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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission File Number 0-27264
UROGEN CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0687976
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
10835 ALTMAN ROW, SUITE 150, SAN DIEGO, CA, 92121
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 450-5949
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form-K. [X]
The number of shares of the Common Stock of the registrant outstanding as of
March 24, 1999, was 9,403,638. The number of shares of Common Stock held by
nonaffiliates on such date was approximately 7,993,638 with an estimated value
of $2,637,901, based on the closing price of the Company's Common Stock on the
over-the-counter on March 24, 1999.
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This amendment is being filed to include exhibits listed in Item 14 which were
not previously filed.
PART IV
ITEM. 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON 8-K
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(A) INDEX TO FINANCIAL STATEMENTS PAGE
<S> <C>
1. Historical Financial Statements
Report of Ernst & Young LLP, Independent Auditors..................................... 31
Consolidated Balance Sheets at December 31, 1998 and 1997 ............................ 32
Consolidated Statements of Operations for the years ended
December 31, 1998, 1997, and 1996 and the period
from July 1, 1991 (inception) to December 31, 1998.................................. 33
Consolidated Statement of Stockholders'/Division Equity
for the period from July 1, 1991 (inception) to
December 31, 1998................................................................... 34
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997, and 1996 and the period
from July 1, 1991 (inception) to December 31, 1998 ................................. 35
Notes to Consolidated Financial Statements ........................................... 36
2. Schedules to Financial Statements
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All schedules are omitted because they are not applicable or the required
information is include in the financial statements or notes thereto.
(B) REPORTS ON FORM 8-K
On July 23, 1998 UroGen filed Current Report on Form 8-K dated reporting under
Item 2 the acquisition of certain intellectual property, tangible property and
other assets from Baxter Healthcare Corporation.
(C) EXHIBITS
Exhibit No. DESCRIPTION
2.1 Distribution Agreement between the Company and Medstone
International Inc. (1)
2.2 Asset Purchase Agreement, dated as of February 28, 1998, UroGen
and Baxter Healthcare Corporation (2)
2.3 Amendment to Asset Purchase Agreement, dated as of May 27, 1998,
between UroGen and Baxter. (2)
3.1 Certificate of Incorporation of the Company (1)
3.2 Bylaws of the Company (1)
3.3 Certificate of Designation of Preferences and Rights of Series A
Preferred Stock of UroGen. (2)
3.4 Certificate of Designation of Preferences and Rights of Series B
Preferred Stock of UroGen. (2)
3.5 Certificate of Designation of Preferences and Rights of Series C
Preferred Stock of UroGen. (2)
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10.1 Contribution Agreement between the Company and Medstone
International, Inc. dated October 31, 1995 (1)
10.2 Form of Indemnification Agreement (1)
10.3 UroGen Corp. 1995 Stock Plan (1)
10.4 UroGen Corp. 1995 Director Option Plan (1)
10.5 License Agreement, dated March 5, 1997, between UroGen and The
Immune Response Corporation.
10.6 Amendment to License Agreement, dated January 29, 1999, between
UroGen and The Immune Response Corporation.
10.7 License Agreement, dated November 5, 1997, by and among UroGen,
Sidney Kimmel Cancer Center and Daniel A. Mercola, M.D., Ph.D.
10.8 License Agreement, dated September 20, 1996 between UroGen and
The Regents of the University of California.
10.9 Form of Note and Warrant Purchase Agreement, dated July 8,
1998 between UroGen and various investors.
10.10 Warrant Certificate, dated July 31, 1997, between UroGen and
Robert E. Sobol.
10.11 Distribution Agreement, dated July 8, 1998, by and among UroGen
and Baxter. (2)
10.12 Investor Rights Agreement, dated July 8, 1998, between UroGen and
Baxter. (2)
10.13 Developmental Collaboration Agreement, dated July 8, 1998 between
UroGen and Baxter. (2)
10.14 Credit Agreement, dated July 8, 1998, between UroGen and Baxter.
(2)
10.15 Technology License Agreement, dated July 8, 1998, between UroGen
and Baxter. (2)
23 Consent of Ernst & Young LLP, Independent Auditors (3)
27 Financial Data Schedule (3)
_________________
(1) Previously filed with the Company's Application for Registration on Form
10-SB dated February 9, 1996.
(2) Previously filed with the Company's Current Report on Form 8-K dated
July 23, 1998.
(3) Previously filed with the Company's Annual Report on Form 10-KSB dated
March 31, 1999.
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EXHIBIT 10.5
LICENSE AGREEMENT
-----------------
THIS LICENSE AGREEMENT dated as of March 5, 1997 (the "Agreement"), is
entered into between THE IMMUNE RESPONSE CORPORATION, a Delaware corporation
("IRC"), having a place of business located at 5935 Darwin Court, Carlsbad,
California 92008, and UROGEN CORP., a Delaware corporation ("UroGen"), having a
place of business located at 3099 Science Park Road, San Diego, California
92121.
W I T N E S S E T H :
WHEREAS, IRC has rights under the Regents License Agreement (as defined
below) in a certain invention, generally characterized as "Tumor Sensitization
by Gene Therapy," created in the course of research at the University of
California, Los Angeles by William McBride.
WHEREAS, UroGen desires to obtain an exclusive license under IRC's rights
in such invention to develop and commercialize Licensed Products (as defined
below) for use in the field of tumors of the urogenital system, excluding the
ovaries.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
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For purposes of the Agreement, the terms defined in this Article 1 shall
have the respective meanings set forth below:
1.1 "Affiliate" shall mean, with respect to any Person, any other Person
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which directly or indirectly controls, is controlled by, or is under common
control with, such Person. A Person shall be regarded as in control of another
Person if it owns, or directly or indirectly controls, at least fifty percent
(50%) of the voting stock or other ownership interest of the other Person, or if
it directly or indirectly possesses the power to direct or cause the direction
of the management and policies of the other Person by any means whatsoever.
1.2 "FDA" shall mean the United States Food and Drug Administration, or the
---
successor thereto.
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1.3 "Field" shall mean the prevention and treatment of tumors of the
-----
urogenital system, excluding the ovaries, in humans.
1.4 "First Commercial Sale" shall mean, with respect to any Licensed
---------------------
Product, the first sale for use or consumption by the general public of such
Licensed Product; and with respect to any Licensed Method, the first practice of
a procedure utilizing such Licensed Method on a patient from the general public.
1.5 "Licensed Method" shall mean any process or method which is claimed in
---------------
the Licensed Patent Rights or whose use or practice would constitute an
infringement of any claim within the Licensed Patent Rights.
1.6 "Licensed Patent Rights" shall mean (a) all patent applications listed
----------------------
on Appendix A hereto and all foreign counterparts thereto which are owned by or
licensed to IRC; (b) all patents that have issued or in the future issue
therefrom, including utility, model and design patents and certificates of
invention; and (c) all divisionals, continuations, continuations-in-part (but
excluding any continuation-in-part application except to the extent that any
continuation-in-part has claims directed to subject matter enabled and described
in the patent applications and patents described above), reissues, renewals,
extensions or additions to any such patent applications and patents; all to the
extent and only to the extent that IRC has the right to grant licenses,
immunities or other rights thereunder as of the date of the Agreement.
1.7 "Licensed Product" shall mean any article, composition, apparatus,
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substance, chemical or other material (a) which is claimed in the Licensed
Patent Rights, or (b) the manufacture, use or sale of which would constitute an
infringement of any claim within the Licensed Patent Rights, or (c) which is
made, used or sold by, utilizing or practicing a Licensed Method.
1.8 "Net Sales" shall mean, with respect to any Licensed Method, the
---------
invoiced price for performing a procedure utilizing such Licensed Method; and
with respect to any Licensed Product, the invoiced sales price of such Licensed
Product in final form, billed to independent customers who are not Affiliates,
less to the extent included in the invoiced sales price, (a) credits,
allowances, discounts and rebates to, and chargebacks from the account of, such
customers for spoiled, damaged, out-dated, rejected or returned Licensed
Product; (b) actual freight and insurance costs incurred in transporting such
Licensed Product to such customers; (c) cash, quantity and trade discounts,
rebates and other price reduction programs; (d) sales, use, value-added and
other direct taxes incurred; and (e) customs, duties, surcharges and other
governmental charges incurred in connection with the exportation or importation
of such Licensed Product.
1.9 "Person" shall mean an individual, corporation, partnership, limited
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liability company, trust, business trust,
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association joint stock company, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
1.10 "Royalty Term" shall mean, with respect to each Licensed Product or
------------
Licensed Method in each country, the term for which a Valid Patent Claim remains
in effect and would, if in an issued patent, be infringed by the manufacture,
use or sale of such Licensed Product or the practice of a Licensed Method in
such country but for the license granted by the Agreement.
1.11 "The Regents" shall mean The Regents of the University of California,
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a California nonprofit corporation.
1.12 "The Regents License Aqreement" shall mean the License Agreement
-----------------------------
effective March 21, 1996, between The Regents and IRC (as the same may be
amended or restated from time to time).
1.13 "Third Party" shall mean any Person other than IRC, UroGen and their
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respective Affiliates.
1.14 "Valid Patent Claim" shall mean either (a) a claim of an issued and
------------------
unexpired patent included within the Licensed Patent Rights, which has not been
held permanently revoked, unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not been admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise or (b) a
claim of a pending patent application included within the Licensed Patent
Rights, which claim was filed in good faith and has not been abandoned or
finally disallowed without the possibility of appeal or refiling of such
application.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
------------------------------
Each party hereby represents and warrants to the other party as follows:
2.1 Corporate Existence and Power. Such party (a) is a corporation duly
-----------------------------
organized, validly existing and in good standing under the laws of the state in
which it is incorporated; (b) has the corporate power and authority and the
legal right to own and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its business as it is now
being conducted; and (c) is in compliance with all requirements of applicable
law, except to the extent that any noncompliance would not have a material
adverse effect on the properties, business, financial or other condition of it
and would not materially adversely affect its ability to perform its obligations
under the Agreement.
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2.2 Authorization and Enforcement of Obligations. Such party (a) has the
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corporate power and authority and the legal right to enter into the Agreement
and to perform its obligations hereunder; and (b) has taken all necessary
corporate action on its part to authorize the execution and delivery of the
Agreement and the performance of its obligations hereunder. The Agreement has
been duly executed and delivered on behalf of such party, and constitutes a
legal, valid, binding obligation, enforceable against such party in accordance
with its terms.
2.3 No Consents. All necessary consents, approvals and authorizations of
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all governmental authorities and other Persons required to be obtained by such
party in connection with the Agreement have been obtained.
2.4 No Conflict. The execution and delivery of the Agreement and the
-----------
performance of such party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.
2.5 The Regents License Agreement. IRC hereby represents and warrants to
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UroGen as follows:
2.5.1 IRC has the lawful right to grant the rights granted to UroGen
under this Agreement.
2.5.2 The Regents License Agreement is in full force and effect as of
the Effective Date and IRC has not received any notice of termination from The
Regents under The Regents License Agreement.
2.5.3 IRC shall not terminate The Regents License Agreement during the
term of this Agreement without the express written consent of UroGen. IRC shall
notify UroGen within five (5) days of its receipt of any termination notices
from The Regents of The Regents License Agreement. IRC agrees that should IRC
receive a notice from The Regents of default under The Regents License Agreement
for failure to timely pay any amounts due, IRC shall notify UroGen and, if IRC
has not already cured any such default, UroGen at its option may cure any such
default on IRC's behalf by paying any delinquencies.
2.5.4 IRC shall inform UroGen in advance of any renegotiation of The
Regents License Agreement. IRC shall promptly provide UroGen with a copy of any
modification of The Regents License Agreement.
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ARTICLE 3
LICENSE GRANT
-------------
3.1 Licensed Patent Rights. On the terms and conditions of the Agreement,
----------------------
IRC hereby grants to UroGen an exclusive license (with the right to grant
sublicenses) under the Licensed Patent Rights, in jurisdictions where Licensed
Patent Rights exist, (a) to make, have made and use Licensed Products in the
Field, (b) to sell and offer to sell Licensed Products for use in the Field, and
(c) to practice Licensed Methods in the Field. UroGen acknowledges that the
Agreement is subject to the rights of The Regents under, and subject to the
conditions of, The Regents License Agreement, and IRC acknowledges that IRC
retains all obligations owing to The Regents except as expressly provided
otherwise in the Agreement.
3.2 Sublicenses. UroGen shall deliver a copy of each sublicense (with any
-----------
confidential information redacted) under the Agreement to IRC promptly after
execution of the same. Each sublicense shall be subject to the terms and
conditions of the Agreement and The Regents License Agreement.
3.3 Export Control Laws. UroGen shall observe all applicable United States
-------------------
and foreign laws with respect to the transfer of Licensed Products, Licensed
Methods and related technical data to foreign countries, including the
International Traffic in Arms Regulations and the Export Administration
Regulations.
3.4 Preference for United States Industry. Because the Agreement grants an
-------------------------------------
exclusive right to a particular use of the invention described in the recitals
hereto, UroGen shall manufacture Licensed Products in the United States to the
extent required by 35 U.S.C. (S)(S)201-212.
3.5 Technical Assistance and Materials. IRC shall provide UroGen with such
----------------------------------
technical assistance as UroGen reasonably requests, and IRC reasonably agrees to
provide, regarding UroGen's exercise of the Licensed Patent Rights. IRC shall
provide UroGen with one IL-3 transfected fibroblast cell line, and such
reasonable sample quantities of such other research materials as UroGen
reasonably requests and IRC agrees to provide, regarding the Licensed Patent
Rights. Upon receipt of one such IL-3 transfected fibroblast cell line, in
consideration therefor, UroGen shall pay to IRC the sum of $20,000 in cash or by
cancellation of indebtedness of IRC owing to UroGen. IRC agrees to arrange to
have one such IL-3 transfected fibroblast cell line certified for use in human
clinical trials under all applicable FDA regulations and to bear all expenses of
such certification.
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ARTICLE 4
ROYALTIES AND MILESTONE FEE
---------------------------
4.1 Royalties.
---------
4.1.1 In consideration for the license granted to UroGen herein,
during the Royalty Term, UroGen shall pay to IRC royalties equal to ten percent
(10%) of Net Sales of Licensed Products and Licensed Methods by UroGen, its
Affiliates and sublicensees. IRC shall be solely responsible for paying all
royalties, if any, owing to The Regents under The Regents License Agreement on
the sale of Licensed Products and Licensed Methods by UroGen, its Affiliates and
sublicensees.
4.1.2 Upon the payment by UroGen to IRC of the non-refundable, non-
creditable fee (the "Royalty Offset Fee") in the amount of two hundred fifty
thousand dollars ($250,000), UroGen shall have the following right: With respect
to any Licensed Product or Licensed Method in any country, if UroGen is required
to pay royalties to any Third Party upon the sale of a Licensed Product or
Licensed Method which is validly claimed by an issued patent or pending patent
application of such Third Party licensed to UroGen in such country, then UroGen
shall have the right to offset one-half (1/2) of such Third Party royalties
which are based on sales of such Licensed Product or Licensed Method in such
country invoiced after the payment in full of the Royalty Offset Fee against the
royalties owing to IRC under Section 4.1.1 above with respect to sales of such
Licensed Product or Licensed Method in such country; provided, however, that
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UroGen shall not reduce the royalties paid to IRC under Section 4.1.1 above,
with respect to sales of such Licensed Product or Licensed Method in such
country, to less than six percent (6%) of Net Sales of such Licensed Product or
Licensed Method in such country. Notwithstanding anything to the contrary in the
Agreement, UroGen shall have no right under this Section 4.1.2 to offset any
amount against the royalties owing to IRC under Section 4.1.1 above unless and
until the payment in full to IRC of the Royalty Offset Fee.
4.2 Milestone Fee. Upon receipt of the required marketing and pricing
-------------
approval from the FDA (or from the governing health authority of any other
country) to sell the first Licensed Product or Licensed Method for use in the
Field, pay to IRC the amount of two hundred thousand dollars ($200,000) in
cash, which amount shall be creditable against future royalties as set forth in
Section 4.3 below.
4.3 Royalty Credit. UroGen shall have the right to credit the aggregate
--------------
amount of the payments to IRC under Section 4.2 above (if any) against up to
one-half (1/2) the amount of the royalties owing to IRC under Section 4.1 for
each calendar quarter until a credit has been taken in the aggregate amount of
such cash payments.
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ARTICLE 5
ROYALTY REPORTS AND ACCOUNTING
------------------------------
5.1 Reports, Exchange Rates. During the term of the Agreement following
-----------------------
the First Commercial Sale of a Licensed Product or Licensed Method, UroGen shall
furnish to IRC a quarterly written report showing in reasonably specific detail,
on a country by country basis, (a) the gross sales of each Licensed Product or
Licensed Method sold by UroGen, its Affiliates and its sublicensees during the
reporting period and the calculation of Net Sales from such gross sales; (b) the
royalties payable in United States dollars, if any, which shall have accrued
hereunder based upon Net Sales of each Licensed Product or Licensed Method; (c)
the withholding taxes, if any, required by law to be deducted in respect of such
sales; (d) the date of the First Commercial Sales of each Licensed Product or
Licensed Method in each country during the reporting period; (e) the exchange
rates used in determining the amount of United States dollars; and (f) the
number of jobs created or maintained to support further development,
manufacture, sales and service of Licensed Products or the practice of Licensed
Methods. With respect to sales of Licensed Products and Licensed Methods
invoiced in United States dollars, the gross sales, Net Sales, and royalties
payable shall be expressed in United States dollars. With respect to sales of
Licensed Products and Licensed Methods invoiced in a currency other than United
States dollars, the gross sales, Net Sales and royalties payable shall be
expressed in the domestic currency of the party making the sale together with
the United States dollar equivalent of the royalty payable, calculated using the
average closing buying rate for such currency quoted in the continental terms
method of quoting exchange rates (local currency per US$1) by Bank of America
NT&SA in London, England on each of the last business day of each month in the
quarter prior to the date of payment. Reports shall be due on the forty fifth
(45th) day following the close of each quarter. UroGen shall keep complete and
accurate records in sufficient detail to properly reflect all gross sales and
Net Sales and to enable the royalties payable hereunder to be determined.
5.2 Audits.
------
5.2.1 Upon the written request of IRC and not more than once in each
calendar year, UroGen shall permit an independent certified public accounting
firm of nationally recognized standing, selected by IRC and reasonably
acceptable to UroGen, at IRC's expense, to have access during normal business
hours to such of the records of UroGen as may be reasonably necessary to verify
the accuracy of the royalty reports hereunder for any year ending not more than
forty-eight (48) months prior to the date of such request. The accounting firm
shall disclose to IRC only whether the reports are correct or not and the
specific details concerning any discrepancies. No other information shall be
shared.
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5.2.2 If such accounting firm concludes that additional royalties were
owed during such period, UroGen shall pay the additional royalties within thirty
(30) days of the date IRC delivers to UroGen such accounting firm's written
report so concluding. The fees charged by such accounting firm shall be paid by
IRC; provided, however, if the audit discloses that the royalties payable by
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UroGen for the audited period are more than one hundred five percent (105%) of
the royalties actually paid for such period, then UroGen shall pay the
reasonable fees and expenses charged by such accounting firm.
5.2.3 UroGen shall include in each sublicense granted by it pursuant
to the Agreement a provision requiring the sub-licensee to make reports to
UroGen, to keep and maintain records of sales made pursuant to such sublicense
and to grant access to such records by IRC's independent accountant to the same
extent required of UroGen under the Agreement.
5.3 Confidential Financial Information. IRC shall treat all financial
----------------------------------
information subject to review under this Article 5 or under any sublicense
agreement as confidential, and shall cause its accounting firm to retain all
such financial information in confidence.
ARTICLE 6
PAYMENTS
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6.1 Payment Terms. Royalties shown to have accrued by each royalty report
-------------
provided for under Article 5 above shall be due and payable on the date such
royalty report is due. Payment of royalties in whole or in part may be made in
advance of such due date.
6.2 Payment Method. Except as provided in this Section 6.2, all payments by
--------------
UroGen to IRC under the Agreement shall be paid in United States dollars, and
all such payments shall be originated from a United States bank located in the
United States and made by bank wire transfer in immediately available funds to
such account as IRC shall designate before such payment is due.
6.3 Exchange Control. If at any time legal restrictions prevent the prompt
----------------
remittance of part or all royalties with respect to any country where the
Licensed Product or Licensed Method is sold, payment shall be made through such
lawful means or methods as IRC reasonably shall determine.
6.4 Withholding Taxes. All amounts owing from UroGen to IRC under the
-----------------
Agreement are net amounts, and shall be grossed-up to account for any
withholding taxes, value-added taxes or other taxes, levies or charges with
respect to such amounts, other than (a) United States taxes and (b) taxes
imposed solely by reason of IRC having a permanent establishment in any other
country or IRC
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otherwise being subject to taxation by such country (except solely by reason of
the license granted under the Agreement).
ARTICLE 7
RESEARCH AND DEVELOPMENT OBLIGATIONS
------------------------------------
7.1 Research and Development Efforts.
--------------------------------
7.1.1 UroGen shall use its commercially reasonable efforts (a) to
conduct research, development and preclinical and human clinical trials as
necessary or desirable to obtain all regulatory approvals to manufacture and
market Licensed Products and practice Licensed Methods for use in the Field, (b)
to obtain necessary approval to market Licensed Products and practice Licensed
Methods for use in the Field in the United States and in such other countries as
UroGen determines to be commercially feasible, (c) to commence marketing as soon
as reasonably practicable after approval, and market, Licensed Products for use
in the Field, and (d) to market such Licensed Products and practice Licensed
Methods in sufficient quantities to meet the reasonably foreseeable market
demands therefor.
7.1.2 On or before March 21, 1997, UroGen shall submit to IRC a
research and development plan with diligence milestones, in form and content
reasonably acceptable to IRC, for the commercialization of Licensed Products.
IRC shall not unreasonably withhold such approval. Upon receiving the approval
of IRC, the diligence milestones pertaining to the Field will be automatically
incorporated into this Section 7.1.2 by this reference. In the event UroGen
fails to materially perform its obligations under this Section 7.1, IRC has the
right and option to terminate this Agreement. To exercise this right to
terminate the Agreement, IRC must give UroGen written notice of UroGen's
deficiency in achieving the diligence milestones. UroGen thereafter has ninety
(90) days to cure the deficiency, or to submit for approval by IRC, which
approval will not be unreasonably withheld, a plan to cure such deficiency as
soon as is feasible (if such deficiency cannot be cured within ninety (90)
days). If IRC does not receive within the ninety (90) days either satisfactory
tangible evidence that UroGen has cured the deficiency or a written plan for
curing the deficiency, then IRC may, at its option, terminate this Agreement by
giving written notice to UroGen.
7.1.3 Within ninety (90) days after the date of the Agreement, UroGen
shall enter into an agreement with Sidney Kimmell Cancer Center ("SKCC") to
conduct certain research and clinical development in the field of prostate
cancer (pursuant to a research plan and clinical trial protocol reasonably
acceptable to both parties. The parties each acknowledge that such plan will
allow for certain activities to be performed outside of SKCC. UroGen shall
expend not less than one hundred thirty thousand
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dollars ($130,000) funding the work described in the plan, including but not
limited to funds paid to SKCC.
7.2 Research and Development Costs. UroGen, at its sole expense, shall fund
------------------------------
the costs of all research, development, preclinical and clinical trials,
regulatory approval and commercialization of the Licensed Products and Licensed
Methods, except for the costs of cell line certification described in Section
3.5 and except to the extent UroGen arranges for Third Parties to share such
expenses.
7.3 Records. UroGen shall maintain records, in sufficient detail and in
-------
good scientific manner, which shall reflect all work done and results
achieved in the performance of its research and development regarding the
Licensed Patent Rights, the Licensed Products and Licensed Methods.
7.4 Reports. On or before each January 20 and July 20 during the terms of
-------
the Agreement, UroGen shall prepare and deliver to IRC a semiannual written
report which shall describe, in reasonably sufficient detail, (a) the research
performed to date employing the Licensed Patent Rights and the key scientific
discoveries thereunder, (b) the progress of the development, and testing of
Licensed Products and Licensed Methods in clinical trials, (c) the status of
obtaining the necessary approvals to market Licensed Products and practice
Licensed Methods, (d) the work in progress, (e) current schedule of anticipated
events and milestones, (f) the market plans for introduction of Licensed
Products and Licensed Methods (for Licensed Products and Licensed Methods in
clinical development), and (g) the dollar value of the resources spent, and the
number of jobs created or maintained, in the research employing the Licensed
Patent Rights and in the development and testing of Licensed Products and
Licensed Methods. IRC shall use such reports and the information contained
therein only for the purpose of complying with The Regents License Agreement and
monitoring UroGen's compliance with the Agreement, and not in connection with
any IRC research, development or commercialization programs.
ARTICLE 8
INFRINGEMENT ACTIONS BY THIRD PARTIES
-------------------------------------
If UroGen, or any of its Affiliates, sublicensees or customers shall be
sued by a Third Party for infringement of a Third Party's patent because of the
manufacture, use or sale of Licensed Products or practice of Licensed Methods,
UroGen shall promptly notify IRC in writing of the institution of such suit. If
the alleged infringing process, method or composition is claimed under the
Licensed Patent Rights, IRC shall have the right, in its sole discretion, to
control the defense of such suit at its own expense, in which event UroGen shall
have the right to be represented by advisory counsel of its own selection, at
its
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own expense, and shall cooperate fully in the defense of such suit and furnish
to IRC all evidence and assistance in its control. If IRC does not elect within
thirty (30) days after such notice to so control the defense of such suit,
UroGen may undertake such control at its own expense, and IRC shall then have
the right to be represented by advisory counsel of its own selection, at its own
expense, and IRC shall cooperate fully in the defense of such suit and furnish
to UroGen all evidence and assistance in IRC's control. The party controlling
the suit may not settle the suit or otherwise consent to an adverse judgment in
such suit that diminishes the rights or interests of the non-controlling party
without the express written consent of the non-controlling party. Any judgments,
settlements or damages (except for royalties based on future sales of Licensed
Products or Licensed Methods) payable with respect to legal proceedings covered
by this Article 8 shall be paid by the party which controls the litigation.
If IRC, or any of its Affiliates, licensees (other than UroGen) or
customers, is sued by a Third Party who alleges that such entity's manufacture,
use or sale of any process, method or composition claimed in the Licensed Patent
Rights infringes a Third Party's patent, IRC shall notify UroGen promptly in
writing. IRC and its Affiliates may not settle a suit or otherwise consent to an
adverse judgment in such a suit that diminishes the rights or interests of
UroGen without the express written consent of UroGen.
ARTICLE 9
CONFIDENTIALITY
---------------
9.1 Confidential Information. During the term of the Agreement, and for a
------------------------
period of five (5) years following the expiration or earlier termination hereof,
each party shall maintain in confidence all information of the other party
(including samples) disclosed by the other party and identified as, or
acknowledged to be, confidential (the "Confidential Information"), and shall not
use, disclose or grant the use of the Confidential Information except on a need-
to-know basis to those directors, officers, affiliates, employees,
(sub)licensees, permitted assignees and agents, consultants, clinical
investigators, contractors or potential or actual investors, to the extent such
disclosure is reasonably necessary in connection with such party's financing
activities or business activities expressly authorized by the Agreement. To the
extent that disclosure is authorized by the Agreement, prior to disclosure, each
party hereto shall obtain agreement of any such Person to hold in confidence and
not make use of the Confidential Information for any purpose other than those
permitted by the Agreement. Each party shall notify the other promptly upon
discovery of any unauthorized use or disclosure of the other party's
Confidential Information.
-11-
<PAGE>
9.2 Permitted Disclosures. The confidentiality obligations contained in
---------------------
Section 9.1 above shall not apply to the extent that (a) any receiving party
(the "Recipient") is required (i) to disclose information by law, order or
regulation of a governmental agency or a court of competent jurisdiction, or
(ii) to disclose information to any governmental agency for purposes of
obtaining approval to test or market a Licensed Product, provided in either case
that the Recipient shall provide written notice thereof to the other party and
sufficient opportunity to object to any such disclosure or to request
confidential treatment thereof; or (b) the Recipient can demonstrate that (i)
the disclosed information was public knowledge at the time of such disclosure to
the Recipient, or thereafter became public knowledge, other than as a result of
actions of the Recipient in violation hereof; (ii) the disclosed information was
rightfully known by the Recipient (as shown by its written records) prior to the
date of disclosure to the Recipient by the other party hereunder; or (iii) the
disclosed information was disclosed to the Recipient on an unrestricted basis
from a source unrelated to any party to the Agreement and not under a duty of
confidentiality to the other party.
9.3 Terms of the Agreement. Except as otherwise provided in Section 9.2
----------------------
above, IRC and UroGen shall not disclose any terms or conditions of the
Agreement to any Third Party without the prior consent of the other party.
Notwithstanding the foregoing, prior to execution of the Agreement, UroGen and
IRC shall agree upon the substance of information that can be used to describe
the terms of this transaction, and UroGen and IRC may disclose such information,
as modified by mutual agreement from time to time, without the other party's
consent.
ARTICLE 10
PATENTS
-------
10.1 Patent Prosecution and Maintenance. Subject to the rights of The
----------------------------------
Regents, IRC shall be responsible for and shall control, at its sole expense,
the preparation, filing, prosecution and maintenance of all patents and patent
applications related to the Licensed Patent Rights. IRC shall supply UroGen with
a copy of such patent application as filed, together with notice of its filing
date and serial number. IRC shall make a reasonable effort to keep UroGen
informed of major events regarding the prosecution of those patent applications
relating to the Licensed Patent Rights for which IRC has documentation. Upon the
written request of UroGen and not more than twice each calendar year, IRC shall
give UroGen the opportunity, upon reasonable notice during normal business hours
and at UroGen's sole expense, to review and to make copies of all office
actions, correspondence and other materials received from The Regents regarding
the preparation, filing, prosecution and maintenance of the Licensed Patent
Rights, provided that all such office actions, correspondence and other
-12-
<PAGE>
materials shall constitute Confidential Information of IRC pursuant to Article 9
above. UroGen shall cooperate with IRC, execute all lawful papers and
instruments and make all rightful oaths and declarations as may be necessary in
the preparation, prosecution and maintenance of all patents and other filings
referred to in this Section 10.1.
10.2 Notification of Infringement. Each party shall notify the other party
----------------------------
of any infringement of any Licensed Patent Rights in the Field known to such
party and shall provide the other party with the available evidence, if any, of
such infringement.
10.3 Enforcement of Patent Rights. Subject to the rights of The Regents,
----------------------------
IRC, at its sole expense, shall have the right to determine the appropriate
course of action to enforce Licensed Patent Rights or otherwise abate the
infringement thereof, to take (or refrain from taking) appropriate action to
enforce Licensed Patent Rights, to control any litigation or other enforcement
action and to enter into, or permit, the settlement of any such litigation or
other enforcement action with respect to Licensed Patent Rights, and shall
consider, in good faith, the interests of UroGen in so doing. If IRC does not,
within one hundred twenty (120) days of receipt of notice from UroGen, abate the
infringement in the Field or file suit to enforce the Licensed Patent Rights
against at least one infringing party in the Field, UroGen shall have the right
to take whatever action it deems appropriate to enforce the Licensed Patent
Rights in the Field; provided, however, that, within thirty (30) days after
-----------------
receipt of notice of UroGen's intent to file such suit, IRC shall have the right
to jointly prosecute such suit and to fund up to one-half (1/2) the costs of
such suit. The party controlling any such enforcement action shall not settle
the action or otherwise consent to an adverse judgment in such action that
diminishes the rights or interests of the non-controlling party without the
prior written consent of the other party. All monies recovered upon the final
judgment or settlement of any such suit to enforce the Licensed Patent Rights
shall be shared, after reimbursement of expenses, by IRC and UroGen pro rata
--- ----
according to the respective percentages of costs borne by each in such suit.
Notwithstanding the foregoing, IRC and UroGen shall fully cooperate with each
other in the planning and execution of any action to enforce the Licensed Patent
Rights.
ARTICLE 11
TERMINATION
-----------
11.1 Expiration. Subject to the provisions of Sections 11.2 and 11.3 below,
----------
the Agreement shall expire on the expiration of UroGen's obligation to pay
royalties to IRC under Section 4.1 above.
-13-
<PAGE>
11.2 Termination by UroGen. UroGen may terminate the Agreement or all of
---------------------
its rights and obligations with respect to any particular Licensed Patent
Rights, in its sole discretion, upon thirty (30) days prior written notice to
IRC.
11.3 Termination for Cause. Except as otherwise provided in Article 13,
---------------------
either party may terminate the Agreement upon the material breach of the
Agreement by the other party if the other party has not cured such breach within
ninety (90) days after notice thereof by the non-breaching party. The provisions
of Section 7.1.2, and not this Section 11.3, will apply to termination for lack
of diligence.
11.4 Effect of Expiration or Termination. Expiration or termination of the
-----------------------------------
Agreement shall not relieve the parties of any obligation accruing prior to such
expiration or termination, and the provisions of Articles 9, 10 and 12 shall
survive the expiration or termination of the Agreement.
ARTICLE 12
INDEMNIFICATION AND INSURANCE
-----------------------------
12.1 Indemnification. UroGen shall indemnify and hold IRC and The Regents
---------------
harmless from all losses, liabilities, damages and expenses, including
reasonable attorneys' fees and costs, incurred by IRC in connection with any
Third Party claim, demand, action or other proceeding arising out of or relating
to personal injury (including death) or property damage resulting from the
development, manufacture, use or sale of Licensed Products or the practice of
Licensed Methods by Urogen, its Affiliates or sublicensees pursuant to this
Agreement.
12.2 Insurance. UroGen shall maintain liability insurance including product
---------
liability insurance with respect to the research, development, manufacture and
sales of Licensed Products, and the practice of Licensed Methods, by UroGen in
such amount as UroGen customarily maintains with respect to the research,
development, manufacture and sales of its other products and the practice of its
other procedures on human subjects. UroGen shall maintain such insurance for so
long as it continues to research, develop, manufacture or sell any Licensed
Products or to practice any Licensed Methods, and thereafter for so long as
UroGen maintains insurance for itself covering such research, development,
manufacture or sales. Without limiting the generality of the foregoing, UroGen
shall obtain, keep in force and maintain comprehensive or commercial form
general liability insurance (contractual liability included) with limits as
follows:
Each occurrence $1,000,000
Products/completed operation aggregate $5,000,000
Personal and advertising injury $1,000,000
General aggregate-commercial form only $5,000,000
-14-
<PAGE>
UroGen is not required to insure its activities pertaining to the products'
liability risks until it begins to use Licensed Products or to practice any
Licensed Methods in human subjects. UroGen shall (a) provide IRC with
certificates of insurance evidencing compliance with all such requirements, (b)
provide for 30-day advance written notice to IRC and The Regents of any
modification, (c) indicate that IRC and The Regents are endorsed as insureds
under the coverages described above, and (d) include a provision that the
coverages shall be primary and shall not participate with nor shall be excess
over any valid and collective insurance or program of self-insurance carried or
maintained by IRC or The Regents.
ARTICLE 13
FORCE MAJEURE
-------------
Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached the Agreement for failure or delay in
fulfilling or performing any term of the Agreement to the extent, and for so
long as, such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party including but not limited to fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or other party.
ARTICLE 14
MISCELLANEOUS
-------------
14.1 Notices. Any consent, notice or report required or permitted to be
-------
given or made under the Agreement by one of the parties hereto to the other
party shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, U.S. first class mail or courier), U.S. first
class mail or courier, postage prepaid (where applicable), addressed to such
other party at its address indicated below, or to such other address as the
addressee shall have last furnished in writing to the addressor and (except as
otherwise provided in the Agreement) shall be effective upon receipt by the
addressee.
If to IRC: The Immune Response Corporation
5935 Darwin Court
Carlsbad, California 92008
Attention: Dennis J. Carlo, Ph.D.
-15-
<PAGE>
with a copy to: Pillsbury Madison & Sutro LLP
235 Montgomery Street, 15th Floor
San Francisco, California 94104
Attention: Thomas E. Sparks, Jr.
If to UroGen: UroGen Corp.
3099 Science Park Road
San Diego, California 92121
Attention: Paul Quadros
14.2 Governing Law. The Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
14.3 Assignment. Neither party shall assign its rights or obligations under
----------
the Agreement, in whole or in part, without the prior written consent of the
other party. The consent of the nonassigning party will not be required if the
assignment is in conjunction with the transfer of all or substantially all of
the business of the assigning party to which this Agreement relates, or in the
event of its merger, consolidation, change in control or similar transaction.
14.4 Waivers and Amendments. No change, modification, extension,
----------------------
termination or waiver of the Agreement, or any of the provisions herein
contained, shall be valid unless made in writing and signed by duly authorized
representatives of the parties hereto.
14.5 Entire Agreement. The Agreement embodies the entire agreement between
----------------
the parties and supersedes any prior representations, agreements and
understandings between them regarding the subject matter hereof. There are no
representations, agreements or understandings, oral or written, between the
parties regarding the subject matter hereof which are not fully expressed
herein.
14.6 Severability. Any of the provisions of the Agreement which are
------------
determined to be invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof and without affecting the validity or enforceability of any of
the terms of the Agreement in any other jurisdiction.
14.7 Waiver. The waiver by either party hereto of any right hereunder or
------
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
14.8 Counterparts. The Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but
-16-
<PAGE>
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first set forth above.
THE IMMUNE RESPONSE CORPORATION
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Title VP, R & D; CSO
------------------------------
UROGEN CORP.
By /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Title Chairman, CFO
------------------------------
-17-
<PAGE>
APPENDIX A
LICENSED PATENT RIGHTS
----------------------
[TO BE COMPLETED]
-18-
<PAGE>
EXHIBIT A
Mcbride patent List (U.S. & PORTION)
Printed on: 03/08/97 Page 1
- --------------------------------------------------------------------------------
01932
TITLE COUNTRY DOCKET FILED SERIAL ISSUED PATENTS ??? PARENT STATUS
POUND POUND
- --------------------------------------------------------------------------------
TUMOR RADIOSENSITIZATION USING GENE THERAPY
US P-UL 1932 02/02/96 08/597,524 ??? PENDING
No FP-UL 2407 01/31/97 ????/01??? PCT P-UL 1932 PENDING
- --------------------------------------------------------------------------------
Re: New International Patent Application
Entitled: COMBINED RADIOTHERAPY AND
IMMUNOTHERAPY TO TREAT
CANCER
Applicant: The Regents of the University of California
Date Filed: 31 January 1997
Your File: LA96-069-01
Our Docket: FP-UL 2407
____________________________________________________
Re: United States Patent Application No.:08/597,524
Entitled: TUMOR RADIOSENSITIZATION USING
GENE THERAPY
Inventor: William H. McBride
Filed: February 2, 1996
Our Docket: P-UL 1932
____________________________________________________
<PAGE>
EXHIBIT 10.6
AMENDMENT TO LICENSE AGREEMENT
------------------------------
THIS AMENDMENT TO LICENSE AGREEMENT effective as of January 29, 1999 (this
"Amendment"), is entered into between THE IMMUNE RESPONSE CORPORATION, a
Delaware corporation ("IRC"), having a place of business located at 5935 Darwin
Court, Carlsbad, California 92008, and UROGEN CORP., a Delaware corporation
("UroGen"), having a place of business located at 10835 Altman Row, San Diego,
California 92121.
W I T N E S S E T H:
WHEREAS, IRC and UroGen entered into that certain License Agreement dated
as of March 5, 1997 (the "Agreement"), pursuant to which IRC granted to UroGen
an exclusive license under certain patent rights on the terms and subject to the
conditions of the Agreement.
WHEREAS, IRC and UroGen desire to otherwise modify the Agreement in certain
respects as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth below, the parties hereby amend the Agreement and agree as
follows:
1. Amendments.
----------
a. Section 1.3 of the Agreement hereby is amended and restated to
read in full as follows:
1.3 "Field" shall mean the prevention and treatment of all
-----
cancers except colon cancer, brain tumors and melanoma.
b. Section 3.5 of the Agreement hereby is amended and restated to
read in full as follows:
3.5 Technical Assistance and Materials. IRC shall provide
----------------------------------
UroGen with such technical assistance as UroGen reasonably requests,
and IRC reasonably agrees to provide, regarding UroGen's exercise of
the Licensed Patent Rights.
c. Section 4.1.2 of the Agreement hereby is amended and restated to
read in full as follows:
4.1.2. Upon the payment by UroGen to IRC of a nonrefundable, non-
creditable fee in the amount of two hundred fifty thousand dollars
($250,000), the royalty rate owing to IRC under Section 4.1.1 above
shall be reduced from ten percent (10%) to five percent (5%) of Net
Sales of Licensed Products and Licensed Methods by UroGen, its
<PAGE>
Affiliates and sublicensees.
d. Section 4.3 of the Agreement hereby is amended and restated to
read in full as follows:
4.3 Royalty Credit. UroGen shall have the right to credit the
--------------
aggregate amount of the payments to IRC under Section 4.2 above (if
any) against up to one-half (1/2) the amount of the royalties owing to
IRC under Section 4.1 for each calendar quarter until a credit has
been taken in the aggregate amount of such cash payments; provided,
--------
however, that UroGen shall not reduce the royalties paid to IRC under
-------
Section 4.1 to less than 3% of Net Sales of Licensed Products and
Licensed Methods.
e. Section 10.1 of the Agreement is amended by deleting the first
sentence therefrom and inserting the following two sentences in lieu thereof:
Subject to the rights of The Regents, IRC shall be responsible for and
shall control the preparation, filing, prosecution and maintenance of
all patent and patent applications related to the Licensed Patent
Rights. UroGen shall pay all costs of the preparation, filing,
prosecution and maintenance of such patent and patent applications
within fifteen (15) days of receipt of invoices therefor.
2. Reimbursement of Patent Expenses. In reimbursement for past patent
--------------------------------
expenses relating to the Licensed Patent Rights paid by IRC, UroGen hereby
agrees to pay IRC as follows:
a. $10,000 within five (5) days after the date of this Amendment;
and
b. $49,400 upon the earlier of December 31, 1999 or the closing of
the next sale of debt or equity securities by UroGen involving receipt by UroGen
of an aggregate amount of $500,000 or more.
3. Miscellaneous.
-------------
a. This Amendment shall be effective for all purposes as of the date
first set forth above. Except as otherwise expressly modified by this Amendment,
the Agreement shall remain in full force and effect in accordance with its
terms.
b. All terms used, but not defined, in this Amendment shall have the
respective meanings set forth in the Agreement.
c. This Amendment may be executed in two or more
-2-
<PAGE>
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed the Amendment as of the date
first set forth above.
THE IMMUNE RESPONSE CORPORATION
By [SIGNATURE ILLEGIBLE]
--------------------------------
Title VP, SCIENTIFIC AFFAIRS
-----------------------------
UROGEN CORP.
By [SIGNATURE ILLEGIBLE]
--------------------------------
Title PRESIDENT & CEO
-----------------------------
-3-
<PAGE>
EXHIBIT 10.7
LICENSE AGREEMENT
by and among
SIDNEY KIMMEL CANCER CENTER
and
DANIEL MERCOLA, M.D., Ph.D.,
as Licensor
and
UROGEN CORP.
as Licensee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS............................................................................. 1
2. LICENSE TERMS AND CONDITIONS............................................................ 3
2.1. Grant of License................................................................ 3
2.1.1 Exclusive License for Products........................................... 3
2.1.2 Reserved Rights.......................................................... 3
2.1.3 Rights of United States Government....................................... 3
2.1.4 No Additional Licenses................................................... 3
2.2. Sponsored Research.............................................................. 4
2.3. Minimum Annual Royalties........................................................ 4
2.4. Running Royalties............................................................... 5
2.5. Quarterly Payments.............................................................. 6
2.6. Term of License................................................................. 6
2.7. Sublicense...................................................................... 6
2.8. Reports......................................................................... 7
2.9. Records......................................................................... 7
2.10. Foreign Sales................................................................... 7
2.11. Foreign Taxes................................................................... 7
3. PATENT MATTERS.......................................................................... 8
3.1 Patent Prosecution and Maintenance.............................................. 8
3.2 Information to Licensee......................................................... 8
3.3 Patent Costs.................................................................... 8
3.4 Effect of Licensee's Discounting Payments....................................... 8
3.5 Ownership....................................................................... 9
3.6 Licensor's Right to Pursue Patent............................................... 9
3.7 Infringement Actions............................................................ 9
3.7.1 Infringement............................................................. 9
3.7.2 Challenge to Licensor Patent Rights...................................... 10
4. OBLIGATIONS RELATED TO COMMERCIALIZATION................................................ 10
4.1. Commercialization Obligation.................................................... 10
4.2. Governmental Approvals and Marketing of Products................................ 10
4.3. Indemnity....................................................................... 10
4.4. Patent Marking.................................................................. 11
4.5. No Use of Name.................................................................. 11
4.6. Foreign Registration............................................................ 11
5. LIMITED WARRANTY........................................................................ 11
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6. INTERESTS IN INTELLECTUAL PROPERTY RIGHTS............................................... 11
6.1. Preservation of Title........................................................... 11
6.2. Governmental Interests.......................................................... 11
7. CONFIDENTIALITY AND PUBLICATION......................................................... 12
7.1. Treatment of Confidential Information........................................... 12
7.2. Publications.................................................................... 12
7.3. Publicity....................................................................... 12
8. TERM AND TERMINATION.................................................................... 12
8.1. Term............................................................................ 12
8.2. Termination Upon Default........................................................ 12
8.3. Termination Upon Bankruptcy or Insolvency....................................... 13
8.4. Rights Upon Expiration.......................................................... 13
8.5. Rights Upon Termination......................................................... 13
8.6. Work-in-Progress................................................................ 13
9. ARBITRATION............................................................................. 14
9.1. Binding Arbitration............................................................. 14
9.2. Selection of Arbitrators........................................................ 14
9.3. Discovery....................................................................... 14
9.4. Case Management................................................................. 14
9.5. Remedies........................................................................ 14
9.6. Expenses........................................................................ 15
9.7. Confidentiality................................................................. 15
10. GENERAL PROVISIONS...................................................................... 15
10.1. Assignment...................................................................... 15
10.2. Binding Upon Successors and Assigns............................................. 15
10.3. Independent Contractors......................................................... 15
10.4. Entire Agreement; Modification.................................................. 15
10.5. California Law.................................................................. 15
10.6. Headings........................................................................ 16
10.7. Severability.................................................................... 16
10.8. No Waiver....................................................................... 16
10.9. Attorneys' Fees................................................................. 16
10.10. Notices......................................................................... 16
10.11. Compliance with U.S. Laws....................................................... 17
</TABLE>
ii
<PAGE>
LICENSE AGREEMENT
This License Agreement is entered into and made effective as of
11/5/1997, ("Effective Date")by and among SIDNEY KIMMEL CANCER CENTER, a
California non-profit public benefit corporation ("SKCC"), Daniel A. Mercola,
M.D., Ph.D. ("Licensor") and UroGen Corp., a Delaware corporation ("Licensee").
RECITAL
A. Licensor is an employee of SKCC. Licensor is the inventor of the
presently existing invention described in the patent application listed as item
number 1 on Exhibit A attached hereto, which constitutes Licensor Patent Rights,
as further defined in this Agreement. SKCC has released to Licensor any
ownership rights in said existing invention and patent application, and Licensor
has agreed to an allocation as hereinafter set forth of any royalties which may
be earned by Licensor from said existing invention and patent application and
the Licensor Patent Rights.
B. Licensor has the right to grant a license to certain technology
regarding methods for gene characterization, and Licensor desires to grant to
Licensee, and Licensee wishes to acquire, an exclusive right and license to such
technology on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
conditions set forth herein, Licensor and Licensee hereby agree as follows:
1. DEFINITIONS
Capitalized terms shall have the meaning set forth below.
The term "Affiliate" shall mean any entity which directly or indirectly
---------
controls, is controlled by or is under common control with Licensee. The term
"control" as used herein means the possession of the power to direct or cause
the direction of the management and the policies of an entity, whether through
the ownership of a majority of the outstanding voting securities or by contract
or otherwise.
The term "Confidential Information" shall mean any and all proprietary or
------------------------
confidential information of SKCC, Licensor or Licensee which may be exchanged
between the parties at any time and from time to time during the term of this
Agreement. Information shall not be considered confidential to the extent that
it:
1
<PAGE>
a. is publicly disclosed through no fault of any party hereto,
either before or after it becomes known to the receiving party; or
b. was known to the receiving party prior to the date of this
Agreement, which knowledge was acquired independently and not from the other
party hereto (or such party's employees); or
c. is subsequently disclosed to the receiving party in good faith by
a third party who has a right to make such disclosure; or
d. has been published by a third party as a matter of right.
The term "Field" shall mean methods for therapy sensitization by the
-----
inhibition of jun kinase and/or the claims specified in the patent application
described on Exhibit A attached hereto.
The term "Future Patent Rights" shall mean (i) any and all U.S. and foreign
--------------------
patent applications and issued patents describing inventions within the scope of
the Field resulting from the research conducted by or under the direction of
SKCC or its employees in performance of the Sponsored Research described in
Section 2.2 hereof, if and only to the extent that Licensee agrees to pay and
pays for all patent protection costs related thereof as evidenced by a written
agreement therefor delivered by Licensee to Licensor and SKCC within 120 days
after Licensor and/or SKCC furnish to Licensee a customary invention disclosure
therefor containing a customary description of the invention and of the related
relevant literature references, and (ii) all continuations-in-part (but only to
the extent that said continuation-in-part describes inventions identified in
subpart (i) hereof and excluding any new invention), reissues, reexaminations,
and extensions thereof. Said patents and patent rights shall cease to be Future
Patent Rights to the extent that Licensee ceases to pay the patent protection
costs, that they are withdrawn or abandoned and not refiled, or to the extent
they are held to be invalid and/or unenforceable by a court of competent
jurisdiction from which there is no appeal or, if appealable, from which no
appeal has been taken.
The term "JAMS" shall mean the Judicial Arbitration and Mediation Services
----
in San Diego, California.
The term "Licensor Patent Rights" shall mean all pending patent
----------------------
applications and issued patents and patent rights derived from (i) the
inventions described in the pending patent application listed on Exhibit A
attached hereto and incorporated herein by reference, together with any
corresponding foreign patent applications and/or issued patents, and (ii) all
continuations-in-part (but only to the extent that said continuation-in-part
describes inventions identified in subpart (i) hereof and excluding any new
invention), reissues, reexaminations, and extensions thereof. Said patents and
patent rights shall cease to be Licensor Patent Rights to the extent they are
withdrawn or abandoned and not refiled, or to the extent they are held to be
invalid and/or unenforceable by a court of competent jurisdiction from which
there is no appeal or, if appealable, from which no appeal has been taken.
2
<PAGE>
The term "Products" shall mean any one or more products, processes or
--------
devices which cannot be made, used or sold without infringing one or more claims
under Licensor Patent Rights or the Future Patent Rights.
The term "Net Sales" shall mean:
---------
a. The gross amount invoiced by Licensee, or its Affiliates and
sublicensees, or any of them, on all sales of Products, less (i) discounts
actually allowed, (ii) credits for claims, allowances, retroactive price
reductions or returned goods, (iii) prepaid freight and (iv) sales taxes or
other governmental charges actually paid in connection with sales of Products
(but excluding what is commonly known as income taxes). For purposes of
determining Net Sales, a sale shall be deemed to have occurred when an invoice
therefor shall be generated or the Product is shipped for delivery, whichever
occurs earlier.
b. If a Product is transferred for consideration in some manner
other than a sale for money, then the monetary equivalent of said consideration
shall be deemed "Net Sales" and the transfer shall be deemed a sale.
c. Sales of Products by Licensee, or an Affiliate or sublicensee of
Licensee to any Affiliate or sublicensee which is a reseller thereof shall be
excluded, and only the subsequent sale of such Products by Affiliates or
sublicensees of Licensee to unrelated parties shall be deemed Net Sales
hereunder.
The term "Sponsored Research" shall have the meaning as defined in Section
------------------
2.2 hereof.
2. LICENSE TERMS AND CONDITIONS
2.1. Grant of License.
----------------
2.1.1 Exclusive License for Products. Subject to the terms of this
------------------------------
Agreement, except as otherwise provided in this Section 2.1, Licensor and SKCC
hereby grant to Licensee an exclusive, worldwide license, including the right to
sublicense, under Licensor Patent Rights and Future Patent Rights, to make, have
made, use, sell, import and export Products.
2.1.2 Reserved Rights. Licensor and SKCC reserve and retain the
---------------
rights to use any or all Licensor Patent Rights and Future Patent Rights for
research by Licensor or SKCC or its designees, so long as the same is not used
for any commercial purposes.
2.1.3 Rights of United States Government. As a result of the receipt
----------------------------------
by SKCC and Licensor of certain funding from the United States government,
Licensee acknowledges that the grant of the license hereunder by Licensor
is subject to certain rights of the United States government as further
described in Section 6.2 below.
2.1.4 No Additional Licenses. Licensee acknowledges and agrees that
----------------------
the scope of license granted hereunder is specifically and expressly defined in
this Section 2.1, and no additional licenses are granted or implied hereunder.
3
<PAGE>
2.2. Sponsored Research. Within 30 days after the date when Licensee enters
-------------------
into an agreement for a corporate partner or strategic alliance relationship
(including without limitation a research and development agreement, technology
license agreement, marketing or distribution agreement, merger or acquisition
agreement, etc.), Licensee shall commence making monthly installment payments of
at least $12,500 to fund SKCC's costs for sponsored research to be performed in
the laboratory of and under the direction of Licensor while Licensor continues
to be associated with SKCC (the "Sponsored Research"). If Licensor ceases to be
associated with SKCC, then future payments of said monthly installment payments
shall be payable by Licensee to whatever new institution Licensor becomes
associated, subject to Licensee and said new institution entering into a
mutually approved agreement. Said Sponsored Research shall be (i) in areas of
research within the nature and focus of SKCC's research programs and (ii)
directly or indirectly related to the inventions described in Licensor's Patent
Rights, as mutually approved by Licensor, SKCC and Licensee. If no such mutual
agreement is reached promptly, Licensee shall nevertheless commence and continue
to pay at least $12,500 per month, as credits against costs ultimately to be
incurred by SKCC for conducting Sponsored Research. A minimum of $12,500 per
month for Sponsored Research shall continue to be payable by Licensee to SKCC
for the remainder of the term of this Agreement. The costs for the Sponsored
Research shall be SKCC's actual direct costs for labor, materials and equipment,
plus SKCC's customary overhead/indirect costs at the rate established from time
to time for the governmental grant supported research projects performed by
SKCC.
2.3. Minimum Annual Royalties.
------------------------
2.3.1 Licensee shall pay to SKCC the following minimum annual royalty
cash amounts;
a. Months 1 through 12 following the Effective Date:
$2,500 per month, payable by the end of each month, for a total of $30,000
during the first year.
b. Second anniversary of the Effective Date: $30,000.
c. Third anniversary of the Effective Date: $30,000.
d. Each subsequent anniversary of the Effective Date for
the duration of the term of this Agreement: $30,000.
2.3.2 To the extent that Licensee has paid running royalties
pursuant to Section 2.4.1 hereof for Net Sales made in the year preceding the
anniversary payment date, said payments shall be credited against the foregoing
minimum annual royalty payment for that year. To the extent that the running
royalties for a particular year exceed the minimum annual royalties payable for
that year, the excess shall not be carried forward as a credit against the next
year's minimum annual royalties.
2.3.3 Each of the foregoing payments shall be credited against any
running royalties payable pursuant to Section 2.4 hereof for Net Sales made
during the year preceding the anniversary payment date. If the credit is greater
than the running royalties payable, there is no
4
<PAGE>
carryforward of the unused credit against subsequent minimum annual royalty
payments required to maintain this Agreement in effect. However, half of any
unused credits from the minimum annual royalty payment for one year may be used
as a carryforward and applied as a credit against half of the future accruing
running royalties. For avoidance of doubt and as an example, if Licensee pays
the $30,000 minimum annual royalty for year two, and no running royalties are
earned for year two, then Licensee will have a $15,000 carryforward which can be
used to satisfy $15,000 of a future $30,000 running royalty obligation earned in
year three or a later year.
2.4. Running Royalties.
-----------------
2.4.1 As further consideration for the license granted pursuant to
Section 2.1 hereof, Licensee shall pay to SKCC a running royalty at the rate of
three percent (3%) of Net Sales for any and all Products which are made, used,
sold or otherwise disposed of under Licensor Patent Rights and/or the Future
Patent Rights. The minimum annual royalties paid pursuant to Section 2.3 shall
be credits against the running royalties payable, as specified in Section 2.3.3
hereof.
2.4.2 To the extent that Licensee grants any sublicense rights under
this Agreement and the sublicensee pays to Licensee a running royalty in excess
of 3% of Net Sales, then Licensee shall share with and pay to SKCC an mount
equal to 10% of said excess received by Licensee. SKCC shall also receive the 3%
running royalty on the Net Sales by the sublicensee. Licensee shall not accept
any alternative payments (e.g., license fees or milestone payments) "in lieu of"
a customary, fair and reasonable running royalty, unless Licensee also pays to
SKCC 10% of said "in lieu of" alternative payment.
2.4A. Allocation of Payments. As a matter between Licensor and SKCC,
----------------------
with which Licensee need not be concerned, the payments received by SKCC
pursuant to Sections 2.3 and 2.4 shall be allocated and distributed as follows:
(i) As to payments under Section 2.3 and as to payments under
Section 2.4 for Products utilizing the Licensor Patent Right or for Products
utilizing the Future Patent Rights for which Licensor is the sole inventor, the
payments shall be allocated and distributed:
25% to Licensor, for his own personal benefit, or to his
heirs or assigns;
25% to SKCC, for use in Licensor's laboratory at SKCC
while Licensor continues to be associated with SKCC,
and thereafter to SKCC for its own uses; and
50% to SKCC for its own uses.
(ii) As to payments under Section 2.4 for Products utilizing the
Future Patent Rights for which Licensor is a co-inventor with other SKCC
employees (and not utilizing the Licensor Patent Rights), the payments shall be
allocated and distributed in accordance with SKCC's Patent Policy.
5
<PAGE>
2.5. Quarterly Payments. With regard to Net Sales made by Licensee or its
------------------
Affiliates or sublicensees, royalties shall be payable by Licensee quarterly,
within ninety (90) days after the end of each calendar quarter, based upon the
Net Sales of Products during such preceding calendar quarter, commencing with
the calendar quarter in which the first commercial sale of any Product is made.
2.6. Term of License.
---------------
2.6.1 Unless terminated sooner in accordance with the provisions of
this Agreement, the term of this license shall expire when the last of the
royalty obligations has expired. The royalty obligations of Licensee as to each
Product shall terminate on a product-by-product and country-by-country basis
concurrently with the expiration of the last to expire of Licensor Patent Rights
utilized by or in each such Product in each such country.
2.6.2 Upon the expiration of the royalty obligation on a product-by-
product and country-by-country basis described above, and provided that Licensee
is not then in default hereunder, Licensee shall have the right to continue to
sell or otherwise distribute the applicable Product in said country without
further royalty obligations on account of Net Sales in such country.
2.6.3 Notwithstanding the foregoing, if applicable government
regulations require a shorter term and/or a shorter term of exclusivity than
provided for herein, then the term of this License Agreement shall be so
shortened or this License Agreement shall be amended to provide for a
nonexclusive license, and, in such event, the parties shall negotiate in good
faith to reduce equitably the royalties payable as set forth under Section 2.4
hereof. If the parties cannot agree, the equitable adjustment shall be
determined by arbitration in accordance with Article 9 hereof.
2.7. Sublicense.
----------
2.7.1 Licensee shall have the right to grant sublicenses to any
party with respect to any rights conferred upon Licensee under this Agreement.
Notwithstanding the foregoing, (i) any such sublicense shall be subject in all
respects to the restrictions, exceptions, royalty obligations, reports,
termination provisions, and other provisions contained in this Agreement (but
not including the payment of a license fee pursuant to Section 2.3 hereof) and
(ii) each such sublicensee, and the form and substance of each such sublicense,
shall be subject to the prior written approval of Licensor and SKCC, which
approval shall not be unreasonably withheld. Any termination of this License
Agreement shall automatically terminate any sublicense hereunder, at the option
of Licensor and SKCC.
2.7.2 Licensee shall pay to SKCC, or cause its Affiliate or
sublicensee to pay SKCC, the royalties on all Net Sales of such Affiliate or
sublicensee the same as if said Net Sales had been made by Licensee. Each
Affiliate and sublicensee shall report its Net Sales to SKCC through Licensee,
which Net Sales shall be aggregated with any Net Sales of Licensee for purposes
of determining the Net Sales upon which royalties are to be paid to Licensor.
6
<PAGE>
2.8. Reports. Licensee shall furnish to SKCC at the same time as each
-------
royalty payment is made by Licensee, a detailed written report of Net Sales of
the Products and the royalty due and payable thereon, including a description of
any permitted offsets or credits deducted therefrom, on a product-by-product and
country-by-country basis, for the calendar quarter upon which the royalty
payment is based.
2.9. Records. Licensee shall keep, and cause its Affiliates and
--------
sublicensees to keep, full, complete and proper records and accounts of all
sales of Products in sufficient detail to enable the royalties payable on Net
Sales of each Product to be determined. SKCC shall have the right to appoint an
independent certified public accounting firm to audit the records of Licensee,
its Affiliates and sublicensees as necessary to verify the royalties payable
pursuant to this Agreement. Licensee, its Affiliates and sublicensees shall pay
to an amount equal to any additional royalties to which SKCC is entitled as
disclosed by the audit, plus a late payment charge thereon at the rate of one
and one-half percent (1.5%) per month. Such audit shall be at the expense of the
party requesting such audit; provided, however, that if the audit discloses that
SKCC was underpaid royalties with respect to any Product by at least five
percent (5%) for any calendar quarter, then Licensee shall reimburse SKCC for
the audit costs applicable thereto. SKCC may exercise its right of audit as to
each of Licensee, its Affiliates or sublicensees no more frequently than once in
any calendar year. The accounting firm shall disclose to SKCC the results of
such audit, but limiting the disclosure to only information relating to the
accuracy and discrepancies of the royalty payments; and otherwise the accounting
firm shall be obligated to maintain the confidentiality of the information it
obtains from said audit. Licensee, its Affiliates and sublicensees shall
preserve and maintain all such records required for audit for a period of three
(3) years after the calendar quarter to which the record applies.
2.10. Foreign Sales. The remittance of royalties payable on sales outside
--------------
the United States shall be payable to SKCC in United States Dollar equivalents
at the official rate of exchange of the currency of the country from which the
royalties are payable, as quoted in the Wall Street Journal for the last
business day of the calendar quarter in which the royalties are payable. If the
transfer of or the conversion into the United States Dollar equivalents of any
such remittance in any such instance is not lawful or possible, the payment of
such part of the royalties as is necessary shall be made by the deposit thereof,
in the currency of the country where the sale was made on which the royalty was
based to the credit and account of SKCC or its nominee in any commercial bank or
trust company of SKCC's choice located in that country, prompt written notice of
which shall be given by Licensee to SKCC.
2.11. Foreign Taxes. Any tax required to be withheld by Licensee under the
-------------
laws of any foreign country for the account of SKCC shall be promptly paid by
Licensee for and on behalf of SKCC to the appropriate governmental authority,
and Licensee shall use its best reasonable efforts to furnish SKCC with proof of
payment of such tax together with official or other appropriate evidence issued
by the applicable government authority. Any such tax actually paid on SKCC's
behalf shall be deducted from royalty payments due SKCC.
7
<PAGE>
3. PATENT MATTERS
3.1. Patent Prosecution and Maintenance. From and after the date of this
----------------------------------
Agreement, the provisions of this Article 3 shall control the prosecution and
maintenance of any patent included within Licensor Patent Rights and/or Future
Patent Rights. Subject to the requirements, limitations and conditions set forth
in this Agreement, Licensor shall direct and control patent matters applicable
to the invention described in item 1 of Exhibit A, and SKCC shall direct and
control the patent matters for inventions resulting from the sponsored research
program described in Section 2.2 hereof, including (i) the preparation, filing
and prosecution of the United States and foreign patent applications within
Licensor Patent Rights and/or Future Patent Rights (including any interferences
and foreign oppositions) and (ii) maintain the patents issuing therefrom.
Licensor or SKCC, respectively, shall select the patent attorney, subject to
Licensee's written approval, which approval shall not be unreasonably withheld.
Licensee shall have full rights of consultation with the patent attorney so
selected on all matters relating to Licensor Patent Rights and/or Future Patent
Rights. Licensor or SKCC, respectively, shall use its reasonable good faith
efforts to implement all reasonable requests made by Licensee with regard to the
preparation, filing, prosecution and/or maintenance of the patent applications
and/or patents within Licensor Patent Rights and/or Future Patent Rights.
3.2. Information to Licensee. Licensor or SKCC shall keep Licensee informed
-----------------------
with regard to the patent application and maintenance processes applicable to
patent protection. Licensor or SKCC shall deliver to Licensee a copy of all
patent applications, amendments, related correspondence, preliminary drains of
the foregoing prior to finalization, and other relevant matters related thereto.
3.3. Patent Costs. Licensee acknowledges and agrees that Licensor and SKCC
------------
do not have independent funding to cover patent costs, and that the license
granted hereunder is in part in and consideration for Licensee's assumption of
patent costs and expenses as described herein. Licensee shall pay for all
expenses incurred by Licensor or SKCC pursuant to Section 3.1 hereof. SKCC
hereby represents and acknowledges that SKCC has not yet incurred any patent
costs and expenses in connection with Licensor Patent Rights and/or Future
Patent Rights licensed hereunder. By separate agreement, Licensor and Licensee
are handling patent costs previously incurred by Licensor. Licensee agrees to
pay all such future patent expenses directly to Licensor's or SKCC's patent
attorney, within thirty (30) days after Licensee receives an itemized invoice
therefor.
3.4. Effect of Licensee's Discontinuing Payments. In the event Licensee
-------------------------------------------
elects to discontinue payment for the filing, prosecution and/or maintenance of
any United States or foreign patent application and/or United States or foreign
patent within Licensor Patent Rights and/or Future Patent Rights, Licensee shall
give Licensor or SKCC at least sixty (60) days' prior written notice of such
election. No such notice shall have any effect on Licensee's obligations to pay
expenses incurred up to the effective date of such election. From and after the
effective date of such notice of election, Licensor or SKCC shall have the
right, but not the obligation, to pay for the prosecution and/or maintenance of
the patent right which Licensee is discontinuing. From and after the effective
date of such notice of election, any such patent application or patent as to
which Licensee shall have elected to discontinue payments shall thereafter be
excluded from the
8
<PAGE>
definition of Licensor Patent Rights and/or Future Patent Rights and from the
scope of license granted under this Agreement. All rights relating to such
patent application or patent for Licensor Patent Rights shall revert to Licensor
or SKCC, as the case may be, and may be freely licensed by Licensor, and for
Future Patent Rights shall revert to SKCC, as the case may be, to any other
person or entity.
3.5. Ownership. The patent applications filed and the patents obtained by
---------
Licensor or SKCC pursuant to Section 3.I hereof shall be owned solely by
Licensor or SKCC, as the case may be, and deemed a part of Licensor Patent
Rights and/or Future Patent Rights.
3.6. Licensor's Right to Pursue Patent. If at any time during the term of
---------------------------------
this Agreement, Licensee's rights with respect to Licensor Patent Rights and/or
Future Patent Rights are terminated, Licensor and SKCC shall have the right to
take whatever action Licensor and SKCC deem appropriate to obtain or maintain
the corresponding patent protection at its own expense. If Licensor or SKCC
pursues patents under this Section 3.6, Licensee agrees to cooperate fully,
including by providing, at no charge to Licensor or SKCC, all appropriate or
necessary technical data and executing all appropriate or necessary legal
documents for said patent prosecution.
3.7. Infringement Actions.
--------------------
3.7.1 Infringement. Licensee shall have the option to prosecute any
------------
and all infringements of any Licensor Patent Rights and/or Future Patent Rights.
Licensee shall be entitled to bring an action against the infringement in
Licensor's or SKCC's name if required by law or otherwise deemed appropriate.
Licensee hereby holds Licensor and SKCC harmless from and against any costs,
expenses or liability of any kind respecting all such infringements or any
charges of infringements. Licensor and SKCC agree to provide reasonable
assistance of a technical nature to Licensee which Licensee may require in any
litigation arising in accordance with the provisions of this Section 3.7.1, for
which Licensee shall pay to Licensor and SKCC a reasonable hourly rate of
compensation together with reimbursement of reasonable out-of-pocket costs and
expenses. Licensee shall have the right, with the consent of Licensor and SKCC,
which consent shall not be unreasonably withheld, to enter into any settlements,
judgments or other arrangements respecting the infringement claim. Any damages,
judgments or other payments actually recovered from the infringing party in the
litigation pursued by Licensee shall be used first to reimburse Licensee for all
costs (including those Licensor's or SKCC's costs paid by Licensee) of pursuing
the litigation; and any net remaining balance shall be shared seventy percent
(70%) to Licensee and thirty percent (30%) to SKCC. In the event Licensee elects
not to prosecute any such infringement, Licensee shall promptly so notify
Licensor and SKCC, and Licensor and SKCC shall thereafter have the right to
prosecute such infringement action on its own behalf. In the event Licensor or
SKCC elects to prosecute any such infringement action on its own behalf, any net
recovery obtain in connection therewith shall be shared seventy percent (70%) to
Licensor and/or SKCC, as the case may be, and thirty percent (30%) to Licensee.
Any net payments received by SKCC pursuant to this Section shall be treated as a
payment pursuant to Section 2.4 and allocated and distributed as specified in
Section 2.4A.
9
<PAGE>
3.7.2 Challenge to Licensor Patent Rights. In the event there is any
-----------------------------------
challenge to the validity, scope or enforceability of Licensor Patent Rights,
Licensee shall bear the costs to resist and defend said challenge unless
Licensee elects to not do so by written notice to Licensor. Licensor and
Licensee shall confer and decide upon an appropriate strategy and plan to
resist said challenge, including the selection of legal and patent counsel to
represent Licensor therein. Fifty percent (50%) of Licensee's costs to resist
said challenge shall constitute credit offsets against up to fifty percent (50%)
of the running royalties payable in any future period. Licensee shall pay the
royalty rate for said Licensor Patent Rights unless and until a final and non-
appealable decision has been rendered upholding the challenge. If Licensee
elects to not fund the costs to resist said challenge, then Licensor may do so.
Licensee hereby agrees to not contest or challenge the validity of Licensor
Patent Rights and/or Future Patent Rights and to not encourage or abed any third
party to do so; but in the event and to the extent that the foregoing is legally
impermissible, the foregoing shall be deemed to be modified and limited so as to
be legally permissible.
4. OBLIGATIONS RELATED TO COMMERCIALIZATION
4.1. Commercialization Obligation. In order to maintain the license granted
----------------------------
hereunder in force, Licensee shall use reasonable efforts and due diligence (i)
to pursue research and development for Products, and (ii) to obtain and maintain
necessary governmental approvals for the sale of Products, as promptly as is
reasonably and commercially feasible, and (iii) thereafter to produce and sell
reasonable quantities of such Products in worldwide markets. Licensee shall keep
Licensor and SKCC generally informed as to Licensee's progress for such
research, development, approvals, production and sale, including its efforts, if
any, to sublicense Licensor Patent Rights and/or Future Patent Rights. Licensee
shall deliver to Licensor and SKCC an annual written report and such other
reports as Licensor or SKCC may reasonably request. In the event Licensor, SKCC
and Licensee cannot agree upon any matter related to Licensee's
commercialization obligations, the parties agree to utilize arbitration pursuant
to Article 9 hereof in order to resolve the matter. If the arbitrator determines
that Licensee has not complied with its obligations hereunder as to a particular
Product or Products, and such default is not fully cured within six (6) months
after the arbitrator's decision, then Licensor may terminate this Agreement as
to said particular Product or Products.
4.2. Governmental Approvals and Marketing of Products. Licensee shall be
------------------------------------------------
responsible for obtaining all necessary governmental approvals for the
development, production, distribution, sale and use of the Products, at
Licensee's expense. Licensee shall have sole responsibility for any warning
labels, packaging and instructions as to the use of Products and for the quality
control for any Product.
4.3. Indemnity. Licensee hereby agrees to indemnify, defend and hold
---------
harmless Licensor and SKCC from and against any liability or expense arising
from any product liability claim asserted by any party as to the Products or any
claims arising from the use of any Licensor Patent Rights and/or Future Patent
Rights pursuant to this Agreement. Such indemnity and defense obligation shall
apply to any product liability or other claims, including without limitation,
personal injury, death or property damage, made by employees, subcontractors,
sublicensees, or agents of Licensee or its Affiliates or sublicensees, as well
as any member of the general public.
10
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4.4. Patent Marking. To the extent required by applicable law, Licensee
--------------
shall mark all Products or their containers in accordance with the applicable
patent marking laws.
4.5. No Use of Name. The use of the name of Licensor or SKCC in connection
--------------
with the advertising or sale of the Products is expressly prohibited.
4.6. Foreign Registration. Licensee agrees to register this Agreement with
--------------------
any foreign governmental agency which requires such registration, and Licensee
shall pay all costs and legal fees in connection therewith. In addition,
Licensee shall assure that all foreign laws affecting this Agreement or the sale
of Products are fully satisfied.
5. LIMITED WARRANTY
Licensor hereby represents and warrants that it has sole ownership of
Licensor Patent Rights licensed hereunder, and that Licensor has the full right
and power to enter into this Agreement. SKCC hereby represents and warrants that
it has the right to grant the rights it is granting as specified in this
Agreement. LICENSOR AND SKCC MAKE NO OTHER WARRANTIES CONCERNING LICENSOR PATENT
RIGHTS AND/OR FUTURE PATENT RIGHTS COVERED BY THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AS TO LICENSOR PATENT RIGHTS AND/OR FUTURE PATENT RIGHTS OR
ANY PRODUCT. LICENSOR AND SKCC MAKE NO WARRANTY OR REPRESENTATION AS TO THE
VALIDITY OR SCOPE OF LICENSOR PATENT RIGHTS AND/OR FUTURE PATENT RIGHTS OR THAT
ANY PRODUCT WILL BE FREE FROM AN INFRINGEMENT ON PATENTS OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY
INFRINGING LICENSOR PATENT RIGHTS AND/OR FUTURE PATENT RIGHTS COVERED BY THIS
AGREEMENT.
6. INTERESTS IN INTELLECTUAL PROPERTY RIGHTS
6.1. Preservation of Title. Licensor hereby retains ownership and title to
---------------------
Licensor Patent Rights and SKCC hereby retains ownership and title to Future
Patent Rights licensed hereunder, subject to Licensee's rights under this
Agreement.
6.2. Governmental Interests. To the extent, if any, that Licensor or SKCC
----------------------
has received funding from the United States Government in support of research
activities which resulted in Licensor Patent Rights and/or Future Patent
Rights, Licensee acknowledges that Licensee's rights pursuant to this Agreement
shall be subject to the rights of the United States Government, if any, which
arise or result from the receipt of research support from the United States
Government by Licensor and SKCC, including without limitation, (i) the grant to
the United States of a nonexclusive, irrevocable, royalty-free license to
Licensor Patent Rights and/or Future Patent Rights licensed hereunder for
governmental purposes, (ii) the right of the United States to exercise "march-
in" rights to force certain non-exclusive licensing if Licensee is not
diligently commercializing certain Products, and (iii) the obligation of
Licensee to manufacture substantially
11
<PAGE>
in the United States those licensed Products which are sold in the United
States, unless a waiver is obtained from an agency of the United States.
7. CONFIDENTIALITY AND PUBLICATION
7.1. Treatment of Confidential Information. The parties agree that during
-------------------------------------
the term of this Agreement, and for a period of three (3) years after this
Agreement terminates, a party receiving Confidential Information of the other
party will (i) maintain in confidence such Confidential Information to the same
extent such party maintains its own proprietary industrial information, but in
any event the party shall use reasonable efforts, (ii) not disclose such
Confidential Information to any third party without prior written consent of the
other party and (iii) not use such Confidential Information for any purpose
except those permitted by this Agreement.
7.2. Publications. Licensee agrees that Licensor and SKCC shall have the
------------
right to publish in accordance with customary academic practices and policies.
However, prior to publication, Licensor and SKCC shall submit to Licensee copies
of proposed publications which contain subject matter relating to intellectual
property licensed hereunder or to a Product, and afford Licensee thirty (30)
days to review the publication(s). Upon timely written request by Licensee,
Licensor and SKCC shall delay any such publication until the preparation and
filing of a patent application pursuant to Section 3.1, which delay shall not
exceed an additional thirty (30) days.
7.3. Publicity. Except as otherwise provided herein or required by law, no
---------
party shall originate any publication, news release or other public
announcement, written or oral, whether in the public press, stockholders'
reports, or otherwise, relating to this Agreement or to any sublicense
hereunder, or to the performance hereunder or any such agreements, without the
prior written approval of the other party, which approval shall not be
unreasonably withheld. Scientific publications published in accordance with
Section 7.2 of this Agreement shall not be construed as publicity governed by
this Section 7.3.
8. TERM AND TERMINATION
8.1. Term. Unless terminated sooner in accordance with the terms set forth
----
herein, the term of this Agreement, and the license granted hereunder, shall
terminate as provided in Article 2.6 hereof.
8.2. Termination Upon Default.
------------------------
8.2.1 Any one or more of the following events shall constitute an
event of default hereunder: (i) the failure of a party to pay any amounts when
due hereunder and the expiration of sixty (60) days after receipt of a written
notice requesting the payment of such amount; or (ii) the failure of a party to
perform any other obligation required of it to be performed hereunder, and the
failure to cure within sixty (60) days after receipt of notice from the other
party specifying in reasonable detail the nature of such default. Upon the
occurrence of any event of default, the
12
<PAGE>
non-defaulting party may deliver to the defaulting party written notice of
intent to terminate, such termination to be effective upon the date set forth in
such notice.
8.2.2 Such termination rights shall be in addition to and not in
substitution for any other remedies that may be available to the non-defaulting
party. Termination pursuant to this Section 8.2 shall not relieve the defaulting
party from liability and damages to the other party for breach of this
Agreement. Waiver by either party of a single default or a succession of
defaults shall not deprive such party of any right to terminate this Agreement
arising by reason of any subsequent default.
8.3. Termination Upon Bankruptcy or Insolvency. Unless otherwise prohibited
-----------------------------------------
by applicable law, this Agreement may be terminated by Licensor or SKCC giving
written notice of termination to Licensee upon the filing of bankruptcy
proceedings for Licensee, or the appointment of a receiver of any of Licensee's
assets, or the making by Licensee of any assignment for the benefit of
creditors, or the institution of any proceedings against Licensee under any
bankruptcy law. Termination shall be effective upon the date specified by
Licensor or SKCC in such notice.
8.4. Rights Upon Expiration. Neither party shall have any further rights or
----------------------
obligations upon the expiration of the full term of this Agreement upon its
regularly scheduled expiration date with respect to this Agreement, other than
the obligation of Licensee to make any and all reports and payments for the
final quarter period. Notwithstanding the foregoing, upon such expiration, (i)
each party shall be required to continue to abide by its obligations as
described in Article 7, (ii) Licensee may continue to sell the Product under the
terms described in Section 2.6, and (iii) Licensee shall continue to abide by
its obligation to indemnify Licensor as described in Section 4.3.
8.5. Rights Upon Termination. Notwithstanding any other provision of this
-----------------------
Agreement, upon any termination of this Agreement prior to the regularly
scheduled expiration date of this Agreement, the license granted hereunder shall
terminate. Except as otherwise provided in Section 8.6 of this Agreement with
respect to work-in-progress, upon such termination, Licensee shall have no
further right to develop, manufacture, use, market or sell any Product, or to
otherwise use any Licensor Patent Rights and/or Future Patent Rights. Upon any
such termination, Licensee shall promptly return all materials, samples,
documents, information, and other materials which embody or disclose Licensor
Patent Rights and/or Future Patent Rights, provided, however, that Licensee
shall not be obligated to provide Licensor and SKCC with proprietary information
which Licensee can show that it independently developed. Any such termination
shall not relieve either party from any obligations accrued to the date of such
termination. Upon such termination, each party shall be required to abide by its
obligations as described in Section 7.1, and Licensee shall continue to abide by
its obligations to indemnify Licensor as described in Article 4.3.
8.6. Work-in-Progress. Upon any such early termination of the license
----------------
granted hereunder in accordance with Section 8.5 of this Agreement, Licensee
shall be entitled to finish any work-in-progress and to sell any completed
inventory of Product covered by such license which remain on hand as of the date
of the termination, so long as Licensee pays to SKCC the
13
<PAGE>
royalties applicable to said subsequent sales in accordance with the terms and
conditions as set forth in this Agreement, provided that no such sales shall be
permitted after the expiration of six (6) months after the date of termination.
9. ARBITRATION
9.1. Binding Arbitration. Any dispute arising out of this Agreement shall
-------------------
be resolved by binding arbitration under the rules of JAMS. The location of the
arbitration shall be in the County of San Diego.
9.2. Selection of Arbitrators. The arbitration shall be conducted by a
------------------------
panel of three neutral arbitrators who are independent and disinterested with
respect to the parties, this Agreement, and the outcome of the arbitration.
Licensor and SKCC, together, shall appoint one neutral arbitrator, and Licensee
shall appoint one neutral arbitrator, and these two arbitrators so selected by
the parties shall then select the third arbitrator. If one party has given
written notice to the other party as to the identity of the arbitrator appointed
by the party, and the party thereafter makes a written demand on the other party
to appoint its designated arbitrator within the next ten days, and the other
party fails to appoint its designated arbitrator within ten days after
receiving said written demand, then the arbitrator who has already been
designated shall appoint the other two arbitrators.
9.3. Discovery. Unless the parties mutually agree in writing to some
---------
additional and specific pre-hearing discovery, the only pre-hearing discovery
shall be (a) reasonably limited production of relevant and non-privileged
documents, and (b) the identification of witnesses to be called at the hearing,
which identification shall give the witness's name, general qualifications and
position, and a brief statement as to the general scope of the testimony to be
given by the witness. The arbitrators shall decide any disputes and shall
control the process concerning these pre-hearing discovery matters. Pursuant to
JAMS rules, the parties may subpoena witnesses and documents for presentation at
the hearing.
9.4. Case Management. Prompt resolution of any dispute is important to both
---------------
parties; and the parties agree that the arbitration of any dispute shall be
conducted expeditiously. The arbitrators are instructed and directed to assume
case management initiative and control over the arbitration process (including
scheduling of events, pre-hearing discovery and activities, and the conduct of
the hearing), in order to complete the arbitration as expeditiously as is
reasonably practical for obtaining a just resolution of the dispute.
9.5. Remedies. The arbitrators may grant any legal or equitable remedy or
--------
relief that the arbitrators deem just and equitable, to the same extent that
remedies or relief could be granted by a state or federal court, provided
however, that no punitive damages may be awarded. No court action may be
maintained seeking punitive damages. The decision of any two of the three
arbitrators appointed shall be binding upon the parties.
9.6. Expenses. The expenses of the arbitration, including the arbitrators'
--------
fees, expert witness fees, and attorney's fees, may be awarded to the prevailing
party, in the discretion of the arbitrators, or may be apportioned between the
parties in any manner deemed appropriate by the
14
<PAGE>
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses, both parties shall share equally in the
payment of the arbitrators' fees as and when billed by the arbitrators.
9.7. Confidentiality. Except as set forth below, the parties shall keep
---------------
confidential the fact of the arbitration, the dispute being arbitrated, and the
decision of the arbitrators. Notwithstanding the foregoing, the parties may
disclose information about the arbitration to persons who have a need to know,
such as directors, trustees, management employees, witnesses, experts,
investors, attorneys, lenders, insurers, and others who may be directly
affected. Additionally, if a party has stock which is publicly traded, the party
may make such disclosures as are required by applicable securities laws.
Further, if a party is expressly asked by a third party about the dispute or the
arbitration, the party may disclose and acknowledge in general and limited terms
that there is a dispute with the other party which is being (or has been)
arbitrated. Once the arbitration award has become final, if the arbitration
award is not promptly satisfied, then these confidentiality provisions shall no
longer be applicable.
10. GENERAL PROVISIONS
10.1. Assignment. Neither this Agreement nor any rights granted hereunder
----------
may be assigned or transferred by Licensee except (i) to an Affiliate of
Licensee or (ii) as expressly permitted hereunder, without the prior written
consent of Licensor and SKCC.
10.2. Binding Upon Successors and Assigns. Subject to the limitations on
-----------------------------------
assignment herein, this Agreement shall be binding upon and inure to the benefit
of any successors in interest and assigns of Licensor, SKCC and Licensee. Any
such successor or assignee of Licensee's interest shall expressly assume in
writing the performance of all the terms and conditions of this Agreement to be
performed by Licensee.
10.3. Independent Contractors. The relationship between SKCC, Licensor and
-----------------------
Licensee is that of independent contractors. SKCC, Licensor and Licensee are not
joint venturers, partners, principal and agent, master and servant, employer or
employee, and have no other relationship other than independent contracting
parties. SKCC, Licensor and Licensee shall have no power to bind or obligate
each other in any manner, other than as is expressly set forth in this
Agreement.
10.4. Entire Agreement; Modification. This Agreement sets forth the entire
------------------------------
agreement and understanding between the parties as to the subject matter hereof.
There shall be no amendments or modifications to this Agreement, except by a
written document which is signed by both parties.
10.5. California Law. This Agreement shall be construed and enforced in
--------------
accordance with the laws of the State of California.
10.6. Headings. The headings for each article and section in this Agreement
--------
have been inserted for convenience of reference only and are not intended to
limit or expand on the meaning of the language contained in the particular
article or section.
15
<PAGE>
10.7. Severability. Should any one or more of the provisions of this
------------
Agreement be held invalid or unenforceable by a court of competent jurisdiction,
it shall be considered severed from this Agreement and shall not serve to
invalidate the remaining provisions thereof. The parties shall make a good faith
effort to replace any invalid or unenforceable provision with a valid and
enforceable one such that the objectives contemplated by them when entering this
Agreement may be realized.
10.8. No Waiver. Any delay in enforcing a party's rights under this
---------
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such party's rights to the future enforcement of its
rights under this Agreement, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.
10.9. Attorneys' Fees. In the event of a dispute between the parties
---------------
hereto or in the event of any default hereunder, the party prevailing in the
resolution of any such dispute or default shall be entitled to recover its
reasonable attorneys' fees and other costs incurred in connection with resolving
such dispute or default.
10.10. Notices. Any notices required by this Agreement shall be in writing,
-------
shall specifically refer to this Agreement and shall be sent by registered or
certified airmail, postage prepaid, or by telefax, telex or cable, charges
prepaid, or by overnight courier, postage prepaid and shall be forwarded to the
respective addresses set forth below unless subsequently changed by written
notice to the other party:
For Licensee: UroGen Corp.
3099 Science Park Road, Suite A
San Diego, CA 92121
Attn: President
Fax: 450-5949
For SKCC: Sidney Kimmel Cancer Center
3099 Science Park Rd., Suite 200
San Diego, CA 92121
Attn: President
Fax: (619) 450-3251
For Licensor: Daniel A. Mercola, M.D., Ph.D.
P.O. Box 3752
Rancho Santa Fe, CA 92067
Notice shall be deemed delivered upon the earlier of (i) when
received, or (ii) three (3) days after deposit into the United States mail if
sent within the United States, or (iii) the date
16
<PAGE>
notice is sent via telefax, telex or cable, or (iii) one business day
immediately following delivery to overnight courier (except Sunday and holidays)
for delivery within the United States.
10.11. Compliance with U.S. Laws. Nothing contained in this Agreement
-------------------------
shall require or permit Licensor or Licensee to do any act inconsistent with
the requirements of any United States law, regulation, or executive order as the
same may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement by
their duly authorized representatives as of the date set forth above.
Licensee: SKCC:
UroGen Corp. Sidney Kimmel Cancer Center
By: [SIGNATURE ILLEGIBLE] By: /s/ Linda Bergen
--------------------------------- -------------------------------
Its: President & CEO Its: Assistant Vice President
-------------------------------- ------------------------------
Licensor:
/s/ Daniel A. Mercola
-----------------------------------
Daniel A. Mercola, M.D., Ph.D.
17
<PAGE>
EXHIBIT A
Licensor Patent Rights
1. U.S. Patent Applications
------------------------
Inventor: Daniel Mercola
Title: Methods for Therapy Sensitization by Inhibition of Jun Kinase
Patent Attorney Docket No.: P-UR 2590 (2841302)
---------
Date filed with PTO: 5/28/97
------------------
i
<PAGE>
EXHIBIT 10.8
EXCLUSIVE LICENSE AGREEMENT
between
THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
and
UROGEN CORP.
for
DETECTION OF CARCINOMA METASTASES BY NUCLEIC ACID
AMPLIFICATION
UC Case No. 91-145
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Article No. PAGE
- ----------- ----
<S> <C>
BACKGROUND..................................................................... 1
1. DEFINITIONS................................................................ 2
2. LIFE OF PATENT EXCLUSIVE GRANT............................................. 4
3. SUBLICENSES................................................................ 4
4. PAYMENT TERMS.............................................................. 5
5. LICENSE-ISSUE FEE.......................................................... 6
6. LICENSE MAINTENANCE FEE (MILESTONES)....................................... 6
7. EARNED ROYALTIES AND MINIMUM ANNUAL ROYALTIES.............................. 7
8. DUE DILIGENCE.............................................................. 7
9. PROGRESS AND ROYALTY REPORTS............................................... 8
10. BOOKS AND RECORDS.......................................................... 9
11. LIFE OF THE AGREEMENT...................................................... 10
12. TERMINATION BY THE REGENTS................................................. 10
13. TERMINATION BY LICENSEE.................................................... 11
14. DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION.................. 11
15. USE OF NAMES AND TRADEMARKS................................................ 11
16. LIMITED WARRANTY........................................................... 12
17. PATENT PROSECUTION AND MAINTENANCE......................................... 13
18. PATENT MARKING............................................................. 15
19. PATENT INFRINGEMENT........................................................ 15
20. INDEMNIFICATION............................................................ 16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
21. NOTICES.................................................................... 17
22. ASSIGNABILITY.............................................................. 18
23. NO WAIVER.................................................................. 18
24. FAILURE TO PERFORM......................................................... 18
25. GOVERNING LAWS............................................................. 18
26. PREFERENCE FOR UNITED STATES INDUSTRY...................................... 19
27. GOVERNMENT APPROVAL OR REGISTRATION........................................ 19
28. EXPORT CONTROL LAWS........................................................ 19
29. SECRECY.................................................................... 19
30. MISCELLANEOUS.............................................................. 21
</TABLE>
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
----------------------------
for
DETECTION OF CARCINOMA METASTASES BY NUCLEIC ACID
AMPLIFICATION
This License Agreement (the "Agreement") is made effective this
20th day of September, 1996 (the "Effective Date") between THE REGENTS OF THE
- ---- ---------
UNIVERSITY OF CALIFORNIA, a California corporation having its statewide
administrative offices at 300 Lakeside Drive, 22nd Floor, Oakland, California
94612-3550, ("The Regents"), and UroGen Corp., a California corporation having a
principal place of business at 3099 Science Park Road Suite A, San Diego,
California 92121, (the "Licensee").
BACKGROUND
1. Certain inventions, generally characterized as "Detection of Carcinoma
Metastases by Nucleic Acid Amplification" UC Case No. 91-145 (collectively the
"Invention"), were made in the course of research at the University of
California, San Diego by Drs. Robert Sobol, Mark Green, and also at Cetus
Corporation by Ernest Kawasaki are covered by Regents' Patent Rights as defined
below;
2. Roche Molecular Systems, Inc., is co-owner with The Regents of the
Invention and is an assignee of patent applications and resulting patents under
Regents' Patent Rights;
3. The development of the Invention was sponsored in part by the National
Institute of Health, and the Veterans Administration and as a consequence this
license is subject to overriding obligations to the Federal Government under 35
U.S.C. 200-212 and applicable regulations;
1
<PAGE>
4. Dr. Sobol is an employee of the Veterans Administration Medical Center.
The Veterans Administration has released its rights in the Invention to Dr.
Sobol. Dr. Sobol has assigned his rights to The Regents;
5. The Licensee has evaluated the Invention under a Secrecy Agreement with
The Regents (U.C. Control No. 96-20-0706);
6. The Licensee wishes to obtain rights from The Regents for the commercial
development, use, and sale of products from the Invention, and The Regents is
willing to grant those rights so that the Invention may be developed to its
fullest and the benefits enjoyed by the general public; and
7. The Licensee is a "small business firm" as defined in 15 U.S.C. 632;
8. Both parties recognize and agree that royalties due under this Agreement
will be paid on both pending patent applications and issued patents;
- - oo 0 oo - -
In view of the foregoing, the parties agree:
1. DEFINITIONS
1.1 "Regents' Patent Rights" means The Regents' rights, title and
interests in any subject matter claimed in or covered by any of the following:
U.S. Patent Application Serial No. 07/720,061 entitled "Detection of Carcinoma
Metastases by Nucleic Acid Amplification" filed June 26, 1991 by Drs. Robert
Sobol, Mark Green, and Ernest Kawasaki (abandoned), U.S. Patent Application
Serial No.08/096,110 entitled "Detection of Carcinoma Metastases by Nucleic Acid
Amplification" filed June 22, 1993 (abandoned), and Pending U.S. Patent
Application Serial No. 08/357,565 entitled "Detection of Carcinoma Metastases by
Nucleic Acid Amplification" filed December 16, 1994 and assigned to The Regents
and Hoffman La Roche; and continuing applications thereof including divisions
and continuation-in-part applications; but only to the extent that
continuations-in-part are entitled to the priority date of the parent
application, any patents issuing on said applications including reissues,
2
<PAGE>
reexaminations and extensions; and any corresponding foreign applications or
patents.
1.2 "Licensed Product" means any material that is either covered by
Regents' Patent Rights, that is produced by the Licensed Method, or that the use
of which would constitute, but for the license granted to the Licensee under
this Agreement, an infringement of any pending or issued claim within Regents'
Patent Rights. As used in this Agreement the term Licensed Product includes
Licensed Methods.
1.3 "Licensed Methods" means any method that is covered by Regents'
Patent Rights, the use of which would constitute, but for the license granted to
the Licensee under this Agreement, an infringement of any pending or issued
claim within Regents' Patent Rights.
1.4 "Net Sales" means the total of the gross invoice prices of Licensed
Products sold or Licensed Methods performed by the Licensee, an Affiliate, or a
sublicensee, less the sum of the following actual and customary deductions where
applicable: cash, trade, or quantity discounts; sales, use, tariff,
import/export duties or other excise taxes imposed on particular sales;
transportation charges and allowances; or credits to customers because of
rejections or returns. For purposes of calculating Net Sales, transfers to an
Affiliate or sublicensee for end use by the Affiliate or sublicensee will be
treated as sales at list price.
1.5 "Affiliate" means any corporation or other business entity in which
the Licensee owns or controls, directly or indirectly, at least fifty percent
(50%) of the outstanding stock or other voting rights entitled to elect
directors, or in which the Licensee is owned or controlled directly or
indirectly by at least 50% of the outstanding stock or other voting rights
entitled to elect directors; but in any country where the local law does not
permit foreign equity participation of at least 50%, then an "Affiliate"
includes any company in which the Licensee owns or controls or is owned or
controlled by, directly or indirectly, the maximum percentage of outstanding
stock or voting rights permitted by local law.
1.6 "Field of Use" means diagnosis of metastases by nucleic acid
amplification.
3
<PAGE>
2. LIFE OF PATENT EXCLUSIVE GRANT
2.1 Subject to the limitations set forth in this Agreement, The Regents
grants to the Licensee a world-wide license under Regents' Patent Rights to
make, have made, use, sell, offer to sell and import Licensed Products and to
practice Licensed Methods.
2.2 Except as otherwise provided in this Agreement, the license granted
in Paragraph 2.1 is exclusive for the life of this Agreement.
2.3 The license granted in Paragraphs 2.1 and 2.2 is subject to all the
applicable provisions of any license to the United States Government executed by
The Regents and is subject to the overriding obligations to the U.S. Government
under 35 U.S.C. 200-212 and applicable governmental implementing regulations.
2.4 The licenses granted in Paragraphs 2.1 and 2.2 are limited to
methods and products that are within the Field of Use. For other methods and
products, the Licensee has no license under this Agreement.
2.5 The Regents reserves the right to use the Invention and associated
technology for educational and research purposes.
3. SUBLICENSES
3.1 The Regents also grants to the Licensee the right to issue
sublicenses to third parties to make, have made, use, sell, offer to sell and
import Licensed Products and to practice Licensed Methods, as long as the
Licensee has current exclusive rights thereto under this Agreement. To the
extent applicable, sublicenses must include all of the rights of and obligations
due to The Regents (and, if applicable, the United States Government) contained
in this Agreement.
3.2 The Licensee shall promptly provide The Regents with a copy of each
sublicense issued; collect and guarantee payment of all payments due The Regents
from sublicensees; and summarize and deliver all reports due The Regents from
sublicensees.
3.3 Upon termination of this Agreement for any reason, The Regents, at
its sole
4
<PAGE>
discretion, shall determine whether the Licensee shall cancel or assign to The
Regents any and all sublicenses.
4. PAYMENT TERMS
4.1 Paragraphs 1.1, 1.2, and 1.3 define Regents' Patent Rights, Licensed
Products and Licensed Methods so that royalties are payable on products and
methods covered by both pending patent applications and issued patents.
Royalties will accrue in each country for the duration of Regents' Patent Rights
in that country and are payable to The Regents when Licensed Products are
invoiced, or if not invoiced, when delivered to a third party.
4.2 Licensee shall pay earned royalties quarterly on or before February
28, May 31, August 31 and November 30 of each calendar year. Each payment will
be for earned royalties accrued within the Licensee's most recently completed
calendar quarter.
4.3 All monies due The Regents are payable in United States dollars.
When Licensed Products are sold for monies other than United States dollars,
Licensee shall first determine the earned royalty in the currency of the country
in which Licensed Products were sold and then convert the amount into equivalent
United States funds, using the exchange rate quoted in the Wall Street Journal
on the last business day of the reporting period.
4.4 Royalties earned on sales occurring in any country outside the
United States may not be reduced by any taxes, fees, or other charges imposed by
the government of such country on the payment of royalty income. The Licensee is
also responsible for all bank transfer charges. Notwithstanding this, all
payments made by the Licensee in fulfillment of The Regents' tax liability in
any particular country will be credited against earned royalties or fees due The
Regents for that country.
4.5 If at any time legal restrictions prevent the prompt remittance of
royalties by the Licensee from any country where a Licensed Product is sold, the
Licensee shall convert the amount owed to The Regents into United States funds
and shall pay The Regents directly from its U.S. source of funds for as long as
the legal restrictions apply.
5
<PAGE>
4.6 If any patent or patent claim within Regents' Patent Rights is held
invalid in a final decision by a court of competent jurisdiction and last resort
and from which no appeal has or can be taken, all obligation to pay royalties
based on that patent or claim or any claim patentably indistinct therefrom will
cease as of the date of final decision. The Licensee will not, however, be
relieved from paying any royalties that accrued before the final decision or
that are based on another patent or claim not involved in the final decision, or
that are based on The Regents' property rights.
4.7 No royalties may be collected or paid on Licensed Products sold to
the account of the U.S. Government, any agency thereof, state or domestic
municipal government as provided for in the License to the Government.
4.8 In the event payments, rebilling or fees are not received by The
Regents when due, the Licensee shall pay to The Regents interest charges at a
rate of ten (10) percent per annum. Interest is calculated from the date payment
was due until actually received by The Regents.
5. LICENSE-ISSUE FEE
The Licensee shall pay to The Regents a license-issue fee of Thirty
Thousand Dollars ($30,000). Fifteen Thousand Dollars ($15,000) shall be paid
within thirty (30) days after the Effective Date and an additional Fifteen
Thousand ($15,000) shall be paid within thirty (30) days of the first
anniversary of the Effective Date. This fee is non-refundable, non-cancelable,
and is not an advance against royalties.
6. LICENSE MAINTENANCE FEE (MILESTONES)
6.1 The Licensee shall also pay to The Regents a royalty in the form of a
license maintenance fee of Ten Thousand Dollars ($10,000) beginning on the
second-year anniversary of the Effective Date and continuing annually on each
anniversary of the Effective Date. The maintenance fee is not due on any
anniversary of this Agreement if on that date Licensee is
6
<PAGE>
commercially selling Licensed Product and paying an earned or minimum annual
royalty to The Regents on the sales of that Licensed Product. License
maintenance fees are non-refundable and not an advance against earned royalties.
6.2 The Licensee shall also pay to the Regents milestone fees according
to the following schedule:
<TABLE>
<S> <C>
Milestone Payments
A. Filing of an IDE or equivalent on $25,000
a Licensed Product or Licensed Method
with the US FDA
B. Marketing Approval of a Licensed $50,000
Product or a Licensed Method by the US FDA
</TABLE>
7. EARNED ROYALTIES AND MINIMUM ANNUAL ROYALTIES
7.1 The Licensee shall also pay to The Regents an earned royalty of five
percent (5%) of the Net Sales of Licensed Products or Licensed Methods.
7.2 The Licensee shall pay to The Regents a minimum annual royalty of
Fifty Thousand Dollars ($50,000) for the life of Regents' Patent Rights,
beginning with the year of the first commercial sale of Licensed Product, but no
later than the fifth anniversary of the Effective date. For the first year of
commercial sales, the Licensee's obligation to pay the minimum annual royalty
will be pro-rated for the number of months remaining in that calendar year when
commercial sales commence and will be due the following February 28, to allow
for crediting of the pro-rated year's earned royalties. For subsequent years,
the minimum annual royalty will be paid to The Regents by February 28 of each
year and will be credited against the earned royalty due for the calendar year
in which the minimum payment was made.
8. DUE DILIGENCE
8.1 The Licensee, on execution of this Agreement, shall diligently
proceed with the
7
<PAGE>
development, manufacture and sale of Licensed Products and shall earnestly and
diligently endeavor to market the same within a reasonable time after execution
of this Agreement and in quantities sufficient to meet market demands.
8.2 The Licensee shall endeavor to obtain all necessary governmental
approvals for the manufacture, use and sale of Licensed Products.
8.3 The Licensee shall:
8.3.1 submit an IDE covering Licensed Products to the
United States FDA within three (3) years from the Effective Date of
this Agreement;
8.3.2 market Licensed Products by 2001;
8.3.3 reasonably fill the market demand for Licensed
Products following commencement of marketing at any time during the
exclusive period of this Agreement.
8.4 If the Licensee is unable to perform any of the above provisions,
then The Regents has the right and option to either terminate this Agreement or
reduce the Licensee's exclusive license to a nonexclusive license. This right,
if exercised by The Regents, supersedes the rights granted in Article 2 (GRANT).
9. PROGRESS AND ROYALTY REPORTS
9.1 Beginning February 28, 1997 and semi-annually thereafter, the
Licensee shall submit to The Regents a progress report covering the Licensee's
(and any Affiliate or sublicensee's) activities related to the development and
testing of all Licensed Products and the obtaining of the governmental approvals
necessary for marketing. Progress reports are required for each Licensed Product
until the first commercial sale of that Licensed Product occurs in the United
States and shall be again required if commercial sales of such Licensed Product
are suspended or discontinued.
9.2 Progress reports submitted under Paragraph 9.1 shall include, but are
not limited to, the following topics:
8
<PAGE>
- summary of work completed
- key scientific discoveries
- summary of work in progress
- current schedule of anticipated events or milestones
- market plans for introduction of Licensed Products, and
- a summary of resources (dollar value) spent in the reporting
period.
9.3 The Licensee has a continuing responsibility to keep The Regents
informed of the large/small business entity status (as defined by the United
States Patent and Trademark Office) of itself and its sublicensees and
Affiliates.
9.4 The Licensee shall report to The Regents in its immediately
subsequent progress and royalty report the date of first commercial sale of a
Licensed Product in each country.
9.5 After the first commercial sale of a Licensed Product anywhere in the
world, the Licensee shall make quarterly royalty reports to The Regents on or
before each February 28, May 31, August 31 and November 30 of each year. Each
royalty report will cover the Licensee's most recently completed calendar
quarter and will show (a) the gross sales and Net Sales of Licensed Products
sold during the most recently completed calendar quarter; (b) the number of each
type of Licensed Product sold; (c) the royalties, in U.S. dollars, payable with
respect to sales of Licensed Products; (d) the method used to calculate the
royalty; and (e) the exchange rates used.
9.6 If no sales of Licensed Products have been made during any reporting
period, a statement to this effect is required.
10. BOOKS AND RECORDS
10.1 The Licensee shall keep accurate books and records showing all
Licensed Products manufactured, used, and/or sold under the terms of this
Agreement. Books and records must be preserved for at least five (5) years from
the date of the royalty payment to
9
<PAGE>
which they pertain.
10.2 Books and records must be open to inspection by representatives or
agents of The Regents at reasonable times. The Regents shall bear the fees and
expenses of examination but if an error in royalties of more than five percent
(5%) of the total royalties due for any year is discovered in any examination
then Licensee shall bear the fees and expenses of that examination.
11. LIFE OF THE AGREEMENT
11.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement will be
in force from the Effective Date until the last-to-expire patent licensed under
this Agreement; or until the last patent application licensed under this
Agreement is abandoned and no patent in Regents' Patent Rights ever issues.
11.2 Any termination of this Agreement will not affect the rights and
obligations set forth in the following Articles:
<TABLE>
<S> <C>
Article 10 Books and Records
Article 14 Disposition of Licensed Products on Hand on Termination
Article 15 Use of Names and Trademarks
Article 20 Indemnification
Article 24 Failure to Perform
Article 29 Secrecy
</TABLE>
12. TERMINATION BY THE REGENTS
If the Licensee fails to perform or violates any term of this Agreement,
then The Regents may give written notice of default (Notice of Default) to the
Licensee. If the Licensee fails to repair the default within sixty (60) days of
the effective date of Notice of Default, The Regents may terminate this
Agreement and its licenses by a second written notice (Notice of
10
<PAGE>
Termination). If a Notice of Termination is sent to the Licensee, this Agreement
will automatically terminate on the effective date of that notice. Termination
will not relieve the Licensee of its obligation to pay any fees owing at the
time of termination and will not impair any accrued right of The Regents. These
notices are subject to Article 21 (Notices).
13. TERMINATION BY LICENSEE
13.1 The Licensee has the right at any time to terminate this Agreement
in whole or as to any portion of Regents' Patent Rights by giving notice in
writing to The Regents. Notice of termination will be subject to Article 21
(Notices) and termination of this Agreement will be effective sixty (60) days
from the effective date of notice.
13.2 Any termination under the above paragraph does not relieve the
Licensee of any obligation or liability accrued under this Agreement prior to
termination or rescind any payment made to The Regents or anything done by
Licensee prior to the time termination becomes effective. Termination does not
affect in any manner any rights of The Regents arising under this Agreement
prior to termination.
14. DISPOSITION OF LICENSED PRODUCTS ON HAND UPON TERMINATION
Upon termination of this Agreement the Licensee is entitled to dispose of
all previously made or partially made Licensed Products, but no more, within a
period of one hundred and twenty (120) days provided that the sale of those
Licensed Products is subject to the terms of this Agreement, including but not
limited to the rendering of reports and payment of royalties required under this
Agreement.
15. USE OF NAMES AND TRADEMARKS
Nothing contained in this Agreement confers any right to use in
advertising, publicity, or other promotional activities any name, trade name,
trademark, or other designation of either party hereto (including contraction,
abbreviation or simulation of any of the foregoing).
11
<PAGE>
Unless required by law, the use by the Licensee of the name, "The Regents of the
University of California" or the name of any campus of the University of
California is prohibited.
16. LIMITED WARRANTY
16.1 The Regents warrants to the Licensee that it has the lawful right
to grant this license.
16.2 This license and the associated Invention are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. THE REGENTS MAKES NO REPRESENTATION OR WARRANTY
THAT THE LICENSED PRODUCTS OR LICENSED METHODS WILL NOT INFRINGE ANY PATENT OR
OTHER PROPRIETARY RIGHT.
16.3 IN NO EVENT MAY THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF
THE INVENTION OR LICENSED PRODUCTS.
16.4 This Agreement does not:
16.4.1 express or imply a warranty or representation as to
the validity or scope of any of Regents' Patent Rights;
16.4.2 express or imply a warranty or representation that
anything made, used, sold, offered for sale or imported or
otherwise disposed of under any license granted in this Agreement
is or will be free from infringement of patents of third parties;
16.4.3 obligate The Regents to bring or prosecute actions or
suits against third parties for patent infringement except as
provided in Article 19;
16.4.4 confer by implication, estoppel or otherwise any
license or rights under any patents of The Regents other than
Regents' Patent Rights as
12
<PAGE>
defined in this Agreement, regardless of whether those patents
are dominant or subordinate to Regent's Patent Rights; or
16.4.5 obligate The Regents to furnish any know-how not
provided in Regents' Patent Rights.
17. PATENT PROSECUTION AND MAINTENANCE
17.1 As long as the Licensee has paid patent costs as provided for in
this Article, The Regents or the co-owner shall diligently endeavor to prosecute
and maintain the United States and foreign patents comprising Regents' Patent
Rights using counsel of its choice, and The Regents shall provide the Licensee
with copies of all relevant documentation so that the Licensee may be informed
of the continuing prosecution and the Licensee agrees to keep this documentation
confidential. The Regents' counsel will take instructions only from The Regents,
and all patents and patent applications under this Agreement will be assigned
solely to The Regents.
17.2 The Regents shall use all reasonable efforts to amend any patent
application to include claims reasonably requested by the Licensee to protect
the products contemplated to be sold under this Agreement.
17.3 The Licensee shall apply for an extension of the term of any
patent included within Regents' Patent Rights if appropriate under the Drug
Price Competition and Patent Term Restoration Act of 1984 and/or European,
Japanese and other foreign counterparts of this Law. The Licensee shall prepare
all documents, and The Regents agrees to execute the documents and to take
additional action as the Licensee reasonably requests in connection therewith.
17.4 If either party receives notice pertaining to infringement or
potential infringement of any issued patent included within Regents' Patent
Rights under the Drug Price Competition and Patent Term Restoration Act of 1984
(and/or foreign counterparts of this Law), that party shall notify the other
party within ten (10) days after receipt of notice of
13
<PAGE>
infringement.
17.5 The Licensee shall bear the costs of preparing, filing,
prosecuting and maintaining all United States and foreign patent applications
contemplated by this Agreement. Costs billed by The Regents' counsel will be
rebilled to the Licensee and are due within thirty (30) days of rebilling by The
Regents. These costs include patent prosecution costs for the Invention incurred
by The Regents prior to the execution of this Agreement and any patent
prosecution costs that may be incurred for patentability opinions, re-
examination, re-issue, interferences, or inventorship determinations. Prior
costs have been paid by the co-owner.
17.6 The Licensee may request The Regents to obtain patent protection
on the Invention in foreign countries if available and if it so desires. The
Licensee shall notify The Regents of its decision to obtain or maintain foreign
patents not less than sixty (60) days prior to the deadline for any payment,
filing, or action to be taken in connection therewith. This notice concerning
foreign filing must be in writing, must identify the countries desired, and must
reaffirm the Licensee's obligation to underwrite the costs thereof. The absence
of such a notice from the Licensee to The Regents will be considered an election
not to obtain or maintain foreign rights.
17.7 The Licensee's obligation to underwrite and to pay patent
prosecution costs will continue for so long as this Agreement remains in effect,
but the Licensee may terminate its obligations with respect to any given patent
application or patent upon three (3) months written notice to The Regents. The
Regents will use its best efforts to curtail patent costs when a notice of
termination is received from the Licensee. The Regents may prosecute and
maintain such application(s) or patent(s) at its sole discretion and expense,
but the Licensee will have no further right or licenses thereunder. Non-payment
of patent costs may be deemed by The Regents as an election by the Licensee not
to maintain application(s) or patent(s).
17.8 The Regents may file, prosecute or maintain patent applications
at its own expense in any country in which the Licensee has not elected to file,
prosecute, or maintain patent applications in accordance with this Article, and
those applications and resultant patents
14
<PAGE>
will not be subject to this Agreement.
18. PATENT MARKING
The Licensee shall mark all Licensed Products made, used or sold under
the terms of this Agreement, or their containers, in accordance with the
applicable patent marking laws.
19. PATENT INFRINGEMENT
19.1 If the Licensee learns of the substantial infringement of any
patent licensed under this Agreement, the Licensee shall call The Regents'
attention thereto in writing and provide The Regents with reasonable evidence of
infringement. Neither party will notify a third party of the infringement of any
of Regents' Patent Rights without first obtaining consent of the other party,
which consent will not be unreasonably denied. Both parties shall use their best
efforts in cooperation with each other to terminate infringement without
litigation.
19.2 The Licensee may request that The Regents take legal action
against the infringement of Regents' Patent Rights. Request must be in writing
and must include reasonable evidence of infringement and damages to the
Licensee. If the infringing activity has not abated within ninety (90) days
following the effective date of request, The Regents then has the right to:
19.2.1 commence suit on its own account; or
19.2.2 refuse to participate in the suit,
and The Regents shall give notice of its election in writing to the
Licensee by the end of the one-hundredth (100th) day after receiving notice of
written request from the Licensee. The Licensee may thereafter bring suit for
patent infringement, at its own expense, if and only if The Regents elects not
to commence suit and if the infringement occurred during the period and in a
jurisdiction where the Licensee had exclusive rights under this Agreement. If,
15
<PAGE>
however, the Licensee elects to bring suit in accordance with this paragraph,
The Regents may thereafter join that suit at its own expense.
19.3 Legal action as is decided on will be at the expense of the party
bringing suit and all recoveries recovered thereby will belong to the party
bringing suit, but legal action brought jointly by The Regents and the Licensee
and fully participated in by both will be at the joint expense of the parties
and all recoveries will be shared jointly by them in proportion to the share of
expense paid by each party.
19.4 Each party shall cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the party bringing suit.
Litigation will be controlled by the party bringing the suit, except that The
Regents may be represented by counsel of its choice in any suit brought by the
Licensee.
20. INDEMNIFICATION
20.1 The Licensee shall indemnify, hold harmless and defend The
Regents, its officers, employees, and agents; the sponsors of the research that
led to the Invention; and the inventors of the patents and patent applications
in Regents' Patent Rights and their employers against any and all claims, suits,
losses, damage, costs, fees, and expenses resulting from or arising out of
exercise of this license or any sublicense. This indemnification includes, but
is not limited to, any product liability.
20.2 The Licensee, at its sole cost and expense, shall insure its
activities in connection with the work under this Agreement and obtain, keep in
force and maintain insurance as follows, or an equivalent program of self
insurance:
Comprehensive or commercial form general liability insurance (contractual
liability included) with limits as follows:
- Each Occurrence $1,000,000
- Products/Completed Operations Aggregate $5,000,000
- Personal and Advertising Injury $1,000,000
16
<PAGE>
- General Aggregate (commercial form only) $5,000,000
The coverage and limits referred to under the above do not in any way limit
the liability of the Licensee. The Licensee shall furnish The Regents with
certificates of insurance showing compliance with all requirements. Certificates
must:
- Provide for thirty (30) day advance written notice
to The Regents of any modification.
- Indicate that The Regents has been endorsed as an
additional Insured under the coverage referred to
under the above.
- Include a provision that the coverage will be
primary and will not participate with nor will be
excess over any valid and collectable insurance or
program of self-insurance carried or maintained by
The Regents.
20.3 The Regents shall notify the Licensee in writing of any claim or
suit brought against The Regents in respect of which The Regents intends to
invoke the provisions of this Article. The Licensee shall keep The Regents
informed on a current basis of its defense of any claims under this Article.
21. NOTICES
Any notice or payment required to be given to either party is properly
given and effective (a) on the date of delivery if delivered in person or (b)
five (5) days after mailing if mailed by first-class certified mail, postage
paid, to the respective addresses given below, or to another address as is
designated by written notice given to the other party.
In the case of the Licensee: UROGEN CORP.
3099 Science Park Road, Suite A
San Diego, California 92121
Attention: President
17
<PAGE>
In the case of The Regents: THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
Office of Technology Transfer
1320 Harbor Bay Parkway Suite 150
Alameda, California 94502
Attention:Executive Director;
Research Administration and
Technology Transfer
Referring to: UC Case No. 91-145
22. ASSIGNABILITY
This Agreement may be assigned by The Regents, but is personal to the
Licensee and assignable by the Licensee only with the written consent of The
Regents, which consent will not be unreasonably withheld.
23. NO WAIVER
No waiver by either party of any default of this Agreement may be
deemed a waiver of any subsequent or similar default.
24. FAILURE TO PERFORM
If either party finds it necessary to undertake legal action against
the other on account of failure of performance due under this Agreement, then
the prevailing party is entitled to reasonable attorney's fees in addition to
costs and necessary disbursements.
25. GOVERNING LAWS
THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA, but the scope and validity of any patent or
patent application will be governed by the applicable laws of the country of the
patent or patent application.
18
<PAGE>
26. PREFERENCE FOR UNITED STATES INDUSTRY
Because this Agreement grants the exclusive right to use or sell the
Invention in the United States, the Licensee agrees that any products sold in
the U.S. embodying this Invention or produced through the use thereof will be
manufactured substantially in the United States.
27. GOVERNMENT APPROVAL OR REGISTRATION
Licensee shall notify The Regents if it becomes aware that this
Agreement is subject to any U.S. or foreign government reporting or approval
requirement. Licensee shall make all necessary filings and pay all costs
including fees, penalties, and all other out-of-pocket costs associated with
such reporting or approval process.
28. EXPORT CONTROL LAWS
The Licensee shall observe all applicable United States and foreign
laws with respect to the transfer of Licensed Products and related technical
data to foreign countries, including, without limitation, the International
Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.
29. SECRECY
29.1 With regard to confidential information ("Data"), which can be
oral or written or both, received from The Regents regarding this Invention, the
Licensee agrees:
29.1.1 not to use the Data except for the sole purpose of
performing under the terms of this Agreement;
29.1.2 to safeguard Data against disclosure to others with the
same degree of care as it exercises with its own data of a similar
nature;
29.1.3 not to disclose Data to others (except to its
employees, agents or consultants who are bound to the Licensee by a
like obligation of confidentiality) without the express written
permission of The Regents, except
19
<PAGE>
that the Licensee is not prevented from using or disclosing any of
the Data that:
29.1.3.1 the Licensee can demonstrate by written records
was previously known to it;
29.1.3.2 is now, or becomes in the future, public knowledge
other than through acts or omissions of the Licensee; or
29.1.3.3 is lawfully obtained by the Licensee from sources
independent of The Regents; and
29.1.4 that the secrecy obligations of the Licensee with
respect to Data will continue for a period ending five (5) years
from the termination date of this Agreement.
29.2 With regard to biological material received by Licensee from The
Regents, if any, including any cell lines, vectors, genetic material,
derivatives, products progeny or material derived therefrom ("Biological
Material"), the Licensee agrees:
29.2.1 not to use Biological Material except for the sole
purpose of performing under the terms of this Agreement;
29.2.2 not to transfer Biological Material to others
(except to its employees, agents or consultants who are bound to the
Licensee by like obligations conditioning and restricting access,
use and continued use of Biological Material) without the express
written permission of The Regents, except that the Licensee is not
prevented from transferring Biological Material that:
29.2.2.1 becomes publicly available other than through
acts or omissions of the Licensee, or
29.2.2.2 is lawfully obtained by the Licensee from
sources independent of The Regents;
20
<PAGE>
29.2.3 to safeguard Biological Material against
disclosure and transmission to others with the same degree of care
as it exercises with its own biological materials of a similar
nature;
29.2.4 to destroy all copies of Biological Material at
the termination of this Agreement.
30. MISCELLANEOUS
30.1 The headings of the several sections are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
30.2 This Agreement is not binding on the parties until it has been
signed below on behalf of each party. It is then effective as of the Effective
Date.
30.3 No amendment or modification of this Agreement is valid or
binding on the parties unless made in writing and signed on behalf of each
party.
This Agreement embodies the entire understanding of the parties and supersedes
all previous communications, representations or understandings, either oral or
written, between the parties relating to the subject matter hereof. The Secrecy
Agreement dated April 15, 1996 is hereby terminated.
30.4 In case any of the provisions contained in this Agreement is held
to be invalid, illegal, or unenforceable in any respect, that invalidity,
illegality or unenforceability will not affect any other provisions of this
Agreement, and this Agreement will be construed as if the invalid, illegal, or
unenforceable provisions had never been contained in it.
21
<PAGE>
IN WITNESS WHEREOF, both The Regents and the Licensee have executed this
Agreement, in duplicate originals, by their respective and duly authorized
officers on the day and year written.
UROGEN CORPORATION THE REGENTS OF THE UNIVERSITY
OF CALIFORNIA
By /s/ Paul D. Quadros By /s/ Terence A. Feuerborn
------------------------- ---------------------------
(Signature) (Signature)
Name Paul D. Quadns Name: Terence A. Feuerborn
----------------------
(Please Print)
Title Chairman of the Board Title: Executive Director,
---------------------
Research Administration and
Technology Transfer
Date Sept. 20, 1996 Date 9-20-96
----------------------- --------------------------
Approved as to legal form: Edwin H. Baker 9/20/96
---------------- -------
Edwin M. Baker, Associate Resident Counsel Date
Office of Technology Transfer
University of California
22
<PAGE>
EXHIBIT 10.9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UROGEN CORP.
-------------------------------------
Note and Warrant Purchase Agreement
-------------------------------------
July 8, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - Purchase of Notes and Warrants .............................. 1
1.1 Notes ......................................................... 1
1.2 Warrants ...................................................... 1
1.3 Allocation of Purchase Price .................................. 1
1.4 Obligations of Investors ...................................... 1
ARTICLE II - Closing and Delivery ....................................... 2
2.1 Place and Date of Closing ..................................... 2
2.2 Subsequent Closings ........................................... 2
2.3 Delivery ...................................................... 2
ARTICLE III - Representations and Warranties of the Company ............. 2
3.1 Organization and Standing ..................................... 2
3.2 Corporate Power ............................................... 2
3.3 Authorization ................................................. 3
3.4 Capitalization ................................................ 3
3.5 Validity of Securities; Reservation of Shares ................. 4
3.6 Governmental Consent, etc. .................................... 4
3.7 SEC Documents; Parent Financial Statements .................... 4
3.8 No Material Adverse Change .................................... 5
3.9 Litigation .................................................... 5
ARTICLE IV - Representations and Warranties of the Investors ............ 5
4.1 Authorization ................................................. 5
4.2 Experience/Risk ............................................... 5
4.3 Investment .................................................... 6
4.4 Restricted Securities ......................................... 6
4.5 Limited Public Market ......................................... 6
4.6 Access to Data ................................................ 6
4.7 Accredited Investor Status .................................... 6
4.8 Government Consents ........................................... 6
4.9 Legends ....................................................... 6
ARTICLE V - Transfer Restrictions; Rights as Stockholder ................ 7
5.1 Restrictions on Transfer ...................................... 7
5.2 No Rights or Liability as a Stockholder ....................... 8
ARTICLE VI - Registration Rights ........................................ 8
6.1 Registrable Securities ......................................... 8
6.2 Registration .................................................. 8
6.3 Company Obligations ........................................... 8
6.4 Underwriting .................................................. 9
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.5 Selling Procedures ............................................ 10
6.6 Expenses ...................................................... 11
6.7 Indemnification ............................................... 11
ARTICLE VII - Miscellaneous ............................................. 12
7.1 Waivers and Amendments ........................................ 12
7.2 Governing Law ................................................. 12
7.3 Survival ...................................................... 12
7.4. Successors and Assigns ........................................ 12
7.5 Entire Agreement .............................................. 12
7.6 Severability .................................................. 12
7.7 California Corporate Securities Law ............................ 13
7.8 Titles and Subtitles .......................................... 13
7.9 Delays or Omissions ........................................... 13
7.10 Notices ....................................................... 13
7.11 Counterparts .................................................. 13
</TABLE>
EXHIBITS
A Schedule of Investors
B Form of Convertible Promissory Note
C Form of Warrant
D Schedule of Exceptions
<PAGE>
UROGEN CORP.
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made as of
July 8, 1998 by and among Urogen Corp., a Delaware corporation (the "Company"),
with its principal office at 10835 Altman Row, Suite A, San Diego, California
92121 and the investors whose names appear on the Schedule of Investors attached
hereto as Exhibit A (the "Investors").
---------
ARTICLE I
Purchase of Notes and Warrants
1.1 Notes. Subject to the terms and conditions hereof, the Company will
-----
issue and sell to the Investors, and the Investors will each purchase from the
Company, subordinated unsecured convertible promissory notes in substantially
the form attached hereto as Exhibit B (each, a "Note," and collectively, the
---------
"Notes") ia the principal amount set forth opposite each Investor's name on the
Schedule of Investors. Each Note shall be convertible into shares of Company's
Common Stock (such shares, the "Conversion Shares") on the terms set forth
therein.
1.2 Warrants. In consideration of the Investors purchasing the Notes,
--------
subject to the terms and conditions hereof, the Company will issue to each
Investor, and each Investor will acquire, severally and not jointly, from the
Company, a warrant or warrants in substantially the form attached hereto as
Exhibit C (each, a "Warrant," and collectively, the "Warrants") exercisable for
- ---------
that number of shares of the Company's Common Stock (such shares, the "Warrant
Shares") set forth opposite such Investor's name on the Schedule of Investors.
1.3 Allocation of Purchase Price. The purchase price payable by each
----------------------------
Investor for the Note and Warrant to be purchased hereunder (the "Purchase
Price") shall be equal to the principal amount of the Note set forth opposite
such Investor's name on the Schedule of Purchasers. The Purchase Price paid by
each Investor shall be allocated as follows: (i) ninety-nine percent (99%) of
the Purchase Price shall be allocated to the Note received by such Investor, and
(ii) one percent (1%) of the Purchase Price shall be allocated to the Warrant
received by such Investor.
1.4 Obligations of Investors. The obligations of the Investors hereunder
------------------------
are several and not joint.
<PAGE>
ARTICLE II
Closing and Delivery
2.1 Place and Date of Closing. The initial closing of the transactions
-------------------------
provided for herein (the "Closing") will be held at the offices of Wilson
Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304 at
10:00 a.m. on July 8, 1998 (the "Closing Date") or at such other time and place
as the parties shall mutually agree.
2.2 Subsequent Closings. The Company may, at its option, schedule
-------------------
additional closings (the "Additional Closings") after the first Closing has
been completed on such date or dates as the Company may determine, but not later
than July 30, 1998. The date of each Additional Closing is hereinafter referred
to as an "Additional Closing Date." The first Closing and each Additional
Closing are sometimes referred to herein individually as a "Closing" and the
first Closing Date and each Additional Closing Date are sometimes referred to
herein individually as a "Closing Date." At each Additional Closing, the Company
shall prepare a revised Schedule of Investors to include any additional
Investors, and each such additional Investor shall execute a signature page to
this Agreement.
2.3 Delivery. At the Closing, the Company will deliver to each Investor
--------
(i) a Note in the principal amount set forth opposite such Investor's name on
the Schedule of Investors and (ii) a Warrant to purchase the number of Warrant
Shares set forth opposite such Investor's name on the Schedule of Investors.
Each Investor shall deliver to the Company the principal amount set forth
opposite such Investor's name on the Schedule of Investors by check or by wire
transfer.
ARTICLE III
Representations and Warranties of the Company
The Company hereby represents and warrants to each Investor as follows:
3.1 Organization and Standing. The Company is a corporation duly organized
-------------------------
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing under such laws. The Company has the requisite corporate
power to own and operate its properties and assets, and to carry on its business
as presently conducted and as proposed to be conducted.
3.2 Corporate Power. The Company will have at the Closing all requisite
---------------
legal and corporate power to execute and deliver this Agreement, to issue the
Notes, the Warrants, the Conversion Shares and the Warrant Shares and to carry
out and perform its obligations under the terms of this Agreement.
-2-
<PAGE>
3.3 Authorization. All corporate action on the part of the Company, its
-------------
officers, directors and stockholders that is necessary for the authorization,
execution and delivery of this Agreement by the Company, for the performance of
the Company's obligations hereunder, and for the authorization, issuance and
delivery of the Notes, the Warrants, the Conversion Shares and the Warrant
Shares, has been taken or will be taken prior to the Closing. This Agreement,
the Notes and the Warrants, when executed and delivered, shall constitute the
legal and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to judicial principles
respecting election of remedies or limiting the availability of specific
performance, injunctive relief, and other equitable remedies, and bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect generally relating to or affecting creditors' rights.
3.4 Capitalization. As of the date hereof, the authorized capital stock of
--------------
the Company consists of 40,000,000 shares of common stock ("Common Stock"), of
which 7,537,319 shares will be issued and outstanding immediately prior to the
first Closing, and 5,000,000 shares of preferred stock ("Preferred Stock'), of
which no shares are issued. All such issued and outstanding shares of Common
Stock have been duly authorized, validly issued and fully paid and non-
assessable and have been issued in accordance with the registration and
qualification provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and relevant state securities laws, or pursuant to valid
exemptions therefrom. As of the date hereof, the Company has reserved 1,017,382
shares of Common Stock for issuance to employees, officers, directors and
consultants of the Company as may be determined by the Company's Board of
Directors from time to time under the Company's 1995 Stock Plan, as amended
("Option Plan"). There are no outstanding rights, options, warrants, preemptive
rights, conversion rights, rights of first refusal or similar rights or
agreements, oral or written, for the purchase or acquisition from the Company of
any shares of its capital stock or any other securities, except for outstanding
options under the Option Plan and the following warrants: (i) in connection with
a License Agreement with an unaffiliated company (the "Third Party"), the
Company issued a warrant to the Third Party which permits the Third Party to
maintain a fully-diluted ownership interest of two percent (2%) or to increase
its ownership interest to three percent (3%) at a price ranging from $0.03 to
$0.04 per share; this warrant expires in March 1999; (ii) in 1997, the Company
issued a warrant to purchase 200,000 shares of Common Stock at $0.05 per share
to an officer of the Company; this warrant expires in July 2001. In addition, on
July 16, 1998, the Board of Directors approved new non-qualified options to Paul
D. Quadros, Robert E. Sobol, M.D., and William Raschke, Ph.D. as well as a
group of consultants currently employed by the Company's potential corporate
partner. A total of 804,472 options for shares of common stock were granted to
the current management team and a total of 1,465,254 options for shares of
common stock were granted to the consultants. All of the option grants are
contingent on shareholder approval of a proposed 1998 Stock Option Plan. In
addition, the grants awarded to the outside consultants are also contingent upon
the execution of consulting agreements on mutually agreeable terms. All of the
grants are subject to four year vesting.
-3-
<PAGE>
3.5 Validity of Securities: Reservation of Shares. The Notes and
---------------------------------------------
Warrants, when issued, sold and delivered in accordance with the terms of this
Agreement, the Conversion Shares, when issued, sold and delivered in accordance
with the terms of the Notes, and the Warrant Shares, when issued, sold and
delivered in accordance with the terms of the Warrants, will be duly
authorized, validly issued, fully paid and nonassessable and will be free and
clear of any liens or encumbrances; provided, however, that any of the Notes,
-------- -------
the Warrants, the Conversion Shares or the Warrant Shares may be subject to
restrictions on transfer to the extent provided herein or under state and/or
federal securities laws. Based in part upon the representations of the Investors
in this Agreement, the offer, sale and issuance of the Notes and the Warrants
(and the Conversion Shares and Warrant Shares) will be issued in compliance with
all applicable federal and state securities laws. The Company has reserved
1,080,000 and 515,000 shares of Common Stock, respectively, for issuance upon
conversion of the Notes and exercise of the Warrants issued hereunder. The
Company covenants that, so long as any Notes or Warrants remain outstanding, it
will at all times reserve and keep available, solely for issuance to the holders
of the Notes and Warrants in accordance with this Agreement, shares of Common
Stock issuable upon conversion of the Notes and exercise of the Warrants. If at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the issuances contemplated by this Agreement, 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 to
such number of shares as shall be sufficient for such purpose.
3.6 Governmental Consent. etc. No consent, approval or authorization of or
-------------------------
designation, declaration or filing with any state or federal governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement or the offer, sale or issuance of the
Notes and Warrants (and the Conversion Shares and Warrant Shares), or the
consummation of any other transaction contemplated hereby, except the
qualification (or the taking of such action as may he necessary to secure an
exemption from qualification, if available) under the California Corporate
Securities Law and other applicable Blue Sky laws, of the offer and sale of the
Notes and Warrants (and the Conversion Shares and Warrant Shares), which filing
and qualification, if required, will be accomplished in a timely manner prior to
or promptly upon completion of the Closing.
3.7 SEC Documents: Parent Financial Statements. The Company has furnished
------------------------------------------
or made available to the Investors true and complete copies of all reports or
registration statements filed by it with the U.S. Securities and Exchange
Commission (the "SEC") under the Securities Act or the Securities Exchange Act
of 1934 (the "Exchange Act") since January 1, 1996, all in the form so filed
(all of the foregoing being collectively referred to as the "SEC Documents"),
which are all the documents (other than preliminary materials) that the Company
was required to file with the SEC since such date. 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
-4-
<PAGE>
extent corrected by a document subsequently filed with the SEC. The financial
statements of the Company, including the notes thereto, included in the SEC
Documents (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 generally accepted accounting principles 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
consolidated financial position of the Company at the dates thereof and the
consolidated 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 the Company's accounting policies except as
described in the notes in the Financial Statements.
3.8 No Material Adverse Change. Since the date of the balance sheet
--------------------------
included in the Company's most recently filed report on Form 10-Q or Form 10-K,
the Company has conducted its business in the ordinary course and there has not
occurred: (a) any material adverse change in the financial condition,
liabilities, assets or business of the Company; (b) any amendment or change in
the Certificate of Incorporation or Bylaws of the Company; or (c) any damage to,
destruction or loss of any assets of the Company (whether or not covered by
insurance) that materially and adversely affects the financial condition or
business of the Company.
3.9 Litigation. There is no action, suit, proceeding, claim, arbitration
----------
or investigation pending, or as to which the Company has received any notice of
assertion against the Company, which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement.
ARTICLE IV
Representations and Warranties of the Investors
Each Investor represents and warrants to the Company, as of the Closing
Date and upon conversion of any Notes or exercise of any Warrants, as follows
(the Notes, the Warrants, the Conversion Shares and the Warrant Shares are
collectively referred to as the "Securities"):
4.1 Authorization. All action on the part of the Investor for the
-------------
authorization, execution, delivery and performance by the Investor of this
Agreement has been taken, and this Agreement constitutes a valid and binding
obligation of the Investor, enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights.
4.2 Experience/Risk. The Investor is experienced in evaluating and
---------------
investing in new companies such as the Company. The Investor is a sophisticated
investor with such knowledge and experience in financial and business matters so
as to be capable of evaluating the merits and
-5-
<PAGE>
risks of a prospective investment in the Securities and who is capable of
bearing the economic risks of such investment.
4.3 Investment. The Investor is acquiring the Securities for investment
----------
for its own account and not with a view to, or for resale in connection with,
any distribution. The Investor understands that the Securities to be acquired
have not been 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.
4.4 Restricted Securities. The Investor acknowledges that the Securities
---------------------
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. The Investor is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permits limited resale of securities purchased in a private placement subject to
the satisfaction of certain conditions, including, in case the Investor has held
the Securities for less than two years or is an affiliate of the Company, among
other things: the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the Securities to be sold, the sale being through a "broker's
transaction" or in transactions directly with a "market maker" and the number
of Securities being sold during any three-month period not exceeding specified
limitations.
4.5 Limited Public Market. The Investor understands that only an extremely
---------------------
limited public market now exists for the Common Stock and no public market
exists for the other Securities issued by the Company and that it is unlikely
public market for the Company's Common Stock will develop sufficiently to permit
the resale of the Securities or that any such public market will be sustained.
4.6 Access to Data. The Investor has had an opportunity to discuss the
--------------
Company's business, management and financial affairs with the Company's
management. The Investor understands that such discussions, as well as the
written information issued by the Company, were intended to describe the aspects
of the Company's business and prospects which it believes to be material but
were not necessarily a thorough or exhaustive description.
4.7 Accredited Investor Status. Investor presently does and will as of the
--------------------------
Closing Date qualify as an "accredited investor" within the meaning of
Regulation D(17 C.F.R. (S) 230.501) of the rules and regulations promulgated
under the Act.
4.8 Government Consents. No consent, approval or authorization of or
-------------------
designation, declaration or filing with any state, federal or foreign
governmental authority on the part of Investor is required in connection with
the valid execution and delivery of this Agreement by Investor, and the
consummation by Investor of the transactions contemplated hereby.
4.9 Legends. Each certificate representing the Securities shall be
-------
endorsed with the following legend (in addition to any legend required under
applicable state securities laws):
-6-
<PAGE>
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 UNLESS
SUCH SALE OR TRANSFER 1S EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT. COPIES OF THE
AGREEMENT COVERING THE ACQUISITION 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 CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
The Company need not record a transfer of Securities, unless the conditions
specified in the foregoing legends are satisfied. The Company may also instruct
its transfer agent not to record the transfer of any of the Securities unless
the conditions specified in the foregoing legends are satisfied.
ARTICLE V
Transfer Restrictions; Rights as Stockholder
5.1 Restrictions on Transfer. Each Investor acknowledges that the
------------------------
Securities may not be transferred or assigned in whole or in part without (i)
the prior written consent of the Company and (ii) compliance with applicable
federal and state securities laws; provided, however, that the Securities may be
-------- -------
transferred without the prior written consent of the Company in the following
transactions:
(a) A transfer of Securities in whole by a holder who is a natural
person during such holder's lifetime or on death by will or intestacy to such
holder's immediate family or to any custodian or trustee for the account of such
holder or such holder's immediate family. As used herein, "immediate family"
shall mean spouse, lineal descendant, father, mother, brother, or sister of the
holder.
(b) A transfer of Securities in whole to the Company or to any
stockholder of the Company.
(c) A transfer of Securities in whole or in part to a person who, at
the time of such transfer, is or is an affiliate of an officer or director of
the Company.
(d) A transfer of Securities in whole pursuant to and in accordance
with the terms of any merger, consolidation, reclassification of shares or
capital reorganization of the cor-
-7-
<PAGE>
porate stockholder or pursuant to a sale of all or substantially all of the
stock or assets of a corporate stockholder.
(e) A transfer of Securities in accordance with Rule 144 under the
Securities Act.
(f) A transfer of Securities in whole by a holder which is a limited
or general partnership to any of its partners or former partners.
5.2 No Rights or Liability as a Stockholder. Neither the Notes nor the
---------------------------------------
Warrants shall entitle the holder thereof to any voting rights or other rights
as a stockholder of the Company. No provisions of the Notes or the Warrants, in
the absence of affirmative action by the holder thereof to purchase Conversion
Shares and/or Warrant Shares, and no enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of such holder
as a stockholder of the Company.
ARTICLE VI
Registration Rights
6.1 Registrable Securities. The shares of Common Stock issued or issuable
----------------------
upon conversion of the Notes and exercise of the Warrants shall be deemed
"Registrable Securities" and the holders of such shares (the "Holders") shall be
entitled to registration rights with respect thereto as set forth in this
Article VI.
6.2 Registration. The Company shall use its commercially reasonable
------------
efforts to cause the Registrable Securities to be held by each Holder to be
registered under the Securities Act so as to permit the resale thereof, and in
connection therewith shall use all commercially reasonable efforts to prepare
and file with the Securities and Exchange Commission (the "SEC") on or before
December 31, 1998, and shall use its commercially reasonable efforts to cause to
become effective as soon as practicable thereafter, a registration statement
under the Securities Act covering the Registrable Securities; provided, however,
-------- -------
that each Holder shall provide all such information and materials to the Company
and take all such action as may be required in order to permit the Company to
comply with all applicable requirements of the SEC and to obtain any desired
acceleration of the effective date of such registration statement. Such
provision of information and materials is a condition precedent to the
obligations of the Company to such Holder pursuant to this Article VI. The
Company shall not be required to effect more than one (1) registration under
this Article VI.
6.3 Company Obligations. The Company shall (i) keep the registration
-------------------
statement filed in accordance with Section 6.2 hereof effective until the
earlier of (A) One Hundred Eighty (180) days after the registration statement is
declared effective by the SEC or (B) such time as all
-8-
<PAGE>
Registrable Securities included in such registration have been sold thereunder;
(ii) forthwith prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities proposed to be
registered in such registration statement; (iii) furnish to each Holder such
number of copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of the
Securities Act, and such other documents, as each Holder may reasonably request
in order to effect the offering and sale of the shares of the Registrable
Securities to be offered and sold, but only while the Company shall be required
under the provisions hereof to cause the registration statement to remain
current; (iv) provide a CUSIP number, transfer agent and registrar for all
Registrable Securities; and (v) use its commercially reasonable efforts to
register or qualify the shares of the Registrable Securities covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as each Holder shall reasonably request (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 jurisdiction where it has not been qualified).
6.4 Underwriting. If the distribution of the Registrable Securities
------------
covered by a registration pursuant to this Article VI is to be effected by means
of a firm commitment underwriting, the right of any Holder to include
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
(a) The Company (together with all Holders proposing to distribute
their securities through such underwriting) shall enter into an underwriting
agreement in customary form with a managing underwriter of nationally recognized
standing selected for such underwriting by the Company but subject to the
approval of a majority in interest of the Holders, which approval shall not
unreasonably be withheld. Notwithstanding any other provision of this Article
VI, if the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, then the underwriters may
limit the number of shares of Registrable Securities that may be included in the
registration and underwriting, provided that no shares other than Registrable
Securities are included in such registration and underwriting. The shares so
limited shall be allocated among Holders 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. No Registrable
Securities excluded from the underwriting by reason of the managing
underwriter's marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company and the managing
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from registration; provided,
--------
however, that if by the withdrawal of such Registrable Securities a greater
- -------
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional
-9-
<PAGE>
Registrable Securities in the same proportion used in determining the
underwriter limitation as set forth above.
(b) If the managing underwriter has not limited the number of
Registrable Securities to be underwritten in any registration requested pursuant
to Section 6.2, the Company may include securities for its own account or for
the account of others in such registration if the managing underwriter so agrees
and if the number of Registrable Securities held by Initiating Holders which
would otherwise have been included in such registration and underwriting will
not thereby be limited. The inclusion of such shares shall be on the same terms
as the registration of shares held by the Initiating Holders. In the event that
the managing underwriter excludes some of the securities to be registered in
connection with a requested registration pursuant to Section 6.2, the securities
to be sold for the account of the Company and any other holders shall be
excluded in their entirety prior to the exclusion of any Registrable Securities.
6.5 Selling Procedures. Any sale of Registrable Securities pursuant to the
------------------
registration statement filed in accordance with Section 6.2 hereof shall be
subject to the following conditions and procedures:
(a) Updating the Prospectus. If the distribution of the Registrable
-----------------------
Securities covered by a registration pursuant to this Article VI is not to be
effected by means of a firm commitment underwriting, and if the Company informs
the selling Holder that the registration statement or final prospectus then on
file with the SEC is not current or otherwise does not comply with the
Securities Act, the Company shall use commercially reasonable efforts to provide
to the selling Holder a current prospectus that complies with the Securities Act
on or before the date of the intended sale of the Registrable Securities;
provided, however, that no more than once during any ninety (90) day period (the
- -------- -------
"Information Delay Period"), the Company shall have the right to delay the
preparation of a current prospectus that complies with the Securities Act for up
to twenty-five (25) days, if the Board of Directors of the Company or an
executive officer of the Company designated by the Board of Directors, acting in
good faith, determines that there exists material nonpublic information about
the Company which the Board or such officer does not wish to disclose in a
registration statement (due to the fact that such disclosure may not be in the
best interests of the Company's stockholders) which information would otherwise
be required by the Securities Act to be disclosed in the registration statement
to be filed pursuant to Section 6.2 above;
(b) General. Notwithstanding the foregoing, the Company shall notify
-------
each Holder (A) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the registration
statement for amendments or supplements to the registration statement or related
prospectus or for additional information relating to the registration statement,
(B) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose, (C) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
-10-
<PAGE>
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (D) of the happening of any event which makes
any statement made in the registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in the
registration statement or prospectus so that, in the case of the registration
statement, it will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the prospectus, it
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. In such event,
the Company may suspend use of the prospectus on written notice to each Holder,
in which case each Holder shall not dispose of Registrable Securities covered by
the registration statement or prospectus until copies of a supplemented or
amended prospectus are distributed to the Holders or until the Holders are
advised in writing by the Company that the use of the applicable prospectus may
be resumed. The Company shall use its commercially reasonable efforts to ensure
that the use of the prospectus may be resumed as soon as practicable. The
Company shall use its commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the securities for sale in any jurisdiction. The Company shall, upon
the occurrence of any event contemplated by clause (D), forthwith prepare a
supplement or post-effective amendment to the registration statement or a
supplement to the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder, such
prospectus will not contain as untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
6.6 Expenses. The Company shall pay all of the out-of-pocket expenses
--------
incurred, other than underwriting or selling discounts and commissions, in
connection with the registration of Registrable Securities pursuant to this
Article VI including, without limitation, all SEC, National Association of
Securities Dealers, Inc. and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of the Company's outside counsel and the Company's independent
accountants.
6.7 Indemnification. Prior to filing of a registration statement pursuant
---------------
to this Article VI, the Company and any Holder wishing to sell Registrable
Securities pursuant to the registration statement shall enter into an agreement
containing customary indemnification provisions with respect to misstatements or
omissions of material fact contained in such registration statement and in any
prospectus contained therein.
-11-
<PAGE>
ARTICLE VII
Miscellaneous
7.1 Waivers and Amendments. With the written consent of the holders of a
----------------------
majority of the Conversion Shares issued or issuable upon conversion of all
outstanding Notes, the obligations of the Company and the rights of the holders
of the Securities under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its board of directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
the Notes or the Warrants; provided, however, that (i) all persons affected by
-------- -------
such waiver or supplemental agreement are treated in the same manner, unless the
record or beneficial holders of all of the Securities consent to such amendment
or supplemental agreement, and (ii) no such waiver or supplemental agreement
shall reduce the above percentage of holders of Conversion Shares which is
required to consent to any waiver or supplemental agreement, without the consent
of the record or beneficial holders of all of the Securities. Upon the
effectuation of each such waiver, consent, agreement, amendment or modification
the Company shall promptly give written notice thereof to the record holders of
the Securities who have not previously consented thereto in writing. Neither
this Agreement nor any provisions hereof may be changed, waived, discharged or
terminated orally, but only by a signed statement in writing.
7.2 Governing Law. This Agreement shall be governed in all respects by the
-------------
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.
7.3 Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive the execution and delivery of this Agreement and the
sale of the Notes and Warrants.
7.4 Successors and Assigns. Except as otherwise expressly provided herein,
----------------------
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
7.5 Entire Agreement. This Agreement and the other documents delivered
----------------
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
7.6 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
-12-
<PAGE>
7.7 California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
-----------------------------------
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
7.8 Titles and Subtitles. The titles of the paragraphs and subparagraphs
--------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.9 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any right, power or remedy accruing to the Investor, upon any breach or
default of the Company under this Agreement, the Notes or the Warrants, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind or character by the Investor of any
breach or default under this Agreement, or any waiver by the Investor of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to the
Investor, shall be cumulative and not alternative.
7.10 Notices. Any notice or report required in this Agreement or permitted
-------
to be given shall be given by depositing the same in the United States mail,
postage prepaid and addressed to the parties as follows: (i) if to the Company,
to the attention of the President at the Company's principal address set forth
on the first page hereof, with a copy to Herbert P. Fockler, Wilson Sonsini
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, and (ii) if
to an Investor, to such Investor at such Investor's address as set forth on the
Schedule of Investors.
7.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[This space intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Note and Warrant Purchase
Agreement to be duly executed and delivered as of the date first written above.
THE COMPANY: UROGEN CORP.
By: /s/ Paul D. Quadros
------------------------
Paul D. Quadros
Chief Executive Officer
THE INVESTORS: INVESTOR
By: /s/ Paul D. Quadros
------------------------
Name: Paul D. Quadros
------------------
Title:__________________
-14-
<PAGE>
IN WITNESS WHEREOF. the parties have caused this Note and Warrant Purchase
Agreement to be duly executed and delivered as of the date first written above.
THE COMPANY: UROGEN CORP.
By: ________________________________
Paul D. Quadros
Chief Executive Officer
THE INVESTORS: INVESTOR
By: /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Name: /s/ [SIGNATURE ILLEGIBLE]
--------------------------
Title:__________________________
<PAGE>
Exhibit 10.10
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO,
(ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (III) RECEIPT OF A NO-ACTION
LETTER FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (IV) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 5 OF THE WARRANT CERTIFICATE UNDER
WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.
Warrants to Purchase 200,000 Shares
of Common Stock
UROGEN CORP.
Warrant Certificate
This Warrant Certificate certifies that Robert E. Sobol, M.D., or his
permitted registered assigns ("Holder"), is the registered holder of Two Hundred
Thousand (200,000) Warrants (the "Warrants") to purchase Common Stock, par value
$0.01 per share (the "Common Stock"), of UroGen Corp., a Delaware corporation
(the "Company"). Each Warrant entitles the Holder upon exercise on or before
5:00 p.m. Pacific time on July 31,2001 (such date and time, the "Expiration
Time"), to receive from the Company one fully paid and nonassessable share of
Common Stock (each such share, a "Warrant Share") at the exercise price of Five
Cents ($0.05) per share, as adjusted in accordance with Section 3 hereof (the
"Exercise Price").
1. Term. The Warrants may be exercised by the Holder hereof, in whole or
----
in part, at any time and from time to time until the Expiration Time. No Warrant
may be exercised after the Expiration Time; provided, however, that if the
-------- -------
Expiration Time falls on a Saturday, Sunday or legal holiday, the Expiration
Time shall automatically be extended to 5:00 p.m. Pacific time the next business
day.
2. Method of Exercise; Payment; Issuance of New Warrant Certificate. The
----------------------------------------------------------------
Warrants may be exercised by the Holder hereof in whole or in part and from time
to time, at the election of the Holder, by (i) the surrender of this Warrant
Certificate (with the notice of exercise substantially in the form attached
hereto as Exhibit A duly completed and executed) at the principal office of the
---------
Company and by the payment to the Company, by certified or bank check, or by
wire transfer to an account designated by the Company, of an amount equal to the
Exercise Price multiplied by the number of Warrants then being exercised or (ii)
exercise of the conversion right provided for in Section 7 hereof. The person or
persons in whose name(s) any certificate(s) representing the Warrant Shares
shall be issuable upon exercise of Warrants shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which the
<PAGE>
Warrants are exercised. In the event of any exercise of Warrants, certificates
for the shares of Warrant Stock so purchased shall be delivered to the Holder as
soon as possible and in any event within thirty (30) days after such exercise
and, in the event that upon any exercise of Warrants the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the Holder or its permitted assignee a new Warrant
Certificate evidencing the balance of the Warrants not so exercised, as soon as
possible and in any event within such thirty-day period.
3. Adjustment of Warrant Price and Number of Shares. The number and kind
------------------------------------------------
of securities purchasable upon exercise of the Warrants and the Exercise Price
thereof shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification. In case of any reclassification or change of
----------------
the Common Stock issuable upon exercise of this Warrant (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), the Company shall duly execute
and deliver to the Holder of this Warrant Certificate a new Warrant Certificate
(in form and substance reasonably satisfactory to the Holder), so that the
Holder of this Warrant Certificate shall have the right to receive, at a total
purchase price not to exceed that payable upon the exercise of the unexercised
portion of the Warrants represented hereby, and in lieu of the Warrant Shares
theretofore issuable upon exercise of the Warrants represented hereby, the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification or change by a holder of the number of Warrant Shares
then purchasable hereunder. Such new Warrant Certificate shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications or changes.
(b) Subdivision or Combination of Shares. If the Company at any
------------------------------------
time while Warrants remain outstanding and unexpired shall subdivide or combine
its outstanding shares of Common Stock, the Exercise Price shall be
proportionately decreased in the case of a subdivision or increased in the case
of a combination, effective at the close of business on the date the subdivision
or combination becomes effective.
(c) Stock Dividends. If the Company at any time while Warrants
---------------
remain outstanding and unexpired shall pay a dividend with respect to its Common
Stock payable in shares of Common Stock (except any distribution specifically
provided for in subparagraphs (a) and (b) above), then the Exercise Price shall
be adjusted, from and after the date of determination of stockholders entitled
to receive such dividend, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction,
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend, and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
after such dividend.
(d) Adjustment of Number of Warrant Shares. Upon each adjustment in
--------------------------------------
the Exercise Price, the number of Warrant Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the
number of Warrant Shares purchasable immediately prior to such adjustment in the
Exercise Price by a fraction, the numerator of which shall be the Exercise Price
-2-
<PAGE>
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price immediately thereafter.
(e) Merger or Consolidation. In case of any consolidation or merger
-----------------------
of the Company with or into another corporation (other than a consolidation or
merger with another corporation in which the Company is a continuing corporation
and in which the Company's stockholders immediately preceding such consolidation
or merger own at least 50% of the voting securities of the Company following
such consolidation or merger and which does not result in any reclassification
of the Common Stock issuable upon exercise of the Warrants), or in case of any
sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing corporation as the case may be, shall issue new
Warrants and shall execute a new Warrant Certificate providing that the holder
of this Warrant Certificate shall have the right to exercise such new Warrants,
and procure upon such exercise and payment of the same aggregate Exercise Price,
in lieu of the shares of Common Stock theretofore issuable upon exercise of the
Warrants evidenced hereby, the kind and amount of shares of stock, other
securities, money and property receivable upon such consolidation, sale of all
or substantially all of the Company's assets or merger by a holder of an
equivalent number of shares of Common Stock. Such new Warrant Certificate shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 3. The provisions of
this subparagraph (e) shall similarly apply to successive consolidations,
mergers, and sales of all or substantially all of the Company's assets.
(f) Notice of Adjustments. Whenever the Exercise Price or the
---------------------
number of Warrant Shares purchasable hereunder shall be adjusted pursuant to
this Section 3, the Company shall prepare a certificate signed by its chief
financial officer setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the Exercise Price and the number of Warrant Shares
purchasable hereunder after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (without regard to Section 12 hereof, by
first class mail, postage prepaid) to the Holder of this Warrant Certificate at
such holder's last known address.
4. Fractional Shares; Fair Market Value of Common Stock. No fractional
----------------------------------------------------
Warrant Shares will be issued in connection with any exercise or exchange
hereunder, but in lieu of such fractional shares the Company shall make a cash
payment therefor based on the Fair Market Value of the Common Stock on the date
of such exercise or exchange. For purposes of this Warrant Certificate, "Fair
Market Value" of one share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(a) If traded on a securities exchange, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30-day period ending five business days
prior to the Determination Date;
(b) If traded on The Nasdaq Stock Market, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five business days prior to the
Determination Date;
-3-
<PAGE>
(c) If the Common Stock is not then traded on the Nasdaq Stock
Market, the Fair Market Value of the Common Stock shall be deemed to be the
average of the high bid and low asked quotations in the over-the-counter market
over the 30-day period ending five business days prior to the Determination Date
as reported by the National Association of Securities Dealers Automated
Quotation System, or, it not so quoted, as reported by National Quotation
Bureau, Incorporated, or a similar organization;
(d) If Fair Market Value is not determinable as aforesaid, then the
Fair Market Value of the Common Stock shall be determined in good faith by the
Board of Directors of the Company.
5. Compliance with Securities Act; Disposition of Warrants or Warrant
------------------------------------------------------------------
Shares.
------
(a) Compliance with Securities Act. The Holder of Warrants
------------------------------
represented hereby, by acceptance hereof, agrees that the Warrants, and the
Warrant Shares to be issued upon exercise thereof, are being acquired for
investment and that such Holder will not offer, sell or otherwise dispose of the
Warrants or any Warrant Shares except under circumstances which will not result
in a violation of the Securities Act of 1933, as amended (the "Act"), or any
applicable state securities laws. Upon exercise of Warrants, unless the Warrant
Shares purchased thereby are registered under the Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Act and shall confirm such other matters related thereto as may
be reasonably requested by the Company. The Warrants and all Warrant Shares
issued upon exercise of the Warrants (unless registered under the Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS
OF SECTION 5 OF THE WARRANT CERTIFICATE UNDER WHICH THESE SECURITIES WERE
ISSUED, DIRECTLY OR INDIRECTLY."
Such legend shall be removed by the Company, upon the request of a Holder, at
such time as the restrictions on the transfer of the applicable security shall
have terminated. In addition, in connection with the issuance of the Warrants,
the Holder specifically represents to the Company by acceptance of this Warrant
Certificate as follows:
(1) The Holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire the Warrants. The
Holder is acquiring the Warrants for its own
-4-
<PAGE>
account for investment purposes only and not with a view to, or for the resale
in connection with, any "distribution" thereof in violation of the Act.
(2) The Holder understands that the Warrants and the Warrant Shares
issuable upon the exercise thereof have not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of the Holder's investment intent as
expressed herein.
(3) The Holder further understands that the Warrants and the
Warrant Shares must be held indefinitely unless subsequently registered under
the Act and qualified under any applicable state securities laws, unless
exemptions from registration and qualification are otherwise available. The
Holder is aware of the provisions of Rule 144, promulgated under the Act.
(b) Restrictions on Transfer of Warrant Shares. The Holder
------------------------------------------
acknowledges that no market for the Common Stock presently exists and no
assurance can be given that any active trading market will develop or be
sustained. The Holder also acknowledges that the Warrant Shares issued pursuant
to the exercise of Warrants hereunder may not be transferred, sold or otherwise
disposed of prior to December 31, 1997, unless such transfer restriction is
earlier terminated by the Company as to all outstanding shares of Common Stock,
except for the following transfers (each, a "Permitted Transfer"): (i) transfers
by gift, will, bequest or the applicable laws of descent and distribution; (ii)
non-sale distributions by partnerships, corporations or trusts to their
partners, shareholders or beneficiaries; (iii) transfers to the Company; and
(iv) transfers pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or the regulations promulgated
thereunder. In the case of a Permitted Transfer, the Warrant Shares in the hands
of the transferees will continue to be subject to the same restriction on
transfer. Any certificates representing Warrant Shares shall be stamped or
imprinted with a legend referring to the foregoing restriction on transfer. Said
legend will be removed by the Company, upon request of a Holder, at such time as
the restrictions on transfer shall have terminated.
(c) Disposition of Warrants or Warrant Shares. With respect to any
-----------------------------------------
offer, sale or other disposition of Warrants represented hereby or Warrant
Shares acquired pursuant to the exercise of Warrants prior to registration of
such Warrants or Warrant Shares, the Holder hereof agrees to give written notice
to the Company prior thereto, describing briefly the manner of such offer, sale
or other disposition, together with a written opinion of such Holder's counsel,
or other evidence reasonably satisfactory to the Company, to the effect that
such offer, sale or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state
securities law then in effect) of such Warrants or Warrant Shares and indicating
whether or not under the Act certificates for the Warrants or Warrant Shares to
be sold or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Promptly upon receiving such written notice and reasonably satisfactory opinion
or other evidence, the Company, as promptly as practicable but no later than
fifteen (15) days after receipt of the written notice, shall notify such Holder
that such Holder may sell or otherwise dispose of such Warrants or such Warrant
Shares, all in accordance with the terms of the notice delivered to the Company,
provided in
-5-
<PAGE>
the case of a disposition of Warrants that the transferee of such Warrants
agrees to be bound by the provisions hereof. If determination has been made
pursuant to this subparagraph (c) that the opinion of counsel for the Holder or
other evidence is not reasonably satisfactory to the Company, the Company shall
so notify the Holder promptly with details thereof after such determination has
been made. Notwithstanding the foregoing, the Warrants or Warrant Shares may, as
to such federal laws, be offered, sold or otherwise disposed of in accordance
with Rule 144 or 144A under the Act, provided that the Company shall have been
furnished with such information as the Company may reasonably request to provide
a reasonable assurance that the provisions of Rule 144 or 144A have been
satisfied. Each certificate representing the Warrants or the Warrant Shares thus
transferred (except a transfer pursuant to Rule 144) shall bear a legend as to
the applicable restrictions on transferability in order to ensure compliance
with such laws, unless in the aforesaid opinion of counsel for the Holder, such
legend is not required in order to ensure compliance with such laws. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.
6. Rights as Stockholders; Information. No Holder of Warrants, as such,
-----------------------------------
shall be entitled to vote or receive dividends or be deemed the holder of the
Warrant Shares issuable upon exercise thereof, nor shall anything contained
herein be construed to confer upon the Holder of Warrants, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until Warrants shall have been exercised and the Warrant Shares
purchasable upon the exercise thereof shall have become deliverable, as provided
herein. Notwithstanding the foregoing, the Company will transmit to the Holder
such information, documents and reports as are generally distributed to the
holders of Common Stock of the Company concurrently with the distribution
thereof to the stockholders.
7. Right to Convert Warrants into Warrant Stock: Net Exercise.
----------------------------------------------------------
(a) Right to Convert. In addition to, and without limiting the rights
----------------
of the Holder under the terms of this Warrant Certificate, the Holder shall have
the right (the "Conversion Right"), without payment of any cash or other
consideration, to convert the Warrants or any portion thereof into Warrant
Shares as provided in this Section 7 at any time or from time to time. In order
to exercise the Conversion Right, the Holder shall tender to the Company at its
principal office the Warrant Certificate evidencing the Warrants being
converted, along with written notice in the form attached hereto as Exhibit A
---------
(the "Net Exercise Notice") of the Holder's election to convert some or all of
such Warrants pursuant to this Section 7, and the Company shall issue to the
Holder the number of Warrant Shares computed using the following formula:
-6-
<PAGE>
Y(A-B)
X = ------
A
Where: X = the number of Warrant Shares issuable to the Holder upon
exercise of the Conversion Right;
Y = the total number of Warrants the Holder has elected to convert
as indicated in the Net Exercise Notice;
A = the Fair Market Value of the Common Stock (as defined in Section
4 hereof) on the date of exercise of the Conversion Right; and
B = the Exercise Price, as adjusted in accordance with Section 3
hereof.
No fractional shares shall be issuable upon exercise of the Conversion Right,
and, if the number of shares to be issued determined in accordance with the
foregoing formula is other than a whole number, the Company shall pay to the
Holder an amount of cash equal to the value of any fractional share as
calculated in accordance with Section 4. Warrant Shares issued pursuant to the
Conversion Right shall be treated as if they were issued upon the exercise of
the Warrants so converted.
(b) Method of Exercise. The conversion of Warrants tendered pursuant
------------------
to subparagraph (a) shall be effective upon receipt by the Company of this
Warrant Certificate together with the Net Exercise Notice, or on such later date
as is specified therein (the "Conversion Date"). Certificates for the Warrant
Shares issuable upon exercise of the Conversion Right and, if applicable, a new
Warrant Certificate evidencing the balance of the Warrants not so converted,
shall be issued as of the Conversion Date and shall be delivered to the Holder
within thirty (30) days following the Conversion Date.
8. Piggyback Registration. The Company agrees to grant the Holder
----------------------
piggyback registration rights as follows:
(a) Notice of Registration. If at any time or from time to time the
----------------------
Company shall determine to register any of its equity securities under the Act,
either for its own account or for the account of a security holder or holders,
other than a registration relating solely to employee benefit plans or a
registration relating solely to a Rule 145 transaction, the Company will:
(1) promptly give to the Holder written notice thereof; and
(2) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Warrant Shares specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Company, by the Holder.
-7-
<PAGE>
(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 Holder as a part of the written notice given
pursuant to Section 8(a)(1). In such event the right of the Holder to
registration pursuant to this Section 8 shall be conditioned upon the Holder's
participation in such underwriting, and the inclusion of Warrant Shares in the
underwriting shall be limited to the extent provided herein.
The Holder shall (together with the Company and any 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 8, 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 Warrant Shares to be included in such registration to
zero.
If the 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 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 8 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
(d) Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration pursuant to this Section 10 shall be borne by
the Company. Unless otherwise stated, all Selling Expenses relating to
securities registered on behalf of the Holder and all other registration
expenses shall be borne by the Holder of such securities pro rata on the basis
of the number of shares so registered.
(1) For purposes of this subparagraph (d), "Registration
Expenses" shall mean all expenses, except as otherwise stated below, incurred by
the Company in complying with this Section 10, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company) and the reasonable
fees and disbursements of one counsel for all selling shareholders.
(2) For purposes of this subparagraph (d), "Selling Expenses"
shall mean all underwriting discounts, selling commissions and stock transfer
taxes applicable to the securities registered by the Holder and, except as set
forth in the definition of "Registration Expenses," all fees and disbursements
of counsel for the Holder.
-8-
<PAGE>
(e) Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep the 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:
(1) 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 sixty (60)
days or until the distribution described in the registration statement has been
completed, whichever first occurs; and
(2) Furnish to the Holder 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 Holder and underwriters may reasonably request in order to facilitate the
public offering of such securities.
(f) Indemnification. The Company will indemnify the Holder of Warrant
---------------
Shares included in a registration pursuant to this Section 8, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Act, with respect to which registration
has been effected pursuant to this Section 8, 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 registration statement, final prospectus or any
amendment or supplement thereto, incident to any such registration, 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 not misleading, or
any violation by the Company of the Act, the Securities Exchange Act of 1934 or
any rule or regulation promulgated under such laws applicable to the Company in
connection with any such registration, and the Company will reimburse the
Holder, each of its officers, directors and partners, and each person
controlling such Holder for any legal and any other expenses reasonably
incurred, as such expenses are 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 upon and in conformity with written information furnished to the
Company by an instrument duly executed by the Holder or a controlling person and
stated to be specifically for use therein; provided, however, that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any such untrue statement, alleged untrue statement, omission or alleged
omission made in a preliminary prospectus on file with the Securities and
Exchange Commission (the "Commission") at the time the registration statement
becomes effective or the amended prospectus filed with the Commission pursuant
to Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall not
inure to the benefit of any underwriter, or the Holder, if there is no
underwriter, if a copy of the Final Prospectus was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Act, and if the Final Prospectus would have cured the
defect giving rise to the loss, liability, claim or damage.
-9-
<PAGE>
(1) The Holder will, if Warrant Shares held by such Holder are
included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers, 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 Act, and each other such holder, each of its officers,
directors and partners and each person controlling such other holder within the
meaning of Section 15 of the Act, against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement or Final Prospectus, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such other holder, such directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred, as such expenses are incurred, in connection with investigating,
preparing 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
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or Final Prospectus in reliance upon and in conformity
with written information furnished to the Company by an instrument duly executed
by the Holder and stated to be specifically for use therein. Notwithstanding the
foregoing, the liability of the Holder under this Section 8(f)(1) shall be
limited in an amount equal to the net proceeds of the Warrant Shares sold by the
Holder, unless such liability arises out of or is based on willful misconduct by
the Holder.
(2) Each party entitled to indemnification under this Section 8(f)
(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 8(f) unless the failure to give such notice
is materially prejudicial to an Indemnifying Party's ability to defend such
action, and provided further that the Indemnifying Party shall not assume the
defense for matters as to which representation of both the Indemnifying Party
and the Indemnified Party by the same counsel would be inappropriate due to
actual or potential differing interests between them, but shall instead in such
event pay the fees and costs of separate counsel for the Indemnified Party. 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.
(g) Information by Holder. The Holder of Warrant Shares included in
---------------------
any registration shall furnish to the Company such information regarding such
Holder, the Warrant Shares held by them and the distribution proposed by such
Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section 10.
-10-
<PAGE>
(h) Termination of Registration Rights. The rights granted pursuant
----------------------------------
to this Section 8 shall terminate as to the Holder at such time as the Holder
(i) can sell all of its Warrant Shares pursuant to Rule 144(k) promulgated under
the Act or (ii) can sell all of its Warrant Shares pursuant to Rule 144
promulgated under the Act in any ninety (90) day period.
9. Representations and Warranties. The Company represents and warrants to
------------------------------
the Holder of the Warrants evidenced hereby as follows:
(a) The Warrants represented hereby have been duly authorized and
executed by the Company and constitute a valid and binding obligation of the
Company enforceable in accordance with the terms of this Warrant Certificate,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and the rules of law or principles at equity governing
specific performance, injunctive relief and other equitable remedies;
(b) The Warrant Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof
will be validly issued, fully paid and non-assessable and free of any liens,
pledges, security interests, encumbrances, claims and the like, and are not
subject to preemptive rights or rights of first refusal created by statute, the
Certificate of Incorporation or Bylaws of the Company or any agreement to which
the Company is a party or by which it is bound;
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Warrant Shares and the holders thereof are as set forth in
the Certificate of Incorporation of the Company;
10. Covenants of the Company.
------------------------
(a) The Company covenants that, during the period within which the
Warrants may be exercised, it will at all times have authorized, and reserved
for the purpose of the issue upon exercise of the Warrants, a sufficient number
of shares of its Common Stock to provide for the issuance of Warrant Shares upon
the exercise in full of all outstanding Warrants.
(b) The Company will not, by amendment of its Certificate of
Incorporation or through any other means, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant Certificate, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrants against impairment.
11. Modification and Waiver. The terms of the Warrants and any provision
-----------------------
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request, communication or other document required
-------
or permitted to be given or delivered to the Holder hereof or the Company shall
be delivered, or shall be sent by
-11-
<PAGE>
nationally recognized overnight courier, or by certified or registered mail,
postage prepaid, to each such Holder at its address as shown on the books of the
Company or to the Company at the address indicated therefor on the signature
page of this Warrant Certificate.
13. Lost Warrant or Stock Certificates. The Company covenants to the
----------------------------------
Holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant
Certificate or any stock certificates representing Warrant Shares and, in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant Certificate or stock
certificates, the Company will make and deliver a new Warrant Certificate or
stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant Certificate or stock certificate.
14. Governing Law. This Warrant Certificate shall be construed and
-------------
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of California.
15. Severability. The invalidity or unenforceability of any provision of
------------
this Warrant Certificate in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant Certificate, which shall remain in full force and
effect.
[This Space Intentionally Left Blank]
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<PAGE>
16. Entire Agreement: Modification. This Warrant Certificate constitutes
------------------------------
the entire agreement between the parties pertaining to the subject matter hereof
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to the
subject matter hereof.
UROGEN CORP.
a Delaware corporation
By: Paul D Quadros
------------------------
Paul D. Quadros
Chief Executive Officer
Address: 3099 Science Park Road
Suite A
San Diego, CA 92121
-13-
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
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To: UROGEN CORP. (the "Company")
1. The undersigned hereby:
[_] elects to purchase _______________shares of Common Stock of
the Company pursuant to the terms of the attached Warrant
Certificate, and tenders herewith payment of the purchase price
of such shares in full; or
[_] elects to exercise its conversion rights pursuant to Section 7
of the attached Warrant Certificate with respect
to ________________Warrants.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name or names as
are specified below:
____________________________
(NAME)
____________________________
(ADDRESS)
____________________________
(ADDRESS)
3. The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof, and that the undersigned
has no present intention of distributing or reselling such shares, all except as
in compliance with applicable securities laws.
______________ ___________________________________
(DATE) (SIGNATURE)
-14-
