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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 25, 2000
GENSTAR THERAPEUTICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-27264 33-0687976
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
10835 ALTMAN ROW, SUITE 150 SAN DIEGO, CA 92121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (858) 450-5949
UroGen Corp.
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On May 15, 2000 GenStar Therapeutics Corporation (GenStar) acquired all of the
outstanding shares of Allegro Cell Systems, Inc. (Allegro) in exchange for
288,000 shares of GenStar Common Stock, and an obligation to issue an additional
12,000 shares of common stock. Allegro has a license to certain technologies
for the treatment and prevention of AIDS and for lentiviral gene therapy.
Allegro has no products, revenues, employees, facilities or other assets.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS.
Exhibit
Number Description
- ------ -----------
2.1 Acquisition Agreement and Plan of Merger
4.1 Registration Rights Agreement
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 25, 2000
GENSTAR THERAPEUTICS CORPORATION
By: /s/ Carin D. Sandvik
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Carin D. Sandvik
Corporate Controller
& Corporate Secretary
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2.1 Acquisition Agreement and Plan of Merger
4.1 Registration Rights Agreement
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EXHIBIT 2.1
================================================================================
ACQUISITION AGREEMENT AND PLAN OF MERGER
by and among
GenStar Therapeutics Corporation
and
Allegro Cell Systems, Inc.
dated
May 15, 2000
================================================================================
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ACQUISITION AGREEMENT AND PLAN OF MERGER
----------------------------------------
This Acquisition Agreement and Plan of Merger (the "Agreement") is dated
May 15, 2000, by and between GenStar Therapeutics Corporation, a Delaware
corporation ("GenStar"), and Allegro Cell Systems, Inc., a Delaware corporation
(the "Company").
WHEREAS, GenStar is a duly incorporated Delaware corporation engaged in the
business of developing gene therapy products for the treatment of hemophilia,
cancer and other genetic disorders.
WHEREAS, the Company is a duly incorporated Delaware corporation, with
authorized capital stock consisting of 5,000,000 shares of Common Stock, $0.001
par value, of which 96,000 shares are duly and validly issued, outstanding and
entitled to vote as of the date hereof.
WHEREAS, the shareholders of the Company and the respective Boards of
Directors of GenStar and the Company have approved the acquisition of the
Company by GenStar via merger (the "Merger") of the Company with and into
GenStar pursuant to the terms of this Agreement and in a transaction intended to
qualify as a tax-free reorganization under Section 368(a) of the Code (as
defined below).
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by each signatory hereto, it is agreed as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 "Affiliate" shall mean any person directly or indirectly controlled
by, controlling or under common control of any party to this Agreement.
1.2 "Closing" shall mean the closing of the transactions contemplated in
this Agreement.
1.3 "Closing Consideration" shall mean the consideration to be paid to
the Shareholders pro rata at the Closing, payable in 288,000 newly-issued
GenStar Shares (as defined below).
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
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1.5 "Company Common Stock" shall mean all of the issued and outstanding
Common Stock of the Company, $0.001 par value, all of which shares are held by
the Shareholders as of the date hereof.
1.6 "Company Financial Statements" shall mean the Company's audited
balance sheet as of December 31, 1999, and the related audited statements of
operations, stockholders' equity and cash flows for the year ended December 31,
1999.
1.7 "Contract" shall mean any existing written or oral contract, lease,
policy, commitment, sales order, purchase order, indenture, mortgage, note,
bond, instrument, license or other agreement.
1.8 "Delaware Code" shall mean the Delaware General Corporation Law, as
amended.
1.9 "Effective Date" shall mean the date and time the Certificate of
Merger (as defined below) is filed with the Delaware Secretary of State.
1.10 "Employee Benefit Plan(s)" shall mean any "employee benefit plan" as
defined in Section 3(3) of ERISA (as defined below) and any other plan, policy,
program, practice or arrangement providing compensation or other benefits to any
current or former officer or employee of the Company or any beneficiary or
dependent thereof that is or was maintained by the Company.
1.11 "Encumbrances" shall mean any mortgage, chattel mortgage, conditional
sales Contract, pledge, liability, lien, charge, security interest, encumbrance,
option, lease, license, easement or similar interest.
1.12 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all regulations promulgated thereunder.
1.13 "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
1.14 "GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.
1.15 "Intellectual Property" shall mean all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, trademarks, service marks, trade dress,
logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, mask works and all
applications, registrations and renewals in connection therewith, trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data,
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designs, drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), proprietary
software, other proprietary rights and copies and tangible embodiments thereof
(in whatever form or medium).
1.16 "Knowledge" shall mean that an individual will be deemed to have
Knowledge of a particular fact or other matter if such individual is actually
aware of such fact or other matter or a reasonably prudent individual could be
expected to discover or otherwise become aware of such fact or other matter in
the course of conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter. The Company will be deemed to have
Knowledge of a particular fact or other matter if any director or executive
officer of the Company has, or at any time had, Knowledge of such fact or other
matter. For purposes of this Agreement, Dr. Flossie Wong-Staal is the only
director and executive officer of the Company.
1.17 "Licenses" shall mean all material governmental licenses, permits,
approvals and registrations necessary for the ownership of the Company
properties and the conduct of its business as currently conducted.
1.18 "Material Adverse Effect" shall mean any material adverse effect on
the business, assets, properties, operations or condition (financial or
otherwise) of the Company.
1.19 "Person" shall mean an individual, a partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture or any other entity of whatever nature.
1.20 "GenStar Common Stock" shall mean the shares of Common Stock of
GenStar, $0.001 par value.
1.21 "GenStar SEC Filings" shall mean GenStar's quarterly reports on Form
10-QSB for the quarters ended September 30, 1999, June 30, 1999 and March 31,
1999, and GenStar's annual report on Form 10-KSB for the fiscal year ended
December 31, 1999.
1.22 "GenStar Shares" shall mean the shares of GenStar Common Stock
issuable as the Closing Consideration.
1.23 "SEC" shall mean the United States Securities and Exchange
Commission, or any successor entity.
1.24 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.25 "Shareholders" shall mean the shareholders of the Company set forth
on Schedule 3.6.
1.26 "Surviving Corporation" shall mean GenStar as the surviving
corporation following the Merger.
1.27 "Tax Return(s)" shall mean all federal, state, foreign, local and
other tax returns, reports and statements heretofore required to be filed by the
Company to which reference is
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being made or by any consolidated, combined or unitary group of which the
Company is or was a member.
ARTICLE II
THE MERGER
2.1 Merger. Subject to the terms and conditions hereof, the Merger
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shall be consummated in accordance with the Delaware Code. At the Effective
Date, subject to the terms and conditions of this Agreement and in accordance
with the Delaware Code, the Company shall be merged with and into GenStar, which
shall be the Surviving Corporation.
2.2 Company Common Stock. Each share of Company Common Stock issued and
--------------------
outstanding immediately prior to the Effective Date shall, by virtue of the
Merger and without any action on the part of the Shareholders, be cancelled and
converted into the right to receive a ratable portion of the Closing
Consideration upon surrender at the Closing of the certificates representing
such shares. At the Effective Date, all rights in respect of such Company
Common Stock shall cease to exist, other than the right to receive the Closing
Consideration and all such shares shall be cancelled and retired. Until
surrendered, each outstanding certificate which prior to the Effective Date
represented issued and outstanding Company Common Stock shall be deemed for all
corporate purposes to evidence the right to receive such amounts. Each share of
Company Common Stock held in the Company's treasury immediately prior to the
Effective Date shall, by virtue of the Merger, be cancelled and retired and
cease to exist, without any conversion thereof.
2.3 Shellwater Right. At the Effective Date, the Shellwater Right (as
----------------
defined in Section 3.5) shall be automatically cancelled and converted into the
right to receive 12,000 shares of GenStar Common Stock.
2.4 GenStar Common Stock. The outstanding shares of GenStar Common Stock
--------------------
shall remain outstanding and are not affected by the Merger.
2.5 Execution of Certificate of Merger. At the Closing, the Company shall
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complete and execute the Certificate of Merger, substantially in the form
attached hereto as Exhibit A and incorporated herein by this reference (the
---------
"Certificate of Merger"), and counsel for GenStar shall cause the Certificate of
Merger to be delivered to the Delaware Secretary of State for filing as provided
in Section 252 of the Delaware Code. The parties hereto will also execute and
deliver such other documents or certificates as may be required to effect the
Merger.
2.6 Effect of the Merger. The Merger shall have the effect set forth in
--------------------
Section 259 of the Delaware Code.
2.7 Articles of Incorporation; Bylaws. As of the Effective Date, the
---------------------------------
Certificate of Incorporation of GenStar shall be the Certificate of
Incorporation of the Surviving Corporation, and the Bylaws of GenStar shall be
the Bylaws of the Surviving Corporation.
2.8 Directors. The directors of GenStar as of the Effective Date shall be
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the directors of the Surviving Corporation and shall hold office from the
Effective Date until their respective
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successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation and Bylaws of the Surviving Corporation, or as
otherwise provided by law.
2.9 Officers. The officers of GenStar as of the Effective Date shall be
--------
the officers of the Surviving Corporation and shall hold office from the
Effective Date until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation and
Bylaws of the Surviving Corporation, or otherwise provided by law.
2.10 Closing. The Closing of the transactions contemplated by this
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Agreement shall take place at such time as may mutually be agreed to by the
parties (the "Closing Date") by facsimile (with original signature pages to
immediately follow by overnight courier), unless otherwise agreed by the
parties.
2.11 Closing Obligations of the Company. At the Closing, the Company shall
----------------------------------
deliver or cause to be delivered to GenStar:
(a) the original certificates representing the shares of Company
Common Stock owned by the Shareholders, duly endorsed in blank (or accompanied
by duly executed stock powers);
(b) the Certificate of Merger executed by the Company;
(c) a certificate of the Secretary of the Company attesting to the
incumbency of the officers executing the Agreement and the other agreements and
certificates delivered by the Company at the Closing and certifying to the
authenticity of the Certificate of Incorporation and Bylaws of the Company, each
as amended;
(d) written resolutions of the Shareholders and Board of Directors of
the Company, authorizing by unanimous consent the execution, delivery and
performance of this Agreement, certified by the Secretary of the Company
(provided, however, that so long as a majority of the Shareholders have provided
such authorization, the requirement that the Shareholders provide such
authorization by unanimous consent may be waived in writing by the Company); and
(e) resignation letters of each of the officers and directors of the
Company dated effective as of the Closing.
2.12 Closing Obligations of GenStar. At the Closing, GenStar shall
------------------------------
deliver or cause to be delivered to the Company:
(a) the Closing Consideration;
(b) a certificate of the Secretary of GenStar attesting to the
incumbency of the officers executing the Agreement and the other agreements and
certificates delivered by GenStar at the Closing;
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(c) written resolutions or minutes of the Board of Directors of
GenStar authorizing the execution, delivery and performance of this Agreement,
certified by the Secretary of GenStar; and
(d) the Registration Rights Agreement (defined in Section 5.4)
executed by GenStar.
2.13 Private Placement. The GenStar Shares to be issued to the
-----------------
Shareholders of the Company pursuant to this Agreement will be exempt from
registration requirements of the Securities Act pursuant to the private
placement exemption provided by Rule 505 and/or 506 of Regulation D promulgated
under the Securities Act and/or Section 4(2) of the Securities Act, and
applicable state securities laws.
2.14 Tax Consequences. It is intended that the Merger shall constitute a
----------------
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of Section
368 of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to GenStar as follows, except as stated
in the disclosure schedules provided by the Company to GenStar, which describe
exceptions to the representations and warranties:
3.1 Organization and Good Standing. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power and authority to own, lease and operate
its assets and properties and to carry on its businesses and to enter into,
deliver and perform its obligations under and to consummate the transactions
contemplated by this Agreement.
3.2 Articles of Incorporation and Bylaws. The Company has delivered to
------------------------------------
GenStar true, correct and complete copies of its Certificate of Incorporation
and Bylaws together with all amendments to each through the date hereof, and
such documents are in full force and effect.
3.3 Corporate Minutes. The Company has delivered to GenStar true, correct
-----------------
and complete copies of its minute books, stock certificate books and corporate
records, and such books and records reflect all issuances of equity and debt
securities of the Company or rights to acquire any such securities, and contain
true and complete records of all meetings and consents in lieu of meetings of
the Board of Directors (and any committees thereof) and shareholders of the
Company.
3.4 Qualifications to do Business. The Company is qualified to do
-----------------------------
business and is in good standing in each jurisdiction in which the failure to be
so qualified would have a material adverse effect on the business or financial
condition of the Company.
3.5 Capitalization. As of the date of this Agreement, the only authorized
--------------
capital stock of the Company consists of 5,000,000 shares of Company Common
Stock, $0.001 par value, of
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which 96,000 shares are issued and outstanding. All issued and outstanding
shares of Company Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable and are not subject to, nor were any issued in
violation of, any preemptive rights. There are not and, as of the Closing, there
will not be, any outstanding convertible securities of the Company or options,
warrants, subscriptions, convertible debentures or other rights, commitments or
any other similar agreements for the purchase of any securities of the Company,
with the exception of the right of Shellwater & Co. to receive 4,000 shares of
Company Common Stock (the "Shellwater Right"), pursuant to the License Agreement
(as defined in Section 3.13). The Company and the Shareholders are not party to
any voting trust agreements or other Contracts, agreements or arrangements
restricting voting rights or transferability with respect to the issued and
outstanding Company Common Stock.
3.6 Ownership of Shares; No Change. As of the date of this Agreement and
------------------------------
as of the Closing, Schedule 3.6 contains the name, address and share ownership
------------
of all shareholders of the Company. The Shareholders own all of the issued and
outstanding Company Common Stock. Each of the shares of Company Common Stock to
be tendered by the Shareholders at the Closing is free and clear of any
Encumbrance, and at the Closing, each of such shares of Company Common Stock
will be free of any Encumbrance. Each of the Shareholders has full power and
authority to convey good marketable title to the shares of Company Common Stock
owned by him, her or it free and clear of any Encumbrances.
3.7 Subsidiaries and Other Affiliates. The Company does not have any
---------------------------------
subsidiaries and does not own, either directly or indirectly, any interest or
investment, whether debt or equity (other than an interest as a creditor holding
a trade account receivable), or any obligation, option or right to acquire any
interest, direct or indirect, in any other corporation or other entity.
3.8 Authority. The Company has the necessary corporate power and
---------
authority to enter into and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by the Company have been duly authorized by the unanimous
written consent of each of the Board of Directors and Shareholders of the
Company in accordance with applicable law. This Agreement has been duly and
validly authorized, executed and delivered by the Company and this Agreement
(assuming due authorization, execution and delivery by the other parties hereto)
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms (except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws affecting the
rights of creditors generally or by general principles of equity). Neither the
execution, delivery nor performance of this Agreement by the Company nor the
consummation of the transactions contemplated hereby, nor compliance by the
Company or any of the Shareholders with the terms and provisions of this
Agreement nor the Certificate of Merger will result in a violation or breach of
any term or provision of the Certificate of Incorporation or Bylaws of the
Company, each as amended, or of any material statute, rule or regulation
applicable to the Company or its businesses, properties, assets or personnel, or
conflict with or constitute a violation or breach of, or a default under (or an
event which, with the passage of time or the giving of notice, or both, would
constitute a default under), nor give any party a right to accelerate the due
date of any indebtedness or obligation under, any indenture, mortgage, deed of
trust, Contract or agreement to which the Company is a party or to which its
properties or assets
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are subject, or any instrument, judgment, decree, writ or other restriction to
which the Company is a party or by which the Company or its businesses,
properties, assets or personnel are bound. Except for filing the Certificate of
Merger with the Delaware Secretary of State, the Company is not required to
obtain the consent of any third party or to submit any notice, report or other
filing with any federal, state or local governmental authority in connection
with the execution or delivery or performance by the Company of this Agreement
or the consummation of the transactions contemplated herein.
3.9 Company Financial Statements. The Company has delivered to GenStar
----------------------------
true, complete and correct copies of the Company Financial Statements. The
Company Financial Statements present fairly the Company's financial position in
accordance with GAAP, as of the dates indicated, and the results of its
operations and changes in financial position for the periods therein specified
(subject, in the case of unaudited interim financial statements, to normal year-
end adjustments and provided that such unaudited interim financial statements do
not contain footnotes in accordance with GAAP). Since the date of the Company
Financial Statements (the "Balance Sheet Date"), there has been no material
adverse change in the financial condition or results of operations of the
Company that has resulted in a material adverse change in the businesses,
assets, properties, operations or condition (financial or otherwise) of the
Company.
3.10 Undisclosed Liabilities. Except for liabilities disclosed or provided
-----------------------
for on the Company Financial Statement, liabilities incurred in the ordinary
course of business consistent with past practice since the Balance Sheet Date,
and liabilities set forth on Schedule 3.10, the Company does not have any direct
-------------
or indirect indebtedness, liability, losses or obligation, accrued, absolute or
contingent required by GAAP to be set forth on a balance sheet.
3.11 Absence of Certain Changes. Except as set forth on Schedule 3.11 or
-------------------------- -------------
as provided for in this Agreement, since the Balance Sheet Date, the Company has
conducted its business only in the ordinary course and consistent with prior
practice.
3.12 Real Property Matters. The Company does not own or lease any real
---------------------
property.
3.13 Intellectual Property. Schedule 3.13 sets forth all Intellectual
--------------------- -------------
Property of the Company, other than goodwill, trade secrets and confidential
business information. The Company is not in violation of, or infringing upon,
any patent, trademark, service mark, trade name, copyright or franchise of any
third party, and no claims have been asserted, nor is there any litigation
pending or, to the Knowledge of the Company and the Shareholders, threatened
claiming such infringement. The Company licenses certain patents and related
technology from the Regents of the University of California pursuant to a
License Agreement dated May 8, 2000 (the "License Agreement"). The Company has
delivered to GenStar a correct and complete copy of the License Agreement (as
amended to date). With respect to the License Agreement: (i) the License
Agreement is legal, valid, binding, enforceable and in full force and effect
against the Company; (ii) the License Agreement will continue to be legal,
valid, binding, enforceable and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (iii)
neither the Company, nor to the Knowledge of the Company, the other party to the
License Agreement is in breach or default, and to the Knowledge of the Company,
no event has occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification or acceleration
thereunder; (iv) neither the Company, nor to the
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Knowledge of the Company, the other party to the License Agreement has
repudiated any provision thereof; (v) with respect to the License Agreement, the
representations and warranties set forth in subsections (i) through (iv) above
are true and correct with respect to the underlying license; (vi) to the
Knowledge of the Company, the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling or
charge; (vii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against the Company is pending or, to the Knowledge
of the Company, is threatened which challenges the legality, validity or
enforceability of the underlying item of Intellectual Property; and (viii) the
Company has not granted any sublicense or similar right with respect to the
License Agreement.
3.14 Software. The Company does not own any proprietary software marketed
--------
or licensed to third parties.
3.15 Tax Matters. The Company has prepared and timely filed all Tax
-----------
Returns, and has paid or accrued all taxes it is required to pay or accrue.
3.16 Employees. The Company has no employees or Employee Benefit Plan(s).
---------
3.17 Insurance. The Company has no insurance.
---------
3.18 Non-Assignable Rights. Neither the execution, delivery nor
---------------------
performance of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in a breach or
termination of, or prevent the Company from realizing the benefits otherwise
obtainable by the Company under, any permits or property interests of the
Company or any Contract, agreement, arrangement or commitment of the Company or
(ii) require the affirmative consent or approval of any third party.
3.19 Investment Representations. Each of the Shareholders is an
--------------------------
"accredited investor" within the meaning of the Securities Act, or a donee of an
"accredited investor." Each of the Shareholders is aware that the GenStar
Shares issued pursuant to this Agreement have not been registered under the
Securities Act or any applicable state securities laws, and that such GenStar
Shares may not be offered or sold in the absence of registration under the
Securities Act and any applicable state securities laws or an exemption from the
registration requirements of the Securities Act and any applicable state
securities laws, which shall be accompanied by an opinion of counsel to such
selling Shareholder satisfactory to GenStar and its counsel that registration of
such shares is not required. Each of the Shareholders will not transfer the
GenStar Shares in violation of the provisions of any applicable federal or state
securities laws. Each of the Shareholders is familiar with Rule 144 and Rule
145 promulgated by the SEC pursuant to the Securities Act, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Each of the Shareholders understands that the offering and sale
of the GenStar Shares is intended to be exempt from registration under the
Securities Act, by virtue of the private placement exemption provided by Rule
505 and/or 506 of Regulation D promulgated under the Securities Act and/or
Section 4(2) of the Securities Act, based, in part, upon the representations,
warranties and agreements contained in this Agreement, and GenStar may rely on
such representations, warranties and agreements in connection therewith. Each
of the Shareholders is acquiring the GenStar Shares for his, her or its own
account and for investment, and not with a view to the distribution thereof or
with any present intention of distributing or
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selling any of the GenStar Shares except in compliance with the Securities Act.
Each of the Shareholders, by reason of his, her or its business and financial
experience, has knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits and risk of the
prospective investment. In evaluating the suitability of the acquisition of the
GenStar Shares hereunder, each of the Shareholders has not relied upon any
representations or other information (whether oral or written) other than as set
forth in the GenStar SEC Filings or as contained herein.
3.20 Broker's and Finder's Fees. There are no broker's or finder's fees or
--------------------------
obligations due to any Persons engaged by either the Company or the Shareholders
or any of the Company's employees, officers or directors in connection with the
transactions contemplated by this Agreement, except for the fees and expenses of
its counsel and accountants.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF GENSTAR
GenStar represents and warrants to the Company as follows, except as stated
in the disclosure schedules provided by GenStar to the Company, which describe
exceptions to the representations and warranties:
4.1 Organization and Good Standing. GenStar is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2 Authority. GenStar has the necessary corporate power and corporate
---------
authority to enter into and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by GenStar have been duly authorized by the Board of
Directors of GenStar in accordance with applicable law. This Agreement has been
duly and validly authorized, executed and delivered by GenStar and this
Agreement (assuming due authorization, execution and delivery by the other
parties hereto) constitutes the legal, valid and binding obligation of GenStar,
enforceable in accordance with its terms (except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or by general principles of equity).
Neither the execution, delivery nor performance of this Agreement by GenStar,
nor the consummation of the transactions contemplated hereby, nor compliance by
GenStar with the terms and provisions of this Agreement or the Certificate of
Merger will result in a violation or breach of any term or provision of the
Certificate of Incorporation or Bylaws of GenStar, each as amended, or of any
material statute, rule or regulation applicable to GenStar or its businesses,
properties, assets or personnel, or conflict with or constitute a violation or
breach of, or a default under (or an event which, with the passage of time or
the giving of notice, or both, would constitute a default under), nor give any
party a right to accelerate the due date of any indebtedness or obligation
under, any indenture, mortgage, deed of trust, Contract or agreement to which
GenStar is a party or to which its properties or assets are subject, or any
instrument, judgment, decree, writ or other restriction to which GenStar is a
party or by which GenStar or its businesses, properties, assets or personnel are
bound. Except for filing the Certificate of Merger with the Delaware Secretary
of State, and for any federal or state securities filings that may be required
in connection with the
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Merger, GenStar is not required to obtain the consent of any third party or to
submit any notice, report or other filing with any federal, state or local
governmental authority in connection with the execution or delivery or
performance by GenStar of this Agreement or the consummation of the transactions
contemplated herein.
4.3 GenStar Shares. As of the Closing, the GenStar Shares will have been
--------------
duly reserved for delivery pursuant to the terms of this Agreement and will,
when so delivered and paid for, be duly authorized, validly issued, fully paid
and nonassessable shares and will be free and clear of all Encumbrances imposed
by or through GenStar.
4.4 GenStar SEC Filings. The GenStar SEC Filings have been duly filed,
-------------------
were in compliance in all material respects with the requirements of their
respective report forms, were complete and correct in all material respects as
of the dates at which the information therein was furnished, and as of such
date, contained no untrue statement of a material fact nor omitted to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The
consolidated financial statements of GenStar and the related notes and schedules
included in the GenStar SEC Filings comply in all material respects with the
requirements of the Exchange Act and present fairly the consolidated financial
position in accordance with GAAP, as of the dates indicated, and the results of
its operations and changes in financial position for the periods therein
specified (subject, in the case of unaudited interim financial statements, to
normal year-end adjustments, and provided that such unaudited interim financial
statements do not contain footnotes in accordance with GAAP). Except as set
forth on Schedule 4.4, since the date of the filing with the SEC of GenStar's
------------
most recent 10-KSB, there has been no material adverse change in the financial
condition or results of operations of GenStar that has resulted in a material
adverse change in the businesses, assets, properties, operations or condition
(financial or otherwise) of GenStar. Notwithstanding the foregoing, GenStar
makes no representations or warranties regarding its future financial condition,
results of operations or stock price. GenStar's future financial condition,
results of operations and stock price are subject to various risk factors and
uncertainties, including without limitation those reflected in the GenStar SEC
Filings.
4.5 Broker's or Finder's Fees. There are no broker's or finder's fees or
-------------------------
obligations due to any Persons engaged by GenStar or any of its employees,
officers or directors in connection with the transactions contemplated by this
Agreement, except for fees and expenses of its counsel and accountants.
ARTICLE V
POST-CLOSING COVENANTS
The parties hereby agree as follows with respect to the period following
the Closing:
5.1 Further Assurances. In case at any time after the Closing any
------------------
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request, all the sole cost and expense of the requesting
party.
12
<PAGE>
5.2 Scientific Advisory Board. GenStar shall take all actions necessary
-------------------------
to appoint Dr. Flossie Wong-Staal to its Scientific Advisory Board, with such
duties and compensation as is provided by GenStar to other members of such
advisory board.
5.3 Restrictions on Transferability of GenStar Shares. The certificates
-------------------------------------------------
representing the GenStar Shares shall bear the following legend restricting
transfer, and such other legends as may be required by any applicable state
securities law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144
OF SUCH ACT.
The GenStar Shares shall not be transferable in the absence of an effective
registration statement under the Securities Act or an exemption therefrom or in
the absence of compliance with any term of this Agreement. In the absence of an
effective registration statement under the Securities Act, neither the GenStar
Shares nor any interest therein shall be sold, transferred, assigned or
otherwise disposed of, unless GenStar shall have previously received an opinion
of counsel knowledgeable in federal securities law, in form and substance
reasonably satisfactory to GenStar and accompanied by such supporting documents
as GenStar may reasonably request, to the effect that registration under the
Securities Act is not required in connection with such disposition. GenStar
shall be entitled to give stop transfer instructions to its transfer agent with
respect to the GenStar Shares in order to enforce the foregoing restrictions.
Notwithstanding the foregoing, GenStar agrees that it shall not require an
opinion of counsel in connection with Rule 144 transactions except in unusual
circumstances. GenStar shall be obligated to reissue promptly unlegended
certificates at the request of any Shareholder thereof if such stockholder
shall have obtained an opinion of counsel reasonably acceptable to GenStar to
the effect that the securities proposed to be disposed of may lawfully be
disposed of without registration, qualification or legend.
5.4 Registration Rights. GenStar will provide the Shareholders with
-------------------
registration rights with respect to the GenStar Shares issuable hereunder in
accordance with the terms and conditions of that certain Registration Rights
Agreement, substantially in the form attached hereto as Exhibit B and
---------
incorporated herein by this reference (the "Registration Rights Agreement");
provided, however, that as more fully set forth in the Registration Rights
- -------- -------
Agreement, as a condition precedent to exercise of such registration rights,
each Shareholder shall be required to execute a "lockup" agreement providing
that such Shareholder's GenStar Shares shall not be offered or sold for a period
of six (6) months after the effective date of the registration statement
pertaining to such GenStar Shares. At such time as a registration statement for
the GenStar Shares has been declared effective in accordance with the terms and
conditions of the Registration Rights Agreement, the provisions of Section 5.3
above shall cease to apply to the GenStar Shares.
13
<PAGE>
ARTICLE VI
GENERAL
6.1 Survival of Representations and Warranties. The representations,
------------------------------------------
warranties and covenants of the Company and GenStar contained in this Agreement
shall not survive the Closing.
6.2 Amendments. Subject to applicable law, this Agreement, the
----------
Certificate of Merger and any exhibit attached hereto or thereto may be amended
by the parties hereto at any time prior to the Effective Date; provided,
however, that any such amendment must be in writing and executed by all parties
hereto.
6.3 Assignment. The rights under this Agreement shall not be assignable
----------
nor the duties delegable by any party without the written consent of the other
parties and nothing contained in this Agreement, express or implied, is intended
to confer upon any person or entity, other than the parties hereto and their
successors in interest and permitted assignees, any rights or remedies under or
by reason of this Agreement unless so stated to the contrary.
6.4 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally, by facsimile transmission, or when mailed, by United
States certified or registered mail, prepaid, to the parties or their assignees
at the following addresses or facsimile numbers (or at such other address as
shall be given in writing by any party):
If to GenStar: 10835 Altman Row, Suite 150
San Diego, California 92121
Facsimile: (858) 450-5949
Attn: Robert E. Sobol, M.D.
with a required copy to: Luce, Forward, Hamilton & Scripps LLP
600 W. Broadway, Suite 2600
San Diego, California 92101
Facsimile: (619) 645-5322
Attn: Dennis J. Doucette, Esq.
If to the Company: c/o Brobeck, Phleger & Harrison LLP
Attention: Craig Andrews, Esq.
12390 El Camino Real
San Diego, California 92130
Facsimile: (858) 720-2555
6.5 Entire Agreement. This Agreement, the Certificate of Merger and the
----------------
Registration Rights Agreement (including all exhibits and schedules attached
hereto and all documents delivered as provided for herein) contain the entire
agreement among the parties hereto with respect to the subject matter hereof and
the transactions contemplated hereby and
14
<PAGE>
supersedes all prior negotiations, discussions, agreements and undertakings,
both written and oral, among the parties hereto, with respect to the subject
matter hereof.
6.6 Counterparts; Facsimile. This Agreement may be executed in one or
-----------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile (with originals to follow by United States mail), and such
facsimile shall be conclusive evidence of the consent and ratification of the
signatories hereto.
6.7 Governing Law. This Agreement shall be construed by and enforced in
-------------
accordance with the laws of the State of California without giving effect to the
principles of the conflicts of laws.
6.8 Payment of Expenses and Liabilities. If the Merger is not
-----------------------------------
consummated, each of the Company and GenStar will pay its respective costs and
expenses (including fees and expenses of legal counsel, accountants and
financial advisors) incurred in connection with the transactions contemplated by
this Agreement. If the Merger is consummated, all outstanding liabilities of
the Company, including the costs and expenses incurred by the Company in
connection with the transactions contemplated hereby, will be paid by GenStar at
the Closing, provided that GenStar will not be responsible for such outstanding
liabilities to the extent they exceed $25,000 (excluding obligations owed under
the License Agreement) without the prior written consent of GenStar, in its sole
and absolute discretion.
6.9 Recovery of Attorneys Fees and Costs. If any legal action or
------------------------------------
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
GenStar Therapeutics Corporation
/S/ ROBERT E. SOBOL
-------------------------------------
By: Robert E. Sobol, M.D., President
THE COMPANY:
Allegro Cell Systems, Inc.
/S/ FLOSSIE WONG-STAAL
----------------------------------------
By: Flossie Wong-Staal, M.D., President
15
<PAGE>
EXHIBIT A
---------
CERTIFICATE OF MERGER
---------------------
Exhibit A-1
<PAGE>
EXHIBIT B
---------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Exhibit B-1
<PAGE>
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of May 15, 2000, by GenStar Therapeutics Corporation, a Delaware
corporation (the "Company"), for the benefit of the individuals and entities
listed on Exhibit A hereto (each a "Holder").
RECITALS
A. The Company and Allegro Cell Systems, Inc., a Delaware corporation
("Allegro"), entered into an Acquisition Agreement and Plan of Merger dated May
15, 2000 (the "Merger Agreement"), providing for the acquisition of Allegro by
the Company via the merger of Allegro with and into the Company.
B. Pursuant to Section 5.4 of the Merger Agreement, the Company has
agreed to extend registration rights to the Holders, subject to certain
limitations upon the transfer of shares so registered, as more fully set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Merger Agreement, the parties hereby agree as follows:
Section 1. General.
-------
1.1 Definitions. As used in this Agreement, the following terms shall
-----------
have the following respective meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means each of the individuals and entities listed on
Exhibit A hereto.
"Registrable Securities" means (i) Common Stock of the Company
issued to the Holders pursuant to the Merger Agreement, and (ii) any Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a Holder to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 2.2 and 2.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Ten Thousand Dollars ($10,000.00) of a single special counsel for the
Holders, blue sky fees and expenses and 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).
<PAGE>
"SEC" means the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
Section 2. Registration; Restrictions on Transfer.
--------------------------------------
2.1 Restrictions on Transfer of Registrable Securities. As a condition
--------------------------------------------------
precedent to the inclusion of any Holder's Registrable Securities in a
registration statement under Section 2.2 or 2.3 hereof, such Holder shall be
required to execute a "lockup" agreement, in form and substance acceptable to
the Company, providing that for the Lockup Period (as defined below) applicable
to such registration statement, such Holder shall not, directly or indirectly,
by operation of law or otherwise, sell, donate, transfer, assign, exchange,
encumber, pledge, alienate or otherwise dispose of all or any part of such
Holder's Registrable Securities so registered. Any Holder not executing such a
"lockup" agreement shall not be entitled to registration rights hereunder. The
"Lockup Period" shall mean (i) one hundred eighty (180) days after the effective
date of a registration statement filed on or before ninety (90) days from the
date of this Agreement, and (ii) ninety (90) days after the effective date of a
registration statement filed on or after ninety-one (91) days from the date of
this Agreement.
2.2 Best Efforts to File Registration Statement. The Company shall use
-------------------------------------------
its best efforts to prepare and file, within one hundred eighty (180) days after
the effective time of the Merger, a registration statement under the Securities
Act covering the registration of all of the Registrable Securities, and shall
thereafter use its best efforts to cause such registration statement to be
declared effective as expeditiously as possible.
2.3 Piggyback Registration Rights. The Company shall notify all Holders
-----------------------------
of Registrable Securities in writing at least fifteen (15) days prior to the
filing of any registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within ten (10) days after the above-described notice from the Company,
so notify the Company in writing. Such notice shall state the intended method of
disposition of the Registrable Securities by such Holder. If a Holder decides
not to include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(a) Underwriting. If the registration statement under which the
------------
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise
2
<PAGE>
the Holders of Registrable Securities. In such event, the right of any such
Holder to be included in a registration pursuant to this Section 2.3 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. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company; second, to the Holders on a pro rata basis based on the total
number of Registrable Securities held by the Holders; and third, to any
stockholder of the Company (other than a Holder) on a pro rata basis. No such
reduction shall (i) reduce the securities being offered by the Company for its
own account to be included in the registration and underwriting or (ii) reduce
the amount of securities of the selling Holders included in the registration
below twenty-five percent (25%) of the total amount of securities included in
such registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration. For any Holder which is a partnership or corporation, the
partners, retired partners and stockholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing person shall be deemed to be a single "Holder",
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
(b) Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.4 hereof.
2.4 Expenses of Registration. Except as specifically provided herein,
------------------------
all Registration Expenses incurred in connection with any registration hereunder
shall be borne by the Company. All Selling Expenses incurred in connection with
any registration hereunder shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered.
2.5 Obligations of the Company. Whenever effecting a registration of any
--------------------------
Registrable Securities hereunder, the Company shall, as expeditiously as
reasonably possible:
(a) With respect to a registration statement filed relating to
Registrable Securities, keep such registration statement effective for up to one
(1) year following the expiration of the applicable Lockup Period or, if
earlier, until the Holder or Holders of such Registrable Securities have
completed the distribution thereof.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as
3
<PAGE>
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement for the period set forth in paragraph (a) above.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
2.6 Termination of Registration Rights. All registration rights granted
----------------------------------
under this Section 2 shall terminate and be of no further force and effect on
the date five (5) years after the date of this Agreement. In addition, a
Holder's registration rights shall expire if all Registrable Securities held by
and issuable to such Holder (and its affiliates, partners, former partners,
members and former members) may be sold under Rule 144 during any ninety (90)
day period.
2.7 Delay of Registration; Furnishing Information.
---------------------------------------------
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2 or 2.3 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
2.8 Indemnification. In the event any Registrable Securities are included
---------------
in a registration statement under Section 2.2 or 2.3:
4
<PAGE>
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder,
any underwriter (as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the 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 (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.8(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers and each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.8(b) shall not apply to
amounts paid in settlement of any such loss,
5
<PAGE>
claim, damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
provided further, that in no event shall any indemnity under this Section 2.8
exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.8.
(d) If Section 2.8 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted by
applicable law contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a court
of law by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, that in no event
shall any contribution by a Holder hereunder exceed the net proceeds from the
offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 2.8
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. 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.
6
<PAGE>
2.9 Assignment of Registration Rights. Subject to the restrictions on
---------------------------------
transfer set forth in Section 2.1 hereof, the rights of a Holder pursuant to
this Section 2 may be assigned by such Holder to a transferee or assignee of
Registrable Securities which (a) is a general partner, limited partner, retired
partner, member or retired member of a Holder, (b) is a partnership in which a
Holder is a partner, or an associate of such partnership, (c) is a Holder's
family member or trust for the benefit of an individual Holder, or (d) acquires
at least fifty thousand (50,000) shares of Registrable Securities (as adjusted
for stock splits and combinations); and provided further, (i) the transferor
shall, within twenty (20) days after such transfer, furnish to the Company
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned and
(ii) such transferee shall agree to be subject to all restrictions set forth in
this Agreement.
2.10 Amendment of Registration Rights. Any provision of this Section 2
--------------------------------
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 2.10 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Section 2, Holders of
Registrable Securities hereby agree to be bound by the provisions hereof.
2.11 Subordination of Registration Rights. The registration rights
------------------------------------
granted to Holders hereunder shall be subordinate in nature to the registration
rights granted by the Company to Baxter Healthcare Corporation, a Delaware
corporation ("Baxter"), pursuant to the Investor Rights Agreement dated July 8,
1998, by and among the Company, Baxter, and certain individuals named therein
(the "Investor Rights Agreement"). In accordance with the foregoing, nothing
contained herein shall operate to reduce the number of shares of Company common
stock held by Baxter which pursuant to the Investor Rights Agreement may be
included in a registration statement filed by the Company under the Securities
Act.
Section 3. Miscellaneous.
-------------
3.1 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
3.2 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 and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
3.3 Entire Agreement. This Agreement and the Merger Agreement and the
----------------
other documents delivered pursuant thereto constitute the full and entire
understanding and agreement
7
<PAGE>
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
3.4 Severability. In the event one or more of the provisions of this
------------
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
3.5 Amendment and Waiver.
--------------------
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least a majority of then outstanding Registrable Securities.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least a majority of then
outstanding Registrable Securities.
3.6 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
3.7 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally, or when mailed by United States certified or registered
mail, prepaid, to the parties or their assignees at the addresses set forth on
the signature page hereto (or at such other address as shall be given in writing
by any party).
3.8 Attorneys' Fees. In the event that any suit or action is instituted
---------------
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
3.9 Titles and Subtitles. The titles of the sections and subsections of
--------------------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8
<PAGE>
3.10 Facsimile. This Agreement may be executed by facsimile (with
---------
originals to follow by United States mail), and such facsimile shall be
conclusive evidence of the consent and ratification of the signatory hereto.
IN WITNESS WHEREOF, the undersigned has executed this Registration Rights
Agreement as of the date first written above.
GenStar Therapeutics Corporation
/s/ ROBERT E. SOBOL
-----------------------------------------
By: Robert E. Sobol, M.D., President
Address:
10835 Altman Row, Suite 150
San Diego, CA 92121
9
<PAGE>
EXHIBIT A
HOLDERS
Wong-Staal Family Trust dtd 9/27/90
Eric Polescha
David Looney
Tina Nova
June and Malcolm Mitchell
Craig Andrews
Shellwater & Co.
1
