
and assigns;
C. Reference to any gender includes the other gender;
D. Reference to any Section, Exhibit or Schedule means such section
of this Agreement, exhibit to this Agreement or schedule to this
Agreement, as the case may be, and references in any section or
definition to any clause means such clause of such section or
definition;
E. "Herein," "hereunder," "hereof," "hereto," and words of similar
import shall be deemed references to this Agreement as a whole and
not to any particular section or other provision of this
Agreement;
F. "Including" (and with the correlative meaning "include") means
including without limiting the generality of any description
preceding such term;
G. Relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding" and "through"
means "through and including";
H. Reference to any law (including statutes and ordinances) means
such law as amended, modified codified or reenacted, in whole or
in part, and in effect from time to time, including rules and
regulations promulgated thereunder;
I. Accounting terms used herein shall have the meanings historically
attributed to them by GAAP;
J. In the event of any conflict between any of the provisions of the
body of this Agreement and any exhibit or schedule hereto, the
provisions of the body of this Agreement shall control;
K. The headings contained in this Agreement have been inserted for
convenience of reference only, and are not to be used in
construing this Agreement; and
L. Any rule of construction or interpretation which might otherwise
require this Agreement to be construed or interpreted against any
party shall not apply to any construction or interpretation
hereof.
-9-
<PAGE>
IN WITNESS WHEREOF, Baxter and UroGen have executed this Agreement by their
respective duly authorized representatives.
BAXTER HEALTHCARE CORPORATION UROGEN CORP.
By: /s/ Victor W. Schmitt By: /s/ Paul D. Quadros
----------------------------------- -------------------------------
Name: Victor W. Schmitt Name: Paul D. Quadros
Title: President Venture Management Title: President and CEO
BAXTER INTERNATIONAL INC.
By: /s/ Victor W. Schmitt
-----------------------------------
Name: Victor W. Schmitt
Title: President - Venture Management
[TECHNOLOGY LICENSE AGREEMENT]
<PAGE>
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK OF
UROGEN CORP.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
The undersigned, Paul D. Quadros, Chief Executive Officer, and Robert E.
Sobol, Secretary, of Urogen Corp., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company") in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, the Board of Directors at a meeting
duly held on June 16, 1998 and by unanimous written consent dated June 30, 1998,
adopted the following resolutions, creating a series of 40,000 shares of
Preferred Stock designated as Series A Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company (the "Board") in accordance with the provisions of
its Certificate of Incorporation, a series of Preferred Stock of the
Company be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, are as follows:
1. Designation. This series of Preferred Stock shall be designated
-----------
Series A Preferred Stock, $0.01 par value (the "Series A Preferred").
2. Authorized Number. The number of shares constituting the Series
-----------------
A Preferred shall be Forty Thousand (40,000) shares.
<PAGE>
3. Dividends. The holders of the Series A Preferred shall not be
---------
entitled to receive any dividends with respect to such Series A Preferred.
4. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution, or winding up of the Company, either voluntary or involuntary,
distributions to the stockholders of the Company shall be made in the following
manner:
(a) The holders of Series A Preferred shall be entitled to
receive liquidation preferences based on their respective preference amounts
(which shall include any amounts owing in respect of declared and unpaid
dividends), prior and in preference to any distribution of any of the assets or
funds of the Company to the holders of the Common Stock, the preference amount
of Ten Dollars ($10.00) per share in cash for each share of Series A Preferred
then held by such holders of Series A Preferred (subject to appropriate
adjustments for stock splits, stock dividends, combinations or other
recapitalizations (each a "Recapitalization")) plus an amount equal to all
declared but unpaid dividends on such Series A Preferred as of the date of
liquidation, dissolution or winding up. If the assets and funds thus distributed
among the holders of the Series A Preferred are insufficient to permit the
payment to such holders of the full preferential amount described above, then
the entire assets and funds of the Company legally available for distribution,
after payment in full of liquidation preferences to all other securities of the
Company ranking senior to the Series A Preferred as to liquidation preferences,
shall be distributed ratably among the holders of the Series A Preferred. After
payment has been made to the holders of the Series A Preferred of the full
amounts to which they are entitled, no further amounts shall be paid with
respect to the Series A Preferred, and the remaining assets of the Company shall
be distributed among the holders of the Common Stock in accordance with the
Certificate of Incorporation and applicable law.
(b) For purposes of this Section 4, sale of all or substantially
all of the Company's assets or the acquisition of the Company by another entity
by means of merger or consolidation resulting in the exchange of the outstanding
shares of the Company for securities or consideration issued, or caused to be
issued, by the acquiring entity in which the holders of capital stock of the
Company hold less than 50% of the voting securities of the acquiring corporation
(each a "Reorganization") shall not be treated as a liquidation, dissolution or
winding up of the Company (unless in connection therewith, the liquidation,
dissolution or winding up of the Company is specifically approved), but shall be
treated as provided in Section 6(d) hereof.
5. Voting Rights. The holder of each share of Series A Preferred
-------------
shall not possess any voting rights with respect to such shares. To the extent
any such vote is required, fractional votes by the holders of Series A Preferred
shall not be permitted, and any fractional voting rights shall (after
aggregating all shares into which shares of Series A Preferred held by each
holder could be converted) be rounded to the nearest whole number. Holders of
Series A Preferred shall be entitled to receive the same notice of any
stockholders' meeting as is provided to holders of Common Stock. In addition,
the Company will, or will cause the registrar to, transmit to the registered
holders of the Series A Preferred all reports and communications from the
Company that are generally mailed to holders of its Common Stock.
-2-
<PAGE>
6. Conversion. The Series A Preferred shall be subject to the
----------
following conversion provisions:
(a) Right to Convert. Each share of Series A Preferred
----------------
outstanding shall be convertible, without the payment of additional
consideration, at the option of the holder thereof, at any time into such number
of fully paid and nonassessable shares equal to (i) the Conversion Value (as
adjusted for Recapitalizations), multiplied by (ii) the number of shares of
Series A Preferred being converted; provided, however, that no shares of Series
-------- -------
A preferred shall be convertible prior to July 8, 2001. The "Conversion Value"
shall initially be $1,000 per share of Series A Preferred.
(b) Unpaid Dividends and Fractional Shares.
--------------------------------------
(i) Any declared but unpaid dividends upon the Series A
Preferred at the time of any conversion pursuant to Section 5(a) shall be paid
or distributed upon such conversion or as soon thereafter as permitted by law.
(ii) No fractional shares of Common Stock shall be issued
upon conversion of Series A Preferred. In lieu of any fractional shares to which
the holder would otherwise be entitled, the Company shall, after aggregation of
all fractional share interests held by each holder, pay cash equal to such
remaining fractional interest multiplied by the conversion price of the Series A
Preferred.
(c) Mechanics of Conversion. Before any holder of Series A
-----------------------
Preferred shall be entitled to receive certificates of Common Stock upon
conversion of the Series A Preferred, such holder shall surrender the
certificate or certificates for the Series A Preferred to be converted, duly
endorsed, at the office of the Company or of any transfer agent for the Series A
Preferred. The Company shall, as soon as practicable after such delivery, issue
and deliver to such holder of Series A Preferred (or to any other person
specified in the notice delivered by such holder) a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled
as aforesaid and a check payable to the holder for any cash amounts payable.
Notwithstanding any such delivery, such conversion shall be deemed to have been
made immediately prior to the opening of business on the date of conversion
pursuant to Section 6(a), and the person or persons entitled, upon proper
delivery, 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 on such date. Notwithstanding the foregoing, the Company shall
not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless the certificates evidencing Series A
Preferred are either delivered to the Company or its transfer agent, or the
holder notifies the Company or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement (and posts any
requested bond or security) satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection with such certificates. The issuance
of certificates for shares of Common Stock issuable upon conversion of shares of
Series A Preferred shall be made without charge to the converting holder for any
tax imposed in respect of the issuance thereof; provided that the Company shall
--------
not be required to pay
-3-
<PAGE>
any additional tax which may be payable with respect to any transfer involved in
the issue and delivery of any certificate in a name other than that of the
holder of the shares of Series A Preferred being converted.
(d) Certain Reorganizations. In the event of any change,
-----------------------
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company, whether pursuant to a Reorganization or otherwise,
the shares of Series A Preferred shall, after such Reorganization or other
transaction, be convertible thereafter pursuant to this Section 6 into the kind
and amounts of stock or other securities or property of the Company or
otherwise, to which such holder would have been entitled if immediately prior to
such event the Series A Preferred had been converted into Common Stock pursuant
to Section 6(a). The provisions of this Section 6(d) shall similarly apply to
successive changes, reclassifications, conversions, exchanges or cancellations.
(e) No Impairment. The Company will not, by amendment of its
-------------
Certificate of Incorporation or through any Reorganization, other transfer of
assets, 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 Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 6 and in
the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series A Preferred against
impairment.
(f) Calculation of Conversion Price. All calculations under
-------------------------------
this Section 6 shall be made by the Company and shall be made to the nearest
cent or to the nearest one hundredth of a share, as the case may be.
(g) No Other Conversion Rights. The holders of Series C
--------------------------
Preferred shall have no rights of conversion other than as specifically set
forth herein.
7. Status of Converted Shares. Shares of Series A Preferred
--------------------------
converted pursuant to Section 6 shall be canceled and no longer constitute
authorized shares.
8. Covenants. So long as any shares of Series A Preferred, Series B
---------
Preferred or Series C Preferred remain outstanding:
(a) The Company shall not, without the vote or written consent
by the holders of a majority of the then outstanding shares of Series B
Preferred and Series C Preferred, voting together as a single class redeem,
purchase or otherwise acquire (or pay into or set aside for a sinking fund for
such purpose) any of the Company's capital stock; provided, however, that this
restriction shall not apply to the repurchase of shares of Common Stock from
employees, officers, directors, consultants or other persons performing services
for the Company or any subsidiary pursuant to agreements under which the Company
has the option to repurchase such shares upon the occurrence of certain events,
such as the termination of employment; and
-4-
<PAGE>
(b) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock and Series A
Preferred, solely for the purpose of effecting the conversion of the shares of
the Series A Preferred, Series B Preferred and Series C Preferred, such number
of its shares of Common Stock and Series A Preferred as shall from time to time
be sufficient to effect the conversion of all outstanding shares of the Series A
Preferred, Series B Preferred and Series C Preferred; and if at any time the
number of authorized but unissued shares of Common Stock or Series A Preferred
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred, Series B Preferred and Series C Preferred, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock
and/or Series A Preferred to such number of shares as shall be sufficient for
such purpose, including, without limitation, engaging in commercially reasonable
efforts to obtain the requisite stockholder approval of any necessary amendment
to the Company's Certificate of Incorporation.
9. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, certified or registered mail, postage prepaid, express
courier or when sent by telex or telecopier (with receipt confirmed, provided a
copy is also sent by first class mail), addressed (i) in the case of a holder of
Series A Preferred, to such holder's address of record, and (ii) in the case of
the Company, to the Company's principal executive office to the attention of the
Company's secretary.
10. Amendments and Waivers. Any right, preference, privilege or power
----------------------
of, or restriction provided for the benefit of, the Series A Preferred set forth
herein may be amended and the observance thereof may be waived (either generally
or in a particular instance and either retroactively or prospectively) with the
written consent of the Company and the affirmative vote or written consent of
the holders of not less than a majority of the shares of Series A Preferred then
outstanding, and any amendment or waiver so effected shall be binding upon the
Company and all holders of Series A Preferred.
-5-
<PAGE>
* * *
RESOLVED FURTHER, that the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President, and the Secretary, the
Chief Financial Officer or any Assistant Secretary or Assistant
Treasurer of the corporation are each authorized to execute,
acknowledge, file and record a certificate of designation for the
Series A Preferred in accordance with Section 103 of the Delaware
General Corporation Law."
IN WITNESS WHEREOF, the undersigned have executed this Certificate and do
affirm under penalty of perjury that the foregoing is the act and deed of the
corporation and that the facts stated herein are true as of this 8th day of
July, 1998.
/s/ Paul D. Quadros
----------------------------------------
Paul D. Quadros, Chief Executive Officer
ATTEST:
/s/ Robert E. Sobol
- --------------------------
Robert E. Sobol, Secretary
[SIGNATURE PAGE TO SERIES A PREFERRED STOCK CERTIFICATE OF DESIGNATION]
-6-
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SERIES B PREFERRED STOCK OF
UROGEN CORP.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
The undersigned, Paul D. Quadros, Chief Executive Officer, and Robert E.
Sobol, Secretary, of Urogen Corp., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company") in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, the Board of Directors at a meeting
duly held on June 16, 1998 and by unanimous written consent dated June 30, 1998,
adopted the following resolutions, creating a series of 10,000 shares of
Preferred Stock designated as Series B Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company (the "Board") in accordance with the provisions of
its Certificate of Incorporation, a series of Preferred Stock of the
Company be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, are as follows:
1. Designation. This series of Preferred Stock shall be designated
-----------
Series B Preferred Stock, $0.01 par value (the "Series B Preferred").
2. Authorized Number. The number of shares constituting the Series
-----------------
B Preferred shall be Ten Thousand (10,000) shares.
<PAGE>
3. Dividends. The holders of the Series B Preferred shall not be
---------
entitled to receive any dividends with respect to such Series B Preferred.
4. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution, or winding up of the Company, either voluntary or involuntary,
distributions to the stockholders of the Company shall be made in the following
manner:
(a) The holders of the Series B Preferred shall be entitled to
receive, ratably with the holders of any other series of Preferred Stock with
Parity Rights (as defined in Section 5(a)) as to liquidation preferences based
on their respective preference amounts (which, in the case of the Series B
Preferred, shall include any amounts owing in respect of declared and unpaid
dividends), prior and in preference to any distribution of any of the assets or
funds of the Company to the holders of the Series A Preferred or Common Stock
(or any other securities of the Company ranking junior to the Series B Preferred
as to liquidation preferences), the preference amount of One Thousand Dollars
($1,000) per share in cash for each share of Series B Preferred then held by
such holders of Series B Preferred (subject to appropriate adjustments for stock
splits, stock dividends, combinations or other recapitalizations (each a
"Recapitalization")) plus an amount equal to all declared but unpaid dividends
on the Series B Preferred as of the date of liquidation, dissolution or winding
up. If the assets and funds thus distributed among the holders of the Series B
Preferred and of any other series of Preferred Stock with Parity Rights as to
liquidation preferences are insufficient to permit the payment to such holders
of the full preferential amount described above, then the entire assets and
funds of the Company legally available for distribution shall be distributed
among the holders of the Series B Preferred and of any other series of Preferred
Stock with Parity Rights as to liquidation preferences in the proportion that
the aggregate preferential amount of shares of Series B Preferred and of any
other series of Preferred Stock with Parity Rights as to liquidation preferences
held by each such holder bears to the aggregate preferential amount of all
shares of Series B Preferred and of any other series of Preferred Stock with
Parity Rights as to liquidation preferences. After payment has been made to the
holders of the Series B Preferred and of any other series of Preferred Stock
with Parity Rights as to liquidation preferences of the full amounts to which
they are entitled, no further amounts shall be paid with respect to the Series B
Preferred, and the remaining assets of the Company shall be distributed among
the holders of the Common Stock (and other junior securities with regard to
liquidation preferences) in accordance with the Certificate of Incorporation and
applicable law.
(b) For purposes of this Section 4, a sale of all or
substantially all of the Company's assets or the acquisition of the Company by
another entity by means of a merger or consolidation resulting in the exchange
of the outstanding shares of the Company for securities or consideration issued,
or caused to be issued, by the acquiring entity in which the holders of capital
stock of the Company hold less than 50% of the voting securities of the
acquiring corporation (each a "Reorganization"), shall not be treated as a
liquidation, dissolution or winding up of the Company (unless in connection
therewith, the liquidation, dissolution or winding up of the Company is
specifically approved), but shall be treated as provided in Section 7(e) hereof.
-2-
<PAGE>
5. Provisions Generally Applicable to Dividends and Liquidation.
------------------------------------------------------------
(a) The term "Parity Rights," as used in this Certificate of
Designation, shall mean dividend rights and liquidation preferences of the
Company's Series B Preferred and Series C Preferred and of any other series of
Preferred Stock of the Company which have preferences upon any liquidation,
dissolution, or winding up of the Company or rights with respect to the
declaration, payment and setting aside of dividends on a parity with those of
the Series B Preferred and Series C Preferred.
(b) Except as provided in Section 8, the Company will not, by
amendment of its Certificate of Incorporation or through any Reorganization,
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 Company, but will at all times in good faith
assist in the carrying out of all the provisions of Section 3 and 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the dividend and liquidation rights of the holders of the Series B Preferred
against impairment; provided, however, that nothing herein will prevent the
-------- -------
Company from creating any new series of Preferred Stock with higher dividend
rates or liquidation payments so long as the priority of such rights is not
senior to the rights of the Series B Preferred.
6. Voting Rights. Except as otherwise required by law or by Section
-------------
8 hereof, the holder of each share of Series B Preferred shall not possess any
voting rights with respect to such shares. To the extent any such vote is
required, fractional votes by the holders of Series B Preferred shall not be
permitted, and any fractional voting rights shall (after aggregating all shares
into which shares of Series B Preferred held by each holder could be converted)
be rounded down to the nearest whole number. Holders of Series B Preferred
shall be entitled to receive the same notice of any stockholders' meeting as is
provided to holders of Common Stock. In addition, the Company will, or will
cause the registrar to, transmit to the registered holders of the Series B
Preferred all reports and communications from the Company that are generally
mailed to holders of its Common Stock.
7. Conversion. The Series B Preferred shall be subject to the
----------
following conversion provisions:
(a) Automatic Conversion. Each share of Series B Preferred
--------------------
outstanding shall automatically be converted without the payment of additional
consideration into fully paid and nonassessable shares of Common Stock or Series
A Preferred Stock (at the option of the holder thereof) pursuant to the
provisions of Section 7(b) hereof upon the earlier of (i) the first business day
following the treatment of the first patient under an Initial New Drug
Application for a Collaboration Product (as defined in that certain
Developmental Collaboration Agreement between Baxter Healthcare Corporation
("Baxter") and the Company dated June 30, 1998) commences in a Phase I Clinical
Trial (the "IND Milestone Date"), (ii) the date five years after the last
advance of funds by Baxter under the Credit Agreement between Baxter and the
Company (the "Credit Agreement") through and including the IND Milestone Date
and (iii) automatic conversion pursuant to the terms
-3-
<PAGE>
of the Credit Agreement (the date of any such event, "Conversion Date"). All
rights with respect to shares of Series B Preferred outstanding on the
Conversion Date shall forthwith after the Conversion Date terminate, except only
the right of the holders of such shares to receive shares of Common Stock or
Series A Preferred Stock ("Series A Preferred") upon surrender of their
certificates for the Series B Preferred.
(b) Conversion Price. Should the holder of Series B Preferred
----------------
elect to convert to Common Stock pursuant to the automatic conversion provisions
of Section 7(a), the number of shares of Common Stock which shall be deliverable
upon conversion shall be that number of shares equal to (a) the quotient of (i)
the Liquidation Value (as adjusted for Recapitalizations), divided by (ii) one
hundred and ten percent (110%) of the per share Fair Market Value of the
Company's Common Stock, multiplied by (b) the number of shares of Series B
Preferred so converted. If the holder of Series B Preferred elects to convert to
Series A Preferred pursuant to the automatic conversion provisions of Section
7(a), the number of shares of Series A Preferred received shall be equal to the
number of shares of Series B Preferred being converted. The "Liquidation Value"
shall initially be $1,000 per share of Series B Preferred. "Fair Market Value"
of the Common Stock shall mean the average Market Price of a share of the Common
Stock (adjusted for Recapitalizations occurring during such period) for the
thirty (30) consecutive trading days ending two days prior to the Conversion
Date. As used herein, the term "Market Price" of a share of Common Stock on any
date shall mean: (i) the last reported sales price of the Common Stock on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if no such reported sale takes place on such date, the
average of the closing bid and asked prices thereon, as reported in The Wall
--------
Street Journal, or (ii) if the Common Stock shall not be listed or admitted to
- --------------
trading on a national securities exchange, the last reported sales price on the
NASDAQ National Market System or, if no such reported sale takes place on any
such date, the average of the closing bid and asked prices thereon, as reported
in The Wall Street Journal, or (iii) if the Common Stock shall not be quoted on
-----------------------
such National Market System nor listed or admitted to trading on a national
securities exchange then the average of the closing bid and asked prices, as
reported by The Wall Street Journal for the over-the-counter market. In the
-----------------------
absence of an established trading market for the Company's Common Stock, the
Fair Market Value of the Common Stock as of the Conversion Date shall be as
determined by a nationally recognized investment banking or appraisal firm and
pursuant to a method of appraisal mutually agreeable to a majority of the
holders of Series B Preferred and the Company. The cost of retaining any such
firm shall be borne equally by the holders of Series B Preferred and the
Company.
(c) Unpaid Dividends and Fractional Shares.
--------------------------------------
(i) Any declared but unpaid dividends upon the Series B
Preferred as of the Conversion Date shall be paid or distributed upon such
conversion or as soon thereafter as permitted by law.
(ii) No fractional shares of Common Stock or Series A
Preferred shall be issued upon conversion of Series B Preferred. In lieu of any
fractional shares to which the
-4-
<PAGE>
holder would otherwise be entitled, the Company shall, after aggregation of all
fractional share interests held by each holder, pay cash equal to such remaining
fractional interest multiplied by the conversion price of the Series B
Preferred.
(d) Mechanics of Conversion. Before any holder of Series B
-----------------------
Preferred shall be entitled to receive certificates of Common Stock or Series A
Preferred upon conversion of the Series B Preferred, such holder shall surrender
the certificate or certificates for the Series B Preferred to be converted, duly
endorsed, at the office of the Company or of any transfer agent for the Series B
Preferred. The Company shall, as soon as practicable after such delivery, issue
and deliver to such holder of Series B Preferred (or to any other person
specified in the notice delivered by such holder) a certificate or certificates
for the number of shares of Common Stock or Series A Preferred to which such
holder shall be entitled as aforesaid and a check payable to the holder for any
cash amounts payable. Notwithstanding any such delivery, such conversion shall
be deemed to have been made immediately prior to the opening of business on the
Conversion Date pursuant to Section 7(a), and the person or persons entitled,
upon proper delivery, to receive the shares of Common Stock or Series A
Preferred issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock or Series A Preferred on
such date. Notwithstanding the foregoing, the Company shall not be obligated to
issue certificates evidencing the shares of Common Stock or Series A Preferred
issuable upon such conversion unless the certificates evidencing Series B
Preferred are either delivered to the Company or its transfer agent, or the
holder notifies the Company or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement (and posts any
requested bond or security) satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection with such certificates. The issuance
of certificates for shares of Common Stock or Series A Preferred issuable upon
conversion of shares of Series B Preferred shall be made without charge to the
converting holder for any tax imposed in respect of the issuance thereof;
provided that the Company shall not be required to pay any additional tax which
- --------
may be payable with respect to any transfer involved in the issue and delivery
of any certificate in a name other than that of the holder of the shares of
Series B Preferred being converted.
(e) Certain Reorganizations. In the event of any change,
-----------------------
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company, whether pursuant to a Reorganization or otherwise,
the shares of Series B Preferred shall, after such Reorganization or other
transaction, be convertible thereafter pursuant to this Section 7 into the kind
and amounts of stock or other securities or property of the Company or
otherwise, to which such holder would have been entitled if immediately prior to
such event the Series B Preferred had been converted into Common Stock pursuant
to Section 7(a). The provisions of this Section 7(e) shall similarly apply to
successive changes, reclassifications, conversions, exchanges or cancellations.
(f) No Impairment. Except as provided in Section 8, the Company
-------------
will not, by amendment of its Certificate of Incorporation or through any
Reorganization, other transfer of assets, 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
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this
-5-
<PAGE>
Section 7 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series B Preferred against impairment.
(g) Calculation of Conversion Price. All calculations under
-------------------------------
this Section 7 shall be made by the Company and shall be made to the nearest
cent or to the nearest one hundredth of a share, as the case may be.
(h) No Other Conversion Rights. The holders of Series B
--------------------------
Preferred shall have no rights of conversion other than as specifically set
forth herein.
8. Additional Voting Rights.
------------------------
(a) Class Voting upon Certain Events. In addition to such other
--------------------------------
vote as may be required by law or provided by this Certificate of Designation,
or the resolution creating this series of Preferred Stock, the consent of the
holders of at least a majority of the shares of the Series B Preferred at the
time outstanding, voting together as a single class, shall be necessary for
effecting or validating any issuance of additional shares of Series B Preferred.
(b) Written Consent. Any action which may be taken by the
---------------
holders of the Series B Preferred pursuant to this Section 8 at any annual or
special meeting of such holders may be taken without a meeting if written
consents setting forth such action are signed by the holders of shares of Series
B Preferred entitled to vote on such matters having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
9. Status of Converted Shares. Shares of Series B Preferred
--------------------------
converted pursuant to Section 7 shall be canceled and no longer constitute
authorized shares.
10. Covenants. So long as any shares of Series B Preferred or Series
---------
C Preferred remain outstanding:
(a) The Company shall not, without the vote or written consent
by the holders of a majority of the then outstanding shares of Series B
Preferred and Series C Preferred, voting together as a single class, redeem,
purchase or otherwise acquire (or pay into or set aside for a sinking fund for
such purpose) any of the Company's capital stock; provided, however, that this
restriction shall not apply to the repurchase of shares of Common Stock from
employees, officers, directors, consultants or other persons performing services
for the Company or any subsidiary pursuant to agreements under which the Company
has the option to repurchase such shares upon the occurrence of certain events,
such as the termination of employment; and
(b) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock and Series A
Preferred, solely for the purpose of effecting the conversion of the shares of
the Series A Preferred, Series B Preferred and Series C Preferred, such number
of its shares of Common Stock and Series A Preferred as shall from time to
-6-
<PAGE>
time be sufficient to effect the conversion of all outstanding shares of the
Series A Preferred, Series B Preferred and Series C Preferred; and if at any
time the number of authorized but unissued shares of Common Stock or Series A
Preferred shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred, Series B Preferred and Series C
Preferred, the Company will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock and/or Series A Preferred to such number of shares as shall be
sufficient for such purpose, including, without limitation, engaging in
commercially reasonable efforts to obtain the requisite stockholder approval of
any necessary amendment to the Company's Certificate of Incorporation.
11. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, certified or registered mail, postage prepaid, express
courier or when sent by telex or telecopier (with receipt confirmed, provided a
copy is also sent by first class mail), addressed (i) in the case of a holder of
Series B Preferred, to such holder's address of record, and (ii) in the case of
the Company, to the Company's principal executive office to the attention of the
Company's secretary.
12. Amendments and Waivers. Subject to Section 8, any right,
----------------------
preference, privilege or power of, or restriction provided for the benefit of,
the Series B Preferred set forth herein may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) with the written consent of the Company and the
affirmative vote or written consent of the holders of not less than a majority
of the shares of Series B Preferred then outstanding, and any amendment or
waiver so effected shall be binding upon the Company and all holders of Series B
Preferred.
-7-
<PAGE>
* * *
RESOLVED FURTHER, that the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President, and the Secretary, the
Chief Financial Officer or any Assistant Secretary or Assistant
Treasurer of the corporation are each authorized to execute,
acknowledge, file and record a certificate of designation for the
Series B Preferred in accordance with Section 103 of the Delaware
General Corporation Law."
IN WITNESS WHEREOF, the undersigned have executed this Certificate and do
affirm under penalty of perjury that the foregoing is the act and deed of the
corporation and that the facts stated herein are true as of this 8th day of
July, 1998.
/s/ Paul D. Quadros
----------------------------------------
Paul D. Quadros, Chief Executive Officer
ATTEST:
/s/ Robert E. Sobol
- --------------------------
Robert E. Sobol, Secretary
[SIGNATURE PAGE TO SERIES B PREFERRED STOCK CERTIFICATE OF DESIGNATION]
-8-
<PAGE>
EXHIBIT 4.3
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SERIES C PREFERRED STOCK OF
UROGEN CORP.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
The undersigned, Paul D. Quadros, Chief Executive Officer, and Robert E.
Sobol, Secretary, of Urogen Corp., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Company") in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, the Board of Directors at a meeting
duly held on June 16, 1998 and by unanimous written consent dated June 30, 1998,
adopted the following resolutions, creating a series of 17,000 shares of
Preferred Stock designated as Series C Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company (the "Board") in accordance with the provisions of
its Certificate of Incorporation, a series of Preferred Stock of the
Company be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, are as follows:
1. Designation. This series of Preferred Stock shall be designated
-----------
Series C Preferred Stock, $0.01 par value (the "Series C Preferred").
2. Authorized Number. The number of shares constituting the Series
-----------------
C Preferred shall be Seventeen Thousand (17,000) shares.
<PAGE>
3. Dividends. The holders of the Series C Preferred shall not be
---------
entitled to receive any dividends with respect to such Series C Preferred.
4. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution, or winding up of the Company, either voluntary or involuntary,
distributions to the stockholders of the Company shall be made in the following
manner:
(a) The holders of the Series C Preferred shall be entitled to
receive, ratably with the holders of any other series of Preferred Stock with
Parity Rights (as defined in Section 5(a)) as to liquidation preferences based
on their respective preference amounts (which, in the case of the Series C
Preferred, shall include any amounts owing in respect of declared and unpaid
dividends), prior and in preference to any distribution of any of the assets or
funds of the Company to the holders of the Series A Preferred or Common Stock
(or any other securities of the Company ranking junior to the Series C Preferred
as to liquidation preferences), the preference amount of One Thousand Dollars
($1,000) per share in cash for each share of Series C Preferred then held by
such holders of Series C Preferred (subject to appropriate adjustments for stock
splits, stock dividends, combinations or other recapitalizations (each a
"Recapitalization")), plus an amount equal to all declared but unpaid dividends
on the Series C Preferred as of the date of liquidation, dissolution or winding
up. If the assets and funds thus distributed among the holders of the Series C
Preferred and of any other series of Preferred Stock with Parity Rights as to
liquidation preferences are insufficient to permit the payment to such holders
of the full preferential amount described above, then the entire assets and
funds of the Company legally available for distribution shall be distributed
among the holders of the Series C Preferred and of any other series of Preferred
Stock with Parity Rights as to liquidation preferences in the proportion that
the aggregate preferential amount of shares of Series C Preferred and of any
other series of Preferred Stock with Parity Rights as to liquidation preferences
held by each such holder bears to the aggregate preferential amount of all
shares of Series C Preferred and of any other series of Preferred Stock with
Parity Rights as to liquidation preferences. After payment has been made to the
holders of the Series C Preferred and of any other series of Preferred Stock
with Parity Rights as to liquidation preferences of the full amounts to which
they are entitled, no further amounts shall be paid with respect to the Series C
Preferred, and the remaining assets of the Company shall be distributed among
the holders of the Common Stock (and other junior securities with regard to
liquidation preferences) in accordance with the Certificate of Incorporation and
applicable law.
(b) For purposes of this Section 4, sale of all or substantially
all of the Company's assets or the acquisition of the Company by another entity
by means of merger or consolidation resulting in the exchange of the outstanding
shares of the Company for securities or consideration issued, or caused to be
issued, by the acquiring entity in which the holders of capital stock of the
Company hold less than 50% of the voting securities of the acquiring corporation
(each a "Reorganization"), shall not be treated as a liquidation, dissolution or
winding up of the Company (unless in connection therewith, the liquidation,
dissolution or winding up of the Company is specifically approved), but shall be
treated as provided in Section 7(e) hereof.
-2-
<PAGE>
5. Provisions Generally Applicable to Dividends and Liquidation.
------------------------------------------------------------
(a) The term "Parity Rights," as used in this Certificate of
Designation, shall mean dividend rights and liquidation preferences of the
Company's Series B Preferred Stock and Series C Preferred and of any other
series of Preferred Stock of the Company which have preferences upon any
liquidation, dissolution, or winding up of the Company or rights with respect to
the declaration, payment and setting aside of dividends on a parity with those
of the Series B Preferred Stock and Series C Preferred.
(b) Except as provided in Section 8, the Company will not, by
amendment of its Certificate of Incorporation or through any Reorganization,
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 Company, but will at all times in good faith
assist in the carrying out of all the provisions of Section 3 and 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the dividend and liquidation rights of the holders of the Series C Preferred
against impairment; provided, however, that nothing herein will prevent the
-------- -------
Company from creating any new series of Preferred Stock with higher dividend
rates or liquidation payments so long as the priority of such rights is not
senior to the rights of the Series C Preferred.
6. Voting Rights. Except as otherwise required by law or by Section
-------------
8 hereof, the holder of each share of Series C Preferred shall not possess any
voting rights with respect to such shares. To the extent any such vote is
required, fractional votes by the holders of Series C Preferred shall not be
permitted, and any fractional voting rights shall (after aggregating all shares
into which shares of Series C Preferred held by each holder could be converted)
be rounded down to the nearest whole number. Holders of Series C Preferred
shall be entitled to receive the same notice of any stockholders' meeting as is
provided to holders of Common Stock. In addition, the Company will, or will
cause the registrar to, transmit to the registered holders of the Series C
Preferred all reports and communications from the Company that are generally
mailed to holders of its Common Stock.
7. Conversion. The Series C Preferred shall be subject to the
----------
following conversion provisions:
(a) Automatic Conversion. Each share of Series C Preferred
--------------------
outstanding shall automatically be converted without the payment of additional
consideration into fully paid and nonassessable shares of Common Stock or Series
A Preferred Stock (at the option of the holder thereof) pursuant to the
provisions of Section 7(b) hereof upon the earlier of (i) the first business day
following the approval by the United States Food and Drug Administration ("FDA")
of the right to market, sell or distribute any product using the Mini-Ad Vector
Technology (the "Technology") for the treatment of blood clotting disorders in
humans relating to hemophilia A, which has been developed pursuant to that
certain Developmental Collaboration Agreement between Baxter Healthcare
Corporation and the Company dated June 30, 1998 (the "Development Agreement"),
and (ii) the date seven years after the achievement of the most recently
achieved "Series C Milestone"
-3-
<PAGE>
such that the calculation of such seven year period shall begin again if another
Series C Milestone is achieved before expiration of such seven year period.
"Series C Milestone" shall mean any of (X) the IND Milestone (as defined in the
Development Agreement ), (Y) commencement of Phase III clinical trials of the
Technology with respect to Collaboration Product(s) (as defined in the
Development Agreement), and (Z) FDA approval of the first product license
application of Collaboration Product(s)) (the "Conversion Date"). All rights
with respect to shares of Series C Preferred outstanding on the Conversion Date
shall forthwith after the Conversion Date terminate, except only the right of
the holders of such shares to receive shares of Common Stock or Series A
Preferred Stock ("Series A Preferred") upon surrender of their certificates for
the Series C Preferred.
(b) Conversion Price. Should the holder of Series C Preferred
----------------
elect to convert to Common Stock pursuant to the automatic conversion provisions
of Section 7(a), the number of shares of Common Stock which shall be deliverable
upon conversion shall be that number of shares equal to (a) the quotient of (i)
the Liquidated Value (as adjusted for Recapitalizations), divided by (ii) one
hundred and ten percent (110%) of the per share Fair Market Value of the
Company's Common Stock, multiplied by (b) the number of shares of Series C
Preferred so converted. If the holder of Series C Preferred elects to convert to
Series A Preferred pursuant to the automatic conversion provisions of Section
7(a), the number of shares of Series A Preferred received shall be equal to the
number of shares of Series C Preferred being converted. The "Liquidation Value"
shall initially be $1,000 per share of Series C Preferred. "Fair Market Value"
of the Common Stock shall mean the average Market Price of a share of the Common
Stock (adjusted for Recapitalizations occurring during such period) for the
thirty (30) consecutive trading days ending two days prior to the Conversion
Date. As used herein, the term "Market Price" of a share of Common Stock on any
date shall mean: (i) the last reported sales price of the Common Stock on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if no such reported sale takes place on such date, the
average of the closing bid and asked prices thereon, as reported in The Wall
--------
Street Journal, or (ii) if the Common Stock shall not be listed or admitted to
- --------------
trading on a national securities exchange, the last reported sales price on the
NASDAQ National Market System or, if no such reported sale takes place on any
such date, the average of the closing bid and asked prices thereon, as reported
in The Wall Street Journal, or (iii) if the Common Stock shall not be quoted on
-----------------------
such National Market System nor listed or admitted to trading on a national
securities exchange then the average of the closing bid and asked prices, as
reported by The Wall Street Journal for the over-the-counter market. In the
-----------------------
absence of an established trading market for the Company's Common Stock, the
Fair Market Value of the Common Stock as of the Conversion Date shall be as
determined by a nationally recognized investment banking or appraisal firm and
pursuant to a method of appraisal mutually agreeable to a majority of the
holders of Series C Preferred and the Company. The cost of retaining any such
firm shall be borne equally by the holders of Series C Preferred and the
Company.
-4-
<PAGE>
(c) Unpaid Dividends and Fractional Shares.
--------------------------------------
(i) Any declared but unpaid dividends upon the Series C
Preferred as of the Conversion Date shall be paid or distributed upon such
conversion or as soon thereafter as permitted by law.
(ii) No fractional shares of Common Stock or Series A
Preferred shall be issued upon conversion of Series C Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall, after aggregation of all fractional share interests held by each holder,
pay cash equal to such remaining fractional interest multiplied by the
conversion price of the Series C Preferred.
(d) Mechanics of Conversion. Before any holder of Series C
-----------------------
Preferred shall be entitled to receive certificates of Common Stock or Series A
Preferred upon conversion of the Series C Preferred, such holder shall surrender
the certificate or certificates for the Series C Preferred to be converted, duly
endorsed, at the office of the Company or of any transfer agent for the Series C
Preferred. The Company shall, as soon as practicable after such delivery, issue
and deliver to such holder of Series C Preferred (or to any other person
specified in the notice delivered by such holder) a certificate or certificates
for the number of shares of Common Stock or Series A Preferred to which such
holder shall be entitled as aforesaid and a check payable to the holder for any
cash amounts payable. Notwithstanding any such delivery, such conversion shall
be deemed to have been made immediately prior to the opening of business on the
Conversion Date pursuant to Section 7(a), and the person or persons entitled,
upon proper delivery, to receive the shares of Common Stock or Series A
Preferred issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock or Series A Preferred on
such date. Notwithstanding the foregoing, the Company shall not be obligated to
issue certificates evidencing the shares of Common Stock or Series A Preferred
issuable upon such conversion unless the certificates evidencing Series C
Preferred are either delivered to the Company or its transfer agent, or the
holder notifies the Company or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement (and posts any
requested bond or security) satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection with such certificates. The issuance
of certificates for shares of Common Stock or Series A Preferred issuable upon
conversion of shares of Series C Preferred shall be made without charge to the
converting holder for any tax imposed in respect of the issuance thereof;
provided that the Company shall not be required to pay any additional tax which
- --------
may be payable with respect to any transfer involved in the issue and delivery
of any certificate in a name other than that of the holder of the shares of
Series C Preferred being converted.
(e) Certain Reorganizations. In the event of any change,
-----------------------
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company, whether pursuant to a Reorganization or otherwise,
the shares of Series C Preferred shall, after such Reorganization or other
transaction, be convertible thereafter pursuant to this Section 7 into the kind
and amounts of stock or other securities or property of the Company or
otherwise, to which such holder would have been entitled if immediately prior to
such event the Series C Preferred had been
-5-
<PAGE>
converted into Common Stock pursuant to Section 7(a). The provisions of this
Section 7(e) shall similarly apply to successive changes, reclassifications,
conversions, exchanges or cancellations.
(f) No Impairment. Except as provided in Section 8, the Company
-------------
will not, by amendment of its Certificate of Incorporation or through any
Reorganization, other transfer of assets, 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
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 7 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series C Preferred against impairment.
(g) Calculation of Conversion Price. All calculations under
-------------------------------
this Section 7 shall be made by the Company and shall be made to the nearest
cent or to the nearest one hundredth of a share, as the case may be.
(h) No Other Conversion Rights. The holders of Series C
--------------------------
Preferred shall have no rights of conversion other than as specifically set
forth herein.
8. Additional Voting Rights.
------------------------
(a) Class Voting upon Certain Events. In addition to such other
--------------------------------
vote as may be required by law or provided by this Certificate of Designation,
or the resolution creating this series of Preferred Stock, the consent of the
holders of at least a majority of the shares of the Series C Preferred at the
time outstanding, voting together as a single class, shall be necessary for
effecting or validating any issuance of additional shares of Series C Preferred.
(b) Written Consent. Any action which may be taken by the
---------------
holders of the Series C Preferred pursuant to this Section 8 at any annual or
special meeting of such holders may be taken without a meeting if written
consents setting forth such action are signed by the holders of shares of Series
C Preferred entitled to vote on such matters having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
9. Status of Converted Shares. Shares of Series C Preferred
--------------------------
converted pursuant to Section 7 shall be canceled and no longer constitute
authorized shares.
10. Covenants. So long as any shares of Series B Preferred or Series
---------
C Preferred remain outstanding:
(a) The Company shall not, without the vote or written consent
by the holders of a majority of the then outstanding shares of Series B
Preferred and Series C Preferred, voting together as a single class, redeem,
purchase or otherwise acquire (or pay into or set aside for a sinking fund for
such purpose) any of the Company's capital stock; provided, however, that this
restriction shall not apply to the repurchase of shares of Common Stock from
employees, officers,
-6-
<PAGE>
directors, consultants or other persons performing services for the Company or
any subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares upon the occurrence of certain events, such as the
termination of employment; and
(b) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock and Series A
Preferred, solely for the purpose of effecting the conversion of the shares of
the Series A Preferred, Series B Preferred and Series C Preferred, such number
of its shares of Common Stock and Series A Preferred as shall from time to time
be sufficient to effect the conversion of all outstanding shares of the Series A
Preferred, Series B Preferred and Series C Preferred; and if at any time the
number of authorized but unissued shares of Common Stock or Series A Preferred
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred, Series B Preferred and Series C Preferred, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock
and/or Series A Preferred to such number of shares as shall be sufficient for
such purpose, including, without limitation, engaging in commercially reasonable
efforts to obtain the requisite stockholder approval of any necessary amendment
to the Company's Certificate of Incorporation.
11. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, certified or registered mail, postage prepaid, express
courier or when sent by telex or telecopier (with receipt confirmed, provided a
copy is also sent by first class mail), addressed (i) in the case of a holder of
Series C Preferred, to such holder's address of record, and (ii) in the case of
the Company, to the Company's principal executive office to the attention of the
Company's secretary.
12. Amendments and Waivers. Subject to Section 8, any right,
----------------------
preference, privilege or power of, or restriction provided for the benefit of,
the Series C Preferred set forth herein may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) with the written consent of the Company and the
affirmative vote or written consent of the holders of not less than a majority
of the shares of Series C Preferred then outstanding, and any amendment or
waiver so effected shall be binding upon the Company and all holders of Series C
Preferred.
-7-
<PAGE>
* * *
RESOLVED FURTHER, that the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President, and the Secretary, the
Chief Financial Officer or any Assistant Secretary or Assistant
Treasurer of the corporation are each authorized to execute,
acknowledge, file and record a certificate of designation for the
Series C Preferred in accordance with Section 103 of the Delaware
General Corporation Law."
IN WITNESS WHEREOF, the undersigned have executed this Certificate and do
affirm under penalty of perjury that the foregoing is the act and deed of the
corporation and that the facts stated herein are true as of this 8th day of
July, 1998.
/s/ Paul D. Quadros
----------------------------------------
Paul D. Quadros, Chief Executive Officer
ATTEST:
/s/ Robert E. Sobol
- --------------------------
Robert E. Sobol, Secretary
[SIGNATURE PAGE TO SERIES C PREFERRED STOCK CERTIFICATE OF DESIGNATION]
-8-
